Friday, September 28, 2012

Downside of Paul 2012

There were many who were challenged by the 2012 campaign by Representative Ron Paul’s 2012 campaign for president. There were unique challenges for both liberals and conservatives as they were forced to confront what they really believe. Now that the campaign is over there is a whole new challenge for libertarians based on the campaign.

His campaign has given new life to the old lie about how libertarians and conservatives have some sort of closeness that excludes liberals and progressives. Because Representative Paul ran in the Republican Party instead of the Libertarian Party, he somehow demonstrated that libertarians have a home there.

It doesn't matter how poorly Ron Paul was treated through the primary, and how reprehensibly his supporters were treated at the Republican convention. It doesn't matter that Governor Mitt Romney and Representative Paul have nothing in common ideologically, or how much Governor Romney and President Obama do have in common. It doesn't matter how Ron Paul's ideas were kept out of discussion through the whole process from first debate to convention close.

None of that matters. All that matters is that Ron Paul has an "R" after his name. The fact that he ran in the Republican Party instead of the Libertarian Party is proof of that closeness. Never mind that in order to have a reasonable chance at victory he had to run in some major party - that he ran in a major party proves that there is some special affinity for the major party he ran in.

Since the argument being made is not a logical argument, there is no logical counter-argument. One could point out how much Ron Paul was at odds with his own party. One could point out how he wasn't even given a speaking spot at the convention. One could point out how he had to fight for speaking time at the debates. One could even point out how Romney cheated Paul of his delegates even though Romney didn't need to because his victory was already assured.

This isn't an argument meant to appeal to the intellect. It is an argument meant to appeal to the emotions. There is no counter-argument to be made as a result. Although one can say many good things about the Ron Paul 2012 effort, it also gave new life to the big lie.

Sunday, September 23, 2012

Hyperinflation or Default?

The big debate in libertarian circles regarding the economic future of the United States government managed economy is whether the future contains hyperinflation or if it contains default. The answer is really quite simple; the question cannot be answered. An economist cannot predict the actions of politicians, but can instead only tell what will be the result of decisions made by politicians. What path exactly the United States will follow when conditions worsen is a question that can be answered only by politicians.

The biggest question can only be answered by the Federal Reserve, which has a hybrid nature that is partly political and partly private. If the "Audit the Fed" bill passes, then the resulting audit will surely reveal facts that will not please the political class. Given that the only advocate of a sound currency is retiring from the congress, the result of an audit will instead result in tighter governmental controls over the Federal Reserve, which could ultimately end up in nationalization of the Federal Reserve.

This would be the solution favored by the other great opponents of the Federal Reserve, the Greenbackers. If the Federal Reserve is brought under greater governmental control it will result in a Federal Reserve that has no choice but to continue purchasing worthless government bonds and in that event the flood of worthless currency will indeed result in hyperinflation.

On the other hand, the Federal Reserve as it is currently structured is ultimately owned by the private banks that do not desire hyperinflation. If the Federal Reserve remains mostly independent of the government, the private banks could order the Federal Reserve to purchase no more bonds that it can sell on the market. As the federal budget remains unbalanced, with almost half of the revenue the result of borrowing that will result in the Federal Reserve refusing to purchase any more bonds from the government. That ends with a government default as the money to pay for more than can be sustained simply isn’t there anymore.

Both cases hinge on the decisions made in the legislative and executive branches of the federal government. Congress and the President are in full control of that decision, and thus no economist can actually predict what will happen.

In either case, though, there will be upheaval and social unrest. Again, there are many options but no economist can predict which will happen. Economists can only outline the different options and describe the resulting conditions of each.

In one scenario the unrest results in riots. There may be riots due to the banks being unable to process any more payments as an emergency measure. If the electronic payment network breaks down, most people do not have enough currency on hand to purchase more than a few trinkets or a few snacks. Currency riots would lead to food riots.

In another scenario, politicians actually act before the riots start by declaring martial law before the riots instead of after them. Strict controls barely contain the chaos, with political control breaking down farther away from the armed encampments of the cities.

In a third scenario the infrastructure grid in the country cannot sustain the delicate balance and this ultimately results in food shortages, which will result in even more desperate riots throughout the country as people flee the cities to find food.

Of course, in order to preempt those outcomes, the political class may decide that a war against an external enemy is necessary to distract the population. This would most likely result in a war against Iran If that happens, there will be both high inflation but not necessarily hyperinflation, as well as shortages and other hardships. There will be much more direct management of the economy, with people receiving their basic sustenance from the government.

That is also an unsustainable solution, but the additional bloodshed abroad may forestall the inevitable result of either hyperinflation or default for a short time. But as any economist can predict, the government cannot ignore reality forever.

Friday, September 14, 2012

Why did they find him?

Recently an absurdity of a film called "Innocence of Muslims" has been making the rounds in the news. Although all the evidence indicates that the attacks on the embassies and consulates had been planned long in advance, the film is being blamed for the attacks.

Although it is understandable that some people are curious about who produced this teaser for a movie that doesn’t even actually exist, and therefore various news media organizations have been trying to find out who it is so that they can satisfy the demand, there is a very disturbing element to the quest for the identity of the producer.

Why is the United States government involved in trying to figure out his identity? Has the producer of this teaser actually broken any laws of the United States or of the fifty states? What law could he have broken that would spur such an investigation? And if he were put on trial, say for incitement, would he not have a solid first amendment defense under freedom of speech, freedom of the press, and freedom of religion?

Having the Associated Press try to find his identity is one thing. If a person thrusts himself into the public eye, then the public has every right to try to find out more. But having the government do the same without any identifiable cause is itself cause for concern.

Yes, people can say things that impede the foreign policy of government officials. People can say things that embarrass government officials to, although far less so than in the past.

This following so closely on the heels of having Brandon Raub committed to a psychiatric hospital for the “crime” of criticizing the government, while having the British "ally" threaten Ecuadorean sovereignty to claim Julian Assange shows that the line has been crossed a long time ago with regards to the lawlessness of the United States regime.

Sunday, September 09, 2012

Government by Blackmail

There is a tax initiative on the California ballot for November; Proposition 30, Sales and Tax Increase (2012), otherwise known as Jerry Brown's Tax Increase. All of the public unions support it, of course, because it backfills the pension programs for state employees. But it has other groups supporting it as well.

There is a lot of support coming from the film companies in Hollywood. At first glance that would make sense, given how strongly most people in that industry support the Democratic Party. But even so, the studios are trying to fight against films being shot in more business friendly environments. More and more films are being shot out of state and out of country. So why is there such support for a measure that would only accelerate the trend?

There are special tax exemptions for filming in California, to support the local film industry. And unlike many parts of the tax code, these exemptions are renewed annually instead of being a normal (until a new bill is passed) part of the tax code. The threat is implicit, that if the studios do not support measures supported by the permanent Democratic Party majority in the legislature, those exemptions could easily and quickly disappear simply by failing to renew them. That would not even need the 2/3 vote required by Proposition 13, passed many years ago in order to combat ever increasing taxes.

The American Beverage Association is also backing this measure, in spite of how easily it can harm their operations in California. Shortly before gaining the support of the American Beverage Association, there was much discussion among prominent Democrat politicians about how the state needs to combat obesity by putting punitive taxes on sugary drinks as is happening in other areas of the country. This discussion died down quickly after the American Beverage Association gave its backing to Proposition 30. They even donated $250,000 towards the passage of Proposition 30.

Although there is no explicit threat, at least not one where there is a written demand that could be used as proof, this is pretty clearly a case where various organizations are being threatened to support a measure that they otherwise would not, in exchange for not being harmed more directly. It is the highway man saying "your money or your life" to these groups.