A weekly liberty briefing and news guide to keep you informed and prepared on what’s UP to more freedom or DOWN to bigger, more intrusive government.
Quote of the Week:
“Citizens, not history or economic interests cast votes. Considerations of area alone provide insufficient justification for deviations from the equal population principle.”
–Reynolds v. Sims, 377 U.S. 533 (1964)
PRP’s Spending Ranks Ahead of Some Presidential Super PACs (Civil Beat, 11/14)
Civil Beat’s Nick Grube reports that Pacific Resource Partnership would rank 26th in campaign expenditures if compared to this year’s presidential super PACs, spending $2.8 million and just behind the National Association of Realtors PAC. “According to OpenSecrets.org,” the report adds, “the group sent just over $122,000 supporting President Barack Obama and U.S. Rep. Mazie Hirono in her successful bid for Senate.”
ANALYSIS: Over the last thirty years, political scientists have laboriously sought to determine what the effects of campaign spending are on election outcomes and what effects lobbying – as a form of legislative subsidy – has on agenda setting in elected government. Money in politics has become so pervasive that studying it has become a full time job. But when all is said and done, the truth is the escalating nature of campaign expenditures and the massive lobbying complex we see is a testament to the growing power of government.
Today, corporations and special interest groups all across the nation expend billions to ensure that they get preferential contracts, easy access to licenses and exemptions from regulations that hamstring and hold back their competitors. The problem today is not so much “the effects of money in politics” but rather “the danger of government in our business.”
Economist Hans Hermann Hoppe defines all government as “a compulsory territorial monopolist of protection and jurisdiction equipped with the power to tax without unanimous consent.” Said in plain language, the purpose of government is to single-handedly determine the market price of justice and to execute it on behalf of those who can pay for its services. As awful as that sounds, the truth is government almost always works best for those who “pay to play” rather than those who expect the government to abide by its own (supposed) set of rules.
America’s founding fathers knew that government in all forms was dangerous to pocketbook and life alike, so rather than seeking to make a perfect government they aimed to make as small a government as possible. The bigger a government gets, the more expensive and the more ridiculous the methods are needed to pay the price of “justice” in a state. Today, with over 68 new regulations being created or proposed a day by our government, is it any wonder that the only people who can afford to have a voice are large independent expenditure committees and corporate-funded special interest groups?
If Hawaii wants to break the stranglehold of “money in politics” and special interest powers, her people need to commit to shrinking the size of government and abolishing the octopus-like regulatory tentacles its countless enforcement agencies have on our marketplace. In a free market, private individuals through private contracts and private ownership set the rules. If you don’t like something, you’re not forced to buy it, subscribe to it or submit to it in a free market. Lobbying and campaigning are seldom necessary in a free market because people are able to do what they want without someone forcing compliance on them.
So long as government is massive, those who have the ability to “pay to play” can divide and conquer the public by setting the price of justice against you and me.
If we want UP to more freedom and liberty without having to pay for licenses, exemptions and preferential treatment from politicians or government, we have to shrink the size of government. Less government always means MORE freedom.
Kauai County Employee Indicted After Audit Into Fuel Consumption Documented Abuse (Hawaii Reporter, 11/15)
Hawaii Reporter published a story that a recent audit revealed “Kauai County’s employees consume $1.4 million worth of fuel per year, with most acquired and dispensed through four fueling stations managed by the county’s Department of Public Works. The audit had four major findings including: Inaccurate fuel data and inventory tracking procedures result in significant loss of ability to fully account for fuel usage; Accountability for fuel usage is hampered by employees entering incorrect identification numbers into the system; Accountability for fuel usage is hampered by billing inefficiencies and inconsistencies; [and] Improvements are needed in controls designed to monitor and detect unauthorized usages”.
ANALYSIS: Fraud, waste and abuse is a recurring phenomenon throughout all government, both in Hawaii and around the world. What is most unfortunate however is that over the last few years increasingly fewer and fewer people realize that government is bad for taxpayers and markets alike. I call the decline of understanding of law and economics “Liberty Brain Drain” and here in Hawaii it seems that we are plagued with it.
Today, everyone loves to talk about “government waste” – or what they think is waste. But what people fail to realize is that every dollar spent by government and every resource consumed by government – no matter how efficiently or inefficiently it is consumed – is something that is restructured from (that is, taken out of) the private marketplace. Using the example of Kauai County employees, $1.4 million worth of fuel consumed by the government is $1.4 million in fuel that private individuals cannot use towards production, capital creation or personal use. Unlike private industry consumption of fuel that usually produces something in exchange for the resources and moneys consumed, government produces nothing.
The scarcity created by government consumption of $1.4 million in fuel causes the demand curve to shift, making the price of fuel higher than it would be if $1.4 million in fuel wasn’t being consumed. Now multiply that effect nationwide: in 2011 alone the U.S. Government in sum consumed a total of 1.12 quadrillion BTUs of energy, .8 quadrillion of which was from petroleum alone. Let’s all say it together with me: “OUCH!” Is it any wonder that fuel prices are going through the roof at the pump?
So let’s be clear: all government consumption from a market perspective is destructive. Fuel that is used by the government is fuel that couldn’t be used by the shipping companies that deliver your food to Hawaii, the manufacturing companies that build industrial equipment, your next door stay-at-home mom and so forth. Government puts scarcity and inflationary pressure on the marketplace – translated into plain English, the government’s very existence causes a pinch on your quality of life and accessibility to resources. This is a serious DOWN for liberty. If you want to end government waste … cut government!
A press release by outgoing Sen. Daniel Akaka blasts Republicans for voting in opposition to the Cybersecurity Act of 2012. “For years, my colleagues and I on the Homeland Security Committee have heard about how computer networks in the United States – both in the government and the private sector – are under constant cyber attack. The computer control systems that operate our critical infrastructure, such as our electricity grid, water plants, and transportation systems, have been incessantly targeted as well. Last month, Defense Secretary Leon Panetta warned that the U.S. faced the threat of a ‘cyber Pearl Harbor’ and the national security experts on both sides of the aisle have warned about a impending ‘cyber 9/11.’ As a witness to the attack on Pearl Harbor, it is frightening to know that a successful attack on a critical infrastructure control system could lead to more loss of life, injury and damage than those terrible events.”
ANALYSIS: “Security” is a service, and like all other things in the marketplace, security has a value that is assigned to it. In the case of “cybersecurity” the argument for making control and regulation of the internet and electronic infrastructure a public good is that somehow, government knows best how to procure cybersecurity for America. The problem with this is that unlike the free market which 1.) determines the optimal security subscription cost that is appropriate for the risk level and 2.) makes security subscription optional, government-run cybersecurity makes every taxpayer an unwilling participant in and subscriber to the security regime.
Consider: if I owned a life insurance company, protection of the firm’s data would necessarily require that my company guard client information. An insurance company that doesn’t have adequate cybersecurity would gamble exposing its clients to unnecessary risk, so market forces compel acquisition of appropriate security. On the other hand, there is absolutely no reason for an 17-year old who works at McDonald’s to pay out of his income taxes for cybersecurity since his risk vectors (and income) are smaller. Government on the other hand says “All of you, irrespective of what you are or who you are must be monitored and pay to be monitored so that you can be kept safe.”
When security is breached, it is the result of a market failure to have appropriate security measures. Stuff happens in the world. Lightning strikes randomly, thieves break into things and accidents do happen. Market failures are inevitable because human beings are not omniscient or omnipotent.
Government makes the assumption that its security is always perfect and that it never makes a market failure, therefore because they know better than the rest of us, they should control things in the public interest. Ironically, Senator Akaka’s use of references to the Pearl Harbor and 9/11 attacks underscore not a failure of private individuals but rather public security: on Pearl Harbor, Japanese planes didn’t attack Hawaii because private markets failed to have air defense, they breached the radar network because the operators at Opana Point who saw the incoming attack planes were told “not to worry about it” and reports by the Destroyer Ward of a Japanese midget submarine in Oahu waters went unheeded. The attack on Pearl Harbor was a government failure to stop the attack.
The fact that Pearl Harbor happened in spite of Hawaii being an armed fortress in the middle of the Pacific Ocean illustrates perfectly why government, like private markets, is not omniscient or omnipotent. Government wants to have a multibillion dollar solution for every real and imagined threat in the universe, but ultimately its success rate is no better than private markets. Government wants to secure you whether you need it or not – and forces you to pay for it!
If cybersecurity is a threat, then private markets should determine how best to address that. Government run cybersecurity also isn’t security against foreign threats – it’s just one more tier of domestic surveillance and domestic regulation. Our founding fathers would have voted no to the Cybersecurity bill. This is a serious DOWN to less freedom.
Pro-secession requests grows to over 40 states (Washington Times, 11/13)
The Washington Times reports that in the wake of President Obama’s re-election, people in over 40 states have filed petitions on the White House’s crowd-sourcing website requesting peaceful secession from the United States of America. One petition from Texas even aggregated more than 108,000 signatures in support of secession!
ANALYSIS: Chances are if you attended public school, you were taught that secession was something that pro-slavery states did to preserve their right to oppress human rights. Secession is portrayed as something that “evil people who want to destroy the Union and freedom” do. Unfortunately – as another sad example of Liberty Brain Drain, almost no attention in public schooling is placed on the legal rationale behind secession or an even rarer known concept known as nullification/interposition.
Thomas Jefferson wrote:
“in cases of an abuse of the delegated powers, the members of the general government, being chosen by the people, a change by the people would be the constitutional remedy; but, where powers are assumed which have not been delegated, a nullification of the act is the rightful remedy: that every State has a natural right in cases not within the compact, (casus non fœderis) to nullify of their own authority all assumptions of power by others within their limits: that without this right, they would be under the dominion, absolute and unlimited, of whosoever might exercise this right of judgment for them: that nevertheless, this commonwealth, from motives of regard and respect for its co-States, has wished to communicate with them on the subject: that with them alone it is proper to communicate, they alone being parties to the compact, and solely authorized to judge in the last resort of the powers exercised under it.”
The idea behind this doctrine is that the United States Constitution, and by extension, the Federal Government, exists because of a compact between the States in which power is granted by the authority of the States. The States created the Federal Government; the Federal Government didn’t create the States. Therefore any breach of the Constitution or usurpation of powers delegated to the States (or People) is cause for the States to nullify or refuse to enforce or submit to unconstitutional mandates.
As James Madison said, “in cases of a deliberate, palpable, and dangerous exercise of other powers, not granted by the said compact, the States, who are parties thereto, have the right, and are in duty bound to interpose to arrest the evil, and for maintaining, within their respective limits, the authorities, rights, and liberties appertaining to them.”
Public schools teach that secession is “evil” and that the Civil War took away “irresponsible” power from the States and gave it to the Federal Government. But the truth is that secession has legal precedent in cases of Federal abuse of power. Hopefully America will not need to resort to secession to get its house in order, but the fact that so many states and so many people are beginning to consider it shows what a DOWN on liberty Washington D.C. has become.
Buffett not worried about fiscal cliff (CNN Money, 11/14)
CNN Money reports that Berkshire Hathaway founder Warren Buffett believes that “President Obama must be willing to keep pushing for higher taxes on the wealthy, even if it triggers the fiscal cliff” and adds further “The U.S. economy, he said, can weather it”.
ANALYSIS: Most people have absolutely no clue whatsoever what profits are, how profits are created and what impact government has on money and markets. Ironically, Warren Buffet’s father Howard Buffett was a far different man ideologically who believed in the dangers of government and warned:
“The paper money disease has been a pleasant habit thus far and will not be dropped voluntarily any more than a dope user will without a struggle give up narcotics. But in each case the end of the road is not a desirable prospect. I can find no evidence to support a hope that our fiat paper money venture will fare better ultimately than such experiments in other lands. Because of our economic strength the paper money disease may take many years to run its course. But we can be approaching the critical stage. When that day arrives, our political rulers will probably find that foreign war and ruthless regimentation is the cunning alternative to domestic strife. That was the way out for the paper-money economy of Hitler and others.”
“The critical stage” that Howard Buffett spoke of is our present day fiscal cliff. Unlike his son Warren Buffett, Howard Buffett did not want to go over the edge because he knew what impact it would have on the nation and the average person who, unlike billionaire investors, make money from producing things rather than transferring wealth or banking on volatility.
Higher taxes and more regulations on the rich almost never fall on the rich because they have the means to get exemptions from them. Who they do fall on are the lower classes, preventing them from advancing further in the socioeconomic regime. In this regard, aristocratic socialism is used as a device to keep old money entrenched in old hands. Warren Buffett may be advocating policies that are good for the inflation industries such as finance, insurance, real estate and government, but his ideas will hurt the average person. If we want UP to more freedom, we need to cut spending, lower taxes and let the market correct itself.
Obama Donor’s Corporation Lays Off Employees Due to Obamacare (Big Government, 11/13)
For all of the socialist fanboy rage against companies like Papa John’s and Applebee’s for making employment corrections to comply with the Obamacare mandate, Brietbart’s Big Government reports that Stryker Corporation – whose founder donated $2m to the Priorities USA Action Super PAC and $66,000 to Obama and the Democratic Party – “has announced that it will close its facility in Orchard Park, New York, eliminating 96 jobs next month. It will also counter the medical device tax in Obamacare by eliminating 5% of their global workforce, an estimated 1,170 positions.”
ANALYSIS: Today we live in a guilt society where “social justice” is considered pressuring people through a combination of social bullying and government threats into doing whatever the regime deigns as acceptable. The truth is, private companies know that Obamacare’s insurance mandate hits their bottom line hard. Some have the capability to accept the compliance cost and continue, others – sometimes competitors – are put out of business along with their employees because obeying the government is just too expensive these days.
You wouldn’t know it from reading most news reports, but the fastest growing sectors in the United States today are nontradeable sectors: government and healthcare. The very health insurance crisis that we are experiencing today is a result of the fact that government intervention in the last 50 years of healthcare has distorted prices and denied individuals and businesses alike the opportunity to bring market equilibrium to the ever-increasing cost of medicine.
As I have said so many times in previous Perspectives, government mandates are not neutral devices, they help those who control the system and its favors at the expense of those who do not. Obamacare is nothing more than a means to help select industries and businesses while others flounder. This is a serious breach of the Constitution and the Supreme Court’s ruling in favor of Obamacare was, to be honest, poor judgment. It is my hope that the States will work through the auspices of the Tenth Amendment to nullify Obamacare – otherwise, this will be the most severe DOWN for liberty America has ever seen.
Until next time fellow friends in liberty, good luck and godspeed!
Danny de Gracia is the Economic Policy Adviser for the Grassroot Institute of Hawaii. Views expressed in this column are intended to promote creative thought, educate, and, we hope, prompt comment. Accordingly, thoughts expressed do not necessarily reflect the official position of Grassroot Institute of Hawaii or the author.
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