Tuesday, November 17, 2015

The Syrian Refugee Problem - Part 1

Battle lines have been drawn on the issue of Syrian refugees.  (Whether or not the refugees are actually from Syria is beside the point.)  The questions everyone is struggling with are these:

  • Are the refugees fleeing a war?
  • Are they coming here for a better life?
  • Do we owe them a better life? 
  • Are they coming here to conquer us?  
  • Is coming here the best way for them to have a better life?
  • Can we know they are not terrorists?
  • Can we discriminate against refugees based on religion?
  • Does the West have an obligation to absorb every civil war torn population?

All good questions.  Before I answer them, please watch some Syrians sing about one of their favorite events:

I'll answer the questions in my next post - Part 2.

Saturday, November 14, 2015

Déjà vu à Paris

I wrote the following in March of this year:

Kinetic Islam Déjà vu 

In March of 2001, Mullah Omar and the Taliban destroyed two 1700 year-old stone Buddahs in Afghanistan.  One of them stood 165 feet tall.  At the time, few westerners understood that act.  Six months later when the twin towers of The World Trade Center were destroyed, we all got an education in how kinetic Islam feels about infidel idols and symbols.  

Fast forward to today, and the exact same thing is happening in Iraq.  Islamic State, or ISIS, or ISIL, is summarily destroying ancient churches, statues, artwork, and symbols of the infidels.  This time we have some perspective on why this behavior is occurring – Islam, or at least a fundamental interpretation of Islam, leads its followers to destroy these symbols.  It turns out the Quran, like the Old and New Testaments, contains a fair amount of idol destruction.  The difference is, Christians and Jews do not go about re-enacting these verses from the early days of monotheism.  Muslims do, particularly the kinetic radical fundamental type. 

What scares me is the timing of all this.  Six months after the Buddahs came down, we got 9/11.  I hope kinetic Islam has a different schedule this time.

Thursday, November 5, 2015

Anatomy of a Myth - Democrats are Better for the Economy!

The Wall Street Journal published a letter Nov, 3rd from two Princeton Professors, Alan Blinder and Mark Watson, defending Hillary Clinton for saying, "The economy does better when you have a Democrat in the White House!"  They have written a well publicized research paper proving her assertion.  Alan Blinder is a Clinton advisor.

Robert Reich, (no relation), is another one who has written extensively about the miraculous economies of Democrats, particularly in the years after WWII.   Robert Reich served in the Bill Clinton administration.

The New York Times ran a related piece in 2008,  right before the election,  about how the stock market does much better under Democrats than under Republicans.  The New York Times is a long time supporter of both Clintons. (I refuted the NYT piece thoroughly at the time here.  I highly recommend reading it.)

We can expect much more of this as the 2016 election approaches.  Having studied these claims for years, I find this is all carefully calculated political sophistry, but very weak economics, and void of logic.      

The assertions are of two types:
  • Democrat presidents have a better record of growing GDP since 1947.
  • During some of our best GDP growth periods we had much higher tax rates and a highly unionized workforce.  
Both assertions are factually correct - and meaningless at the same time.

It is true that Democrat presidents have a better record of growing GDP.  After all, Democrats are the party of growing government.  GDP includes government spending.  Not surprisingly, when government grows, GDP grows.  You could nationalize every company in the US,  go on a money printing spree, and show nice GDP growth.  That's the nature of GDP.    

Republican presidents have two hands tied behind their backs when it comes to economic policy.  No Republican president since 1947 has ever had robust control of either house of congress.  Democrats, on the other hand, had either filibuster power or complete control of the government every second since 1947. Moreover, Republican presidents have had an interest rate headwind.  They have governed under higher average Fed imposed interest rates since the Fed began setting rates.  The difference is about 15% higher interest rates for Republicans.  

Presidential party affiliation has almost no correlation with economic policies over time.  JFK, a Democrat, was a tax cutting supply-sider like Reagan, and nothing like Hillary Clinton.  Richard Nixon, a Republican, instituted wage and price controls, something Ronald Reagan would never have done.  Bill Clinton ended up as a free trader and a capital gains tax cutter.  The list goes on.

Finally, economic policies do not reveal themselves instantly.  Medicare, Medicaid, and Social Security were passed long ago, but only now threaten to explode in our faces.  George W. Bush was saddled with the 2008 sub-prime disaster, yet Bill Clinton and the Democrats set that disaster in motion in the 1990’s when they thought it was a good idea to offer mortgages to unqualified people.  Sub-prime boosted the economy smartly until it blew-up over a decade later.  Barack Obama likes to claim victimhood for inheriting the sub-prime mess, yet he was a key supporter all the way back to his community organizer days, through the state senate in Illinois,  into the US Senate in 2008 when the poop hit the rotating blades, and continuing to this very day as President!   

Alan Blinder asserted in his letter that the economy is healthier today than it was in 2009.  I calculated that if we had just given every family in the US the money added to the debt since 2009, plus the Fed’s Quantitative Easing under Obama, each family could have been gifted $30,000.  My Labradoodle could improve the economy if you gave him $12 trillion to re-distribute!

Robert Reich waxes nostalgic for the halcyon days after WWII when tax rates and unionization were high and the economy grew like topsy.  He is making a classic "post hoc" fallacy mistake.  ("post hoc, ergo propter hoc" is latin for the logical fallacy, "after this, therefore because if this.") Correlation is not causation.  Yes, the post war economy was very strong for decades, but that strength had nothing to do with high taxes and high levels of unionization.   In fact it was in spite of that.  WWII left us the only intact industrial developed country in the world!  Japan, Europe, and the USSR were smoldering ruins.  China was still in loincloths.  South Korea was about to be embroiled in its own war.   Of course we grew!  We could do no wrong with that tailwind.

Despite being convinced that Democrats are not superior stewards of the economy, I cannot make the claim that Republicans are.  There's just too much noise in an economy.  Too many moving parts. And party affiliation is too weak an indicator of historical economic philosophy.  

It all comes down to where the parties are at a given point in time.  Today's Democrat party is a Demand Side Economics party, and there's one thing I know in this life; nothing good ever comes from a Demand Side Economy.  

(For my definition of Demand Side Economics see this.  And this.)    

Friday, October 30, 2015

Ted Cruz is Awesome! VIII

Watch for as long as you like, but the whole thing is worth seeing.
At least to this classical liberal observer, this may be the best political speech I've ever seen.

Here's the link in case the embed doesn't work properly. Remember, this is C-SPAN, a government operation.

Ted Cruz is Awesome! VII

I heard Ben Carson refer to this as a "Cruz Missile".  I like that.

Search for Ted Cruz in the upper left search box for the other six "Ted Cruz is Awesome!" posts.

(UPDATE: I tried to upload my own version of this exchange from CNBC but was blocked by NBC for copyright infringement.  I intend to file a claim based on this being a public matter that is now in the public domain.  If they continue to fight, I will research whether they are as strict with Democrat content, because if not, that constitutes an in-kind unreported campaign contribution to the Democrat party.  As Saul Alinsky said, "Make them live up to their own book of rules."  This will be interesting...)  

Monday, October 26, 2015

Happy Birthday, Hillary!

On the occasion of Hillary Clinton's 68th trip around the sun, I offer two videos I made just for her, because everyone knows store bought gifts are never as cool as hand crafted ones.  Please enjoy and share!

Thursday, October 22, 2015

Dude, Benghazi Still Matters!

(Originally posted May 7, 2014)

According to the “Obama-Is-Awesome” crowd, Benghazi doesn’t matter.  It’s old news, the election’s over, Fox is the only network that cares, nothing can bring back those who died, it’s all about politics, what difference does it make, move on dot org, let’s focus on jobs, look, the Koch brothers, and go Hillary 2016! 

Dude, Benghazi still matters.  Some are calling the Ben Rhodes email a smoking gun.  Yes it is, but not just for what it says.  The Ben Rhodes email proves illegal activity on the part of the Obama Administration.  Remember, this email was part of a previous subpoena but was withheld by the administration.  A judge forced its release as part of another subpoena from a private lawsuit.  At this rate there could be hundreds of such documents. This renders all previous hearings and investigations null and void.  It is abundantly clear that there has been a twenty-month campaign by the Obama administration to stonewall and cover-up the truth.  Innocent parties don’t behave this way.  And it is illegal to ignore a subpoena.

The content of the withheld email along with recent testimony contradicts everything the administration has been telling us.  They were involved in pushing the YouTube video story.  They did edit the talking points.  They did know an al Qaeda affiliate called Ansar al-Sharia was responsible.  They knew there was no demonstration about a video in Benghazi.

Moreover, they have never revealed why requested security was denied and who was responsible.  They have never told us why Chris Stevens and the CIA were in Benghazi.  They have never explained Barack Obama’s whereabouts during the attack and involvement in the decision not to attempt a rescue.  They still have not brought justice to the murderers - no one has been captured or punished - despite several journalists being able to locate and interview the perpetrators.  A filmmaker was jailed for a full year as a result of this alleged deception.  $70,000 in taxpayer funds was spent on ads in Muslim countries to apologize for a YouTube video. 

The Presidential oath of office begins with the line “I do solemnly swear to faithfully execute the Office of The President…”  The definition of faithfully is “in a manner that is true to the facts…”  Just in recent history Richard Nixon lost his job because he did not act in a manner true to the facts.  Bill Clinton was impeached for the same offense.  No one died in either case.  Did Barack Obama know the truth about Benghazi and then lie to the American people to cover-up his incompetence in the face of a re-election campaign?  This matters, and Presidents have lost their jobs over it. 

The second line of the Presidential oath regards the obligation to “preserve, protect, and defend the Constitution…”  If the YouTube video was a deception to cover-up incompetence, then jailing a filmmaker to support the deception clearly violates the Constitution.  If the video was a deception, then the $70,000 spent on running ads in Muslim countries was a theft of taxpayer funds for purposes of winning an election. 

Hillary Clinton aspires to swearing the same oath as Barack Obama.  She swore a similar oath as Secretary of State. 

Dude, Benghazi still matters, and learning the truth is the right thing to do.

(UPDATE:  Since 5/7/14 thousands of illegally hidden emails have been discovered pertaining to this matter.  There are still thousands more illegally withheld as part of the stonewall put up by Hillary Clinton and Barack Obama.  What they are hiding is the subject of these hearings, and it should be.)    

Monday, October 12, 2015

Why Socialism is Chic, and Capitalism is Not (ICYMI)

Socialism is chic in 2015.   But, just a few short years ago, Obama voters would mock and charge racism when anyone likened his ideology to socialism.  Now, Bernie Sanders, an openly socialist candidate, is leading in some key polls of those very same voters!

Why is this happening in a country which enjoys the highest standard of living of any large diverse country, and one which uniquely earned it's place due to its historic reliance on free markets and constitutionally limited government?  Part of this is a triumph of deliberate indoctrination which has been going on for at least half a century.  Another part, and the most recent part, is a deliberate deception regarding the financial crisis of 2008.

Pop quiz:   
  1. Who is the father of modern socialism/communism?  
  2. Who is the father of modern capitalism? 
Odds are you will be able to answer the first question correctly, and can name Karl Marx as the father of modern socialism/communism.  You probably can do a decent job of explaining Marxism without even looking it up on Wikipedia.  You may even be familiar with the Marxist slogan, "from each according to his ability, to each according to his need".

Conversely, if you are asked who the father of modern capitalism is, odds are you'd either draw a blank or be mostly wrong.

You may not realize it, but socialists have been influencing you your whole life. Prior to the 1960's there were prohibitions on government workers joining organized labor.  That's because there was an obvious conflict of interest; organized labor and socialism have been synonymous throughout their shared history in the U.S.. But that changed in the 1960's under Democrat John F. Kennedy, and since then, government workers, including school teachers, have flooded into organized labor.   Most likely every teacher who taught you in a U.S. public school was a member of organized labor.  Of course, not all teachers nor members of organized labor are socialists, but the politics of organized labor in the U.S. leans undeniably in that direction. 

So how did you answer the second question?  In one sense the answer to that one is again... Karl Marx.  Yes, Karl Marx is both the father of modern socialism AND the father of modern capitalism. Karl Marx was the person who defined capitalism for the masses in his scathing critique of 1860s capitalism, called "Das Kapital".  He constructed a convenient dichotomy between socialism and capitalism based on his own definitions to support his theories .  Of course Marx's preferred ideology, socialism, was defined in the most glowing light, while capitalism was defined in the most sinister.

Many scholars credit a Scotsman named Adam Smith as the person whose ideas most influenced our economic system.  Adam Smith’s book, “An Inquiry into the Nature and Causes of the Wealth of Nations”, was actually published in 1776.  (That date rings a bell, no?)  But the word capitalism didn't exist in Adam Smith’s day.  He never used it.  We mistakenly call our economic system capitalism because that's what Marx and the critics called it.  The name unfortunately stuck. 

If everyone knows what Marxism is, why doesn't everyone know what Smithism is?  Because it’s not taught.  "Smithism" never became a word.  Marxism is taught everywhere all the time.  If you want to learn about Adam Smith, you most likely have to do it on your own.  You can go through K-12 and well beyond in schools in the U.S., and never hear the name Adam Smith, never learn about his ideas, and never understand the influence those ideas had on the founding of our country.  If you go to Wikipedia and look up Marxism, you’ll find plenty.  If you go to Wikipedia and look up Smithism, you’ll get crickets. 

How about a more modern term, like Supply Side Economics?  You are probably familiar with that term, but can you accurately define it?  Can you define its opposite, Demand Side Economics?

·         Supply side economics is the theory that people will SUPPLY (create) more value if they are free to function in a free market and pursue happiness.
·         Demand side economics is the theory that people will DEMAND (consume) more value if wealth is taken from suppliers and redistributed to demanders.  

These are opposite approaches for achieving different economic goals.  Supply Side seeks to optimize overall economic vitality (Smithism).  Demand Side at times seeks to stimulate consumption (Keynesianism), or at times to achieve egalitarianism (Marxism).

If you look up supply side economics on Wikipedia, you’ll find a thorough entry along with plenty of criticisms.  If you look up demand side economics, you’ll get zip.  The language in this case does not favor the socialist demand side ideology.   Hence, it is not even defined.

No event has had a more profound impact on this country's recent tilt towards socialism than the financial crisis of 2008.  It is said that history is written by the victors.  That has never been more true than in the wake of the financial crisis.  Democrats controlled the government commission that wrote the post-mortem.  Barack Obama won the presidency.  Democrats had both houses of congress.  And liberals made the movies and wrote the books explaining the crisis to the masses. Unfortunately, everything they told you was a deliberate deception designed to exonerate socialism, and scapegoat capitalism.   

The fact is the financial crisis of 2008 was a perfect demonstration of the failures of socialism. Redistribution of wealth, in this case redistribution of mortgage credit, was at the heart of the financial crisis.  At times, the support for this redistribution was bi-partisan, but the ideology behind it was socialist regardless of who was advocating.

It all began with the affordable housing goals promoted by Democrats in the early 1990s, which lowered mortgage requirements.  It accelerated in the mid 1990s under Democrat Bill Clinton with further loosening of mortgage standards, pressure on banks to write loose loans, and mandates for government backed companies FNMA (Fannie Mae) and FHLMC (Freddie Mac) to buy all the new mortgages.  It finally reached it’s apex in 2007 under Republican George W. Bush, while Democrats, including Senator Barack Obama, ran both houses of congress.

All the risk from this socialist redistribution was supposed to be assumed by the federal government in the form of the afore mentioned government backed companies.  Fannie and Freddie were ground zero for the financial crisis.  No government official took more money from these two companies, and at a faster rate, than the junior Senator from Illinois named Barack Obama.  His closest competitors in that money grab included Barney Frank, Chris Dodd, and Hillary Clinton.  If this is news to you,  it's because they wrote the history.

What they told you was that it was a perfect storm involving greedy bankers, deregulation, and the natural flaws of capitalism.  It was a plausible argument designed to deceive.  Bankers today are no greedier than their banking forebears.  So why did they suddenly engage in subprime lending for the first time in history in such large numbers? Because they were coerced to do so by their government.

Deregulation also had nothing to do with it.  Canadian banks are lightly regulated compared to their U.S. counterparts, and none of them failed.  Are U.S. bankers so much greedier than their Canadian counterparts that they drove their banks into insolvency while their less regulated neighbors to the north did not?  No, it was U.S. government regulation in the form of a socialist housing policy that caused the financial crisis.  Unfortunately, when the scheme went bad, the damage spread to the private banking and investment sector, bringing the entire global financial system to its knees.

The deceptions about this animated the Occupy Wall Street movement, got Barack Obama elected twice, and are responsible for the acceptance of openly socialist candidate Bernie Sanders today.   They are also part of the continuing campaign that has mischaracterized the mortgage market as an example of failed capitalism.

The frightening thing about this is that, if history is written by the victors, and they engage in deception, aren't we doomed to repeat it?  We are.  Fannie and Freddie own just about every new mortgage written since 2008, and the socialist policies promoting home ownership and borrowing have accelerated under Barack Obama.  We are in the process of building a second real estate bubble.

National socialism has never produced anything long term other than misery, starvation, poverty, and authoritarianism.  That's at the national level.  At the local level, socialism can and does survive longer term.  Survival of local socialism does not eliminate the incentive killing aspects of socialism, but it does avoid some of the other negative effects. That's because local governments cannot create money.  State and local governments must be more disciplined, or risk imminent collapse.  Local governments tend to be more fiscally responsible as a result.  National governments can hide their insolvency much longer, plunder future generations, devalue currencies, manipulate interest rates, and cause much bigger problems down the road.

This is an important point that deserves repeating;  socialism cannot work long term at the national level.  The national level is where money is created and controlled (Euro countries being a recent exception).  The conflict of interest is just too great for elected officials.  National politicians will eventually destroy the currency, borrow too heavily, undermine the work ethic, and undermine national defense in an attempt to gain power today.  It's happening here now, and it's a runaway train. We have doubled our national debt in just the last seven years.  Interest rates have been artificially held near zero for that entire time.  If and when rates normalize to historical levels, the debt service alone will cause the kind of pain socialist nations have felt throughout history. We are not immune.
Meanwhile, socialism is chic in America today, and the indoctrinated masses are marching like lemmings towards the cliff.

Saturday, October 10, 2015

Why we do Redistribution all Wrong, and how to Fix It

Redistribution goes back a long time.  The first undocumented case of redistribution was back in caveman times when a particularly disciplined and skilled hunter, let's call him Grok, managed to kill more food than he and his family could immediately consume.  In stepped the tribal leaders who, realizing that others in the tribe were hungry and somewhat envious, confiscated the bulk of Grok’s food and redistributed it to the others.  Of course, in a tradition that would be forever etched in stone, the tribal leaders took a huge chunk for themselves.  Redistribution, in one form or another, has gone on unabated ever since. 

Naturally, in the wake of this redistribution, Grok decided to spend less time hunting and more time on his hobby, which was etching pictures on cave walls.  His family was soon as hungry as the rest of the tribe, and as history has shown, such is the fate of an artist’s family. 

When tribal leaders redistributed Grok’s food, they were doing more than just redistributing his wealth.  They were redistributing his power, responsibility, and rights too. Grok’s power to provide for his family's future was taken from him as was his right to his own work.  Meanwhile, the responsibility to feed others was redistributed to Grok.  Anything can be redistributed and is in modern societies.  Life, Liberty, and the Pursuit of Happiness included.  Redistribution can be any coerced transfer of wealth, power, or rights from individuals or groups for the explicit purpose of benefiting other individuals or groups.

Neither Karl Marx, Vlad Lenin, Mao Zedong, or even Barack Obama are innovators in redistribution.  They just took it to relatively new levels in their societies.  Every society, from the most democratic to the most autocratic, does some kind of redistribution.  No politician, particularly in a democracy, can afford to oppose redistribution in its entirety, even though many are philosophically opposed to coercing one person to provide for another.  Blame it on the collective will.  Universally, the people allow and desire some redistribution to satisfy needs and envy within the society.

Yet, redistribution is our nemesis too.  It is the opiate of the people.  Free stuff paid for by others.  Rights granted by denying others theirs.  Costs passed to the unborn.  It has led to deficits unprecedented in human history.  It has ruined societies right in our lifetime.  It kills incentive.  It was the primary cause of our recent financial collapse, which was precipitated by a giant redistribution scheme that gave easy money to marginal homebuyers.  And yet, neither party has satisfactorily figured out exactly where to draw the line.   Both parties played roles, albeit to varying degrees, in the recent crisis.  Amidst this confusion, the default position of the voters has been - redistribute more, and redistribute it to me!

In the US, the two political parties are not far enough apart on redistribution.   It is safe to say that one party advocates progressively more redistribution than we have at any given time, while one party advocates less.  But that puts them both firmly in the redistribution camp only with varying degrees.  This results in an arbitrary and nebulous difference between the parties.  Hence the claim by some that there’s not a “dimes worth of difference.”  As one party just found out, this can result in voter apathy.  History has proven it also leads to runaway deficits regardless of which party resides at 1600 Pennsylvania Avenue.

What I propose is a policy that will create a bold distinction for politicians, win elections for them, and insure that redistribution is done responsibly, all the while acknowledging the undeniable human instinct to redistribute.  This can be done by opposing all redistribution at the federal level, and at the same time recognizing that redistribution is essential at the state level.  This is not a contradiction.  In fact, the Founders showed us how.  The problem is not redistribution per se.  The problem is only federal redistribution.  State and local governments must be free to redistribute as they please. 

But states are not able to print money, and thus market signals will ensure redistribution is done with discipline.  This is essentially what the constitution prescribes.  By articulating this distinction, responsible politicians can both side with voters, who want redistribution, and be 180 degrees opposed to the irresponsible redistributors who want to continue doing it the unsustainable way we have been doing it.

I believe separating redistribution from the federal sphere is the system we were given in 1789.  For one, the constitution limits the power of the federal government to a few things and redistribution is not one of them.  For two, one of the things the constitution does grant to the federal government is the power to create, borrow, and manage money.  Redistribution combined with the power to control money is a formula for disaster.  This sets up a massive conflict of interest for politicians who can use redistribution to endlessly buy votes with borrowed and printed money.

Politicians who run nationally and vow to redistribute less are seen as party-poopers who want to remove the punch bowl.  The austerity approach has been, and will continue to be, a losing one.  Nor has it been an effective one at stopping the problem.  Fiscal conservatives (few though they are) have only been able to slow the acceleration of the fiscal train wreck, but the train has continued to accelerate.  I don’t see voters voluntarily removing the punch bowl either. They like the punch.  It makes them feel good.   They are not going to stop drinking because they have been shielded from the hangover.

I have heard the argument that the constitution twice mentions the term “general welfare” and thus the founders wanted the federal government to be the provider of “welfare”, or redistribution.  This is a canard.  Both mentions of “general welfare” in the constitution refer to the federal government, not to “the people”.  Thus the phrase is not about redistribution, but rather about having roofs over government buildings, paying government workers salaries, arming soldiers, providing adequate courthouses, and the like.  It is about running the government properly and seeing to its general welfare.  General welfare was never intended to mean satisfying the needs of individuals in society.

The constitution however, does enumerate the powers of printing, borrowing, and managing money to the federal government.  As the world’s current lone superpower and issuer of the world’s main reserve currency, we are in a unique position to print and borrow money at little or no present cost.  But that’s just how it appears in the present.  As Milton Friedman was fond of saying, “There is no such thing as a free lunch”.  Someday, the real cost of borrowing $20 trillion and printing trillions more will rear its ugly head. 

What have we done with all those trillions?  We used it to redistribute wealth from future individuals to present ones, with the express purpose of obtaining votes in the present.  This is the “fatal deceit”, to paraphrase a term, of our deadly mixture of federal redistribution and federal borrowing and money printing.  We must separate these functions and eliminate the conflict of interest if we hope to have a sustainable future.

No, we did not spend 20 trillion dollars on “unfunded wars”.  No war in history was ever fought without being financed.  In other words, no wars are “funded” with current receipts.  Our debt and printing issues are the demographic result of the above conflict of interest.   Politicians can only boost revenues temporarily to keep up with our runaway redistribution.  But revenues always fall back to the average of 18% of GDP while the redistribution climbs ever upward.  Even in the 90s, when many people claim the budget was balanced, unfunded liabilities were never included and it was in the 90s when the seeds were sown for the recent financial crisis.  The high revenues in the 90s were short-lived and based on bubbles in technology, housing, and lowering of the capital gains rate.    

Why is it that the party of less redistribution is more successful at the state level (they currently hold 30 out of 50 governorships and 27 legislatures to the other party’s 17), yet they have struggled at the national level?   I would argue the key difference is the seemingly unlimited ability of the federal government to print and borrow money and thus obscure the true costs of its redistribution.  States must function in the real world of finance where choices have consequences and redistribution must be paid for.

One argument would be, “Well, what about California, Illinois, and New York, etc.?  States aren’t so good when it comes to managing their own finances!  Why should we have them run all the redistribution programs too?”  To that I would say, yes some states are a mess, but others are in good shape.  It’s about 33% bad and 67% good for states.  The federal government is a 100% mess!  The states are way better overall, and the ones in trouble are about to have to reckon with their spending because they are bleeding population, businesses, high earners, and cash.  The market is giving them signals, signals that do not exist at the federal level. 

One reason a third of the states are a mess is that they currently have a limited stake in managing their own redistribution.  That’s because, although states manage many of their own redistribution programs, one third of the money comes from the federal government.  The incentive for state politicians is to be as generous as possible, kiss up to the federal government, and tap federal taxpayers somewhere else to pay for their largesse.  But there are limits, which is why a majority of states get it right.  Every state has some form of balanced budget law except tiny Vermont, which is small enough to have a bake sale to make-up any shortfall!

Look at the European example:  The Euro has only been in existence for 12 years, yet thanks to the inability of the PIIGS (Portugal, Italy, Ireland, Greece, Spain) and Cyprus to revert to the printing press, market signals have exposed their bad habits.  Discipline is sweeping the Euro zone, not without some pain, but the result should be a sustainable future.  We in the US currently have no such market signals warning us of our trajectory. 

Again, I’m only talking about eliminating federal redistribution.  Politicians at the national level should not oppose redistribution at the state or local level.  They should be consistent with the constitution and the constitution leaves this up to the states and the people.  Societies want a safety net.  That much is axiomatic.  Voters want a certain amount of welfare, food stamps, subsidized healthcare, free contraception, subsidized mortgages, etc.  Politicians at the national level must defer to the states and support the will of the people.   States and individuals must decide the proper level of welfare and redistribution they desire.  But this can be done much better by the states, with correct feedback signals, than it can at the federal level without them.  State taxpayers will have to make the hard choices and decide the proper level of the safety net they are willing to fund.  No magic money involved.  They also will be in a better position to eliminate fraud and abuse.  (Did you know that the states administer Medicaid, but the money comes from the federal government?  Neither party has an interest in stopping Medicaid fraud: the state because it costs them nothing, and the Feds because it’s not theirs to administer!)

Of course, taking this stand will require transitional details.  How do we turn Social Security, Medicare, ObamaCare, and Medicaid, over to the states?  In fact, any federally coerced transfer from individuals for the explicit purpose of benefiting other individuals would have to be turned over to the states along with the revenue stream which funds it. Federal taxes and spending would go way down, while state taxes and spending would go up by a commensurate amount.

We would also need to address the backdoor redistribution schemes.  This is the type that got us into the financial crisis in 2008.  The federal government mandated that banks lend money to anyone, regardless of ability to make payments.  My Labradoodle could have gotten a mortgage.  Then the feds bought up many of the bad mortgages through government-sponsored creations like Fannie Mae and Freddie Mac (FNMA & FHMLC).  No one's taxes went up.  No wealth was redistributed initially. It was all done through the backdoor in the form of a "redistribution of risk".  All of the explicit redistribution, as well as this backdoor type must go to the states.  

The actual details of the transition are beyond the scope of this proposal.  I’m proposing this as a policy stance for politicians and voters who agree that:  a) Our current debt path is unsustainable. b) Austerity is not a politically viable solution. c) The root cause of our unsustainable path is a conflict of interest. d) The conflict is the result of redistribution combined with our ability to print and borrow money with little or no present cost. e) Voters and most politicians have little incentive to fix this because it benefits them. f) There is, however, a passionate group of politicians and voters who want to fix this. g) The above proposal is a viable strategy to fix it.  Those that agree and know the system best can work out the details.

By standing against all federal redistribution, and simultaneously standing for the rights of states to redistribute as they choose, politicians can draw a clear ideological contrast with their opponents and still be aligned with voters. The only reason politicians will oppose this is because it will interfere with their ability to buy votes.  Smart politicians will smoke them out, and put us on a sustainable fiscal course.  

Thursday, October 8, 2015

Oregon Shooting Coverup?

The Oregon shooting is looking more and more like a terrorist attack.  Consider the following:

Meanwhile, the federal government has taken down all social media relating to the Oregon shooting, and Obama and the Democrats want everyone to focus on...  guns.  

This looks an awful lot like a diversion.

(UPDATE: Sacramento officials are all over the airwaves declaring no terrorism in the stabbing of Spencer Stone.  Similarly, federal officials are denying any terrorism in the Oregon shooting.  I am not a conspiracy guy, but I have developed a healthy skepticism when confronted with strange coincidences and government denials.  "Workplace violence", anyone?

This is especially curious in light of the recent revelations that another Democrat administration, that of Bill Clinton's, covered-up Iranian involvement in the 1996 Khobar Towers attack in Saudi Arabia, which killed 19 U.S. servicemen.   Bill Clinton was successful in hiding this information from the American people for twenty years!

UPDATE2: Stone may have been protecting a woman from attack.  So maybe a coincidence after all?)