Are Progressives For the Little Guy?

Liberals aren't liberals anymore. These days they call themselves "progressives."

Writing in The New York Times, Columbia University economist Jeffrey Sachs said there were two progressive eras: one in the early part of the last century and the other during the administration of Franklin Roosevelt. He called on liberals to create a third progressive era, in part "to re-establish the supremacy of people votes over dollar votes in Washington."

To hear Sachs tell it, progressivism means being in favor of the little guy and against the special interests. Aligning himself with the motley crew that calls itself Occupy Wall Street, he writes:

The young people in Zuccotti Park and more than 1,000 cities have started America on a path to renewal. The movement, still in its first days, will have to expand in several strategic ways. Activists are needed among shareholders, consumers and students to hold corporations and politicians to account. Shareholders, for example, should pressure companies to get out of politics. Consumers should take their money and purchasing power away from companies that confuse business and political power.

Sachs doesn't know much about history. Nor do most other people. Given Teddy Roosevelt’s attacks on "the trusts" and the muckraking novels of Upton Sinclair and Ida Tarbell, you might suppose that 100 years ago progressives were antibusiness. Yet nothing could be further from the truth. The fundamental economic vision of progressivism was to not to combat special interests, but to embrace and empower them. In a very real sense, "progressivism" means rule by special interests.

As the leftist historian Gabriel Kolko has documented, the Interstate Commerce Commission (ICC) — our first progressive-era federal regulatory agency — was dominated by, and served the interest of, the railroads. The main accomplishments of regulation were to outlaw price cutting, establish minimum prices and make the railroads more profitable than they had ever been. The experience was far from unique.

The regulatory apparatus created by the Meat Inspection Act of 1906 served the interests of large meat packers. Safety standards were invariably already being met — or were easily accommodated — by large companies. But the regulations forced many small enterprises out of business and made it difficult for new ones to enter the industry.

This same pattern — of regulatory agencies serving the interests of the regulated — was repeated with the establishment of almost all subsequent regulatory agencies. For this reason, Kolko called the entire Progressive Era the "triumph of conservatism."

The practices Kolko described were elevated to a refined science by Woodrow Wilson’s War Industries Board (WIB) during World War I. Trade associations were allowed to organize along industry lines — controlling output, setting prices and effectively functioning as an industry-by-industry system of cartels. By the time Franklin Roosevelt established the National Recovery Administration (NRA) during the Depression years, planners could draw not only upon the experience of the Wilson-era WIB, but also on the far more extensive experience of Mussolini’s Italian economy — which was organized in the same way. In fact, Roosevelt’s economic vision for America was almost identical to the vision of Italian fascism.

As Jonah Goldberg has pointed out, there are more than a few transatlantic parallels. The symbol of the NRA was the Blue Eagle, which businesses were expected to hang on their doors to show compliance with NRA rules. Newspapers in both America and Germany compared the Blue Eagle to the swastika and the German Reich eagle. A quasi-official army of informants and goon squads helped monitor compliance. Nuremberg-style Blue Eagle rallies were held, including a gathering of 10,000 strong at Madison Square Garden. A New York City Blue Eagle parade was larger than the ticker-tape parade celebrating Charles Lindbergh’s crossing of the Atlantic.

Through the NRA, the federal government — backed by the full force of criminal law — intruded into virtually every economic transaction. An immigrant dry cleaner spent three months in jail for charging 35 cents to press a suit when the code required a minimum charge of 40 cents. Another case — one that went all the way to the Supreme Court — involved immigrant brothers who ran a small poultry business. Among the laws they were accused of violating was a requirement that buyers of chickens not select the chicken they were buying. Instead the buyer needed to reach into the coop and take the first chicken that came to hand. (Amity Shlaes explains the reason: buyers would be tempted to take the best chicken, leaving less desirable options for other buyers.)

In Schechter Poultry Corp. v. United States (the so-called "sick chicken" case), a unanimous Supreme Court declared the NRA unconstitutional. Roosevelt responded by trying to intimidate the justices and by asking Congress to expand the number of justices so that he could pack the court with judges more to his liking. Although he lost the battle, Roosevelt eventually won the war.

The Supreme Court today places very few restrictions on government authority to regulate the marketplace, no matter how indefensible the interventions.

The use of the word "progressive" by modern liberals is appropriate — to the degree that it reminds us of the historical and intellectual roots of much of liberal thinking. But there is another sense in which the word is very misleading. In general, there is nothing truly progressive about modern progressives. That is, nothing in their thinking is forward looking. Invariably, the social model they have in mind is in the distant past. Many explicitly admit they would like to resurrect Roosevelt’s New Deal.

In this sense, most people on the left who use the word "progressive" are actually reactionaries. Many are explicit about their desire to preserve the current allocation of jobs and the incomes that derive from those jobs. Although they tend to focus on opposing globalization and international trade, consistency requires them to oppose virtually all of the "creative destruction" that the economist Joseph Shumpeter said was inevitable in any dynamic, capitalistic economy.

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Small business: The latest Obama pretense

Today is Small Business Saturday, a new holiday supported by little firms such as American Express, Google, Verizon, Dun and Bradstreet, Occupy Wall Street and –[gush, breathless] Barack Hussein Obama!

Just by the sponsors alone you can tell this is a program designed to create millions of small business jobs in places like India, China, Thailand and Mexico.

Remember, there’s no U-S-A in small business. Ok, maybe there are the letters U-S-A in small business, but why let the facts get in the way of another of Obama's Potemkin jobs moments.

In the Orwellian world of Obama-speak, Small Business Saturday is a day when we should “reaffirm our support for America’s small business owners and their staff, and …celebrate the proud tradition of entrepreneurship they represent.”

Reaffirm and Celebrate. Gotcha. Words that will make the eyes of any small business owner red with gratitude when Obama sends them their very own personal Small Business Saturday greeting card made by Hallmark’s greeting card division instead of Hallmark’s retail store or broadcasting division.

Because what celebration of small business would be complete by the Obama administration without reaffirming the mounds of red-tape that Obama and his confederates have saddled small business with?

“Overall, the Obama Administration imposed 75 new major regulations from January 2009 to mid-FY 2011, with annual costs of $38 billion,” reports Heritage.

In contrast, there were only six deregulatory actions by the Obama administration saving $1.5 billion says the Heritage report.

And those costs were just the cost by the government to implement the regulations, not the overall cost to industry- that is; not the costs to you and I.

In terms of the overall impact on the economic health of the country, the figure is much higher.

“More specifically, the total cost of federal regulations has increased to $1.75 trillion,” writes the federal government’s own Small Business Administration.

Heritage reports that that’s nearly twice the amount that the government collects annually in individual income taxes. Ouch!

The costs are a hidden tax, not just on the rich, says Heritage, but on everyone equally.

But because regulations prevent the creation of new jobs, it hits the poor and middle class particularly hard, “while the updated cost per employee for firms with fewer than 20 employees is now $10,585 (a 36 percent difference between the costs incurred by small firms when compared with their larger counterparts),” says the SBA.

In other words, small employers take it on the chin at the rate of $3,810.60 per employee more than the big guys do.

No wonder the big corporate sponsors of Small Business Saturday wanted to invite Obama in on the deal.

Because while Obama’s rhetoric panders to the little guys, his actions seem geared to favor the big guys instead.

Maybe that’s what the president meant in his State of the Union message when he said his administration was only into doing “big” things: Big Labor, Big Business and Big Graft. There’s just so little opportunity to monetize political power with little people involved in small business- and monetization of political power is the first priority of Obama’s political machine.

It’s not hard to figure why the Obama administration is creating jobs at a post-war low. Jobs aren’t the goal. Fundraising is. That’s why dog and pony shows like Small Business Saturday loom so large for Obama and his corporate pals.

They serve as a reminder that Obama “cares” about little guys [cough, hack], while giving him an opportunity to put the squeeze on the Big Guys.

If Reagan was the Great Communicator, Obama is the Great Fabricator.

For Obama, every day is just another episode of the Beltway Unreality show, where acting is much more important than actually doing something; where pop-culture trumps substance.

But something’s different this election cycle.

The Chambers of Commerce, the Aspen Institute, American Express and the International Monetary Fund don’t own the media anymore.

You do- via the internet. While some may still be deceived, the rest of us are on to the scam.

And through you, Obama’s going to find out that reaffirming and celebrating small business one day a year, doesn’t make up for the 364 days a year that he screws them.

SOURCE

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Moron speech from Hollywood


Mr Freeman

For an actor, the talented Morgan Freeman doesn't have the best sense of timing. At least when off-camera and talking politics. There's a lot of that going around. It figures. A presidential election approaches and folks are heating up.

For example, Mr. Freeman chose the eve of the GOP's straw poll in Florida to describe both the tea party and Republicans in general as racists. Mr. Freeman was particularly vociferous on the subject of those terrible Republicans who were always putting party above country. The only thing they're really interested in, he explained, was denying Barack Obama a second term in the White House. Or, as the talented Mr. Freeman put it, the Republicans' general attitude is: "Screw the country. We're going to do whatever we (need to do) to get this black man out of here."

Whereupon, the next day, the results of Florida's straw poll were announced, and, sure enough, which presidential candidate did those awful Republicans and tea party racists endorse, and by an overwhelming margin at that?

You guessed it: Herman Cain, who, as the current phraseology has it, happens to be black. (You can tell by the way he sings gospel.)

Stars of stage, screen and Democratic politics like Morgan Freeman and Alec Baldwin sound so much better when they let others write their lines. Rather than expose their prejudices. They can be so intelligent when following a well-written script. But left to their own clumsy devices off camera, they can say some fairly idiotic things. Sometimes that's not clear for a while. In this case, it was clear within 24 hours.

Just the other day, Mr. Baldwin was bashing Ronald Reagan as a "failed actor." If only the Republicans could find as great a failure to nominate as their next presidential candidate.

SOURCE

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Unable to win fair and square, Big Labor pushes 'ambush elections'

Leaders of the Service Employees International Union (SEIU) last week officially endorsed President Obama for re-election in 2012. Endorsing a presidential candidate 11 months before the general election may seem a bit premature, but it's not even the record for the earliest endorsements so far in this cycle. The National Education Association (NEA) endorsed Obama in July, 14 months before the voting. While these early endorsements highlight the fact that Big Labor's leaders are little more than cheerleaders (and paymasters) for the Democratic Party, at least voters will have plenty of time between now and next November to weigh all the facts, policy positions and records of the parties' two eventual nominees.

But what if they didn't? What if unions not only got to endorse candidates, but also schedule election day at a time of their choosing? What if they could also control what the opposing party could say during that election? Would that be fair? Well, it's obviously a moot point in elections for public office, but President Obama thinks it would be just dandy in union votes. His appointees on the National Labor Relations Board (NLRB) promise to make a final decision November 30th on their proposed new regulations that would allow unions to force organizing elections in non-union workplaces in as little as 10 days.

Currently, there is about a five-week window between when union organizers petition the NLRB to conduct a secret-ballot election, and when the vote actually happens. That time between announcement and vote allows both sides abundant opportunities to make their case, so workers can cast informed ballots on whether to form a union. But the problem for Big Labor is that informed workers are increasingly choosing to keep their freedom to work without paying union dues. Union membership peaked at 26 percent of the work force in 1953. Today, only 9.6 percent of workers are union members. In the private sector, less than 7 percent of workers are unionized.

The NLRB regulation to be adopted next Wednesday is designed to reverse that trend. Union organizers would be empowered to force hurry-up, or "ambush," elections in less than two weeks. At best, this compressed schedule would significantly reduce the time business owners and managers have to make their case against unionization.

More HERE

My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena

List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)

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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)

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The definition of liberalism has changed greatly over time

By Adam Bitely

Many people—unfortunately—associate the term “liberalism” with the ideology commonly held by people who associate themselves with Barack Obama, progressivism, Occupy Wall Street, and the Democratic National Committee. But are supporters of the above causes, politicians, and parties really “liberals?”

In the modern sense of the term as it applied to American politics, the answer would be yes. But if we were to go back in time about 200 years or so, modern day American liberals would not agree with their “liberal” forefathers.

Think of the revolutionary period in American history. American patriots rallying around the cause of “No taxation without representation,” fear of centralized governments that ruled with great authority, and a great desire for the relationship that people have with their government to forever change to one of the people holding their government in check.

American liberals in 1776, the most famous of which are known as the Founding Fathers, supported limiting the power of government as much as possible. They believed that government powers needed checks at every turn, and that power would naturally corrupt.

Furthermore, these “liberals” did not subscribe to the view that empowering the government with more and more power would lead to a better society. They stood against such expansions as they already knew what happened when the government’s size and scope was beyond control. That is why the Constitution was designed the way it was, pitting each branch of government against the other, so that no one branch would grow powerful beyond control.

As George Mason University Professor of Economics Don Boudreaux recently wrote at CafeHayek.com, “Experience and reason recommended to liberalism’s founders the opposite view, namely, restraining the power of government might not be sufficient to ensure harmony and widespread wealth, but it is certainly necessary.”

But it in the modern day, the American liberal is associated with an ideology that supports ever-expanding government powers intended to correct the ills of society. To the modern American liberal, there is no problem that a politician should not be able to solve. The modern American liberal believes the government is needed to even the playing field, and redistribute from those who have to those who have not. The modern American liberal foresees the government making our lives pain-free and directing society towards prosperity.

Simply put, the modern American liberal has an ideology based in pure fantasy.

Ludwig von Mises once wrote when the definition of liberalism was much different, “Imagine a world order in which liberalism is supreme . . . there is private property in the means of production. The working of the market is not hampered by government interference. There are no trade barriers; men can live and work where they want.”

If Mises were alive today, he would have to use the word libertarianism in place of liberalism to describe the world where government stayed out of the market and no barriers to exchange existed. The liberals of 200 years ago are now referred to as classical liberals, and the modern day people who have a similar distrust of centralized government and the powers they have in the market place are now referred to as libertarians.

What a strange world it is when you consider just how much the definition of liberalism has changed. From the Declaration of Independence in 1776 to ObamaCare in 2010, the term “liberalism” has come to stand for entirely different meanings as the power of the government has expanded.

SOURCE

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Should the Rich Be Condemned?

Walter E. Williams

Thomas Edison invented the incandescent bulb, the phonograph, the DC motor and other items in everyday use and became wealthy by doing so. Thomas Watson founded IBM and became rich through his company's contribution to the computation revolution. Lloyd Conover, while in the employ of Pfizer, created the antibiotic tetracycline. Though Edison, Watson, Conover and Pfizer became wealthy, whatever wealth they received pales in comparison with the extraordinary benefits received by ordinary people. Billions of people benefited from safe and efficient lighting. Billions more were the ultimate beneficiaries of the computer, and untold billions benefited from healthier lives gained from access to tetracycline.

President Barack Obama, in stoking up class warfare, said, "I do think at a certain point you've made enough money." This is lunacy. Andrew Carnegie's steel empire produced the raw materials that built the physical infrastructure of the United States. Bill Gates co-founded Microsoft and produced software products that aided the computer revolution. But Carnegie had amassed quite a fortune long before he built Carnegie Steel Co., and Gates had quite a fortune by 1990. Had they the mind of our president, we would have lost much of their contributions, because they had already "made enough money."

Class warfare thrives on ignorance about the sources of income. Listening to some of the talk about income differences, one would think that there's a pile of money meant to be shared equally among Americans. Rich people got to the pile first and greedily took an unfair share. Justice requires that they "give back." Or, some people talk about unequal income distribution as if there were a dealer of dollars. The reason some people have millions or billions of dollars while others have very few is the dollar dealer is a racist, sexist, a multinationalist or just plain mean. Economic justice requires a re-dealing of the dollars, income redistribution or spreading the wealth, where the ill-gotten gains of the few are returned to their rightful owners.

In a free society, for the most part, people with high incomes have demonstrated extraordinary ability to produce valuable services for -- and therefore please -- their fellow man. People voluntarily took money out of their pockets to purchase the products of Gates, Pfizer or IBM. High incomes reflect the democracy of the marketplace. The reason Gates is very wealthy is millions upon millions of people voluntarily reached into their pockets and handed over $300 or $400 for a Microsoft product. Those who think he has too much money are really registering disagreement with decisions made by millions of their fellow men.

In a free society, in a significant way income inequality reflects differences in productive capacity, namely one's ability to please his fellow man. For example, I can play basketball and so can LeBron James, but would the Miami Heat pay me anything close to the $43 million they pay him? If not, why not? I think it has to do with the discriminating tastes of basketball fans who pay $100 or more to watch the game. If the Miami Heat hired me, they would have to pay fans to watch.

Stubborn ignorance sees capitalism as benefiting only the rich, but the evidence refutes that. The rich have always been able to afford entertainment; it was the development and marketing of radio and television that made entertainment accessible to the common man. The rich have never had the drudgery of washing and ironing clothing, beating out carpets or waxing floors. The mass production of washing machines, wash-and-wear clothing, vacuum cleaners and no-wax floors spared the common man this drudgery. At one time, only the rich could afford automobiles, telephones and computers. Now all but a small percentage of Americans enjoy these goods.

The prospects are dim for a society that makes mascots out of the unproductive and condemns the productive.

SOURCE

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More bureaucratic tyranny

Man catches 881-pound tuna, seized by feds‏

A Massachusetts fisherman pulled in an 881-pound tuna this week only to have the federal authorities take it away. It sounds like a libertarian twist on the classic novella by Ernest Hemingway, The Old Man and the Sea, but for Carlos Rafael, the saga is completely true.

Rafael and his crew were using nets to catch bottom-dwellers when they inadvertently snagged the giant tuna. However, federal fishery enforcement agents took control of the behemoth when the boat returned to port. The reason for the seizure was procedural: While Rafael had the appropriate permits, fishermen are only allowed to catch tuna with a rod and reel.

It would seem that unlike the fictional New England shark hunters in Jaws, Rafael didn't need a bigger boat, just a better permit.

In an interview with the Standard-Times of New Bedford, Rafael disputes the claims from the National Oceanic and Atmospheric Administration's (NOAA) enforcement division that the humungous tuna was trawled from the bottom of the Atlantic. "They didn't catch that fish on the bottom," he said. "They probably got it in the mid-water when they were setting out and it just got corralled in the net. That only happens once in a blue moon."

And while Rafael is denied the mother of all fish stories, the federal impoundment of his catch also means he's probably losing out on a giant payday. A 754-pound tuna recently sold for nearly $396,000. NOAA regulators do not share any of the proceeds from the fish's eventual sale with a fisherman found in violation of federal rules.

"They said it had to be caught with rod and reel," a frustrated Rafael said. "We didn't try to hide anything. We did everything by the book. Nobody ever told me we couldn't catch it with a net."

Rafael says he has meticulously prepared for a giant catch like this, purchasing 15 tuna permits over the past four years for his groundfish boats. He even immediately called a "bluefin tuna hot line" (yes, such things exist) to report his catch. "I wanted to sell the fish while it was fresh instead of letting it age on the boat," he said. "It was a beautiful fish."

Proceeds of the sale from the fish will be held in an account until the case is resolved, according to the National Oceanic and Atmospheric Administration's Office of Law Enforcement. "The matter is still under investigation," said Monica Allen, deputy director with NOAA Fisheries public affairs. "If it's determined that there has been a violation, the money will go into the asset forfeiture fund."

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OWS has plenty of haters and agitators but stymied by lack of any leadership

Despite numerous anti-capitalist signs (e.g., "End Capitalism" and "Smash the Pillars of the Pig Empire") and an equally large number of signs advocating socialism and communism, the OWS movement insists that it doesn't want to destroy business; it just wants to make a few changes. Specifically, it wants American business to hire more people, increase salaries and benefits, provide free health care and education, reduce the prices of products and services, and eliminate pollution and greenhouse gas emissions. The profits (if any, after all the wealth-sharing) should be returned to society. So the new system would be a hybrid in which capitalists could own businesses but control neither their property nor their profits. Let's call it Marxalism.

Nationwide demonstrations by rebellious youth may annoy and disrupt American business, but they are unlikely to cause an immediate, voluntary switch to Marxalism. Nor will they result in a swift enactment of anti-greed laws. The real leaders understand the futility of such languid tactics. They are professional radicals, hiding in the bowels of the movement — deep thinkers for whom class warfare is a full-time job. They are the friendly statists from ACORN-like orgs, whose anti-capitalist outrage calls for social revolution. And they want it before ADHD and cold weather drive demonstrators back to their jobs and classrooms.

In terms of the stated goals, two months of demonstrations have achieved nothing. As the OWS movement has grown and spread, so too has its proclivity for violence and revolution. Writing in the New York Post of a recent visit to Zuccotti Park, Charles Gasparino "found a unifying and increasingly coherent ideology emerging among the protesters, which at its core has less to do with the evils of the banking business and more about the evils of capitalism — and the need for a socialist revolution."

Unfortunately, the latest recruits to the cause — for the most part, criminals, drug users, panhandlers, and the homeless — have produced little more than a stench pervading the carnival-like encampments. Indeed, the increasing violence and decreasing sanitation of the movement has begun to wear out its welcome in many cities. And with the onslaught of winter, many protestors plan to retreat, vowing to return with the fair weather of spring. Self-respecting socialists cannot be expected to carry their clever anti-capitalist signs while shivering and holding their noses at their own fetor. Besides, it is an image more ridiculous than that of a Michael Moore T-shirt.

In the bowels of the OWS movement lie zealous agitators who see themselves as its true leaders. Privately they regard the mainstream media, vocal celebrities, and shrill professors of socioeconomic equality as useful idiots. When it comes to money and power, they are as greedy and exploitative as any of their oppressors. By offering false hope and fomenting hatred and unrest, they seek to extort capital and usurp power for themselves. And with thousands of eager demonstrators at their disposal, they believe their moment is now (or next spring).

But there is an obstruction, a chronic irritation — the lack of charismatic demagogues to articulate the ideology. Some would say the movement has been stricken with irritable bowel syndrome. Alas, for this strain, no medicine seems to be available.

SOURCE

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Money slated for health law gets detoured

Lawmakers tap fund three times within a year

In cash-strapped Washington, President Obama’s $1 trillion health care law is presenting a tempting target for lawmakers seeking funds for other projects, as Congress last week raided the health care piggy bank for the third time in less than a year.

Congress last week axed a part of Democrats’ signature domestic achievement to find $11 billion to cover the cost of repealing a withholding tax that otherwise would have hit government contractors in 2013. Mr. Obama signed that bill into law on Monday.

The withholding bill follows two other efforts — one in December and another in April — that reworked the health care law to squeeze savings for other priorities. The December bill funded higher payments for doctors who treat Medicare patients, and the April legislation repealed a paperwork provision in the original health care law that businesses said would be onerous.

All told, Congress and the president have tapped some $50 billion earmarked to pay for benefits and programs in the health care overhaul in future years to fund more-immediate spending needs.

Both earlier efforts dealt with health care issues, but the bill Mr. Obama signed Monday marks the first time that the massive 2010 law has been tapped to fund something completely unrelated.

“They don’t want to open it up. They’re getting forced to open it up now and then, but to open it up for budgetary reasons, I think the pressures are pretty real,” said former Congressional Budget Office Director Doug Holtz-Eakin, who said it’s easier to cut future benefits than it is to cut programs that are already paying out.

Most of the health care law’s benefits won’t begin paying out for several years, and Mr. Holtz-Eakin said he expects legislators to revisit the law again before then.

The failure of the bipartisan supercommittee this week to come up with a plan to shrink the federal deficit and find spending cuts and revenues is likely to increase the pressure to raid the health care program for funds.

More HERE

My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena

List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)

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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)

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European court says ISPs can't be forced to monitor illegal downloads

Since the American Left just ADORES European precedents, this verdict might cause both the FCC and legislators to lose momentum in their attempts to impose internet filtering and control on American ISPs

Internet service providers cannot be forced to block their users from downloading songs illegally, as such an order would breach EU rules, Europe's highest court said in a ruling welcomed by a consumer group.

The Luxembourg-based EU Court of Justice (ECJ) issued its verdict on Thursday in a case involving Belgian music royalty collecting society SABAM and Belgian telecom operator Belgacom unit Scarlet.

SABAM asked a Belgian court to order Scarlet to install a device to prevent its users from downloading copyrighted works. The court ruled in SABAM's favour and order Scarlet to install such a device. However, Scarlet then challenged the ruling, prompting the Belgian court to seek advice from the ECJ.

"EU law precludes the imposition of an injunction by a national court which requires an internet service provider to install a filtering system with a view to preventing the illegal downloading of files," the ECJ said.

"The filtering system would also be liable to infringe the fundamental rights of its [Scarlet's] customers, namely their right to protection of their personal data and their right to receive or impart information," the Luxembourg court said.

More here

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I'll Gladly Pay You Tuesday For a Tax Increase Today

By Ann Coulter

Bored with the Penn State scandal because it didn't implicate any prominent Republicans, the mainstream media have suddenly become obsessed with Grover Norquist's "Taxpayer Protection Pledge." They are monomaniacally fixated on luring Republicans into raising taxes.

If Democrats could balance the budget tomorrow and quadruple government spending, they'd refuse the deal unless they could also make Republicans break their tax pledge. That is their single-minded goal.

But the media are trying to turn it around and say that it's Republicans who are crazy for refusing to consider raising taxes no matter how much they get in spending cuts.

At Tuesday night's Republican presidential debate on foreign policy, for example, CNN's Wolf Blitzer asked the candidates for the one-millionth time if they would agree to raise taxes in exchange for spending cuts 10 times larger than the tax hikes.

Terrorism can wait -- first, let me try to back you into a corner on raising taxes.

Amazingly, Blitzer cited Ronald Reagan's statement in his autobiography, "An American Life," that he would happily compromise with Democrats if he could get 75 or 80 percent of what he wanted -- implying that today's Republicans were nuttier than Reagan if they'd refuse a dollar in tax hikes for $10 in spending cuts.

Wolf should have kept reading. As Reagan explains a little farther in his autobiography: He did accept tax hikes "in return for (the Democrats') agreement to cut spending by $280 billion," but, Reagan continues, "the Democrats reneged on their pledge and we never got those cuts."

Maybe that's why Republicans won't agree to raise taxes in exchange for Democratic promises to cut spending.

For Americans who are unaware of the Democrats' history of repeatedly reneging on their promises to cut spending in return for tax hikes, the Republicans' opposition to tax increases does seem crazy. That's why Republicans need to remind them.

From the moment President Reagan succeeded in pushing through his historic tax cuts in 1981 -- which passed by a vote of 323-107 in the House and 89-11 in the Senate, despite Democrats' subsequent caterwauling -- he came under fantastic pressure to raise taxes from the media and the Democrats.

You will notice it is the same culprits pushing for tax hikes today.

So in 1982, Reagan struck a deal with the Democrats to raise some business and excise taxes -- though not income taxes -- in exchange for $280 billion in spending cuts over the next six years. As Reagan wrote in his diary at the time: "The tax increase is the price we have to pay to get the budget cuts."

But, of course, the Democrats were lying. Instead of cutting $280 billion, they spent an additional $450 billion -- only $140 billion of which went to the Reagan defense buildup that ended the Evil Empire.

Meanwhile, Reagan's tax cuts brought in an extra $375 billion in government revenue in the next six years -- as that amiable, simple-minded dunce Reagan always said they would. His tax cuts funded the entire $140 billion defense buildup, with $235 billion left over.

If Democrats had lied only a little and merely held spending at the same level, Reagan could have smashed the Russkies, produced the largest peacetime expansion in U.S. history with his tax cuts and produced a $235 billion budget surplus. (Jobs created in September 1983: 1.1 million; jobs created in September 2011: 150,000.)

But the Democrats not only refused to implement any budget cuts, they hiked government spending. To the untrained eye, that appears to be the exact opposite of cutting the budget.

Even the gusher of revenue brought in by Reagan's tax cuts couldn't pay for all the additional spending piled up by double-crossing Democrats -- more than twice as much as Reagan's spending on defense.

Reagan's defense spending crushed the Soviet war machine. What did Tip O'Neill's domestic spending accomplish? (I mean, besides destroying the black family, increasing single motherhood and creating government bureaucracies that can never be eliminated.)

Unable to learn from the first kick of a mule, President George H.W. Bush made the exact same deal with Democrats just a few years later.

Pretending to care about the deficit -- created exclusively by their own profligate spending -- Democrats demanded that Bush agree to a "balanced budget" package with both spending cuts and tax increases.

In June 1990, Bush did so, agreeing to tax hikes in defiance of his "read-my-lips, no-new-taxes" campaign pledge.

Again, Democrats, being Democrats, produced no spending cuts, and within two years the increased federal spending had led to a doubling of the deficit.

The Democrats didn't care: All that mattered was that they had tricked Bush into breaking his tax pledge, which they celebrated all the way to Bush's defeat in the next election.

Democrats had effectively taken away the Republican Party's central defining issue -- low taxes -- and the Republicans got nothing in return.....

It's been 20 years since they pulled that scam, so Democrats figure it's time to make Republicans break a tax pledge again. As long as no one knows the history of these "deals," the media can carry on, blithely portraying Republicans as obstructionist nuts for refusing the third kick of a mule.

More here

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President Obama Fails George Gilder's "Israel Test"

Hostility to Israel is a marker of hostility to freedom and civilization

In these days of Occupy Wall Street demonstrations across the U.S., it’s important to see what motivates Obama administration policies here and abroad. Mr. Obama, as a candidate, had to bat away accusations that he was close, too close, to Rashid Khalidi, a radical Palestinian Arab intellectual. Candidate Obama then soothed worried friends of Israel, by minimizing his intellectual fealty to Khalidi, saying merely that “[Khalidi provides] consistent reminders to me of my own blind spots and my own biases” on matters related to the Arab-Israeli conflict. How humble. How becomingly modest.

Rashid Khalidi is a professor at Columbia University, Mr. Obama’s alma mater. Khalidi holds the Edward Said Chair in Modern Arab Studies at that distinguished Ivy League school. The late Edward Said (sigh-EED) gained respect among left-leaning intellectuals for his numerous writings on Orientalism, the notion that Western colonial powers viewed Arabs, Asians, Africans and Latin Americans as lesser peoples, as “others.” But Said was most famous—or infamous—for some direct action.

He was photographed throwing stones at Israeli forces as they departed South Lebanon in 2000. Harmless, Said claimed, he was only practicing with his son. But deadly stoning was the weapon of choice for the intifadas engineered by Yasser Arafat and Mahmoud Abbas against Israeli soldiers. Arafat and Abbas knew that teenage boys throwing stones with lethal accuracy would play well in the Western media, including especially in the pro-PLO precincts of CNN.

At home, the Occupy Wall Street crowd quickly descended to anti-Semitism. They are protesting income inequality, they say, but their cry of 99% against the 1% is a veiled reference to American Jews, who constitute less than 2% of the U.S. population. More than a few anti-Semitic signs and demonstrators have been drawn to Zuccotti Park, in Lower Manhattan.

In Israel, author George Gilder points out, Arabs were wealthier on the West Bank of the Jordan River and in the Gaza Strip than any Arabs in the world. This, in territories administered by Jews that had no oil. From 1967, when Israel won the Six-Day War against four Arab enemies, until 1991, when Arafat instigated the first of his intifadas (stone-throwing riots by youths) and initiated suicide bombings as a terror tactic, Arabs working with the Israelis prospered and lived healthier longer lives.

Despite vast oil revenues in much of the Arab world, Gilder notes in his important book, The Israel Test, the Arab peoples who live in these countries are poor. We have only to contrast the vast wealth amassed by the late and unlamented Muammar Gaddafi (estimated at $200 billion) with the wretched state of the average Libyan to see this. This was equally true of Iraq. The Saudi people, while materially better off than many Arabs, nonetheless are denied religious and civil rights. Arab rulers keep their peoples at bay by blaming all their troubles on the Jews, on Israel.

Gilder sees a direct link from attitudes toward Israel, attitudes toward Jewish excellence, and attitudes toward free enterprise itself. Occupy Wall Street today is protesting against income inequality. They have been embraced by President Obama, whose stated goal is to “spread the wealth around.” Asked by an interviewer if he would seek tax increases on the wealthy even if that meant lower tax revenues for the government, Mr. Obama said he would, for the sake of “fairness.”

From each according to his abilities to each according to his need: that’s the standard Marxist formulation. Left unsaid is that it is Mr. Obama and his administration that decide whose needs are met and how much to take from those with abilities.

Gilder challenges us to ask ourselves what we think about excellence—that of Jewish achievers and all those others who excel. Do we resent their achievement? Do we attribute it to some evil conspiracy? Do we want to drag them down? Or do we want to emulate them, study, work hard, invent, create, and share our own ideas?

Gilder writes: “With wealth seen as stolen from the exploited poor, the poor in turn [are given] a license to dispossess and kill their oppressors and to disrupt capitalist economies. This is the foul message of Franz Fanon, Hamas, al-Qaida, Hezbollah, and the academic coteries of Chomsky, Zinn, and a thousand Marxist myrmidons across the campuses of the world. But no capitalist system can sustain prosperity amid constant violence. The idea that suicide bombing is a tolerable policy that can be extenuated by alleged grievances is preposterous. It is the violence that makes necessary the police measures that render economic progress impossible, particularly for the groups associated with the attacks. By justifying violent attacks on a civilized democracy -- and then condemning the necessary retaliatory defense -- leftists would allow no solution but tyranny.”

Gilder’s “Israel Test” is not one our Ivy Leaguer president can pass. Of course, Mr. Obama does not support terrorism. But he is giving $500 million this year to the PLO—which has simply deconstructed and re-defined its support for suicide bombers and stone throwers. The president simply shares the worldview of the academy—in which Israel is much to blame for “Mideast turmoil” as her attackers are. He believes that fairness requires redistribution of what he terms “the nation’s wealth.” He sees our Judeo-Christian heritage not as the bedrock of American Exceptionalism, but as merely one part of the broad tapestry of American life.

Barack Obama’s intellectual world is one in which Fanon, Chomsky, Zinn, and those neo-Marxist thinkers hold sway. Only free societies can create enough surplus wealth to support such dissident scholars and their “myrmidons” in the Occupy Wall Street Movement in their midst. But such societies—in the U.S. and Canada, in Western Europe and in Israel--will not survive if they do not understand and protect the very foundations of their own freedom.

SOURCE

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ELSEWHERE

There is a site here promoting an "Aftershock Survival Summit" that seems a bit overhyped to me but the present out-of-control Federal spending is certainly a huge threat to America's economic future. That the dire predictions come from an economist with an unusually good track-record of predictions is food for thought.

Norquist: GOP “won’t be fooled” into raising taxes: "As a Congressional 'super committee' tasked with cutting the deficit was on the verge of failure, anti-tax crusader Grover Norquist insisted in a series of interviews Monday that it wasn’t his fault. Norquist told CNN’s Carol Costello that Republicans were willing to 'compromise' with Democrats as long as additional tax revenues were off the table. At least 279 Republican members of the current Congress have signed Norquist’s pledge to never raise taxes."

Spain: Voters elect conservative in response to debt crisis: "Spanish voters kicked out the Socialist government Sunday in elections seen as a referendum on the handling of the European debt crisis, which has left Spain buckling under soaring unemployment, burgeoning debt and cuts in public benefits. It was the fifth European government -- after Portugal, Ireland, Greece and Italy -- to be brought down in the past year because of the debt crisis and the Socialists' worst result since Spain held its first democratic election in 1977 after a 40-year-long dictatorship."

Armed illegals stalked Border Patrol: "Five illegal immigrants armed with at least two AK-47 semi-automatic assault rifles were hunting for U.S. Border Patrol agents near a desert watering hole known as Mesquite Seep just north of the Arizona-Mexico border when a firefight erupted and one U.S. agent was killed, records show. At least two of the Mexicans carried their assault rifles “at the ready position,” one of several details about the attack showing that Mexican smugglers are becoming more aggressive on the U.S. side of the border. According to the indictment, the Mexicans were “patrolling the area in single-file formation” a dozen miles northwest of the border town of Nogales and — in the darkness of the Arizona night — opened fire on four Border Patrol agents after the agents identified themselves in Spanish as police officers. Two AK-47 assault rifles found at the scene came from the failed Fast and Furious operation."

My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena

List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)

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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)

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Making Americans

by Jeff Jacoby

WITH OUR MUSIC TEACHER, Mrs. Feigenbaum, at the piano playing the melody – the Toreador's Song from the opera "Carmen" – and the lyrics handed out to us on mimeographed pages, my 4th-grade classmates and I practiced one of the songs we were learning for our school's Thanksgiving assembly:

Thanksgiving Day comes once each year
Our president proclaims it far and near.
Thankful for the bounty of our land,
The harvest that makes this nation grand,
Bestowed us from above,
God bless this land,
This precious land we love.

I was a student at the Hebrew Academy of Cleveland, a Jewish day school where half of the curriculum was devoted to religious studies and the school year conformed to the Jewish calendar. Most of the kids in my class came from Orthodox Jewish homes, and many of us were the children of Eastern European immigrants who spoke Yiddish more fluently than they spoke English.

Yet there we were, kids whose parents may have gotten off the boat only 10 or 15 years earlier and whose family life bore little resemblance to The Patty Duke Show, singing songs about the Mayflower and turkey dinners without a hint of irony. The inculcation of Jewish values and learning was the Hebrew Academy's chief priority, but it was understood that raising kids to be good Jews went hand-in-hand with raising them to be good Americans. Parents and teachers alike took it for granted that the story and traditions of Thanksgiving (or Columbus Day or Washington's Birthday) should be as familiar a part of our cultural identity as the Passover story and its traditions.

I didn't know it at the time, but what my classmates and I were experiencing was the classic model of American assimilation: the process by which immigrants and ethnic minorities, and the children of those immigrants and minorities, had for decades been successfully turned into Americans. In a world filled with ethnic antagonism and religious violence, the United States had found a paradigm for unifying the most ethnically, racially, and religiously varied population on the planet into a relatively tolerant and unified culture.

We rarely reflect on what an astonishing achievement this was. But how many other societies have managed to maintain national cultural unity in the midst of ethnic diversity? Cyprus? Rwanda? Sri Lanka? The former Yugoslavia?

The key to what Peter Salins, a scholar at the Manhattan Institute, calls "assimilation, American style" was a balancing act. On the one hand, newcomers streaming to the United States found out quickly that they were expected to become honest-to-God Americans. That meant learning English, getting a useful job, embracing America's democratic values and institutions, and eventually taking the oath as new citizens.

On the other hand, immigrants weren't obliged to shed their ethnic pride, or to drop the foods and customs and festivals they brought with them from their native land. They were free to be "as ethnic as they pleased," writes Salins. The goal of assimilation was not to make all Americans alike; it was to get newcomers, however dissimilar their backgrounds and cultures, to believe that they were "irrevocably part of the same national family."

There was one other key ingredient, which we too easily overlook. Immigrants understood that the country they had come to was in some indispensable way better than the one they had left. They might retain a soft spot for the scenery or clothing or rhythms of life in the old country, they might always prefer their mother tongue to English, they might even pay tuition at a private or parochial school so that the religious or linguistic values they had grown up with would be passed on to their kids.

But underlying everything would be the awareness that they had chosen to be Americans. America was better than their native land -- perhaps because its rulers were corrupt, or because it was riven by war, or because economic opportunities were limited. Perhaps, as in my father's case, because totalitarian tyrants – first Nazis, then Communists – had made life there a hell on earth. Perhaps because, like the Pilgrims, they sought a peaceable society where they could worship as they saw fit without being "hunted and persecuted on every side."

As my fellow 4th-graders and I belted out the lyrics to another song -- "P-I-L-grim fathers landed here on Plymouth Bay" -- we probably assumed that Mrs. Feigenbaum was just getting us ready for the Thanksgiving assembly. She knew, of course, that she was doing something far more important. She was getting us ready to be Americans.

SOURCE

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So-Called Electability and MSM Bias

It is open season for the liberal media on any GOP presidential candidate who displays the audacity to surge in the polls, the latest targets being Herman Cain and Newt Gingrich. A reasonable case can be made for some of these criticisms, and conservatives often concede the weaknesses, but there is no justification for this same media's ongoing cover-up for the current White House occupant.

Can you imagine how differently our political climate would be if the mainstream media had the slightest inclination toward fairness and balance? The liberal media have never, to my knowledge, shined the spotlight on Obama's many embarrassing gaffes. They have rarely called attention to his deceit, broken promises and policy failures.

Part of the reason is their presupposition that because he's a credentialed left-winger, he is brilliant, and any departure from that is a mere aberration, an exception that couldn't possibly detract from his presumptive brilliance. And as a bona fide "progressive," he is imbued with superior moral standards, and his misdeeds must be excused in exchange for his dedication to policies the liberal media deem are ethically unassailable.

From the mainstream media's perspective, conservatives, on the other hand, are presumptively dimwitted or morally bankrupt, because you can't be intelligent and conservative unless you're morally depraved. Ronald Reagan was an amiable dunce, despite his unparalleled ability to communicate; Dan Quayle was irredeemably simple because he misspelled "potato." George W. Bush was too stupid to tie his shoes (but inexplicably cunning enough to con erudite liberal congressmen into supporting him in his devious plot to depose Saddam Hussein).

GOP candidates magically become less competent or more corrupt the instant they show any signs of electability. Meanwhile, the MSM continue to ignore, defend and lie about Obama's abundant gaffes, policy failures, deceptions, divisiveness and extremism.

Think how different our discussions of electability would be if the liberal media were to:

--Dan-Quayle Obama for his "57 states" and Navy "corpse-man" gaffes.

--Play a video loop of his brain freezes and verbal stutter-steps.

--Showcase his shoutout to Dr. Joe Medicine Crow during what was expected to be a solemn expression of sorrow for the victims of the Fort Hood murderer.

--Air a montage of his bellicose attacks against Republicans, followed by clips in which he bitterly complained of their partisanship.

--Remind him of his immodest pledge to be a post-racial president while having ushered in an acutely race-conscious climate.

--Call him out for wasting $868 billion on a "stimulus" that Congressional Budget Office Director Douglas Elmendorf admitted would have "a net negative effect on the growth of GDP over 10 years."

--Refuse to ignore his cynical admission that he hadn't been altogether honest in claiming there were abundant "shovel-ready" jobs waiting in the wings.

--Point out that he promised to improve America's international image but has turned out to be even less popular in the Muslim world than President George W. Bush and has repeatedly offended our allies and their leaders, the most recent being Israeli Prime Minister Benjamin Netanyahu.

--Highlight that Obama expressed solidarity with the Occupy Wall Street protesters, many of whom have been arrested for criminality, but demonized law-abiding tea partyers.

--Challenge Obama on his disingenuous commitment to make abortion "safe, legal and rare" while his administration has actively promoted the proliferation of abortion domestically, through its unswerving support for Planned Parenthood and its 900 abortions per day and through its taxpayer-funded lobbying for pro-abortion policies in Kenya and other nations.

--Report that Obama crammed through Obamacare on the false representation, aided by fraudulent accounting, that it would bend the health care cost curve down, even though it actually will greatly increase costs.

--Provide even the most rudimentary scrutiny of the twin scandals of Solyndra -- and its many green cousins -- and "Fast and Furious."

--Tell even part of the sordid tale of Obama's symbiotic relationship with ACORN and the Service Employees International Union.

--Ask Obama how he can be so high and mighty in condemning enhanced interrogation techniques on moral grounds despite knowing that with the implementation of those techniques in just three instances, many American lives were actually saved.

--Press him to explain his shaming Hillary Clinton during the 2008 Democratic primary race for proposing a health care insurance mandate and then brazenly making such a mandate a foundational component of Obamacare.

--Underscore his phony, though tepid and "evolving," opposition to same-sex marriage while he unleashes a full-frontal assault on traditional marriage through his extraconstitutional refusal to enforce it in court and his active effort to repeal it legislatively.

I speak of an imaginary world, but imagining it should serve to illustrate the extent to which the liberal media conspire to perpetuate a lingering illusion, to the immeasurable detriment of the nation.

SOURCE

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Not Herman Cain, please

Republican presidential candidate Herman Cain formed a political action committee (PAC) last year, ostensibly for the purpose of supporting other Republicans seeking elective office in the 2010 elections. That’s what Mr. Cain announced in an e-mail to his "Hermanator's Intelligent Thinkers Movement," an online extension of his motivational speaking business, T.H.E. New Voice, Inc.

He called it the “Hermanator PAC.” It raised more than $220,000. Two Republican contenders each received $1,000 from the PAC money (about nine-tenths of 1%). Cain spent the rest of the loot – at least $218,000 (about 99.1%) -- on himself according to federal election commission records.

"By agreeing to help The Hermanator PAC, either by volunteering or by giving a monetary donation, you will be helping to elect conservative candidates that share our principles and values," Cain represented to potential donors. "Let's send President Obama, Nancy Pelosi and Harry Reid a message for the right kind of change."

But Cain, the Hermanator, used almost all the cash instead on five star first class hotel stays, lavish restaurant meals at pricy high-end establishments, and luxurious private airplane travel for expensive jaunts across the country.

The problem for Mr. Cain, according to Paul Ryan, associate legal counsel at the Campaign Legal Center, is that candidates who create PAC’s like these are supposedly legally barred from using any of the funds collected on themselves.

In this case the poor saps who donated to The Hermanator PAC thinking that their contributions were going to help other Republicans get elected were simply duped into establishing a big cushy slush fund for Herman Cain’s personal use.

This news comes on top of earlier reports that a Wisconsin tax-exempt charity called Prosperity USA, founded by Mark Block, Cain’s chief of staff, and Linda Hansen, his deputy chief of staff, doled out some $40,000 worth of iPads, private chartered airplane fees and other high-end expenses for Cain’s fledgling campaign.

Once again, these kinds of payments are supposedly illegal under federal tax and election laws, because nonprofit charities are not allowed to donate money or services to political campaigns.

SOURCE

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Free the Market. Save Lives

The prohibition on human-kidney sales is a perfect example of uncompensated third-party harms – negative externalities – inflicted on innocent people by political decision-making. A chief (tho’ not the only) reason given to justify this prohibition is that many people find the thought of a free-market in kidney sales to be distasteful. As a fellow student at UVA Law informed me 20 years ago, “I [my fellow student] just don’t want to live in a society that allows such commerce.” She advised that it’s just so distasteful that it shouldn’t be allowed to occur.

This woman was willing to vote for a policy that results in unnecessary suffering and premature deaths simply so that she and her tender sensibilities might be spared what for her is the unsavory knowledge that somewhere in America some people voluntarily and peacefully engage in exchanges that are mutually agreeable and, frequently, life-saving. Having her ‘say’ in other people’s lives – without her having to pay to exercise that say or to compensate those people harmed by her vote – is an instance of a politically induced negative externality....

More broadly, this example highlights the strength of Carl Dahlman’s important 1979 argument (in the Journal of Law & Economics) that, ultimately, what is and what is not a policy-relevant externality is not a matter of objective science but, rather, of value judgments.

My law-school classmate from long ago might well reply that the psychic harm inflicted on her by the knowledge that legal kidney sales are taking place would itself be a negative externality unleashed by the legalization of such sales.

And she’d be correct. Or, at least, neither I nor anyone else would be able to disprove her positive claim of being severely psychically harmed by knowing that such legal sales occur.

Some value judgment must be exercised to weigh the value of saving people from suffering and dying prematurely against the value of saving the tender psyches of people such as my former classmate.

Most people, I believe, value saving innocent lives and preventing unnecessary physical suffering more highly than they value preventing the ethically sensitive among us from having to endure pangs of anguish caused by the knowledge that other people are buying and selling human kidneys. (This case isn’t close to being ‘close’ – for example, as between valuing the farmer’s desire to grow crops without worrying about those crops being set afire by sparks from a passing locomotive, and the railroad’s desire to run its train at top speed over its tracks that abut a cornfield.)

Trouble is, each person is intimately familiar with and concerned with his or her own personal psyche – each person gets the full measure of pleasure from gratifying that psyche and suffers the full measure of disappointment or anguish from irritating that psyche. A busybody – especially one unaware of the unintended economic and medical consequences of banning kidney sales – is too likely, then, to gratify his or her psyche by imposing uncompensated burdens on those people who wish to purchase kidneys and on those who wish to sell their kidneys.

If we agree that saving lives is more important than saving tender psyches, then the policy of preventing the buying and selling of kidneys at market prices inflicts on innocent third-parties a policy-relevant negative externality – and, frankly, one that is especially heinous.

SOURCE

My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena

List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)

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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)

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Back to 1693‏

Economic historian Martin Hutchinson, below, is having a lot of fun using his knowledge of history to enlighten us about the world financial crisis. But while he agrees with many other economists in foreseeing much gloom immediately ahead he has a vision for the medium-term future which is positively radiant by libertarian/conservative standards.

I think he over-eggs the pudding and I cannot see that a return to the gold standard is on the cards but he is probably broadly correct. The money-printing binge in the USA and the UK combined with the un-repayable debt run up in much of Europe has got to lead to massive asset-destruction sooner or later. If I were an American right now, I would be taking a trip to Canada and converting my holdings of greenbacks into deposits of Loonies. Anybody who did so a couple of years ago would certainly be laughing now -- JR

The eurozone crisis, which could have been defused initially by allowing Greece to depart the euro, has now taken on a much more serious aspect. If as seems possible Italy, Spain and even France lose the confidence of the international debt markets and are forced to write down debt, then government debt of prime countries will no longer be considered a risk-free asset. That will take markets back beyond the traumas of the 20th century, beyond the relatively serene 19th century, beyond even the institution-forming 18th century. It will undo the 1751 triumph of the forgotten financier Samson Gideon in forming the immortal Consols, will undo the sterling if self-serving 1721 work of Sir Robert Walpole in preventing the South Sea crash from destroying the British government bond market as the Mississippi crash did the French one, and will even undo the 1694 foundation of British credit, the formation of the Bank of England. Life for government bond dealers will revert to a primitive Hobbesian state of nature, nasty, brutish and short. But will the rest of us suffer, except in the short term?

Based on the bond market as we have known it over the last century or two, only Greece was bound to default. Its problem was not so much its starting ratio of debt to GDP, but the fact that its GDP was over-inflated, being based on hopelessly unrealistic living standards for the Greek people. Once the Greeks were paid at a level at which the country’s economy would balance – no more than $15,000 or so in GDP per capita compared to 2008’s overinflated $32,000 – Greek GDP would be halved, and its debt/GDP ratio doubled to a level approaching 300%. That would have been beyond the highest levels ever successfully reduced without default – 250% of GDP by Britain after 1815 and again after1945. Since Greece is a notoriously undisciplined society, with poor tax enforcement and an open economy whose citizens keep much of their wealth abroad, a Greek default was and is inevitable in the best of circumstances.

The same is not however true of Italy and Spain. Italy’s competitiveness has declined by about 20% against Germany’s in the last decade. However its debt level is only 120% of GDP, or say 150% of GDP if Italy’s living standards and GDP declined by the necessary 20%. Since its budget deficit under the competent management of Silvio Berlusconi’s finance minister Giulio Tremonti was only about 3-4% of GDP, Italy’s position by the standards of the last two centuries is perfectly manageable without default being more than a distant threat. Similarly Spain has a budget deficit of around 7% of GDP, and a housing finance sector that is a mass of bad debts, with house prices still to descend to market-clearing levels, but its official debt is only 61% of GDP, and its economically odious Zapatero government is on the way out.

The level of market panic about Italian and Spanish debt indicates that the comforting parameters of 19th and 20th century sovereign debt finance no longer hold. The principal reason for this is the determination by the eurozone authorities to break the rules by which debt markets have traditionally been governed. Instead of allowing Greece to default or rescuing it completely, they arranged an inadequate debt-financed bailout that simply postponed Greece’s inevitable exit from the euro and increased its debt. Then they arranged a “voluntary” writedown of Greek private sector debt, which was subordinated in repayment to the monstrous institutional and government debt created by the bailout.

When the Greek government attempted to get referendum or electoral support for the “reforms” imposed by the eurozone authorities, they replaced it by a eurozone stooge, without democratic legitimacy. They repeated this stooge imposition process with the long-lasting and economically capable Italian government of Silvio Berlusconi, who they regarded as euro-skeptic and excessively devoted to free market, low-tax principles, replacing him with a government dominated by europhiles and the left, who had been decisively defeated in the previous election.

Finally and most damagingly, the eurozone authorities prevented the modest $3.5 billion of Greek credit default swaps from paying out, thus drastically devaluing the CDS of Italy, Spain and France, whose volume is of the order of $40 billion each. They have thus called the entire CDS market into question, at least for sovereign names, and have badly shaken the security of international contracts. By doing this, according to Gillian Tett of the FT, they removed the protection that Deutsche Bank, for example thought it had obtained this year by buying CDS on $7 billion of its $8 billion Italian exposure.

Investors in PIIGS debt thus now face the reality that they have been subordinated arbitrarily to the international and eurozone institutions. Their ability to protect themselves by CDS purchase has been removed. The security of their debt contracts themselves has been called into question. Finally, investors’ protection against coups and revolutions, that monetary and fiscal policy were being set by democratically elected governments acceptable to their people, has been removed by the imposition of governments wholly lacking in democratic legitimacy. If those governments impose policies that the populace finds intolerable, as is very likely, there is now far more chance of outright popular revolt or coup d’etat, since ordinary democratic change has been blocked.

In short, the protections given to government debt progressively in the last three centuries have been removed. The rationale for the Basel committee rating government debt at zero in banks’ risk calculations has been exposed for the fraud it always was. Since government levels of taxation are close to the Laffer Curve yield peak in most countries, the protection given to investors by the taxing power has also been rendered nugatory. Investors are no longer in the position of investors in the solid, well managed government debt of Walpole and Lord Liverpool, in which the phrase “as solid as the Bank of England” made British debt sell at the finest international rates. Instead they are in the position of the goldsmiths lending to Charles II, charging 10% for their money and liable to be ruined at any point by a Great Stop of the Exchequer like that of 1672.

I have written before in some detail about the likely effect on the global economy of the removal of government debt markets. In general, it should improve financial availability for the private sector, while starving profligate governments of the means to implement “Keynesian” stimulus and other wasteful policies. Thus it may well improve economic performance in the long run, certainly compared to the anemic growth and high unemployment suffered in most countries since 2009. Needless to say however, the 2010s will be a grim decade, since the transitional and wealth effects of eliminating the government debt markets that have formed the centerpiece of the last three centuries will be enormous – a Reinhart/Rogoff depression of spectacular severity.

However there is another effect of transporting the world financial system back to 1693. The European Central Bank will be bankrupt, because of its holdings of worthless PIIGS debt, and it is most unlikely that German taxpayers will consent to recapitalize an institution that has failed so badly, after first eliminating their beloved deutschemark. The Bank of England, the Federal Reserve and the Bank of Japan will also be legally insolvent, since in their policies of quantitative easing they have acquired gigantic quantities of assets that will drop catastrophically in price once interest rates rise.

The Fed for example is leveraged 60 to 1, and it was recently calculated that a rise in long-term interest rates of only 40 basis points – 0.4% -- would be sufficient to wipe out its capital. Needless to say, a rise of 4-5% in long-term interest rates, back to a historically normal level 2-3% above the true level of inflation, would put a hole in the Fed’s balance sheet that in current stringent budgetary conditions would be politically impossible for the U.S. Treasury to fill. Thus if a debt default in the eurozone spread even partially to the over-indebted economies of Britain, Japan and the United States, not only will government bond markets be wiped out, but central banks in their current form will disappear also.

In the long term, this should also prove a blessing. My colleague and co-author Kevin Dowd has been trying for some years to persuade me that the ideal monetary system is not only a Gold Standard, but one entirely without a central bank. I had always resisted this, believing in the positive qualities of the privately owned Bank of England of the 1797 Old Lady of Threadneedle Street Gillray cartoon, the 1844 Bank Charter Act and the elegant inter-war Montagu Norman, the hero who removed the 1929-31 Labour Government by omitting to tell that bunch of economic illiterates that leaving the Gold Standard was an available option.

However lovers of central banks cannot deny that the Fed bears a substantial share of the responsibility for creating the Great Depression and an even greater share of the responsibility for creating the 2008 crash and the period of grindingly high unemployment that has followed. Thus the existence of a central bank is no longer a battle won and lost in 1694, but must be considered to have become a live question.

If government debt markets across Europe collapse and central banks worldwide are rendered insolvent, the fiat currencies of the world are no longer likely to command enough public confidence to be workable. Like successive generations of Argentine pesos and Ecuadorian sucres, they will have to be junked. Further, since there is unlikely to be a figure like Weimar Germany’s Gustav Stresemann, able to create a new and workable fiat “rentenmark” out of a mythical monetization of land values, a return to a Gold Standard will be not only inevitable but irresistible, since it will have been imposed on the ruins of the current system by the global private sector.

With a Gold Standard, and central banks in ruins, a truly free banking system will also be inevitable. Most large existing banks will have failed along with their central banks, with no more money for bailouts and their regulatory institutions thoroughly discredited. The new central bank-less Gold Standard banking system that arises from the ashes of the old will be perfectly workable, as in 18th century Scotland, 19th century Canada and the United States between 1837 and 1862. It will permit only minimal government, but will allow the private sector, particularly the small scale private sector, to flourish as never before. As after 1945, from the chaos of monetary ruin will emerge a new global economy that is stronger and healthier, provides better living standards for its citizens and imposes far fewer taxes, scams and state-aided rip-offs on their wealth than does the current system.

But the intervening decade is certainly not going to be easy or pleasant.

SOURCE

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The authoritarianism, simple-mindedness and failure of America's pundits

That liberty might be the answer doesn't seem to occur to them

Consider for a moment the paradoxical pain of being a best-selling political pundit so successful that American presidents don’t just seek but heed your advice. You have lobbied in your columns for the commander in chief to deploy your signature catch phrases, and he has. You have, in times of both crisis and sloth, advocated robust federal action in the name of national “greatness,” and the people in power have mostly followed suit. You have been flattered by invitations to the White House and pecked at by lesser partisans, yet you’ve maintained your critical distance in the patriotic spirit of post-ideological problem solving. All this influence and success, and somehow the country still sucks.

“Are we going to roll up our sleeves or limp on?” an exasperated Thomas L. Friedman asked the nation in a September 20 New York Times column. Friedman, the three-time Pulitzer Prize winner, influential Iraq war supporter, champion of “green jobs” industrial policy, and backer of President Barack Obama’s public education initiatives, is threatening to secede from a status quo he helped create.

“Given those stark choices,” he wrote, “one would hope that our politicians would rise to the challenge by putting forth fair and credible recovery proposals that match the scale of our debt problem and contain the three elements that any serious plan must have: spending cuts, increases in revenues and investments in the sources of our strength. But that, alas, is not what we’re getting, which is why there remains an opening for an independent Third Party candidate in the 2012 campaign.”

These are glum times not just for the 23 million working-age Americans without steady jobs but for hyper-employed commentators who have built comparative fortunes whispering into and occasionally bending the world’s most powerful ears. “I’m a sap,” a morose-sounding New York Times columnist David Brooks confessed the day before Friedman’s outburst. “I believed Obama when he said he wanted to move beyond the stale ideological debates that have paralyzed this country. I always believe that Obama is on the verge of breaking out of the conventional categories and embracing one of the many bipartisan reform packages that are floating around.” But now that the president had unveiled a dead-on-arrival, soak-the-rich jobs package in a televised address designed more to please his progressive base than to actually solve problems, even David Brooks—who in March 2010 deemed Obama “the most realistic and reasonable major player in Washington”—was forced to admit the unbearable: “This wasn’t a speech to get something done.” But noble dreams die hard. “I still believe,” Brooks insisted, “that the president’s soul would like to do something about the country’s structural problems.”

Do something. Is there a two-word phrase in politics more loaded with disguised ideological content? Embedded within is both an urgent call for powerful government action and an up-front declaration that the policy details don’t matter. The bigger the crisis, the more the urgency, the sparser the detail. On September 30, 2008, in a classic of the do-something genre, Brooks argued that the Troubled Asset Relief Program should be rammed through Congress over public objections because the federal government needed “to give people a sense that somebody was in charge, that something was going to be done.” Did that “something” involve buying up toxic assets? Introducing or relaxing certain banking regulations? Taking over or winding down Fannie Mae and Freddie Mac? Not important. “What we need in this situation,” Brooks declared, “is authority.”

American discourse is saddled with a large and influential do-something school of political punditry, a cadre of pragmatists from Meet the Press to your local editorial board who are forever seeking to solve the country’s problems by transcending ideology, demanding collective citizen sacrifice, and—always—empowering authority. In their new book That Used To Be Us: How America Fell Behind in the World It Invented and How We Can Come Back, Friedman and Johns Hopkins foreign policy professor Michael Mandelbaum lament that people “in positions of authority everywhere have less influence than in the past,” due to a “corrosive cynicism” preventing “the collective action that is required.” America, David Brooks wrote in March 2010, “is suffering a devastating crisis of authority,” resulting in a “corrosive cynicism about public action.” The similarities are not accidental.

Brooks and Friedman may be the most prominent practitioners, but the do-something school is evident just about anywhere the political class is talking shop. Here is former George W. Bush speechwriter David Frum at CNN.com on September 26, lamenting that the “old rules” of bipartisan cooperation “have broken down,” unlike those bygone days when “the imperatives of the Cold War inspired a spirit of deference to the president.” There is centrist Matt Miller at Washingtonpost.com the day before, writing an imaginary speech (a favored tactic of the do-something set) for an imaginary independent presidential candidate (ditto) who rejects “the Democrats’ timid half-measures and the Republicans’ mindless anti-government creed” in favor of “a bold agenda equal to the scale of our challenges.” That agenda is virtually indistinguishable from the Brooks/Friedman playbook: higher energy taxes, more money for infrastructure and schools, and national service for the young, all while somehow cutting government spending over the long term.

There are some obvious rejoinders to this fictitious excrescence of the “radical center” (Friedman’s preferred term). As The Washington Post’s Greg Sargent pointed out in response to Miller, “many of those calling for a third party are refusing to reckon with an inconvenient fact: One of the two parties already occupies the approximate ideological space that these commentators themselves are describing as the dream middle ground that allegedly can only be staked out by a third party. That party is known as the ‘Democratic Party.’ ” By dreaming up a third way to deliver ideas and rhetoric already associated with Barack Obama, the centrists are making the implicit admission that the president is ineffectual in the face of GOP intransigence.

But there is an even less charitable explanation. Because do-something punditry inevitably appeals to whoever holds power—what president doesn’t want to rise above partisanship to get things done, particularly if the solution amounts to a blank check to government?—pragmatic centrism has been implemented to a much greater extent than any of the “rigid” ideologies it abhors, whether they be trade unionism, social conservatism, or across-the-board libertarianism. Put another way, we live in a David Brooks/Thomas L. Friedman world, but now that the results have come in they are trying to wash their hands of the whole experiment.

Much more HERE

My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena

List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)

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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)

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Compassionate Liberalism?

By Gary Baker

While viewing and commenting on a different blog today (Enemy of the Republic ((Hi Susan!))) I came across a comment that was amusing, exasperating, and somewhat ironic. It was amusing in how sincere the writer was. It was exasperating in how factually wrong she was. And it was ironic in that a few comments ago I was cautioned about using that particular blogsite as forum for personal view, and then this comes along. So it goes. At any rate, I sent a follow-up comment stating that I would not try to engage her on that site, but that she could come over here if she had any interest in honest discussion. I am eager to see if she will arrive.

The subject of the thread was government neglect of education. The blogger who commented put forth a number of statements regarding the Bush administration and compassionate conservatism. Many of these are worth examining.

She (the commenter) began by telling the story of a sadly depressed area, the city of East St. Louis (ESL). Lest anyone think that I am mocking the poor, please be assured that I am not. I hardly grew up in a well-to-do area or family. I did some research in this area, and it certainly has had its share of hard knocks. What the commenter wrote:

"I live near one of the most disadvantaged areas in the US. It's called East Saint Louis, IL. At least,75% of the people who live there are below the national poverty level. And these people, were forced to live there because they had no other place to go, they were segregated. Their children were not welcome at our schools, with our children....they were the untouchables of our society. ESL has basically been a reservation. "

Back in the 1980's the city was sued and the plaintiff won, after this the city went bankrupt. ... They no longer had any money to pay the garbage collectors, there were bags of trash sitting in back yards, in empty lots, in the streets. There were huge rats everywhere. Of course, there were children living here. Then, the ancient sewer stystem finally began to wear out. There was sewage all over the city, backing up in peoples houses, their basements, coming out of peoples sinks, pooling in the empty lots. The school kept having to be shut down, the sewage was coming out of the sinks in the school kitchens where the children's meals were prepared. Diptheria and hepatitis were major health threats.

And again, I remind you, this was in the late 1980's.

There have many large factories outside the city, one of them being Monsanto. They had been illegally dumping chemicals into the soil for years. The lead level in the soil is way beyond what is considered toxic. No-one cared, these people had no-one to help them. "

(Full Disclosure - Some of the parts of the text above, though reproduced accurately, do not appear in the same order as they were posted on the original thread. I have taken great pains, however, to ensure that the meaning of the words quoted is accurately preserved. For the complete full thread, please go to Enemy of the Republic blogsite.)

This certainly sounds like an impoverished area. For those most part, the facts are uncontested. According to an article in Time on line, the lawsuit was in 1995. It also said that the town used to be integrated, but by 2001 was 98% black. There are other statements, however, that are far less accurate from a historical aspect. For example:

"This was during Reagan's administration and the policies of the administration were what was making this possible."

A review of the history of the area shows that if Monsanto was illegally dumping, then it was the last of a long and illustrious line. The town had been largely a mining town since early in the century. According to PATRICK E. GAUEN, Politics writer for the St. Louis Post-Dispatch, coal was a large part of the economy, as well as aluminum and zinc. This continued from early in the century until after WWII. Considering the methods involved, I think it reasonable to assume that a good deal of the damage had been done before Reagan took the reins of the country. Also, according to the same columnist,

"East St. Louis remains an enigma to most Illinoisans, who know it only through its poverty, corrupt past, outsized crime rate and historical ability to deliver Democratic votes."

In point of fact, the article shows the past of the town as one mired in corruption, gangsterism, drug abuse, prostitution. All of this, and reliably democrat elected officials. I find it very odd through all of this, only a Republican president is singled out for any blame or responsibility. When the commentor brings up Clinton, it is in a far different reference:

"When Clinton became president, he fixed the most immediate problems. The city is still bad but at least there is not garbage and sewage in the streets. The city is actually run by the State of Illinois now. "

If the commenter can offer some bona fide points that Clinton "fixed" I would be happy to examine them. The press that I read gives credit for the limited recovery to revenues that came when a casino located there in the 94-95 time frame.

"There are people who manage to become productive members of society who come from there, most of them join the Military and hope that they don't get blown up while they are over in Iraq, it is their only ticket and they are willing to take the chance. And we say that they don't try?"
As a former veteran myself, I question the ability of the commenter to determine all the motives that people have for joining up. I myself went into service more for training than for patriotism, and I freely admit that. I got the training, and it has helped me to be far more successful than I might have been without it. I, for one, applaud those who take advantage of the opportunity and privilege to serve.

"No child left behind withholds funds from schools that do not meet federal standards. ESL is a perfect illustration of why this program will not help those who need help the most. It shows a lack of insight and understanding of the environments that these children live in and how they can best be helped. It shows a lack of compassion."

Granting funds to schools that take the children, give them no useful skills, and trap them into poverty is not compassion. It is stupid. And again, the schools were lousy before NCLB. The schools are now being held accountable. Parents with students in failing schools now at least have the hope of transferring to someplace better, and taxpayers have the hope that their hard earned money is not thrown down a rathole. This is compassion that works. This is improving people's lives, not offering them a fake smile while you slowly ruin their children's lives.

The commenter also wrote " Get out of your books and take a walk. Talk to people like this, ask them questions, get to know them.....Jesus did.....and he would have never promoted 'compassionate conservatism'. Anyone who thinks he would have must have a different Bible than I do."

Take a look at that Bible again. Christ gave people a chance for success. He fed some people at his sermons. Once. He didn't say "Come back tomorrow for more." He didn't set up government food programs. During his time, the church was the program for the poor, not the government. Families were to take care of each other. The poor were helped through the church if they were unable to work. Those who could work were expect to do so (Check "gleaning" in your concordance.) Yes, we are to be generous, but with our own resources, not with those who we feel "already have enough." Compassionate liberalism gave people generational welfare, several generations without two parents, and an endless cycle of dependency. I never recall Christ pushing people to be dependent on anyone except for God; certainly not government.

SOURCE

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Can the Underground Economy Save Europe?

"The growth of unofficial employment is an entrepreneurial response to unnecessarily rigid labor markets and excess regulation."

As the old saying goes, the more expensive you are to fire, the more expensive you are to hire. Nowhere is this more apparent than on the European continent.

Even with the United States' lengthening of unemployment insurance benefits at the wake of this crisis, the benefits for the standard down-on-his-luck American pale in comparison to those of the average European. Upon job separation the average Frenchman can expect to see more than half of his salary extended in the form of unemployment benefits. Many European workers see these benefits extended for two to three years after their termination, with some countries extending benefits indefinitely.

Spells of unemployment are consequently prolonged on the European continent. Strict laws governing the separation of employees from companies (a nice way to say, "You're fired") lower the rate of job separation in these countries. Unfortunately, these laws also decrease the rate of job finding, resulting in the prolonged unemployment durations evident.

This problem of unemployed masses was no more than an unfortunate consequence of a well-developed social-welfare system during the boom years. Government coffers were plush to pay out hefty benefits. As the crisis wears on, this unfortunate side effect is increasingly turning into an oncoming train wreck as government deficits widen and welfare payments strain already tenuous state finances.

Decreasing benefits may be unfortunate to those relying on them, but such cuts are inevitable. Already some countries have enacted measures to try to bring these unsustainable systems closer to sustainability. The retirement age has been extended to reduce social-security payments, and unemployment benefits have been cut. People have responded with protests, trying to maintain the standard of living that they fought so hard to achieve over the past decades. Unfortunately, not all things desirable are feasible — Europe's plush welfare system is a case in point.

Fortunately there is a silver lining. In most European countries, and especially in the crisis-stricken periphery, large underground economies exist. While Spain's official unemployment rate is pegged around 20 percent, a substantial portion of its workers are indeed employed, if only outside official statistics. As I outline in a new collection I've edited, Institutions in Crisis: European Perspectives on the Recession, the underground economies of Europe's periphery provide ample (if not always desirable) opportunities for employment. While the Greek economy has the largest underground estimated at 25.2 percent of GDP, the PIGS countries (Portugal, Italy, Greece, and Spain) average 21.7 percent of their economic activity hidden from the official statistics. For comparison, 14.7 percent of German, and 7.8 percent of American output is estimated to be confined to the underground.

If substantial masses of officially unemployed workers can take solace in knowing that there exist large underground venues for their efforts, we may do well to outline the reasons why this unofficial option exists. Hans Sennholz, in his work The Underground Economy, lists four main categories of underground economy activity:

* that portion evading taxes,

* that portion violating laws or production standards,

* production from transfer beneficiaries barred from otherwise partaking in pecuniary-enhancing activities (welfare recipients for example), and

* production from illegal aliens.

While many people assume that the underground economy consists purely of tax evaders and drug dealers, we see that only two of the categories above allow for these groups. That is not to say that underground workers in the other categories do not evade taxes or sell elicit substances. It is to say that the main reason for their involvement outside of the official economy is neither of those reasons.

Europe's underground economies have seen much growth over the past 30 years, especially since this crisis began. In some ways the growth of unofficial employment is an entrepreneurial response to unnecessarily rigid labor markets and excess regulation. Evidence suggests that industry in at least two of our prime culprits have benefited from the expansion of the underground economy. Growing underground economy employment has allowed Italian and Spanish firms to expand and contract production more easily to market demands.

There is an increased emphasis on reallocating the underground economy into the official one as Europe's crisis progresses. The most commonly advocated method involves more frequent tax audits and heavier fines to incentivize entrepreneurs to report their full incomes to the official authorities. The problem with such a solution is that it ignores the core reason why the underground economy exists — and may very well strengthen its existence.

Entrepreneurs operate in the unofficial economy for two main reasons: taxes make official transactions unprofitable, or regulations make them unfeasible. Threats of increased monetary fines do nothing to alleviate the former reason, while only a reduction in the web of rules and regulations will reduce the latter.

Increased fines and audits will undoubtedly reduce the size of the underground economy. Entrepreneurs, even underground ones, will respond to the increased costs and risks by reducing the scope of their activities. This reduction will not translate into an increase in official market activity. Only by easing the regulatory and tax burden facing entrepreneurs will more of them be willing to operate in the official economy.

Instead of viewing Europe's underground economies as bad things, policy makers would do well to start viewing them for what they are: an important signal that old interventionist policies have failed. If one views large underground economies as inherently bad, one must also deem the policies that breed their existence to be bad.

SOURCE

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Big recovery in the Rich Port shows what sensible economic policy looks like

The gridlocked members of the congressional Supercommittee should grab President Barack Obama and decamp to a tropical island. Specifically, they should visit Puerto Rico, where a courageous leader is using free-market reforms to reinvigorate this recently moribund U.S. territory.

"We are clearly pro-growth," says Republican Governor Luis G. Fortuno. "And we do not apologize for that."

Fortuno was inaugurated on January 2, 2009, just 18 days before Obama. Since then, these two officials have marched in opposite directions, with opposite results.

"We were closer to the abyss than most states," Fortuno says. "When I came into office, we were facing not just the worst recession since the '30s, but the worst budget deficit in America, proportionally. We were literally broke. We did not have enough money to meet our first payroll. We had to take out a loan to do that. At that point, my wife asked me if we could ask for a recount."

So, unlike the free-spending Obama, and George W. Bush before him, Fortuno declares: "We cut expenses."

Fortuno gave himself a 10-percent pay cut. He trimmed his agency heads' salaries by 5 percent. That bought him the credibility to chop overall spending by 20 percent. He booted some 20,000 government workers, through attrition as well as layoffs, saving $935 million. (Compare that to Bush-Obama's 11.7 percent hike in federal civilian headcount since the Great Recession began in December 2007 -- excluding temporary Census jobs.) Fortuno has shifted remaining government workers from old-fashioned, statist, defined-benefit pensions to modern, market-friendly, defined-contribution plans.

Ranked No. 51 in 2009, behind each of the United States, in terms of deficit-to-revenue, Puerto Rico now is 15th, with the $3.3 billion deficit Fortuno inherited (44 percent of revenues) now macheteed to $610 million (7.1 percent). Fortuno's reforms, including merging government agencies, led Standard and Poor's to upgrade Puerto Rico's credit rating for the first time in 28 years. S and P, of course, famously downgraded U.S. sovereign debt last August, a historical first. Meanwhile, America's national debt screamed past the $15 trillion mark on Wednesday.

Fortuno has sliced taxes. The corporate tax rate plunged last January 1 from 41 percent to 30 percent, en route to 25 percent in 2014. He cut average individual tax rates by one quarter this year and in half within six years.

"You needed to obtain an average of 28 permits and endorsements to do anything," Fortuno says, regarding regulatory relief. "You had to go to 20-plus different agencies to do that. Today, you go to one agency, and you get your permit there, or you can go to PR.gov, and get it online."

"We have created a better business climate, and it shows," Fortuno explains.

A five-year property-tax holiday and the scrapping of capital gains and death taxes have helped push existing home sales up 35 percent this year (while they fell 7.9 percent on the Mainland) and new home sales soaring 92.2 percent (as they sagged 9.9 percent up north)

SOURCE

My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena

List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)

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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)

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