Monday, July 26, 2010

OBushonomics vs. Gilliganomics

Since the economy peaked nearly three years ago, we have seen so-called “demand-side economics” resurface with a vengeance. It has been bi-partisan, with Presidents Bush and Obama enacting multiple “stimulus packages” starting with Winter 2008. Under this scheme, government intervenes to increase “consumer spending” (“demand” for goods and services), which is believed to spur economic growth.

OBushonomics – the latest incarnation of an old economic theory – keeps its grip on our government policy makers. In a July 19, 2010 “consensus statement”, GET AMERICA BACK TO WORK, 16 prominent economists called on the federal government to enact yet another "stimulus" package to spur "demand". They wrote:

"The urgent need is for government to replace the lost purchasing power of the unemployed and their families and to employ other tax-cut and spending programs to boost demand. Making deficit reduction the first target, without addressing the chronic underlying deficiency of demand, is exactly the error of the 1930s". (For my brief comments left at the site, click here.)

However, these and similar policies to “address” the alleged “chronic underlying deficiency of demand” do not, never have, and in fact never can work.

To understand why, let’s turn to some of history’s best economic experts.

Gilligan … the Skipper too … the millionaire, and his wife … the movie star … the professor and Mary Ann: Remember them? They were the crew and passengers of a sightseeing tour boat in the 1960s sit-com Gilligan's Island. They all knew better. When the SS Minnow ship-wrecked on that uninhabited island off of Hawaii in 1964, the hapless seven’s first thoughts were not: Let’s see, how can we create food and shelter out of nothing, without any effort on our part other than to simply “demand” it?

The primary theme of the show centered on the castaways’ efforts to get off of the island. Another major theme, though, portrays their efforts to fashion the items they needed to survive, out of the native raw materials. Their inventiveness ranged from the production of “simple everyday things, [to] stretches of the imagination” - it’s a sit-com, after all - but “stretches of the imagination” are a driving force of productive innovation.

But, it is far from far-fetched to draw economic lessons from that show, and I have drawn upon the Gilligan analogy before. Those lessons relate directly to our government’s response to what has become known as “the Great Recession of 2007 -?”.

There was no episode in which the wealthy passenger Thurston B. Howell, III passed out some of his millions as “stimulus checks” to his fellow travelers so that they could rush out and spend their way to a vibrant Gilligan's Island economy.

They understood implicitly that before consumption, you must have production. They understood that to have production, you need real people doing real thinking and real labor. That’s what they did.

That silly little 1960s sitcom was way too serious a show to allow the producers to run an episode that portrayed Mr. Howell assuming the role of central banker, and yanking paper money out of his wallet and handing it out to everyone, telling them: “This paper will shower you with prosperity, because it will magically materialize into ‘purchasing power’!” It would have failed after that one episode. No one would have believed it. Money is not wealth, the castaways understood, because production comes before consumption. Gilliganomics reigned, or they would have perished.

Now, let’s step back from that uncharted island, and view the American economy. The first difference we see, is that the economy involves money, which is not needed on an island of seven inhabitants.

Washington politicians observe “consumers” exchanging money for goods in stores, car dealerships, and so on. Since it is widely believed that “consumer spending” represents some 70% of the economy, the politicians conclude that more money in consumers’ hands is all that is needed to “stimulate” the economy, evading the source of that money.

Money, however, does not change the fundamental nature of economic activity. Whether occurring among a handful of island castaways or on a vast continent involving 300 million people, the same principles apply. As Gilliganomics teaches us, production comes before consumption, and money is not wealth. What money does do is facilitate the exchange of goods and services… i.e., trade … among a vast number of productive people. Money enables you to produce economic values to satisfy the desires of one person, and receive in return economic values from another person who produces what you desire. You receive money in exchange for your work, and then exchange your money for that food, car or computer. Money makes possible an unlimited number of trades, among a limitless number of producing people who have never and will never meet. Money is the blood stream of a complex industrial economy.

Money is merely a tool, albeit a vital one. But it also serves to camouflage economic reality, and enables politicians to believe that they can make a miraculous end run around the inexorable principles of Gilliganomics. What act of evasion is involved here?

For the consumer, spending is the completion of an exchange of goods and services that began when he earned his money. Consumer spending is a trade, not between a consumer and a producer, but between two producers. As any honest “consumer” knows, you need to earn some money before you go to the store. Money must be made, before it can be spent. Put another way, money is not wealth – wealth creates money. If Gilligan’s Island were a New World, the close-knit group of seven would grow until money becomes necessary, based upon the expanding production of an expanding population.

Evading this knowledge - the meaning and source of money - leads to certain destructive actions. To understand what they are, let’s get back to the island.

They did pretty well there, that rag-tag group of economic experts. They worked. They had to. But suppose, in one episode, a looting gang of primitive savages invaded the island and began seizing their clothes, food, building materials, hunting weapons, etc., as well as their seed corn (their savings) that was set aside to plant the next harvest? Suppose those savages simply began consuming the stuff created by the ingenuity and hard work of the Gilligan Islanders? Would that have left the shipwrecked crew and passengers more prosperous, or poorer? Now you know why all attempts to stimulate growth through government spending always must fail, if prosperity rather than central planning is the goal. Those savages would have created plenty of “demand”, just like our president wants to do with government money.

Politicians who promote stimulus programs ignore or evade the first part of the trade that makes consumer spending possible – the earning part. This fact exposes the crucial difference between consumer spending and government (or government-induced) spending.

Every time the federal government creates another program to stimulate demand (or consumption), it does so – like the savages - by seizing the earnings and savings of the nation’s productive citizens through taxation, deficit spending, or inflationary printing press money. Posturing politicians claim to make us more prosperous, through policies paid for out of our own money and financial nest eggs. Unlike private consumers, the government doesn’t “earn” its money.

Stimulus always fails, for this very reason. Private consumers work for the money they spend, thus producing their own demand. Production comes before consumption. Stimulus politicians – from liberals like Obama to psuedo-conservatives like Bush – do not create demand. They simply steal it.

The source of consumer spending is productive work. The source of government demand-side stimulus policies is economic plunder.

OBushonomics does not and logically can not work. At best, all it can do is create a temporary illusion of “recovery”, much as an unemployed man can seem to prosper temporarily by running up credit card debt. The difference is the private citizen must eventually pay for his profligacy or declare bankruptcy. The government sacks and eventually bankrupts the entire productive class.

So, what kinds of policies would Gilliganomics yield? For starters, we would get massive, across the board cuts in income and capital gains taxes, major reductions in government spending, and a return to gold convertibility for the dollar. We would see an end to government attempts to manipulate the economy. And we would begin to dissolve the crushing regulatory burden, leaving Americans as free to act on their judgements as the Gilligan seven. In other words, we would kick those savages off of the island - or out of Washington.

Gilligan’s Island is a monument to economic wisdom compared with much of what comes out of Washington and the academic ivory towers today. As of now, the American economy seems to be recovering, grudgingly, no thanks to government policies. Despite loud assurances from the Obama Administration that its worn out, historically failed policies saved us from another Great Depression, OBushonomics is creating powerful headwinds against economic recovery. Until and unless we learn the lessons of Gilliganomics, our economy will continue to wallow well below its potential – or worse.

Oh, and one more thing. That looting tribe of fictional savages that invaded Gilligan’s Island? They had a famous leader. You might recognize him. His name was Chief John Maynard Keynes.

John Maynard Keynes helped to pioneer the field of macroeconomics, which studies economic activity without focussing on actual human beings. Macroeconomics, the “science” that studies “the economy as a whole”, can only have validity if it is anchored to the concrete reality of microeconomics, which focuses on the study of actual humans beings, their metaphysical nature, and their related economic activity.

But Keynes employed a gimmick. He helped to split the science of economics into two parts – macro- and micro-economics. Then, he disconnected macro from micro – i.e., from reality. This freed politicians from the necessity of logic and common sense. Keynesian Economics provides a semi-plausible theoretical cover for them, based upon a bevy of economic statistics, providing a vehicle for satisfying their powerlust and craving for a pat on the back for “doing something”. What Keynes managed to do is unleash government power to do whatever the whims of politicians dictated, to the escalating detriment of free markets. Keynsianism is statism in disguise.

Ideas are valid only to the extent that they can be logically connected to reality. Keynsianism cannot be, demonstrating its invalidation. But, it serves its sinister purpose – the expansion of government central planning authority.

On some level, perhaps, Keynes was not oblivious to the destructive effects of his theories. If he had been on the other side – a castaway on the SS Minow – would he have welcomed the savages as “consumers” rescuing them from a “chronic underlying deficiency of demand”? We’ll never know what he would have done in real life, although we can guess. We only know what his disciples continue to do. Keynsianism relies on a ready made store of wealth and savings previously produced by millions of people who know that reality can not be faked. They will, apparently and against all evidence that it cannot work, continue to loot this nation’s wealth with stimulus after stimulus until they bankrupt us.

They are undaunted, and stand ready for anyone who attempts to bring them into reality. When skeptics complained that the economy will be damaged long term, Keynes uttered his famous answer. Reaching the height of immoral irresponsibility, he flippantly declared: “In the long run, we are all dead.”

The long run has arrived, and we are fighting for our economic (and actual) lives. The choice is between OBushonomics and Gilliganonmics; between statist macroeconomic fantasy and economic free market reality; between economic deterioration and prosperity. The time to choose is now, and our time is running out.

[Please note that this essay was inspired, in part, by Ayn Rand’s lecture Egalitarianism and Inflation, which can also be read at Give Me Liberty.

Also, see George Reisman's essay entitled Stimulus Packages.]

Tuesday, July 20, 2010

Notes, and Myths, on American History - 2

[This is the second of a series briefly examining myths about American history. Part 1 was published on 7/6/10.]

Part 2

America was founded on the rights of the individualall individuals. That principle led directly to the abolition of slavery, universal suffrage, and the eventual recognition of equal rights for all, including American Indians(mischaracterized as “native” Americans).

Fisher states that “the native people certainly had no rights”. Of course they didn’t, by the accepted customs of their own culture. After centuries of a brutal, collectivist, primitive Stone Age existence, the American Indians’ rights were finally recognized – by Enlightenment ideals imported to the New World and enshrined in America’s Founding. Before that time, they engaged in genocide, slavery, cannibalism, perpetual tribal warfare, literal human sacrifices, and lived lives of unending destitution and stagnation, “in harmony with nature”, under the rule of witch doctors and tribal dictators. No individual rights, including property rights, were even conceived of. Ignorance and superstition, not reason and science, reigned.

The issue of suffrage needs to be examined here. The right to vote, it must be understood, is not a primary right. It derives from the individual’s right to direct his own life, which includes choosing his political leaders. But, the right to vote is not primary because democracy is not primary under the original American system. Regardless of whether one can vote or not, in a limited republic one’s fundamental rights are protected by being constitutionally lodged outside of the powerscope of elected politicians to effect. So, in a rights based society, any non-voter does not have to worry about voters attacking his rights.

This does not mean that all non-incarcerated, legally sane American citizen adults should not have the right to vote. They should, in my view. What it does mean is that the method used to establish voting rights must be objective and uniformly applied. For example, in early America, only landed property owners could vote. That restriction was not in principle any different from today’s rules limiting voting rights to those 18 years or older. It was a procedural rule. Since voting is not a fundamental, unalienable right, this method cannot be considered a violation of American principles as long as everyone has equal freedom to pursue property ownership, and thus the corresponding right to vote. What this method meant in practice was quite different from the common perception that only the rich could vote. In reality, wealthy people who didn’t own property could not vote, while the dirt-poor small farmer who lived in a one room dilapidated shack, could. Of course, that system had many holes, including the fact that women's voting rights were severely restricted even if they held property, and the slaves were denied the freedom to acquire property in the first place. Another hole is that only land property counted. But property takes many forms, and includes such things as personal effects, patents, and a bank account. But, as long as the rules are fair and objective, and the social conditions are open to every adult to meet them, then any voting method is technically valid.

To go back to Fisher’s and Paulson’s original assertions, the fact that women could not vote does not change the fact of America’s rights-based Founding. As I said, voting rights are not and can not be a primary right, and the fact that most adults were legally barred from voting in colonial America does not contradict that fact. Women’s fight for suffrage was successful because of America’s rights-based Founding.

The mid-twentieth century civil rights crusade against segregation in America was built on the very ideas that Fisher and Paulson deride, and succeeded because of them. Despite devastating contradictions in his political premises, the philosophical underpinnings of Martin Luther King’s civil rights crusade rested firmly on the Founding Fathers. This is quite instructive, in light of Paulson’s dismissal of the Declaration as mere “poetic flourish”. King’s most famous speech contained these words uttered on August 28, 1963 before a massive march on Washington, DC that he helped to organize:

“In a sense we have come to our nation's capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men, yes, black men as well as white men, would be guaranteed the unalienable rights of life, liberty, and the pursuit of happiness.

“It is obvious today that America has defaulted on this promissory note insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check which has come back marked ‘insufficient funds.’ But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. So we have come to cash this check — a check that will give us upon demand the riches of freedom and the security of justice.

“We must forever conduct our struggle on the high plane of dignity and discipline. We must not allow our creative protest to degenerate into physical violence. Again and again we must rise to the majestic heights of meeting physical force with soul force. The marvelous new militancy which has engulfed the Negro community must not lead us to a distrust of all white people, for many of our white brothers, as evidenced by their presence here today, have come to realize that their destiny is tied up with our destiny. They have come to realize that their freedom is inextricably bound to our freedom. We cannot walk alone.

“I say to you today, my friends, so even though we face the difficulties of today and tomorrow, I still have a dream. It is a dream deeply rooted in the American dream.

“I have a dream that one day this nation will rise up and live out the true meaning of its creed: ‘We hold these truths to be self-evident: that all men are created equal.’

“I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

“I have a dream today.”

Martin Luther King recognized that the injustices levied against Black people (and others) were not a failure of America’s Founding ideals. Rather, he saw American ideals as the solution to the ills he was fighting against. Unlike Paulson, King emphatically believed that the Founding Fathers did, indeed, give all Americans “the gift of liberty”.

The modern … or more accurately the postmodern … Left wants you to forget those words, and that one of their alleged icons spoke them, because America’s individual rights ideals conflict with their statist agenda. Racism, a form of collectivism, is thoroughly compatible with socialism, but not the individual rights based capitalist system. The very same is true of the institution of slavery.

Yes, the journey toward the full realization of American ideals was tortuous and halting and much too slow for the victims of injustice. And yes, the First Amendment was, and is, crucial to that progress. It is the most important Amendment, because it gives you the tools of liberty with which to fight. But it is not, as Paulson believes, “the most powerful passage in America’s history”. The Declaration of Independence and Constitution are inextricably linked, of course. But as King understood, the most powerful passage is the one that “guaranteed the unalienable rights of life, liberty, and the pursuit of happiness”. That is the core philosophical principle upon which the entire Bill of Rights is based, which the First Amendment leaves us free to fight for, and without which the First is meaningless. Notice that today, the First Amendment is under attack and eroding, even as the concept of the unalienability of rights is disappearing from cultural dialogue. Those two parallel developments are no coincidence. Neither Paulson nor anyone else will save the First without the “poetic flourish” of the document that the July 4th holiday celebrates. Without the Declaration of Independence, there can be no “1 for all”.

Those unalienable rights are also, I must note, at odds with the entire regulatory welfare state. Since Paulson views the First Amendment as having a “pivotal role in making America what it is today”, one has to wonder if he has a vested interest in downgrading the Declaration. What America is today is certainly not what the Founding Fathers envisioned!

In any event, as I stated above, progress toward the full realization of American ideals was much too slow. But, viewed in proper historical context, the advances made possible by Enlightenment ideals was rapid indeed. Sadly, however, there is a concerted effort to wipe out true American history by those who wish to creat a government that directly conflicts with the Founders’ vision. They seek, not a government “to Secure these Rights”, but one with “unbridled power over other human beings”. Sowell minces no words:

“It is not just the history of slavery that gets distorted beyond recognition by the selective filtering of facts. Those who go back to mine history, in order to find everything they can to undermine American society or Western civilization, have very little interest in the Bataan death march, the atrocities of the Ottoman Empire or similar atrocities in other times and places.

“Those who mine history for sins are not searching for truth but for opportunities to denigrate their own society, or for grievances that can be cashed in today, at the expense of people who were not even born when the sins of the past were committed.

“An ancient adage says: "Sufficient for the day is the evil thereof." But apparently that is not sufficient for many among our educators, the intelligentsia or the media. They are busy poisoning the present by the way they present the past.”

Fighting for an American resurrection is a daunting task. It requires the recapture of the lessons of the past from the historical distortionists in order to cleanse the present. As can be seen, the fight is broad and deep. It is a fight that confronts not just innocent ignorance but willful deceit.

[Supplemental Note: Charlotte Cushman's letter referenced in Part 1 and which I hadn't located at the time, is republished below. The date is when it was posted online. The actual letter, the subject of Jaki Fisher's comments, was published earlier]:

May 7, 2010

Our rights are eroding away

To the Editor:

“I want you to look at the birth of a miracle: the United States of America. If it is ever proper for men to kneel, we should kneel when we read the Declaration of Independence.

The concept of individual rights is so prodigious a feat of political thinking that few men grasp it fully – and 200 years have not been enough for other countries to understand it.” - Ayn Rand

Our country, was the first and only country in history that was founded on a brand new idea, the idea that people have rights. These rights are:

• the right to one’s own life (which includes what one has worked for)

• the right to one’s own liberty

• the right to pursue one’s own happiness.

For the first time men were free from other men. They were no longer subservient to the lord, master or king. They could live their lives and pursue their goals independently.

When America was created, there was another new idea - the idea that the only legitimate purpose of government was to protect these rights, to make sure no person violated the rights of another.

Government was not there to tell men what to do, or how to live their lives, or to take by force what each man has earned by his own efforts to give to another.

The only proper use of force was in retaliation against those who had initiated force against another. Force was only used as a means of defending rights.

And look what happened. America became the happiest, wealthiest, most prosperous, most advanced nation on earth. And you know what else? It was also the most moral country because it recognized individual rights.

But we have lost sight of individual rights. It’s all about wants and needs now, someone else’s want or someone else’s need.

We are all obligated to provide whatever the government deems because the government deems it. We have been told we are our brother’s keeper.

So our rights have been eroding away, our private property confiscated and our income stolen. And now the government wants to take away the last of our individual rights, the right to our own lives, by controlling our health care.

Goodbye America. It was great while it lasted.

Charlotte Cushman
Maple Grove, works in Anoka

Thursday, July 15, 2010

The Coming Collision Between the Doctors and the State

In my June 1, 2010 post, The Coming Collision between the Doctors and the State, I showed how a long established government power intended for one purpose is becoming an instrument of terror to force doctors into submission to government-run medicine. Government licensure is the practice of forcing millions of people in a myriad of occupations to get permission from the state in order to earn their living in the line of work of their choice. In Florida and Massachusetts, politicians are attempting to force doctors to conform to the arbitrary dictates of the state as a condition of their medical licenses.

Now we have another long established government power being brought to bear on doctors - this time in Idaho. The federal Antitrust Laws were created beginning in the 1890s for the alleged purpose of reining in the “excesses” of capitalism. But in reality, the antitrust laws are a conglomeration of unjust, contradictory statutes that amount to an economic dictatorship operating within the confines of a free society. Under antitrust, virtually any business practice can be deemed illegal at any given time. A practice found legal in one case can be found illegal in another.

Antitrust represents unconstitutional ex post facto law, and a reversal of a key American ideal – a government of laws and not of men. New York City business lawyer Robert S. Getman calls antitrust “a form of ‘legalized’ terrorism”. Duke University’s Gary Hull calls antitrust “a political cancer, clearly alien to the founding principles of this country”. The Wall Street Journal’s Holman W. Jenkins calls antitrust enforcers “leech bearers” who exhibit “not a whit of due process” and act as “prosecutor, judge and jury”.

Who created the antitrust laws? They are the brainchild of the conservative “defenders” of free markets. The first major American “trustbuster” was conservative hero and McCain idol Theodore Roosevelt. Said philosopher Ayn Rand of antitrust:

“The Antitrust laws—an unenforceable, uncompliable, unjudicable mess of contradictions—have for decades kept American businessmen under a silent, growing reign of terror. Yet these laws were created and, to this day, are upheld by the ‘conservatives,’ as a grim monument to their lack of political philosophy, of economic knowledge and of any concern with principles.”

Now, the conservatives’ antitrust laws are being leveled against the doctors in Idaho – by the thugs of socialized medicine. “Price fixing” is one of the utterly undefinable antitrust “crimes” that has the effect of abolishing all constitutional limits on the Justice Department’s prosecutorial lawyers. In an article I discovered through FIRM, S. M. Oliva reports in the Christian Science Monitor on government actions that would fit nicely into George Orwell’s 1984.

On May 31, 2010, the federal Antitrust boys, backed by the Republican State Attorney General, forced a settlement on a group of Idaho doctors accused of “price fixing”. Their penalty – accept government price controls. There were two alleged “conspiracies” involved in the charges. Oliva writes:

“In the first conspiracy, through a series of meetings and other communications, the orthopedists agreed not to treat most patients covered by workers’ compensation insurance.

“They entered into a group boycott in order to force the Idaho Industrial Commission (which sets the fee schedule) to increase the rates at which orthopedists were paid for treating injured workers.

“In the second conspiracy, all of the defendants, except [one], and other conspiring orthopedists agreed to threaten to terminate their contracts with Blue Cross of Idaho. They jointly threatened to terminate their contracts to force Blue Cross of Idaho to offer better contract terms to orthopedists.”

As in the licensure cases, a group of doctors – American citizens – endeavored to protest a government action, in this case its price control policies. They were fighting to exercise their right to set their own fees. In classic Orwellian fashion consistent with Antitrust “logic”, “the Justice Department has unambiguously stated that refusal to accept government price controls is a form of illegal 'price fixing.' ”

The article goes on to document a number of terrifying aspects to this case:

For one, it was handled by the DOJ, which has criminal prosecutorial powers, rather than the FTC, which does not.

Second, the premise was established that “Government prices are market prices.” (Now you know the true meaning behind Obama’s pro-free market lip service.)

Third, “the Antitrust Division has linked a refusal to accept government price controls with a refusal to accept a ‘private’ insurance company’s contract offer. This leaves little doubt that antitrust regulators consider insurance party contracts the equivalent of government price controls.” This confirms what I and others have been saying – ObamaCare is fascist and the insurance industry is private in name only.

Fourth, the DOJ has the extraordinary powers granted to it under the Patriot Act, another conservative Republican statist gift. Among these are the power to “seek wiretaps of physicians’ phones and computers”. “The potential exposure of your physician’s confidential records — including your medical records — is limitless.”, reports the Monitor.

And, in an update to the article, the Monitor reports on another DOJ action that is perfectly consistent with a dictatorship, “a naked censorship order that restrains the physicians” from communicating with other physicians on anything the DOJ lawyers decree as off limits to freedom of speech. Such is the nature of the awesome, arbitrary power of the Antitrust laws that is being brought to bear on the doctors. The “conspiracy” charges were brought under the 1890 Sherman Act.

Richard E. Ralston, Executive Director for Americans for Free Choice in Medicine, has a piece in the Orange County Register entitled: Feds' boot on your doctor's neck. He writes:

“In the Orwellian world of the Justice Department, if physicians decide on a price, they are engaged in a criminal conspiracy, and if the government forces a price on everyone, that is a 'market price'.

“When the clear meaning of words is replaced with government fiat in this way, all limits on arbitrary government power and its use of force are destroyed.”

As Ralston writes, Obama mouthpieces like the NY Times set the ideological table, attacking physicians as "unabashed profiteers” because they "have been complicit in driving up health care costs." How? – They "largely decide what medicine or surgical treatments are needed.”

The Times all but calls doctors Enemies of the State - for exercising their independent judgement on behalf of the patient! Under ObamaCare, according to Ralston:

“What President Obama calls health care 'reform' will, over the next few years, make it quite clear who will decide which medicine or surgical treatments you need. It will not be your physician.

“As the government becomes the exclusive authority over the cost of health care, it will inevitably become the exclusive authority over the treatments permitted in health care.”

Dr. Paul Hsieh warns in an Objective Standard article that “U.S. politicians are working feverishly to prevent doctors from upholding the Hippocratic oath” by forcing physicians to conform to government edicts instead of their own judgement.

How can this be, in a free country? Because, the building blocks of tyranny are embedded throughout our governmental structure. The Antitrust laws are one such building block.

In the totalitarian world of 1984, language is not a means of communication, but the means of destroying it:


…Trumpets the Ministry of Truth. (page 26)


…Trumpets the Antitrust Division of the Justice Department.

This is ObamaCare’s true nature. This is Antitrust’s true nature.

Freedom rests on Objective law. Tyranny rests on the opposite premise.

As reported by NJ Star-Ledger columnist Bob Braun, a recent Supreme Court decision overturned another vague law. In a rare and heartening decision, and by a unanimous 9-0 vote, the Court overturned the so-called "honest services" statute of a federal anti-corruption law. The reasons are instructive. Liberal Justice Ginsburgh called the law too "amorphous.’’
Conservative Justice Scalia concurred, asserting the statute “fails to define the conduct it prohibits [and] does not answer the question, `What is the criterion of guilt?’"

“That’s ground zero in constitutional law. The law must say what is illegal. The core of due process of law. Otherwise, anyone can be accused of anything and, if the prosecution is persuasive, anyone can be convicted”, wrote Bob Braun.

This is Antitrust in spades, and this is the kind of power the Obama government is using to bludgeon the doctors into submission to the state. The same logic the high court based that decision on applies to Antitrust. Justice is impossible under the jackboots of government lawyers wielding arbitrary powers. A law that started out targeting the alleged “robber baron” titans of big business has become a tool of the political tyrants of “healthcare reform”.

There’s a small reed of hope here, though. The Monitor’s S. M. Oliva concludes his article with this:

“Since this is an DOJ case, it is subject to final approval by a federal judge in Idaho. There’s a mandatory 60-day public comment period, after which the judge will almost certainly rubber stamp the order as being ‘in the public interest.’ Still, there’s at least an opportunity to express some serious dissent to what’s transpired here.

“It turns out the Idaho physicians hired the guy who used to run the Antitrust Division’s litigation department — and developed the government’s anti-physician antitrust rules — to represent them.”

And, there’s an opportunity for the doctors’ case to reach the Supreme Court. If it does, perhaps the court will still be in the mood to strike down non-objective law.

Saturday, July 10, 2010

Rand Paul, Title 2, and the Importance of Principles

The Randal Paul upset in the May Kentucky GOP senate primary exploded recently into a controversy surrounding his previously elicited views concerning the “public accommodations” clause in the 1964 Civil Rights Act, known officially as Title 2. Paul is on record as opposing that portion of the Act. Thus, he has shined a spotlight on an issue that was thought to be long ago “settled”.

Title 2 is the segment of the Act that legally bans discrimination in privately owned establishments offering “public accommodations” based upon race, national origin, color, or religion. The rest of the Act deals only with the elimination of laws upholding segregation and discrimination … i.e., government sanctioned and/or enforced segregation. Thus, most of the 1964 Civil Rights Act is valid, just, and necessary.

My concern here is with Title 2. It is not with Rand Paul. There is much to say on this subject. This post will serve as an introduction in which I state my position, and give a brief outline of the fundamental issues that underlie my reasons for that position. From time to time, in subsequent posts and as time permits, I will elaborate on the points in that outline. I’ve posted numerous online comments regarding key aspects of this issue. So, much of the raw material is already written.

The controversy surrounding Title 2 that Rand Paul ignited is one of those signature issues that encapsulates core premises regarding individual rights, the proper role of government, and human nature. Since this blog is dedicated to ascertaining the role of ideas in concrete events – and upholds, as right, the ideas of the Enlightenment, America’s Founding ideals, and Objectivism - it is necessary for me to make unequivocal where I stand. The fundamental ideas I uphold, and fundamental ideas as such, are tied in to this issue.

Here are the key issues I will be covering in future posts, as they relate to Title 2:

1. Title 2 violates Property Rights.

2. Title 2 violates the right to freedom of association … and disassociation.

3. Title 2 violates the right to live by your own ideas, and to act on your own judgement and moral principles.

4. Title 2 was an unnecessary infringement of individual rights, if eliminating racial injustice was the goal. The question is, did the Civil Rights Act of 1964 lead to the abolition of racial segregation? Or was a powerful, established cultural trend already under way, dealing a deathblow to segregation, with the Civil Rights Act of 1964 being the culmination of that trend? My contention is not that the Act shouldn’t have been passed (except for Title 2), but that cause and effect has been reversed by many historians. The Civil Rights Act of 1964 was possible only because of massive and growing cultural pressure against segregated America.

5. Title 2 lays a vital building block of tyranny. It places into the hands of government the power to decide which ideas are officially “acceptable”, which types of human associations are valid, and which of both are not.

6. The role of the ancient doctrine of Original Sin in justifying laws such as Title 2 will be examined.

7. There are proper, practical, and powerful private means at the disposal of free people to defeat and marginalize non-rights-violating injustice. “Non-rights-violating injustice” is not an oxymoron. In a free society that respects individual rights, reason, voluntary persuasion, and justice eventually win out over irrationality and injustice without resorting to freedom-endangering governmental coercion.

I will be arguing against Title 2, and by implication against all similar laws, from the standpoint of the principles of freedom that it violates. This is a warning to those shallow minds whose knee-jerk reaction will be to see my position not as a defense of freedom's but of racism and racial segregation. What they must learn is that when you defend the rights of any one person, regardless of his character, you defend the rights of all. Indeed, defending the rights of all is the only way to defend the rights of all. Either rights are unalienable, or they are not. If they are not, then we return to the dark days before the Enlightenment, when people acted by permission, the state was free to do as it pleased with no constraints, and brute force was the ruling principle.

Since my views on this very sensitive issue that Rand Paul brought to the forefront are defined by my passionate belief in the moral principle of individual rights, let me first define my terms. What do I mean by principles? Since my foundational philosophy is Objectivism, I will offer as my reference Ayn Rand’s definition:

“A principle is ‘a fundamental, primary, or general truth, on which other truths depend.’ Thus a principle is an abstraction which subsumes a great number of concretes. It is only by means of principles that one can set one’s long-range goals and evaluate the concrete alternatives of any given moment. It is only principles that enable a man to plan his future and to achieve it.”

Focus for a moment on the phrase, “an abstraction which subsumes a great number of concretes”. This is key to understanding the powerful, irresistible force of ideas in the course of human events. There is no such thing as an isolated concrete issue in human affairs. Human beings are, by their very nature, conceptual beings. That is how a vast sum of knowledge can be held in a single mind. How is it that you can walk into a room and see an elevated, flat object that you have never seen before, yet know instantly that it is a table? Because, you hold in your mind the abstract knowledge of the concept “table”, which you learned many years before, and which you can draw upon an unlimited number of times. How many tables are in the world? They have unlimited differences in terms of shape, color, number of legs, etc. Yet, you know what each and every one of them is, by means of a single concept.

The same is true of concrete socio-political issues. Europe is the birthplace of fascism – specifically, Italy and Germany. If it arose in America, would you be able to identify it, even if you weren't alive in the early 20th century, or experienced it? Yes, by the same method of abstraction that you would identify that table – by zeroing in on fascism’s essential characteristics. Each issue implies at least one abstract concept, or principle, which can be used to identify all similar issues regardless of specific concrete differences. Each time you form an opinion on any specific issue regarding human affairs, you can not escape the underlying abstract implications of that issue. You can ignore it, at your peril. But you can not escape it. The only question is, do you seek to discover the implications – the fundamental ideas and premises, i.e., the principles – that underlie it? Or, not. When a law is passed to ban smoking in restaurants, a principle has been established. When, five years later, another law is passed to ban transfats in menu items, that same previously established principle is at work. And when, five years later another law is passed that requires the calorie count of all menu items to be listed, we once again see that principle at work. And when the owner of a restaurant chain complains that his costs will rise dramatically because of this latest law, will he know that he is encountering the consequences of a principle established ten years earlier – or perhaps in 1964?

When a culture accepts a fundamental abstract premise in relation to one particular issue, it has unleashed – for good or for evil – consequences that range far and wide beyond that one issue. When you understand this, you have gained the intellectual key that helps explain the seemingly inexplicable. This understanding helps you to integrate world events. It helps you to figure out where we are, how we got here, and where we are heading.

There was once a towering group of men who understood exactly where the world stood, where they wanted to take it, and how to get it there. I speak, of course, of the Founding Fathers of this country. They understood the role of ideas, defined the principles that would guide them, and then pledged their lives, their fortunes, and their sacred honor on them.

The Founder' reverence for principle is demonstrated in these excerpts from James Madison's "Memorial and Remonstrance Against Religious Assessments". In his dramatic defense of religious liberty in opposition to Virginia's proposed tax to support the Christian Church, he said:

"Because it is proper to take alarm at the first experiment on our liberties [the Church assessment]. We hold this prudent jealousy to be the first duty of Citizens, and one of the noblest characteristics of the late Revolution. The free men of America did not wait till usurped power had strengthened itself by exercise, and entangled the question in precedents. They saw all the consequences in the principle, and they avoided the consequences by denying the principle." (Emphasis added.)

The principle James Madison was referring to was the one underlying a Virginia law, known as “A Bill establishing a provision for Teachers of the Christian Religion”. He understood that once any governmental “department of power” (the legislature or the Executive branch) “overleap[s] the great Barrier which defends the rights of the people”, there is no way to contain that power, because " ‘the equal right of every citizen to the free exercise of his Religion according to the dictates of conscience’ " is held by the same tenure with all our other rights.” (Emphasis added.) He continued:

“Either we must say, that they may control the freedom of the press, may abolish the Trial by Jury, may swallow up the Executive and Judiciary Powers of the State; nay that they may despoil us of our very right of suffrage, and erect themselves into an independent and hereditary Assembly or, we must say, that they have no authority to enact into the law the Bill under consideration.”

Notice the broad sweep of the rights that Madison saw threatened by a single religion-funding bill in a single state. Keep Madison's wisdom in mind as you read this and subsequent related posts, in which I "deny the principles" behind Title 2 of the 1964 Civil Rights Act in order to "avoid the consequences" rather than "wait till usurped power had strengthened itself by exercise, and entangled the question in precedents". We've already embarked down that road strewn with “exercise” and “precedent”, but its not too late.

Notice that Madison is not concerned with whether the religious or Christian ideas the tax money would have supported were good or bad, or whether or not he personally agreed or disagreed with them. His concern was with the destructive consequences of the principle of “usurped power” to religious freedom - and ultimately all freedoms - which follow when government funds religion.

Although there was not unanimous agreement with Madison on this concrete issue, the Founders were united in their belief in the importance of universal truths. In this instance, Madison’s powerful principled arguments carried the day handily. Such was the intellectual stature of America’s Founding Fathers. To those who would say that there is no connection between abstract theory and practice, I say that America exists because a radical group of activist intellectuals believed exactly the opposite! America exists because men at the time understood the importance and power of principles. America is perishing because that understanding has largely been lost, thanks to the twin mind-poisons of Pragmatism and Progressive Education.

Principles matter, whether one chooses to acknowledge that fact or not. To once again quote Ayn Rand:

“The present state of our culture may be gauged by the extent to which principles have vanished from public discussion, reducing our cultural atmosphere to the sordid, petty senselessness of a bickering family that haggles over trivial concretes, while betraying all its major values, selling out its future for some spurious advantage of the moment.

“But there is nothing as impractical as a so-called “practical” man. His view of practicality can best be illustrated as follows: if you want to drive from New York to Los Angeles, it is “impractical” and “idealistic” to consult a map and to select the best way to get there; you will get there much faster if you just start out driving at random, turning (or cutting) any corner, taking any road in any direction, following nothing but the mood and the weather of the moment.

“The fact is, of course, that by this method you will never get there at all. But while most people do recognize this fact in regard to the course of a journey, they are not so perceptive in regard to the course of their life and of their country.

“Concrete problems cannot even be grasped, let alone judged or solved, without reference to abstract principles.

“When men abandon principles (i.e., their conceptual faculty), two of the major results are: individually, the inability to project the future; socially, the impossibility of communication.”

Ayn Rand’s reverence for principles parallels that of the Founders, which is one reason why I consider her to be America’s Last Founding Father.

Any breach of the fundamental principles underlying our freedoms undermines all of the concrete values subsumed under those principles. Therefor, the most despicable practitioners of our unalienable rights must be defended with full moral conviction. Yes, it is hard … sometimes excruciatingly hard … to defend the rights of those who hold the most irrational and the most evil ideas, such as those who would hang a “no blacks” or “no Mexicans” sign in their windows. It’s so much easier to make exceptions in those cases. But, that is precisely where the courage of one’s convictions counts most. Principles matter, and it is in regard to the most difficult issues that principles matter most. The exception you make is exactly the kind of breach through which the wedges of statism gain entrance into the legal structure of a free society.

So, here is my statement:

Title 2 is politically, culturally, morally, and philosophically wrong, because it violates the principles of freedom … i.e., individual rights.

I will defend that statement systematically in subsequent posts.

There is one more thing I want to say here. I believe that Title 2, and all of the interlocking myriad of rights-violating laws we have on the books, should be abolished. However, I do not support any attempt to repeal Title 2 at this time, or for the foreseeable future. For one thing, my reading of the comments sections of online articles demonstrate that the heart-wrenching memories of the victims and their families of what life was like in segregated America are still too real and vivid. Time-wise, we are not that far removed from that period.

More importantly, it would be politically impossible to repeal Title 2 without the proper philosophical foundation in the culture. It is the building of that foundation, not repeal, that is my goal at this time. Politics follows ideas. Since the fundamental ideas of America’s Founding and of freedom - and fundamental ideas as such - are ignored, forgotten, misunderstood and even met with outright hostility, the primary job today is educational. To change the political direction of the country and unwind bad law, the right ideas must first be absorbed into the culture.

So, time and energy spent seeking outright repeal would be futile, in my view, and can be better spent advocating for the ideals that will ultimately lead to repeal, and simultaneously to a society without racism and prejudice. My attack on Title 2 should be seen for what it is – philosophical base-building rather than an activist call for repeal.

Related Reading:

1964 Civil Rights Act party voting percentages

Tuesday, July 6, 2010

Notes, and Myths, on American History - 1

Part 1

During Independence Day season, it is important, as well as interesting, to take note of what others think the day stands for. As a follow-up to my Holiday post, I want to answer a few fallacies that are accepted wisdom by many.

The following comment was posted to a letter-to-the-editor at Timberjay which, unfortunately, I can’t locate. However, from the comment text, we can certainly gather what it was about. Anyway, it is the ideas in this comment that I want to address here.

In response to Charlotte Cushmann’s statement (April 3 letter) that our country was founded on the idea that people have rights.

That’s not quite accurate. The only people who had rights were white men. Women had no rights, the native people certainly had no rights, the slaves who were hauled here in chains had no rights. So really, our country was founded on genocide and built on the backs of slaves.

And by the way…what is wrong with being our brother’s keeper? Isn’t that what Jesus taught?

Jacki Fisher
Ely, Minn.

The line of thinking evident here is, unfortunately, not unique. Ken Paulson, former USA Today editor who took up the cause of defending the First Amendment, said this:

“Every July 4th, we celebrate the Founding Fathers who gave America the gift of liberty.
Except that they didn’t.

“These gentlemen did a fine job of building a nation founded on freedom — unless you happened to be a woman, a slave or poor.”

Mr. Paulson is the president of the First Amendment Center, a pro First Amendment organization, and founder of its 1 for All First Amendment awareness campaign. I’m not yet fully familiar with Mr. Paulson’s views on the First Amendment, or of the organization he heads up. However, his Independence Day article concerns me here, because they show that Fisher’s sentiments encompass even those with a serious interest in our history and who should know better.

The ideas espoused by Fisher and Paulson deserve serious consideration, and rebuttal, because if this country is ever going to right itself, the validity of its Founding Ideals must be established (or re-established). Both ignore context. Paulson, in particular, should understand the importance of that. He’s a former editor of a major nationwide newspaper.

Charlotte Cushman is referred to as having stated, correctly, that this country was Founded on the idea of rights. Fisher doesn’t see it that way. But how is that “not quite accurate”? The Declaration of Independence and Constitution are quite explicit. Has Fisher read them? She simply denies they exist, because “The only people who had rights were white men”. Paulson, for his part, explicitly downgrades the importance of the Declaration to America’s Founding. He writes:

“For all the poetic flourish of the Declaration of Independence, the most powerful passage in America’s history can be found in the First Amendment to the Constitution. The five freedoms guaranteed there gave Americans the right to speak out against injustice, to report about inequality, to protest and petition, and to draw strength from freedom of faith.

“In the centuries that followed this nation’s founding, the First Amendment was used to free the slaves, extend the vote to women and ensure equal protection under the laws.”

Paulson reverses cause and effect. He fails to understand that the roots of the five freedoms he refers to – speech, press, religion, assembly, and petition - draw their vital nourishment from the Declaration’s philosophical soil. The unalienability of the First Amendment freedoms is what makes it such a powerful tool for freedom fighters. He takes the First Amendment as an isolated given, requiring no philosophical validation. There is a danger in singling out a specific concrete, without understanding how it relates to an integrated whole: In this case, the First Amendment vs. the broad sweep of America’s philosophical underpinnings. It is crucial, to put it simply, to see the forest and not just the trees.

Both Fisher and Paulson essentially claim that America’s Founding documents do not represent what they represent - the creation of a nation of liberty and rights for all. They are invalidated because, they claim, 1776 ushered in a nation of freedom limited to a select few.

But, that’s not what those documents say. The Declaration states that “ all men are created equal”, and “endowed with … unalienable rights” (Emphasis added). The Founders considered those principles to be “self-evident truths”. (The term “men” is used generically, and applies to all human beings.) It’s true that at America’s inception many people were denied the freedom guaranteed to them. But, that does not change the undeniable fact that “our country was founded on the idea that people have rights”. The Founders are precise on this point. How is it, then, that the fruits of liberty bypassed so many? Context, as I said, is crucial.

The fight for freedom and political equality did not start or end in 1776. America’s founding was a tremendous advance philosophically and politically, because it established, for the first time as the foundation for a new nation, the bedrock principle of the unalienable individual rights of all men. This did not happen in a vacuum. America was, in fundamental respects, centuries in the making. Its ideals were developed and fought for over a long span of history (see my July 4 post). The achievement of a rights-based nation was the high point of that historical battle. But, the fight for individual rights neither began nor ended on July 4, 1776. This greatest of all political achievements, that for the first time established rights as unalienable and the government as servant and rights-protector, should not be underestimated or brushed off, as both Jacki Fisher and Ken Paulson rather flippantly do.

Even though America’s philosophical foundation was set, the practical task of full implementation was far from complete. The fight continued against ancient evils. The biggest concerned the slaves. But, and this is crucial, America can not be faulted for the institution of slavery.

America inherited slavery. Its existence was a remnant of mankind’s barbaric past. America’s early acceptance of slavery was indeed a black mark, precisely because it contradicted our individual rights-based founding. Anti-slavery forces chose of necessity to make a political compromise, to establish the nation. But, they did not make a philosophical compromise, as we shall see in the words of one of America’s greatest freedom fighters. Slavery, the roots of which penetrate back through all of mankind’s history, survived into this country’s early decades, but only under the looming shadow of the bedrock, radical American principle of individual rights. That contradiction could never stand. Slavery’s fate was sealed at America’s Founding. The defeat of slavery in early America was ultimately inevitable, even though it could not be achieved immediately, and would require a bloody civil war to accomplish. The wiping out of slavery – a practice that up to that time had been practiced by all races, nationalities, and cultures at one time or another - was one of this country’s (and Western Civilization’s) finest hours, and a demonstration of the power of its noble ideals.

Yet the lie continues to be perpetuated. Historian Thomas Sowell writes:

“The history of slavery across the centuries and in many countries around the world is a painful history to read … because slaves and enslavers alike have been of every race, religion and nationality.

“If the history of slavery ought to teach us anything, it is that human beings cannot be trusted with unbridled power over other human beings…

“But that is not the message that is being taught in our schools and colleges, or dramatized on television and in the movies. The message that is pounded home again and again is that white people enslaved black people.”

There are other fallacies in Fisher’s comments, as well, such as the common Leftist claim that America was “built on the backs of slaves”. If this were true, then history would be one long, unstoppable economic boom, because slavery was a widely accepted practice worldwide throughout mankind’s history prior to the rise of capitalistic Western Civilization – and still is in third world tribal societies. Instead, material destitution was the norm until the advent of capitalism wiped out slavery in the Western world.

It is utterly absurd to claim that prosperity is the result of slavery. That illogical claim ignores the basic source of wealth – the individual mind and its liberation under a rights-based socio-political system. The truth is just the opposite of her wild assertion. Free people built this country. The slaves, who were forbidden an education, the freedom to act on their own judgement, and forced to perform repetitive, menial muscular tasks, were a drag on American progress. The correspondent, Jacki Fisher, has no idea of the evil premise she is promoting with that statement. To claim that the economic powerhouse that is America was “built on the backs of slaves” is to elevate the evil practice of slavery to the exalted position of mankind’s benefactor. If slavery produces prosperity, there is no other conclusion one can draw.

America is poorer for that evil practice, not richer. To the extent that any Americans were enslaved, was the extent to which the source of material production – the human mind - was stymied. The innovative chemist and agricultural giant George Washington Carver contributed more to American prosperity as a single free man than all of the plantation slaves combined. How many Carvers, and ambitious black men and women generally, failed to flourish because they were locked up in the slave system. How much better off would America be today had this country’s Founding ideals been spread to everyone at its beginning? The loss to this country in terms of today’s prosperity because of the existence of slavery is incalculable.