Is government absolution?

It has often been said that government is required to help the poor and disabled; however the evidence consistently shows that government’s involvement has not reduced poverty levels. Seeing that government has never (to my knowledge) cured a societal ill like poverty, why then does there remain so much confidence in it for future success? Could it be that support for government welfare programs stems not only from those who directly benefit from being on it, but also as a path to absolution by those who advocate for it?

So, what do I mean by absolution? First, let us discuss the idea that our government has a responsibility to the poor. Milton Friedman wisely pointed out that governments cannot have a responsibility to people…instead, only individuals can have responsibility. We often hear advocates of government welfare say that we are “our brother’s keeper,” a clear reference to the book of Genesis in the Bible; however, the verse is talking about an individual’s (Cain’s) responsibility to his own brother (Abel) and not society’s responsibility to a person or people. This is a blatant misuse of a Bible verse with the intent of misleading people who, by faith, feel an obligation to fulfill Biblical mandates (at least to some extent).

The question then is how does the brother’s keeper example contrast with government welfare and where does the concept of absolution come in? Let us assume that people do feel an innate obligation to help others; which is arguable, but for the sake of this discussion we must accept it generally. What is the easiest way for people to meet that obligation to others? One could work harder and produce more so that they may transfer (via donation) some of that excess production for the consumption of others. Or, one could spend a few minutes every couple of years voting for a group of people who will give money (that is largely not theirs) to others. Both seems to meet the goal of “helping others” yet one of the two options entails significantly less hardship on the individual choosing to vote instead of donate. It is certainly much easier to vote charity to others than it is to actually provide it. Particularly when a good segment of society pays nothing to fund these programs; the estimated percentage of people in America who file tax returns and owe $0 (or less) is 43% (as of 2013).

In the case of this group of people, a vote for welfare is not only costless and potentially beneficial, but also absolves them totally of any further responsibility to be their “brother’s keeper.” In fact, an IRS analysis of the 2012 tax year showed that the most generous states (by percentage of their income donated) were “red states” that voted for Mitt Romney. This implies that those people that believe government should not engage in coerced charity (to as great of an extent) are much more likely to give of their own money while people who see government as a reasonable and righteous source of charity (albeit at the point of a gun, a fact they often ignore) sees little reason to give of their own money when they can instead vote for “charitable” actions.

Therefore, a vote for government welfare represents a much cheaper way (for the voter) to donate largely because others pay the bill. Individuals can then fulfill their sense of obligation from the pockets of others and still gain the sense of giving that usually motivates people to actually give. This leaves people who preach an obligation to the poor and disabled from actually having any responsibility for meeting that obligation personally. Thus, the individuals that choose the voting method over the donating method have effectively been absolved of their responsibility to others. Effectively, those people do not practice what they preach; instead they demand others serve as their brother’s keeper, while they hold the moral high ground through their mere demanding of action by force.  This reminds me of the brilliant words of Ayn Rand who said:

“It stands to reason that where there’s sacrifice, there’s someone collecting sacrificial offerings. Where there’s service, there’s someone being served. The man who speaks to you of sacrifice, speaks of slaves and masters. And intends to be the master.”

Interestingly, the people most hurt are the ones who do, most significantly, need the help. For the real crime is not that everyone does not have access to “assistance”; instead, the real crime lay in the reality that those who truly cannot do for themselves are left in poverty so as to satiate the majority who wishes to forgo their own personal responsibility for their own monetary gain. Simply put the absolution through government costs the absolved little, while that release from obligations is paid for dearly by those they claim to be helping. This is the danger of idealism rooted in greater good terms; for the actual good is left subjected to the eye of the beholder while the intent of actions is weighted far greater than actual outcomes. I close with the definition of absolution: “the formal release of guilt, obligation, or punishment.”

Understanding competition in different market structures.

There seems to be some surprise when different forms of competition are used in different industries and markets; however, much of this confusion can be remedied if we break the system into an array of three basic market structures and the likely competitive behavior of each.

For example, here in Florida our legislature passed a law allowing a particular form of medical marijuana, dubbed Charlotte’s Web (a non-hallucinogenic form of cannabis), to be used for the treatment of different chronic conditions. Unfortunately, in the drafting of the bill, the legislature did what government does and decided the market for this product would be best regulated by government than by market participants and consumers. This did prevent any lives from being lost to misuse of the drug, but also ensured no lives could be saved either because, after almost a year, the production of the substance has been exactly zero.   This is because the supply side has been embroiled in legal suits over who will get to produce and profit off of this new product; or, more succinctly, who will the government choose to hold monopolies over the consumer?

This circumstance prompted some to accuse the potential producers to be engaging in “greedy behavior.” Question is: is this true? No, it is most certainly false. In fact, anyone with a rudimentary understanding of economics could have predicted this very result. Instead, the problem was with the premise that government should regulate to best ensure consumer safety. Regulation has, as a matter of fact, been most successful at preventing consumer access to products, not ensuring safety (see airline deregulation).

For the sake of simplicity I will break down the market into three types: 1) free market, 2) government regulated market, and 3) black markets (where the products are illegal for sale and/or use). Within these three market types there are very predictable methods for competition between suppliers. You see, no matter the structure of the market, there is competition for market share (portion of the available consumers); it is the market structure which dictates the methods employed to compete for customers not the production side participants.

In a free market, producers are required to appeal to the consumer to sell their products; this is most commonly done through pricing and quality; although an argument could be made for the influence of advertising and endorsements in the modern market. Either way, the transaction is voluntary on both sides—the producer provides a certain good at a certain price and consumers choose from whom (and what) they will buy.

On the opposite end of the spectrum we have black markets; markets that are required to operate outside of the law and at greater risk than a traditional legal market. These markets still exist because the demand for certain illegal products exists and; with greater risk, higher levels of profits can be extracted from the consumers. Once the ratio between risk and profits become acceptable, people will enter into the market; however, it is those people with higher risk tolerance that will be induced into the market earliest.

This reality dictates that people already comfortable with high levels of risk will enter these markets. Thus, competition will take place in a very risky manner. Instead of these market participants competing with price and quality, they will instead compete with violence and intimidation. We can see this clearly illustrated in the prohibition era alcohol trade and the modern day drug trade. The contrast between those two examples also highlights how that status quo of violence ends when the legal prohibition ends; the drug trade still involves high levels of crime while alcohol involves practically none.

Finally, in a regulated market there is also competition between suppliers (and potential suppliers). This competition, however, does not take place for the benefit of the consumers; very little appeal is made to them. On the contrary, this competition takes place in the legislature and in the court room. When government determines market eligibility, the consumers are not a requisite piece of the equation; no longer is the preference of the consumers the primary concern. Bureaucrats, politicians, lobbyists, and judges become the arbiters of market share. This leads to inefficiency, cronyism, and a lack of innovation. If you have a government mandated monopoly on the distribution of a product, what is the motivation to make that product better or less expensive? There is none. Competitors are either not allowed or the obstacles to entry are so great that the likelihood of a new competitor entering is close to zero.

This is the problem with the Charlotte’s Web law. Because competition is not based on price and quality, potential suppliers must compete in the legislature or in the court room. Once these suppliers are chosen by government (and given regulatory power by their inclusion into a regulatory board) I can guarantee that it is unlikely the regulatory nature of the market for Charlotte’s Web will change. Also, we can expect supply to be relatively low, while price is disproportionately high compared to cost and value. A regulatory monopoly (or oligopoly in the case of multiple firms) is no less predatory on consumers than a natural monopoly; they just get to rest well knowing they are immune to challenge from a government that instituted the monopoly in the first place. Consumers (in this case, sick children and their families) are caught in the cooperative crossfire that exists between the suppliers and government.

 

The nature of black markets: why making commodities illegal is ineffective.

I think it is important to characterize the commodity in very a generalized manner—at least for now—therefore we will refer to our commodity in question as a widget. Now, it is of no consequence what a widget is because, when analyzing the effects of a black market, the only relevant factor is that widgets were made illegal by lawmakers. It is important to begin with a basic definition of a black market:

“A black market or underground economy is the market in which goods or services are traded illegally. The key distinction of a black market trade is that the transaction itself is illegal. The goods or services may or may not themselves be illegal to own, or to trade through other, legal channels.”

It is important to note that the definition also identifies that the goods (in our example widgets) need not be illegal to own. This refers to situations where taxation or regulations are used to limit, control, or inhibit the trade of a good or service (i.e. high cigarette taxes). However valid this discussion is, it will not be the focus of this conversation as we are assuming our commodity has been made illegal for the sake of simplicity.

Black markets develop because making a product illegal does not cause people to stop using it; instead, it merely marginalizes consumption, the production, and the distribution to those who are willing to accept and operate under greater degrees of risk. I know this may sound a little confusing which is why I created a graphic that illustrates the levels of acceptable risk for different groups of society:

Risk flow chart

In this graphic we can observe that the lower two segments (5 & 6) are those people who enjoy or are comfortable with greater risk levels; next (segments 3&4) we can observe the greatest amount of people as the average level of risk takers which would be generally averse to great risk, but partaking in some low/moderate risk; finally, in our upper two segments (1 & 2) we can see a portion of the population who range from mostly risk averse to almost exclusively averse to risk. This understanding of risk tolerance is important in the realization that making commodities illegal only serves to focus use and production on the risk loving segments which are most likely to partake in other risky behaviors (e.g. crime, violence, etc.) regardless of their use of a certain commodity. This reality is why the argument of illegality for the purpose of public safety is largely invalid.

Let us return to our concept of widgets again. If widgets are made illegal then we have some serious problems: 1) people are still demanding this product (although demand is now almost exclusively coming from groups 5&6 and a small part of group 4) so new producers will enter the market to meet this demand and receive the greater profits now offered by an illegal trade operating at monopoly pricing. 2) By compressing consumption to the risk loving segments we create a self-fulfilling prophesy – that the people using the widget will also be breaking other laws [don’t believe me?…look at why prohibition did not work for alcohol].

We can see a new and growing market segment dominated by those who are more predisposed to risky (read: criminal) behavior. Also, we have reduced competition in the production of widgets which would generally (particularly in a highly criminalized black market) lead to the production of “crappier” products at higher prices. Therefore, the risk factors of our widgets become even greater due to the lower quality. Additionally, in this market with limited competition, lower quality requirements, and huge profit margins we will observe more criminal (mob-like) activities in the production and distribution of our widget. In essence, criminal producers compete with force instead of with price or quality (or both) to gain customers; this has many negative effects on the communities in which these suppliers operate.

We are also presented with a consumption level distortion. The new consumer group—which is also isolated to higher risk tolerances—engages in the same activities they would have likely done anyway; however, now our widgets are given the credit (blame) for these activities. This creates somewhat of a paradox in that the results of prohibition become the best argument for prohibition because the correlation between widget use and other risky/criminal behavior increases due to us arbitrarily slicing segments 1, 2, 3, and most of 4 off of the consumer base. We have not eliminated any undesirable by-products of consuming widgets; we have merely magnified the (rudimentary) perception of the widgets’ effect on producing these negative by-products.

Why is this important? First, there are little to no positive effects of making products illegal beyond people making themselves feel better that they may have coerced others into not engaging in an activity this other person condemns [think Michael Bloomberg and soft drink sizes]. Second, by isolating supply to risk loving individuals we fuel illegitimate activities and isolate supply into the hands of people willing to exercise the most risk. Not only have we criminalized users, we have laid the foundation to launch a whole new and highly profitable enterprise that relies on criminal activity and violence as the primary means to restricting market entry. This incorporation excludes traditional competitive means (product differentiation and price) in favor of force, violence, intimidation, and a new criminal recruitment system resulting in social problems in these communities as well as losses in property values, tax revenues, and legitimate employment opportunities.

Gun rights advocates make this argument quite accurately and succinctly when they state that: “making guns illegal would only keep them out of the hands of the law abiding population who do not commit crimes anyhow.” This is a very astute observation. Unfortunately, this same group often fails to realize that the same is true for our widget example, or drugs, or prostitution, and was found empirically to be true with alcohol. Making any of those things illegal did not eliminate the use of them; it merely marginalized use and created a criminal enterprise where one did not previously exist. Does prohibition result in decreased use?…only a little because, if the product is inherently risky, a vast majority of the population will avoid it anyway. Does prohibition make society safer? No, in fact the evidence would indicate the opposite.

So, why does our society struggle with this idea? Because liberty is scary to so many people! Of course, liberty—like so many other things—is really only a good idea for ourselves, not for others. The false premise that one group of people has the responsibility or authority to try and save others is preposterous and, I would argue, excludes the people who hold that idea from having any real profound understanding of the concept of Natural Rights or the ideas that our founders held so dear in creating this greatest of countries. The land of the free has become the land of the busybodies, intent on utilizing their votes to gain access to the force that government wields to make individuals “mind” them. I do not wish to have a nanny state economically nor do I wish to have one for individual choices. Incidentally, one thing everyone should keep in mind, you do not get one of those without the other.

Unions are cartels that should be subject to anti-trust laws

        Most people are familiar with the general idea of anti-trust laws and proceedings; but, as with many things the devil is in the details. A major problem that underscores this greater issue is a lack of understanding of the exact nature of labor. People often think of labor and capital as having a protagonist/antagonist relationship and this misconception is quite profitable to labor leaders and their political allies. However, the pervasiveness of this misconception does great harm to those who directly control labor—individuals; particularly those individuals who have the lowest skill levels which are most often the poor, minorities, and young people. People see laborers as having no leverage in the business relationship and thus assign laborers a more limited value.

        First of all, there are two primary factors of production: labor and capital. Labor is the efforts of people in producing goods and services for trade. Capital describes the accumulation of machinery and tools (often thought of monetarily) that are used in the production process. Neither factor holds a distinctive advantage over the other as a general rule, but differing circumstances can tip the scales of control to one or the other.

        This can be seen throughout history and even today. For example, there was a period in time when labor was so highly demanded (thus, labor held the advantage) that employers would wait outside of prisons to hire people as they were released. In the modern day, people who hold strong skills in computer programming or web design (etc.) can command significant salaries and benefits. These are not the instances that the media and politicians focus on; instead they choose to highlight the false narrative of the minimum wage and the “plight” of entry-level, low wage workers. This misses the reality of the damage done by labor unions by creating a sleight of hand, parlor trick.

         We—rightly—prosecute the collusion (cartelization) of business (owners of capital) if they join together to fix prices or production levels in a manner to extract much higher profits from the market than the competitive (more often the monopolistically competitive) value of their outputs. However, when it comes to labor unions, who collude openly on a national scale and across industry sectors (e.g. SEIU and AFL-CIO), we see that not as being an extortion of the consumer as we do in the capital example. Instead, we see labor unions—simply groups of individuals colluding to monopolize and thus increase their market power artificially—as merely protecting their members from an otherwise predatory institution. This is not the reality when it comes to mega-unions. The reality is that they are utilizing their control of one of the two primary factors of production in the same way businesses do when they collude; therefore consumers pay significantly higher prices which would resemble monopoly level pricing.

     Furthermore, just as other monopolies who do not enjoy regulatory protection by government which controls market entry, they induce others to enter the market and capture their market share by offering superior products at lower prices [note: natural monopolies that do not rely on regulatory control of market entry do exist; however, they are quite rare]. The effects of the monopoly, outside of government intervention, are often limited in their scope. We can see the results of this in the automobile market where, as trade restrictions relaxed (which is good for the US consumer), the foreign car producers began to rapidly grow against the domestic ones which were plagued by higher than natural equilibrium labor costs and diminishing relative quality (as a way to fight costs) versus the competition. The eventual result was that all those people who owned and controlled the labor factor of production in the car market and enjoyed higher than appropriate levels of profits (pay and benefits) ended up dropping their long run incomes to zero as new competitors entered and captured market share. From a labor perspective, these new market participants would include southern state workers who drew in production facilities as well as foreign workers (via outsourcing).

      Additionally, areas densely populated with people who enjoyed this monopoly level pricing for their labors collapsed as the monopoly structure of their labor force declined. Their government, bloated on the excess of extracting unrealistic levels of profits in their labor force from other areas in the country, could not sustain the drop in tax revenues and have essentially become ghost towns (Detroit’s population in 1950 was 1.8 million and is approximately 700,000 today). Also, the greater than equilibrium labor cost overall in markets like Detroit due to unionization of the auto industry crowded out other industries making Detroit perilously dependent on one industry.

        The real long-run winners in the equation have been the labor unions themselves (not their members) and the politicians who have enjoyed control of their votes and contributions for many years. The losers in the short run were workers that did not gain entry into those industries and, in the long run, all the people of areas once dominated by big labor production. People often say that unions were once a good thing and that somehow is supposed to justify the existence of mega union entities; however, I find that logic to be severely flawed. Instead, I argue that unions are still positive things when they are constrained to plant (or perhaps firm) level entities. This reduces large scale collusion while granting the owners of labor a more even position in the negotiating process without giving them unfettered control of the production of certain markets completely. Owners of a particular firm control all of the capital for that firm, but no single laborer controls all of the labor for a firm; therefore, an alliance of firm level labor can be positive without being punitive to consumers or damaging to the industry sector. Also, compulsory inclusion in unions should not exist because this removes the competitive nature of markets which allow a fair blend of profits to capital and labor simultaneously, while ensuring maximum marginal value to the consumers.

Recent Middle East events prove we must stop ignoring reality…

        Here we stand, once again faced with abhorrent violence in the Middle East.  Violence which we are to believe is random, spontaneous, and to some extent – justified(?).  Through the blinding light of our own ignorance; the impediment to logic which is idealism; and paralyzed by the ongoing evidence that we may never be adored globally, we stand as a nation with leadership that is prepared to do…nothing to change the status quo.  This is the unfortunate position that America’s post-Cold War foreign policy has placed our nation in.  Reject reality, we say!  Instead, let’s hope the thousands of years of human nature are going to change overnight because…well, it just ought to.

       So, what is the goal of American foreign policy you might ask?  A form of idealism aimed at showing strength towards allies, passivity towards foes, and demoralizing our own people in the process.  Idealistic foreign policy is derived from the “progressive” notion that all nations will gather ‘round the fire, cook some smores, tell some ghost stories, and generally frolic together like a group of girl scouts after a successful cookie drive.  This is a complete shift in policy since the end of the Cold War in which we now attempt to get all nations to rise above their own national interests and become part of the global family.  Plus, at some point we have determined if nations do not like us, it is not their people nor their traditions, only their despotic leaders that do not like us.  Easy remedy, right, depose Hussein and the Taliban and the people of Iraq and Afghanistan will welcome us with open arms because of their newly instituted, American-style democracy…Yet another miscalculation of the “democracy builders” on the left and the right.

    So, how is it we miss the point so bad?  We have unrealistic expectations of people we largely do not understand; and when we do understand them, we try to insert our own, more favorable version of reality in the hopes that they too might embrace this alternate reality.  So, instead of the rioters in Libya or Egypt merely hating us, we are told they just did not like a movie.  There are plenty of movies I do not like, but I have easily refrained from killing anyone over them [note on Napoleon Dynamite…I would love to have those couple of hours of my life back].  Now, just how do we begin to fix it?

     The first remedy would be to incorporate a little bit of cultural relativism into our foreign policy.  Cultural relativism reminds us not to view other cultures through our own eyes to best understand them, but to consider their practices through their own worldview.  This is an important detail, not for some ill-fated pursuit of political correctness, but because understanding the other culture provides us information as to how they will act in the future and what potential impact our foreign policy may (or may not) have on them.  Our actions must be measured, but must not be measured arbitrarily through the lens of our own moral authority, regardless of how relevant that authority may be.

      Second, act on those things which we know to be true.  Understand that, as unfortunate as it may be, reality is just as advertised and no matter how much hope we engage in, we cannot change reality.  Example:  if we know that nation-building has a low probability of changing a group of peoples’ attitude towards the U.S., let’s save the money and move along (Iraq and Afghanistan).  We must act in our own national security interest!  This may seem conceited, but if we engage in trying to make the world what we wish it were, we will likely be ambushed by that which it certainly is.  We are not the teacher of some global kindergarten class in which our will can be imposed through idealistic efforts and frequent use of “time-out” (does that really even work in kindergarten anyway?).  Instead, we must realize that we stand as the only remaining superpower in a world which largely believes that it no longer has a requirement for one.

Additionally, appeasing terrorists, tyrants, and despots is ineffective foreign policy (see: pre-WWII French and British policy towards Hitler—then “Google” The Holocaust).  Furthermore, there is a reason we have a policy of not negotiating with terrorists because, if we did it once, we would be doing it all the time.  And, lest we forget that having a Bill of Rights and individual liberty does make us better than everyone else!   If we continue down the path of excusing inexcusable behavior and apologizing for our own global superiority, we will only perpetuate and encourage behavior like we are seeing once again throughout the Middle East.  We mortgage our future for the unattainable goal of popularity, but must wake up to realize this is most certainly not a high school prom court; in reality, we live in a world riddled with danger where we stand as the biggest prize for those who wish to prove something.

 

What is the Electoral College…and is it a good thing?

      Since the election I have had several requests to do a blog about what the Electoral College (EC) is and what purpose it serves.  The question is reminiscent of the same question that was asked following the 2000 election when the Electoral College and the “popular vote” split between Bush and Gore.  You may ask why I put the popular vote in quotations, and that is an easy question to answer:  there is no such thing as a constitutional popular vote for president and as such it is a measureable myth of sorts.

       Obviously most people know that the Electoral College is outlined in the Constitution (Article II, Section 1); however, it is 1) the value of the Electoral College and 2) how it came to be which causes confusion and creates a bit of disinterest in the electoral process.  First, I will tackle the most common questions surrounding its value in today’s world.  Second, I will give some background as to why the Framers of the Constitution felt it necessary for the resistance of tyranny.

Question #1:  Where does the number come from?

      There are 538 electors (half plus one equals 270 to win) which make up the EC and the number of those electors represents the composition of Congress; one for each of the 435 voting members of the House and one for each of the 100 voting members of the Senate.  I know you are beginning to question my math skills, but do not be concerned!  The additionally 3 electors represent the non-voting “representatives” from the District of Columbia.

Questions #2:  Why do some states have more this time than 2008?

      Great question!  The answer:  reapportionment.  Reapportionment takes place after every census based on the changes in population from state to state (and district to district).  For example, from 2008 to 2012 Ohio and New York lost 2 electoral votes each and Texas gained 4 electoral votes.  As population changes so does representation in the House and the electoral allocation.

Questions #3:  Since the “popular vote” does not count, why bother voting?

        Well, this is where I hear people showing concern as to whether to vote or not.  The statewide popular vote does determine the electoral allocation.  So, yes you should vote…but only if you take enough time to care and become at least moderately informed.  [Quick Tip:  If you do not know the names of both the current president and vice-president, do your neighbors, children, and fellow citizens a favor and keep it at the house; you can always vote on American Idol instead!!!]

       Now, this is where the water really muddies and we must begin transitioning into the purpose of the EC.  Our Constitution was designed, regardless of what your high school teacher or friendly neighborhood lefty may have told you, to enumerate (grant) certain specific powers to the government of the United States; the rest of which would be “reserved to the States respectively, or to the people (Amendment 10)…Seriously, it says it in there and was written by the same guy who designed the framework of the Constitution (James Madison).  In a nut shell, this means that the states maintain a level of sovereignty and this is the first step into understanding why exactly the EC is important:  (semi) sovereign states choose presidents, not the general public.

       In fact, the EC was an elaborately developed strategy to avoid a popular vote because the only thing the Framers may have feared more than the tyranny of a king was a tyranny of the majority.  Actually, the whole idea of even having a president was quite contentious, but I will refrain from that discussion for the purpose of keeping it as short as possible.  But what of all the cries of majority rule and we must follow the will of the people(?)…well, to state it simply, that is a bunch of crap.  Consider the words of Madison (Oct. 5, 1786) concerning majority rule:  “In fact it is only reestablishing under another name and a more specious form, force as the measure of right.”  Additionally, Madison (Oct. 17, 1788) warns that government’s oppressive capacity does not come from “acts of Government contrary to the sense of its constituents, but from acts in which the Government is the mere instrument of the major number of the constituents.”  Majority rule was anything but a well-respected concept then, as it should be now.

      However, if you are still not convinced that majority rule (which always results in the minority being taken advantage of, or worse) is a bad thing let me remind you of a few incidents in the history of both the US and the world in which the much-fabled majority ruled:  Jim Crow and slavery in America and the Jewish Holocaust orchestrated by that hero of democracy, Adolf Hitler.   Still want to order up a heaping helping of good ole democracy?  [Note:  that is why we are guaranteed a republican form of government in the Constitution and the term democracy does not show up even once.]

     There were other alternate ideas for voting the president into office, one was a vote by the House of Representatives (similar to the parliamentary system of England) and it was even kicked around that the Senate should elect the president.  These ideas were unsuccessful because they placed into peril the concept of the separation of powers by putting the legislature in control of the executive branch; and, seeing how much politicians try to bribe the people to get into office, it is hard to imagine the hijinks that would have occurred in that format.

        Because of those reasons (primarily) the EC was born as a system for which states chose the president, but not necessarily through any direct vote of the people.  [Fun Fact:  each state retains the power to determine how electors will be selected; so, if the states decided to let the state legislatures pick the electors, they could and the citizens of the state would no longer be able to vote for the president (depending on the structure of the state constitutions, of course).]  People often point to the limited campaigning in the several swing states as a solid justification for the popular vote by noting that more states would be important; however, that is naïve at best.  Instead of campaigns in the swing states, politicians would merely double down on large population centers in political strongholds to boost their margins in those areas in an attempt to outpace the popular vote of any competitors.  Thus, states like California, Texas, New York, Florida, and Illinois would become major players in presidential politics and it would seem profoundly imprudent to give California any further say in the president than they already have…besides they are too busy screwing up their own state to need any more responsibilities.

       The Electoral College seems to be wrapped in a shroud of mystery, but is a relatively simple and very relevant creation of our Framers.  The problem that comes in explaining it is that it requires the acknowledgement that majority rule is a profoundly poor system (a truth that the very designers of the system knew well).  Our Framers were not some obscure set of hick farmers with a lack of understanding of the principles of an organized society (as is sometimes suggested); instead they were a very highly educated, well-studied group of political scholars.  If you doubt this I would suggest you visit the Library of Congress and review the display of Jefferson’s personal library; it is full of volumes of political theory from Plato to John Locke (in French, English, and Latin).  They studied and understood political history and what had led to the failures of republics and the rapid erosion of liberty that plagued democracies throughout history; therefore, it is no wonder that liberty in America has survived many assaults and continues beyond the accepted life-expectancy of a free society.  We have already irreparably damaged a part of our Constitutional structure through the perversion that is the 17th Amendment (subject for another blog); and it is uncertain how many more assaults, by those who wish to impose the will of the majority through the police power of government, that our republic may be able to survive.

 

Regulation Is Not Our Salvation

        There is much talk of regulation and the need for it in every aspect of our “dangerous capitalistic” society; however, there is seldom talk of what regulation is and of what precisely it accomplishes. Ironically, the very people who exhibit the greatest disdain for “big business” are often the most ardent supporters of regulation (besides the big businesses themselves, of course). Democrats, and statists of all parties, are particularly interested in imposing regulations for the stated purpose of controlling the “animal instincts” of the free market. These are the same people who often deride big business publicly for taking advantage of consumers and keeping the “little man” down. And this is where it becomes interesting.

          What if I were to tell you that regulation is largely designed to do that very thing and that the politicians who both advocate and introduce regulation understand very clearly that it will remove competition by restricting new market participants? I know, I know–many people out there will be shaking their heads in outright refusal of this assertion. I can just hear it now: “we need government to protect us from big corporations”; or “that’s not what the news said”; or “Obama said we deregulated too much.” Food for thought, though: big opponents of airline deregulation were the (big) airlines and the big opponents of trucking deregulation?…you guessed it, the (big) trucking companies. That, by the way, is not an isolated situation.

          Now, before people start into the irrational argument that I hate all regulation or that I am an anarchist; try to refrain from acting arbitrarily dramatic, ‘cause it just ain’t true! Here is an example of the real world scenario and why most regulation is not only supported by “big business,” but also why they (and their lobbyists) write a significant amount of the legislation.

          Let us assume that I am a builder of houses in a small economy with a relatively static population (a miniature US, for example). I am the only builder of houses as I have been an innovator in early house building technology. Let us also assume I hired you to work for me as my helper and you worked your way up to foreman over some amount of time. At this point you realize that you know everything you would need to provide the same service that I do, but feel you can do it more cheaply (because I am operating as a monopolist and thus my pricing is artificially high). So, you strike out on your own and begin competing with me. This does not please me for obvious reasons.

          So, I go see the executive (president/governor) of this “state” we live and work in and I convince him that we should, for the safety of all consumers, get control of the house building market and pass some regulations so that amateur and dangerous new builders do not hurt anyone financially or physically. The executive, not wanting his constituents hurt or angry sees great value in regulation that will control the evil capitalists (besides me, of course as I will be grandfathered in…) and will make one of his major campaign contributors happy. He goes to the legislative branch and convinces them to draft a law; however, how can these lawmakers draft regulations about housing that will safeguard their citizens when they themselves have never built houses? Hmmmm…Wait, they have an idea—they should approach the local expert for help in constructing these regulations. My phone rings and I gladly accept my civic duty of drawing up regulations for housing standards so that I am guaranteed customers…I mean, so that the citizens are safe!

          Now, back to you, my only competitor; if am lucky I can build in professional fees and licensing, insurance, or even capital requirements that create a great enough obstacle to you not being able to continue in the market. If not, I have almost guaranteed that neither of our employees will likely ever be able to afford to compete with us.   Here is the best part, though. Having seen how well the appeal to citizens to safeguard them from “greedy profit-driven” capitalists worked out for his polling numbers; the executive decides to move on to another market segment. Once again, this executive finds great public support (who doesn’t want to be safer) and also finds he has more campaign contributions rolling in from companies which no longer have to fear any significant competition in their field.

     Here is the reality and the bad side of this equation. First, capitalism in this example no longer exists (incidentally, there has not been true capitalism in the U.S. for many decades except perhaps in some isolated market segments). The little man has been effectively “held down” and kept out of the marketplace. Skill, pricing, or a combination of the two is no longer that which is primarily supplied by market participants; instead, the ability to navigate the political waters and afford to pay for these regulatory burdens is what determines market participation.

          Second, the government has created a moral hazard in which the citizenry no longer feels responsible for ensuring quality in the products and services they purchase; additionally, government takes on no liability that the work they attest to (through regulatory obstacles) is of high or even good quality. For example, if you have a house built, it will have to be approved by government inspectors on many occasions for different purposes. However, if that house burns down later from faulty wiring that was inspected; the government that essentially told you it was safe carries no liability. This begs a tangential question: what is the point, exactly?

          Third, in fields that are “regulated” it has been made essentially illegal for people to work. To license something is defined as: the ability to grant a license to (someone or something) to permit the use of something or to allow an activity to take place. If something requires a license, it is otherwise illegal—ergo, it is illegal to work and earn a living if the government does not permit you to do so. Yet another disincentive towards working, just what we need!

          The rise in corporations over the last century is not due to not enough government. Inversely, it is due to too much government. I understand there is a long held belief in most people that government is there to help us, but we must get beyond misconceptions and use logic to approach questions. Whether a politician is well-intentioned or not, regulation still results in the same thing. Also, do not believe the hype that the Bush administration marked the biggest rollback of regulations in modern history—that could not be further from the truth. In fact, if you are a fan of regulation, you should have a picture of “W” over your mantle right next to your picture of Obama.

          If people actually understand what the true effects of regulation are, it is likely that we will tolerate less of it. However, I understand there is a draw in believing in wholesale regulation; the comfort of feeling like someone evil and rich is being halted on their wicked quest for world domination is probably great. But, perception a reality does not make. Regulation is the pet of “big business” that does not wish to compete and colorful plumage which politicians display to prove how “caring” and “egalitarian” they are; both, instead, use it largely as a tool to monopolize market segments and line their own pockets; perverting capitalism into cronyism.

          When you consider the effectiveness of government in solving all our problems you should truly ponder why all of governments “wars” of morality such as the one on drugs and the one on poverty have only resulted in more of both. Certainly, in the thousands of years of human history it is unlikely that humans have only recently gone bad; perhaps, we should realize that government has the anti-Midas effect of turning everything it touches into crap instead of gold.

 

The Fallacy of Greed

       Greed…what a fun word! It is that invisible cause of all of society’s problems, right? Have an older car or smaller house than your neighbor? Don’t beat yourself up, they are obviously greedy. Textile manufacturing is now (predominantly) overseas? Duh…just a greedy capitalist. Walmart not forking over that mythical thing called a “living wage?” They are blatantly exhibiting their own greed. She has too much; he has too little…all byproducts of American greed, right?

     Effort is good, the old college try they used to say; but don’t you dare actually succeed because clearly you have morphed into just a common greedy piece of trash. Here is an interesting question then: If, in fact, a person who develops a product for which millions wish to pay for is greedy; what do we call a person who is willing to live for nothing off the labors of others? Ah, I remember now, we call them victims of American greed. Instead might I suggest we call them greedy victimizers of Americans; merely a semantic difference, I am sure.

     The convenience of greed lay in its ability to be arbitrarily blamed for anything. Those on the left have made careers playing on peoples’ petty jealousy through use of the word greed. People have justified the taking of others’ property because of greed; however, greed cannot be proven and, perhaps more importantly, cannot be disproven. How does one combat an accusation of greed? They cannot, which is why it is such a powerful tool of the politician to ensure support from those who Bastiat noted “wish to live at the expense of others.”

     Legalized theft and redistribution gains its mandate from this notion of greed, but how do we define greed exactly? If greed is to be defined as the desire and effort to take something from people which is not theirs, then who is greedy? Can we rightfully call Steve Jobs greedy because he created things which many were willing to trade money for? Or would that title be more properly attributed to the 23 year old which, instead of practicing responsibility, decides to live off the welfare system? I would say the latter; our president would likely say the former. A person who makes a living at the point of a gun is, in my estimation, greedy. There is little difference between someone who is able-bodied and living (almost) exclusively off the taxpayer than there is a common gangster. Both prey off of those unable to defend themselves from their oppressors, the only difference is the mobster at least has the courage to do their own dirty work.

Liberty is the Root of Our Prosperity

     Without liberty, we lose that which makes America unique among the nations of the world, in both the past and the present.  It can hardly be said to be a coincidence that the most free people in the history of humanity have also become the most wealthy and powerful; but there are those who would wish to convince people that it was not our liberties which opened the door to prosperity…no, they would offer that prosperity was attained despite these freedoms.  What a lucky break it has been, then, that the nation where its people are free to imagine something greater and free to expect a return for their labors are the people who have exercised tremendous ingenuity and an incredible work ethic…go figure.  Imagine how many Steve Jobs, Henry Fords, or Nikola Teslas may have been lost to history in communal nations where it was the government’s job to determine people’s aptitudes or their worth to society and thus assign them their tasks?

    A common argument (read: excuse) of the collectivists is that we are a product of our resources; and yes, we do have those in abundance relative to some nations.  However, I would argue that our resources did not define us as a people; instead, we defined our resources.  Upon the ratification of the Constitution, the framers did not find a map to resources with a multi-lingual set of instructions for how to develop machines and methods to utilize them.  It was the liberty to develop, to invent, to discover, and ultimately to earn a reward for our labors that drove generations of Americans to develop those resources which would eventually increase the living standards of much of the entire planet.  That is not inconsequential, nor is it coincidental; that is a staggering feat for the ultimate benefit of all of humanity.

      I often ponder as to why our economic progress and achievements, due greatly to our level of freedom, is something to be ashamed of; particularly when we wonder why kids do not try to excel at school.  Is there not a link between denigrating success and a dwindling amount of it?  Perhaps instead of hiding from our prosperity, we should embrace the fact that we are the engine of advancement for the entire globe; then, just maybe the children of this generation and the next may return to aspiring for more and settling for nothing less than whatever it is their individual dreams may conjure.  The true “arrogance” of America is to enjoy the fruits of labor and the results of our capitalist, free-market society (at least it used to be) while simultaneously acting as if those were not significant accomplishments.

Why warnings of tyranny must not be “rejected.”

Unfortunately, you’ve grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity that’s at the root of all our problems. Some of these same voices also do their best to gum up the works. They’ll warn that tyranny is always lurking just around the corner. You should reject these voices.

                                                -Barack H. Obama, 2013 Ohio St. Commencement

        Actually, what they suggest is that any government is predisposed to usurp the liberties of its people. What they would suggest is that trust in a government official merely at their own behest is unwise at best and disastrous at worst. But, to be completely honest, it is not the government official for whom we must fear attempted subjugation; instead, it is “from acts in which the Government is the mere instrument of the major number of the constituents” (James Madison, 1788). It is the tyranny of some oppressive majority. Generally, though, a single figure stands ready to exact the pound of flesh which this majority so dearly desires.

     “Reject these voices” Obama tells young people…or, perhaps in other words: “pay no attention to the man behind the curtain.” Indeed, the manifestation of a threat to liberty has and will always be a single figure. Is Obama that figure to be feared? Who knows, only time can bear that out; however, I suspect he is only one of the puppets opening the show. The proverbial hand up his back, as with other leaders before him, has been our neighbors and family members and perhaps even ourselves. Eagerly our populace has stood ready to pull the handle for whomever promises to subdue ideological enemies and punish others for our own self-victimization. The choice has largely been either those people willing to seize the property of one man for the benefit of another; or, on the other hand, seize one’s liberty to appease the conscience of another. Both are mere perversions of liberty and, I would assert, share the same outcome: slavery.

    There is, however, shelter from the looming storm of statism. Unfortunately, the concept of liberty appears far too risky for those who never lived without it—sloth likely is our greatest sin. Liberty is merely a punch-line for people like Obama and Bush. For two “truths” resonate loudly for both: 1) the people cannot be trusted with liberty, and 2) most of us are more than happy to trade it for payments in-kind. Our weakness invites the shackles that will bind us, be they real or figurative. Ronald Reagan once said:

Socialists…can provide you shelter, fill your belly with bacon and beans, treat you when you’re ill, all the things guaranteed to a prisoner or slave.

This may be the best characterization of socialisms’ ill-fated pursuit. Despite popular opinion, however, the socialists ride on donkeys and elephants; and we should be wary of both.

      What then are those of us who yearn for liberty to do—where is our shelter? Not coincidentally, the “they” who Obama speaks of are very much the same as the “they” who founded our great nation. And those great minds and greater men gave us a weapon to defend ourselves from tyranny. They armed us with words whose sole purpose was to warn us of tyranny and provide the tools to defend ourselves from it: the Bill of Rights.

        What is the Bill of Rights? In school it is an inconvenience we have to remember for one test. In our adult life it is only the 1st Amendment (part of it, anyway) for Democrats and simply the 2nd and 10th for Republicans. But, in a broader sense its purpose was the explicit outline of what tyranny may look like. In fact, if tyranny was not even a possibility, the Bill of Rights would be unnecessary. Furthermore, for those who claim the mere age of the Constitution is proof of its own irrelevance and short-sightedness; they would be wise to appreciate that it is the very blanket of liberty which keeps us warm at night.

            For example, in the last couple of years alone, the news has been filled with government acts which challenge the:

  • 1st Amendment (“Obamacare” and the Catholic Church; Rosen from Fox News, etc.)
  • 2nd Amendment (gun control efforts)
  •  4th Amendment (NSA data collection, phone tapping, etc.)
  • 5th Amendment (illegal government takings during TARP)
  • 6th Amendment (NDAA)
  • 8th Amendment (NDAA, again)
  • 9th Amendment (the one the statists of neither party like)
  • 10th Amendment (Obamacare and unfunded mandates on states)

        Maybe the guys in the powdered wigs were on to something, huh? Simply put, our Constitution and the first ten amendments were designed to protect us from our government; and ensure we have the tools with which to protect ourselves from it. This is true even when an over-zealous majority threatens to exercise the government’s monopoly on violence to make us behave in a way which pleases them. It would be fair to say that distrust of government is the founding principle upon which our great republic (not democracy) was built. We would be wise to heed these warnings, not reject them; the cheap parlor trick of the politician is an illusory idea that we are safe because we are Americans. Instead, to retain the freedoms encapsulated in what Martin Luther King, Jr. referred to as the “promissory note to which every American was to fall heir” we must remain ever-vigilant. I leave you with these words:

Although all men are born free, and all nations might be so, yet too true it is, that slavery has been the general lot of the human race.  Ignorant—they have been cheated; asleep—they have been surprised; divided—the yoke has been forced upon them.  But what is the lesson?  That because the people may betray themselves, they ought to give themselves up, blindfold, to those who have an interest in betraying them?  Rather conclude that the people ought to be enlightened, to be awakened, to be united, that after establishing a government they should watch over it, as well as obey it.

                                                                               -James Madison, 1792