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Great Quotes: Ludwig Von Mises

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The aforementioned individual was a widely acclaimed economist and political philsopher of his time. Born in 1881 in what is now Liviv, Ukraine, he became a great leader in the classical liberal movement and in advancing the Austrian School of Economic though (libertarianism and extremely laissez faire economics, respectively). Justifying his opinion that government ought not to be in the business of protecting people from their own foolishness, he opined in his great book Human Action, as follows:
Opium and morphine are certainly dangerous and habit forming drugs. But once a principle is admitted that it is the duty of government to protect the individual against his own foolishness, no serious objections can be advanced against further encroachments. A good case could be made out in favor of the prohibition of alcohol and nicotine. And why limit the government’s benevolent providence to the protection of the individual’s body only? Is not the harm a man can inflict on his mind and soul even more disastrous than bodily evils? Why not prevent him from reading bad books and seeing bad plays, from looking at bad paintings and statues and from hearing bad music?

The passage struck a chord with for the same reason it did for the great skeptic and libertarian Michael Shermer, who said of the passage that it  “…resonated with me because his analogue from the physical to the ideological is so effective in conveying the central message of freedom and liberty[.]”

On Obama and Taxes

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My good friend Will Simpson over at Will’s Perspective wrote a fantastic article on Obama’s tax plans (note the plural) this morning. The excerpt below will lead you to his post:

A preface on tax cuts:  Congress writes them, not the president.  Anyone want to take a  wager on how likely Democrats in Congress are to cut taxes for anyone?  Major Garrett of FoxNews is beginning to refer to potential problems for John McCain from an unlikely issue: taxes.  Apparently, the American people are beginning to believe the propoganda from the Obama campaign about taxes, while factcheck.org is criticizing McCain claims and the new, post-partisan, positive Obama campaign perpetually calls McCain the “sleaziest, most dishonest campaign in American history.”  Yes, those are the words repeatedly used.

Here’s the facts:

1) Obama’s on his third tax plan….(continue reading here)

Written by Astuteness

September 17, 2008 at 12:42 pm

Davy Crockett on Public Charity: Not yours to give

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Some time ago, I came across this excerpt from a book about Davy Crockett, written by Edward Sylvester Ellis, titled “The Life of Colonel David Crockett”. The portion below gives not only a reason why public welfare shouldn’t exist, but also what should in its place. Certainly, disaster funds and disaster response have their place at the state level, but regarding welfare in light of federal and consitutional purposes, Crockett makes some astute points:

Davy CrockettOne day in the House of Representatives a bill was taken up appropriating money for the benefit of a widow of a distinguished naval officer. Several beautiful speeches had been made in its support. The speaker was just about to put the question when Crockett arose:

“Mr. Speaker–I have as much respect for the memory of the deceased, and as much sympathy for the suffering of the living, if there be, as any man in this House, but we must not permit our respect for the dead or our sympathy for part of the living to lead us into an act of injustice to the balance of the living. I will not go into an argument to prove that Congress has not the power to appropriate this money as an act of charity. Every member on this floor knows it.

We have the right as individuals, to give away as much of our own money as we please in charity; but as members of Congress we have no right to appropriate a dollar of the public money. Some eloquent appeals have been made to us upon the ground that it is a debt due the deceased. Mr. Speaker, the deceased lived long after the close of the war; he was in office to the day of his death, and I ever heard that the government was in arrears to him.

“Every man in this House knows it is not a debt. We cannot without the grossest corruption, appropriate this money as the payment of a debt. We have not the semblance of authority to appropriate it as charity. Mr. Speaker, I have said we have the right to give as much money of our own as we please. I am the poorest man on this floor. I cannot vote for this bill, but I will give one week’s pay to the object, and if every member of Congress will do the same, it will amount to more than the bill asks.”

He took his seat. Nobody replied. The bill was put upon its passage, and, instead of passing unanimously, as was generally supposed, and as, no doubt, it would, but for that speech, it received but few votes, and, of course, was lost.

Later, when asked by a friend why he had opposed the appropriation, Crockett gave this explanation:

“Several years ago I was one evening standing on the steps of the Capitol with some members of Congress, when our attention was attracted by a great light over in Georgetown. It was evidently a large fire. We jumped into a hack and drove over as fast as we could. In spite of all that could be done, many houses were burned and many families made houseless, and besides, some of them had lost all but the clothes they had on. The weather was very cold, and when I saw so many children suffering, I felt that something ought to be done for them. The next morning a bill was introduced appropriating $20,000 for their relief. We put aside all other business and rushed it through as soon as it could be done.

“The next summer, when it began to be time to think about election, I concluded I would take a scout around among the boys of my district. I had no opposition there but, as the election was some time off, I did not know what might turn up. When riding one day in a part of my district in which I was more of a stranger than any other, I saw a man in a field plowing and coming toward the road. I gauged my gait so that we should meet as he came up, I spoke to the man. He replied politely, but as I thought, rather coldly.

“I began: ‘Well friend, I am one of those unfortunate beings called candidates and—

“Yes I know you; you are Colonel Crockett. I have seen you once before, and voted for you the last time you were elected. I suppose you are out electioneering now, but you had better not waste your time or mine, I shall not vote for you again.”

“This was a sockdolger…I begged him tell me what was the matter.

“Well Colonel, it is hardly worthwhile to waste time or words upon it. I do not see how it can be mended, but you gave a vote last winter which shows that either you have not capacity to understand the Constitution, or that you are wanting in the honesty and firmness to be guided by it. In either case you are not the man to represent me. But I beg your pardon for expressing it that way. I did not intend to avail myself of the privilege of the constituent to speak plainly to a candidate for the purpose of insulting you or wounding you.’

“I intend by it only to say that your understanding of the constitution is very different from mine; and I will say to you what but for my rudeness, I should not have said, that I believe you to be honest.

But an understanding of the constitution different from mine I cannot overlook, because the Constitution, to be worth anything, must be held sacred, and rigidly observed in all its provisions. The man who wields power and misinterprets it is the more dangerous the honest he is.’

” ‘I admit the truth of all you say, but there must be some mistake. Though I live in the backwoods and seldom go from home, I take the papers from Washington and read very carefully all the proceedings of Congress. My papers say you voted for a bill to appropriate $20,000 to some sufferers by fire in Georgetown. Is that true?

“Well my friend; I may as well own up. You have got me there. But certainly nobody will complain that a great and rich country like ours should give the insignificant sum of $20,000 to relieve its suffering women and children, particularly with a full and overflowing treasury, and I am sure, if you had been there, you would have done just the same as I did.’

“It is not the amount, Colonel, that I complain of; it is the principle. In the first place, the government ought to have in the Treasury no more than enough for its legitimate purposes. But that has nothing with the question. The power of collecting and disbursing money at pleasure is the most dangerous power that can be entrusted to man, particularly under our system of collecting revenue by a tariff, which reaches every man in the country, no matter how poor he may be, and the poorer he is the more he pays in proportion to his means.

What is worse, it presses upon him without his knowledge where the weight centers, for there is not a man in the United States who can ever guess how much he pays to the government. So you see, that while you are contributing to relieve one, you are drawing it from thousands who are even worse off than he.

If you had the right to give anything, the amount was simply a matter of discretion with you, and you had as much right to give $20,000,000 as $20,000. If you have the right to give at all; and as the Constitution neither defines charity nor stipulates the amount, you are at liberty to give to any and everything which you may believe, or profess to believe, is a charity and to any amount you may think proper. You will very easily perceive what a wide door this would open for fraud and corruption and favoritism, on the one hand, and for robbing the people on the other. ‘No, Colonel, Congress has no right to give charity.’

“‘Individual members may give as much of their own money as they please, but they have no right to touch a dollar of the public money for that purpose. If twice as many houses had been burned in this country as in Georgetown, neither you nor any other member of Congress would have Thought of appropriating a dollar for our relief. There are about two hundred and forty members of Congress. If they had shown their sympathy for the sufferers by contributing each one week’s pay, it would have made over $13,000. There are plenty of wealthy men around Washington who could have given $20,000 without depriving themselves of even a luxury of life.’

“The congressmen chose to keep their own money, which, if reports be true, some of them spend not very creditably; and the people about Washington, no doubt, applauded you for relieving them from necessity of giving what was not yours to give. The people have delegated to Congress, by the Constitution, the power to do certain things. To do these, it is authorized to collect and pay moneys, and for nothing else. Everything beyond this is usurpation, and a violation of the Constitution.’

“‘So you see, Colonel, you have violated the Constitution in what I consider a vital point. It is a precedent fraught with danger to the country, for when Congress once begins to stretch its power beyond the limits of the Constitution, there is no limit to it, and no security for the people. I have no doubt you acted honestly, but that does not make it any better, except as far as you are personally concerned, and you see that I cannot vote for you.’

“I tell you I felt streaked. I saw if I should have opposition, and this man should go to talking and in that district I was a gone fawn-skin. I could not answer him, and the fact is, I was so fully convinced that he was right, I did not want to. But I must satisfy him, and I said to him:

“Well, my friend, you hit the nail upon the head when you said I had not sense enough to understand the Constitution. I intended to be guided by it, and thought I had studied it fully. I have heard many speeches in Congress about the powers of Congress, but what you have said here at your plow has got more hard, sound sense in it than all the fine speeches I ever heard. If I had ever taken the view of it that you have, I would have put my head into the fire before I would have given that vote; and if you will forgive me and vote for me again, if I ever vote for another unconstitutional law I wish I may be shot.’

“He laughingly replied; ‘Yes, Colonel, you have sworn to that once before, but I will trust you again upon one condition. You are convinced that your vote was wrong. Your acknowledgment of it will do more good than beating you for it. If, as you go around the district, you will tell people about this vote, and that you are satisfied it was wrong, I will not only vote for you, but will do what I can to keep down opposition, and perhaps, I may exert some little influence in that way.’

“If I don’t, said I, ‘I wish I may be shot; and to convince you that I am in earnest in what I say I will come back this way in a week or ten days, and if you will get up a gathering of people, I will make a speech to them. Get up a barbecue, and I will pay for it.’

“No, Colonel, we are not rich people in this section but we have plenty of provisions to contribute for a barbecue, and some to spare for those who have none. The push of crops will be over in a few days, and we can then afford a day for a barbecue. ‘This Thursday; I will see to getting it up on Saturday week. Come to my house on Friday, and we will go together, and I promise you a very respectable crowd to see and hear you.

“‘Well I will be here. But one thing more before I say good-bye. I must know your name.”

“‘My name is Bunce.’

“‘Not Horatio Bunce?’

“‘Yes

“‘Well, Mr. Bunce, I never saw you before, though you say you have seen me, but I know you very well. I am glad I have met you, and very proud that I may hope to have you for my friend.’

“It was one of the luckiest hits of my life that I met him. He mingled but little with the public, but was widely known for his remarkable intelligence, and for a heart brim-full and running over with kindness and benevolence, which showed themselves not only in words but in acts. He was the oracle of the whole country around him, and his fame had extended far beyond the circle of his immediate acquaintance. Though I had never met him, before, I had heard much of him, and but for this meeting it is very likely I should have had opposition, and had been beaten. One thing is very certain, no man could now stand up in that district under such a vote.

“At the appointed time I was at his house, having told our conversation to every crowd I had met, and to every man I stayed all night with, and I found that it gave the people an interest and confidence in me stronger than I had ever seen manifested before.

“Though I was considerably fatigued when I reached his house, and, under ordinary circumstances, should have gone early to bed, I kept him up until midnight talking about the principles and affairs of government, and got more real, true knowledge of them than I had got all my life before.”

“I have known and seen much of him since, for I respect him – no, that is not the word – I reverence and love him more than any living man, and I go to see him two or three times every year; and I will tell you, sir, if every one who professes to be a Christian lived and acted and enjoyed it as he does, the religion of Christ would take the world by storm.

“But to return to my story. The next morning we went to the barbecue and, to my surprise, found about a thousand men there. I met a good many whom I had not known before, and they and my friend introduced me around until I had got pretty well acquainted – at least, they all knew me.

“In due time notice was given that I would speak to them. They gathered up around a stand that had been erected. I opened my speech by saying:

“Fellow-citizens – I present myself before you today feeling like a new man. My eyes have lately been opened to truths which ignorance or prejudice or both, had heretofore hidden from my view. I feel that I can today offer you the ability to render you more valuable service than I have ever been able to render before. I am here today more for the purpose of acknowledging my error than to seek your votes. That I should make this acknowledgment is due to myself as well as to you. Whether you will vote for me is a matter for your consideration only.”

“I went on to tell them about the fire and my vote for the appropriation and then told them why I was satisfied it was wrong. I closed by saying:

“And now, fellow-citizens, it remains only for me to tell you that the most of the speech you have listened to with so much interest was simply a repetition of the arguments by which your neighbor, Mr. Bunce, convinced me of my error.

“It is the best speech I ever made in my life, but he is entitled to the credit for it. And now I hope he is satisfied with his convert and that he will get up here and tell you so.’

“He came up to the stand and said:

“Fellow-citizens – it affords me great pleasure to comply with the request of Colonel Crockett. I have always considered him a thoroughly honest man, and I am satisfied that he will faithfully perform all that he has promised you today.’

“He went down, and there went up from that crowd such a shout for Davy Crockett as his name never called forth before.’

“I am not much given to tears, but I was taken with a choking then and felt some big drops rolling down my cheeks. And I tell you now that the remembrance of those few words spoken by such a man, and the honest, hearty shout they produced, is worth more to me than all the honors I have received and all the reputation I have ever made, or ever shall make, as a member of Congress.’

“Now, sir,” concluded Crockett, “you know why I made that speech yesterday. “There is one thing which I will call your attention, “you remember that I proposed to give a week’s pay. There are in that House many very wealthy men – men who think nothing of spending a week’s pay, or a dozen of them, for a dinner or a wine party when they have something to accomplish by it. Some of those same men made beautiful speeches upon the great debt of gratitude which the country owed the deceased–a debt which could not be paid by money–and the insignificance and worthlessness of money, particularly so insignificant a sum as $20,000 when weighed against the honor of the nation. Yet not one of them responded to my proposition. Money with them is nothing but trash when it is to come out of the people. But it is the one great thing for which most of them are striving, and many of them sacrifice honor, integrity, and justice to obtain it.”

 

Written by Astuteness

April 28, 2008 at 5:29 pm

John Stossel on Lawyers

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I’ve usually enjoyed John Stossel’s coverage of the political arena. There are some areas that I disagree with him on, but this piece on lawyers and judges is a good summery. More can be found on this issue in his books “Give Me a Break” and “Myths Lies and Downright Stupidity: Get out the Shovel. Why Everything you know is wrong”.

“We cannot use force.”

That was my response last week when a lawyer shouted at me, “You media types are bullies, too!”

We were arguing about my Wall Street Journal op-ed that called class-action and securities lawyers bullies and parasites who enrich themselves through extortion. It’s legal extortion, but extortion nonetheless.

These aggressive lawyers and their Naderite defenders don’t get it. Or they pretend they don’t.

There are only two ways to do things in life: voluntarily or forced. We reporters may be obnoxious, intrusive, stupid, rude, etc., but we cannot force anyone to do anything. All our work is in the voluntary sector.

But litigation is force. When a plaintiff sues, a defendant is forced to mount a defense. If he settles or loses, he’s forced to pay. Government is the enforcer.

Sometimes we need force — including the force behind the litigators — to protect our freedoms, just as we may need missiles. But we try not to use our missiles because we understand that they do tremendous collateral damage. But litigation does collateral damage, too. The millions spent on legal defense can’t be used to make life-enhancing — and life-saving — products.

We ought to avoid using lawyers the way we avoid firing missiles.

But we don’t. State attorneys general even hire them to pursue unpopular businesses, like gun makers. When the lawyers make a killing in the name of “protecting the people,” they give a piece of that money to the attorney general’s political campaign. Somehow that is not considered a scandal.

The businesses that pay may have done nothing wrong. Once an attorney has rounded up lots of complainants, it’s not hard to terrorize companies into settling. They could fight and maybe win, but that distracts managers from what they ought to be doing. And they might get a bad jury and lose the entire company. It’s safer to settle.

Our legal system invites lawyers to act like bullies. Only in America can I sue you for dubious reasons, force you to spend thousands of dollars on lawyers (not to mention the psychic costs — the anxiety and lost sleep that lawsuits create), and when a judge rules that my claim is bunk, I don’t even have to say “sorry.” I can blithely move on to sue someone else. In other countries, I would have to pay your legal fees to at least compensate you for some of the financial damage I caused. “Loser pays,” it’s called.

The trial lawyers have even gamed the language. They call “loser pays” the “English Rule,” as if it’s some weird British law. But it’s not. It’s really the Rest of the World Rule. America is the odd man out because we rarely punish litigators who misuse force.

Litigators fight for a living, day after day. Practice makes perfect. They get good at winning. Because of their clout, “loser pays” never gets though the legislature.

So the lawyers go on bullying. After Friday’s “20/20” piece on lawyer bullies, viewers sent comments like this one:

“After a real estate deal fell through, the owner of the property, a lawyer, sued me for $25,000 in damages. After two years, I won a summary judgment, which he immediately appealed. We are still in litigation over this, and there is nothing I can do to stop the process. I have offered settlements all along the way, but at this point I have paid more for my mandatory defense than the entire case was worth. If that’s not bullying, I don’t know what is. He continues to do everything in his power to prolong the case, knowing full well what it is costing me. By the time this is all over and I ‘win,’ I will have spent $35,000 and dealt with the stress of the case for more than five years. We are a modest, middle-class family. What was once the hope of being able to pay for my children’s college education now lines a lawyer’s pockets. I have had no recourse but to take it.”

America needs judges willing to say no to the lawyer bullies. America also needs “loser pays.” Otherwise, the parasites will bully away your money and your choices.”

Written by Astuteness

April 9, 2008 at 8:07 am

Congress’ April fools joke on the Oil Executives

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Yesterday, congress grilled the 5 top oil executives, hoping they would explain why energy prices are so high, and why consumer appreciation is so low.

During the hearings, the usual attitudes were prevalent: Greedy business people exploit the middle class for their own profit, and government needs to do something about it. Congressman Emanuel Cleaver reminded the nation’s top 5 oil executives that “The anger level is rising significantly.” edward-markey.jpgRepresentative Edward Markey of Massachusetts stated that: “On April Fool’s Day, the biggest joke of all is being played on American families by Big Oil,”

Here is the real story behind April Fools that congress doesn’t know: That the government had more to do with creating the energy problem than they do with solving it. Why? Because the government, insisting on protecting the environment based on the flimsy evidence from the global warming movement, taxes gas per gallon. It was $.32 a gallon last time I checked. That raises the cost of gas by so much for all of us. If the government would stop taxing gasoline, gas would be about $2.80 a gallon. That would be a good start.

On top of that, the government keeps oil companies off limits to the multi-billion barrel oil reserve in Alaska and 85% of our coastal drilling opportunities, again in the name of protecting the environment. So instead we have to buy oil from overseas: mid-east-oil-001.jpgCanada, Saudi Arabia, Iraq, etc, just to name a few. That drives up costs even more, since we have to pay for not just the cost of drilling the oil, but also for the shipping from around the world as it reaches our ports. If the government would allow us to drill our own oil more, that would lower our prices here at the pump. That’s because a basic law of economics states that the more you have of a thing, the less it costs. Take shoes, for example: People in this country used to be hard pressed to afford a good pair of shoes. They were hard to make and very expensive. Yet, as the production of shoes streamlined, they became more plentiful, and thus, cheaper overall.

The idea of production brings me to another aspect of April Fools folly–Refineries. It is reported that since the late 1970’s, the Federal Government has not let a single new refinery be built in the United States. That means that as ours wear out, we must have more and more of our fuel refined elsewhere. In foreign countries (So much for democrats promises to keep jobs in the United States) To cover the costs of shipping to the foreign country and back, prices at the pump must be raised. Surely with all the digital technology, we could find ways to vastly improve our refining process by using updated computers and sensors to make the process more precise and efficient. But the politicians won’t let us do it. So the people scream louder, and the politicians point the finger more at the Executives, reminding everyone of the “record profit” that the oil companies made last year.

Which brings me to one last point: We in America need a new attitude on rich people. The media, along with select classes of politicians, portray the American CEO as a greedy, conniving, impostor who seizes and exploits poor people’s resources for his own benefit. But this characterization is improper for two reasons:

First, businesses depend on us for our voluntary cooperation. They can’t use force. Only government can. For a business to succeed, the people must be willing to buy his products at the price he asks. It is only when the people do this that the CEO can succeed. Thus, any success a business has depends on the consumer. If the consumer caused the company to succeed, and to make evil profits, then what logical role does the federal government play in causing them to “not succeed”?

Secondly, we need rich people. They provide employment for all kinds of folks. Yet that was only possible by letting them make a profit so that they could have money left over to hire us. For providing jobs to untold millions, don’t CEO’s deserve to be highly compensated? Why should companies be investigated and punished if the people voluntarily decide to buy their wares? No one is forcing people to buy gas or oil, so neither should the government use force in return, whether it be in new regulation, taxes, or price ceilings.

CEO pay could be ‘worse’. George Mason University Economist Walter Williams put it well:

“When Jack Welch became General Electric’s CEO in 1981, the company was worth about $14 billion. Through hiring and firing, buying and selling decisions, Welch turned the company around and when he retired 20 years later, GE was worth nearly $500 billion. What’s a CEO worth for such an achievement? If Welch was paid a measly one-half of a percent of GE’s increase in value, his total compensation would have come to nearly $2.5 billion, instead of the few hundred million that he actually received.” 

oil-well-01.jpgIf government would get out of the way, let us drill our own oil, and refine our own fuel, costs could be cut, (since we wouldn’t have to pay for the shipping from foreign countries) and jobs would be created (since we would be doing our own drilling and refining). With the increased supply of fuel in the market, prices could be reduced. But I bet it won’t happen soon.

Why?

Because government bureaucrats know best.

Especially on April Fools Day.

Written by Astuteness

April 3, 2008 at 11:00 am

Gov. Mark Sanford and the REAL ID Act

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 Jim Harper, Director of Information Policy Studies at the Cato Institute, had a great peice on the REAL ID Act.

“In the next few days South Carolina’s Gov. Mark Sanford will decide whether or not the citizens of South Carolina should allow the federal government to bully them into adopting national identification.

In spite of its growing unpopularity, federal legislators are still pushing an arguably unconstitutional national ID law called the REAL ID Act.

The governor now has a chance to stand up for the people of South Carolina, and help restore some important constitutional principles.

States are sovereign entities, not administrative outposts of the national government.

Last year, South Carolina’s legislature passed a law barring the state from implementing REAL ID. This particular federal boondoggle would put basic identity documents into nationally accessible government databases and promote tracking of law-abiding citizens like they were criminals on parole.

But the U.S. Department of Homeland Security now threatens to make air travel and entry into some federal buildings inconvenient if Gov. Sanford doesn’t pretend that South Carolina might still implement the federal law. They want him to request an extension of the May 11 statutory deadline for compliance.

The case resembles a similar instance of strong-arming in the early 1990s, when Congress passed a law requiring the state of New York to dispose of radioactive waste according to federal prescriptions or “take title” to the waste. If state officials didn’t do what the federal government said, they would have the burden of owning all this waste dumped in their laps.

In 1992, the Supreme Court ruled on the case, issuing the first in an important line of decisions that is beginning to restore balance to the state-federal relationship. The federal law violated the constitutional structure of our governmental system, the court said, by attempting to “commandeer” the state into implementing a federal program.

States are sovereign entities, not administrative outposts of the national government. Allowing the federal government to commandeer states would blur lines of responsibility, requiring state officials to raise taxes and make unpopular decisions on behalf of federal officials who really should be accountable. If the federal government wanted to take care of radioactive waste, the federal government should have figured out how to do it and how to pay for it.

The same applies to the national ID program in REAL ID. If the federal government wants to have a national ID system, the federal government should figure out how to do it and how to pay for it. Congress never even had a hearing to assess the costs, the complexities, or the privacy consequences of the REAL ID Act, much less whether the United States should have a national ID system at all. Instead, the federal government is trying to foist all this on the states.

If South Carolina doesn’t fall in line, the Department of Homeland Security threatens to attack South Carolinians’ right to travel.

These problems will be dumped in the laps of South Carolina’s leaders, like the radioactive waste the feds wanted to dump on New York.

Another way to look at it is as a form of hostage-taking. If you don’t implement our national ID law, the federal government is saying to Gov. Sanford, we will make life miserable for the citizens of your state.

That’s unfair, and it’s probably unconstitutional.

Federal politicians didn’t give up on trying to commandeer state governments after the radioactive waste case. In a later case, Congress tried directly, requiring state officials to implement the Brady gun control law. The court struck that down, too.

With the REAL ID Act, the feds are at it again. The governor should use this opportunity to seek another Supreme Court ruling that respects the state-federal balance.

Instead of backing down and abandoning his principled approach to government, the governor should sue the Department of Homeland Security under the 10th Amendment.

In standing up for the residents of South Carolina, he has a good chance to restore constitutional principles for all states. His constituents are not pawns in a power game.

And the South Carolina government is not a bureaucratic outpost of the federal government.”

So should Texas. As Texas Congressman John Culberson says, “Let Texans Run Texas”.

Written by Astuteness

March 31, 2008 at 9:32 am

Scholarly Skepticism on Stimulus Senselessness, part 1: Causality

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MoneyAs the economy’s signs of turbulence worsened at the turn of the year, Politicians were quick to react. Not all the reactions were unified, but react they did. Almost everyone was quick to promise “swift” or decisive” “action”. I think I even heard democrats briefly mention that taxes might need to be cut. Too bad Republicans didn’t harp on that idea more.  

Nevertheless, both sides of the aisle quickly agreed that money needed to be injected into the economy. Even democrats agreed to this. If politicians can agree that more money in the economy makes it grow, I wonder why anyone would oppose a tax cut. Indeed, how is it possible that democrats and some republicans can vote for higher taxes, while at the same time indirectly admitting that more money in the economy is better by voting to put money into the economy through a stimulus package? Astuteness, anyone? 

It amazes me that politicians are rushing to give back to American’s their hard earned taxpayer dollars; yet, these same politicians don’t seem to be the least embarrassed that they took the money from Americans in the first place.  

Although more money in the economy by virtue of lower taxes is good, the government’s decision to stimulate the economy with (up to) $1200 handouts is based on…well, imagination. And that’s about it. Historically, logically, and economically, the stimulus package is a joke on political economics. I’ve read and thought quite a bit on the issue, and the foremost arguments are provided below.   

Causality—Does a reduction in consumer spending necessarily cause a recession? 

Central to the justification for passing the stimulus package was the despair over the drop in consumer spending. Politicians would have us believe that because we average people spend less, then the economy goes down because business aren’t making as much money. If businesses aren’t making as much money, then they can’t afford to hire as many employees. Then employment drops. When employment drops, more people apply for government benefits. That drains the government coffers…and the vicious cycle goes on.  

Problem is, we don’t know if the drop in consumer spending was the cause of the vicious cycle. At least once historically, this has not been the case, as explained by Alan Reynolds, Senior Fellow at the Cato Institute and author of the book Income and Wealth. He explained January article titled “Bush’s Stimulus Flop” that:  

“The economy was in recession from March 2001 to November 2001, but consumer spending fell in only the first and last of those months, plus September. Real consumption last November was still 3% higher than a year before — not much below the post-1960 average increase of 3.6%” 

So we don’t know if a drop in consumer spending causes the economy to drop. But the politicians tell us that more consumer spending is the answer anyway. Which brings us to another question…

Next on Fundamental Astuteness: Scholarly Skepticism on Stimulus Senselessness, part 2—Will the money be spent on consuming?

To be continued…

Written by Astuteness

February 20, 2008 at 3:50 pm