David Stockman has a long track record in economics. He was one of the head economists in the Reagan administration but left in disgust after that administration started running huge deficits.
David Stockman has a long track record in economics. He was one of the head economists in the Reagan administration but left in disgust after that administration started running huge deficits.
Bittersweet would sum up my feelings about regarding the Supreme Court’s ruling for the “constitutionality” of the healthcare law, more popularly known as “Obamacare”. Sweet because it was correctly challenged as unconstitutional by a majority of the states. Bitter because of what this implies for America as a society and the prospective future we’re facing. To put things in perspective; they are (progressives and “liberals”) now attempting to rationalize and constitutionalize the federal government making you, under threat of fine and force if necessary, purchase an arbitrary good from a private firm for the purpose to eliminate the number of medically uninsured people who cannot afford health insurance. It was tyranny like this that has caused hundreds of thousands of Americans since the Founding of this country to give their lives to stave off, only to have the very people who’ve benefitted the most from their precious sacrifice unceremoniously throw it back in their faces in favor of the unlimited, totalitarian state. To show how we got from “Give me Liberty or give me Death”, to dishonestly trying to prove a coercive federal healthcare mandate is constitutional would indeed take up many pages. Here we’ll try to boil it down to two main points plus explaining what the bill means and ultimately the logical conclusion it must play itself out to.
The first point we must cover is the how. How did it all come to this? Well first off the Supreme Court in this day and age tries to follow something they call precedent. Precedent is basically using what former judges have ruled on in the past regarding a certain type of case they’re considering, and trying to apply the same legal reasoning and logic to a current case of the same type. This is called the case method, and (allegedly) it brings uniformity to the legal cases considered because (allegedly) the same legal reasoning and rules are applied to all the cases of a given type. So as one can see, what judges ruled on in the past (allegedly) has an effect on what the current judges do in the present. When the Constitution was ratified these were the basic assumptions the conventions understood; that the Constitution only gave the federal government the explicitly enumerated powers actually written in the Constitution (woah there’s a thought), that those words meant what they actually said (very abstract I’m sure), and that the Constitution applied only to the federal government, not the states that composed and created it. The main instrument the unconstitutionalist (liberals and progressives) use to implement their totalitarian vision are two clauses; the Due Process clause(s) found in the 14th and 5th amendment by means of “Incorporation” (see my other note), and the Commerce Clause found in Article One Section 8 of the Constitution. This clause gives Congress the ambiguously defined power to “Regulate Commerce with foreign nations, and among the several States, and with the Indian Tribes.”
Now how they get “forcing people under threat of monetary penalty or state coercion to buy a privately produced good” from the above stated Section is a study in intellectual dishonesty informed by a fanatical power-centric worldview (i.e liberalism/progressivism). But the condensed version goes like this; over the last 150 years the federal government has methodically taken the Constitution, a devise created by the states to grant a central government limited enumerated powers to protect liberty, and turned it on its head using the above mentioned case-study method and hence explaining my generous usage of the word “allegedly”. Court ruling after Court ruling went in favor of the federal government’s power grabs from overturning state laws, to regulating and eventually directing national economic activity, to social engineering projects the last 50 years until its inevitable logical conclusion; the federal government Constitutionally coercing you into buying an arbitrarily decided upon good. Any casual study of history has shown the Supreme Court hasn’t been consistently right for a very long time. For all you who are wondering how we can possibly know the answer to the constitutionality of a federal mandate on health insurance here’s a foolproof (hence why it’s lost on liberals) method of discovering the constitutionality of any proposed piece of legislation.
Step 1; Take the end or purpose of the proposed legislation in Congress by reading the bill’s printed words.
Step 2; Open up a free copy of “the Constitution” and flip to Article One, Section Eight, “Powers granted to Congress” should assault your unsuspecting eyes, unless you have one of those “blank” or “living” Constitutions like the liberals seem to have. If so, disregard entire note and check yourself in to the nearest asylum for treatment. After treatment return to Step 1.
Step 3; Try to match the words in Step 1 with a clause in Step 2. If there are no matches, then the answer to your question is, “No, Congress does not have the legal power to perform such an act”, therefore making it unconstitutional.
Anyone with functioning mental capacities (again, this excludes certain people) should be able to take this method and replicate it as many times as they see fit to ensure the actions their government is taking are constitutional (legal).
The last topic we need to cover is the why. Why would a certain contingent of the population think it is conducive to a free and prosperous society to pass a law giving the central government the power to issue arbitrary orders to the citizens to buy economic goods? The answer is because we are dealing with people who believe in a totalitarian idea of the role of government. They envision a god-state in control of all the material goods within a country that can distribute and redistribute them as they see fit, therefore ending all pain, suffering etc. and creating a more equal (they call it just) society. This isn’t a new idea and has been tried before last century under different labels; the Fascist in Italy, the Kemalist in Turkey, the Bolsheviks in Russia, and the Nazis in Germany. In America we have what is commonly called “modern liberalism” or more vulgarly, “liberals” who carry this torch of totalitarianism that emphasizes the importance of the collective instead of the sacredness of the individual and his liberties. They do not care about individual liberty or freedom; instead they have placed their trust in egalitarianism of outcomes of the masses accomplished by the hand of the god-state, with them at the helm in the positions of power of course.
Specifically, they know that this healthcare bill will eventually drive private insurers out of business because of the incentives for companies to drop their employees off their health insurance roles, leading to a single payer system for everyone where they control the strings on the who, what, when, where, and how much healthcare you get. Ultimately this is all about power, not affordable healthcare. They know it and most Americans are now becoming cognizant of this. The power over someone’s healthcare backed by the force of the social apparatus of compulsion and coercion in society (i.e the state) basically equates to power over one’s life, the ultimate earthly power. I believe we all know what was said about power and ultimate power so long ago….
Here are some of the highlights that I found interesting.
Libertarians have the “most masculine style brains.” They are more cerebral than both liberals and conservatives with liberals being the most feminine. “We used Simon Baron-Cohen’s measures of “empathizing” (on which women tend to score higher) and “systemizing”, which refers to “the drive to analyze the variables in a system, and to derive the underlying rules that govern the behavior of the system.” Men tend to score higher on this variable.”
Libertarians also scored the highest on a crude IQ test. Libertarians are also “more than liberals or conservatives, have the capacity to reason their way to their ideology.” This makes total sense to me, both liberals and conservatives have so many contradictions in their own respective ideologies that they appear to me to be pure pragmatists with no underlying belief system that I can tell. Libertarian’s arguments from both the utilitarian side and the natural rights moral approach are completely superior to anything liberals and conservatives can offer. This is why liberals and conservatives can’t reason through their own ideology because to do so would mean that they would have to confront the contradictions that they espouse. The current political scene and media make this situation much worse and make conservative and liberal ideology almost meaningless. Conservatives supposedly love the American Constitution but also wholeheartedly embrace the patriot act, undeclared wars, and a king like executive. Liberals supposedly care about the weak and the poor but have no clue or don’t care how government welfare has been completely destructive to those groups.
Libertarians when “asked directly, using a series of standard psychological measures available at YourMorals.org, they reported being less neurotic, less disgusted, and less empathic, compared to liberals and conservatives, while also reporting a greater need for cognition and systematic understanding of the world.” Libertarians also responded with more “rational/utilitarian style.” “Libertarians tended to do better on logic problems that included answers designed to fool more intuitive thinkers.” This makes sense to me. To be a libertarian at all means that you have to seek at knowledge and consciously assimilate ideas that you never hear from the main stream. This would imply that they, by seeking out and discovering libertarianism in the first place are trying to understand reality in a logical way.
Here is the reason page where I found out about the article. It is definitely worth the read. It is also a useful reference to understanding the differences between, liberals, conservatives, and libertarians.
Lastly, from a personal observation, libertarians have by far the best sense of humor. Liberals and conservatives take themselves way to seriously. This is obvious in political discussion with both groups but they do the same thing in life as well from my observations. For example, conservatives are really defensive about their American greatness ideology. The same is true with liberals and the welfare state. Try to question either of these, like saying maybe not every war we have been in has been a good idea or that maybe the welfare state does not work, and you are met with a emotionally charged response more often than not. Libertarians on the other hand are very comfortable in their ideology. They do not hold irrational ideas about government sacred and usually have a firm logical understanding of the world that can be explained very effectively. People that are comfortable with themselves are usually more laid back than those who are not. For proof of what a great sense of humor libertarians have, just read the comments bellow the reason article I linked to. I don’t think you find such good fun comments under a article by slate or the national review.
What is the proper role of the government within society? What should the government do in the economy? All these are normative questions that one must sort through some time in order to make informed decisions in the voting booth. Ultimately, these questions will be answered by what people think, or feel they know, a.k.a their opinion. Opinions are subjective and are usually not open to debate because the person has an emotional attachment to them; people do not like to be proven wrong because then they would have to deal with the psychological effects of recognizing their intellectual shortcomings pertaining to a certain topic. They would have to admit they were wrong and uninformed, a thing most people aren’t willing to do because of the prospect of negative psychological fallout. We are not going to examine the nature and end of government in this column, mostly because I’ve already attempted elsewhere (see “The End of Government”). In this column we are going to examine the effects of government intervention into the private sphere of the economy. Intervention also goes by the more euphemistically positive name “regulation”, so as not to evoke a negative reaction among commoner who is unfamiliar with economics. If we can know and understand the effects of government intervention into the economy, we can come to the correct conclusion about the proper role of the government within the economic sphere.
If we are going to examine the effects of government intervention (“regulation”, same thing) into the economy it would first be a good idea to define and sketch a rough outline of what the economy actually is, and how it really works. Unlike the quasi-socialist narrative most people are spoon-fed and led to believe from T.V and school in which the economy is where people just “get” jobs to make a living and rich fat cats use their position of “power” to “exploit” the common worker, the economy and its workings are almost the complete opposite of this simpleton economic interpretation.
Let’s start from the beginning; people, since they are mortal (they have human bodies), need certain materials to survive or else they and their families will quickly die of starvation, thirst, or exposure to the elements. This being said, people, in order to survive, take it upon themselves to provide the goods they need by using some of their time to produce consumer goods. This is called labor. It is using some of the limited amount of time you have here on this earth and delegating it aside as a means to continue existing, usually at the highest standard achievable. People’s time here is limited, they cannot plan to live and work for eternity because they will not live for eternity here. Since one’s time here is limited, man cannot produce all the goods he needs or wishes to have by himself because man’s needs and wants are seemingly infinite whereas his means to acquiring them (time/labor, natural resources) are finite, they’re limited. In order to meet as many needs and wants as possible in the shortest amount of time man devised what is called the division of labor; where one person or group of people specialize in making a certain good while another person or group specializes in making another good. These two sides then meet and exchange the surplus they produced for the each other’s goods at a given rate of exchange (price). For example; Group A produces corn and Group B produces axes. After production each group meets and exchanges corn for axes at a price, say 10 pounds of corn per axe. The modern exchange economy was began by two people exchanging something they had for something they valued more in terms of each other (price).
Generally speaking, in our semi-free market economy, the prices of everything we see at the store and online are set by the aggregated demand schedules of all the individuals participating in exchange for that specific good, which in turn dictates the supply producers will make. People have it in their heads how much they will be willing to pay (exchange) for a certain item, so if a store were to sell an item for well over a reasonable price, it would not sell a lot of these items and would have to lower the price in order to make some money on it or else the item just sits there and collects dust and not money. Likewise with goods that are priced too low in the opinions of most people. If a store were to sell a good for well below the price that most people are willing to exchange for then they would sell out of the item and not be able to sell anymore of these. So, in order to make money, the store raises the price until those people who really want the good are the only ones buying it and those who don’t value the good as highly leave that market. This intersection between supply and demand is called the equilibrium price or market price; it is the price you see at the store. It matches the demands of the consumer with the capability of the producer to make the demanded good at just the right amount so no goods sit idly on the shelves or are habitually sold out all the time. The main point to take away from this is that is it you, the private consumer, and all other private consumers, who dictate the price of a certain good by signaling to a producer through your demand schedules (money votes) what he should and shouldn’t produce.
The free market is in essence an arena where private individuals come together for the sake of peaceful, and therefore free or voluntary exchange. If there is someone or some force physically making you act against your will regarding economic exchange then there is an absence of freedom from that sector and it is therefore not free. This is where our discussion about the government comes in. Up until now we have assumed that there is no government and that people are free to enter into or not enter into economic exchanges with other people. There is an absence of violence from the economy since no one is being made to act contrary to their own volition with the property they have used their own time to produce. The government is, more or less, legalized violence. It is a necessary evil that man has had to live with for thousands of years due to man’s flawed and sinful nature. Unfortunately, not everyone will be virtuous and allow peaceful and free exchange to flourish in a free market. There are those who will, since they are short-sighted, desperate, greedy, or just evil people, want to acquire everything they need and want in as short of time as possible. They will resort to violence by robbing, extorting, assault, and even murder to gain what they personally want. So man, to continue to be able to exchange peacefully so they can attempt to raise their standard of living to as high a level as possible, created an institution whose sole purpose was to use violence against those who would disrupt the free market and people’s livelihoods. The government’s sole role was to be the force that protects peaceful people by subduing violent people through the use of force or violence. At its very nature, government is a violent institution, nothing else.
What happens when the people who instituted the government in order to ensure peaceful exchange request it to interfere into (or “regulate”) the exchange sphere (or economy)? Since we know that the government is more or less institutionalized and regulated violence, we know that its actions within the economy can be no different due to its nature. It will not engage in the economy as private individuals do (peacefully and freely), it will exhibit violent and coercive actions against whatever individuals or groups of individuals it chooses to. Private individuals engage in the free market by exchanging one good or service (most of us sell our labor, which is a service, for a certain rate) for another good or service (a T.V, a meal, gas etc). The government does not do this. To be able to exchange it first has to acquire a good of value being used in the market to exchange for the task it has been commanded to complete. The most valuable good in the economy is the good that facilitates exchanges, also known as money. Money is used in our modern economy in every exchange; it is one of the two goods exchanged in every economic transaction. We exchange money for gas, clothes, food, homes, phones etc. Since this is a valuable means of exchange the government will set out to get as much of this good as it can from the private individuals who generate it through their exchange actions. The most popular method of acquiring money is called taxation and is fundamentally structured as so; “we are the government, and since we have a lot of force at our disposal we can take from you whatever we please regardless of whether the property is yours or what your wishes are. If you don’t comply with us we will use force on you to make sure we get what we seek after.”, talk about being a bully. This is how the government acquires its revenue; by force or threat of force.
More specifically, economically speaking, these are the effects of government interference into the economy. Since it is a fundamentally violent institution, its actions into the economic sphere will be of a similar nature. After the government confiscates private property from the private citizen through taxation (force), it comes to the table as a consumer in the sense that it now has money to exchange with producers for their goods and services. It then exchanges the money it has expropriated from the private individual with a producer for their good or service. Is that the end of the story? No. What happens is this. We know that the supply of goods and services in the free market are dictated by individual’s personal demand schedules, but now, in place of those individual demand schedules, we have the government now dominating the data producers are receiving to plan their supply. The thing about government supply curves is that they tend to be inelastic; they’re very hard to change once they’ve been set. It is no secret that some people will benefit (in the short run) through government intervention and these people will tend to support this action through means of voting. Once a certain good or service has been demanded by some voters, expropriated by the government, and supplied to people (all through means of taxation), it is very hard to take this good or service away because those who benefit become used to getting something for what they believe is nothing, or relatively little cost.
Producers know this, they know that once the government demands something it is usually obligated to continue providing it or else it may offend a large constituent of voters and risk losing some political power. Taking this into account, producers raise the price on their good or service because they know the government will have to raise taxes, borrow money, or inflate the money supply in order to meet their requested price. This of course incenses the people, how dare these companies raise their prices when everyone wants their goods or services? This leads the people to think that more of the problem is the solution, they vote in more people who claim that the only way to fix this problem is to impose price controls on these profiteers through force of government. Only then will we be able to have low prices and abundant goods simultaneously. This only makes matters worse. If a maximum price is imposed on a producer telling him he cannot sell his good over X amount of dollars, he will only hold most of this good off the market and wait for the price control to be removed because the cost of storing the good to wait is less than the loss he would take if he were to sell his good for the government determined price. This results in a shortage of the good or service which leads to rationing or people simply going without it, even if they have the money to buy it.
Then the final nail in the coffin is struck. The people are frustrated that the private owners and producers of all these goods and services they want for free or a low price would react in such a manner, even though they are just protecting their property and livelihood. They demand that the government use force and take the over permanent production of the specific good and service in order to have it for a cheap price and in abundance. The government agrees to and passes a law saying that they now have the monopoly to produce X good and anyone who acts or thinks otherwise will be arrested at gunpoint and jailed for lawbreaking. Now the government produces the good or service, but remember, the government doesn’t produce anything on its own, it only consumes. The only way it can “produce” is if it forcefully takes more from the people that actually produce and use this revenue to “produce.
When the government owns the means of production in the society of a certain good, or all of them, it is called socialism. And socialism has one fatal error that ultimately results in the ruin of the economy if its idea is pursued to it conclusion, it can’t rationally plan because it doesn’t have a way to allow prices to arise; there are no supply and demand schedules. The only thing that is produced is what the government says should be produced, and what the government says should be produced is usually determined by the amount of revenue they have at their disposal. If the people at the top making decisions don’t know how much they should produce for the rest of the “incapable” masses, resources aren’t allocated efficiently and are used to make things no one has a demand for, they sit and collect dust or are worth less than it took to produce them. If this misallocation continues, people’s standard of living declines slowly until the government wastes so much resources and does not produce things of value the people decide to take things into their own hands and revert back to rudimentary production methods in order to produce the things they really want, and then barter for those they can’t produce. This causes the final breakdown of the monetary exchange economy, the price system, and the division of labor, all of which greatly facilitate prosperity and high living standards. All this, just because the government, the social manifestation of force, decided to interfere into the economy. This is the downward spiral.
Most calls for government interference are put forth with good intentions; some people honestly believe the government can bring about prosperity through brute show of force over the private individual(s). But they are of course wrong, violence is almost never an efficient means of achieving long term economic prosperity, only the freely agreed upon, moral, and peaceful decisions and actions of everyone participating in the division of labor working towards achieving a higher living standard can bring about prosperity. We, and everyone around us, need to either learn this lesson or practice the speech we will have to give to our children about why things deteriorated the way they did, about why they don’t have as high of a living standard we did, when we’re older.
I think Bitcoins are pretty cool. In short, bit-coins are a digital online currency. There is much debate among libertarians whether they fall into the category of “real money” but they are far better than Federal Reserve notes which don’t really fall into the real money category either. Bit-coins have been used on websites like silkroad, which largely sell illegal merchandise like drugs. This can be done because bit-coins are so hard to trace. The reason I like bit-coins the most is because it allows people to use currency that is outside the privately controlled Federal Reserve system. Its use alone is a protest against that system.
Here is a short video explaining bitcoins.
QE3 was announced last week. Like usual, most Austrians economists predicted this because they also predicted that the first two would not work. As predicted, the Federal Reserve is going to try it again. This one will not work either. Tom woods explains how Austrian Business Cycle theory works and how monetary stimulus is so damaging to the economy. If you need to know one thing about Austrian economics, this is it. I wish I could get Ben Bernanke would watch this.
It is political season and it seems that people like to talk about politics. For liberty minded people, this may be a good opportunity to educate people when the conversation turns into politics. From my experience, you will have trouble changing their minds from a brief conversation but you will at least have the time to expose people to new ideas. Hopefully this will encourage people in the future to research these ideas and maybe open their minds. They might not change their minds by next election cycle but this is a long term intellectual battle, just getting these ideas out there is a positive thing, especially considering most people have probably not heard of any of them. I think this guy does a pretty good job at presenting his case in what seems like a normal guy on the street type conversation.
Here is Ron Paul talking to people in the Libertarian Party.
Though, I don’t think the libertarian party is the answer to our problems, he makes some interesting points and I often use strategies that Ron Paul talks about in conversation. Most importantly in my opinion is that libertarians have common ground with both the left and the right on a lot of issues. I think if we start with this common ground and then point out the logical inconsistencies in their own ideology and whatever political leaders they support. This is pretty easy. If the person is a liberal, they should support things like civil liberties and reducing the warfare state. I then point out that the Democrats have vastly increased the surveillance state and the warfare state. If the person is a conservative, I point that every time Republicans have been elected to office, they have vastly increased the size of government. I also point out that the current Republican presidential candidate has supported bail outs, universal health care, and stricter gun control laws. Even the supposed conservative Paul Ryan has supported TARP, the auto company bail outs, no child left behind, the vast expansion of medicare under Bush.
Here is Edward Griffon talking about how to need to get our people in power. I agree.
I think long term the future is bright. The people in the liberty movement are by far the most dedicated and knowledgeable group of people I have ever met. Let us keep finding other member of the remenant and continue the intellectual battle for liberty in our time.