An announced recovery

The economy continues to decay, but people in various media and government outlets were cheering the fact that the economy only shrank by one percent in the prior quarter, unlike the over six percent shrinkage in previous quarters. That the economy continued to get worse is considered good news because it got less worse instead of more worse.

Some, such as Bernanke, conclude that the economy will recover by the end of the year. Bernanke was saying the same thing back at the beginning of the year though, so the only real strong point he has is consistency. While unable to foresee the recession he sees that it will soon be over.

Naturally anyone familiar with Austrian Economics can poke holes in the pronouncements of recovery.

The GDP only shrank by one percent, in a quarter which saw phenominal increases in government spending. Unfortunately government spending is considered a contributing factor to the GDP instead of either an outside factor or a subtractive factor. The basic equation for the GDP is: GDP = private consumption + gross investment + government spending + (exports − imports). A corrected equation for the GDP would be GDP = private consumption + gross investment - government spending + (exports − imports).

The second formula accurately represents the drain on the economy that is the government. But that may be too controversial for most economists, and just leaving out government spending as a whole would still give a clearer picture of the GDP. GDP = private consumption + gross investment + (exports − imports).

In either case, the GDP smaller than actually reported. And that smaller GDP would indicate a larger decay of the economy considering how rapidly the federal budget is growing.

But supposing that Bernanke is right, that the economy is starting to recover. According to Austrian economics, that will mean that the USA will have to deal with the negative effects of the efforts of the government to stave off the inevitable liquidation of malinvestments. Since this was done by doubling the money supply, the negative effect will be a havling of the value of the currency. That means if the recession does indeed end in 2009, the next one begins in 2010.

Fallacy of the Broken Window

Anyone who has studied economics is familiar with the parable of the broken window. One day in a peaceful small town some kid throws a rock through the Baker’s window. Understandably the baker is upset about this because now he has to buy a new window. A Keynesian economist comes along and declares this to be a good thing because this stimulates economic activity, as the Baker will buy a new window enabling the Glazer to make purchases he would not have otherwise been able to, creating a ripple effect throughout the economy. He calls it "The Parable of the Broken Window."

But a Misean economist comes along and calls it "The Fallacy of the Broken Window” instead of "The Parable of the Broken Window" because the Keynesian assumes the Baker's money was doing nothing and is now being put to use. The Misean says that we do not know what the Baker might have done with the money, what he would have spent it on instead. The Baker might have purchased, for example, a newer and better oven, increasing his productivity. Instead of everyone being better off, because bread is now cheaper and more plentiful, the town is really only poorer by the amount of one window. This is commonly referred to as the problem of the unseen.

Socialists and Keynesians hate the fallacy of the broken window. It undermines their entire view. Creative destruction and central planning do not create wealth if the story of the broken window is considered a fallacy instead of a parable. But for a long time the only response was to say that calling it a fallacy is wrong. But now it seems there is circulating in the discussions of central planners a new counter to "The Fallacy of the Broken Window." Some central planners are starting to call it "The Fallacy of the Fallacy of the Broken Window."

Their argument is that we do not know that he would have spent the money in a productive manner. Since we do not know that the money would have been used productively if the Baker's window were not broken, and we do know that the money was used productively since the Baker’s window was broken, the certainty of productive use in the latter situation means that the problem of the unseen is a fallacy and therefore advocating for the former situation is uninformed.

There is a major problem with that counter argument.

While it is true we do not know exactly what the Baker might have spent the money on otherwise, we do know it in a few broad categories. He would either have saved it, spent it, or given it away.

If he gives it away then the three options pass on to another person, who either spends it or saves it or give it away. Eventually the wealth will get spent or saved, so this option can be ignored as simply regression.

If he spent it, then it is a given it would have been spent in a productive manner given that people do act in their own rational self interest within the confines of their knowledge. To say it was spent in an unproductive manner is a subjective value judgment that Keynesians are not actually capable of making. This is also true if the recipient of giving the money away spends it.

Finally if he saves it, it is a use. This is the biggest Keynesian stumbling block, but as all Miseans know saving is not detrimental to the economy. Saving is how a person is able to consume in the future. The Baker might be saving up for that new oven, and in another month would have been able to purchase it, but now cannot because his savings must be spent unproductively on a new window. If the money is saved in a bank, the bank lends it out for economically productive purposes. But even if the money is saved in a box buried in the back yard it is still being put to the economically useful activity of saving for the purpose of future consumption.

The central planner's response to "The Fallacy of the Broken Window" by calling it “The Fallacy of the Fallacy of the Broken Window" is actually "The Fallacy of the Fallacy of the Fallacy of the Broken Window."

Public and Private Competition

One way those who want to "improve" the free market do so is by introducing competition in the form of a government program or agency that duplicates work done outside the government. Usually those in the afflicted field would be surprised to know that the field doesn't currently have competition. But in order to correctly analyze the claim, it is good to look at fields where the government directly competes with private enterprises.

First and foremost on any list of government activities that compete directly with private endeavors is education. At one time education was largely private, and to a great extent taxes were not used to pay for education. Yet education was available at all levels, although non-compulsory, to the point where religious groups were even offering free education to the poor. But government sponsored education has only increased. Since it is paid for by taxes the direct consumer does not directly pay for the education and therefore mistakenly considers it free.

As a result, private schools have diminished in number. While they generally provide a much higher level of education, only those who are either make major sacrifices or are wealthy can take advantage of the better education offered.

The second endeavor to be examined is in delivery of the mail. Libertarians are generally familiar with Lysander Spooner's attempt to deliver first class mail, and how the Post Office used legal coercion to shut it down. Package delivery still has private competition in the form of UPS or FedEx.

The prices for package delivery by the USPS are lower than UPS or FedEx, due to undercutting. The low price is supported by raising the rates on first class mail. Even with that undercutting those who can afford it (and in this case many but not all can) prefer to use FedEx or UPS. What makes the USPS special among cases of comparing private and public offering of services is that the user does pay for the service directly. But even then the USPS is subsidized by the Federal Government.

Another is the providing of security. It is well known that the rich do have private security in private communities or residences that respond quickly in the event of a disturbance. Those who are of average means can afford to defend themselves by the purchase of a firearm. Those who cannot afford any better rely on the police, who arrive after a crime has already been committed to make the report and try to apprehend the criminal. The rich have proactive protection, the middle class can protect themselves, and the poor have no protection.

The building of roads has been entirely taken over by the government to the point where many cannot imagine it being any other way. In the former Soviet Union people could not imagine how shoes could be distributed if the government did not do so, and wondered if those who thought a free market in shoes meant that only the rich could get shoes. There is nothing to compare the building of roads to, given that the ability of government to force everyone to pay and offer the resuliting roads for "free" has completely driven private roads out of business. Those toll roads that are managed by special grants from the states do not count as they are not free market but are corporatism.

In every case except the Post Office, the ability to force payment into the program, combined with while offering the service for "free" has driven competition out of the market for all but the very wealthy. The same is true to a lesser extent for the Post Office. This has resulted in only the wealthy being able to truly afford high quality goods or services.

The health care plans offered by President Obama include a "Public Option" where the Federal Government directly competes with private insurance companies. If history is any indication this will result in only the wealth being able to afford high quality medical insurance. Taxes will be raised to provide the service, and the public will be lied to about how the service is free. Those who advocate anything other than a program which will result in only the rich being able to afford quality insurance will be accused of wanting a program which will result in only the rich being able to afford quality insurance.

I'd like to welcome as readers the Complete Liberty Podcast, as I've just discovered that they've used two of my articles in their podcasts. I'm flattered.

Edited to add:

A critic of this article pointed out that education is somehow disproof of the proposition that public and private competition leads to only the rich being able to afford quality services. What was offered as proof wasn't primary education but colleges, which in the United States are still considered to be very good.

It is true that on the level of Masters or Doctorate the United States is of exceptionally high quality, and in some fields a Bachelor's Degree is worth more than the paper it is printed on. But as is being pointed out on Lew Rockwell's website the cost is becoming prohibitive. Students graduate with many thousands of dollars in student loans just for a Bachelor's, after scholarships and grants. Those who go for even higher degrees finance it almost entirely by borrowing. Education is becoming a way to become an indentured servant of the lending agencies.

It is true that a Bachelor's Degree holder statistically earns more over the course of his life than someone with only a High School degree. It is also true that the costs of paying for that degree are rising to the point where they may be higher than the lifetime earning differential. If that happens than the economic decision would be to forego higher education.

That would mean that thanks to public versus private competition a quality higher education is only the rich can afford.

Secession Day in Retrospect

July fourth rolled around with many of the comments one would expect. Republicans and Democrats turned it into yet another opportunity to worship the state. Libertarians bemoaned the chasm between the original intensions of the signers of the declaration and how far this country has gone since.

But there was another thread in libertarian blogging on the subject. There were more than a few bloggers who pointed out that the signers were not trying to “work within the system” but had openly taken up arms against the government in open revolt. Those bloggers were also questioning the reluctance of modern libertarians to make such an open revolt against a government far more oppressive than the king of England was.

The question was asked, as an imperative, if libertarians had what it takes to say to the government “I’m not going to obey your laws anymore.” There are many people every day who say that. They are called “criminals” by the government. True if everyone became a criminal at once the government would fall but that is not what the authors are actually urging.

What these authors actually want is a movement to join that will actually be a revolt. If they really stood by the call to arms at this time, they would be taking up arms at this time. They would become criminals. But they do not want to go to jail for their solo efforts.

The signers were not individual criminals funding a revolt. They were politicians. They had worked their way up through the political system and were speaking on behalf of the states that they were delegates from. John Hancock, first president of the United States, was one of the wealthiest men in the colonies before the declaration was signed. Early in his political career he was one of the five selectmen of Boston. He served in various political offices until he was made president of the Continental Congress. The rest of the singers were all people of influence, prominent lawyers, doctors, military officers, shippers, educators, publishers, and politicians. They all served in offices, elected or appointed, before they were appointed as representatives – by their states – to speak for their states in the Continental Congress.

The second revolt was also led by those who had already established themselves, when the eleven Confederate States seceded. Like the secesion of 1776, the secession of 1861 was a product of those who were already withing the political system. The vote to secede took place in the legislatures of the states.

In other countries, where avenues such as that are not available, instead of prominent politicians leading an anti-government movement, other institutions where one can have influence are used as a vehicle for revolt. In many countries religious leaders and institutions are vessles for this kind of activity.

If what the authors of those blog entries really want is a movement that people can join, what they should do is find a way to start such a movement. They need to form their own militia, train it themselves, and fund it themselves. Like everyone else raised in the current system of dependency on the government, they are waiting for someone else to handle the organization aspect of this problem. The real work is to become influential enough to create this sort of movement, instead of waiting for the movement to exist and urging everyone else to join it.

California issues IOUs

While everyone else in the libertarian blogosphere is writing about how the founding fathers were rebels, traitors, and secessionists, and encouraging us to live up to their examples, I decided that while they are right my own input on this is not needed at this time. So I decided to write about something a lot more current.

First the government of California passed the single largest state tax increase in the history of the United States. Then ballot propositions are sent to the voters to extend the tax increases, which the voters reject. The propositions were rejected by all groups in California; they were rejected by blacks, whites, Hispanics, Asians, and "others", they were rejected by men and women, by Republicans and Democrats, by conservatives and moderates, and only broke even among liberals. They were most strongly rejected in Orange County and barely rejected in San Francisco County.

The rejection of the propositions threw the budget into unbalance again, and as time went on and the economy worsened (and the tax increases failed to provide a corresponding increase in revenue for reasons Miseans would understand but would confuse Keynesians) the need for a balanced budget grew more urgent as the state Comptroller warned repeatedly that the state was running out of money. In the time between the failures of the propositions to the deadline the deficit rose from a projected $16 billion to a projected $24 billion.

The deadline came and went, a budget was not passed, and so on July 2nd the State of California started issuing IOUs. This was largely because although the Republicans were more than willing to aid and abet the last tax increase the voter reaction was so strong that they thought it better to actually follow their election promises this time around.

The reaction from the politicians is the most interesting part.

In the Assembly Budget Committee, a Democrat on the committee opined that while he supported the new round of tax increases perhaps it was time for the state to start living within its means. Chairperson Noreen Evans disagreed saying "There is this mantra out there 'living within our means' and while it sound really nice it sounds really simple and it sound really responsible it's meaningless. Our means are completely within our control". She opposed any cutting of the budget on the grounds that the state can always raise taxes to cover any needed revenue.

In an interview Assemblywoman Karen Bass reacted to the Republican refusal to approve of any tax increases. The recall effort against Assemblyman Anthony Adams (as well as other Republicans who violated even indirectly their no-tax pledges) has scared the rest of the party straight. Assemblywoman Bass opined about those who dare oppose tax increases by saying "The Republicans were essentially threatened and terrorized against voting for revenue. Now [some] are facing recalls. They operate under a terrorist threat: 'You vote for revenue and your career is over.' I don't know why we allow that kind of terrorism to exist. I guess it's about free speech, but it's extremely unfair." Daring to hold politicians accountable is now a form of terrorism? She called the taxpayers of California "terrorists" for being over-taxed already and not wanting to be even more over-taxed.

Finally Proposition 13, the favorite scapegoat of all who believe in government instead of the people, is being blamed with any rationale that makes limited sense at the moment. Some say it works too well. Others say that it holds the majority hostage to the minority, as if requiring 2/3 to pass a tax increase means that the remaining 1/3 is actually in charge.

So after all of that the state is issuing IOUs instead of payments. There is no information yet on whether or not the banks will accept these interest bearing IOUs, although the likelihood of that increases with the proffered interest rate. If the banks decline to accept the IOUs the willingness of the public to receive them will plummet, as will the credit rating of the state. Where California goes, so does the rest of the nation.

Privatization versus Sub-Contracting

It happened in an internet forum that someone tried to use sub-contracting as an example of how privatization doesn’t work. However, sub-contracting doesn’t work as an example of privatization.

The State of California, in trying to manage a state park owned by the state government, hired AIG to manage the state park. AIG hired private firefighters to perform the firefighting service in the state part, at the behest of AIG, at the behest of the State of California. Those private firefighters apparently didn’t do a very good job, and so after being paid by the state (ultimately) to do a state job on state land it is considered a failure of privatization.

A real example of privatization would not have the state involved. These private fire fighters would be hired, not by California (via AIG) but by the private owner of the private land.

The two do not compare. No matter how many intermediary agencies there are between the top and the bottom, the top level agency, the one that initiates the sub-contracting, sets the rules for the entire chain downwards.

This is evident in the way companies that get most of their business from government contracting are run. Those companies have an internal structure and practice that is in many ways as bureaucratic as the government. They may be a little less bureaucratic since they do not have to follow the full range of regulations, but adherence to many government policies are written into contracts to ensure that sub-contracting doesn’t interfere with social planning objectives.

In the private sector sub-contracting also means that the goals of the top level company are the goals that determine all contracts down the line. The difference is that the goals in the private sector are all the same, best product for the lowest price. Government contracts aren’t written to make money for the government but to adhere to some policy driven standard, thus ensuring that there will be conflicting goals in government contracting.

When a contractor fails to deliver what should be the desired result, but stays entirely within the contract, it is not the fault of a private system. It is the fault of a public system that, in this case, happened to use a sub-contractor. The fault is still in the public sector.

Sub-contracting, contracting out to private companies government functions, is not an example of the free market at work. It's more correctly referred to as corporatism.

A bold move by the GOP?

Former Vice President Dick Cheney has come out publicly in support of gay marriage. Meanwhile President Barack Obama and the rest of the leadership of the Democratic Party have come out in favor of Civil Unions instead. While Obama could single-handedly end "don't ask don't tell" and integrate the military, he refuses to do so.

Could Cheney’s announcement be a ploy to win over the homosexual constituency away from the Democratic Party?

The Democrats love to divide people into categories, because doing so make it appear they have a demographic advantage – given that every group except White Heterosexual Able-bodied Christian Males is considered a constituency of the Democratic Party. This is done to present a case that the Republican Party is dying for demographic reasons and had better embrace all of the Democratic Party’s race baiting policies (known for Orwellian reasons as "Civil Rights") or die as a party because, unlike the “robust” Democratic Party, the Republican Party represents just one demographic.

But in spite of the absurdity and inherent racism of politicking by demographics, there are those who believe it. And those will try to make policy around it.

About the only good thing that can be said about Neoconservatism is that since it originated in the Democratic Party those who follow that belief system have little interest in laws that mandate morality. Neoconservatism is a distinct political ideology from the Religious Right. True, the Neoconservatives want a police state, but they want to police loyalty, not morality. Thus they actually are in a unique position to advocate that the Republican Party change its position on homosexual issues.

How would they do this? It would not be an easy sell. The Religious Right caucus wants nothing to do with homosexuality. While selling them on gays in the military can be done more easily the harder sell would be gay marriage.

Gays in the military can easily be covered under the need for manpower. Endless war is a Neoconservative objective, and the belief that the United States has some divine mandate and the idolatrous way the Religious Right views the government can be tailored to advocate integrated service. Greater manpower is needed to fulfill the divine mission of the United States – or so would the Neoconservatives say when selling this to the Religious Right. The Neoconservatives won't believe it, they view the Religious Right as dupes, but that’s how they would sell it.

But Gay Marriage is the major hurdle. The entire debate would have to be reframed. The Neoconservatives would have to frame it as "monogamy versus promiscuity." Given that the Religious Right believes the only appropriate sexual behavior for homosexuals is either abstinence or conversion to heterosexuality, reframing the debate in this manner would be very difficult.

That doesn’t mean that it cannot be done. It could.

And given that, one state at a time, gay marriage is becoming the norm in this country. Civil Unions, once the progressive position, is now seen as the regressive position. It is also the official position of the Democratic Party.

The Democratic Party has long taken many of its core constituencies for granted because "who else will they vote for, the Republicans?" If Cheney is indeed making that play for that voting block, the answer to that question would become "yes."

Republicans out of Power

Republicans are never more dangerous to the cause of liberty than when they are out of power. It is when they are out of power that they might actually attract the support of libertarians, even those who do not have a short attention span.

It is well known that Republicans have a habit of stealing libertarian rhetoric. It is also very well known that Republican follow through is abysmal on that for all the rhetoric they steal they never act on it. Everyone - Republican, Democrat, and Libertarian - knows that is true, although occasionally to score points in a debate Democrats will conveniently "forget" that there is no relationship between Republican word and Republican deed in order to try to paint a false association between Libertarians and Republicans.

When Republicans are in power, the divide between word and deed is apparent to all. There was no libertarian support for No Child Left Behind or Perscription Drug Coverage for Seniors. Libertarians never support deficit spending, following the principle that total spending is equivalent to total taxation. Given that principle, when a libertarian calls for tax cuts that libertarian is also calling for spending cuts by necessity. Direct taxes are evil, but still a lesser evil that the indirect taxes of deficit spending or inflation. When a Republican calls for tax cuts that Republican is calling for more of the burden of taxes to be shifted from direct taxation to indirect taxation.

When Republicans are in power, it is very difficult to paint any sort of assocation, whether by a Republican trying to attract libertarian votes or by a Democrat trying to show a flaw in libertarianism by laying at the feet of libertarianism the faults of Republicans.

But when Republicans are out of power not only is there a shortage of direct examples of how Republicans are nothing like libertarians, that is when Republicans increase their rhetoric theft. There was no rhetoric theft when Bush was trying to defend the use of torture, and there was nearly none when he was trying to justify the baseless invasion of two different countries. There was some effort to portray the invasion as a liberation, but all attempts to paint it as such rang rather hollow.

Such an increased level of rhetoric theft coupled with a decrease in manifest counter-examples leads to some undesirable results. Those who are new to the libertarian movement, or overly forgiving of past betrayals, may be swayed to support Republicans due to the rhetoric, a particularly dangerous temptation given that both are opposing Democrats at that time. Due to having a temporary common cause some might be willing to convince themselves that "this time" the Republicans are actually better. That sometimes leads people away from being libertarian as happened during the Bush administration and the War on Terror. The remaining libertarians, seeing some of their own pulled away have to work twice as hard at trying to win people over since they have to replace those leaving while trying to grow the movement. But even the attempt to persuade people to join is hampered because any attempt to persuade people to support libertarianism is met with opposition by some Democrats who feel more free to create the false association between libertarians and Republicans.

It is when Republicans are out of power that libertarians must most strongly resist thinking well of them, and contine to judge Republicans as harshly as they did when Republicans were in power, acknowledging only the small handful that actually are libertarian because their actions match their rhetoric.

The Social Contract

Occasionally some social planner, either from the right or the left, will react to opposition to the proposed plan by reminding people that resisting is wrong. The planner will do this by invoking the Social Contract and asserting that by living in society the person opposing the plan agreed to whatever "society" decides to do to that person. The only option, says the planner, is to leave society.

That version of the Social Contract is full of misunderstandings and fallacies.

To start with there is the basic confusion between "society" and "government." Even in a democracy the two are not the same. In a pure democracy, the government is 51% of the public. In a democratic republic the government consists of elected officials and hired bureaucrats and officers. In neither case is it true that the entire public "is" the government.

Second, the Social Contract describes the relationship between the people and the society, not the relationship between the individual and the government. While those two perspectives overlap, the key focus is that the people created a government to protect certain rights. The government is the agent of and not a party to the social contract.

According to such a Social Contract theory it is possible for the government to be the party that violates the social contract. When that happens then according to Social Contract theory the people have every right to declare the contract null and void and overthrow the government that is violating the contract.

By making the argument that people are bound by the Social Contract, the social planner is undercutting his own case. Since the planner is invariably proposing some violation of the rights of the individual in order to implement the plan, the planner is therefore proposing that the people rise up in rebellion against the planner.

In essence, the Social contract belongs to libertarians and not to statists.

But most importantly, the Social Contract is a myth. There is no such actual contract, it is an analogy used by enlightenment philosophers to try to understand the nature of the relationship between the people and the government. While the myth describes pre-government people getting together and agreeing to set up a social system, no such meeting ever occurred.

The first governments were primitive tribal governments that are descended from the primate bands of pre-human ancestors. The pre-human bands were groups of related hominids with a few leaders and several followers. The alphas were those who had first pick of any food or mates. These formed the basis of the first tribal governments, without the intervention of any meeting to establish a social contract. The first tribal government evolved into more complex structures with kings and other sorts of rulers.

Based on that perspective it becomes obvious that kings and presidents are nothing more than self-important chimpanzees who want first pick of food and mates. That rather lowers the prestige of those offices.

***

See a very good analysis of the content of the social contract by Kent McManigal.

California Bleeding

The voters have spoken, and have decided that not only would they voluntarily tax themselves further, they also rejected measures that provided a quick fix to budget problems without raising taxes - raiding special purpose funds that had been "underutilized" in the time leading up to the budget failure. The only measure that passed is a hit against legislator pay - a weak hit but still a hit.

There are those with an ideological bias against any restraint on government. That the voters actually stood up to the state is considered a travesty. Economic commentator Paul Krugman blames the whole mess on Proposition 13 which made it difficult to raise property taxes and impossible to reassess upwards without a change of house ownership, and requiring a 2/3 supermajority to raise taxes, which is considered holding the majority hostage to the minority. Since the Democrats do not have a 2/3 majority they are forced to come to terms with the permanent Republican minority in order for taxes to be raised. Paul Krugman is against any form of spending cuts.

Even with the requirement for a 2/3 majority, California is already one of the most heavily taxed states in the nation, showing how little the requirement for a supermajority hampered the ability to raise taxes. It should also be noted that for all of Krugman's claims to being an economist, he completely failed to predict the recession that started unofficially in 2007 and officially in 2008 - the biggest economic news of the decade.

So Governor Schwarzenegger is striking back. When forced to cut, he made some interesting choices. Some of them make sense, such as the park closures, but he also wants to have it so that if stolen property is recovered by the police they have no requirement to notify the owner that the stolen property is recovered. This would ultimately result in a new form of civil asset forfeiture, forfeiture by default.

He's also proposing a 5 percent pay cut for state employees.

Since Chapter 9 bankruptcy is only available to municipalities the only option the state has if bailouts fail is to default. It has been many years since a state defaulted on its debts, and doing so would lead to a domino effect of state debt.

That is probably why Governor Schwarzenegger is targeting his cuts at certain services. He’s not laying off auditors, but he is closing state parks. He has proposed cutting state salaries by 5% since that would mean he doesn’t have to fire state employees, but instead of firing state employees he’s cutting funding for medical care and school busses. Granted while the state should not be in those, the cuts seem designed to inconvenience the residents of the state as much as possible.

But these programs are also the reason many people believe the state exists. This is a dangerous move for Governor Schwarzenegger because if he follows through on his threats people may discover that they do not need the state to provide these services, and will wonder where their tax dollars are actually going. This could even result in a freer California.

No wonder Peter Schiff, in a sentiment shared by all liberty lovers, advised Obama to reject any bailout of California, advice Obama is likely to reject for the very same reason that any libertarians hope he takes it.

The TSA

Times have been difficult for the public relations department of the TSA. A story was released on CNN describing the MMW imaging system being introduced as a new security measure. Included in the CNN story was an image as the TSA screener would see.

This image was considerably more graphic than the one the TSA has been using to assure everyone that there was nothing improper going on with the imaging system, that this was not an electronic strip search, that the images were "family safe" and could be used "on the cover of Reader's Digest."

Scanner Images - NSFW

The image on the left is the one provided by the TSA. The image on the right is the one provided by CNN. The only change to the image is to make the CNN image larger to be of comparable size to the TSA image - meaning that even when smaller the CNN image showed considerably more detail than the TSA wanted the American public to know about.

The TSA spokespeople assure the traveling public that the capability of the computers to store those images has been disabled. As any technical person knows, that the capability exists means that it can be reenabled at any time with no difficulty. The assurance that the capability is currently turned off offers no reassurance to anyone who understands how computers work. This capability is turned off as long as the public is worried, and can be turned on at any time.

Because the images were so graphic, a major concern was whether or not children will be subjected to these searches. As it turns out, Children will be screened, although any informed parent may choose to opt their child out of MMW screening to opt for a frisking instead. Any child old enough to stand unassisted with hands raised will be a possible sbject for this screening.

This makes the TSA the world's foremost child pornographer. Every single TSO who works around one of these machines could be considered a criminal for their participation in this procedure. Every TSO who is in a position of authority of them, going all the way up the chain of command to the head of the TSA (and higher) is potentially liable for conspiracy to and aiding and abetting child pornography.

The TSA is already seen as criminal by most people Apparently it was decided that the reputation of the TSA wasn't bad enough in the eyes of the public. Those who work there are already seen as criminals. Now those who work there risk being seen as sex offenders.

What Recovery?

The economic news this year was already going to be bad. Those who did foresee hard times last year also foresaw that this year would have a commercial real estate bust. Those who own strip malls still have to pay the mortgage, even if there are no stores renting space in the strip mall. The commercial real estate bust is on top of the continuing residential real estate bust. But now it appears that matters are going to get much worse.

Some people appear to think that the economy is recovering. Stocks are up somewhat and therefore everything should be better soon. This is according to officials in the Treasury and the Federal Reserve, the very same officials who failed to see the recession coming in the first place.

If a bucket has a hole in the bottom, it will eventually drain of whatever is in the bucket. But if water is added to the bucket at a faster rate than the hole can drain it the water level in the bucket will, for a while, rise. Bush and Obama, through their stimulus packages, have pumped so much money into the economy that the bubble has partially re-inflated in spite of it deflating just as much as before.

What has instead happened is an increase in debt of unprecedented scale. The end result is that when this trickles through the economy prices will skyrocket. This is the leading indicator of severe inflation.

But while that would be bad news on its own, the government has decided that stricter rules are needed for credit cards to prevent the raising of rates or the lowering of available credit for those who have them.

Any act of lending is a risk, which is one of the reasons lenders charge interest. If it becomes impossible to recoup the risk of lending, such lending will cease. It’s already the case that payday loans are under heavy fire. This will shutter the other means of short term unsecured debt that people have access to. This is not to suggest that debt is a good thing, especially in the current economic environment, but responsible use of debt and short term loans will be hurt by the attacks on payday loans and credit cards.

Combine that with the proposed Employee Free Choice Act and a new mercantilist pro-America policy coming from the White House it becomes apparent that this year the United States is in for a very rough time.

It is no wonder that the administrators of the Social Security Trust Fund recently announced that they are foreseeing trouble.

Libertarian Accusations

Finding it relevant to the discussion at hand, a post from The Humble Libertarian was referenced in an internet discussion forum.

The response was quite unworthy of a forum alleging intellectual discussion.

"humble"???


"libertarian"????

?????????

It is ironic.

Libertarians say "we have no desire to take from you what is yours" and are called "greedy". Libertarians say "we have no desire to run your life for you" and are called "arrogant".

Orwell would be proud of modern political debate because it so closely mirror the doublespeak he wrote about in 1984. Libertarians are constantly accused of saying the exact opposite of what libertarians actually are saying.

How else could someone accuse a libertarian of selfisheness for saying "I have no desire to take your money or that of your descendants"? It makes no intellectual sense, but the desire to deficit spend for wealth redistrubution and continue enslaving future generations in programs such as Social Security is considered altruistic. A libertarian is willing to say "look, we'll continue funding it for you, and sacrifice our own ability to receive payment, if you will allow our own kids to not have to pay us. We have no desire to rob our own children for our own benefit, we desire to do our best for them." That is considered selfish and greedy.

What kind of doublethink does it take to respond to a libertarian saying "I can't tell you how to live your life. Nobody can tell you how you should live your life. It's up to you." by accusing that libertarian of having profound arrogance? What is more arrogant, to leave others alone or to insist that one does indeed posess the knowledge necessary to run the lives of others?

Accusations such as these are not meant to be believed. They are projections, trying to convince the credulous that the one making the accusation is not the one actually guilty of the accusation. It is useful to confuse and distract, to ensure as C. S Lewis described, people are bailing out the water furiously when the ship is on fire, but spraying water everywhere when the ship is flooding.

The Authoritarian Mindset

When encountering those who have a desire to tell others what to do, to dictate to them, one can try to classify them into different categories. C. S. Lewis did so by discussing the difference between the dictator who dictates out of greed and the one who dictates out of a desire to help others. The former, he said, was preferable because his greed could sometimes be sated.

Another way of looking at this is to compare those who desire to dictate because of a specific action they see (or fail to see) in others that they want to correct. While they consider themselves lovers of liberty they are all too willing to violate it for "just this cause" or "just that purpose." It could be the moral authoritarianism of the war against vice or it could be the socialist authoritarianism of the war against differences of ability. In neither case does the person involved see himself as anti-liberty, but they see themselves correcting a flaw in liberty.

But the worst dictators are the ones who most strongly desire to be dictated to.

Some people, a minority but they actually do exist and are the antithesis of libertarians, are actually comfortable in an authoritarian system because it frees them from the necessity of decision making. They do not need to rely on their own judgment. Experts, who have been recognized by the government as experts, are more qualified to make decisions for them.

These people hate libertarians because libertarians are willing to challenge the experts. Paul Krugman won a Nobel Prize, and libertarians reply with "So what? He's still an idiot." Libertarians even say that the Supreme Court has erred on occasion, and not just when later courts overturned earlier judgments. And sometimes the libertarians who say these things are self-educated and do not have the necessary certificates to prove that they know what they actually do know.

An individual must not challenge the decision making of the proper authorities. That one could do so challenges their worldview to the core.

These people also make the most severe dictators. When given power their decisions must never be challenged because they have to be right because they have all the certificates and credentials that say they are right. Dissent is not to be tolerated.

These people make the most docile slaves and the most demented dictators.

Two faces of liberalism

Although five factions of liberalism were explored in Liberalism, Conservatism, and Libertarianism and the relationship between liberals and libertarians was explored in Liberals versus the Nolan Chart, sometimes it is useful to re-examine a subject, to look at it from a new perspective.

One way to consider the problem of liberalism and the relationship between liberals and libertarians is to consider two distinct types of liberals. These types are very difficult to distinguish because they have the same goals and the same proposals to accomplish these goals.

In Liberals versus the Nolan Chart, it was considered that liberals and libertarians have the same end goals of economic fairness and civil liberty but take exactly the opposite approach to reach these goals. Since unlike the conservative to either camp the goals are the same, this could produce sympathy between liberals and libertarians. Since the methods are so diametrically opposed this more often produces friction between the two groups.

Theoretically it should be possible to open up a dialogue to discuss which method would achieve the goal. This seldom works, and one of the reasons it doesn’t work is because of the two types of liberals.

The difference between the two types is very fine. For all intents and purposes they are indistinguishable. What separates them is that one chooses the means in order to reach the goal, while the other chooses the goal in order to reach the means. For instance, while one supports unionization in order to achieve economic fairness for workers, one supports economic fairness for workers in order to achieve unionization. For one the primary purpose is economic fairness. For the other the primary purpose is unionization.

The two types are what makes it so difficult to engage in that dialogue. When a libertarian says "Universal Health Care is not the way to ensure everyone gets health care" one type may be willing to listen. Does the libertarian perhaps have a better proposal? The other type is completely unwilling to listen because any proposal the libertarian might have conflicts with the higher goal of implementing UHC for the sake of implementing UHC.

With that type there can actually be no compromise. While too many liberals are trying socialism in an effort to achieve the same goals of libertarians, these don’t actually care at all about the shared goals of libertarians and liberals but only use the words in an effort to advance an agenda of government power.

In other words, they are conservatives using different rhetoric.

Who would be hurt by ending the drug war

A friend actually requested this article. The economic dislocations of ending the drug war is one reason that she cannot yet back doing so. She wanted this issue explored farther.

Momentum is growing to legalize some drugs, which is good. So what will it mean if drugs are legalized?

In terms of abuse, it is unlikely that matters will change significantly in terms of general usage. The ending of prohibition provides an object lesson in that as consumption of alcohol changed very little once prohibition was repealed. If anything the damage will be lessened the way the damage of alcohol was lessened due to the introduction of quality and price competition.

But the real area of focus is in how the economy will be impacted by the ending of drug prohibition.

Government statistics show that a significant portion of the prison population is "non-violent drug offenders." It's not the best indicator, as the best is "victimless drug offenders." A victimless drug offender only includes those involved in purchase, sale, possession, or use of drugs, and conspiracy to purchase, sell, possess, or use drugs. Non-violent drug offender can include those who steal without hurting anyone. "Victimless" also includes money launderers from the drug sales.

It's also often reported that the prisons are overcrowded. Releasing the victimless drug offenders will reduce overcrowding by a significant amount. This will bring a recession into the prison construction industry, but those in that industry can apply their talents to constructing other buildings.

This will also significantly reduce the role of any police involved in drug enforcement, from city and county level up to the Drug Enforcement Administration.

Those on the city and county level, where most laws are enforced, will be able to turn their attention to crimes that actually have victims. In an ideal world police reports about drug enforcement mean that all other crimes have been solved. In this world those reports mean that time is being taken away from all other crimes.

It is at the level of the Drug Enforcement Agency where real changes will be seen. Taking just marijuana off the enforcement list alone will reduce the need for their operations enough to cut both budget and jobs.

This could result in unemployment among drug enforcement agents. Many of them could transfer to other departments within law enforcement. Given that all of them are already tax consumers instead of wealth producers, switching them from drug enforcement to welfare recipient merely switches numbers from one column to another.

Plus it enriches everyone else because even if their welfare exactly equals their salary they cannot impoverish anyone through the activities of their job any more.

Due to a decline in crime, including violent crime, law enforcement will find they have less to do. As a result, slowly, the police may start to reduce their numbers. That is actually unlikely as government agencies exist to expand their budgets instead of achieving efficiency. More likely the police will claim that budgets need to be maintained or expanded to continue the downward trend in crime.

Cities will no longer need to pay reparations for wrong house no knock raids (sometimes ending in the death of the house occupant and always ending in death of their dogs). Lawsuits will decline as a result. The cities will be richer by the amount of those lawsuits. Those who live at the places that may be raided are not impoverished by the raids anymore. (And the dogs are all safe.)

The biggest losers of drug legalization are the criminal syndicates that currently supply illegal drugs. They will lose their market share, their standard of living will rapidly plummet – and they will not be able to wage war on their competition.

The war on home-based businesses

In the entry Home Business Opportunities, various endeavors one could invest in with low startup costs were investigated, endeavors that could operate out of the home. These could function as home based businesses as well as sidelines to primary employment.

Many potential businesses are already forbidden to entrants without extensive resources due to prohibitive licensing requirements, a subject much examined by the Institute for Justice as they try to remedy the various laws that prohibit people from working their way out of poverty.

But it is impossible to license every single field. It is impossible to prohibit home businesses. While certain fields can be forbidden or strictly regulated, the realm of human endeavor is too broad for piece-meal laws to restrict.

In order to inhibit home based businesses it is necessary for there to be very broad laws to catch any endeavor not already covered by existing licensure laws.

Two such bills have recently been in the congress. One has been signed into law and one is in committee.

The Consumer Product Safety Improvement Act is one of those laws.

Anyone who makes any home crafts, from furniture to clothing, has to spend exorbitant sums of money to test the product and ensure that the amount of lead in it is safely under the legal limit, even if there was no lead involved at any stage of manufacture. Buying yarn, knitting a scarf, and selling that scarf is now restricted unless the scarf is tested – even though the yarn has theoretically been tested.

An exception to that rule is that it may be theoretically possible to say that the product is not primarily intended for children, requiring extensive market research to determine if that is the case, extensive market research that (like the testing) is something large corporations can afford but home based enterprises cannot.

The other is the Food Safety Modernization Act which will do for the family farm what the CPSIA did to the family firm.

It is officially target at organic farms, requiring them to use commercial fertilizers and pesticides that organic farmers currently do not use. But that is not the full scope of the law. Anyone who sells any excess produce (as family farms often do) are subject to this law as those family farms are now commercial farms. This bill also includes standard for feed of livestock

Also this creates a Food Safety Administration within the Department of Health and Human Services that tracks the DNA of food products, which would be of great benefit to the primary lobbyist in favor of the bill, Monsanto. Given how bees are spreading genetically modified crop pollen to organic farms and family farms, Monsanto feels entitled to payment whenever a farmer has contaminated seed.

While there is nothing inherently wrong with genetically modified crops, billing innocent farmers is a dirty tactic. Pushing a bill through congress to make it easier is even dirtier. That this will ultimately undermine the family farm when excess produce is produced is a terrible idea in the middle of a recession or at the beginning of a depression.

Two very broad sweeping bills, they essentially cover any product you can sell that is edible (FSMA) or inedible (CPISA). A home based business either sells products or services, and these bills restrict products. Since most services are either licensed or are illegal, these bills finish the destruction of the home business.

Analysis of the California Ballot Propositions for May 2009

Generally analysis of ballot propositions is quite simple. Any ballot proposition that advances liberty is supported, any that diminishes it is opposed, and any lateral movement is abstained. But sometimes special circumstances around a ballot proposition can force one to think tactically instead of strategically and take a position outside the normal rule. Some of the ballot propositions are clearly anti-liberty, some have the potential to be mixed, and some of them are lateral movements. Only one of them is good.

Proposition 1A is the worst that will be on the May ballot. If it is approved there will be a budget cap, but there will also be two additional years of higher taxes. The budget cap contains loopholes so that voter approved initiatives could divert money from the “rainy day fund” and any tax increase raises the budget limit. The arguments against were carefully chosen from friendly sources to ensure that they do not mention the extended taxes. If Proposition 1A fails the voters get two years of higher taxes. If Proposition 1A passes the voters get four years of higher taxes. This measure must be opposed.

Proposition 1B is simply additional spending. In the best of times libertarians oppose additional spending, and these are not the best of times. It diverts money from the rainy day fund and gives it to the schools. The catch is that Proposition 1B only passes if Proposition 1A passes, making this a bribe to the teachers to not oppose Proposition 1A. Normally the teacher’s union would oppose even a phony budget cap as offered by Proposition 1A, but if they oppose Proposition 1A they lose proposition 1B. This measure also must be opposed.

Proposition 1C allows the state to sell the proceeds from future lottery earnings. Essentially this allows the state to go into debt by borrowing against the lottery. It is by going into debt that California got into the current mess it is in. It would be simpler to just divert money from the lottery. In some respects this is a lateral move that would simply be ignored, and in some respects this is more debt that should be opposed, but if it is treated as a lateral move this is one of those exceptions about ignoring lateral moves. If this is considered lateral, it should be opposed for the tactical reason of solving the budget crisis on the backs of the taxpayers. This would nullify part of the horrendous budget deal and force the legislators back to work. Whether considered as a diminishing of liberty or a lateral movement, this measure should be opposed.

Propositions 1D and 1E are both clearly lateral movements. They divert money from special funds that libertarians opposed in the first place. Proposition 1D allows the state to divert money from a special children and families fund created in 1998 by raising taxes on cigarettes. Proposition 1E allows the state to divert money from a special mental health fund created in 2004 by raising taxes on millionares. Both of these take special fund monies and put them in the general fund. There may be a libertarian argument in favor of doing that, but because approval of these propositions would facilitate the horrible budget deal they should be opposed.

Proposition 1F is the only good measure on the ballot. It prohibits pay raises for the legislature and they governor if the budget has not passed. This one should be supported.

Source

AIG – too big to succeed

The phrase "too big to fail" is too often used to describe why various companies should receive bailouts from the federal government. Some financial companies are allegedly too big to fail because if they do fail it would create a series of failures as those who do business with the failing companies would be hurt by the failure of the initial company. Some automobile companies are allegedly too big to fail because if they do fail then parts suppliers and dealerships would all fail as well.

Perhaps it is time to introduce a new phrase into the national lexicon, "to big to succeed." A company is too big to succeed if it grows so big that it cannot make a profit anymore, and as a result it must fail.

What about the domino effect of dependent companies. They are part of the "to big to succeed" model, because their success is entirely dependent on a failed company. If someone is betting that a company that is bleeding money will succeed, that someone should lose the bet.

There is no way to turn a failed model into a successful model without changing the model. There is no way to turn a failed company into a successful company without liquidating the losses. Making the company bigger only makes the failure bigger.

A bigger failure needs more bailouts to keep from liquidating, but those bailouts do not change the model – they do the reverse. They save those in charge of the failure from having to adjust their behavior.

Let AIG fail, because it is too big to succeed. Then go on to bigger failures, such as the State of California, and eventually to the United States Government itself.

Healthcare in the United States

A friend of mine works in medicine, and I told her that if she were to write up commentary on the state of healthcare in the United States I would print it for her. I expected an essay, but instead she forwarded to me two emails she had sent to another organization, the second as an addendum to the first.

To: Department of Health and Human Services

Re: Action plan to to prevent healthcare-associated infections

I am responding as an individual, not representing any organization.

Myself, BS, BSN, MPH, formerly CIC

I currently work as an Infection Preventionist (name recently changed from Infection Control Nurse) in a 500+ bed community hospital. I cover all the intensive care units in the facility, so I am aware of the problems faced on the front line of infection prevention.

1. Basics: Make sure government agencies at all levels do not impede best practice.

Research has shown that alcohol-based hand hygiene products can improve compliance in intensive care units. (Maury et. al, Am J Respir Crit Care Med Vol 162, pp 324-327). The hospital I work in has had alcohol based hand sanitizer available for over 8 years. We spent time and effort in selecting a product that was acceptable to all involved. The Georgia State Insurance Commissioner is currently investigating removal of foam sanitizers under pressure for a theoretical fire risk. The last time we were forced to remove our current product from the hallways, our cross transmission of MRSA skyrocketed. Replacing the hallway dispensers stopped the outbreak.

2. Partnership of all involved groups: The patient also needs to be seen as a partner in reducing healthcare associated infections.

Transmission of flora within the hospital does cause healthcare-associated infections, but for SSI (surgical site infection), the patient's own flora can be the source. Aside from complying with preoperative showers for elective surgery, patients need to prepare themselves for the surgery by stopping smoking and controlling blood glucose levels. Smoking has been shown to increase SSI. Post-operative glucose control is important in prevention of SSI, but patients who know they are going to have surgery should prepare themselves.

Patients also need to understand that requiring their physicians to prescribe unnecessary antibiotics also contributes to infection with CD (C diff).

Physicians also need to be involved in getting patients ready for elective surgery. The following is a true story. My mother and the brother of a friend of mine both had knee replacements on the same day. It took a long time to get my mother ready for surgery because her surgeon insisted that she see her primary care physician and her dentist for clearance.. She had to be screened for infection--UTI. Our hospital does nasal screening for MRSA and MSSA on all orthopedic implant surgeries. The brother did not have to do any of this. Within three weeks of surgery, my friend told me that her brother had an infection. My mother is now over one year out from her surgery and doing fine. We switched surgeons early in the course of getting her knee replaced because the first surgeon we went to wanted to basically go from his office to the OR without the preparation the second one required.

3. Focus on MRSA: I find this short sighted.

The worst infections in our facility are caused by Gram negative rods (GNR) for which there are no antibiotic treatments. It is much easier to track MRSA and may be easier to put in interventions. However, GNR are a much worse and growing problem.

4. Futility of Care and End of Life issues: something nobody want to discuss as part of the solution. Strong guidelines on futility of care, and decreased payments for care after such a determination is made need to be in place now.

The last three infections I identified (2 BSI and 1 VAP) were all in patients in whom it had been acknowledged that there was no hope of recovery and all medical interventions were futile. DNR discussions had been ongoing with the families for as long as three weeks prior to the infections. All three patients died of their underlying conditions within three weeks of the onset date of the infection. The infection was not the immediate cause of death, even if it might have hastened the inevitable. Physicians discuss the problem openly during our intensive care rounds. The family will be around after the patient's death and might bring a law suit if their wishes (the family's) are not carried out. The wishes are usually expressed as "Do everything for Mama" even if they have been told that everything will not work and that Mama is going to die anyway. We have discussed the reason for families not to withdraw care. Sometimes it is just too soon. It because apparent today that the patient was beyond hope. Sometimes it is the level of education and sophistication of the family. When you talk to them, they are very nice but they just don't seem to understand the issues. Guilt can play a part also. Having neglected Mama for the past year (nursing home patient, living with a friend, not family), the family wants to make amends. We see cultural differences. African American families seem less able to withdraw care. Sometimes we find out that there is a financial reason.. Mama's Social Security check is going into a family member's bank account.

What ever the reasons are, physicians are not comfortable withdrawing care and instituting palliative care measures if the family still states they want everything done, even if it prolongs death and does not lead to life.

5. Payment issues: The assumption appears to be that hospitals control doctors. I wont' even go there.

We ask, we coax, we nag. We already use a Foley catheter reminder sticker for physicians. It is usually ignored, even though it is part of the chart. Some physicians sign the reminder without indicating why the Foley is to continue and without giving an order for its removal. Physicians have not reason to listen. I recommend that payment for physicians whose patients develop a healthcare-associated infection (HAI) also be reduced, just as payments for hospitals are. The payments are reduced to the extent that hospitals used to get reimbursed for care of infections. Yes, hospitals need good systems to ensure timely care, but physicians have to do their part by responding in a timely fashion.

In my introduction, I noted that I was formerly CIC. One of the most important things that you can do is make sure that all front line workers are adequately prepared. I dropped CIC for three major reasons: my current employer does not pay for the test and it is expensive, I do not get any pay differential for it, and CIC ensure entry level competence. I have been in infection control for over 20 years now. I will have to pass the new requirements for getting my NHSN certificate so I can continue to use the CDC computer-based reporting system. Hospitals should be supported in efforts to make sure that employees are qualified.

Addendum.

1. Best practice. The Office of Insurance and Safety Fire Commissioner has denied the request of the hospital that I work in to keep the foam hand santizing product. The reason that is stated is that the "State is bound by contract to meet the requirements of CMS 211, which supersede those of the State of Georgia..." This ruling was given by the Regional Director for CMS.

If CMS will not pay for HAI then CMS must allow the use of the best products to prevent infection. Changing hand hygiene products is not as simple as it sounds. Not only do the products have to work, but the employees must use them. The products must not cause redness, skin breakdown, stickiness or other problems. The hospital did evaluate gels the last time it looked at hand hygiene products. The end users preferred the foam.

2. Please add to your reserach list: the best way to wean a patient from the ventilator. We have six Intensivists. Each has a way to do this. Each tells us the other ways won't work. ATC trials should not be done more than once a day. ATC does not work at all. Do ATC trials three to four times a day before considering extubation. PLEASE HELP. Meanwhile, we are having a difficult time decreasing our ventilator days and getting patients off the ventilator is the best way to prevent VAP.

3. Patient as partner: All patients should know that it is not a good idea to keep drinking patterns a secret. It can be a major problem when a patient comes in for elective surgery and goes into DTs three days post-op. The patient may wind up on the ventilator with central lines and then is at risk for hospital associated infections. DTs prolong stay no matter what.