I have made it a point not to discuss the Presidential race or endorse a candidate in my postings because I want this blog to be about issues and ideas and not about personalities. However, I would like to suspend that custom today and comment on the results of yesterday's historic U.S. Presidential election.
I must admit that I did not vote for Barack Obama yesterday. Other than his opposition to the war in Iraq, his views are antithetical to those presented in this blog. However, today I am proud of my country for electing him. Although he had a number if advantages - fund raising, George Bush's unpopularity, John McCain's link to an unpopular war and the simple truth that the party that holds the White House during an economic downturn always loses it - any of those could have been negated by racial prejudice, and they weren't. I may not agree that President-elect Obama's policies will be the best for our future, however 63 million Americans did and they didn't let Barack Obama's race dissuade them. That may seem like a small thing, but in a country that as recently as 150 years ago enslaved people of colour and as recently as 50 years ago had laws designed to deny them access to the voting booth, it is a big deal.
But more than that, Barack Obama is a bi-racial person, and on his father's side, a first generation American (the son of a Kenyan immigrant). His origins are humble, raised by a single parent and grandparents. From this improbable beginning, he will become President of the United States. His election is an affirmation that the American Dream is alive and well. He has demonstrated that we speak the truth when we tell our young people that in this great land, you can be anything you want to be and achieve anything you set your mind to achieve. Regardless of who your parents are or the colour of your skin, the United States of America is a land of opportunity for all.
I am sure that in the years to come I will be posting criticism of some of President Obama's policies. But today it is my sincere hope that his administration will be a successful one during which our nation enjoys peace and prosperity. It is my hope that his election will transform how the world views the U.S. by demonstrating to the world that we are not simply a nation of gun-slinging cowboys, but a nation of diverse peoples.
I did not support Senator Obama's candidacy, but his election reminds my of why I love this country.
Wednesday, November 5, 2008
Sunday, October 26, 2008
D.C. v. Heller Revisited
A friend of mine recently sent me this article from The New York Times:
www.nytimes.com/2008/10/21/washington/21guns.html?_r=1&ei=5070&emc=eta1&oref=slogin
The article presents arguments critical to Justice Scalia's majority opinion in D.C. v. Heller from the right.
The gist of the article is that the Justice Scalia's opinion in Heller is politically motivated and at odds with an originalist interpretation of the Constitution. It is an example of judicial activism on the right, the way Roe v. Wade is an example of judicial activism on the left. The argument runs that it makes a mockery of federalism by restricting the states ability to establish their own gun laws (as Roe restricts the states ability to have their own abortion laws).
Those that have read my post from April 26, 2008 (freemarkets-freeminds-freesociety.blogspot.com/2008/04/district-of-columbia-v-heller.html) will already know that I disagree with this view. I came to the same conclusion, by the same reasoning as Justice Scalia did.
Unlike Justice Scalia, who is an avid hunter (I think he's even survived hunting trips with the Vice President), I have never and will never own a gun. I don't hunt and I detest handguns. The only purpose of a handgun is to shoot a person, and I would agree no one needs one. I would favour the DC handgun ban, if I thought the Constitution allowed it. I came to the conclusion that it didn't independent of any political pro-gun agenda.
Justice Scalia's decision does not impair localities ability to regulate ownership - in the same way speech is still regulated (no profanity on publicly owned broadcasting venues, speech that incites violence isn't protected, speech that creates a danger (the old, "yelling fire in a crowded theatre,") isn't protected and slander isn't protected). In my view, there is nothing different about the right to keep and bear arms (which the framers clearly viewed as an individual right) and the right to free speech, free assembly, a free press, or freedom of religion. They are all quite explicit in the Bill of Rights. I agree with the point, later in the article, that comparing D.C. v. Heller with Roe is unfair because gun rights are explicitly mentioned in the Constitution and abortion rights are not.
I can see how some would view the decision (DC v. Heller) as activist. The idea that this decision is an assault on federalism is certainly a very originalist way of looking at the issue as the Bill of Rights was initially felt to apply only to federal law (and therefore the original interpretation to the 2nd Amendment is that the federal government shall not infringe the right to keep and bear arms - important because of the preceding clause that explains the reason: so that States will always have an armed citizenry to resist a federal standing army if necessary). Jefferson and the Democratic-Republicans viewed the Alien and Sedition Acts as unconstitutional, and they were, but after they were repealed there will still plenty of state sedition laws viewed completely acceptable under the Constitution that provided that only the federal government couldn't restrict speech or the press.
However, the 14th amendment changed all that. The equal protection clause mandates that those rights extend to everyone equally, in any state. So now state legislatures can't pass laws restricting free speech, free press, free assembly and so on. The argument from the right against Scalia's decision is an argument that they should be able to. In my view, if the 14th amendment extends all other rights guaranteed in the Constitution into every state and locality, it does so for second amendment rights as well, just as Scalia observed. We would not tolerate a different law with regard to free speech in New York city compared to Wichita Falls, Kansas would we? There are perhaps good reasons to have different gun laws in those two places, but the Constitution, extended to the states by the 14th amendment, forbids it.
I am not in favour of a national gun ban. I am, in priniciple, in favour of letting states and localities figure what gun laws work best for them as the critics of the Scalia decision suggest. I would be all for a constitutional amendment that restricted the second amendment to the federal government and allowed states and localities to be autonomous on this issue. But, I remain convinced that it takes an amendment to do that, and to do it without an amendment sets precedent that puts the remainder of the Bill of Rights at risk.
www.nytimes.com/2008/10/21/washington/21guns.html?_r=1&ei=5070&emc=eta1&oref=slogin
The article presents arguments critical to Justice Scalia's majority opinion in D.C. v. Heller from the right.
The gist of the article is that the Justice Scalia's opinion in Heller is politically motivated and at odds with an originalist interpretation of the Constitution. It is an example of judicial activism on the right, the way Roe v. Wade is an example of judicial activism on the left. The argument runs that it makes a mockery of federalism by restricting the states ability to establish their own gun laws (as Roe restricts the states ability to have their own abortion laws).
Those that have read my post from April 26, 2008 (freemarkets-freeminds-freesociety.blogspot.com/2008/04/district-of-columbia-v-heller.html) will already know that I disagree with this view. I came to the same conclusion, by the same reasoning as Justice Scalia did.
Unlike Justice Scalia, who is an avid hunter (I think he's even survived hunting trips with the Vice President), I have never and will never own a gun. I don't hunt and I detest handguns. The only purpose of a handgun is to shoot a person, and I would agree no one needs one. I would favour the DC handgun ban, if I thought the Constitution allowed it. I came to the conclusion that it didn't independent of any political pro-gun agenda.
Justice Scalia's decision does not impair localities ability to regulate ownership - in the same way speech is still regulated (no profanity on publicly owned broadcasting venues, speech that incites violence isn't protected, speech that creates a danger (the old, "yelling fire in a crowded theatre,") isn't protected and slander isn't protected). In my view, there is nothing different about the right to keep and bear arms (which the framers clearly viewed as an individual right) and the right to free speech, free assembly, a free press, or freedom of religion. They are all quite explicit in the Bill of Rights. I agree with the point, later in the article, that comparing D.C. v. Heller with Roe is unfair because gun rights are explicitly mentioned in the Constitution and abortion rights are not.
I can see how some would view the decision (DC v. Heller) as activist. The idea that this decision is an assault on federalism is certainly a very originalist way of looking at the issue as the Bill of Rights was initially felt to apply only to federal law (and therefore the original interpretation to the 2nd Amendment is that the federal government shall not infringe the right to keep and bear arms - important because of the preceding clause that explains the reason: so that States will always have an armed citizenry to resist a federal standing army if necessary). Jefferson and the Democratic-Republicans viewed the Alien and Sedition Acts as unconstitutional, and they were, but after they were repealed there will still plenty of state sedition laws viewed completely acceptable under the Constitution that provided that only the federal government couldn't restrict speech or the press.
However, the 14th amendment changed all that. The equal protection clause mandates that those rights extend to everyone equally, in any state. So now state legislatures can't pass laws restricting free speech, free press, free assembly and so on. The argument from the right against Scalia's decision is an argument that they should be able to. In my view, if the 14th amendment extends all other rights guaranteed in the Constitution into every state and locality, it does so for second amendment rights as well, just as Scalia observed. We would not tolerate a different law with regard to free speech in New York city compared to Wichita Falls, Kansas would we? There are perhaps good reasons to have different gun laws in those two places, but the Constitution, extended to the states by the 14th amendment, forbids it.
I am not in favour of a national gun ban. I am, in priniciple, in favour of letting states and localities figure what gun laws work best for them as the critics of the Scalia decision suggest. I would be all for a constitutional amendment that restricted the second amendment to the federal government and allowed states and localities to be autonomous on this issue. But, I remain convinced that it takes an amendment to do that, and to do it without an amendment sets precedent that puts the remainder of the Bill of Rights at risk.
Tuesday, October 14, 2008
Anatomy of a Financial Crisis
Two weeks ago, Congress passed a $700 billion dollar spending bill to buy mortgage loans in danger of default. Doing so bailed out numerous lenders who made these risky loans and will require the federal government to figure out a way to realize payment on these loans. The purpose of bailout was to prevent the financial collapse of the nation’s mortgage companies and banks. The move comes after purchasing the failing AIG and was aimed at preventing a massive credit crunch as loans would default, banks would collapse and failing companies would send the stock market in a tail spin. There would be no money to lend, no loan that would be considered safe, stockholders (and people with a 401K) would see their savings evapourate and a run on banks could jeopardize cash savings as well. This crisis, we were told, had the potential to develop into the next Great Depression.
Our politicians have a penchant for labelling everything a “crisis.” Whether it is the tide of illegal immigration, or the number of Americans without health insurance; whether it is the war on drugs, or the war on poverty; whether it is the threat of WMD in Iraq or the threat of global climate change; we are always told by our leaders that the sky is falling and only decisive action by government can fix the problem. Although our political leadership has, “cried wolf,” on many occasions, it is easy to see how the current situation could degenerate into the misery described above. Whether or not the government’s action will stop this economic collapse is, of course, another story.
What has been missing, however, from the rhetoric of both the President and the Congress and from most politicians on both sides of the aisle, is a frank discussion about how we got to this point in the first place. Politicians on the left have, predictably, laid the blame on greedy predatory lenders who took advantage of folks to make a quick buck. They argue that this is what naturally follows from too little regulation of the economy and that if only the government had regulated the mortgage industry more tightly then all of this could have been avoided. The current situation is a failure of deregulation. Even the Republican candidate for Vice President railed against the, “greed and corruption on Wall Street,” during the Vice Presidential debate. Almost no one has the political courage to assign any blame to the borrowers that took out mortgage loans that were beyond their means.
Although both lenders and borrowers are clearly at fault here, the notion that this crisis was created by a lack of government influence in the market place could not be further from true. Our government actively fostered the economic climate that created this housing bubble. Far from being a failure of deregulation, government intervention in the market place had a hand in creating this financial crisis.
The first piece of the puzzle is the Community Reinvestment Act. First passed in 1977 and then modified in 1995 and 2005, this act was passed with the goal of increasing home ownership among the working poor. It requires lenders in impoverished areas to maintain a quota of loans (often subprime loans) to underprivileged individuals. In other words, a percentage of the subprime loans contributing to this crisis were specifically mandated by the federal government. The act requires federally regulated banks to meet the credit needs of the community in which it is chartered by offering mortgage loans to low income families.(1) Although the act specifically states that banks are not required to make high risk loans to meet community needs, a study by the Federal Reserve Bank of Cleveland in 2000 of 143 of the 500 largest CRA-regulated banks revealed that the security of such loans is variable from loan to loan and institution to institution and that, on average, such loans are more likely to default or be unprofitable than other loans.(2) The same study estimated that 25% of CRA loans were, “unprofitable or marginally unprofitable.”(2) The CRA encourages predatory lending in two ways. First, some CRA banks will issue subprime loans to low income families directly because they would still get CRA credit for these loans and improve their CRA rating. Secondly, banks can get CRA credit by securitizing predatory subprime loan, buying them with federally guaranteed letters of credit.(3) Banks can even get credit for making subprime loans to low or middle income individuals that qualify for prime rates.(3) New federal regulations in 1995 and 2002 expanded the CRA, making it easier for smaller banks to participate by focusing on just lending.(4) In 2002, when several states, including Georgia(5), tried to limit credit for subprime lending, federal regulators blocked those efforts.(6)
In addition to the CRA, a 1992 federal law required Fannie Mae and Freddie Mac to devote a percentage of their activities to meeting affordable housing goals(4) and at the height of the housing bubble in 2003-2004 the federal government was directly securitizing nearly half of the nation’s subprime loans through Fannie Mae and Freddie Mac (government subsidized corporations).(7) In 1999, Fannie Mae was pressured by the Clinton administration to securitize more high risk loans, in an effort to expand home ownership among low and middle income Americans.(8) The Clinton administration also moved, in 1995, to allow Fannie Mae and Freddie Mac to count subprime mortgage securities toward their affordable housing goal.(9) Although this directive was later rescinded in 2001, in 2004 the Bush administration raised the affordable housing goal from 50% to 56% and again allowed Fannie and Freddie to count securitized subprime mortgages toward this goal, further encouraging predatory lending. Although some, such as University of Michigan Law Professor Michael Barr would call easing these restrictions on Fannie and Freddie, “an abject failure to regulate,”(9)nothing could be further from the truth. This was no failure to regulate. This was a specific government tampering with market forces to encourage subprime lending as a mechanism for increasing home ownership. President Bush bragged about the success of this policy in his 2004 State of the Union address noting that new home construction was the highest in twenty years and home ownership at its highest levels ever in the U.S.(10) He was, of course, describing the housing bubble that has now burst. Far from being created by an unfettered free market, this bubble was created, intentionally, by government policies aimed at loosening credit to expand home ownership.
However, Professor Barr pointed out that about half of the subprime mortgages were made by lenders not under the CRA’s jurisdiction and another 20-25% were made by small lenders and only later securitized under the CRA (although we have seen how this is a direct result of government policy and encourages predatory lending), leaving only 25-30% if subprime loans made by CRA institutions.(11) Robert Gordon, senior fellow at the Center for American Progress, offers as proof that the mortgage crisis was caused by a lack of regulation a statistic provided by Janet Yellen of the San Francisco Federal Reserve, “Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts.”(12),(13) However, this does not negate the fact that CRA lending is responsible for thousands of subprime and high risk loans. In communities where CRA institutions were conservative in lending, there was demand for other institutions to offer higher risk loans.(3),(4) This was also encouraged, actively, by the federal government as we have seen through its mandate to Freddie and Fannie to increase the percentage of their business that is directed to affordable housing goals and by giving other banks incentives to securitize these mortgages by guaranteeing their investments or allowing these banks to claim that activity as CRA credit. Therefore, many of these loans made by independent mortgage companies ultimately do fall under the CRA.(14) But even the subprime lending completely outside the CRA was encouraged by federal government policies. From 2003-2005, the Federal Reserve held interests low, below the expected level of inflation.(15) This reduced the cost of borrowing money dramatically and allowed lenders to offer subprime mortgages with very low introductory, but variable, rates easily. It was a policy that changed market dynamics from encouraging people to save to encourage them to borrow. Furthermore, the Fed lowers interest rates by buying bonds from banks and thereby injecting more cash into the economy. The increased supply in money reduces the “cost,” of borrowing it, or the interest rate. The increased supply in money also devalues the dollar, and we have seen the U.S. dollar plummet in value over the past few years (yet few talk about the fact that it is the policies of our federal government that are responsible for its devaluation). Oil is sold on the world market in U.S. dollars, therefore, even without the increased demand for oil from India and China, the rise in oil prices is directly linked to the falling value of the dollar. The Feds’ inflationary policies have not only encouraged the exuberant lending that is at the root of this financial crisis, but they have also contributed to rising energy and food prices, putting an economic pinch on those low income homeowners that the government wanted to have mortgages. When these people can no longer afford to pay their mortgage, put food on the table, heat their homes, or put gas in their car to get to work, all at the same time, they then default or are at risk for defaulting on that loan, and hence the bursting of the bubble and the beginning of the financial crisis. Because many U.S. securities are owned by foreign lenders, this has become an international credit crunch. Another mechanism by which government policy helped create the crisis are government regulations that limit assessment of credit risk to a handful of credit agencies, who inaccurately assessed the risk of these loans, leading to, ironically, the most regulated banks making some of the worst mortgage investments.(15)
In summary, the federal government set a goal of increasing home ownership among low and middle-income families, an ostensibly laudable goal. The government employed several mechanisms to achieve this goal. First, it mandated lending to lower income families through the Community Reinvestment Act. Sometimes this was done responsibly, and sometimes not. Secondly it put pressure on lenders to increase their CRA activity and allowed smaller lenders to participate in the CRA. Third, it subsidized subprime lending, both directly by ordering Fannie Mae and Freddie Mac to securitize more of these loans to increase its activity to meet affordable housing goals, and indirectly by allowing secondary mortgage market banks to count securitized subprime loans towards their CRA ratings. Fourth, it encouraged non-CRA lenders to join the party by keeping interest rates artificially low and fifth, it pumped capital into the economy to lower the interest rates, thereby devaluing the dollar and putting an economic pinch on the lower income families that made the loans. Those that argue that this crisis was caused by a failure to regulate the financial industry are simply wrong. Ironically, those on the left who are blaming the, “deregulatory policies of the Bush administration,” actually opposed Bush administration plans in 2003 to increase oversight of Fannie and Freddie (Barney Frank (D-MA) argued that Fannie and Freddie were not, “facing any kind of financial crisis,” and that, “The more people exaggerate these problems, the more pressure we see on these companies, the less we will see in terms of affordable housing.”)(16) This crisis was not caused by a lack of government oversight. It was caused by government policies specifically designed to create a housing bubble (to increase home construction and home ownership). Alan Greenspan cheered it on,(12) Barney Frank made sure no one put on the brakes,(16) and President Bush bragged about its success.(10) Certainly in a free market, at times, individuals or groups will act irrationally. But, a correction will occur and those who acted imprudently will pay the price, often with minimal effect on the economy as a whole. In the current situation, however, our government encouraged exuberant borrowing and lending, through a combination of mandates and incentives, creating a national economic mess. The lemmings didn’t jump off the cliff, they were pushed. These actions were taken for a good cause, affordable housing, but illustrate clearly the principle that government intervention in the market place often has unforeseen, unintended, negative consequences. This isn’t what happens when the government keeps its hands off the market, this is what happens when your government fights for you.
Unfortunately, understanding how the crisis occurred is not the same as knowing what to do about it. Much like the invasion of Iraq, the mess was caused by misguided policies but how to clean it up isn’t as obvious. Personally, I am inclined to be distrustful of government action to, “fix,” the problem, since it was government action that created it in the first place. I am distrustful of this government when it tells me there is a crisis that requires immediate governmental action, for history shows that usually politicians call something a crisis that isn’t simply to expand the government’s (and therefore their own) power. Certainly many on the left are taking just that opportunity right now, using the current situation as an excuse to expand the government’s influence in the market place (so we can have more crises like this in future). And of course it really irritates me that the solution proposed is to bailout all those greedy lenders (who, yes, do share responsibility with the federal government) who made risky loans and now don’t have to pay the price for taking a risk (which will encourage similar risky economic behaviour in the future because it is without consequence). Where is this $700 billion dollars coming from? Our Treasury certainly doesn’t have this money as our federal government is in debt. I suspect the Federal Reserve will simply print it, further devaluing the dollar and causing greater inflation (the value of the dollar compared the British Pound and the euro has increased over the last week because national banks in Europe have already pumped large amounts of capital into their economies and devalued their currencies). And, as I write this, President Bush is proposing another cash injection to capitalize banks by having the government buy ownership shares in the nation’s major banks (alas, we are back to the 200-year-old Hamilton-Jefferson debate about whether or not there should be a national bank…). Those of the Austrian school of Economics, such as Loyola College (Maryland) economics professor Thomas DiLorenzo and Congressman Ron Paul (R-TX) would argue that this bailout only has the effect of prolonging economic misery by attempting to stop, but only delaying, a necessary correction in the market (in his book, How Capitalism Saved America, Professor DiLorenzo argues that the market interventionism of both Presidents Hoover and Roosevelt extended the duration of the Great Depression, whereas previous economic crises had been much briefer).(17),(18) While I am convinced that this is true and that allowing the market to correct would be quicker, the real question is, at what cost? Would the losers be only those who acted irresponsibly, or does the crunch in credit have the ability to affect those who did the right thing, as illustrated in the opening paragraph. If the savings of those who were fiscally responsible are at risk in the correction, then that, in my view, is market failure and I would be willing to sacrifice my laissez-faire principles if it would prevent another Great Depression. But how can we trust that our leaders will do the right thing (even if the right thing is doing nothing) when they are always telling us of crises government needs to address, demonstrate so little understanding of how this crisis was created, and use the crisis to advance a pro-regulatory political agenda? Understanding the genesis of the crisis may not help us determine the best course of action (or inaction) to take going forward, but it does tell us something useful about future policy. The lesson to learn here is that this kind of government interventionism in the market place that creates artificial incentives to promote certain economic behaviour and devalues our currency, leading to boom and bust business cycles, has got to stop.
See also: http://online.wsj.com/article/SB122298982558700341.html for another nice summary of how government policies helped create the housing bubble.(19)
_______________________
(1)Full text of Community Reinvestment Act available at: http://www.fdic.gov/regulations/laws/rules/6500-2515.html
(2)Avery RB, Bostic RW, and Canner GB, “The Performance and Profitability of CRA Regulated Lending,” Economic Commentary, Federal Reserve Bank of Cleveland [November 2000]. Available at: http://www.clevelandfed.org/research/Commentary/2000/1100.htm
(3)Engel KC and McCoy PA, “The CRA Implications of Predatory Lending,” Fordham Urban Law Journal, Vol. XXIX, April 2002. Available at: http://lsr.nellco.org/cgi/viewcontent.cgi?article=1029&context=uconn/ucwps
(4)Bernanke BS, “The Community Reinvestment Act: It’s Evolution and New Challenges.” Speech at the Community Affairs Research Conference in Washington, D.C., on March 30, 2007. Available at: http://www.federalreserve.gov/newsevents/speech/Bernanke20070330a.htm
(5)Georgia Fair Lending Act. dbf.georgia.gov/vgn/images/portal/cit_1210/56/7/64943073GAFLA-OCGA7-6A.pdf#12
(6)Bagley N, “Crashing the Subprime Party: How the Feds Stopped the States from Averting the Lending Mess,” Slate, January 24, 2008. Available at: http://www.slate.com/id/2182709/pagenum/all
(7)http://www.washingtonpost.com/wp-dyn/content/graphic/2008/06/10/GR2008061000059.html
(8)Holmes SA, “Fannie Mae Eases Credit to Aid Mortgage Lending,” The New York Times, September 30, 1999. Available at: http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260
(9)Leonnig CD, “How HUD Mortgage Policy Fed the Crisis,” The Washington Post, June 10, 2008, p. A01.
Available at: http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626.html
(10)Bush GW, State of the Union Address to Congress at the Capitol in Washington D.C. on January 20, 2004. Available at: http://www.whitehouse.gov/news/releases/2004/01/20040120-7.html
(11)Barr MS, “The Community Reinvestment Act: Thirty Years of Accomplishments, but Challenges Remain,” Testimony before the Committee on Financial Services, U.S. House of Representatives on February 13, 2008. Available at: http://www.house.gov/apps/list/hearing/financialsvcs_dem/barr021308.pdf
(12)Gordon R, “Did Liberals Cause the Sub-Prime Crisis?” The American Prospect (on-line), April 7, 2008. Available at: http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis
(13)Yellen JL, Opening Remarks to the 2008 National Interagency Community Reinvestment Conference. San Francisco, California. March 31, 2008. Available at: http://www.frbsf.org/news/speeches/2008/0331.html (statistic referenced in the Gordon article is actually in footnote 16, not the text of the speech).
(14)DiLorenzo TJ, “The CRA Scam and It’s Defenders,” Ludwig von Mises Institute, Daily Article for April 30, 2008. Available at: http://mises.org/story/2963
(15)“A Mortgage Fable,” The Wall Street Journal, September 22, 2008. Available at: http://online.wsj.com/article/SB122204078161261183.html?mod=special_page_campaign2008_mostpop
(16)Labaton S, “New Agency Proposed to Oversee Freddie Mac and Fannie Mae,” The New York Times, September 11, 2003. Available at: http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print
(17)Paul R, “Bailouts Will Lead to Rough Economic Ride,” CNN Commentary (online), September 23, 2008. Available at: http://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html
(18)DiLorenzo TJ. How Capitalism Saved America. Crown Forum 2004.
(19)Roberts R, “How Government Stoked the Mania,” The Wall Street Journal, October 3, 2008.
Our politicians have a penchant for labelling everything a “crisis.” Whether it is the tide of illegal immigration, or the number of Americans without health insurance; whether it is the war on drugs, or the war on poverty; whether it is the threat of WMD in Iraq or the threat of global climate change; we are always told by our leaders that the sky is falling and only decisive action by government can fix the problem. Although our political leadership has, “cried wolf,” on many occasions, it is easy to see how the current situation could degenerate into the misery described above. Whether or not the government’s action will stop this economic collapse is, of course, another story.
What has been missing, however, from the rhetoric of both the President and the Congress and from most politicians on both sides of the aisle, is a frank discussion about how we got to this point in the first place. Politicians on the left have, predictably, laid the blame on greedy predatory lenders who took advantage of folks to make a quick buck. They argue that this is what naturally follows from too little regulation of the economy and that if only the government had regulated the mortgage industry more tightly then all of this could have been avoided. The current situation is a failure of deregulation. Even the Republican candidate for Vice President railed against the, “greed and corruption on Wall Street,” during the Vice Presidential debate. Almost no one has the political courage to assign any blame to the borrowers that took out mortgage loans that were beyond their means.
Although both lenders and borrowers are clearly at fault here, the notion that this crisis was created by a lack of government influence in the market place could not be further from true. Our government actively fostered the economic climate that created this housing bubble. Far from being a failure of deregulation, government intervention in the market place had a hand in creating this financial crisis.
The first piece of the puzzle is the Community Reinvestment Act. First passed in 1977 and then modified in 1995 and 2005, this act was passed with the goal of increasing home ownership among the working poor. It requires lenders in impoverished areas to maintain a quota of loans (often subprime loans) to underprivileged individuals. In other words, a percentage of the subprime loans contributing to this crisis were specifically mandated by the federal government. The act requires federally regulated banks to meet the credit needs of the community in which it is chartered by offering mortgage loans to low income families.(1) Although the act specifically states that banks are not required to make high risk loans to meet community needs, a study by the Federal Reserve Bank of Cleveland in 2000 of 143 of the 500 largest CRA-regulated banks revealed that the security of such loans is variable from loan to loan and institution to institution and that, on average, such loans are more likely to default or be unprofitable than other loans.(2) The same study estimated that 25% of CRA loans were, “unprofitable or marginally unprofitable.”(2) The CRA encourages predatory lending in two ways. First, some CRA banks will issue subprime loans to low income families directly because they would still get CRA credit for these loans and improve their CRA rating. Secondly, banks can get CRA credit by securitizing predatory subprime loan, buying them with federally guaranteed letters of credit.(3) Banks can even get credit for making subprime loans to low or middle income individuals that qualify for prime rates.(3) New federal regulations in 1995 and 2002 expanded the CRA, making it easier for smaller banks to participate by focusing on just lending.(4) In 2002, when several states, including Georgia(5), tried to limit credit for subprime lending, federal regulators blocked those efforts.(6)
In addition to the CRA, a 1992 federal law required Fannie Mae and Freddie Mac to devote a percentage of their activities to meeting affordable housing goals(4) and at the height of the housing bubble in 2003-2004 the federal government was directly securitizing nearly half of the nation’s subprime loans through Fannie Mae and Freddie Mac (government subsidized corporations).(7) In 1999, Fannie Mae was pressured by the Clinton administration to securitize more high risk loans, in an effort to expand home ownership among low and middle income Americans.(8) The Clinton administration also moved, in 1995, to allow Fannie Mae and Freddie Mac to count subprime mortgage securities toward their affordable housing goal.(9) Although this directive was later rescinded in 2001, in 2004 the Bush administration raised the affordable housing goal from 50% to 56% and again allowed Fannie and Freddie to count securitized subprime mortgages toward this goal, further encouraging predatory lending. Although some, such as University of Michigan Law Professor Michael Barr would call easing these restrictions on Fannie and Freddie, “an abject failure to regulate,”(9)nothing could be further from the truth. This was no failure to regulate. This was a specific government tampering with market forces to encourage subprime lending as a mechanism for increasing home ownership. President Bush bragged about the success of this policy in his 2004 State of the Union address noting that new home construction was the highest in twenty years and home ownership at its highest levels ever in the U.S.(10) He was, of course, describing the housing bubble that has now burst. Far from being created by an unfettered free market, this bubble was created, intentionally, by government policies aimed at loosening credit to expand home ownership.
However, Professor Barr pointed out that about half of the subprime mortgages were made by lenders not under the CRA’s jurisdiction and another 20-25% were made by small lenders and only later securitized under the CRA (although we have seen how this is a direct result of government policy and encourages predatory lending), leaving only 25-30% if subprime loans made by CRA institutions.(11) Robert Gordon, senior fellow at the Center for American Progress, offers as proof that the mortgage crisis was caused by a lack of regulation a statistic provided by Janet Yellen of the San Francisco Federal Reserve, “Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts.”(12),(13) However, this does not negate the fact that CRA lending is responsible for thousands of subprime and high risk loans. In communities where CRA institutions were conservative in lending, there was demand for other institutions to offer higher risk loans.(3),(4) This was also encouraged, actively, by the federal government as we have seen through its mandate to Freddie and Fannie to increase the percentage of their business that is directed to affordable housing goals and by giving other banks incentives to securitize these mortgages by guaranteeing their investments or allowing these banks to claim that activity as CRA credit. Therefore, many of these loans made by independent mortgage companies ultimately do fall under the CRA.(14) But even the subprime lending completely outside the CRA was encouraged by federal government policies. From 2003-2005, the Federal Reserve held interests low, below the expected level of inflation.(15) This reduced the cost of borrowing money dramatically and allowed lenders to offer subprime mortgages with very low introductory, but variable, rates easily. It was a policy that changed market dynamics from encouraging people to save to encourage them to borrow. Furthermore, the Fed lowers interest rates by buying bonds from banks and thereby injecting more cash into the economy. The increased supply in money reduces the “cost,” of borrowing it, or the interest rate. The increased supply in money also devalues the dollar, and we have seen the U.S. dollar plummet in value over the past few years (yet few talk about the fact that it is the policies of our federal government that are responsible for its devaluation). Oil is sold on the world market in U.S. dollars, therefore, even without the increased demand for oil from India and China, the rise in oil prices is directly linked to the falling value of the dollar. The Feds’ inflationary policies have not only encouraged the exuberant lending that is at the root of this financial crisis, but they have also contributed to rising energy and food prices, putting an economic pinch on those low income homeowners that the government wanted to have mortgages. When these people can no longer afford to pay their mortgage, put food on the table, heat their homes, or put gas in their car to get to work, all at the same time, they then default or are at risk for defaulting on that loan, and hence the bursting of the bubble and the beginning of the financial crisis. Because many U.S. securities are owned by foreign lenders, this has become an international credit crunch. Another mechanism by which government policy helped create the crisis are government regulations that limit assessment of credit risk to a handful of credit agencies, who inaccurately assessed the risk of these loans, leading to, ironically, the most regulated banks making some of the worst mortgage investments.(15)
In summary, the federal government set a goal of increasing home ownership among low and middle-income families, an ostensibly laudable goal. The government employed several mechanisms to achieve this goal. First, it mandated lending to lower income families through the Community Reinvestment Act. Sometimes this was done responsibly, and sometimes not. Secondly it put pressure on lenders to increase their CRA activity and allowed smaller lenders to participate in the CRA. Third, it subsidized subprime lending, both directly by ordering Fannie Mae and Freddie Mac to securitize more of these loans to increase its activity to meet affordable housing goals, and indirectly by allowing secondary mortgage market banks to count securitized subprime loans towards their CRA ratings. Fourth, it encouraged non-CRA lenders to join the party by keeping interest rates artificially low and fifth, it pumped capital into the economy to lower the interest rates, thereby devaluing the dollar and putting an economic pinch on the lower income families that made the loans. Those that argue that this crisis was caused by a failure to regulate the financial industry are simply wrong. Ironically, those on the left who are blaming the, “deregulatory policies of the Bush administration,” actually opposed Bush administration plans in 2003 to increase oversight of Fannie and Freddie (Barney Frank (D-MA) argued that Fannie and Freddie were not, “facing any kind of financial crisis,” and that, “The more people exaggerate these problems, the more pressure we see on these companies, the less we will see in terms of affordable housing.”)(16) This crisis was not caused by a lack of government oversight. It was caused by government policies specifically designed to create a housing bubble (to increase home construction and home ownership). Alan Greenspan cheered it on,(12) Barney Frank made sure no one put on the brakes,(16) and President Bush bragged about its success.(10) Certainly in a free market, at times, individuals or groups will act irrationally. But, a correction will occur and those who acted imprudently will pay the price, often with minimal effect on the economy as a whole. In the current situation, however, our government encouraged exuberant borrowing and lending, through a combination of mandates and incentives, creating a national economic mess. The lemmings didn’t jump off the cliff, they were pushed. These actions were taken for a good cause, affordable housing, but illustrate clearly the principle that government intervention in the market place often has unforeseen, unintended, negative consequences. This isn’t what happens when the government keeps its hands off the market, this is what happens when your government fights for you.
Unfortunately, understanding how the crisis occurred is not the same as knowing what to do about it. Much like the invasion of Iraq, the mess was caused by misguided policies but how to clean it up isn’t as obvious. Personally, I am inclined to be distrustful of government action to, “fix,” the problem, since it was government action that created it in the first place. I am distrustful of this government when it tells me there is a crisis that requires immediate governmental action, for history shows that usually politicians call something a crisis that isn’t simply to expand the government’s (and therefore their own) power. Certainly many on the left are taking just that opportunity right now, using the current situation as an excuse to expand the government’s influence in the market place (so we can have more crises like this in future). And of course it really irritates me that the solution proposed is to bailout all those greedy lenders (who, yes, do share responsibility with the federal government) who made risky loans and now don’t have to pay the price for taking a risk (which will encourage similar risky economic behaviour in the future because it is without consequence). Where is this $700 billion dollars coming from? Our Treasury certainly doesn’t have this money as our federal government is in debt. I suspect the Federal Reserve will simply print it, further devaluing the dollar and causing greater inflation (the value of the dollar compared the British Pound and the euro has increased over the last week because national banks in Europe have already pumped large amounts of capital into their economies and devalued their currencies). And, as I write this, President Bush is proposing another cash injection to capitalize banks by having the government buy ownership shares in the nation’s major banks (alas, we are back to the 200-year-old Hamilton-Jefferson debate about whether or not there should be a national bank…). Those of the Austrian school of Economics, such as Loyola College (Maryland) economics professor Thomas DiLorenzo and Congressman Ron Paul (R-TX) would argue that this bailout only has the effect of prolonging economic misery by attempting to stop, but only delaying, a necessary correction in the market (in his book, How Capitalism Saved America, Professor DiLorenzo argues that the market interventionism of both Presidents Hoover and Roosevelt extended the duration of the Great Depression, whereas previous economic crises had been much briefer).(17),(18) While I am convinced that this is true and that allowing the market to correct would be quicker, the real question is, at what cost? Would the losers be only those who acted irresponsibly, or does the crunch in credit have the ability to affect those who did the right thing, as illustrated in the opening paragraph. If the savings of those who were fiscally responsible are at risk in the correction, then that, in my view, is market failure and I would be willing to sacrifice my laissez-faire principles if it would prevent another Great Depression. But how can we trust that our leaders will do the right thing (even if the right thing is doing nothing) when they are always telling us of crises government needs to address, demonstrate so little understanding of how this crisis was created, and use the crisis to advance a pro-regulatory political agenda? Understanding the genesis of the crisis may not help us determine the best course of action (or inaction) to take going forward, but it does tell us something useful about future policy. The lesson to learn here is that this kind of government interventionism in the market place that creates artificial incentives to promote certain economic behaviour and devalues our currency, leading to boom and bust business cycles, has got to stop.
See also: http://online.wsj.com/article/SB122298982558700341.html for another nice summary of how government policies helped create the housing bubble.(19)
_______________________
(1)Full text of Community Reinvestment Act available at: http://www.fdic.gov/regulations/laws/rules/6500-2515.html
(2)Avery RB, Bostic RW, and Canner GB, “The Performance and Profitability of CRA Regulated Lending,” Economic Commentary, Federal Reserve Bank of Cleveland [November 2000]. Available at: http://www.clevelandfed.org/research/Commentary/2000/1100.htm
(3)Engel KC and McCoy PA, “The CRA Implications of Predatory Lending,” Fordham Urban Law Journal, Vol. XXIX, April 2002. Available at: http://lsr.nellco.org/cgi/viewcontent.cgi?article=1029&context=uconn/ucwps
(4)Bernanke BS, “The Community Reinvestment Act: It’s Evolution and New Challenges.” Speech at the Community Affairs Research Conference in Washington, D.C., on March 30, 2007. Available at: http://www.federalreserve.gov/newsevents/speech/Bernanke20070330a.htm
(5)Georgia Fair Lending Act. dbf.georgia.gov/vgn/images/portal/cit_1210/56/7/64943073GAFLA-OCGA7-6A.pdf#12
(6)Bagley N, “Crashing the Subprime Party: How the Feds Stopped the States from Averting the Lending Mess,” Slate, January 24, 2008. Available at: http://www.slate.com/id/2182709/pagenum/all
(7)http://www.washingtonpost.com/wp-dyn/content/graphic/2008/06/10/GR2008061000059.html
(8)Holmes SA, “Fannie Mae Eases Credit to Aid Mortgage Lending,” The New York Times, September 30, 1999. Available at: http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260
(9)Leonnig CD, “How HUD Mortgage Policy Fed the Crisis,” The Washington Post, June 10, 2008, p. A01.
Available at: http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626.html
(10)Bush GW, State of the Union Address to Congress at the Capitol in Washington D.C. on January 20, 2004. Available at: http://www.whitehouse.gov/news/releases/2004/01/20040120-7.html
(11)Barr MS, “The Community Reinvestment Act: Thirty Years of Accomplishments, but Challenges Remain,” Testimony before the Committee on Financial Services, U.S. House of Representatives on February 13, 2008. Available at: http://www.house.gov/apps/list/hearing/financialsvcs_dem/barr021308.pdf
(12)Gordon R, “Did Liberals Cause the Sub-Prime Crisis?” The American Prospect (on-line), April 7, 2008. Available at: http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis
(13)Yellen JL, Opening Remarks to the 2008 National Interagency Community Reinvestment Conference. San Francisco, California. March 31, 2008. Available at: http://www.frbsf.org/news/speeches/2008/0331.html (statistic referenced in the Gordon article is actually in footnote 16, not the text of the speech).
(14)DiLorenzo TJ, “The CRA Scam and It’s Defenders,” Ludwig von Mises Institute, Daily Article for April 30, 2008. Available at: http://mises.org/story/2963
(15)“A Mortgage Fable,” The Wall Street Journal, September 22, 2008. Available at: http://online.wsj.com/article/SB122204078161261183.html?mod=special_page_campaign2008_mostpop
(16)Labaton S, “New Agency Proposed to Oversee Freddie Mac and Fannie Mae,” The New York Times, September 11, 2003. Available at: http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print
(17)Paul R, “Bailouts Will Lead to Rough Economic Ride,” CNN Commentary (online), September 23, 2008. Available at: http://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html
(18)DiLorenzo TJ. How Capitalism Saved America. Crown Forum 2004.
(19)Roberts R, “How Government Stoked the Mania,” The Wall Street Journal, October 3, 2008.
Saturday, August 9, 2008
On Libertarianism
This entry is a discussion of the meaning and importance of libertarian principles, or principles of limited government that was composed as a response to a challenge to those principles. It is presented as the second part of a dialogue between the ideological Publius and his more practical friend, Pragmaticus. In the first part of the dialogue, Pragmaticus championed a traditional conservative view of as small a government as reasonably possible, but asserted that the libertarian view of as little government as possible was dangerous because it left society's moral compass in the hands of industry, which cares little for the people. He offered as evidence the business practices of the cigarette and restaurant industries, the latter of which serves unhealthy food in large portions to the detriment of society. He argued that communism failed because it ignored its moral compass and that public policy should be based on a sound moral compass and scientific method to determine correct policy. Publius responds:
Let me start, dear Pragmaticus, with the fact, that we don’t seem that far apart on our view on the proper role of government. The only real difference is your willingness to compromise on the philosophical view of small government for the right cause (public health, school funding, etc.) and my ideological insistence that, no matter how well meaning the goal, the aggrandizement of government is, in the long run, a dangerous precedent which threatens the liberty of the individual (government power always comes at that price). The road to Hell is paved, as they say, with good intentions. The unintended consequences of government intervention are often ignored and the principle of rule of law is sacrificed by political expediency and the overwhelming, although completely human, desire to “do something,” to address a potential problem. You are a very reasonable, rational, and thoughtful person as is evident in your discussion of how reason, fact and evidence should be used to shape public policy. What I would contend, however, is that it is a small step from conceding that government can or should intervene in a particular aspect of social policy and engaging the type of demagoguery we have seen with regard to climate change or invading Iraq, to bludgeon rational debate about facts and evidence into oblivion. Having conceded the principle of government intervention, it then becomes impossible to stem the tide of those who will then view it as their moral responsibility to use whatever means necessary to achieve a goal that they are convinced is right and just, regardless of whether our Constitution grants our government that kind of authority and whether or not they need to play fast and loose with the truth to achieve what they are convinced is a morally just end. I think that conceding a role for government in things in which it has no Constitutionally defined role leads inevitably to the type of decay of scientific method and reason that you lament.
I would disagree that a libertarian view leaves society’s moral compass in the hands of business or corporations. Libertarianism leaves the moral compass in the hands of individuals, where it belongs. I think there is no more fundamental human right than the right to self-determination – the right to make choices for yourself, the right to think independently and voice those thoughts publicly, the right to worship as one pleases, the right to engage in business and recreation as one sees fit, the right to keep what one has earned and use it as one sees fit. Is this not the philosophical premise behind the Bill of Rights? Is this not the philosophical premise of our Revolution? That we hold, “these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, and the pursuit of happiness; that to secure these rights, governments are instituted among men, deriving their powers from the consent of the governed; that whenever any form of government becomes destructive of these ends, it is the right of the people to alter or abolish it…”(1) This is the creed of a free society. The individual is his own king. The individual is free to live his or her life as he or she sees fit, so long as it does not threaten the life, liberty, or property of another.
A truly free society, therefore, requires a system of self-government. Your comments on the importance of a moral compass and scientific method in governance are eerily similar to Plato’s proposed benign and enlightened rule by philosopher-kings. I recently read The Republic (how I got through college philosophy courses without reading it, I am not sure) and Plato raises the same issues you do. He argued that popularly elected rulers, that are eager rather than reluctant to govern, use office for their own aggrandizement and hold and maintain it by pandering to the masses rather than pursuing good governance. His solution? Groom the most intelligent to be philosophers and rulers from day one to have an educated pool of rulers who understand science and justice, that must take a turn at ruling regardless of their will, to rule for the benefit of society. However, this philosophy presupposes that happiness is maximized in a society when everyone’s individual will is subjugated to the benefit of the state. You come close to this philosophy with your suggestions that government has a role to make sure industry does, “what’s right for society.” Plato took the argument one step further. He made the case that too much freedom for individuals to pursue their own desires, rather than simply good and productive desires as defined for them by the philosopher-kings, causes men to become slaves to their passions and allows a tyrant to rise that can play to the hopes and fears of the masses to rise to power. “The excess of liberty, whether in States or individuals, seems only to pass into the excess of slavery.”(2) Eerily similar to Orwell’s, “FREEDOM IS SLAVERY.”(3) Yet Plato’s solution to the problem of democracy is to have a Big Brother!
In your comments, you do not quite stray this far and you were quite clear that you still favour popularly elected government. The problem with communism, however, is not that it had no moral compass and that, “from each according to his ability, to each according to his need…” was lip service. The problem with communism is that, even if practiced in its purest form, it is unworkable. It, by its very definition, subjects the free will of every individual to the will of the state, or collective. In the most ideal form of communism, no worker is entitled to the fruits of his labour (the very definition of slavery – forced labor for the benefit of someone else), only to a “fair share,” of the fruits of everyone’s labour in aggregate. With no penalty for working less, clearly such a system will encourage some to live off the work of others – and that will happen if communism abides by its stated moral compass!(4)
A free society requires that each individual be allowed to set his own moral compass. There is no moral difference between the spiritual legislation of morality passed by 18th century British parliaments (everyone must belong to the Church of England) and advocated by modern social, so-called, “conservatives,” or the secular legislation of morality that bans drug use, redistributes wealth, or combats climate change. In each case, individuals are having choices made for them and forced upon them. Each is an example of coercion. A recognition that it is a role of government to review data, decide what is right or good for society, and then enforce that end on each individual in society is an implicit approval of coercion as a tool of public policy. If five guys who haven’t eaten in a week attack me in downtown Baltimore, steal my money and buy food they have committed a crime – even though they are many (an overwhelming majority in that hypothetical group of six) and I am only one and their need is clearly greater than mine. I ask you, how is that morally different from a majority of Americans (or a majority of their representatives in Congress) from voting to take money from wealthier Americans and distributing it to poorer Americans? It’s not. In both cases the property owned by one individual is forcibly or coercively taken, by the will of a majority and given to someone else. How can a free society operate like this? If I am not entitled to the fruits of my own labour, am I not a slave? How would we react if the majority voted to silence the free speech of the minority, or to exclude the minority from voting, or to condemn the minority’s sexual orientation, instead of taking the minority’s property? Why does it matter if the minority is a small group or just an individual; a minority of the poor, or of the wealthy; to have equal protection of personal rights and liberties (including private ownership) under the law?
It is this individual liberty that libertarianism seeks to preserve. It is important to do so, because coercing individuals to do what seems obviously, “right,” in one setting sets a precedent for government coercion that can be applied to any of those other basic freedoms we enjoy that I mentioned above. There is an important role for government in the libertarian view. The view does not advocate near anarchy. Government is necessary to protect the rights of individuals. Without it, the rich would trample of the rights and freedoms of the poor and the strong would coercively take from the weak. It is the fundamental role of government to prevent that from happening. As Mr. Jefferson said, a free society requires, “a wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labour the bread it has earned. This is the sum of good government…”(5) If we are to maximize liberty (and prosperity), we need to be left free to do most things, but we can’t be left free to do anything. I have been arguing that government doesn’t have the right to tell me what foods to eat, what substances I can and can’t take recreationally, who I can or can’t have sex with, or to take my money or property arbitrarily. Well, neither do I have the right to do that to any other citizen and it is the role of government to prevent me from doing so and to punish me if my actions coerce others or take from others. But, just as there needs to be a rule book to limit coercive behaviour by individuals, their needs to be a rule book limiting the power and scope of government as well to prevent this government in which we, of necessity, invest so much power from misusing this power and do to us exactly what we are charging it to prevent us from doing to each other. Most people are quite annoyed when their parents or in-laws tell them how they should raise their own children. And although they might tolerate that, they would find it completely unacceptable if their neighbours told them how they should raise their children. Why on earth, then, should we give government (the voice of our neighbours in aggregate) any role in this arena (beyond protecting children from abuse, of course) or any other decision of personal, political, or economic behaviour? In our country, the rule book that limits power of government is the U.S. Constitution. More than democracy (we have seen how tyranny can occur just as easily when a majority imposes it’s will on a minority or individual as when an individual tyrant imposes his will on the majority), this is the guarantor of our liberty. It is our Constitution that prevents government from wielding the power we have invested in it arbitrarily. It is for this reason that I tend to oppose any government program or role for government for which authority is not specifically granted by the Constitution. I understand that a 220-year-old document may not always be relevant to the 21st century, but I think it is in the long run threatening to our liberty to lessen our restraints on governmental power by ignoring the Constitution, a court decision, or a simple majority; rather than by using the constitutionally proscribed remedy of amendment.
The economic system of a free society is capitalism. In a truly capitalist society, the consumer is king. When markets are open and competitive, profits are maximized by providing a good or service that the masses desire, at an acceptable level of quality for the masses, and at a price that the market will bear. The individual consumer benefits from having multiple companies competing for his business, the individual labourer benefits from having multiple businesses competing for his work, and the businesses benefit from having a competitive labour force to choose workers from. Most importantly, for a free society, in an open market, all of these transactions are engaged in voluntarily. Markets achieve goals through voluntary cooperation – a business chooses whether to hire person A or person B, a worker decides whether to take a job offer from employer A or employer B, a borrow decides between lender A and his terms or lender B and his, A lender decides whether nor not borrower A or borrower B is a better investment or risk, a consumer decides whether or not to buy widget A or widget B, or whether or not he needs a widget at all. Some grow impatient that markets are too slow to effect change, others complain that they distribute wealth inequitably. However, markets accomplish a distribution of wealth and resources based on persuasion and voluntary cooperation that preserves and protects liberty, rather than coercion and force. Furthermore, in truly competitive markets, wealth is distributed to those who have worked for and earned it. This brings me to another crucial role for government. It is imperative, both for freedom and individual empowerment, as well as for prosperity and economic growth, that government pursue policies that keep markets open and competitive. This means removing trade barriers and pursuing free and open trade with all countries, breaking up trusts and monopolies that would limit consumer choice and competition, providing a framework for the protection of private ownership and property rights (on which a market economy is based), and the mediation of contract disputes. Some regulation of business practice is also important. Competitive markets are based on the notion that the prices of goods and services, costs of investments or borrowing, value of stock prices and so on convey accurate information to consumers about the relative safety and profit potentials of a given benefit or the supply and demand of a particular good or service. If companies cook their books, like Enron, the consumer doesn’t have accurate information on which to base economic decisions. Monopolies are coercive and must be avoided. It is particularly egregious for governments to decide winners and losers in the marketplace by subsidies; bailouts; tax breaks; or regulatory favours for one particular industry, business, or economic sector over another.
The late, great, libertarian guru (and Nobel laureate in economics), Milton Friedman, also argued a role for government when there is, “market failure.”(6) This includes situations in which an intervention is desirable to a society as a whole but not cost effective for private industry, such as infrastructure. I would argue government funding of, particularly basic science, research falls into this category as well as it increases the understanding and knowledge base of society at large and would not be otherwise funded if the application, and therefore profit potential, of such knowledge is decades away. The classic example of market failure is pollution. The Chesapeake Bay gets polluted from the water tables of West Virginia, Pennsylvania, New Jersey, Delaware, Maryland and Virginia; but only Maryland and Virginia have a direct interest in preserving the bay. Therefore market forces would never, in and of themselves, provide an incentive for other states in the Chesapeake water table to assist with conservation of the Chesapeake Bay. Clearly, there is an important role for government in protecting the environment – not dictating how we live our lives as a way of tilting at the windmill of climate change - but regulations to limit actual pollutants, maintain a supply of clean air and clean water, and conserve important but scarce natural resources. I would argue that your “conservative,” position that government should be as small as reasonably possible is the libertarian position. Government is important and has the above roles to play – and must be effective at those roles to benefit society. But, to protect individual liberty, government must be limited to those defined roles. Government that is as small as possible (as you asserted the libertarian view advocates) is often ineffective and cannot accomplish its important role in the maintenance of a free society. Our government under the Articles of Confederation is a good example of that.
I am concerned about your trust in government over business and industry. You argued that business, “cares the least for the people.” And yet, business generates its profits solely from the people, the consumers. A business that provides a good or service that people don’t want, or at inferior quality, or at an exorbitant price will go out of business! Businesses compete for our business and need to persuade us to by their products. Although certainly some unscrupulous business owner will cut corners or cook books to generate short-term profits at the expense of his consumers, a business model for long term success is one of providing goods or services that are in demand and of competitive quality and price. It seems to me that business owes for more to the goodwill of consumers than does government (particularly with the growth of independent regulatory agencies that are outside of elective politics). Do you really think politicians seek office and wield political power because they care about you and me? Do you believe that just because we vote for a government means it will be more farsighted in pursuing what is in the nation’s best interests, or even more foresighted than a company that would like to ensure our business for years and decades to come? Do you believe the popularly elected governments don’t respond to organized special interests rather than the diffuse national interest? And regardless of what product a particular business is selling, what sneaky advertising campaign they have used to market it and make you think you need it, the bottom line is they must still persuade you to buy it. It is still your choice. I’ll put aside your mention of the cigarette industry. That is, perhaps, a special case since the product they sell is addictive. But your example of the restaurant industry is illustrative. Yes it is unhealthy to eat out. It is particularly unhealthy to eat fast food. Yes we can decry the morality of serving unhealthy food in portions sizes that are too large and not giving healthy choices to consumers. But, McDonald’s can’t force me into the store. Once I enter, McDonald’s can’t force me to super-size my fries. If I stop in for a Big Mac value meal it is a choice I have made. Government on the other hand does have the ability to force behaviour by rule of law, at the point of a gun. You are afraid of corporate power and aggressive business practices, but there is not a company in this country that can make you or I do anything we don’t want to do or don’t choose to do. Private sector monopolies are coercive (which is why government needs to prevent them), but even a private sector monopoly leaves the consumer with the choice of trying to do without that particular good or service. When laws are passed, individuals have no choice but to obey or be punished. You may recall there was a push by fast food restaurants a few years ago to add “healthier” choices to their menus. They all abandoned it when the Hardee's franchise rebounded by offering people the Monster Thick-Burger. Now it’s all about bigger burgers and super-sized fries. But why did that happen? People wanted it. People chose it. The fast food restaurants were responding to consumer demand. There was a market for unhealthy fast food and people weren’t going to fast food places in the first place because they wanted salad. These people are making individual choices (and need to be responsible for the consequences of those choices). It may not be a choice that is good for them and it may not be the choice you would want them to make, but in a free society it is their right to make it and if there is enough of them, then of course businesses will actively seek that market. As an aside, as far as mandatory labeling for restaurant food, I personally don’t have much of a problem with the concept – anything that allows consumers to make more informed choices is probably a good thing. The only caveat is, it must be applied equally, across the board, so that it doesn’t put any one particularly restaurant at a competitive advantage or disadvantage. Most people will probably still choose the food they like, rather than the food that is healthier – and many will still choose that super-sized Big Mac value meal…
This then, is the essence of libertarianism. It begins with recognizing that the most important thing about a society are the individuals that comprise it. Each individual is a unique moral agent with an intrinsic right to make choices for himself about personal, political and economic behaviour; an intrinsic right to express those choices and thought freely; an intrinsic right to worship freely; and an intrinsic right to the fruits of his own labour. Free choices are best expressed through an open and competitive market of ideas, goods, and services, in which associations are based on the voluntary cooperation of the participants and not coercion. In this context, there is an important role for government to protect our liberty from foreign threat; protect our liberty from others who may wish to coerce us; maintain a free, open, and competitive marketplace; protect property rights and mediate contract disputes; and undertake projects the market may fail to handle such as infrastructure, scientific research and environmental protection. To be effective at this essential role a government must be powerful. To prevent this power from being used arbitrarily and coercively against the citizenry and therefore undermining the liberty and freedom to choose that the government is ostensibly there to protect; the role of government must be precisely defined and limited. Those limits, in our country, are spelled out in the U.S. Constitution and therefore it is imperative that we seek to avoid empowering government with roles not enumerated in the Constitution if we are to protect our liberty in the long term. If it seems as though our Constitution is outdated on a particular subject and we want to lift the limits it imposes on our government for political expediency in dealing with an issue of the modern world, we should do so only after serious and sober reflection and prolonged debate to insure that doing so does not set a precedent for government intrusion that will threaten the liberty of future generations. This is why such limits on governmental power should be lifted only by constitutional amendment, not by fiat from the judicial bench, executive order, or the simple majority of a legislature.
I’ll end with this thought, similar to the sentiment with which I began:
Experience should teach us to be most on our guard
to protect liberty when the government's purposes are
beneficial. Men born to freedom are naturally alert to
repel invasion of their liberty by evil-minded rulers.
The greater dangers to liberty lurk in insidious encroach-
ment by men of zeal, well-meaning but without
understanding.(7)
1 Jefferson, T. The Declaration of Independence. In the Continental Congress, July 4, 1776.
2 Plato. The Republic. Book VIII.
3 Orwell, G. 1984.
4 Excellent literary examples of how such a system is doomed to fail, resulting in oppression, can be found in the example of the horse in Orwell’s Animal Farm (“I must work harder…”) and in the disintegration of the Twentieth Century Motor Company in Ayn Rand’s Atlas Shrugged
5 Jefferson, T. First Inaugural Address. March 4, 1801.
6 Friedman M and Friedman R. Free to Choose: A Personal Statement. Harcourt, Brace, and Jovanovich. 1979.
7 Justice Louis Brandeis, Olmstead v. United States. 1928
Thursday, June 26, 2008
Coup d'Liberte
Today the United States Supreme Court struck a blow for liberty! In a majority (5-4) opinion, authored by Justice Scalia and using arguments strikingly similar to those in my posting on April 26, 2008 (including the same grammatical argument and the same quotes from Federalist #46 (Madison) and Federalist #29 (Hamilton)), the Court struck down the District of Columbia's handgun ban and reaffirmed that the right to keep and bear arms is an individual right and not a collective one:
"The Second Amendment protects an individual right to possess a
firearm unconnected with service in a militia, and to use that arm for
traditionally lawful purposes, such as self-defense within the home."
SCOTUS, D.C. v. Heller
The Court argued that the independent (or as the Court put, operative) clause conveying a right to the people to bear arms is not limited by the the dependent or prefatory clause, which merely explains why the right was held to be important. The Court argued that the phrase, "the people" used in the Second Amendment conveys the same general meaning as elsewhere in the Constitution (and again implies the right to bear arms is a broad, individual one) and found support for this view of individual rights (and this definition of militia) in the writings of the Founding Fathers. The Court also found support for this view in a similar right to bear arms found in many state constitutions written prior to the U.S. Constitution. The majority opinion reads U.S. v. Miller narrowly, arguing that the Second Amendment did not protect, specifically, the type of weapon involved (a sawed-off shotgun) because that type of weapon did not have any applicability to a legitimate military use as suggested by the prefatory clause. The Court acknowledges that the prefatory clause has little meaning in 21st century America, but argues that this does not change the interpretation of the right.
Most importantly however, the opinion drives home the importance that Constitutionally enumerated rights are not to be taken away by anything other than Constitutional amendment - not by acts of legislature and not by decisions of judges:
"The very enumeration of the right takes out of the hands of government—
even the Third Branch of Government—the power to decide on a
case-by-case basis whether the right is really worth insisting
upon. A constitutional guarantee subject to future
judges’ assessments of its usefulness is no constitutional
guarantee at all. Constitutional rights are enshrined with
the scope they were understood to have when the people
adopted them, whether or not future legislatures or (yes)
even future judges think that scope too broad."
-SCOTUS, D.C. v. Heller
This is the principle of liberty that needed to be upheld in this case. Our modern sensibilities may no longer desire a broad individual right to bear arms. If so, we have a remedy called Constitutional amendment. But, it is critically important that we not set legal precedents that circumvent the Bill of Rights and open our other enumerated and important Constitutionally guaranteed rights to be side stepped by simple majorities in legislatures or on the bench.
If this opinion is characteristic of this Courts view of the Constitution, then perhaps the second Bush term (and appointments of Roberts and Alito) was not a complete disaster after all.
For the full opinion, and dissenting opinion:
http://www.scotusblog.com/wp/wp-content/uploads/2008/06/07-2901.pdf
"The Second Amendment protects an individual right to possess a
firearm unconnected with service in a militia, and to use that arm for
traditionally lawful purposes, such as self-defense within the home."
SCOTUS, D.C. v. Heller
The Court argued that the independent (or as the Court put, operative) clause conveying a right to the people to bear arms is not limited by the the dependent or prefatory clause, which merely explains why the right was held to be important. The Court argued that the phrase, "the people" used in the Second Amendment conveys the same general meaning as elsewhere in the Constitution (and again implies the right to bear arms is a broad, individual one) and found support for this view of individual rights (and this definition of militia) in the writings of the Founding Fathers. The Court also found support for this view in a similar right to bear arms found in many state constitutions written prior to the U.S. Constitution. The majority opinion reads U.S. v. Miller narrowly, arguing that the Second Amendment did not protect, specifically, the type of weapon involved (a sawed-off shotgun) because that type of weapon did not have any applicability to a legitimate military use as suggested by the prefatory clause. The Court acknowledges that the prefatory clause has little meaning in 21st century America, but argues that this does not change the interpretation of the right.
Most importantly however, the opinion drives home the importance that Constitutionally enumerated rights are not to be taken away by anything other than Constitutional amendment - not by acts of legislature and not by decisions of judges:
"The very enumeration of the right takes out of the hands of government—
even the Third Branch of Government—the power to decide on a
case-by-case basis whether the right is really worth insisting
upon. A constitutional guarantee subject to future
judges’ assessments of its usefulness is no constitutional
guarantee at all. Constitutional rights are enshrined with
the scope they were understood to have when the people
adopted them, whether or not future legislatures or (yes)
even future judges think that scope too broad."
-SCOTUS, D.C. v. Heller
This is the principle of liberty that needed to be upheld in this case. Our modern sensibilities may no longer desire a broad individual right to bear arms. If so, we have a remedy called Constitutional amendment. But, it is critically important that we not set legal precedents that circumvent the Bill of Rights and open our other enumerated and important Constitutionally guaranteed rights to be side stepped by simple majorities in legislatures or on the bench.
If this opinion is characteristic of this Courts view of the Constitution, then perhaps the second Bush term (and appointments of Roberts and Alito) was not a complete disaster after all.
For the full opinion, and dissenting opinion:
http://www.scotusblog.com/wp/wp-content/uploads/2008/06/07-2901.pdf
Saturday, April 26, 2008
District of Columbia v. Heller
Last month, the U.S. Supreme Court began hearing arguments in District of Columbia v. Heller, a case that challenges the District’s handgun ban. The case began when the District denied permission to Dick Heller, a security guard who carries a handgun at work, from having a permit to keep a handgun in his home. The case reached the Supreme Court after the D.C. Circuit Court of Appeals ruled that the D.C. handgun ban was unconstitutional(1).
This is, of course, a Second Amendment issue. The District’s arguments for their ban (and indeed the arguments in general for gun control advocacy) include the following: 1) the Second Amendment applies only to militia – it is a collective right for militias and not an individual right; 2) the Second Amendment applies only to the federal government and only prevents the federal government from interfering with gun rights (a view held by the U.S. Supreme Court in Presser v. Illinois [1886](2); and 3) the concept of the Second Amendment is no longer relevant to life in the U.S. in the 21st century as it was in the 18th. No longer do we defend our nation with, predominantly, civilian militias; No longer is it possible for the average citizen to protect his rights from government with personal arms; and the proliferation of arms on our streets has made us unsafe.(3)
The argument that the Second Amendment does not apply to the District is the easiest to dispense with. Although it is true that initially the limitations on government power enumerated in the Constitution and Bill of Rights were meant to apply only to the federal government and not the states, the District is not a state and ultimately its governance is the responsibility of the federal government. Furthermore, the, “equal protection,” clause of the 14th Amendment has been interpreted, since 1897, to place the states under the same limitations of the Bill of Rights as the federal government.(3)
The Second Amendment reads, “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear arms shall not be infringed,” (emphasis added). The clearest part of this amendment is the last phrase. Whatever right is being conferred, it is quite clear that the government is not permitted, to put any restrictions on it whatsoever! The argument is whether this right is granted to individuals or whether this right is granted only to organized militias. Some argue that the first clause is a precondition for the right that follows, that the right exists only for the militias as a collective right. Indeed, the Supreme Court itself made this argument in United States v. Miller [1939](2). In my view, this reading ignores the grammatical conventions of the English language. In English, the preamble before the second comma is known as a dependent clause. It is it that is dependent on what comes next – the right of individuals to keep and bear arms. If individuals do not maintain this right, they cannot form the militias that the Founding Fathers deemed necessary for our national defense. Furthermore, the independent clause assigns this right to the people. The word militia is not used to describe to whom this right pertains. The word, “people,” is used in other places in the Constitution, specifically in the Tenth Amendment, clearly to denote individual rights. Clearly if the Framers chose the same word for the Second Amendment (and did not substitute, “the right of the militias to keep and bear arms…”), they intended it to convey the same meaning.
The argument that the Second Amendment meant to convey gun rights to individuals is not merely a semantic one. It is pretty clear from the writings of the Framers that they intended for individuals to have the right to bear arms. Although he opposed the concept of a Bill of Rights, Hamilton envisioned our national defense maintained by a small core standing army and militia composed of, “the people at large…properly armed.”(4) In other words militia are the ordinary citizens who keep their own arms and can be called into action, “in a minute’s notice,” for U.S. defense. Madison went further to describe that an armed citizenry would be a protection against any attempt of the federal government to usurp our liberty through the use of a standing army, “To these would be opposed a militia amounting to near half a million citizens with arms in their hands…fighting for their common liberties…”(5) In other words, another intent of the Second Amendment is to allow individuals to keep and bear arms so the government itself cannot take their rights by force. George Mason observed that, “to disarm the people,” was, “the best and most effective way to enslave them.”(6) Pertaining specifically to the crafting of the Second Amendment, Samuel Adams argued in favour of a Bill of Rights so that, amongst other things, the, “Constitution shall never be construed…to prevent the people of the United States who are peaceable citizens from keeping their own arms.”(7) The relationship between the individual right to bear arms and the militia was established in the Militia Act of 1792. This act defined militia as able-bodied free men who were then required to possess their own arms and minimum supply of ammunition.(8)
But the real question is, why do we care what the 18th century intent of the Second Amendment was? What relevance does it possibly have to the 21st century? The compelling case for gun control laws is not that the Second Amendment means something different than what it really means, but rather that circumstances have changed since 1791 and we need gun laws more appropriate for 2008. Although the Second Amendment confers the right to bear arms to individuals, the need to have an armed citizenry has vanished. No longer is our defense based on able-bodied, gun owning citizen militias. Rather, we now have a powerful standing army that is the most powerful fighting force in the history of planet. The right is an anachronism. The unstated intent of some Founders that the right to bear arms would serve as a mechanism for armed resistance to the government, if necessary, is equally ridiculous in 2008. Clearly private citizen gun owners can never be a match for the might and advanced weaponry of the United States military. Sure many citizens use guns for hunting and most people don’t advocate restricting those rights, but what about handguns, or assault weapons, whose sole purpose is to shoot other people? Isn’t there a case to be made that no one needs weapons like that? Even if you advocate gun ownership for self-defense, isn’t that issue one that can be debated rather than accept the 18th century notion that no infringement on gun ownership is permitted? If there are compelling reasons in urban centers, such as Washington, D.C., why gun laws need to be strict for public safety, shouldn’t those centers be allowed to set their laws as they see fit and leave rural states to their less restrictive laws? Over the decades, culminating with U.S. v. Miller, there has been considerable case precedent allowing for this differing interpretation of the Second Amendment as the conditions in the country have made the original intent less and less relevant.(2)
Although many gun rights advocates present data supporting the benefits of private gun ownership and concealed-carry laws; statistics from the Centers for Disease Control, the National Rifle Association, and the Brady Campaign to Prevent Gun Violence, show that states with less restrictive concealed-carry laws have higher mortality rates.(9) Furthermore, of the 30,694 gun deaths in the U.S. in 2005, only a little more than a third, 12,352, were actually homicides. Of the remainder 17,002 were suicides and 1,340 were accidental or police-related shootings.(9) Far from protecting ourselves with handguns, we are killing ourselves with handguns. Indeed, the presence of a gun in the home is an independent risk factor for subsequent homicide in the home.(10) There is also evidence that gun laws do make us safer. A 1991 study of the 1976 D.C. handgun ban at issue in D.C. v. Heller demonstrated that homicide rates declined by 25% and suicide rates by 23% after the law was implemented.(11)
I am not a gun owner, nor an NRA member. I have never been hunting and the sum total of my experience with guns was my great-grandfather showing me how to shoot a .22 when I stayed with him for a week the summer of my 10th birthday. Although I don’t hunt personally, I don’t begrudge others who enjoy the activity. Certainly I wouldn’t favour any laws that would restrict the ownership of weapons used for sport. But, I have to admit, I am convinced by many of the arguments of those who would draw distinction between guns used for hunting and guns that are really only used to kill other people. I agree that the reasons for the individual right to bear arms stated over 200 years ago are either outdated or irrelevant today, for the reasons discussed above. Although gun rights advocates always quote their own statistics about how gun ownership reduces crime, I must acknowledge that the New England Journal of Medicine is a reputable, peer-reviewed journal and the data I have quoted from it is compelling. In my view, it just makes sense that there should be some middle ground policy that can protect citizens from gun violence in places where it is endemic and protect gun ownership where it is not. It seems to be common sense that some weapons don’t need to be legal to own, although I would never favour a complete gun ban.
So why shouldn’t D.C. have a handgun ban that clearly protects residents of District? Why shouldn’t the Supreme Court uphold its previous ruling in U.S. v. Miller, uphold the D.C. handgun ban, and overrule the appellate court? There is an important reason not to do so. There is an important principle of liberty to protect. It does not matter if the D.C. handgun ban is good policy and it does not matter if the original legislative intent of the authors of the Bill of Rights is now woefully outdated and irrelevant. What matters is that their intent, as detailed above, is clear and is part of the Constitution – the supreme law of our land. We must remain wary of laws and precedents that circumvent the Constitution, for it is the limits that the Constitution sets on our government that ultimately protect our liberties. After the Constitutional Convention, when the Hamilton, Jay, and Madison were writing what we now term the Federalist Papers to persuade the country to ratify the new Constitution, there was great debate over whether it should be ratified without a Bill of Rights, or not. Hamilton argued that a Bill of Rights was unnecessary.(12) Hamilton argued that the limits the Constitution set on the powers of government and the checks and balances established among the branches of government would protect the liberties of the citizens without need for an enumerated Bill of Rights. Jefferson, on the other hand, wrote Madison from France to argue that a Bill of Rights be included.(13) In this view, some rights are so important that they must be enumerated so that it is crystal clear that the government never has the authority to limit them. As Jefferson put it, “…a bill of rights is what the people are entitled to against every government on earth…”(13) We have already seen that Samuel Adams argued that the Constitution should not be ratified without a Bill of Rights that included a protection of the right to bear arms, however he also advocated that it include protections of press and religious freedom as well.(7) This is the important point. We may concede that the individual right to keep and bear arms is antiquated, but most of us still view the Constitution’s protections of free speech, free press, free assembly and religious freedom; due process and jury trial; and protection against search and seizure to be as relevant in the 21st century as they were in the 18th. Gun control laws such as the D.C. handgun ban, that run contrary to the meaning and intent of the Second Amendment, and the case precedents that have upheld them, provide the legal framework for circumventing the Bill of Rights. If we allow such tactics to be used to undermine Second Amendment rights, then how can we stop their use to undermine other provisions of the Bill of Rights as well? One could argue that the fact that the other enumerated rights are still relevant will protect them as the majority view remains that those rights should be protected. However the Bill of Rights exists not to protect the majority, but to protect the minority, including the smallest minority, the individual. The whole point of enshrining these rights in our Constitution is so they cannot be altered by a simple majority, but rather require 2/3 of Congress and ratification by ¾ of the states. If you believe that our other freedoms can’t be undermined in this way, what about the assaults on liberty in the USA-PATRIOT Act, or invasion of our privacy by the warrant-less wiretapping that few people seem upset about?
This is the age-old argument between constructionists and leftists. Does the Constitution mean what is says, or is it a, “living document,” the meaning of which changes with circumstances from one generation to the next? I have alluded to the process of amendment of the Constitution. This is the remedy the Framers provided for changing the Constitution as required when the circumstances of the nation changed. In my view, the fact that an amendment process was included not only reveals that the Framers were aware that their priorities might not be the priorities of future generations, but also implies that the Constitution is meant to be read as the strict, immutable supreme law of the land, unless it has been changed through the process of amendment. If we as a society, in the 21st century, have moved beyond the 18th century notion of an individual right to bear arms that, shall not be infringed, and wish to have gun laws allowing for stricter regulation of guns (at least in certain parts of the country) then we should avail ourselves of the prescribed remedy and amend the Constitution so that it no longer protects such a broad individual right to keep arms. Only in this way can we pass gun control laws without setting statutory and common law precedents that could be used to undermine other liberties protected by the Bill of the Rights. I am not opposed to gun control per se, but only if it is done in a way that protects our other liberties, rather than threatens to undermine them – only if it is done through Constitutional amendment. It is for this reason that I fervently hope the U.S. Supreme Court will uphold the appellate court ruling, overturn U.S. v. Miller, and thus reestablish precedent for the respect of the Constitution that will protect our other liberties.
1 Barnes R, “Justices to Rule on D.C. Gun Ban,” The Washington Post. November 21, 2007. p. A01.
2 Tushnet M, “Interpreting the Right to Bear Arms – Gun Regulation and Constitutional Law,” The New England Journal of Medicine. 358(14): 1424 -1426.
3 Levy RA, “The D.C. Gun Ban: Supreme Court Preview,” Legal Times. September 24, 2007.
4 Hamilton A, The Federalist, #29.
5 Madison J, The Federalist, #46.
6 Debates and other Proceedings of the Convention of Virginia, . . . taken in shorthand by David Robertson of Petersburg, at 271, 275 (2nd ed. Richmond, 1805).
7 Debates and Proceeding at the Convention of the Commonwealth of Massachusetts, at 86-87 (Pierce & Hale, eds., Boston, 1850); 2 B. Schwartz, the Bill of Rights 675 (1971).
8 Act of May 8, 1792; Second Cong., First Session, ch. 33.
9 Wintemute G, “Guns, Fear, the Constitution, and the Public’s Health,” The New England Journal of Medicine 358(14): 1421-1424.
10 Kellerman AL, Rivara FP, Rushforth NB, et. al., “Gun Ownership as a Risk Factor for Homicide in the Home,” The New England Journal of Medicine. 329(15): 1084-1091.
11 Loftin C, McDowall D, Wiersema B, and Cottey TJ, “Effects of Restrictive Licensing of Handguns on Homicide and Suicide in the District of Columbia,” The New England Journal of Medicine. 325(23): 1615-1620.
12 Hamilton A, The Federalist, #84.
13 Jefferson T, Letter to James Madison, December 20, 1787.
A Modest Proposal for 2007
Originally written on October 14, 2007:
Earth Day was earlier this week. I just wanted to post this previously written, tongue-in-cheek tract to remind us all not to take it too seriously - Publius, April 26, 2008.
Earth Day was earlier this week. I just wanted to post this previously written, tongue-in-cheek tract to remind us all not to take it too seriously - Publius, April 26, 2008.
In 1729, Jonathan Swift wrote his modest proposal for dealing with the pressing crisis of poverty in Ireland. Bold and decisive action was needed to address so pressing and vexing a problem.
Today, we have another looming threat that requires the same type of bold action. Former Vice President Al Gore was recently awarded a Nobel Peace Prize for highlighting this important issue: the impending crisis of global warming and climate change. In his acceptance speech, Mr. Gore informed us that we are facing, “planetary emergency.” If we do not act, our entire planet is in peril.
Our action, of course, requires understanding the cause of global warming. Scientists tell us that global warming is caused by the greenhouse effect. Greenhouse gases, such as carbon dioxide trap in heat. This allows for temperatures that support life, but the production of too much carbon dioxide is causing are planet to become dangerously warm, will lead to dangerously unstable climate changes, and threatens the existence of polar bears.
Human beings are the cause of this overproduction of carbon dioxide. It is a by-product of industry; produced by the burning of oil and coal for energy and electricity, produced by the burning of gasoline when we drive or fly, and in fact even produced by the lungs of every man, woman, and child when we exhale. Human beings are the proximate cause of global warming and the solution to the problem is therefore, obvious. Human populations must be reduced if the planet is to survive.
Europe has already, voluntarily, addressed the problem with a declining birth rate. Responsibly, the Chinese have limited their population growth by law to address this issue. But these measures are not enough. The human beings that exist today are producing ever-increasing amounts of carbon dioxide. Limiting the growth of human populations will not be enough to turn the tide. Current human populations must be reduced if we are to preserve our planet.
Fortunately, the United States has led on this issue. The state of Oregon has passed an assisted suicide law. This allows for the more prompt disposition of the terminally ill, not only removing the carbon dioxide generated by their assisted ventilation, but also decreasing the power requirements necessary to power mechanical ventilators. Other states will need to adopt similar measures. More commendable is the leadership shown by Virginia and Texas. These states have the highest per capita execution rates in the country. Again, not only removing people who individually produce carbon dioxide as well as reducing our expenditure of electrical power to house these convicts. Other states will need to follow the lead of Virginia and Texas if we are going to adequately address global warming. States that do not have capital punishment will need to institute it and all states will need to maximize their execution rates. In addition, expanding the number of capital crimes, perhaps to include all crimes, will be required. Of course the use of electrocution must be abandoned in favour of lethal injection as the former method increases our carbon footprint. Europe has, sadly, lagged on this issue.
Although these measures are important, they alone will not be enough to reduce our greenhouse emissions adequately to combat catastrophic climate change. More humans will be need to be eliminated to limit our carbon production. I would first advocate elimination of the homeless. Although this category of people does not use as much power as the terminally ill or the convicted, they do produce carbon dioxide in their lungs and their elimination will have the added benefit of making our cities cleaner and more livable. Secondly, we can use this as an opportunity to address as second problem by targeting for elimination those without health insurance. Not only will this reduce our carbon emissions dramatically, but it will also end the health care crisis in this country.
Lastly a national lottery will be required to select people for elimination. Each citizen will have a number of entries in the lottery proportional to the size of their personal carbon footprint, encouraging all of us to seek ways to reduce our carbon dioxide production. The number of people selected each year will depend on our per capita carbon footprint and the amount of carbon reduction that our climate models predict will be necessary to stop climate change.
We cannot afford to wait. We must act. If we do not act soon, our window of opportunity to stop climate change will be gone. We will have to sacrifice for the greater good. Human beings must be eliminated in significant numbers to save our planet. The survival of the polar bears depends on it.
Subscribe to:
Posts (Atom)