Mark Hendrickson

Mark Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

Wednesday, 16 December 2015 11:52

Hendrickson's View

Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

A Free-Market Economist's Take on Ken Burns' "The Roosevelts"

By now, you've probably seen or heard about Ken Burns' 14-hour documentary on the three most famous Roosevelts: Theodore, Franklin, and Eleanor. I have to confess that I almost didn't watch it.

There were two reasons for my reluctance. First, I am not a fan of either Teddy or FDR as presidents. The former was guilty of a lust for war and domestic strongman tendencies, and the latter tragically prolonged the Great Depression. Second, I had watched a one-hour preview of the seven-part series and found it almost nauseating in its worshipful tone. Listening to the hostess, one would have thought that America would have remained mired in the 19th century were it not that these three gods had come down from Mount Olympus to show us the way.

Thank goodness I made myself watch the actual documentary. Ken Burns and his writer, Geoffrey C. Ward, steered clear of presenting a mythological hagiography, and instead gave us vivid, insightful, fair-minded biographies of three immensely important, but oh-so-human Americans.

Although America's history from the late 1800s until Eleanor's death in 1962 serves as the backdrop to these three larger-than-life biographies, it is crucial to understand that this documentary isn't a history of America, but of the Roosevelts. Sure, I or any other economist or historian could quibble about the details. For example, when the script says that Teddy never advocated a redistribution of wealth, I could retort: What about his statement, when running for president on the Bull Moose ticket in 1912, "Our aim is to promote prosperity, and then see to its proper division?" Or when the narrator mentions that some businessmen characterized FDR as dictatorial, he could have cited the 1936 Gallup poll showing that 45 percent of Americans believed FDR's policies could lead to dictatorship or the 1941 Fortune Magazine poll showing that fully 93 percent of employers felt their property rights were under siege and were worried about dictatorship. I never felt, though, that the authors were trying to mislead, manipulate, or propagandize.

Instead, the filmmakers scrupulously strove to present fair, balanced portrayals of their three protagonists. First, they straightforwardly and without sensationalism dealt with the less-than-flattering aspects of their characters - Theodore's compulsive need to be in charge and prove his manhood; Franklin's need for loyal, adoring female companionship and his "deviousness" (although Geoffrey Ward never quite explains that characterization); and Eleanor's aloofness as a mother. Also, the documentarians included many of the Roosevelts' opponents' criticisms, leaving it to the viewer to decide which side was right on various issues.

"The Roosevelts: An Intimate History" shines on at least five levels:

1) It humanizes three individuals who have largely become iconic caricatures. You may not agree with them, but if you can't find anything to like or admire about these three, you have a heart of stone.

2) For all but dedicated Roosevelt scholars, there is much to learn. I personally gained a new appreciation for FDR's morale-boosting leadership during World War II, and for Eleanor's courageous commitment to civil rights for African-Americans.

3) This program provides encouragement and inspiration to anyone who has suffered loss, heartbreak, and trauma, either psychological, such as losing both parents early (Eleanor) or one's mother and wife on the same day (Theodore) or physical - e.g., FDR's polio, the severity of which I never understood until seeing this documentary. Whatever you think of the Roosevelts' politics, it is a triumph for the human race when individuals can survive, thrive, and accomplish much after being dealt harsh blows.

4) The series raises interesting implicit questions about the psychology of presidents. Should we know what makes presidential candidates tick? Certainly it takes a person of special strength of character to be a great president, and often such character is forged in the furnace of shattering experiences, but should we elect someone like Teddy whose manic behavior was driven by a need to escape his demons and to constantly prove that he is strong and manly?

5) Finally, "The Roosevelts" encourages us to think about what kind of president is right for America. What is the right balance between leadership, vision, and values (essential) and power (dangerous) in an American president? Even if a president means well and has good intentions, do the ends justify the means, such as doing an end-run around the Constitution?

I salute Ken Burns for a top-notch, informative, fascinating documentary. And I say that as a free-market economist who has fundamental disagreements with many of the Roosevelts' economic policies. Watching the documentary was 14 hours well spent.

Saudi Arabia Versus the Keystone Pipeline

Wow, I had barely recommended repealing the laws that restrict U.S. oil exports as part of an overall ramping up of competition in global oil markets when news hit that the Saudis were cutting the price of oil shipped to the U.S. The price of oil has been zigzagging downward since then - much to the benefit and delight of American motorists, who have seen gasoline prices fall, and to the angst of oil producers as lower prices squeeze profit margins.

Some may think that the Saudis are targeting American producers by cutting the price of crude oil shipped to the States even as they raised their price to Asian markets where the supply/demand balance is more in the Saudis' favor. However, Stansberry & Associates resource analyst Matt Badiali points out the sour crude that the Saudis are shipping here doesn't compete directly with the light sweet crude coming out of American shale. The Saudis are competing with Canadian producers to whom, as Badiali shows, they have been losing market share. Since the Saudi cost of production is lower than the cost of producing oil from Canadian tar sands, it looks like the Saudis have the upper hand in a price war against the Canadians.

Of course, there are multiple factors here which make predicting the long term problematical: How much longer can the Saudis maintain their rate of production? How fast are the Canadians achieving economies of scale and advancing along the learning curve to reduce the cost of extracting oil from tar sands? Can the Saudis make up in increased sales volume the profits that they lose as the price of oil declines? What geopolitical events might throw a monkey wrench into the Saudis' strategy?

Still, as of today and for at least the near future, the ongoing fall in oil prices has to be a major concern to Canadian tar sands producers. At what price point will lower oil prices force them to cut back on production? Given the possibility that producing oil from tar sands may become uneconomical, would building the Keystone XL pipeline through the American heartland still make sense for American companies and investors?

Indeed, the Saudi decision to drive down oil prices in North America means that the future prospects for the economic viability of the Keystone project need to be re-examined. President Obama has stubbornly refused to give the green light to Keystone. Wouldn't it be ironic if, after squandering so much political capital on his obstructionist position, it turns out that market prices kill or continue to delay the project? Up until a few months ago we needed Keystone - if not for actual production, at least as a sign that America was committed to the development of petroleum resources. The very commitment to increased energy production likely would have been factored into market prices, lowering them earlier has actually happened.

So, what now? Should the Keystone Pipeline be built? That's not for me to say and, frankly, I don't see the future clearly enough to know whether it will be economically viable in the coming years. Neither is it for President Obama to say or know. Only the market can tell us which decisions to produce are wise and which are mistaken.

Policy-wise, the president should simply get out of the way, call off his regulatory dogs, tell his green constituents to sit on it, and let entrepreneurs decide what risks they wish to incur. If they build it and lose money, well, it's their money that's being lost, not the taxpayers' money as it has been for various Obama-financed alternative energy boondoggles. And if they do make money, it will be because they are supplying a commodity that Americans want and their addition to the total supply of oil will result in prices to consumers being lower than they otherwise would - in other words, a win-win situation for both consumers and those who took the risk to build and own the pipeline (with an added beneficiary being the government through its tax on corporate profits).

A final thought: The Saudis aren't being "the bad guys," even though those who hope to work on or otherwise profit from building the Keystone XL pipeline might wish the Saudis and their cheap oil would disappear. There are no "good guys" and "bad guys" in this strenuous struggle for market share. What we have in the oil markets is an example of the rough-and-tumble, unsentimental, take-no-prisoners nature inherent in competitive commodities markets. The sovereign consumer is in charge. Consumers decide which firms thrive and which die based on which ones best serve us. Consumers don't care which particular producers supply our need for commodities - we just want to buy the commodity as cheaply as possible.

The oil market is working. We consumers - thus, society as a whole - are benefiting. In the competitive scramble to serve us, some producers will succeed while others fail. We should be grateful for them all, winners and losers, for each one of them, in their attempt to earn profits by supplying our needs has added to the competitive pressures that have pushed down oil prices. The cheaper oil gets, the more our prosperity will increase. Good luck to all the competitors, and thank you for working for our benefit. *

Wednesday, 16 December 2015 11:48

Hendrickson's View

Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

The Flood of Illegal Immigrant Children: Why the Secrecy?

Illegal immigration is a subject I generally avoid. The issue stirs stronger passions and produces greater polarization than almost any other.

Without touching on the usual hot buttons, I wonder if we could at least agree that there is something - I grope here for the appropriate adjective - suspicious, irregular, uncomfortable, or not quite right about the administration's furtiveness and secrecy in the current crisis of illegal immigrant minors flooding into the United States.

Team Obama has imposed at least a partial media blackout. Journalists seeking to interview the young detainees at Fort Sill, Oklahoma (a long way from the border they crossed) were put off for days, and even then told that their scheduled 40-minute tour would happen only on the grounds that the journalists would ask no questions, take no photos, make no recordings, or otherwise do the kind of investigative work that reporters normally do. Such a Potemkin-type tour with its heavy-handed censorship violates the people's right to know.

At least one member of Congress (Rep. Jim Bridenstine, R-OK) has been denied access to the children detained at Fort Sill - rather astounding, considering that Bridenstine sits on the Armed Services Committee that oversees federal military installations and that Fort Sill is located in the state that the congressman represents. Why the cloak and dagger? What's the big secret? These are mostly peasant children, not dangerous spies or terrorist leaders.

Why, too, the seeming furtiveness with which the administration is transporting hundreds of these minors to various far-flung states? Nebraska Gov. Dave Heineman declared:

I found out in the last 48 hours that approximately 200 illegal individuals have been transported to Nebraska. The federal government is complicit in a secret operation to transfer illegal individuals to my state and they won't tell us who they are.

Denying the governor of a state that kind of information is high-handed and disrespectful. It certainly mocks the principle of federalism.

Overall, the administration's conduct smells like a cover-up. Why? What needs to be hidden? Maybe nothing at all, but why not lift the veil of secrecy and let the truth out in the open? By keeping Americans from having access to the truth, the administration invites speculation, rumor mongering, and distortions that can only cloud the issue and make it harder to figure out what actions would be appropriate.

Already there have been reports, including charges by U.S. Congressman Phil Gingrey (R-GA), a physician, that some of the recent illegal immigrant children are suffering from tuberculosis, dengue fever, swine flu and other infectious diseases. This sounds like it could be exaggerated sensationalism and a false alarm, but how can we know for sure without more openness?

There are so many questions that remain unanswered, but that need to be answered if we are to make informed, intelligent decisions about what we think our government should do: Who are these children? How many of them made the decision to come north on their own and how many were directed (coerced?) by adults into making the journey? How did they get to the border? Do they qualify as refugees? What have they been promised, both before their journeys started and since their arrival? What are the medical problems they are experiencing, are they receiving adequate medical attention, and is there any risk of them spreading disease? Who is going to monitor the children that have been placed with relatives and sponsors to make sure that they show up for their scheduled hearings? Are relatives being asked to pay for a child being delivered to their door or is this a "free" service paid for by the American taxpayer?

The most crucial question is: What will be our policy going forward? What are we going to do with Central American, Mexican, and other foreign children who enter our country illegally, but whose parent(s) or guardian(s) in their native country won't accept them if they are repatriated? It is hard for Americans to understand the mentality that causes parents to send their children on a dangerous, potentially lethal (and, they expect, one-way) journey to the States. I once lived in a Latin American country where poor parents would maim their child (cutting off a foot was the favored form of maiming) and turn them loose on the streets where they depended on the compassion of strangers. To those parents, this was their child's best chance for survival. Similarly today, some parents believe that they have nothing to lose - if the kid gets killed trying to get to the States, well, his prospects weren't appreciably better at home, but if he makes it, then he has the opportunity for a much better life. Roll the dice: The fatalistic attitude, "Que sera sera," is a crucial component of the Latin American psyche.

This is the wrong time and wrong issue for the administration - the one that President Obama promised would be the most open in history - to maintain a wall of secrecy. Mr. Obama, tear down this wall! Let the American people see what is going on.

Deja Vu: Misplaying the Patriotism Card Again

A decade ago, soon-to-be Democratic nominee for president, John Kerry railed against "Benedict Arnold CEOs." That was his term for American executives who moved their business operations offshore. To equate offshoring with something as evil as treason is over the top even by the perfervid standards of political campaigning, but hey, "All's fair. . . " right? Well, not exactly. It turns out that the very corporations Kerry was excoriating were leaving the States due to policies adopted or perpetuated by the very Congress in which Kerry himself then sat.

Take, for example, the iconic candy manufacturer Lifesavers and their venerable competitor, Brach's. Both companies had moved abroad (Lifesavers to Montreal, Brach's to Mexico) not long prior to Kerry's incendiary remarks. They did this not for the purpose of hurting America, but to improve their odds of survival in a very competitive global market.

These companies decided to leave the U.S. because the domestic price of sugar was twice as high as the world price due to Congress' protectionist policies. It's difficult for a business to survive if it has to pay significantly more than its competition for one of its principal factors of production. I'm sure the executives would have preferred to stay in Holland, Michigan (Lifesavers) and Chicago (Brach's) than go to the expense and disruption of moving, but the congressionally imposed cost disadvantage they faced drove them away. For Kerry and other opportunistic pols to condemn those CEOs for leaving after they themselves had virtually driven them out takes a lot of chutzpah. Isn't that what liberals call "blaming the victim"?

Fast forward to July 2014: Secretary of the Treasury Jack Lew is reprising Kerry's rhetorical tactic. In language only slightly less egregious than invoking the name of America's most notorious traitor, Lew has impugned the patriotism of American corporate leaders who are contemplating corporate "inversions" - i.e, acquiring a smaller corporation overseas and then relocating corporate headquarters to the acquired entity's country. Lew said American corporate leaders should show "economic patriotism" by staying here and continuing to pay America's worst-in-the-developed-world 35 percent corporate profits tax.

Once again, moving offshore isn't a matter of executives being anti-American, but simply one of economic viability. In a competitive global marketplace, expecting a business to compete at a significant cost disadvantage is asking a lot. Companies that do what markets impel them to do-e.g., to lower costs-are in a better position to employ workers, reward investors, and lower prices charged to consumers.

Obviously, as head of the federal government's woefully indebted Treasury, Lew is scrambling and scrounging for revenue. We can understand why he would make every effort to persuade corporations to remain in the States. But put yourself in the CEOs' shoes: Is the higher right to protect the interests of their employees and shareholders or to support the profligacy and wastefulness of congressional spending - boondoggles like Solyndra, monstrously inefficient bureaucracies, corporate welfare and other vote-buying special interest handouts? Instead of asking CEOs to ignore their fiduciary responsibilities, Lew should urge the White House and Congress to show their economic patriotism by forswearing the chronic irresponsible overspending that endangers our country's posterity.

Instead of growling like ravenous predators seeking to devour business profits, it's time for government leaders to take a different approach. They should ask the simple question: Why are some American businesses re-domiciling offshore? The predominant reason is to become more competitive by shedding a cost disadvantage - namely, higher corporate tax rates in the U.S. than abroad. Washington could reverse the flow by adopting lower corporate tax rates than other countries have.

Just as private firms compete for consumers by offering them lower prices, so governments compete for corporations by offering them lower prices (i.e., taxes). Of course, everyone from President Obama to the IMF and OECD, to the new progressive rock star, economist Thomas Piketty, abhor the idea of governments competing against each other, but why should we object to competition? After all, it was good old-fashioned economic competition that helped make the U.S. the richest country in the world. Instead of trying to avoid competition, let's embrace it and win. That's the American way. That would be true economic patriotism, American-style. *

Wednesday, 16 December 2015 11:46

Hendrickson's View

Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

How to Stop The EPA's Jihad Against Carbon

A few years ago, Congress narrowly defeated passage of legislation to implement a "cap and trade" program that would have made fossil fuels more expensive. Cap and trade would have been the mother of all excise taxes, transferring large sums of money from users of electricity (i.e., all of us) to Uncle Sam. Penalizing consumption of CO2 would have been a body blow to America's energy-based economy.

The EPA now proposes to do what Congress didn't do. It has proposed mandating a 30 percent reduction in CO2 emissions by the year 2050. In doing so, it is supported by a Supreme Court ruling that greenhouse gases are to be defined as "pollutants" under the Clean Air Act. Given President Obama's stated desire to bypass Congress with unilateral executive action, it is no surprise that the EPA has acted at this time.

What terrible timing! The economy's growth rate is negative; furthermore, the case for taking costly action to address the alleged threat of anthropogenic global warming is even weaker now than it was five years ago.

The supposed scientific case for the AGW theory has collapsed. Attorney Francis J. Menton, Jr., in a brilliant letter to EPA administrator Gina McCarthy, wrote

. . . the most recent IPCC report completely undermines any basis for determining climate sensitivity with the following statement: "No best estimate for equilibrium climate sensitivity can now be given because of a lack of agreement on values across assessed lines of evidence and studies." This means that the IPCC admits that it does not have a credible mean, mode, or median value of the equilibrium climate sensitivity parameter. In the mathematics of Decision Theory, this situation is called Complete Ignorance Uncertainty.

Menton then states that the EPA's "Endangerment Finding" of 2009 (which purports to demonstrate the dangers of CO2) "has been invalidated by the failure of real-world data to support each of the three 'lines of evidence' on which EPA purported to rely in reaching its Finding." Indeed, the data completely demolish and refute the finding.

Yet, some of the more zealous proponents of carbon regulation have taken to manipulating numbers (shades of "Climategate"). It turns out that the claim that 97 percent of climate scientists agree that human activity is likely responsible for the earth getting warmer is fiction. Joseph Bast and Roy Spencer, writing in The Wall Street Journal a few weeks ago, found the actual figure to be closer to 1 percent of the papers used to conjure up the 97 percent claim.

What is particularly ironic about the EPA continuing to press on with its anti-carbon jihad is that even some of the scientists who have advocated stringent anti-carbon rules essentially exploded their own case several years ago when they began to tell us that the earth is likely to cool for a few decades before entering a prolonged period of rapid warming. For years, alarmists insisted that CO2 warms the planet. Then they began to assert that rising levels of CO2 won't warm the earth for 30 or 40 years, but will do so later on. Come again? Does CO2 warm the earth or doesn't it? Alarmists are finally conceding the main argument of global warming skeptics: Other forces - particularly solar variations - overwhelm the greenhouse effect.

The unfathomable irrationality of the EPA's new edict is seen in this: The IPCC's own figures - problematical as they are - project a reduction of a minuscule 0.08C by the year 2050 if the U.S. were to eliminate all CO2 emissions. Presumably, reducing such emissions by the proposed smaller amount - 30 percent - would make even less of a difference. It shouldn't be too hard to frame the issue to the public in terms of whether, if they believe that humans are responsible for global warming, they are willing to pay much higher prices for electricity and suffer a more sluggish economy in exchange for temperatures several decades hence being a few hundredths of a degree lower.

Why do President Obama and the progressives pursue their anti-carbon jihad so relentlessly? It certainly isn't for the well-being of the American people. I can only surmise that it has something to do with the usual preoccupations of politicians, i.e., money and power (and, in the case of President Obama, ideology).

Money? Perhaps people like Sen. Reid see how Al Gore became a very rich man by investing in the very global warming alarmism that he helped to spawn while working in government.

Power? Perhaps the jihad against CO2 has something to do with keeping those campaign contributions from wealthy green groups flowing. Or maybe the "Curley effect" (make Americans poorer and more dependent on government) is a factor. And since progressives, like socialists, prefer to control "the commanding heights" of the economy, it's only natural that, after doing much to increase government control of health care, finance, and education, Obama now craves increased control over energy.

Ideologically, the president is simply opening another front in his war against the middle class and proving once again that he is a "mean green."

So, what is to be done to free us from the counterproductive war against carbon-based energy? Alas, as long as Harry Reid is the Senate Majority Leader and Barack Obama is in the White House, we're stuck, but here is what I propose:

First, Congress should undo the damage done by the Supreme Court and curb the EPA's bureaucratic overreach by passing legislation that states simply: For purposes of U.S. law, greenhouse gases are not to be defined or categorized as "pollutants."

Second, no member of Congress, his or her staff, or any of their relations may ever invest in any enterprise pertaining to green energy or climate change.

Some day we will look back at global warming alarmism and be amazed that so many people were enthralled by such phantasmagoria. At present, though, the threat is painfully real.

America's Losing Battle Against Poor Governance and the Whac-a-Mole

Under President Obama's leadership, a veritable flood of contentious issues has convulsed our body politic. Republicans and Conservatives are aghast at what they perceive as Team Obama's disastrous governance. They cite scandals (Fast and Furious, Benghazi, the IRS, the VA), fiascoes (Obamacare), and bureaucracies running amok (EPA, NLRB, FCC, BLM, et al.). Democrats and progressives counter that there are no real scandals, fiascoes, or abuses, and charge that allegations to the contrary are nothing more than partisan fabrications designed to obstruct and undermine the agenda of the man who has won the last two presidential elections.

I fall into the former camp. What I find ironic and frustrating is that the sheer volume of incidents of poor governance appears to work to Team Obama's advantage. Just when the Republicans look like they might get their hooks into one major problematical policy, several additional such instances arise, each taking its turn in the media spotlight and diverting the public's attention from earlier scandals, fiascoes, or abuses. Instances of poor governance have proliferated at such a dizzying pace that Congress has been unable to gain traction on any individual problem. Instead of providing needed damage control against executive branch malfeasance, the legislative branch futilely spins its wheels as the federal leviathan grows out of control.

Let's slow down for a moment here to take a closer look at just one of this year's disturbing federal flare-ups - the confrontation that the Bureau of Land Management (BLM) had with Nevada rancher Cliven Bundy. There are four aspects of that episode that bear important lessons for us.

The first lesson is the considerable power of the media to frame the public debate. There were multiple important issues in the Bundy/BLM case - property rights, federalism, proper or admissible conduct by federal employees, etc. All of a sudden, though, when Cliven Bundy made some artless, dumb, warped statements, the media turned a serious story involving issues of vital concern into a circus about the question of whether Bundy is a racist. It seems clear that there is little chance that any major government malfeasance or malpractice will be investigated thoroughly unless the major media keep the story alive.

The second aspect of the Bundy/BLM case that merits further attention is the conduct of BLM personnel and other federal employees. In her column, "Liberate The Federally Occupied Western States," former New York Lt. Gov. Betsy McGaughey reported that when BLM personnel moved in on Bundy, they seized his cattle at calving time, separating cows from their less-than-week-old calves, thereby inflicting trauma, suffering and, in some cases, death on those vulnerable creatures.

Such conduct was inexcusable; it showed a premeditated meanness. The raid was a naked power play, timed to inflict maximum damage on an American citizen's livelihood and (I believe) intended to convey an unspoken but unmistakable message to the American people: Uncle Sam is the boss, and if you ever stand up for your rights against his agencies, they will smack you down. (And by the way, what did the cattle do to deserve suffering and death?) The BLM exhibited the same spirit that the president manifested when he sought to impose maximum pain and discomfort on innocent Americans back during the budget sequestration talks. The BLM's heavy-handed tactics in Nevada were reminiscent of the brutal tactics employed by Communists to subdue those who dared to resist them. One vivid example: During the famine in Ethiopia in the mid-1980s, the Stalinist president, Haile Mariam Mengistu, drafted young men off the farms and into his army just before harvest time so that the crops would be lost. It seems that the BLM, like Mengistu, figured that the most effective way of subduing people is to deprive them of their means of sustenance.

Another troubling aspect of the BLM's tactics against Bundy is that employees of the BLM and other federal agencies came after Bundy with SWAT teams, snipers, and overwhelming firepower. Aside from that ridiculous degree of overkill to be brought to bear against a rancher who, according even to his opponents, is a deadbeat squatter, not a rapist or murderer, there is something horribly unsettling about federal bureaucracies taking up arms against American citizens. Yes, by all means, in necessary cases deploy the FBI and other law enforcement agencies. But in the last year or so, there have been too many reports of non-law enforcement agencies obtaining weapons - everything from the Social Security Administration ordering large stockpiles of hollow-tipped bullets to the Department of Agriculture's equipment order for submachine guns.

The third point we need to reassess is the role of the BLM. This federal agency currently controls one-eighth of the surface landmass of the United States plus subsurface mineral rights that are almost three times as large. (All federal agencies combined "own" 28 percent of U.S. land.) Thus, the BLM is larger than many countries in the world. Its current director is 35-year-old Neil Kornze, who previously worked for Senator Harry Reid.

Since the Bundy flap, I have been on the lookout for BLM news. It turns out that young Mr. Kornze is doing his part to help President Obama bypass Congress and set national policy in at least two major ways - namely, assisting Team Obama's green energy plans and weakening the policing of our border with Mexico. In regard to the former, BLM is promoting the green energy agenda by authorizing a corridor for green energy transmission lines through the Defense Department's White Sands Missile Range in New Mexico. This would benefit the private investors of a company named SunZia while compromising national security, according to New Mexico's Governor, Susana Martinez, and Congressman Steve Pearce. Question: Since when did Congress delegate authority to the BLM to pick winners and losers in the energy industry? The BLM is also acting to undermine law enforcement agencies' ability to intercept illegal immigrants across from the notorious Ciudad Juarez by designating 600,000 acres of land the "Organ Mountains-Desert Peaks National Monument." Existing wilderness designations mean that border control patrols cannot ride on the protected land, making it much easier for illegals to elude detection.

This brings us to the fourth aspect of the BLM's 2014 activities that merits further thought: Where is Congress? Why haven't congressmen called BLM on the carpet for its role in usurping Congress' prerogative to legislate the rules that help to determine what energy companies will thrive and what our country's immigration policy should be? In fact, why hasn't Congress begun to dismantle the BLM by privatizing its vast land holdings? Government control over real estate was the first of 10 points in Marx's platform for socializing an economy. Why do we tolerate our government "owning" so much land? Other than keeping the land it needs to support national defense and house the offices of other federal departments, the federal government has no business keeping such vast and valuable resources out of the hands of the productive private sector.

As much as I wish Congress would rein in the BLM and reform it radically, I don't see it happening. This isn't because those members of Congress who see Team Obama's executive branch overreach as unconstitutional and pernicious are lazy or irresponsible. Rather, there simply isn't enough time for them to conduct thorough investigations of most of the abuses. A sensible wish list for those who want to return to sound government would be to extricate us from the suffocating tentacles of Obamacare, get to the bottom of the Benghazi scandal, restrain the IRS, untangle the VA mess, rein in the rogue EPA (and FCC and NLRB and...), etc. Obviously, this ain't gonna happen.

Like a supercharged version of the arcade game Whac-A-Mole, new executive branch problems and abuses keep popping up faster than Congress' ability to address existing ones. We are seeing the scary reality of Obama's bold promise to bypass Congress and implement his policies unilaterally through executive branch agencies, bureaus, and departments. Obama has demolished the traditional system of checks and balances between the legislative and executive branches. Through sheer volume of rule by regulatory fiat, Team Obama has neutered Congress.

To be fair, executive power has been eclipsing congressional power for decades already. I'm sure many of you reading this have seen the photo: The reams of paper stacked in the cabinet are the regulations - rules we all have to obey - promulgated by federal bureaucracies last year. Did you notice the small stack of papers on top of the cabinet? Those are the laws duly passed by our elected representatives in Congress last year. This shows graphically how dominant the unelected bureaucrats in the executive branch of the federal government have become. And if you want to put a dollar figure on the cost of this usurpation of the legislative function by the unelected bureaucrats of the executive branch, economists John Dawson and John Seater calculated that the 2011 GDP of $15.1 trillion could have been $53.9 trillion - three-and-a-half times greater - if federal regulations had remained at their 1949 level.

It's hard to have hope that we will somehow be able to cast off the massive, tangled network of bureaucracy that has steadily and stealthily accumulated so much power over us. Given the current composition of Congress and the administration in the White House, it's going to get worse before it gets better (if, indeed, it ever actually gets better). We're not about to win the battle against the regulatory Whac-A-Mole state.

What I'd settle for now, what I implore our Congress to do, is this: Could we at least have a congressional hearing about whether federal bureaucrats should be amassing fearsome weapons and becoming armed in their official capacity as "civil servants"? And please, Congress, don't single out just BLM, the Social Security Administration, the EPA, or the Department of Agriculture, or any other single bureaucracy. Just have one detailed public hearing on the question of whether federal agencies that aren't explicitly and specifically dedicated to law enforcement should be armed. What do you say, Congress? Are there any takers out there? *

Wednesday, 16 December 2015 11:40

Hendrickson's View

Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

The Politics of St. Paul?

In Romans 13:1-7 the apostle Paul writes:

"[A ruler] is the minister of God to thee for good" (v. 3);
"Wherefore ye must needs be subject . . ."(v. 5);
". . . pay ye tribute [taxes]" (v. 6).

St. Paul seems to be saying that God ordains human governments and that Christians should honor and obey the government under whose jurisdiction they live. Many Christians conclude from these verses that Christians should accept whatever government and laws their country has. Other Christians, while accepting the need for government and lawful behavior, question whether Romans 13 commands us to submit to human governments unconditionally. They ask: Is rebellion ever justified? Reform movements? Civil disobedience? Tax protests? Change?

Based on scriptural texts, Paul appears to be a quintessential conservative - not in the contemporary American sense of favoring a smaller government, but in the more traditional political sense of not wanting to disrupt the established order. Indeed, contemporary progressives reject Paul's unwillingness to challenge the social status quo. In his epistles, St. Paul tells servants to treat their masters well and vice versa. There are no appeals for "social justice," equality of status, or redistribution of wealth. In addition to the famous passage in Romans, Paul exhorts Christians to pray for all in positions of authority (I Timothy 2:1-4). These are not the writings of a political dissident.

Before categorizing Paul as a political conservative, let us consider another possibility: Perhaps he was apolitical. Like his Lord and Savior, Jesus Christ, Paul's life was devoted to a spiritual mission - the advancement of the heavenly kingdom that is not of this world. His objective was to reform and reconstruct the architecture of the thought, soul, and heart, not the superstructure of civil government. Paul was an evangelist for God and His son, not a political philosopher or activist. He was too busy being a spiritual radical to get involved in a political movement.

Indeed, Paul had to take great care that the fire of the Holy Spirit that burned in men's hearts not be conflated with the flames of political passions. Many Jews were still looking for a militant Messiah to lead them in revolt against the hated Romans. Paul must have known that if the followers of Jesus became a political movement challenging the authority of Caesar, the Roman army would crush, if not annihilate, the nascent Christian movement. Out of love for his Lord and his fellow man, Paul would not lead his flock to certain slaughter. His apparent cautiousness was not due to personal timidity or concern for his own safety. This faithful apostle bravely endured repeated hardships in the service of his Lord:

Five times received I forty stripes save one, thrice was I beaten with rods, once was I stoned, thrice I suffered shipwreck, a night and a day I have been in the deep . . . In weariness and painfulness . . . in hunger and thirst . . . in cold and nakedness (2 Corinthians 11:24, 25, 27).

Ultimately, this "great lion of God" (as the novelist Taylor Caldwell characterized him) was martyred for his faith.

It is significant that Paul's statements about honoring government occur in his letter to the Roman church. Certainly Rome, as home to Caesar and capital of the Roman Empire, would be particularly diligent in monitoring potential rebels. What if Roman authorities were to intercept Paul's letter? In that case, his statements about honoring government would contradict any charge that Christians were somehow disloyal to the emperor. At the same time, Romans 13 conveys messages that were opaque to the pagans but transparent to Christians.

The chapter begins, "Let every soul be subject unto the higher powers" (v. 1). While Roman authorities might have assumed that Paul was writing about Caesar, Christians knew that "the higher powers" were divine - that God is the sovereign to whom one owes fidelity. And when Paul writes that a ruler "is the minister of God to thee for good" (v. 4), doesn't this imply that he is speaking of rulers who are just and good - those who uphold God's rules protecting the sanctity of life, marriage, property, reputation, etc.? Yes, we should pray for all who are in positions of authority, for benign and just rulers, that they continue to be so, and for corrupt or unjust rulers, that they mend their ways and govern better.

Here is a jarring thought: If Christians are never to rebel against unjust government, then America's Founding Fathers were wrong to rebel against the English crown and parliament to establish a republic where most people's God-given rights were given greater protections than anywhere else on earth.

This leads us back to those controversial, fundamental questions about which Christians of good conscience may strongly disagree: What is the proper scope of government? To what extent should Christians "turn the other cheek" and "suffer it to be so now" by accepting the status quo, and when is challenging and changing laws and government justified? Is it possible that Paul's contributions to the scriptural canon were not essentially conservative, but so profoundly revolutionary on a long-term basis, leavening human thought until, centuries later, Christians' hearts and minds were filled with the unshakable conviction that it was a human right to throw off unjust governments?

Here is one point on which most Christians may agree: Governments often adopt policies that don't seem right, and we disagree on which policies those are. But all of us can take heart from that glorious promise that St. Paul gave us in that same letter to the Romans: ". . . all things work together for good to them that love God . . ." (Rom. 8:28). Amen.

The UN, EPA, and the Latest Climate Change Folly

When writing about the IMF last week, I mentioned that bureaucracies tend to do everything possible to perpetuate themselves. So it is with the United Nations and the Environmental Protection Agency.

The UN long ago found common cause with redistributionist national governments on the subject of climate change/global warming, spouting an alarmist theory of impending disaster unless we Americans slow down on economic growth and the governments of richer countries give more of their taxpayers' money to the governments of poorer countries. Thus, predictably, the UN's Inter Governmental Panel on Climate Change has just issued its fifth assessment report in which it continues to sound the alarm about warming caused primarily by increased concentrations of CO2 in the atmosphere. It also states that developing countries need between $70 and $100 billion per year to make needed changes - money that the developed countries are expected to supply, even as they shrink their own GDPs.

The EPA has been progressively expanding its reach, successfully positioning itself as a ubiquitous presence in our lives and establishing itself as one of the most powerful agencies of the American government. Its latest gambit involves attempting to regulate emissions of bovine flatulence - a major source of methane, a gas that traps much more heat than CO2. The EPA initiative has far-reaching implications, since the only way to reduce the amount of gas emitted by cattle may be to curtail our consumption of beef by reducing the number of cattle in existence.

There are multiple flaws in the alarmist position. Let's cover just a few:

1) The climate change gurus can't forecast the future. This goes beyond the problem that the alarmists have as a result of their dozens of computer models not conforming to real-world historical data and all contradicting each other like some sort of scientific Tower of Babel. The inescapable problem is that much of the climate is a "coupled, nonlinear, chaotic system," meaning that it may not be possible to predict it with accuracy.

2) Not only can we not "prove" that earth will warm or cool over the coming decades, we don't even know what the net gains and losses of either alternative would be. Maybe (I don't claim to know) warmer would be better on a net basis, maybe cooler would be better (although based on the history of the last 2000 years, I lean toward warmer).

3) Not only can mere mortals not predict the future climate, we cannot control it with present or near-term technology. The UN report warns "that the problem will become increasingly difficult to manage." This belief that humans can somehow "manage" the climate is what Friedrich Hayek called "the fatal conceit" on steroids.

Look, the alarmists themselves already have sabotaged their own theory. A number of them in recent years have started to hedge their bets by suggesting that the current 17-year stretch of non-warming may continue for several decades. They avoid mentioning that manmade CO2 emissions are likely to continue to increase over that period. That pretty much nullifies their thesis that CO2 is the primary driver of climate change. Essentially, they are conceding the skeptics' point that other factors have greater impact on global temperatures than CO2.

Over 20 years ago, the George Marshall Institute published a study showing that all of the small increases in global temperature from 1900 to 1990 could be attributed to increases in the sun's energy output. Over the course of earth's history, changes in earth's orbit around the sun, changes in the tilt of the Earth's axis, and changes in albedo (reflection of light from the planet, due partly to cloud cover) have driven changes in terrestrial warmth. As for the atmosphere's greenhouse effect, by far the major portion of that is attributable to the primary greenhouse gas - water vapor (which even the UN and the EPA aren't foolish enough to propose regulating). As for the minor share of the greenhouse effect due to global warming, since humans account for only about four percent of total global CO2 emissions, it becomes apparent that we humans are, in terms of our impact on climate change, a monkey on an elephant's back - we're not the driver, we're just going along for the ride.

We need to remember how hyper-politicized the IPCC and EPA are. They have their agendas. I was interviewed about climate change for a Voice of America broadcast a few weeks ago, and, since I'm a skeptic, was asked if I had received money from fossil fuel companies. My reply was that I haven't, but how horribly biased it is to ask skeptics if they receive oil money, but not to ask alarmists if they receive government money. Why this presumption that private money is corrupt but government money is pure and noble? What a naive, unrealistic, perhaps deluded assumption that is. Billions of government dollars have been spent advancing the alarmist scenario/agenda. The alarmists bring to mind something H. L. Mencken once wrote:

The whole aim of practical politics is to keep the populace alarmed by menacing it with an endless series of hobgoblins, all of them imaginary.

Don't let the hobgoblins scare you. *

Wednesday, 16 December 2015 11:39

Hendrickson's View

Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

The War Against Work and Wealth?

The Congressional Budget Office's recent analysis of the Affordable Care Act concludes that it will result in the equivalent of 2.3 million full-time workers leaving the work force to preserve their taxpayer-financed subsidies for health insurance.

This is troubling on several levels: In terms of fiscal impact, it will exacerbate the federal budget deficit, both on the revenue side (fewer taxable hours being worked) and on the expenditure side (Obamacare's new subsidies). Economically, our country will be poorer than it otherwise would be. Work produces wealth; less work means less wealth, and also less upward mobility for those who drop out of the labor force. Politically, as the number of unproductive citizens dependent on government increases and the number of productive citizens whose taxes finance government decreases, the unproductive may achieve a permanent majority - a political hegemony - as happened in ancient Rome with dire consequences.

News of fewer Americans working should come as no surprise with the current administration running the show. Whether it be the unproductive "stimulus plan," increasing the minimum wage, suffocating regulation, increasing unemployment subsidies (miscalled "compensation"), adding record numbers to the disability rolls, etc., the Obama presidency has been a job-destroying machine from the start, as I noted four years and two-and-a-half years ago. Even as the heroic efforts of industrious Americans manage to keep our economic nose above water, the labor participation rate has fallen.

What is remarkable about the all-too-predictable loss of jobs resulting from Obamacare is the administration's response. Jason Furman, the chairman of the White House's Council of Economic Advisers, tried to spin the projected net reduction in productive labor as a positive. He said, "This is not businesses cutting back on jobs, this is people having new choices they didn't use to have." Team Obama's attitude seems to be that it's bad for society when businesses reduce jobs in the face of increased cost burdens - as if the primary reason businesses exist is to "give" somebody a job rather than to produce wealth and serve consumer needs - but it's good for society if individuals cut back their work hours and increasingly live on government support. Note the double standard: If businesses respond to Obamacare's disincentives to employ people by reducing employment, that's bad (and the IRS, without statutory authority, will play the grand inquisitor, and demand to know if Obamacare was the reason they cut employees' jobs or workweeks) but if individuals respond to Obamacare's disincentives to work by reducing their hours of work to qualify for larger government subsidies, that's good.

Referring to a record number (over 100 million) of Americans not working, White House spokesman James Carney hailed this lost economic production as a wonderful development. Or, in other words, "a milestone on the path toward the ultimate complete liberation of the American worker from the drudgery of work," to quote Lewis K. Uhler and Peter Ferrara. This utopian vision of a world without work is uncomfortably close to the economic irrationality of the Occupy Wall Street crowd.

At their 2012 May Day rally in Chicago, the Occupy Wall Street members prominently displayed signs saying, "If you have to work to live, is it a choice? If you have no choice, are you free?" Sorry, people, but, we aren't born with a lifelong supply of sustenance accompanying us, and so we are not free from the necessity to produce what we consume - that is, to work. Those who lament that they aren't free if they have to work seem remarkably unconcerned about the freedom of their fellow citizens. To reword the slogan on the Occupy Wall Street sign: If you don't work, and you expect your fellow citizens to work to support you, can your fellow citizens be free?

This administration's desire to make it easier for people not to work and to live at taxpayer expense makes no economic sense. It reduces the amount of wealth produced and keeps people from ascending the ladder of individual economic progress. Politically, though, it makes a lot of sense to Obama and his progressive allies. By continually increasing the number of citizens economically dependent on the political process, Obama comes that much closer to achieving the Curley Effect and securing a permanent Democratic majority over an increasingly shrinking productive sector. Should that happen, the war on producers, and therefore on wealth, will escalate, resulting in a poorer America. The longer Team Obama's war against work continues, the more they cripple the wealth production upon which our standard of living depends.

The State of the Disunion

Americans are deeply divided in 2014, suggesting that this year's elections will be another bitter clash. One major fault line that divides us is that many Americans view the federal government as their benefactor while others perceive it as a grave threat to their well-being.

A recent Pew research project found that 53 percent of Americans think that today's government threatens personal rights and freedoms. (Incidentally, this isn't the first time Americans have felt this way. As historian Burt Folsom reminds us in New Deal or Raw Deal, at the end of Franklin Roosevelt's first term in 1936, a Gallup poll indicated that 45 percent of Americans thought that FDR's policies could lead to dictatorship.)

Government aggression against Americans is indeed rampant. The IRS has targeted conservative groups, persecuted individuals who have tried to expose election fraud, and will now act as the grand inquisitor of businesses that have laid off workers due to Obamacare's costs. The rogue EPA is hounding energy companies and others, the National Labor Relations Board has once again shown it isn't impartial by helping to get Volkswagen workers to join the UAW, and the NSA's snooping seems ubiquitous.

Perhaps most worrisome is that even elected leaders are becoming bolder and more overt in expressing their hostility to individual rights. It's almost as if they feel they are so close to achieving an unbreakable political hegemony that they don't even have to pay lip service to tolerance, pluralism, or the rights of conscience any more.

Here are a few examples: Last month, New York Governor. Andrew Cuomo, stated on live radio that "extreme conservatives" (Americans who are right-to-life, Second Amendment absolutists, and those who do not embrace the gay agenda - far too sizable a percentage to merit the pejorative "extreme") "have no place in the State of New York." (Cuomo's team went into damage control spin mode, claiming that all he meant was that conservatives couldn't win statewide elections.)

New York's senior Senator Charles Schumer followed Cuomo's outburst a couple of days later by openly calling for the IRS and other government agencies to continue to hamstring tea party and other conservative groups so that he and his fellow progressives can exert more control over national policies. Apparently, Schumer no longer fears a public backlash from advocating the suppression of free political speech.

Then, of course, there was the ominous irony of the president declaring in his State of the Union address that, if Republicans wouldn't work with him to adopt the policies he wants, then he would bypass the people's elected representatives completely and rule by executive fiat.

And don't forget Senator Harry Reid's decision last year to jettison Senate rules by reducing the votes needed to approve key presidential appointees from 60 to a simple majority. Critics at the time thought Reid's decision was short-sighted - that he might rue having changed the rules once the Republicans regained a majority. But what if Reid doesn't think the Democrats will fall from power? What if he, Cuomo, Schumer, Obama, and company believe that by ignoring precedent, defying the constitution, and usurping power, they will never relinquish control of the government to Republicans - that they are so sure of their own rightness and good intentions that they feel entitled to rule and that the end justifies the means?

Some of you on the right might regard these brazen statements on the left as a godsend, on the grounds that surely the majority of Americans will perceive how tyrannical the left is, thereby paving the way for a conservative counterrevolution. Although I hope that is the case, the question then becomes: Who are you going to turn to as an alternative - the Republicans?

The problem with today's Republicans is that they do not offer a unified, principled opposition. Recently, they have capitulated on the debt ceiling issue and helped to pass the $956 billion farm bill "with strong bipartisan support." Runaway spending continues unchecked. Central planning is alive and well in Washington, the welfare state is undiminished, and cronyism remains firmly entrenched as the basic modus operandi of the federal leviathan. Combined with the internecine feuding between the GOP "establishment" and the tea party, constitutionalists, and conservatives, prospects for a significant change of direction in Washington in 2014 seem dim.

It appears that those Americans who want to use the government to redistribute wealth outnumber those who feel victimized by the predatory state. This is the true state of our disunion in 2014.

Wednesday, 16 December 2015 11:34

Hendrickson's View

Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

The Excessive Meanness and Injustice of Obama's Healthcare Law

I got a call the other night from my friend who was disgruntled about the myriad hassles caused by Obamacare. You may be tempted to respond, "No fooling! Join the club," and you'd be right, but there's more to it than that. My friend, Larry, is almost impossible to irritate. One of the definitions of "imperturbable" in the dictionary should be "Larry." If Obamacare is egregious enough to bother him, then the Obamacare fiasco is registering 9.0 on the Richter scale of political earthquakes.

Besides the meanness and injustice of millions of Americans suffering from this policy, Obamacare is spreading misery far and wide. This grotesque program has left millions feeling betrayed and abused, and has caused them to feel anxiety, bitterness, and resentment. Obamacare has placed the health (both physical and financial) of masses of innocent Americans at risk. And why? All so that some implacable ideologues can play social engineer and central planner, trampling on the Constitution, defying common sense, and abandoning common decency.

This fiasco is exposing the soul of leftism. Leftist ideologues (perhaps, by now, even some Democrats may concede that this is what Obama is) are chronic malcontents, constantly peeved that the world doesn't conform to their own ideal notions. Consequently, they sanctimoniously lash out, willing to tear down and tear apart society, condemning it for not being perfect, magnifying its imperfections while ignoring, if not despising, what is good about it.

Hardcore leftists are worse than malcontents; they are haters. Lenin told the commissars of education in 1923, "We must teach our children to hate. Hatred is the basis of Communism." Karl Marx, according to Bertolt Brecht, proudly proclaimed himself, "the most outstanding hater of the so-called positive."

It is the left's unremitting negativism that dominates their character. They are like spiteful, spoiled children who never grow up. They rage and complain about "injustice" because other people are not doing what leftists believe they should be doing. Thus, you have Bill Ayers, the young Jane Fonda, the petty intellectuals like Richard Cloward and Frances Fox Piven, the president, and many others who, having partaken of all the rights, privileges, benefits, and amenities of the USA, nevertheless resent, despise, damn, and war against it. They strive to trigger cataclysms and revolutions in our "bourgeois" society to punish it for its alleged sins, even if it harms millions of innocent people in the process. They are so obsessed with the bad that they are blind to the good.

In short, the left has lost the capacity to be happy, unless they are able to impose their will on other people. They are ungrateful for the abundant good that abounds in America. Since "misery loves company," leftists want the rest of us to be as unhappy as they are. What right have we to be happy (indeed, what rights should we have at all?) if they aren't, is their malevolent attitude.

Let us not allow them to succeed in dragging us down to their level of unhappiness. Let us not give in to despair, even as Obamacare swings its deadly wrecking ball through the health insurance industry.

The best response we can make to the predations and depredations of this vicious leftist administration is to refuse to share their wretched mental state. Instead, during this holiday season, let us remember and celebrate the abundance of blessings that we Americans have. Let us vigorously reaffirm that life is a beautiful gift and loved ones are a priceless joy. Let us remember that even though freedom and prosperity have been historical rarities, we Americans have enjoyed them to an unprecedented degree. Let us be glad and rejoice that, despite the unconscionable encroachments of the progressive left, we are still freer than most human beings ever have been. Let us exult that we have the opportunity to exercise that freedom to throw off the yoke of creeping tyranny that the progressives are trying to impose on us.

The left are after our rights, our liberty, and our joy. Let's not let them take them from us.

Do Americans Disrespect Congress or Themselves?

The approval ratings for the U.S. Congress are abysmal. According to, the average score on polls of Congress' popularity taken between Dec. 4 and 23, 2013 was 80 percent disapproval and only 13.9 percent approval. Ouch!

Ironically, the results of the 2012 election paint a different picture. Of 393 seats in which incumbents ran for re-election, 13 were defeated in primaries and 22 in the general election. In other words, over 90 percent of incumbents were re-elected. Where polls show disapproval, actual elections indicate approval. What gives?

Since Americans overwhelmingly re-elect congressional incumbents, it seems that dissatisfaction with Congress is directed mainly against the other 434 representatives rather than one's own single representative. Voters don't like the fallout and side effects from our current system of redistributive politics - the increasing debt; too much spending; the clamor, chaos, and conflicts that inevitably result when each congressman is trying to benefit his constituents at the expense of voters in other congressional districts.

In short, when so many are trying to get their hands into someone else's pockets, and everyone knows that property is up for grabs and that those with the most political clout or pull can get their hands on it, then social harmony is undermined. Voters on the take are unsatisfied with Congress because they aren't getting more, while voters whose property Congress is plundering are upset at being plundered. Few are content.

Far from advancing brotherhood and social justice, the modern transfer society has turned neighbor against neighbor as the fabric of society unravels in a Hobbesian bellum omnium contra omnes (war of all against all). The unseemly, shrill, incessant squabble over the spoils in Washington is not so much the fault of Congress as of the person in the mirror. Yes, Congress is obnoxious and rapacious, but that is because most Americans want, or at least tolerate, a government that redistributes wealth. Congress is merely carrying out the will of the people, so the blame is ours primarily, and Congress' only secondarily.

There are other reasons why many Americans disrespect Congress. Congress exempts itself from costly laws that apply to the rest of us (e.g., Obamacare). Congressmen often seem to leave office worth far more than when they entered. But why should we be surprised? Surely, when millions of voters expect Congress to redistribute trillions of dollars of wealth every year, we shouldn't be surprised when congressmen feel entitled to skim off a minuscule percentage for themselves.

Congressmen can lie with impunity; no truth-in-advertising laws apply to them. Congress - again unlike private businesses - can employ anti-competitive, monopolistic practices to ward off electoral challengers, giving themselves advantages such as large taxpayer-financed staffs and the franking privilege. But why should voters protest when congressmen attempt to rig the outcome of elections when many of those same voters engage in rent-seeking behavior and want Congress to rig the economic game to their financial benefit?

The area in which I deem Congress' performance most worthy of withering disrespect is its abdication of its fundamental constitutional responsibility to legislate the rules by which we live. Today, more than 90 percent of the rules we must obey are not legislated by Congress, but promulgated by unelected federal bureaucrats (e.g., the EPA's current drive to regulate the coal industry out of existence). Add to that the unaccountable Federal Reserve Bank to which Congress has delegated its constitutionally mandated monetary prerogative, and we must conclude that contemporary Americans are subject to powerful, unaccountable, unelected individuals who whittle away at our liberty.

By delegating to unelected officials its constitutional mandate to legislate the laws and policies by which we live, Congress has evaded its responsibility to make the tough decisions and stand accountable to the voters. They may pretend to commiserate with us when the Fed and other bureaucrats discomfit us, but they are glad they can use the unelected officials as scapegoats, blaming them for our diminished wealth and liberty.

Yes, Congress is a disgrace and a mess. Each congressional election is, as Mencken once wrote, an "advanced auction of stolen goods." For the sake of their own personal profit, power, and prestige, individual members of Congress have been plundering our property and diminishing our liberty.

As much, though, as I disapprove of Congress' performance, I think "we the people" are just as much to blame. Joseph de Maistre wrote, "Every country has the government it deserves." That seems particularly true when voters choose their own representatives. Millions of Americans have concentrated so much on using Congress to obtain financial benefits that they have tolerated or ignored Washington's progressive encroachments on their rights. Many of the 80 percent of voters who disapprove of Congress should look in the mirror. If they disrespect Congress, then they are disrespecting themselves.

100 Years Later, the Federal Reserve Has Failed at Everything It's Tried

On Dec. 23, 1913, President Woodrow Wilson signed the Owen-Glass Act, creating the Federal Reserve. As we note its centennial, what has the Fed accomplished during the last 100 years?

The stated original purposes were to protect the soundness of the dollar and banks and also to lessen the jarring ups and downs of the business cycle. Oops.

Under the Fed's supervision, boom and bust cycles have continued. Three of them have been severe: the Great Depression, the stagflationary period of 1974-82, and the current "Great Recession." Bank failures have occurred in alarmingly high numbers. Depending on what measurements are used, the dollar has lost between 95 and 98 percent of its purchasing power. (Amazingly, the Fed's official position today is that inflation is not high enough, so the erosion of the dollar continues as a matter of policy.)

Having failed to achieve its original goals, the Fed also has had a miserable record in accomplishing later goals. The 1970 amendments to the Federal Reserve Act stipulated that the Fed should "promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." In baseball parlance, the Fed has been "0-for-three."

First, the premise that the central bank can "fix" unemployment is erroneous. It is based on the Phillips curve - the discredited academic theory positing a trade-off between inflation and employment. Unemployment is fundamentally a price problem, not a monetary problem; therefore, the cure for unemployment is a free market in wages, not any particular monetary policy. The Fed's current policy of persisting in "quantitative easing" until the official unemployment rate reaches a targeted level is the wrong medicine.

Second, central bank tampering with interest rates is the fundamental cause of, not the cure for, the boom and bust cycles; thus, the Fed should cease from tampering with interest rates.

Finally, focusing on "stable prices" is looking at the problem backwards. The Fed shouldn't try to influence prices any more than a nurse should influence the readings of a thermometer. The "fever" that causes prices to rise and purchasing power to fall is sick money. "Heal" the money (i.e., do away with a fiat currency and abolish fractional reserve banking) and prices will take care of themselves.

So, what has the Fed accomplished during its century of existence? Well, it has become adept at bailing out mismanaged banks. In the aftermath of the 2008 financial crisis, the Fed orchestrated the big bailout of Wall Street. (Why the Occupy Wall Street movement didn't focus their protests on the Fed mystifies me.) Its other "accomplishment" has been to become the enabler of runaway federal deficit spending through its manipulation of interest rates.

Politically, the Fed is repugnant to the American system. Its chairman is commonly referred to as the second most powerful person in the country. In a democratic republic, should the second most powerful policymaker be unelected?

The Fed is unaccountable. Former congressman and presidential candidate Ron Paul tried to get Congress to mandate an audit of the Fed for years, but a majority of his colleagues seem afraid to take this simple, prudent step. Here, let me share an experience I had in 1981: A young congressman (later the governor of his state) gave a talk in which he asserted that Congress essentially was helpless because of the Fed's enormous power. Afterward, I approached him and said that the creator is superior to the creation, and that since the Fed was created by an act of Congress, it could be reformed or abolished by an act of Congress. The congressman turned ashen and fell silent. You can decide for yourself whether congressmen are afraid of the Fed or are using the Fed to get themselves off the hook, but unless something changes, Congress will allow the Fed to remain unaccountable.

The Fed is unconstitutional. Thomas Jefferson argued that Congress has no authority to create a bank and give it a monopoly over our money, because such actions "are not among the powers specially enumerated" in the Constitution. I agree. The Constitution plainly designates the people's elected representatives as the guardians of their money ("Congress shall have Power...To coin Money, [and] regulate the value thereof . . . " -Article I, Section 8.)

The Fed is a rogue entity. As I mentioned in my article about Ben Bernanke, the Fed has arrogated to itself arbitrary powers to create however much money it wants and buy whatever financial assets - whether government, private, or even foreign - it chooses. The Fed even keeps its own Inspector General in the dark.

It is anomalous that there should be such a powerful, unrestrained institution as the Fed in our body politic. The Fed's centennial is nothing to celebrate. Instead, this institution of awesome, arbitrary powers makes a mockery of constitutional checks and balances. It poses a threat, not just to our currency and economic well-being, but to liberty itself. It's a tragedy that this institution has lasted as long as it has.

One of the Most Powerful Christmas Lessons

The entire country pauses on Dec. 25, as Christians commemorate the birth of Jesus of Nazareth, known to Christians as God's Christ and Saviour, and known to many as The Prince of Peace.

The impact of this one special life has reverberated through the centuries. Kingdoms and governments rise and fall; the celebrities of one generation are largely forgotten by the next; powerful institutions and organizations - from central banks to giant business enterprises to mighty armies - come and go, but the influence of Jesus of Nazareth endures.

From the very beginning, Jesus' mission was misunderstood. Many of his own people had expected God to send them a mighty man of war, not a healer and teacher.

Today also, Christians often misunderstand their Saviour, as when they invoke the New Testament as justification for government to forcibly redistribute wealth in the name of charity. The social gospel, social justice, and liberation theology strains of Christianity have overlooked one fundamental principle of Jesus' life - one that should be especially obvious at this time of year when we think of Jesus as a tiny infant: He never used force to compel others to do good.

In Matthew 19, Jesus offered a rich young man a contract - his wealth to be given to the poor (demonstrating that he would not make an idol of his money and be willing to follow Christ fully) in exchange for eternal life - and he accepted the man's decision to decline the offer. In Luke 12, he refused to get involved in a "redistribute the wealth dispute," tacitly accepting the sanctity of property rights. In the parable of the Good Samaritan (Luke 10), Jesus illustrated genuine Christian charity. The Samaritan freely gave his own money and time to help the person in need. He most assuredly did not seize money from others to pay for the wounded man. Jesus shunned the use of force. He rejected the liberal temptation of using other people's money to accomplish ostensibly charitable goals (what William Graham Sumner referred to as A and B deciding what C should do for D).

Adam Smith, the great moral philosopher, understood the difference between law and gospel better than many contemporary Christians do. In The Theory of Moral Sentiments, Smith cited prudence, justice, and beneficence as the three great social virtues. Christian charity - beneficence - was "the ornament which embellishes, not the foundation which supports [society]." Justice, by contrast, is "the main pillar that upholds the whole edifice" of society. Therefore, no person may compel another to give charity, for that would violate justice, the basis of society and law. While Jesus encouraged charity and beneficence in the clearest terms to his disciples, he did not view the gospel as abrogating the law protecting private property; hence his statement in the Sermon on the Mount, "Till heaven and earth pass, one jot or one tittle shall in no wise pass from the law." (Matt. 5:18)

Just as the physician's first principle is "do no harm," so Jesus did harm to nobody. He did not believe in a zero-sum economy in which one person would benefit at the expense of another, but believed in freedom, voluntary contract, and mutual benefits. His life was the highest example of the non-aggression principle in practice. He never taught that it was legitimate to help one person by trespassing on the rights of another. He never taught that the key to heaven lay in compelling other people to do good things. Instead, he healed, comforted, taught, and saved human beings, rescuing them from their sins, errors, diseases, and fallibility with a love so far above the normal human sense of love that we still are far from grasping its full import.

What we can grasp is the innocence and gentleness of the baby Jesus. Think of how blessed the world would be if that spirit governed mankind.

At Christmastime 2013, it's worth pondering what Jesus would ask of us today. I imagine it would be profoundly simple and sublimely wise - something along the lines of: Whatever you do, don't hurt anybody and, if you can find it in your heart, be willing to help somebody.

Merry Christmas everyone, and "on earth peace, good will toward man." (Luke 2:14)

A Miracle of Coincidence

Every now and then, something unforeseen and special happens - something that logic or reason would tell you is either impossible or that the odds against it happening are overwhelming. And yet those things occasionally happen and fill us with wonderment.

How should we characterize or classify such events? Are they miracles? Flukes? Coincidences? Or do they hint at some sort of transcendent or metaphysical power - perhaps another dimension of reality that exists just beyond the range of the human mind - something like karma, fate, destiny, or divinity?

Before I tell you about my recent experience, let me share an incident that typifies the improbable long shots that somehow happen even when there is no apparent reason why they should. Some years ago, I read the book, Beyond Coincidence: Amazing Stories of Coincidence and the Mystery Behind Them, by Martin Plimmer and Brian King.

Over the course of about 260 pages, the authors relate dozens of actual incidents that seemed to mock the laws of probability. One story in particular caught my fancy. In the 1920s, a young opera singer named Lauritz Melchior (whom I later learned became the pre-eminent Wagnerian tenor opera singer of the 20th century) was practicing in the garden at his pension in Munich. Plimmer and King write:

As he sang the words, "Come to me, my love, on the wings of light," a female parachutist landed at his feet. It was the Bavarian actress Maria Hacker, who was performing a stunt for a movie thriller. They were married in 1925. "I thought she came to me from heaven," said Melchior.

Knowing my wife, Eileen, to be a romantic, of all the vignettes compiled in that book, this was the one I decided to share with her. The "coincidences" weren't over, because Eileen said:

I met Lauritz Melchior shortly before his passing when Lou [Eileen's first husband, who died tragically young] auditioned for him at the New York Met.

Think about it: What are the odds that my wife would know any of the individuals whose stories were included in the book I was reading, much less the protagonist in the only account I shared with her?

Okay, now on to recent history and a real feel-good story. This August, while going through a box of memorabilia, I found an article in my high school newspaper about the man who had been my English teacher in the seventh and eighth grades, Mr. Ted Walters. He was leaving our school to return to his native Pittsburgh. This really intrigued me, because the embryonic idea had been developing within me for a few years that I should track down this teacher to thank him for all that he had done for me, and since I now live in western Pennsylvania, too, this seemed like a real possibility.

As a teacher, Mr. Walters worked my tail off. I had to write one paper every week for two school years. Those papers made my Sunday nights in the dormitory miserable, but the payoff was immense. In two years of academic boot camp, he whipped my writing into shape and taught me to write like an adult. Becoming a clear writer helps one become a clear thinker. Quite literally, Mr. Walters equipped me to succeed in all subsequent academic and intellectual endeavors. One example: I earned the first "first" (that's the top grade) ever awarded by my tutor in literature at Oxford, but it was Mr. Walters' achievement as much as mine. Basically, the papers that I wrote for my tutor were based on lessons that Mr. Walters had taught me way back in junior high school at Cranbrook.

Well, you know where this is going, so let's get to it: After learning that he had ties to my geographic area, I tried to find him through Google searches and on the website of the college where he taught, but no luck. Then the school year started and I put my search on hold. On Monday, Oct. 14, I sent an email to my friend and colleague, Paul Kengor, to ask him if his van had broken down, because it had been in the same spot in the school parking lot for several days. Paul wrote back that he and his wife had parked it there while they were out of town at a wedding. Then he added, "By the way, Lee (Wishing, another friend and colleague) and I had lunch with a Grove City College grandfather who told us about teaching Mitt Romney and Mike Kinsley at your school. His name is Ted Walters. Do you know him?"

WOW! I'm looking for one person in the world, not sure how to get in touch with him, and a friend writes and says out of the blue, Oh, by the way, I just had lunch with this man. What are the odds of that? And to make the story even sweeter, it turns out that Ted's granddaughter was a student in a couple of my courses, so I went full circle with the Walters family. And, yes, the story gets happier. Ted and I have exchanged several emails, and we're making plans for a reunion soon.

What unseen force accomplished this joyful miracle for me? I don't think it was luck or coincidence. I'll call it God, you call it what you want, but I'm convinced there is a higher intelligence binding us together for good in ways that we haven't begun to comprehend. The Force is there. May it be with you and bless you. *

Wednesday, 16 December 2015 11:21

Hendrickson's View

Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

The Palpable Politicization of Science by Global Warming Alarmists

For over 20 years, a number of politicians have sought to reduce our consumption of fossil fuels and/or raise taxes on such fuels for the stated purpose of trying to save the world from catastrophic climate change. They insist that scientific research has proved conclusively the validity of the anthropogenic global warming hypothesis that is now called "climate change." Increasingly, people have their doubts about whether this is so.

Why? I don't think it is because people don't respect science. On the contrary, people generally have a high regard for science due to the multitude of ways science has benefited the human race. What many people distrust is the palpable politicization of science by climate alarmists.

People naturally have had trouble enough believing the alarmist line that carbon dioxide inevitably raises global temperatures. The simple reason for this belief is that there has been no global warming for the past 16 years in spite of rising atmospheric concentrations of CO2. However, the alarmists have shot themselves in the foot, weakening their case and diminishing their own credibility by their own misconduct.

The so-called "climategate" scandal of a few years ago cost the alarmists dearly in terms of lost credibility. The more than 1,000 emails that came to light showed a pattern of manipulation and dishonesty on the part of leading British and American scientists. In the words of E. Calvin Beisner, the emails provided shocking evidence of

. . . serious scientific malfeasance - the fabrication, corruption, destruction, hiding, and cherry-picking of data . . . intimidation of dissenting scientists and journal editors . . . and efforts to evade disclosure under Freedom of Information Laws in the United Kingdom and the United States.

That scandal was followed a few weeks later by charges from Russia's Institute of Economic Analysis accusing Britain's Meteorological Office of deliberately editing Russia's temperature data to skew the results.

Anecdotal reports over a period of decades reveal a pronounced tendency by alarmists - whether politicians, scientists, or journalists - to crush or censor dissent. Politicians have purged government offices of dissenters. As William Perry Pendley writes in his excellent new book, Sagebrush Rebel: Reagan's Battle with Environmental Extremists and Why It Matters Today, this has been going on at least since 1977, when the Carter administration fired Dr. Vincent McKelvey, the director of the U.S. Geological Survey, for daring to write that there was an abundant untapped supply of oil at a time when the president was trying to advance a "running out of oil" scenario.

Scientists and even professors in social sciences have told of colleagues or university officials warning them that non-alarmist research could damage their careers or cause the loss of a government grant. In his book Eco-Tyranny, Brian Sussman exposed the Society of Environmental Journalists, a group that provides lists of scientists that either are recommended for interviews (alarmists) or not recommended (skeptics).

Politicized science is very much in evidence in the tactics of the UN's Intergovernmental Panel on Climate Change (IPCC), which is highly regarded by alarmists and provides the final say on the science invoked to justify costly and disruptive policy changes. The IPCC unequivocally makes the case for potentially catastrophic anthropogenic climate change, right? As the commercial says, "Not exactly."

For example, the IPCC's 2007 report stated that it is "very likely" that human activity is causing global warming. Why then, just two months later, did the vice chair of the IPCC, Yuri Izrael, write: "The panic over global warming is totally unjustified. . . . There is no serious threat to the climate . . . [humanity is] hypothetically . . . more threatened by cold than by global warming"? Why did Dr. Vincent Gray, a member of the IPCC's expert reviewers' panel assert, "There is no relationship between warming and level of gases in the atmosphere"?

The discrepancy between the IPCC's reports and some of its leading scientists is explained by certain facts. Rule three of IPCC procedures states, "Documents should involve both peer review by experts and review by governments." The IPCC's policymaker summaries (the ones the media rely upon) are produced by a committee of approximately 50 government appointees, many of whom are not scientists. (Remember: it's an "intergovernmental," i.e., political, body, not a scientific body.) Those political appointees are given considerable latitude to modify the scientific reports.

Another fact appears on page four of Appendix A to the Principles Governing IPCC Work. It states:

Changes (other than grammatical or minor editorial changes) made after acceptance by the Working Group of the Panel shall be those necessary to ensure consistency with the Summary for Policymakers or the Overview Chapter.

According to reports in the U.K.'s The Telegraph and other news outlets, leaks of the soon-to-be released Fifth Assessment Report of the IPCC document reveal that the policy-making committee has requested approximately 1,500 changes in the text on behalf of the government leaders they represent. Would you want to bet on the scientific integrity of such a report?

It is clear that politicians are willing to go to great lengths to produce the best "science" money can buy in order to "prove" the need for major action on the climate change front. In fact, our own government alone has spent tens of billions of dollars in support of "climate change." Why do both the UN and American liberals support the alarmist scenario so strongly? Part of their agenda is to redistribute wealth by curbing American energy consumption (the more energy a society consumes, the wealthier it tends to be) and part of it is the fact that Western governments are desperate for more revenue to fund their ambitious wealth redistribution plans. A tax on energy would be the mother of all excise taxes, producing an immense stream of additional government revenues.

So, when we read reports (this again from The Telegraph) about a "recent survey of 12,000 academic papers on climate change [that] found 97 percent agree human activities are causing the planet to warm," should we be swayed or persuaded? First, one would want to know if the added warmth is significant or negligible. Second, one would need to know more about how and why those particular papers were selected. Were they selected by random, or perhaps cherry-picked, using a list like the Society of Environmental Journalists' list of who "the good guys" are? It would be crucial to know how many of those papers were produced by individuals or institutions that received government grants in support of their work. What is the percentage of papers on climate change that were produced by those not receiving government grants concluded that human activity is warming the planet significantly?

Even if 97 percent of academic papers come to similar conclusions, that doesn't mean they are correct. In my profession, economics, the majority of economists believed in the benefits of large-scale government control over economic activity, and many even believed that socialism was the path to a more prosperous future, only to have their academic theories exploded by subsequent events.

Here is the bottom line: If we truly want public policies grounded on sound science, our best chance is to get government money out of the process. Science, like religion, is a search for truth (the main difference being that scientists are seeking physical truth whereas religionists often are more concerned with metaphysical truth). The U.S. has a well-established tradition of keeping church and state separate for the purpose of preventing religion from being corrupted by politics. That is as it should be. The contorted political shenanigans and, yes, corruptions, of climate science make it plain that it is now time to erect a wall of separation between science and state. Science is too important for us to allow it to be hijacked by political and economic special interests. It is time to remove federal funding from scientific research, liberate scientific research from political influence, get scientists off the federal gravy train, and let the market decide what scientific work is worthy of being funded. The statement, "we're toast," is far more likely to be true if politics dominates science than from using fossil fuels to improve our lives.

William Graham Sumner: The Forgotten Man Who Reminded Us About "The Forgotten Man"

This week (Oct. 30 to be precise) marks the 173rd anniversary of the birth of William Graham Sumner (1840-1910). Sumner, one of the founders of American sociology and the first professor of sociology at Yale, wrote an amazingly clear and quotable book entitled, What Social Classes Owe to Each Other in 1883. Remarkably, it is completely relevant today.

Sumner is a largely forgotten man today, but his lesson about "the forgotten man" as a prototype remains timely. According to Sumner, the various political schemes of social reformers:

. . . may always be reduced to this type - that A and B decide what C shall do for D. ... In all the discussions attention is concentrated on A and B, the noble social reformers, and on D, the "poor man." I call C the Forgotten Man, because I have never seen that any notice was taken of him in any of the discussions.

Sumner continues his observations and says:

The State cannot get a cent for any man without taking it from some other man, and this latter must be a man who has produced and saved it. This latter is the Forgotten Man.

Later in the book, Sumner states, "It is plain that the Forgotten Man and the Forgotten Woman are the real productive strength of the country."

Sumner has no use for muddled collectivist notions, writing, "'Society' is a fine word, and it saves us the trouble of thinking." With bracing logical rigor, Sumner skewers the sloppy theory of collective guilt:

The French writers of the school of '48 used to represent the badness of the bad men as the fault of "society." As the object of the statement was to show that the badness of the bad men was not the fault of the bad men, and as society contains only good men and bad men, it followed that the badness of the bad men was the fault of the good men.

In regard to "the state," Sumner writes:

. . . it is not at all the function of the state to make men happy. They must make themselves happy in their own way, and at their own risk.

A few pages earlier he notes that:

History is only a tiresome repetition of one story. Persons and classes have sought to win possession of the power of the State in order to live luxuriously out of the earnings of others.

Sumner makes another point saying:

A man who is present as a consumer, yet who does not contribute either by land, labor, or capital to the work of society is a burden. On no sound political theory ought such a person to share in the political power of the State.

Sumner offers insight on rights when he says:

If anyone thinks that there are or ought to be somewhere in society guarantees that no man shall suffer hardship, let him understand that there can be no such guarantees, unless other men give them - that is, unless we go back to slavery, and make one man's effort conduce to another man's welfare.

He also points out that, "Rights do not pertain to results, but only to chances . . . to the pursuit of happiness, not to possession of happiness."

On equality Sumner writes that:

. . . if there be liberty, some will profit by the chances eagerly and some will neglect them altogether. Therefore, the greater the chances the more unequal will be the fortune of these two sets of men. So it ought to be, in all justice and right reason. The yearning after equality is the offspring of envy and covetousness, and there is no possible plan for satisfying that yearning which can do aught else than rob A to give to B; consequently all such plans nourish some of the meanest vices of human nature, waste capital, and overthrow civilization.

He also discusses liberty, writing:

The notion of civil liberty which we have inherited is that of a status created for the individual by laws and institutions, the effect of which is that each man is guaranteed the use of all his own powers exclusively for his own welfare.


. . . the product of all history and all philosophy up to this time is summed up in the doctrine, that he should be left free to do the most for himself that he can, and should be guaranteed the exclusive enjoyment of all that he does.

Sumner writes about the importance of entrepreneurs when he says, "Great captains of industry are as rare as great generals." Later, he says that the entrepreneur

. . . contributed . . . what no one else was able to contribute - the one guiding mind which made the whole thing possible. In no sense whatever does a man who accumulates a fortune by legitimate industry exploit his [employees], or make his capital "out of" anybody else. The wealth which he wins would not be but for him.

Writing on various do-gooders, busybodies and social engineers, Sumner says:

For A to sit down and think, "What shall I do?" is commonplace; but to think what B ought to do is interesting, romantic, moral, self-flattering, and public-spirited all at once. It satisfies a great number of human weaknesses.

Then Sumner reminds each of us of a largely forgotten principle (what the Bible called getting the beam out of one's own eye, and Adam Smith described as the social virtue, "prudence." Sumner writes, "Every man and woman in society has one big duty. That is, to take care of his or her own self. This is a social duty."

Sumner writes more about would-be reformers, saying:

It no doubt wounds the vanity of a philosopher who is just ready with a new solution of the universe to be told to mind his own business. So he goes on to tell us that if we think that we shall, by being left alone, attain a perfect happiness on earth, we are mistaken. . . . Under all this lies the familiar logical fallacy, never expressed, but really the point of the whole, that we shall get perfect happiness if we put ourselves in the hands of the world-reformer. We never supposed that laissez faire would give us perfect happiness. We have left perfect happiness entirely out of our account. If the social doctors will mind their own business, we shall have no troubles but what belong to Nature.

There is a lot more timely and timeless wisdom and insight in William Graham Sumner's What Social Classes Owe to Each Other, and I encourage you to check it out.

Burglarizing JPMorgan Chase and Slapping Down Prudential: The New, Tyrannical Normal?

If there is one truth that became apparent during the financial panic five years ago, it is that Big Government and Big Finance are inseparable. Of course Uncle Sam was going to bail out Wall Street, for without the financial infrastructure that Wall Street provides to maintain orderly markets in various securities, particularly debt instruments, the multi-trillion dollar operation of our federal government would cease to function.

I wrote about "The de facto Nationalization of JPMorgan Chase" in April, 2008, suggesting that when the Federal Reserve helped to plan and finance JPMorgan Chase's absorption of many of Bear Stearns' assets and operations, it represented "a major turning point in U.S. financial history." Subsequent events have corroborated that assessment.

If anyone doubted that Uncle Sam was moving to take charge of the U.S. financial system, those doubts should have been dispelled by the passage of the Dodd-Frank Act in 2010. Dodd-Frank conferred unprecedented leverage over financial institutions through its enforcement arm, the Consumer Financial Protection Bureau. Through its power to designate the institutions of its choice as "too big to fail" or "systemically important," and, as I fear we shall see, to effectively dictate policy to firms so designated, the federal government is moving to convert gigantic private corporations into administrative arms of government.

Two recent stories illustrate this point that the trend is moving toward government dominance of Big Finance. The insurance giant, Prudential Financial, attempted to resist the feds designating it a SIFI (the acronym du jour: Systemically Important Financial Institution.) Not a chance. Washington regulators crushed Prudential's resistance and trampled the principle of federalism by usurping the state insurance regulators that heretofore have overseen Prudential's operations. According to Richard Liskov's account in The Wall Street Journal, the feds apparently are devising rules on the fly, having assumed regulatory control over Prudential before the actual regulations have been drafted.

The other incident showing that Big Government is subjugating Big Finance is the record $13 billion penalty that Attorney General Eric Holder has extracted (some would say "extorted") from JPMorgan Chase.

A lot of people don't care about JPMorgan Chase's vicissitudes. "They're just a bunch of corrupt Wall Street fat cats"; "They can afford it"; "It serves them right"-seem to be the yawning reaction of a largely apathetic public. If those who are indifferent to this episode were to understand what's at stake here, they wouldn't be so sanguine.

First, there is the question of justice. The feds strong-armed JPMorgan Chase into absorbing Bear Stearns, and now they are penalizing them for things Bear Stearns had done before the takeover - specifically, peddling low-quality, high-risk mortgage-backed securities. Never mind the fact that the primary impetus to crank out large volumes of such shoddy (and eventually "toxic") securities came from Uncle Sam, particularly the Department of Housing and Urban Development which pressured Fannie Mae and Freddie Mac to increase the number of risky mortgages that were the main ingredient of mortgage-backed securities.

Even if you don't think big financial corporations deserve justice, you should be concerned about the economic impact of Uncle Sam's heavy hand coming down hard on SIFIs. Already, according to Investors Business Daily, JPMorgan Chase and other megabanks are setting aside billions of dollars of capital in anticipation of settlements and legal expenses. That means less capital for entrepreneurs and businesses that could create wealth and provide jobs.

Besides the capital that the government is taking from the banks in penalties, the banks are hemorrhaging capital in another way. Again, Investors Business Daily reports that, "HUD is forcing banks to eat $57 billion in bad FHA loans." It appears that the Federal Housing Administration is HUD's current henchman, having supplanted the disgraced Fannie and Freddie. Again, there goes more capital down the proverbial drain instead of financing wealth-creating enterprises.

The feds are playing a dangerous game by bleeding the megabanks of capital. According to Richard Parsons in the Wall Street Journal, 3,000 banks have failed over the last 30 years. The industry is being consolidated into a progressively shrinking number of lenders. Due to financial stress (i.e., under-capitalization) 30 of the 50 largest U.S. banks in 1980 no longer survive as independent entities - many because federal regulators have merged them into larger, better capitalized banks. If the feds weaken the remaining megabanks by draining capital from them, they are going to exhaust the supply of financially healthy banks available to absorb failing banks. Someday, the only alternative remaining to the Big Government advocates will be to nationalize the banks - to confer de jure status on the de facto reality that banks are being reduced to servile vassals carrying out the will of the federal government.

The current trend of bank consolidation is heading inexorably toward "Centralization of credit in the hands of the State, by means of a national bank with state capital and an exclusive monopoly" - Marx's fifth plank in his ten point program for incrementally achieving socialism. You may not like the big banks, and they surely aren't blameless, but if Washington effectively monopolizes the flow of credit in this country, our economic future will be dismal indeed.

"Average Is Over"-rated: Comments on Tyler Cowen's Doom-and-Gloom Scenario

Years ago, I thought that if I ever attempted to write a novel, I would describe a future dystopia in which the ruling elite were those who made and understood computers and the rest of us would be techno-klutzes like me who wouldn't recognize a byte if it bit me on the behind.

Now, George Mason University economist Tyler Cowen is making a splash with his new book Average Is Over. The book is a nonfiction prediction of an American society comprised of 10 to 15 percent highly prosperous achievers and a "permanent underclass" dwelling in shantytowns and subsisting on beans. With all due respect to the highly erudite Cowen, this is not the natural evolutionary future of market economies.

Let me emphasize that this is not a review of Cowen's book, but an attempt to show why his gloomy vision is flawed in its very conception. This may be the gloomiest pronouncement by an economist since the Malthusian/Ricardian "iron law of wages" mistakenly posited that laborers would inexorably have to settle for subsistence wages.

Cowen's book may provide fodder to the left's incessant refrain "the rich are getting richer while the poor are getting poorer," but to regard this mantra as true requires an abandonment of both economic logic and history.

How are the wealthy to gain their vast riches without selling their products to the masses? Even in the much-maligned "Gilded Age," when the Carnegies, Westinghouses, Fords, and Rockefellers earned their vast fortunes, the standard of living of the vast majority of working Americans also rose.

Indeed, the two phenomena were, and still remain, interdependent. The billions earned by successful entrepreneurs mirror the billions of dollars of value they provided to the mass of consumers. We should hope that 10 to 15 percent of our population become wealthy entrepreneurs, a far higher percentage than was the case during the Gilded Age, because they will uplift standards of living far higher than was possible with the relatively small number of entrepreneurs in the past.

The growth in the number of wealth creators will tend to raise wages rather than lower them. Andrew Carnegie and other early entrepreneurs enjoyed a buyers' market for labor due to the large supply of labor relative to the capitalist demand for labor. As economic development progressed - that is, as more capitalist entrepreneurs wanted to "exploit" workers and provided them with the capital that increased their productivity - the law of supply and demand swung in favor of workers, and the affluent American middle class was the result. With more "exploiters," the potential for higher wages in the coming decades is enormous.

Alas, Cowen appears to have channeled Ned Ludd (see: Luddism), who revolted against technology. Holy smokes, should we now undo the Industrial Revolution? Machines have been raising the productivity of labor in the U.S. since our founding, enabling us to feed ourselves and manufacture a wide variety of products with ever-smaller numbers of workers. Rather than turning waves of unemployed workers into paupers, the country grew richer from all the additional goods and services that erstwhile farmers and shop workers produced.

Is there any scenario under which Cowen's gloomy forecast could come to pass? Yes, but such a tragedy would have political, not economic causes. In a free market, the notion of a permanent underclass is absurd, because, as millions of earlier Americans have proved, freedom includes economic opportunity and opens the door to upward social mobility. Only when the state rigs the system to determine economic winners and losers - as in feudalism, mercantilism, and socialism - do class divisions become rigid. Capitalism remains the best antidote for such social pathologies. Only when the state crushes wealth-producing entrepreneurs do job opportunities dry up and incomes stagnate. This is our current political situation. Progressives have made idleness pay more than employment, engaging in unremitting harassing of and hostility toward profit-seeking (i.e., wealth-producing) business. President Obama has favored the governing elite while attempting to divide us into two Americas.

The last comment I'll make about Cowen's book is that it's a shame he has been taken in by the macroeconomists' and socialists' obsession with "average." Socialism indeed seeks to make citizens average, but at the cost of freedom, dignity, and prosperity. The only "average" that government can enforce is to average down standards of living. That won't happen to us if we remember to respect, appreciate, and value those among us who excel at producing wealth. Average is worse than over-rated. It is unworthy of our aspirations. Let us exalt excellence.

What we need to do today is to dismantle the system of privileges that has supplanted the rule of law in America and has corrupted free enterprise. Big government cronyism has the potential to divide us into the nation that Tyler Cowen envisions in Average Is Over. Alternatively, genuinely free markets under a government that protects, rather than persecutes, wealth creators would blast Cowen's gloomy forecast into oblivion.

The Federal Government Shutdown Raises a Crucial Constitutional Question

For political junkies, October 2013 is shaping up to be a month that will be remembered. The current government shutdown over the bitterly contended issue of whether Obamacare should be funded is only a prelude to the main act - the donnybrook over raising the debt ceiling that will be upon us later this month. Although the two issues partially bleed into each other, the current fracas over Obamacare raises a fundamental constitutional question that nobody seems to be addressing.

First, though, the theatrics: The shutdown standoff reminds us of why politicians are so widely despised. Let's start with the president. In public statements before the start of the shutdown on October 1, Obama stated, "Are they [congressional Republicans] really willing to hurt people just to score political points?" That's a hoot. Once again, this president has projected his own methods of operation onto his opponents. At the outset of sequester-related spending cuts last spring, Obama made it abundantly clear that he has no compunctions or reservations about trimming government services that cause the maximum amount of unpleasantness or inconvenience for the American people in his own attempt to "score political points."

Already this week, Obama has used the shutdown as a pretext to block access to the World War II memorial in Washington. Meanwhile, although most of the White House staff has been furloughed, those who wait on the First Family are still on the job. It wouldn't hurt to let Their Majesties make their own bed and fix a few meals. Well, maybe Ms. Obama is so busy working to influence what people eat that she needs some domestic assistance, but the Golfer-in-Chief certainly has enough time to take out the garbage. Alas for fans of Bill Clinton, this is a president who doesn't feel our pain.

Moving over to Congress, an AP report quoted top-ranking Senate Democrat, Dick Durbin of Illinois, as declaring Republicans' refusal to pass a budget as "conduct unbefitting a responsible Congress." Excuse me, Sen. Durbin, but why didn't you criticize Majority Leader Harry Reid's irresponsibility for refusing to allow the Senate to debate or pass a budget? How quickly politicians change their tune when the partisan shoe is on the other foot.

Then there are some Republicans who, in spite of the almost daily revelations that Obamacare is even more dysfunctional, disruptive, and downright destructive than originally thought, think, "We shouldn't try to stop it. It will wreak so much havoc that we'll gain seats in next year's elections." How terribly cynical! They are willing to sacrifice the American people's welfare on the altar of their own political ambitions. Who wants creeps like that to represent them in Washington?

Thank goodness for the other Republicans who, at least temporarily, are willing to take a stand and try to block the implementation of a program that already is costing Americans lost income opportunities, higher health insurance premiums, dropped coverage, and a host of other problems. But is this strategy constitutional? As Harry Reid asks, "What right did they have to pick and choose what part of government is going to be funded?"

That's a fair question. So is this one: What right does Obama have to "pick and choose" which federal laws his administration will uphold (No Child Left Behind, Defense of Marriage, immigration, and even sections of Obamacare itself)?

So, which is it? Can the House of Representatives, which has the constitutional power of the purse, decide what parts of legislated acts to fund? Can the president unilaterally decide what laws to enforce? In this colossal tug of war, which branch of government, the legislative or the executive, ultimately has the upper hand? Can each essentially thwart the other, or must one prevail?

I don't know the answer to these questions. Maybe the constitutional experts out there can shed some light on it. Would it be too extreme to suggest that if we go forward with uncertainty about which legislative acts really are the law of the land, we'll descend into chaos and political disintegration? *

Wednesday, 16 December 2015 11:16

Hendrickson's View

Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

Technology May Spur 10+ Career Changes for Today's Youth: Are We Ready?

How fast is technology developing? Raymond Kurzweil describes the pace as "exponential," leading to a "singularity" that will radically transform the human experience.

Robert Stevenson asserts, "The doubling speed of knowledge is now between one and two years." This implies that when this year's incoming college freshmen graduate, knowledge will have quadrupled.

Whatever the actual rate of technological progress (as in economics, whatever we assert about the future can only be educated guesses), it appears certain that we will be inundated with amazing changes and breakthroughs. The accelerating pace of technological innovations raises two vital questions: 1) Do human beings have the moral capacity to use new technologies beneficially or destructively? 2) Do humans have the psychological capacity to "roll with the punches" and adapt to mind-boggling rapid change, or will the pace of change overwhelm our psyches and lead to all sorts of individual and societal traumas?

The first question is perennial - every generation has to make moral choices about the appropriate uses of technology. Technology can be a blessing or a curse. Take handguns, for example. They have been used to kill innocent people. That's bad. But many innocent people have used guns to protect themselves and save the lives of loved ones. That's good.

Similarly, nuclear energy can be used to provide abundant energy or to annihilate populations.

Idealists would like to eliminate technologies that have destructive uses, but technological knowledge is like the proverbial genie that can't be put back into the bottle. And, in such a world it makes a huge difference whether lethal technology is in the hands of the (relatively) "good guys" or "bad guys." Technology, in sum, is neither good nor evil in and of itself, but the choices humans make about how they use technology can be categorized according to their moral content. These thoughts have been brought to the fore in recent months by news stories about lethal drones and NSA data-gathering.

Shortly after reading about mini-drones that will be able to chart a course to a particular individual and kill him, there was a disquieting report that the Obama Administration has sold drone technology to one or more of the Arab mini-states. Perhaps someone will find a way to defend against these personalized messengers of death, but imagine what the world will be like if various would-be tyrants gain access to such technology.

Such a scenario was enough to make me think of the old Star Trek episode, "A Taste of Armageddon." In it, technology had advanced to the point where "kills" were a certainty, so rather than blowing up homes and factories, two warring planets let computer programs identify the "kills" who then went to death chambers where their lives were ended without maiming, pain, suffering or destruction of property. Mini-drones raise the question of the morality of such efficient means of killing one's enemies.

As for the NSA's data gathering, it is indeed a technological marvel that the entire content of the Internet and of telephone conversations can be gathered, and that algorithms can identify networks of terrorists. That sounds good. But how confident can we be that nobody who has access to such information will misuse it? Aye, there's the rub. In the final analysis, a technology is only as "good" as the people who use it.

Even if good retains the upper hand over evil so that technology's potential destructiveness is held in check, what will the accelerating pace of technological change do to our psyches? The futurist Alvin Toffler warned nearly fifty years ago that the pace of change could someday exceed humans' ability to adapt, leading to the collapse of societal institutions.

You're aware, I'm sure, of the estimates that the average young person today may experience ten or more career changes. Might not as-yet unseen technological changes impel even greater economic and societal upheavals and changes? This poses an enormous challenge, because humans are creatures of habit. Businesses desperately cling to familiar but no-longer-competitive modes of operation. Union members use the political process to protect themselves against the threat of change from both domestic and foreign competitors. Most of us prefer stability to unpredictable change. We fear the unknown; yet the unknown is what technological change portends and is thrusting upon us.

So, what kind of a brave, new world are we entering? Rapidly evolving technologies seem certain to unfold new wonders that have the potential to greatly enhance human life. Less certain is whether we humans have the moral and psychological capability of keeping up with the pace of technological change.

Smarter Government Might Be President Obama's Most Vacuous Banality Yet

We have a president who specializes in banal slogans and fatuous cliches, yet his July 8 call for "smarter government" has to rank as one of his most vacuous banalities yet. Adding exquisite irony to the occasion, Barack Obama had Joe Biden stand next to him as he droned on about government needing to be smarter. There is less substance to this lame suggestion than meets the eye.

There was additional irony in hearing a president who favors Big Government and has noticeably expanded the size and power of government to openly acknowledge what millions of us in the private sector already knew - namely, that the federal leviathan is chronically inefficient and embarrassingly incompetent. Further, his comments invite the question: Why, Mr. President, have you waited until the fifth year of your presidency to address this problem? Didn't you think government needed to function more intelligently and effectively during the years of economic sluggishness over which you have presided?

There is also something pathetically immature about Obama calling for smarter government. Millions of college undergraduates experience the heady, intoxicating brew of the delusion that they, unlike their predecessors, are the first ones both to care deeply about our society's problems and to know how to fix them. Obama gives the impression that he is the first of our 44 presidents to recognize the need for "smarter" government. It's too bad that he doesn't have a clue what "smarter government" is.

Undoubtedly, there are technologies and procedures that can be adapted from the private sector to the government, but the stubborn fact remains that government will never - indeed, can never - operate as efficiently as private firms. As I wrote earlier this year, the Pentagon is inefficient, not because it was tasked with national defense (with mission creep having expanded the sense of what "national defense" includes) but because it is a bureaucracy. As Ludwig von Mises explained in his book, Bureaucracy, the profit-and-loss calculus that impels efficiencies in the private sector is irretrievably absent from bureaucracies.

Actually, Mr. Obama isn't giving federal bureaucrats enough credit for behaving smartly. If he knew anything about public choice theory, he would realize that many of the decisions made by bureaucrats, though they might not make sense economically to a disinterested observer, make perfect sense from the perspective of bureaucrats and the incentives they face. And consider the incentives acting upon Congress. When a federal bureaucracy, such as FEMA, is perceived as performing poorly, as was the case after Hurricane Katrina, public pressure builds on Congress to keep that from happening again. In the private sector, an underperforming insurance company will lose customers, revenues, and profits, and may even go out of business, whereas the common response to poor performance in the public area is for Congress to increase appropriations so that the bureau can add employees and spend more money.

When Obama talks about "smarter government," what he really means is that he wants government to do more to implement his personal, partisan, and political objectives. Listen to his hectoring State of the Union addresses, and you hear the conceit of the central planner. Obama acts as though he knows what the country needs, and so he supports green energy boondoggles and electric cars, strives to channel more federal dollars to unions and other political allies, and desires to be the architect of a more "just" redistribution of the country's wealth.

All that being said, like Obama, I also want smarter government. Unlike Obama, though, I believe (along with Thoreau, Jefferson, Emerson, and other eminent Americans in our past) that smarter government is smaller government - "that government is best which governs least." Indeed, some of the great economic growth spurts in American history occurred during periods in which the federal government was shrinking (e.g., 1866-1895; the Roaring Twenties, the late 1940s). Study after study and country after country have shown that smaller government is smarter government.

Yes, we need smarter government in Washington. It won't happen, though, as long as Barack Obama is president. The first step toward smarter government is for Americans to become smarter voters.

Ben Bernanke: "The Greatest Central Banker in U.S. History"?

During my vacation travels, I spotted Mortimer Zuckerman's enthusiastic paean to Federal Reserve Chairman Ben Bernanke in the July 26 Wall Street Journal. In his article, Zuckerman lamented President Obama's "shabby treatment" and "mean-spirited" dismissal of "the greatest central banker in American history," "the man who saved the economy" through his "heroic effort" and "imaginative . . . procedures" in the aftermath of the 2008 financial crisis.

Whoa, Mort, slow down! I'll grant you that the way Obama let it be known that he has no use for Bernanke was tawdry, but what do you expect from this most ungracious of presidents? As a central banker, though, Bernanke's performance deserves little praise. Let's review a few of the ways that Zuckerman is mistaken about Bernanke.

First, did Bernanke pull "the country - and ultimately the world economy - back from the abyss"? I assume Zuckerman means that without a massive expansion of the Fed's balance sheet, there would have been a catastrophic deflation triggering a second Great Depression. Perhaps, but there are two flaws with this widely held belief: 1) Deflation need not be catastrophic. The Friedmanite/Keynesian dogma that the Great Depression was caused primarily by a sharp contraction of the money supply ignores what happened during the sharp-but-brief depression of 1920-21. The money supply contracted just as severely then as it did in the early 1930s, but the economy quickly rebounded - not because of Fed intervention, but because government got out of the way (lower taxes and spending) and let markets work as flexible prices and wages adjusted to new equilibriums. 2) By preventing the liquidation of debt and mal-investments, the Fed has contributed to the sluggishness of the Obama era economy and has merely postponed those inevitable corrections, i.e., (as has been said ad nauseam) "kicked the can down the road."

Second, through its unwise interventions, Bernanke's Fed has painted itself into a corner. What Zuckerman praised as Bernanke's "untested [and perhaps extralegal] emergency funding procedures" has turned the central bank into the world's largest repository of financial detritus. The Fed has become a "bad bank" - a garbage dump, by virtue of lending "more than a trillion (newly created) dollars (to]) troubled (i.e., over-leveraged, reckless, and often unidentified) financial firms" and buying distressed (i.e., nearly worthless) mortgage assets" and no-bid "debt from industrial corporations such as General Electric GE -0.04 percent." The Fed will never be able to find buyers for much of the garbage paper it has bought, and what it is able to unload will surely be sold at a significant discount to opportunistic and well-connected financial giants.

Third, Bernanke's series of Quantitative Easing policies are predicated on a fallacy. The notion of continuing to purchase federal debt until unemployment falls to a certain level is little more than the discredited "Phillips curve" - the theory that monetary inflation leads to lower unemployment, which the stagflation of the 1970s blew to smithereens. The simple economic truth that Bernanke and the public policy establishment willfully ignore is that unemployment is a cost phenomenon. (If it were a monetary phenomenon, then there wouldn't be an unemployment problem in any country with a central bank, because the bank would merrily create money and credit until everyone who wanted a job had one.) Our unemployment has remained stubbornly high not because of monetary policy, but because of a widespread mispricing of labor due to various combinations of the wages, benefits, inflexible contracts, tax and regulatory costs of labor.

Fourth, Bernanke's policies have been both unfair and economically harmful to the American people. In the private sector, by selectively assisting certain corporate entities, particularly on Wall Street, Bernanke has exercised the kind of power that Obama likes - i.e., picking economic winners. (Indeed, Zuckerman enthusiastically approves of Bernanke having "transformed the Fed" into "an active market participant" that has abandoned any pretense of impartiality, but millions of Americans regard this as blatantly unfair.) Bernanke's bailouts have increased moral hazard by rescuing and propping up zombie firms guilty of misfeasance and malfeasance.

In the public sector, Bernanke has been the essential enabler of the unconscionable deficit spending of recent years. If it were not for his creation of fiat credit via QE interventions, the federal spending surge of recent years would have pushed the market price of interest to balloon rather than collapse. That would have caused the annual carrying costs of the federal debt to soar, which, in turn, would have made it much harder for Congress and the president to spend so much. Bernanke's massive purchases of federal debt have hurt the American people by adding to Washington's power to transferring additional control of real wealth.

Fifth, where Zuckerman applauds Bernanke for "manipulating prices and forcing interest rates down to virtually zero," this policy deserves our strongest condemnation. Interest rates perform the vital functions of rationally pricing capital and helping to coordinate production between the present and the future. By sabotaging this market, Bernanke has been wreaking havoc with entrepreneurial and business decisions, penalizing savers, and sowing the seeds of future economic problems resulting from the as-yet unseen mal-investments produced by his artificially low interest rates.

Far from being "the greatest central banker in American history," Ben Bernanke has misdiagnosed our economic problems, undermined the soundness and respectability of the Fed, trampled on the principles of justice, and undermined the naturally self-correcting functions of free markets. In some ways, he is a tragic figure, at once both immensely powerful and totally powerless. On the one hand, his words move financial markets. Earlier this year, a statistician reported an astounding .85 correlation between the QE programs and stock market performance showing that the bull market has been the product of Bernanke's interventions. On the other hand, Bernanke seems to sense that QE can't continue forever, but he is reluctant to stop QE, because once he does, the economy is likely to head south in a hurry.

If there is one thing for which we can thank Ben Bernanke, it is that his policies should prove once and for all that central banks can't produce economic growth. They can, however, undermine prosperity.

Your Nosebleed Student Loan Debt Pays the Tuition of the Classmate Next to You

Last year I wrote about some of the myths surrounding higher education in the U.S. You also have to beware of colleges acting to redistribute wealth.

Following is an anecdote with which I am intimately acquainted: In the mid-1990s, there was a family (a white family which you will see is a significant detail) whose daughter had a sterling high school record that guaranteed her acceptance at all but the very top colleges in the country. This girl had everything - a nearly perfect grade point average and strong SAT scores, leadership and citizenship awards, three MVP awards in two different sports, and also additional extracurricular activities in school and community service outside of school.

One college that accepted this girl had annual fees of over $25,000 (more than twice that today, which shows how rapidly college costs have increased). The girl's family had only a few thousand dollars of discretionary income after the unavoidable expenses of mortgages, taxes, insurance, food, transportation, etc. Surely that thriving, well-endowed college would offer such a well-rounded student some financial aid, right?

Nope. Not a penny. The college's financial aid office was committed to increasing educational opportunities for minorities by giving them nearly full scholarships. Essentially, white kids, even ones like this girl with the exceptional range of accomplishments, were expected to subsidize the education of other, often less-qualified, students.

While offended by the college's plan to redistribute wealth racially, this was a private college. The family felt that the college had a right to practice social engineering if it wanted to. The family, though, wasn't going to go into debt to pay for this plan, so the daughter went elsewhere for her highly successful collegiate career.

The issue of colleges redistributing wealth becomes more problematical when it happens at state-subsidized schools. Recently, the Oregon legislature approved a plan that redistributes wealth (although, to their credit, not along racial lines). The Oregon plan will let students attend Oregon's state universities at reduced expense, repaying the state of Oregon after they graduate. Repayments will be a certain percentage of their income. In other words, graduates who earn higher incomes will pay more for their college education than those will lower incomes. This plan passed both the Oregon House and Senate unanimously - a costly mistake.

In fiscal terms, during an era of stressed state budgets, it would have made more sense to reduce the taxpayer subsidy to state universities (i.e., state expenditures) rather than current tuition receipts (state revenues). Budget cuts would have induced university administrators to prune courses that make no economic sense and end up wasting taxpayer dollars.

From a fairness point of view, the Oregon plan is yet another scheme to redistribute wealth from the more productive members of society to the less productive. Why should those students who, while in college, do the extra work necessary to eventually gain employment in demanding fields such as engineering and science be expected to shoulder, through a lengthy stretch of their work lives, a portion of the cost of the instruction received by students in less demanding and less remunerative majors?

In the Oregon plan, we once again see the ugly head of moral hazard rear itself. By reducing the economic penalty for poor decisions in choosing what classes to take, the state is increasing the incentive for students to waste time and postpone a profitable start to their careers.

Did it not occur to conservative legislators (if, in fact, there are any left in Oregon) that they have voted to subsidize less marketable majors in the soft disciplines-those often saturated with statist opinions and fuzzy ideological causes such as "social justice?" Thus, they have made the self-defeating blunder of helping to fund the propagation of worthless and pernicious leftist ideologies that already has done so much to undermine the principles and practice of individual liberty and impartial rule of law in this country.

Consumers are increasingly questioning the value of college degrees. The market for exotic, esoteric, feel-good "blow" courses is shrinking. This is the natural, logical course of events, but the Oregon legislature ignored that trend and instead voted to spend precious resources to subsidize the increasingly uneconomic status quo in higher education.

Both private and public colleges and universities have become active in wealth redistribution practices. If you don't want to support such an agenda, you should find out if your kids' prospective college is engaging in it before selecting that college. *

Wednesday, 16 December 2015 11:11

Hendrickson's View

Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

In My Native City of Detroit, Atlas Has at Long Last Shrugged?

I'm sad. Detroit is my native city. It's decline from being arguably the world's richest city to being America's "first Third Word city" is tragic, politically criminal, and a warning to other Americans.

The official declaration of Detroit's bankruptcy last week could not have come as a surprise to anyone familiar with the Motor City's atrocious financial condition. The city had no hope of ever recovering from its colossal over-indebtedness, and without a central bank standing by to create fiat credit to augment its insufficient revenue - the scheme that is the only thing keeping the even more colossally over-indebted national government solvent - the only question was when someone would pull the plug.

Fiscally speaking, Detroit had been in the "walking dead" category for years. The announcement by Detroit's emergency manager, Kevyn Orr, finally acknowledged the inescapable facts.

Clearly, some Michiganders are still in denial and refuse to face those facts. Last Friday, Ingham County Circuit Judge Rosemarie Aquilina insisted that the Chapter 9 bankruptcy declaration be withdrawn, stating the Michigan constitution forbids any action that would decrease the pension benefits of public employees. In the first place, Judge Aquilina should read my article about will and abandon the delusion that a constitution can alter reality by making nonexistent funds magically appear; second, it is an unjust constitution that confers a protection on public employees that private-sector employees don't have. A sounder constitution would have prohibited the city government from gaining control of employees' retirement funds contributions and instead have mandated that those contributions all go into a private fund in the workers' names where the city couldn't touch them.

The ideology that causes Judge Aquilina to believe that political action - policies, laws, even constitutions - can make reality conform to one's political vision is the very ideology that already has devastated Detroit. Politicians believed that they could create a "fairer" city by raising taxes on businesses and productive individuals and redistributing wealth to favored political constituencies, particularly the public sector unions. In doing so, they killed the goose that laid the golden egg.

The more aggressive the policies to take the wealth of the productive (including imposing an additional tax on those who worked in Detroit but lived outside the city limits), the more people and businesses left the city to avoid the city government's predations. This is the social and political pathology that Ayn Rand portrayed so vividly in Atlas Shrugged. One of her novel's central themes was that when a society, instead of respecting (and perhaps even being grateful for) those who produce the wealth that sustains and enriches our lives, treats society's economic benefactors as enemies to be plundered, a society embarks on a destructive path that, if unchecked, leads to doom.

So, what happens now? It's hard to feel sympathy for any of the vultures who are squabbling over Detroit's carcass. Municipal bondholders certainly don't merit sympathy for the huge losses they will incur. Anyone who invested in the debt promises of such a corrupt and poorly managed city deserves to lose money. They would have had to be blind not to see how broke the city was, so it seems that they made a cold, cynical, calculated bet on Detroit's predatory government continuing to be able to find victims from whom to extract more money. While acknowledging that there are dedicated policemen and teachers in Detroit who labor under difficult conditions, it is still hard to justify economically the generous pension promises they have received when the average response time to a 911 call is 58 minutes, and educational results have been so abysmal.

Just as individuals sometimes resolve to change their ways so that someone who has departed has not died in vain, the demise of Detroit may not be in vain if we learn its grim lesson and reform city, state, and the federal government from their destructive predatory policies. Atlas has shrugged in Detroit. You had better restrain government so that Atlas doesn't shrug where you live.

Big Brother Is Increasingly Watching You

One of the most hotly debated of all individual rights is the right to privacy. Generations of immigrants came to the United States to escape religious persecution, economic oppression, and the danger of becoming embroiled in the Old World's frequently recurring wars. These reasons are variations on a single important theme: People want to be left alone to get on with their own lives. What made America special was not only that it was "The Land of Opportunity," but it also was a place where what a person did with his or her life was his or her own business, and the state was obliged to leave Americans alone except in cases where a person had criminally trespassed upon someone else's rights.

Conservatives oftentimes look askance at the right to privacy. In a typical example, conservative author and talk-show host Mark R. Levin, writing at National Review Online in 2005, stated flatly:

. . . if you look in the Constitution, however, you will find no general "right to privacy" anymore then you will find a "right to abortion" - and for good reason: It's not there.

Mr. Levin is both right and wrong. True, there is no explicit mention of a "right to privacy" anywhere in the Constitution; however, the Ninth Amendment hallows and protects that right: "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."

In the never-ending struggle against government encroachments on individual rights and liberty, a citizen's right to privacy is of crucial importance and a powerful defense. Do you think that the Founders would approve or disapprove of the proposition that American citizens have an inherent right of privacy as a necessary shield and buffer against government intrusions such as those addressed by a plain reading of the First, Fourth and Fifth Amendments? The answer is self-evident.

What Mr. Levin and other conservatives find objectionable is the use (or, from their point of view, misuse) of the "right to privacy" in Supreme Court Associate Justice William O. Douglas' famous 1965 opinion in Griswold v. Connecticut, in which he engaged in somewhat mystical language, invoking the Bill of Rights' "penumbras" and "emanations." A mature understanding of our constitutional rights includes the recognition that these rights are not absolute. Every first-year law student learns that the right to free speech does not entitle one to shout "Fire!" in a crowded theater. Similarly, crimes of violence are not protected from retribution and punishment on the grounds that they were committed in private. We could argue until the cows come home about when and where the right to privacy must be curtailed in order to uphold other individual rights, but we never should disavow or devalue our right to privacy.

There seems to be precious little privacy from government intrusion remaining in contemporary American society. For example:

* As April 15 approaches, tens of millions of Americans regard the Internal Revenue Service as a financial proctologist, uncomfortably familiar with intimate details of our lives.
* Transportation Security Administration agents at airports use x-ray machines to strip us of any vestige of privacy or modesty about our own bodies.
* Government-operated cameras observe us at traffic intersections and other public locations.
* The surveillance may not yet be as extensive as depicted in the CBS television drama "Person of Interest," but the day of ubiquitous surveillance may not be far off.
* Uncle Sam apparently keeps all our Internet communications archived in California, and may be able to hack into our hard drives without our knowledge.
* There have been reports of domestic federal agencies using unmanned drones to monitor us from above.

Increasingly, it feels like Big Brother is always watching and privacy is going the way of the dodo.

The government equivalent of individual privacy is secrecy. The difference is that individual privacy protects freedom, while government secrecy jeopardizes it. One of the great protections for a freedom-loving people is government transparency - the ability of citizens to keep a watchful eye on their elected representatives.

Unfortunately, as individual privacy has been declining in America, government secrecy has been increasing:

* In spite of the existence of the Freedom of Information Act, it is often difficult or impossible to obtain desired information about our government's activities.
* Federal bureaus and agencies often operate in shadows (or "penumbras," to use Douglas' murky term).
* Former Speaker of the House Nancy Pelosi pushed Obamacare through the House of Representatives in the dead of night, announcing that Congress would have to pass the law so that we mere citizens could find out what was in it.
* The recently departed Environmental Protection Agency administrator epitomized secretive regulators, using a false identity to cover her tracks.
* The Department of Justice stonewalled and preserved secrecy rather than divulge who was responsible for the deadly "Fast and Furious" gunrunning scheme in Mexico.
* President Obama and former Secretary of State Hillary Clinton kept secret who was responsible for the unconscionable and or incompetent decisions that led to the tragic deaths of four Americans in Benghazi, Libya, last year.

Clearly, the balance between individual privacy and government secrecy is enormously out of whack. Individual privacy continues to shrink, while government secrecy continues to grow.

It was once wisely said (although not by Jefferson, to whom the quote is frequently misattributed):

When governments fear the people, there is liberty. When the people fear the government, there is tyranny.

We will fear the government less and be freer if we can recover our privacy and remove the veil of secrecy from government.

With Gulliver Asleep, the Lilliputians Are Almost Done Smothering the U.S. Economy

Jonathan Swift's classic novel Gulliver's Travels - and in particular the novel's first section in which the tiny Lilliputians succeeded in immobilizing Gulliver by binding him with thousands of their tiny, threadlike ropes - serves as a literary metaphor for today's American economy. While our friends on the left may complain that it is hyperbolic and chauvinistic to describe the American economy as a colossus bestriding the globe, nobody can dispute that it has been the big kid on the block.

Just as Swift's fictitious Lemuel Gulliver's strength wasn't enough to overcome the cumulative effect of myriad tethers, so the American economy's tremendous strength and energy have been progressively overcome and subdued by innumerable government (and its partner in crime, the Federal Reserve) interferences with the market economy. Taken individually, each intervention has been a minor nuisance in the economy; taken collectively, though, they have been subduing the American Gulliver.

The analogy isn't perfect. The tying up of the American Gulliver has been a decades-long, slow motion process. And, of course, the "American economy" isn't a single sentient being, but a composite of several hundred million. What has enabled government to get away with its encroachments is a combination of demagoguery, factionalism, special interest politics, and the fact that most Americans are content if they are getting theirs, and thus being indifferent to encroachments that adversely affect others.

Let's describe government encroachments that have increasingly burdened and enfeebled what historically has been (and still is, for the time being) the world's greatest wealth-creating economy:

* It is impossible to tabulate all the American businesses that have been hamstrung, crippled, or even forced into closure by the oppressive edicts of federal regulatory agencies. We tend to hear about the large corporations that go broke; their sheer size commands national media attention, but countless thousands of smaller businesses have been crippled or crushed by OSHA, the green brigades of FWS, BLM, and the green queen bee, the EPA. In declaring independence from Great Britain, the Founders complained that the British government "has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance." "Swarms" sounds like an accurate characterization of the present American regulatory state run amuck. (Read Wayne Crews' "Ten Thousand Commandments," which estimates the annual cost of federal regulations to be $14,768 per household - apart from the immeasurable but considerable lost production that never took place due to financially prohibitive regulation).
* During the Obama presidency, federal spending has commandeered a record-breaking share of peacetime GDP. In his insightful economic history, Crisis and Leviathan, economist Robert Higgs detailed the "ratchet effect," whereby federal spending soared during national crises (whether wars or depressions) then, after the emergency had passed, federal spending would recede, but never to the pre-crisis level, thus leading to an unbreakable secular trend toward bigger government (i.e., "leviathan"). Has the ratchet effect worked in the aftermath of the Great Recession? Sort of.

Obama's stimulus plan succeeded in raising annual spending from the $3.0 trillion of George W. Bush's last year to $3.5 trillion in 2009 - Obama's misguided attempt to revive the economy via federal "stimulus." Even though the recession officially ended in summer, 2009 - meaning that the extraordinary fiscal "stimulus" could be withdrawn - federal spending never came even halfway back toward pre-crisis levels. It remained at $3.5 trillion in 2010, actually increased to $3.6 trillion in 2011, eased slightly to $3.5 trillion in 2012, and looks likely to hit $3.7 trillion this year. With Obama in the White House, a one-year emergency stimulus paved the way for a permanent major increase in federal spending.

* One last indicator: The number of federal programs that transfer wealth from some Americans to others. I recall that in the mid-1980s, President Reagan charged the Grace Commission with the task of taking an inventory of federal programs. Although the Grace Commission reported that they found it impossible to find out how many people actually worked for the federal government (its scope was too big, sprawling, unmonitored, and murky even in 1985) but they did find 963 programs that provided various forms of financial support to individual recipients.

Alas, the wealth-redistribution activities of the federal government have continued to grow in the nearly three decades since then. In preparing a talk to my college's student body in March, I found 2,199 transfer programs listed on the government website, The Catalog of Federal Domestic Assistance ( Two days later, I double-checked, and was surprised to find that another program had been added during that brief interval, bringing the total to 2200. Surely, that must have been a fluke during this year of sequester and GOP control of the purse strings via their majority in the House of Representatives, right? Alas, no. I updated my talk a week ago, and when I checked, I found that in less than three months, another 32 federal transfer programs had made the list. Surely such a rate is unsustainable, but for federal transfer programs to be cropping up at a rate of almost three per week shows that the federal leviathan continues to gorge and grow, implying continued strong headwinds for the private sector.

Wake up, Gulliver! Or is it already too late?

The View from Londonistan

For the second straight year I've had the pleasure of an extended visit with my daughter in London, and for the second year, the themes of liberty and rights - and how closely related they are to conflict and religion - have been prominent.

Last year, we saw Magna Carta at Salisbury Cathedral. The fact that one not-so-large sheet of parchment changed the trajectory of Western civilization from despotism to liberty is powerful evidence that the pen is ultimately mightier than the sword. (Regarding Magna Carta: the way the copyist managed to write each letter and space each line with a precision indistinguishable from modern print technologies is truly incredible.)

Last week we toured Scotland, and wherever we went, we heard stories of earlier generations of Scottish freedom fighters, saw the castles (including the famous one overlooking Edinburgh from its perch on top of a volcanic upthrust) used to defend against aggressors, and relived the conflicts between different peoples and religions. Then on Memorial Day, on a day trip to Cambridge, we saw the hallowed cemetery where are 3,811 of the approximately 30,000 graves of U.S. airmen who died while flying combat missions out of England in World War II.

Today, the United Kingdom and its values and liberties are under attack again. While we were enjoying Scotland's beauty, Drummer Lee Rigby was butchered in broad daylight on the streets of London by two fanatical Islamists. We had heard about it from a taxi driver in Edinburgh, but when it really hit home for me was after we got back to London and I saw his wedding photo in one of the newspapers. The young man was one of the kindest, gentlest, most cherubic looking men I have seen in a long time, and the image of his bride gave the same impression. That such a man could be treated so brutally, such a family be devastated so wantonly, is evil of uncommon magnitude.

While walking to the Lords Cricket Club to share a Sunday roast with an old prep school chum, we passed one of London's largest mosques and a number of Muslims on the sidewalk. It's easy to see why some wag coined the word "Londonistan." The tension and mutual mistrust were palpable. It feels like London is under siege. The mosque seems like a beachhead of an invading force. As was the case here centuries ago, a religious war threatens to rob merry olde England of its tranquility. Londoners find themselves potential targets of random attacks by guerrilla jihadists dwelling in their neighborhoods.

In the anguished aftermath of Lee Rigby's murder, Londoners yearned mightily for solutions to the grim threat they feel. The problem is, there are no easy answers, only vexing dilemmas and uncomfortable tradeoffs.

In a land that values free speech, there are proposals to censor jihadist websites and suppress hate speech - understandable and in many ways justifiable - but such suggestions are accompanied by the nagging feelings that enforcing such objectives could lead to abuses and that driving jihadists underground may not be sufficient to prevent future guerrilla attacks.

In a country where one of the finest historical achievements was learning to set aside sectarian differences, agree to disagree about religion, but coexist peacefully in a civil society based on the impartial protection of individual rights, few citizens want their country to be divided by religious strife. Religious tolerance was achieved at great cost by earlier generations of Brits, but how viable is tolerance if a core tenet of one religion is intolerance of anyone outside the faith? How can Christian England avoid religious strife, when adherents of one particular religion are thrusting it upon them?

And how safe and practical is it to cling to the belief that it is wrong and bigoted to look at individual members of some "other group" as being potentially dangerous? The current situation is horribly unfair to Muslims who have assimilated into Western culture and share our belief in religious tolerance and the separation of church and state, but the insurmountable problem is: How are we non-Muslims to know which Muslims are ticking time bombs waiting to explode?

I wonder whether Britons fully realize the nature of the conflict in which they are engaged. What drives Islamism is a religious belief system. The fanatics are moved by what they perceive as a higher purpose. They have the conviction that faith in divine law imparts, and the concomitant willingness to die in the service of that cause.

It seems to me, although I'm sure many in the West will disagree, that only a comparable belief system of religious faith, with its devotion to a purpose that transcends temporal and temporary happiness, can withstand and prevail against a fervent political-religious ideology. Somehow, I doubt that secular humanism or the facile belief that "nice people don't butcher or seek to enslave others" won't cut it against a rabid, unreasoning, uncompromising, to-the-death fanaticism.

There are visible clues about the antidote to illiberal, atavistic ideology of Islamic conquest all over London and the British isles. I refer to the ubiquitous beautiful churches and magnificent, sometimes centuries-old cathedrals. (Speaking of cathedrals, Salisbury Cathedral, which dates from the 13th century and houses Magna Carta, would be worth a visit even if Magna Carta were elsewhere.) The architectural majesty of these hallowed buildings puts to shame the uninspiring utilitarian structures of the modern era.

Britain's grand and gorgeous Christian churches are monuments in stone to grand and enduring ideas. They remind us that, in spite of manifold sins and shortcomings on the part of fallible individual Christians, it has been Christian values and concepts that gave birth to our love of freedom, our respect for individual rights, the search for and discovery of the principles governing nature, and even our free market system, based as it essentially is on the Golden Rule whereby one profits to the extent of providing value to others. It was the genius of Christianity that taught us to live and let live, to tolerate others, to peacefully coexist in our economic and social lives even as we go our separate ways on the Sabbath to observe different religious traditions, or no tradition. These have been the happy and prosperous fruits of Christian culture. Many in our Western societies, having achieved material abundance, have had less time for religion in recent decades. England's churches, like the ones on the European continent and like many at home in the States, are largely empty. We have forgotten what made us what we are. Indeed, we have the right to abandon our cultural roots and forsake the teachings that lifted us above life that was nasty, brutish, and short. I strongly suspect, though, that the cost of doing so will be great, and, conversely, that a return to our roots will strengthen us for the struggle ahead. *

Wednesday, 16 December 2015 11:02

Hendrickson's View

Hendrickson's View

Mark W. Hendrickson

Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College, Grove City, Pennsylvania. These articles are from V & V, a web site of the Center for Vision & Value, and

The EPA: The Worst of Many Rogue Federal Agencies

In the Age of Obama, there are many viable candidates for the official title of Washington's "Private Sector Enemy Number One." You could make a strong case for the National Labor Relations Board, the Department of Homeland Security, the Transportation Security Administration, and others, but my choice would be the Environmental Protection Agency.

For over 20 years I have gathered stories about ways in which the EPA has perpetrated misfeasance and malfeasance, misdeed, and mischief. Let me say that I mean no offense to the many employees of the EPA who conduct their professional lives with integrity and on the basis of sound science. My target is the hyper-politicized leadership of EPA and its henchmen who have misbehaved.

Here are just a few of the significant "lowlights" of the EPA's record: the political nature of the EPA became clear not long after President Nixon established it in 1970. In 1972 the first administrator of the EPA, William Ruckelshaus, banned the insecticide DDT after his own hearing examiner concluded, on the basis of several hundred technical documents and testimony of 150 scientists, that DDT ought not to be banned.

In 1978, the EPA tried to suppress research showing the cost of proposed air pollution standards. If Pennsylvania's two senators at the time (John Heinz and Richard Schweiker) hadn't intervened, the EPA would have imposed standards stringent enough to effectively shut down the U.S. steel industry.

In 1991, a panel of outside scientists brought in to review EPA practices concluded (among other things) that the EPA often tailors its science to justify what it wants to do and shields key research from peer review. EPA Administrator William Reilly acknowledged, "scientific data have not always been featured prominently in environmental efforts and have sometimes been ignored even when available."

The EPA has ignored epidemiological evidence to foment false alarms about the dangers of ozone, radon, Alar (used in apple orchards), dioxins, and asbestos. The asbestos story is illustrative. Not only did the EPA, in 1989, decree an eight-year phase-out of asbestos despite studies from Oxford, Harvard, the Canadian Royal commission, New Jersey, etc. that the health risks posed by asbestos-lined buildings were miniscule, EPA's administrators even ignored the EPA's own scientific panel, which denounced the study used to justify the ban on asbestos as "unconvincing," "scientifically unappealing," and "absurd." (Thankfully, sanity returned and EPA Administrator Reilly rescinded the ban a year later.) The U.S. Fifth Circuit Court of Appeals officially deep-sixed the asbestos ban in October, 1991, on the grounds that the EPA had exceeded its legislated authority - a not-uncommon finding replicated multiple times in subsequent years, such as when the EPA has used the Clean Water Act (which pertains explicitly to "navigable waters") as a pretext to regulate lands where puddles form after heavy rains.

It seems that the most visible EPA administrators were the most problematical. In the 1990s, under the leadership of Carol Browner, the EPA refused to divulge how it calculated cost-benefit analyses. Indeed, in 1997 Browner admitted that new research would be required to set a "scientifically defensible" standard for air quality issues that would "fill obvious and critical voids in our knowledge." The Browner-led EPA also blatantly broke federal law by actively lobbying against legislation designed to curb some of EPA's abuses. Browner herself broke the law by defying a federal judge's orders and overseeing the erasure of the hard drives and the destruction of back-up email tapes that she had used as administrator.

One of the most amazing rulings to come out of Browner's EPA was a letter sent to the city of San Diego, ordering them to stop treating the sewage pouring into the Tijuana River Valley on the grounds that human actions were disturbing the "sewage-based ecology" of the affected estuary - ignoring the fact that the sewage posed a health threat to human beings (whose "ecology" obviously wasn't considered as important by the EPA).

In 1993, Senator Patrick Moynihan (D-NY) wrote to Browner expressing concern that EPA hadn't submitted a report of cost-benefit studies it was required to submit to Congress under Section 812 of the 1990 Clean Air Act amendments. Not only did Browner not even bother to reply, the agency still hadn't completed a report by 1995. Meanwhile, the EPA is notorious for imposing fines on businesses that are late in submitting the piles of paperwork filings that EPA requires of them.

So bad did things get during Browner's tenure that in 1996, a 27-year veteran microbiologist at the agency went public with his concerns about the lowering of scientific standards under Browner, alleging, for example, that the science EPA used in wastewater toxicity tests was unreliable, and that EPA had become more interested in issuing regulations than in practicing sound science. Similarly, during the summer of 1998, a dozen career employees at EPA went public about the agency's "egregious misconduct." These whistleblowers charged that people who work at EPA "are harassed, even fired, for protesting illegal or irresponsible behavior by managers who jeopardize the proper enforcement of the law."

Barack Obama's recently departed EPA Administrator, Lisa Jackson, also distinguished herself by placing political agendas over sound science (and also, like Browner, breaking the laws governing the computer records of public officials - in her case, by trying to hide what she was doing through use of a bogus email identity).

Jackson showed her disregard for scientific rigor by seeking to replace actual samples of air quality with computer estimations of air pollution. Considering the agency's considerable power to act as judge and jury and bring businesses to their knees, it hardly seems like justice to empower the EPA to enter whatever data it chooses into a computer program and essentially produce evidence based on its own assumptions.

The EPA: The Worst of Many Rogue Federal Agencies, Part II

In my previous article, we reviewed some of the ways in which politics has trumped sound science in the EPA's policymaking process, even to the point of defying the law at times. Here are some more specific instances of the EPA having abused its power, often at great cost to American citizens.

We haven't heard much about Superfund in recent years, but this EPA program was a headline grabber 20 years ago. Set up to clean up contaminated sites, Superfund consumed over 40 percent of the EPA's budget at one point. Sadly, most of the money went to lawyers, and the program itself ended up demonstrating its "essential irrelevance to public health."

During the administration of Bush I, the EPA suppressed the findings of a decade-long, half-billion-dollar study of acid rain - NAPAP, the main scientific conclusion of which was that acid rain was not the culprit in increasing the acidity of lakes - until after Congress passed Clean Air Act of 1990. By enacting legislation premised on incomplete and incorrect science, unnecessary regulatory stringency cost Americans untold billions of dollars. So egregious was the EPA's conduct in this matter that Kay H. Jones, the senior scientist on the Council on Environmental Quality under three presidents, issued a report condemning the EPA cover-up and accusing the agency of "blatant public misinformation."

Unfortunately, the NAPAP incident was far from the only instance of EPA misinformation. In the early 1990s, Congressman John Dingell (D-Mich.) pulled no punches in insisting that certain environmental health regulations were based on the work of a scientist who "cooked the books" and performed "criminally fraudulent work." On another occasion (in 1993) Dingell had this to say about the EPA's treatment of scientific research: "It cooks the books with great vigor."

Accuracy in Media published some blockbuster reports in the early 1990s exposing how the EPA would plant disinformation in the media, even quoting an 11-year EPA press officer who stated that EPA handouts were - ahem - "not completely honest."

The late, great journalist Warren Brookes found numerous instances of the EPA's disregard of the cost of its policies. One of the most startling was a rule issued under the Resource Conservation and Recovery Act that shut down 150 companies and imposed $100 million in costs to reduce a hypothetical cancer risk that was the equivalent of spending $9 trillion (yes, with a "t") to avert a single case of cancer.

Congress often has helped the EPA squander the taxpayers' money. It has passed more than 20 environmental laws directing the government to pay the legal fees of green groups that sue the government, even when the government-subsidized plaintiffs would lose. Guaranteed money for suing the government - what a deal! contributor Larry Bell recently detailed EPA's cozy collusion with green groups, in which the two parties (who really are on the same side) negotiate settlements outside of the courtroom where they are shielded from scrutiny.

Another way in which EPA has proven a poor steward of taxpayer dollars is seen in its history of grant giving. According to EPA's inspector general in 2002, the EPA "could not justify more than $1 billion in noncompetitive grants" - just in the year 2000 alone! In some cases, EPA grants are rather incestuous. Over the last 20 or so years, the EPA has given at least $25 million to the American Lung Association, which reciprocates by putting up billboards that amount to pro-EPA propaganda.

The EPA is known for its power grabs, too. In a current notorious inter-bureaucratic power play, the EPA is trying to usurp the Army Corps of Engineers' prerogative under the Clean Water Act to revoke or withhold permits needed by resource extraction companies.

In another Obama-era episode, two experts from the Wyoming Water Development commission charged that the EPA ignored its own guidelines in testing water wells when testing for fracking-related contamination. Referring to the same tests, the Bureau of Land Management said that better testing would be needed to reach accurate conclusions, and the U.S. Geological Survey rebuked the EPA for using poor scientific practices.

When 30-year EPA veteran Alan Carlin dissented from the EPA's alleged "endangerment" finding on carbon dioxide and other gasses in 2009, the EPA ordered him to stand down and remain silent. A subsequent investigation by the inspector general determined that Carlin was right. Carlin, however, retired, and the EPA is marching forward toward regulating carbon emissions.

As has happened many times during EPA's history, Inspector General Arthur A. Elkins, Jr. issued a public statement on Sept. 28, 2011, in which he stated that the agency's greenhouse gas endangerment finding did not make sufficient use of peer review, ignored requirements to certify its compliance with related policies, and provided dubious documentation of its analyses, politely suggesting that the EPA needs to strengthen the quality of its data.

Also in 2011, the chair of a National Academy of Sciences panel on ways to improve EPA's risk assessment practices, told EPA officialdom in no uncertain terms that its research needs to become more sound and transparent if it is to regain credibility and respect.

Under the recently departed Lisa Jackson, the EPA fined 24 businesses about $40 million for not conducting due diligence by virtue of failing to discover that certain refiners of biofuels were selling rights to fictitious output. What makes this fine so outrageous is that the EPA itself had certified the very biofuel companies who were perpetrating the fraud, and even after having discovered the fraud, they waited 15 months to notify the refiners who were being victimized by it. When the EPA finally alerted the refiners that they were holding bogus permits, they gave them only 14 days to find replacements - a virtually impossible task, and yet EPA then lowered the boom and chose to fine the refiners who were the victims, not the perpetrators, of the scam.

Similarly, the EPA seems to derive perverse pleasure from fining refiners for failing to use nonexistent fuels. Under the authority of amendments to the Clean Air Act, the EPA mandates the use of cellulosic biofuels and fines refiners for failing to use the mandated amount. In 2010, the EPA wanted refiners to burn five million gallons of these biofuels, yet zero gallons were even produced in 2010. Nevertheless, in 2011, the EPA upped the mandate to 6.5 million gallons, but again, zero gallons were produced. In 2012, the mandate was for 8.5 million gallons - and a grand total of 25,000 gallons were produced. A federal judge essentially told EPA to stop this nonsense. EPA's response was to raise the 2013 mandate to 14 million gallons.

The EPA's in-your-face, anti-fossil fuel vendetta is even more obvious in this Machiavellian power play: Under its greenhouse gas endangerment finding, coal-powered electricity generating plants would need to pay for expensive equipment to limit CO2 emissions. The EPA then estimated the cost of all this technology to be zero. How so? Because the price will be so high that the EPA assumes no utility would ever do it. In other words, by regulatory fiat, the EPA is flirting with shutting down coal-fired plants completely.

The EPA seems to enjoy imposing impossible requirements on private energy companies.

Often the EPA oversteps its statutory authority so blatantly that federal judges frequently overrule EPA actions. At least one court has ruled that EPA delays at granting permits are illegal. (No word on whether the practice has stopped, but don't bet on it.)

The ideologically split Supreme Court united long enough for a 9-0 slap-down last March, ruling that EPA had gone too far when it refused to grant homeowners a review of the EPA's decision to halt construction of a house on a "wetland." The lot in question had no water on it, and yet EPA decided to fine the homeowners $75,000 per day - half of that without informing the homeowners.

Last summer, the EPA presumed to order ships operating within 200 miles of Alaska's southern shores to use more expensive low-sulfur fuel. The authority EPA invoked was a maritime treaty that had not yet been approved by the U.S. Senate.

In January of this year, a judge in Virginia ruled against the EPA, which had arrogated to itself the power to regulate unpolluted storm water that runs into a creek. The EPA argued that it had the authority to do anything that the Clean Water Act did not explicitly say that it could not do - an expansive view of bureaucratic power indeed.

There are even reports that the EPA is now using drones to keep an eye on American farmers. If this isn't a rogue agency, I don't know what is.

Medicare: Did You Really Pay for That?

Last summer, Barack Obama riled a lot of entrepreneurs when he got carried away at a campaign event and told any American who had built up a successful enterprise, "you didn't build that." An even greater backlash awaits any politician who dares to tell Medicare recipients, "You didn't pay for that" - for there are far more seniors than entrepreneurs in our country.

Time after time during Election Year 2012, seniors and near-seniors reacted to the slightest mention of Medicare reform with indignation and the emphatic insistence, "Don't you dare touch Medicare; I've paid for it!" There is only one problem with that statement: In a mathematical sense, it isn't true.

The amount that American workers have paid and are paying into Medicare isn't enough to fund all the benefits that are being paid out to seniors under Medicare. The trustees of Medicare have stated that the promises they have made exceed their projected revenues by tens of trillions of dollars. Senator Tom Coburn (a physician in private life) has estimated that the average American couple contributes approximately $110,000 to Medicare over their working careers and receives over $330,000 of Medicare benefits. On Feb. 20, USA Today cited Urban Institute data pegging those same figures at $88,000 and $387,000, respectively.

There are differing estimates of the size of the gap, but clearly Medicare suffers from an unsustainable funding deficit. (Just to be clear: Every insurance program has participants who receive far more in benefits than they paid in, but that is possible only because some participants die before they collect. In other words, in a sound insurance program, the average payout will not exceed the average contributions plus earnings on invested funds - but there are none in the pay-as-you-go Medicare program).

Let me hasten to say that I have sympathy for those who make the "I paid for it" case. Through decades of their working lives, millions of seniors paid into the system and were promised that Medicare would be there for them starting at age 65. These citizens played by the rules, acted in good faith, and held up their end of the bargain.

The problem is that the politicians in Washington have not acted in good faith. Instead, they have committed a gigantic fraud by underfunding the program. The fact of the matter is that we've been swindled, and the anger and sense of pending betrayal that many seniors feel is understandable. At the same time, we, the people, need to accept some responsibility for this sorry state of affairs.

Certainly, the members of Congress and presidents who allowed the imbalance between Medicare income and expenditures to get so out of whack are ethically culpable. Still, "we the people" share some responsibility for the Medicare fiasco. The mistake was navet and gullibility. One of our endearing national characteristics is our readiness to take people at their word. Millions of decent Americans would never defraud or deceive their neighbor, and so they assume that others won't deceive them. We can see now what an enormous mistake it was to trust politicians' promises.

This brings to mind a sequence in the slapstick, farcical movie, "Animal House," in which a freshman pledge in Delta house, Flounder, lets some upperclassmen in the fraternity talk him into letting them use his brother's brand-new Lincoln for a road trip. The frat brothers, predictably, trashed the car. As Flounder wept in regret, the suave, smooth-talking senior, Otter, put his arm around Flounder's shoulder and explained the facts of life to him: "You [goof]ed up; you trusted us." ("Goof" replaces the original R-rated verb.) "We the people" have goofed up big time, trusting a government bureaucracy to oversee something as important as our health care.

Regrets and recriminations aside, the question now is: Where do we go from here? What are our options? The only way that the oncoming flood of baby boomers will be able to receive all the Medicare benefits that they were promised would be to either increase payments into the system or reduce disbursements from it.

We already have seen how volatile, contentious, and divisive the political strife over Medicare has been. Sadly, it is likely to get much worse. Generations will be arrayed against generations.

On the one side, gray-haired Americans will demand that the promises made to them, and for which they upheld their end of the bargain, be kept. The progressives have played a masterful political game, for while their socialistic hearts lust to take control of even more of Americans' wealth, they will have huge numbers of average Americans who think of themselves as anything but socialists egging them on and supporting them in their quest to absorb and appropriate more property. The great American middle class, who has the most to lose when Big Government supplants the private sector, will be energetically demanding some of the very policies that will crush the life out of the economy.

On the other side, at some point the younger generations are going to rebel against the debt slavery to which they have been subjected, and they will push back as a matter of economic survival and a desire to feel as free as their elders once did. Responding to pressure from the young, the federal healthcare blob inevitably will ration health care. As happens as a matter of routine in the United Kingdom today, bureaucrats will make cold-blooded decisions about which seniors from which to withhold care as a matter of cost containment.

What a terrible price Americans will pay for falling for the seductive promise of a benign government caring for us all in our old age. Not only will the country be poorer and less free, but the quality of health care itself is bound to decline - all while our society is riven between young and old when the common enemy is the idea that the compulsory economic relations imposed by government comprise a way of life that is somehow more just, more harmonious, more helpful, and more prosperous than a society in which each individual's life and property are his own and economic exchanges are voluntary (i.e., a society in which people are free). *

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Calendar of Events

Annual Dinner 2023
Thu Oct 19, 2023 @ 6:00PM - 08:00PM
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Thu Oct 13, 2022 @ 6:00PM - 08:00PM
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Thu Oct 13, 2022 @ 2:30PM - 05:00PM
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Thu Oct 14, 2021 @ 6:00PM - 08:00PM
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St Croix Review Seminar
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Words of Wisdom