Obitur Dictum

Eliminate the Department of Education?

2011-11-13T06:09:00.001-08:00

The way to begin any policy analysis is to determine which if any of the alternatives is constitutional. Contrary to the views of some critics of the Department of Education, there is actually some constitutional authority for a federal role in education. However, that role is confined to prescribing militia training, and funding it to the extent of that congressional power. Now militia includes everyone, especially children, and militia training can be considered to cover all the main subjects of education -- everything that would be taught in a military academy -- but with a focus on defense against threats to public rights, safety, and health. That would indicate military schools.

At the state level, the constitutional focus is somewhat different: to turn out good citizens, able to perform the functions needed in such fields as policy, law, and government.

At the family and local level, the focus is on educating for economic productivity. Parents and the local community want the kids to be able to make a living and produce the goods and services needed by the community. That focus is more vocational.

These also represent a hierarchy of importance: defense is most important, followed by governance, followed by productivity. They are all important, but we have allowed the last to become emphasized at the neglect of the first two.

As for funding, that needs to be put in perspective. Kids who are motivated to learn will, regardless of whether they have schools, teachers, textbooks, or anything else. If they are not motivated, then all the money thrown at them will be wasted, and it largely has been.

My grandfather taught in the era of the one-room schoolhouse, using the Lancasterian Method. The replacement of that method by the Mann Method of grouping kids by age into classes and trying to regiment their development has been a disaster. It is time to undo that mistake.

Transnational criminal organizations threaten U.S. sovereignty

2011-09-29T14:06:00.000-07:00

For many years, since 1995, I have been writing about the threat to U.S. sovereignty and national security from foreign-based criminal gangs, mainly the narcotrafficantes based in Mexico and organized into what are often called "cartels". For a long time public officials tried to downplay the threat or pretended it was only a foreign problem. Finally, some of them are willing to step forward and openly discuss the problem that has been festering for decades. But they are still avoiding discussion of the corruption of U.S. officials that is attending this invasion.

Texas Agriculture Commissioner Todd Staples has created a website, protectyourtexasborder.com/ , that presents a report from retired four-star Army Gen. Barry McCaffrey and retired two-star Army Maj. Gen. Robert Scales. It was reported in the Texas Tribune. More recently, Edwin Mora wrote a report, DOJ: ‘Mexican-Based Trafficking Organizations Control Access to the U.S.–Mexico Border’, which discusses a report from the U.S. Department of Justice, 2011 National Drug Threat Assessment.

Some have dismissed the reports on the argument that there is not the high level of overt violence on the U.S. side of the border that we are seeing in Mexico, but there is plenty of creeping violence, especially in our inner cities, to persons and to property, which is what funds the trafficking. However, overt violence is not the main measure of the extent of the invasion. Corruption of public officials is.

The geography of this invasion is the gangs trying to gain control of land along the U.S. side of the border, and through transshipment corridors along major highways and transshipment hubs near major metropolitan areas, or at forks in the corridors leading to more than 1000 cities where they have distribution operations. Sometimes they actually purchase the land, at a low price. Sometimes they just warn the landowners or managers to look aside and not interfere. That movement of contraband is made possible by compromising public officials, either through bribery or intimidation. The old Mexican slogan is plata o plomo, "silver or lead".

It was discussed in an article in 1999 by lawyer Joseph Delaney:

"... the proportion of judges who are dishonest, who are on the take, who harbor prejudices against parties or counsel, is far greater than the lay public realizes. ... Corruption is rampant in courts at every level throughout the country. It is equally rampant among prosecutors and law enforcement people. ... The primary corrupting influence is the drug business. ... the dope interests own contemporary justice. ... There is no greater shock than to find that even with both law and the facts in your favor your constitutional rights are worthless because you can't get the crooked regime to enforce them."

Just because U.S. citizens are not yet seeing overt violence on our side of the border to themselves or people they know doesn't mean the corruption is not becoming entrenched or will not be a problem even for all of us in the future. The cartels are trying to turn the U.S. into Mexico, with its endemic corruption at all levels of society, with the danger that it could collapse into a "failed state" with persistent widespread violence. Already the gangs are displacing the regular institutions of government, engaging in their own "tax" collection and even providing some services to build local public support, especially among the young they are trying to recruit.

Some have suggested this as an argument for decriminalizing narcotics in the U.S., and that needs to be done, but we also need to recognize it is now too late to undo all the damage. Just as the Mafia continued with extortion and other forms of crime even after Prohibition was ended, so this new Mafia would continue after the Prohibition of narcotics might be ended. The cartels already make more money from extortion than from narcotics trafficking. We will be suffering from the effects of the misguided "war on drugs" for generations, perhaps centuries.

The threat to our national security is not just from crime or narcotics. These same gangs that smuggle narcotics and other contraband can also smuggle weapons of mass destruction. We have an unconfirmed report from the interrogation of one of the suspected al Qaeda leaders that at least six or seven "suitcase nukes", originally from about 40 missing from the inventory of the old Soviet Union, were smuggled into the U.S. and are now in place waiting for the signal to be detonated in some of our major cities. The report is that the smugglers were members of the MS-13 gang, based in El Salvador, who operate across Mexico and into the U.S. If we start losing cities with millions of American lives, we can blame our own corrupt public officials who turn a blind eye to the danger to us all.

Alternatives to the "Ponzi Scheme"

2011-09-18T10:20:00.000-07:00

More than 30 years ago several Texas counties opted out of Social Security for their county employees, and the result is touted by many as an alternative model that should be adopted nationwide.

This alternative program is essentially similar to that adopted by Chile and several other countries after discovering that the Prussian/Bismarkian model is unsustainable. In the United States, it is also unconstitutional, in two main ways: the FICA tax is unconstitutional and the payout is unconstitutional. As such, the Chilean system would also be unconstitutional if mandated at the federal level. If mandated, it would have to be at the state or local level, and as these Texas counties have shown, it can be done, and should be done, at the county level in most states, and perhaps also in federal enclaves like the District of Columbia created under U.S. Const. Art. I Sec. 8 Cl. 17.

However, there is a problem with government mandating savings or investment and also choosing the investments, because if those investments fail to perform, people would be looking to government for redress of their losses. Choosing how to invest creates a fiduciary duty. Therefore, the workers need to own that choice and the consequences of failure. Government might broker but should never advise.

There may also be a constitutional problem in some states with state or local government mandating investment in that way. To avoid a constitutional challenge there needs to be a way to opt out, particularly on principled or religious grounds.

Cancel all debts?

2011-09-18T09:24:00.000-07:00

When debt is disaggregated into the kinds of debt instruments that represent it, a clearer picture emerges. As it happens the critical debt is represented by fiat currencies or instruments traded like currencies, and from that analysis we can see that almost the entire world economy being discussed here is a giant currency bubble. John Law in spades.

The only sure way out of this mess is to cancel all debts and start over. That means repudiating fiat currencies, which would wipe out all holdings denominated in such currencies. The only real wealth left would be physical resources and tools of production, and legal ownership of them is likely to revert to whomever is in physical possession of them. That has been the historic pattern of economic collapses. The sooner we get on with it the sooner we can recover and the less will be the sum of human suffering for it.

But unless we can greatly increase the supply of gold and silver, such as by mining an asteroid like 2010AU79 (thought to be composed of more gold that has ever been found on Earth), a return to a gold or silver standard will not work well for ordinary transactions, in which a single grain of gold would be worth about a gallon of gasoline. What we need to do is base currencies on units of energy. And those currencies need to be digital certificates that people can generate on their own computers and trade as currency, without government involvement.

Recognize multiple Palestinian states

2011-09-16T18:20:00.000-07:00

This is in response to a New York Times op-ed by Turki al-Faisal, Veto a State, Lose an Ally.

The impasse over UN recognition of a Palestinian State demonstrates the delusional lack of imagination of the main players in this tragedy.

The key delusion is the determination of almost everyone to insist on there being only one Palestinian state. Naturally, Israel wants there to be a single negotiating partner with which it can make peace. That is not going to happen for generations, if ever. The Palestinians do not have the capacity to control their own people, or the means to acquire that control anytime soon, especially if they remain in their present state of dispersed impotence. The divide between Fatah and Hamas should demonstrate that. Even Israel can barely control its own people, if they really do at all.

Israel needs to break out of its rut and pre-empt recognition by doing it first, but not recognition of a single Palestinian state with some kind of well-defined borders. It, and the world, need to recognize Hebron, Nablus, Jenin, Ramallah, Bethlehem, Jericho, and Gaza as separate and mutually independent city states, each with its own small territory corresponding to the territories now under partial Palestinian authority. Each will be responsible for controlling its own people, and peace can be negotiated with each of them separately, or not. That negotiation would include expanding the territory under the control of each as it demonstrates its ability to control the people there. Some day the city-states might federate or unite into one Palestinian state, but they need to evolve toward that and that can't happen unless they get past the city level.

Once Gaza is recognized as an independent state, Israel needs to formally declare war on it. That would invoke the Westphalian law of nations and provide legitimacy for its embargo of it, and the status of neutral shipping. The people of the region need to accept that law of nations, under which every nation has absolute liability for every warlike act committed from its territory. They are not going to learn to control their people unless or until there are grave consequences for failing to do so.

Declaring war would not mean Israel would invade or conquer Gaza. It already did that and has now withdrawn from it. The problem is that was a war and was never declared as such, which would invoke the standards of the law of nations. Formally declaring war defines the roles of all parties.

It is time to re-establish the ancient law of nations and recognize as nation-states only those which effectively restrain any warlike acts of people operating from their territory, and that their territories only extend to the territory over which they do exercise such control.

Such control depends on acceptance of legal authority by almost all its citizens. Any people who are not socialized into a single society that adheres to law because it is right, and not just as long as they don't get caught, is not a society and having a few of them call themselves a national government doesn't make it so. A state, to be a state, has to be composed of people who buy in to a common rule of law. There is no way to make international agreements work if any significant number of a country's citizens don't voluntarily support them. It is impossible to control people who are determined not to conform.

Palestine has never been a coherent society of the kind that could make a nation-state work. We can hope they will be some day, but for the time being they are not a society and cannot be a proper nation-state. Friends of the Palestinian people need to focus on creating the conditions under which they can emerge into such a society, and that begins with the family level, then proceeds to the village level, the city level, and finally to extended territories with borders too long to have every meter of them patrolled. That will take time, but it is past time to begin, and Israel has the strongest interest in promoting such development.

Return to gold?

2011-09-12T10:26:00.000-07:00

With increasing talk about the infirmity of fiat currencies, more people are talking about a return to the gold standard, but is that a feasible option? It is said that it does not matter that growth in the supply of gold has not kept up with growth in the world economy, because gold can always be divided into tokens small enough for small transactions. But would that work? Of course we could embed a single grain of gold into a piece or transparent plastic or glass that would permit testing of the grain to make sure it was genuine, but would this really be convenient or cost-effective for a working daily currency?

According to the Coinage Act of April 2, 1792, the original gold coin, the Eagle, denominated at "ten dollars", contained 247.5 grains of pure gold. A troy ounce is 480 grains. As of this date 1 troy ounce of gold is trading for 1,854.25 $US, or about 3.86 $US per grain of gold. That is about the price of a gallon of gasoline at the pump, so to purchase a gallon you would need a token containing a single grain of gold, which is about the size of a grain of sand. It could be embedded into glass or plastic and verified using something like a spectrum analyzer, but that is an expensive piece of equipment and takes several minutes to get an evaluation. Not practical.

The way around the verification problem would be to embed something in the token with the grain of gold, such as a hologram that encoded a digital signature from the mint, in much the way we are moving to do for verifying paper money. It would even be possible to spread the gold grain into a digital code that would allow verification of it.

As an aside, note that in 1792 a "dollar" was 24.75 grains of gold, which would be 95.54 $US today, so we can say that in some sense the "dollar" has lost about 99% of its value in 219 years, over what it would have if we continued to use eagles as currency. Of course, the only reason gold is only trading at 1854.25 $US is because it is not used as currency. If it were it could easily be 20-100 times that amount.

Backing currency with gold today would make it so valuable it might become profitable to extract it from sea water, at the same time it is desalinated for drinking water. However, it would also become so valuable that it would be profitable to mine asteroids for gold (and other metals). A spectrum analysis of a large Earth-crossing asteroid given the propitious name 2010AU79 indicates it may be composed of as much as 10% gold, 20 million metric tons, more than 100 times as much gold as has ever been mined on Earth. That much gold could easily pay the cost of setting up a mining operation on the asteroid, and whatever country did it would rule the Earth. The mining operations could be largely automated, reducing their costs, and the extracted metals formed into solid foam blocks like pumice that could be put into a descent trajectory into the Earth's atmosphere, and land on an ocean, where they would float and could be picked up by ships.

Now of course injecting so much gold into the world market would devalue the existing gold holdings of everyone, as did such an injection of gold from the New World into Europe by Spain in the 1500s, but the country that does the injection would retain the advantage with respect to the currencies of other nations. It might become possible for the U.S., if it mined the asteroid, to once again mint gold coins (and coins made of other metals) that could each purchase a gallon of gas, albeit they might only be the size of a dime.

The definition of legal tender in 31 USC 5103 only applies constitutionally to territories over which Congress has exclusive legislative jurisdiction under Art. I Sec. 8 Cl. 17 or Art. IV Sec. 3 Cl. 2. There is no constitutional authority for Congress to make anything legal tender on state territory, only to coin money and regulate the value thereof, which is not the power to define legal tender. The states do not have the power to coin money, but they do have exclusive power to define legal tender on their territories, and there make only gold or silver coin legal tender.

To be constitutionally compliant, each state needs to define some gold or silver coins legal tender on their territory. If they did, FRNs would cease to circulate as money, and gold and/or silver coins would replace them. When that happens their value would change to reflect their value as legal tender, which would be quite different from their present value as commodities.

A better solution, however, would be to amend the Constitution to make units of energy, such as joules, legal tender. See Energy Currency.

For more on this see Money Matters.

Parties of Dependency, Parties of Responsibility

2011-08-22T12:54:00.000-07:00

Republicans like to portray the Democratic Party as the Party of Dependency, and themselves as the Party of Responsibility. But the reality is that the Republican Party has been a party of dependency as well, only dependency on a different set of patrons.

So where is a Party of Responsibility? In today's arena there appear to be only two: the Libertarian Party and the Tea Party.

The Libertarian Party is on the ballot in almost every state, and offers candidates in most major contests in those states, some with detailed proposals for reform.

The Tea Party is not on the ballot, and although parts of it informally support or oppose candidates, mostly Republicans, their program seems to be largely limited to opposition to deficit spending and debt, without getting into the details of what to cut. Many call for cutting spending generally but recoil at cutting Social Security or Medicare, which are the programs that cannot be sustained. Never mind "adjusting" them, as some pundits, trying to avoid provoking anger, seem to propose. The numbers are clear and unavoidable. Entitlements, government pensions, and other monetary benefits will end, one way to another. The only alternatives are to end them gracefully, while there are still enough people to cover some of the dependants with personal charity, or, by delaying, cause the collapse of the world economy, which is likely to trigger global warfare, including nuclear warfare.

A lot of people are coming to realize how grim our real alternatives are, but almost no one wants to step forward and say so.

How U.S. collapse may end civilization

2011-07-20T12:17:00.001-07:00

The situation is different when it is the U.S. dollar and it is the backing for most of the currencies of other nations. One nation like Argentina in 2000 can undergo collapse without it affecting the rest of the world much, and enable them to recover in a few years, after a period of misery and social breakdown. That is also a very different situation than prevailed in 1931, when national currencies were still officially backed by gold. It only takes a widespread expectation of collapse to cause one, and that could happen next month. It would proceed as a kind of "panic", with people everywhere abandoning currencies of all kinds except gold or silver, or reverting to barter in commodities. A gallon of gas could become the new dollar.

As in 1929 the harbinger could be everyone trying to sell their assets denominated in dollars and other national currencies, and trying to convert into tangible commodities in their possession. As currencies lose value, people will likely pay off debts in now worthless currency on things they want to preserve through the depression, and walk away from everything else. The result will be a general collapse of banks and investment institutions like pension funds and insurance companies. Suddenly investments held in the form of financial assets will become worthless. Countries less dependent on such assets would suffer the least, but even they might experience unemployment of more than 50%. For the wealthier nations like the U.S., Europe, and Japan, it could go to more than 80%. For those countries that have to import most of their food, it could literally bring famine and widespread death.

The recovery from the Great Depression was made possible by the industrial capacity of the U.S. and by the availability of cheap natural resources, especially oil. If the coming collapse brings the deterioration of that industrial capacity beyond a certain point, the world may enter a situation in which economic growth is "behind the power curve", meaning that no amount of kind of investment of effort can revive it. That could mean a dark age from which we would never recover.

Cut the Durand Knot?

2011-06-24T18:30:00.000-07:00

According to legend, Alexander the Great was confronted with a large knot, tied long before by Gordias, for which a prophesy said that anyone who could undo the knot would rule Asia. After being unable to untie it, he just slashed it open with his sword. This "Alexandrian solution" to the Gordian Knot has become a metaphor for solving an intractable problem with a bold stroke that requires thinking "outside the box".

The attack on the United States on 9/11 can be traced directly back to 1893, when Henry Mortimer Durand, then Foreign Secretary of British India, made a border treaty with the Afghan Amir Abdur Rahman Khan, called the Durand Line, that divided Afghanistan from British India, establishing Afghanistan as a buffer between the Russian and British spheres of influence.

The Durand Curse

What made the Durand Line a source of trouble that continues to this day is that it divided in half the territory dominated by an ethnic group, the Pashtuns, since at least 500 BCE. Indeed, dividing the Pashtuns was one of the objectives of Britain's "divide and rule" policy that drew many other boundaries dividing national groups that also continue to be a source of trouble.

The Afghan Pashtuns asserted dominion over all the territory of what is now Afghanistan. The word "Afghan" is Pashtun, a distinct language. But they were never able to achieve effective control over all of it. Much of the more mountainous areas to the Northeast and through the center of the country remained dominated by ethnic Tajiks, who speak Dari, similar to the Farsi of Iran, and their sometime allies, the Hazaras and Aimaqs, who speak dialects similar to Dari. The territories the various ethnic groups dominate have remained fairly stable for centuries, and the Tajik-led area, which self-identifies as the "Northern Alliance", is sometimes referred to (mainly by outsiders) as "Daristan" (although there is also a town and a mountain with that name). See an ethnolinguistic map of Afghanistan.

Although a reliable census has never been done, the best estimates are that the Pashtuns and Northern Alliance now each comprise about 42% of the population, even though the Pashtuns have been winning national elections and putting a nominal national head of state in Kabul. However, in the last century the Tajiks have pulled ahead of the Pashtuns culturally, and have come to dominate business, the professions, civil service, and most cities, even those in Pashtun areas. They tend to be better educated, more liberal and tolerant, and to be more enlightened about the rights of women, while the Pashtuns have tended to remain less educated, more traditional, and provincial. This linguistic and cultural divide has tended to exacerbate the historic tribal rivalries, such that the two main alliances have a real and persistent animosity toward one another.

Prior to the Soviet invasion, the country was basically just a patchwork of tribal areas, each headed by a warlord, and Kabul, which pretended to be the capital but really governed nothing much beyond the city limits. The Soviet invasion activated the tribes to resist them and fight one another less, but when the Soviets pulled out, the old rivalries erupted into civil war, from which emerged the Pashtun Taliban as an ideological effort to unite the Pashtuns countrywide. That provided a fertile incubator for Al Qaeda. It also united what emerged as the Northern Alliance, which, with the help of 400 U.S. military advisers and U.S. air support, deposed the Taliban and took control of Kabul and other major control points.

U.S. Afghan Doctrine

Our nation-building doctrine has been based on one politically-correct goal of trying to end the conflict among tribal groups by integrating its institutions, extending the governance of Kabul over the countryside, and holding the country together. However, from the beginning the Afghan National Army (ANA) we have been training has been predominantly composed of Northern Alliance Tajiks, and even after trying to impose a quota of at least 30% Pashtun recruits, the percentage of Pashtun recruits has actually been declining and many Pashtuns are deserting or defecting to the Taliban. Our nation-building is indeed working, but not uniformly. It is working well in Northern Alliance areas and not elsewhere. What we are actually doing, without intending to, is setting up a civil war when we leave that will leave the Northern Alliance predominant, at least in its areas, and almost certainly including Kabul and major cities, even some of those in Pashtun areas.

Pashtunistan?

In the meantime, the 1947 partition of the British Raj into India and Pakistan left Pakistan, which is dominated by ethnic Punjabis, with a claim on the Pashtun areas on the southeast side of the Durand Line, which it has never been able to effectively govern. It calls a large part of that territory as its "Federally Administered Tribal Areas" (FATA) and makes no attempt to conduct elections there. The Pashtun leadership of Afghanistan had never recognized the Durand Line, and has made no attempt to enforce it, other than recently to keep out the remnants of the Taliban in Pakistan, who also refuse to recognize the line.

Although the Pashtuns might continue to be troublesome on the world stage if they had their own country, we have seen other redrawings of national boundaries to unite members of a single ethnic group that have eventually brought them into peaceful relations with other, formally rival neighbors.

There have long been proposals to draw a line between the Northern Alliance and Pashtun dominated areas of Afghanistan, and to redraw the Durand Line, moving it southeastward to divide Pakistan into Punjabi Industan and create a new nation, or at least an alliance, of Pashtunistan. Not all Pakistani Pashtuns are going to want to be in the new country, because many have become modern and no longer comfortable with the more traditional Pashtuns. That is also true of Pashtuns in Afghanistan. One suspects that Hamid Karzai might find it safer to live in a Daristan than in a Pashtunistan, especially given his history.

Our current negotiations with the Taliban seem aimed at getting them to assume a share of power in the Afghan parliament, the Jirga, and key ministries, but given their known aspirations for total domination, that seems an unpromising aim. A better approach might be to propose the formal division of each of the tribal areas of both Afghanistan and Pakistan into new independent nation-states, with elections in each such area, and then help them form loose federations with the potential to unite under central governments as they become comfortable with one another. Existing provinces roughly correspond to such tribal areas, through not perfectly. Switzerland might provide the model for the process. That would be a tough sell, especially with the Pakistanis, but at some point they need to come to the realization that their tribal areas are a liability and a threat, especially to their nuclear weapons. It is in their interest to lose some territory they don't control and gain friendly neighbors.

Mineral economics

It is estimated that Afghanistan has more than $3 trillion in minerals waiting to be extracted. It has long been a major source of minerals, going back to the bronze age when it was the source of tin used in making bronze. The country is laced with mine shafts, used to this day as hiding places for insurgents. However, most of the shallow deposits have already been extracted. What remains is deeper, and will require investments of capital to get them out. The capital won't come as long as the security situation remains bad.

As it happens, most of the minerals are in Northern Alliance dominated areas, and foreign investors are much more likely to invest in mining operations that are controlled by Tajiks. If Afghanistan were partitioned into Daristan and Pashtunistan, that extraction could proceed and build reasonably modern nations. However, the Pashtuns would not be likely to go along with a partition if they lost all that wealth, so part of the deal might be to give then shares in mining companies so they would have a stake in keeping the peace.

Of course the Taliban might not agree, but offering them their own country seems like a more promising negotiating position than a share of power with the Tajiks.

Perhaps it is time for us, like Alexander, to cut the Durand Knot.

Paying the Rent

2011-05-16T10:43:00.000-07:00

David Bossie of Citizens United elegantly stated the need to support causes:

"You can't save the world if you can't pay the rent."

If you want to keep these efforts and those of the Constitution Society going, you need to pay your share.

Economic collapses of the past

2011-04-20T11:23:00.000-07:00

No discussion of the present prospects for economic collapse should neglect to examine the evidence of past collapses. Here are a few:

Argentina 1999-2002
The Argentine economic crisis was a financial situation that affected Argentina's economy during the late 1990s and early 2000s. Macroeconomically speaking, the critical period started with the decrease of real GDP in 1999 and ended in 2002 with the return to GDP growth, but the origins of the collapse of Argentina's economy, and their effects on the population, can be found in action before.

Zimbabwe 2000-present
The economy of Zimbabwe has shrunk significantly after 2000, resulting in a desperate situation for the country and widespread poverty from among others 94% unemployment. Hyperinflation has been a major problem from about 2003 to April 2009, when the country suspended its own currency. The economy deteriorated from one of Africa's strongest economies to the world's worst.

Yugoslavia 1970-2008
An economic crisis erupted in the 1970s which was the product of disastrous errors by Yugoslav governments, such as borrowing vast amounts of Western capital in order to fund growth through exports. Western economies then entered recession, blocked Yugoslav exports and created a huge debt problem. The Yugoslav government then accepted the IMF loan.

In 1989, according to official sources, 248 firms were declared bankrupt or were liquidated and 89,400 workers were laid off. During the first nine months of 1990 directly following the adoption of the IMF programme, another 889 enterprises with a combined work-force of 525,000 workers suffered the same fate. In other words, in less than two years "the trigger mechanism" (under the Financial Operations Act) had led to the lay off of more than 600,000 workers out of a total industrial workforce of the order of 2.7 million. An additional 20% of the work force, or half a million people, were not paid wages during the early months of 1990 as enterprises sought to avoid bankruptcy.

Weimar Republic 1919-1923
Since striking workers were paid benefits by the state, much additional currency was printed, fueling a period of hyperinflation. The 1920s German inflation started when Germany had no goods with which to trade. The government printed money to deal with the crisis; this allowed Germany to pay war loans and reparations with worthless marks, and helped formerly great industrialists to pay back their own loans. This also led to pay raises for workers and for businessmen who wanted to profit from it. Circulation of money rocketed, and soon the Germans discovered their money was worthless.

Financial crises, historically

Prior to 19th century

1637: Bursting of tulip mania* in the Netherlands – while tulip mania is popularly reported as an example of a financial crisis, and was a speculative bubble, modern scholarship holds that its broader economic impact was limited to negligible, and that it did not precipitate a financial crisis.
1720: Bursting of South Sea Bubble (Great Britain) and Mississippi Bubble (France) – earliest of modern financial crises; in both cases the company assumed the national debt of the country (80–85% in Great Britain, 100% in France), and thereupon the bubble burst.
Crisis of 1772
Panic of 1792
Panic of 1796–1797

19th century

Danish state bankruptcy of 1813
Panic of 1819 – pervasive USA economic recession w/ bank failures; culmination of U.S.'s 1st boom-to-bust economic cycle
Panic of 1825 – pervasive British economic recession in which many British banks failed, & Bank of England nearly failed
Panic of 1837 – pervasive USA economic recession w/ bank failures; a 5 yr depression ensued
Panic of 1847 - a collapse of British financial markets associated with the end of the 1840s railroad boom.
Panic of 1857 – pervasive USA economic recession w/ bank failures
Panic of 1866 – the Overend Gurney crisis (primarily British)
Panic of 1873 – pervasive USA economic recession w/ bank failures, known then as the 5 yr Great Depression & now as the Long Depression
Panic of 1884
Panic of 1890
Panic of 1893 – a panic in the United States marked by the collapse of railroad overbuilding and shaky railroad financing which set off a series of bank failures
Australian banking crisis of 1893
Panic of 1896 - an acute economic depression in the United States precipitated by a drop in silver reserves and market concerns on the effects it would have on the gold standard

20th century

Panic of 1901 – limited to crashing of the New York Stock Exchange
Panic of 1907 – pervasive USA economic recession w/ bank failures
Panic of 1910–1911
1910 – Shanghai rubber stock market crisis
Wall Street Crash of 1929, followed by the Great Depression – the largest and most important economic depression in the 20th century
1973 – 1973 oil crisis – oil prices soared, causing the 1973–1974 stock market crash
Secondary banking crisis of 1973–1975 – United Kingdom
1980s – Latin American debt crisis – beginning in Mexico in 1982 with the Mexican Weekend
Bank stock crisis (Israel 1983)
1987 – Black Monday (1987) – the largest one-day percentage decline in stock market history
1989–91 – United States Savings & Loan crisis
1990 – Japanese asset price bubble collapsed
early 1990s – Scandinavian banking crisis: Swedish banking crisis, Finnish banking crisis of 1990s
1992–93 – Black Wednesday – speculative attacks on currencies in the European Exchange Rate Mechanism
1994–95 – 1994 economic crisis in Mexico – speculative attack and default on Mexican debt
1997–98 – 1997 Asian Financial Crisis – devaluations and banking crises across Asia
1998 Russian financial crisis

21st century

2001 – Bursting of dot-com bubble – speculations concerning internet companies crashed
2007–10 – Financial crisis of 2007–2010, followed by the late 2000s recession and the 2010 European sovereign debt crisis
2000-2001 - Turkish Crises
2001 - Argentinian Crises

Arnold Toynbee, A Study of History

A Study of History is the 12-volume magnum opus of British historian Arnold J. Toynbee, finished in 1961, in which the author traces the development and decay of all of the major world civilizations in the historical record. Toynbee applies his model to each of these civilizations, detailing the stages through which they all pass: genesis, growth, time of troubles, universal state, and disintegration.

The major civilizations, as Toynbee sees them, are: Egyptian, Andean, Sinic, Minoan, Sumerian, Mayan, Indic, Hittite, Hellenic, Western, Orthodox Christian (Russia), Far Eastern (Japan), Orthodox Christian (main body), Far Eastern (main body), Persian, Arabic, Hindu, Mexican, Yucatec, and Babylonic. There are four 'abortive civilizations' (Abortive Far Western Christian, Abortive Far Eastern Christian, Abortive Scandinavian, Abortive Syriac) and five 'arrested civilizations' (Polynesian, Eskimo, Nomadic, Ottoman, Spartan).

Toynbee counted 20 great civilizations that fell, with our present Western Civilization being the 21st. is noted for his challenge-response model of civilization, according to which civilizations rise when they meet their challenges, and fall when they don't. That includes both external and internal challenges of all kinds.

Atlas Shrugged Part 1

2011-04-18T11:33:00.000-07:00

I liked it. The producers and writers did a good job of extracting the key elements of the first third of the book and fitting them to the two-hour format of a movie in a way that is watchable and sufficiently evocative to encourage attendance and to get people to attend the next two episodes. The critical role of Dagny Taggart is well played by Taylor Schilling . If the episodes succeed commercially, it will be mainly due to the way audiences relate to the way she plays Dagny, and that performance works for me.

I plan to see it again at least once.

I do have some minor quibbles:

The number of cars in the maiden run of the train changes from one scene to the next, and that is not quite what 250 mph looks like, nor could that high speed be maintained on standard gauge track or with such curves in them. It would take something like maglev and fairly straight courses.
About the only kind of metal that would fit the specifications of “Rearden metal” would be titanium, whose properties are well-known and would not be subject to the kinds of doubts raised in the book or the movie. It is plausible that Rearden might have found a cheaper way to produce titanium rails, and there are recent developments on that.
If oil becomes so expensive airlines can’t afford to operate, that would also affect railroads, metal fabrication plants, and every other kind of industrial process. But if oil rose that much we would make liquid fuel out of coal or gas. The problem would come if there were a rapid price increase. The market can adapt given a few years, even if a lot of companies do not, but the transition can be rough for everyone.

Further on the technology of rails. Accidents almost never happen because rails break. They happen because the mounts break, allowing the rails to shift, or because the train jumps the rails, or because of switching errors or obstacles. The weight of rails doesn’t matter much. For the purpose depicted in the movie, better mounts would be more important than using a different material for the rails, which could be made of any of several kinds of metals or ceramics.

Now for bridges, titanium would definitely be better. Even more for the load-bearing parts of maglev monorails which are somewhat like bridges for the entire length. The titanium would not be magnetic, of course, unless alloyed with magnetic materials.

Another couple of quibbles:

The span bridged by the bridge to be replaced is not the same as the span bridged by the new bridge. Different landscape.
High speed only matters for passenger service and perhaps the delivery of critical things like medical supplies or highly perishable goods. For things like oil slow is okay.

But if one suspends one’s annoyance at such technical details, it is enjoyable and I recommend it. As it happens, I didn’t enjoy the book much. I was already well beyond it philosophically at the time.

Redpill or bluepill?

2011-03-13T11:51:00.000-07:00

It is ironic that electionographers chose to depict Democratic-dominant areas as blue and Republican as red, and that this coloring matches the choice in The Matrix between taking a bluepill that will continue the delusion and the redpill that offers traumatic reality. That movie provides a good metaphor for our present political divide between those who imagine, despite all the evidence, that their overconsumption, especially of government benefits, can continue with at most minor reductions, and those who have come to recognize the delusion for what it is.

The problem is that too many of the American people have chosen the redpill, and they vote. Even those in positions of leadership who have taken the bluepill are not prepared to defy those people and make them take the redpill. It appears that nothing less than economic meltdown will wake them up, and that may bring the end of modern civilization.

Children are still in the drivers seat and the adults are as yet unable to bring the vehicle to a safe stop.

There is a libertarian revolution that is growing as the debacle approaches, but it may already be too late to keep us from going over the cliff. We may be having to build a foundation for the aftermath, because we are too close to the edge now.

How feds fund local abuses

2011-03-13T10:08:00.000-07:00

The following is a reply to a post on another forum, which was followed by the post below it:

Williamson County is notorious for this kind of abuse, but it is important to understand why it occurs, there and elsewhere.

Congress has adopted several subsidy programs, for parental rights termination, for protective orders, for juvenile detention, for child support, and for monitoring devices. The way it works is that counties and states apply for federal grants, and get a large sum, generally at the beginning of the fiscal year, to be used for a certain number of applications of each of these funded measures to particular cases. The funds are often not accounted for as parts of the county or state budgets, so it can take some work to dig out the amounts and how the money is used.

The money is divided among a number of well-connected persons: prosecutors, police, judges, medical workers, social workers, guardians ad litem and other lawyers, foster caregivers, and assorted other players. In some counties the inner circle of recipients is netting huge amounts. Some seem to become millionaires from it.

Yes, the judges get a large cut, too. Look at the assets some of them have (often held under other names). Far more than they could have gotten on a judge's salary.

The amount of money varies somewhat for each program. Typically about $35,000 for each parental rights termination. About $50,000 for each protective order. Similar amounts for the other applications.

However, it often happens that by the end of the fiscal year the county or state hasn't spent all its funding. Rather than having to refund the unspent portion, or lose part of the funding for future years, officials will scramble to find cases where they can apply the funds. If they don't have enough real cases in which the application is justified, they will invent some, fabricating evidence and testilying as needed to do so.

The State of Texas is one of the recipients, especially for child support and parental rights terminations. If you examine the court records of Williamson County, you will find that the Office of the Attorney General dumps many if not most of its cases into neighboring Williamson County, where it can count on them to be rubberstamped.

There have been some cutbacks in the federal funding, so counties and states are scrambling even harder to justify the funds still available, inventing as many cases as they need to get the money.

It is not surprising that the courts of Williamson County would not even allow the filing of a writ of habeas corpus. They ignore them. I once filed one in a court there, and the visiting judge, who had served as a judge for more than 40 years, didn't have a clue what it was or how to handle it. He just ignored it.

Having to find cases in which the funds can be applied also leads to another kind of abuse: threatening dissenters and political opponents. Lawyers, especially those with young children, are afraid to challenge judges or prosecutors in court, or in an election, for concern that their kids will be taken away from them. It is a real threat, and used to intimidate not only lawyers, but members of the media, and others who might appear to be threats to the abuses.

To get an idea of how bad it can get, when I lived in Sacramento I investigated the pattern of abuse there. What I found is that the international pedophile mafia (which actually calls itself that) has infiltrated the ranks of foster caregivers, and places orders for attractive children, who are then taken away from their parents and delivered into the clutches of the perverts. Those people are dangerous, and not just to the kids. Local officials are afraid of them, but the money they split helps assuage their consciences. There are indications the pedophile mafia has infested other states as well. I haven't found evidence of them in Texas yet, but it is only a matter of time.

It is important to eliminate the federal funding. That will do more to solve these problems than anything else we can do. However, we should not expect that to be sufficient. Once such corruption sets in, removing one source of funding for it is likely to just get the corrupt to seek and find other sources to support their habit. We need to be alert for that.

The crisis of government deficits is a threat to our liberties in many ways, but it can also be an opportunity to remove some of those threats. We need to expand our efforts to get funding cut for these areas of abuse.

From: Dessie Andrews
Sent: Saturday, March 12, 2011 5:57 PM
Subject: Carolyn Barnes

My friend Carolyn Barnes is being held in the Williamson County Jail. She is being denied medical treatment, (she has crushed discs in her spine, she is being held in solitary confinement and is kept shackled in her cell. A waist band with handcuffs and leg restraints. She is denied visitors. It is the policy of Williamson County to only allow direct family members, attorneys, and clergy.

Her court appointed attorney refuses to file a habeas or attempt to get her out. He clings to his story that she can get out at any time by submitting to an ankle monitor. That is not true. She was in court on January 28 and the judge said, "Do you want to wear the monitor?" and she said, "of course not." The visiting judge, with an oath of office on file that he took in 1999, threw his hands up and said your bail is revoked. He did not giver her a choice. She has a $50K bond posted, but is being held to NO BAIL. She has made it clear that if it means not being in jail she will wear the monitor. Again, she is given no choice. However, that's her attorney's story and he's sticking to it.

I tried to walk a habeas through on Wednesday in Williamson County and was lucky to get out of the courthouse. They are having none of it.

I would like people to call the Williamson County Sheriff's office and ask why she is in jail, why she is shackled and why she is in solitary confinement. The other inmates call her Hannible Lechter.

They will tell you that she is in the infirmary because she has medical problems. She is in solitary and being tortured with sleep deprivation and bright light treatment.

Please help

The sheriff's number is 512-943-1300, Fax 512-943-1444

From: Dessie Andrews

The alleged crime is aggravated assault on a public officer, 1st degree felony, which has been reduced to 2nd degree felony, they crossed out the public officer, (the alleged census worker). If you put her name in Google, you'll see the whole distorted bunch of press releases.

That may be true about monitors, but she didn't refuse to wear one, she has a $50K bond posted, she is an attorney and has never missed a hearing. I'm attaching some of the wonderful exculpatory evidence she received.

Incidentally, the census worker was never on Carolyn's property, there were no shots, no one was injured. This is part of a pogram by out of control Williamson County Texas prosecutors who are totally out of control.

They have run too many attorneys to count from their jurisdiction by scare tactics like this. If you are a criminal defense attorney, if you fight for your client and not roll to a preconceived plea, this is what happens.

Uprisings inspired by Iraq?

2011-02-22T09:51:00.000-08:00

The 2003 invasion of Iraq to overthrow Saddam and install a democratic regime was justified at the time as an effort to cultivate political change in the Middle East, by providing a model in a strategic location in the region. The intervention has been expensive and controversial, and the outcome remains uncertain. However, so far, despite continuing sporadic violence, it seems to be working. Three sectarian rivals, Sunni, Shia, and Kurd, have managed to unite as one nation without a dictator to rule them. Of course, U.S. forces are still there, making sure that happens, but if that model of cooperation endures the departure of U.S. forces, it may indeed be a positive force for change in the region.

Is that what is already happening with all the uprisings in the area? First Tunisia, then Egypt, and now most of the other nations of the Middle East and North Africa? Of course, they are mainly the result of local conditions, of oppression by local rulers, corruption of local officials, rising food prices, and growing numbers of educated but underemployed youth. However, they do not resemble the revolts that have led to the rise of the Ayatollahs in Iran, of Hamas in Gaza, and recently of Hezbollah in Lebanon. These revolutions may still be hijacked in some cases, but on the whole they seem to be mainly led by more enlightened younger persons, a large number of whom seem not only fluent in English, but to speak with an American accent. This is a cultural revolution, and it seems to take its rhetoric more from Thomas Jefferson than from Osama bin Laden. We could finally be seeing the Islamic Reformation that many have been hoping would emerge.

The best way to guide these revolutions in the right direction is to provide them an example of strict constitutional compliance in our own country. The world is very much aware that we are violating our own Constitution, and that diminishes our influence in the world. We cannot police the world, but if we do well enough at providing a model of constitutional rectitude, we may not have to. The burden is on us to prove the rule of law works. We are the leaders in the struggle for constitutional republican government. The world looks to us as an example. Constitutional compliance is not just our duty to one another, it is a matter of national survival.

One of the ways we violate our Constitution has a very real impact on the peoples of these and other countries. Our unlawful use of fiat currency as legal tender, combined with our inability to restrain the growth in the money supply, has been exporting inflation to the entire world, dependent as it is on the U.S. dollar as the world's reserve currency, and thus raising the prices of critical commodities like food in countries where people can barely afford it. Such inflation might provoke needed political reform, but reforms won't endure if new democratic regimes can't solve the economic distress of their peoples, caused in part by our own overconsumption. We need to reduce our consumption of government services and benefits, and reduce government spending, not just to avoid economic collapse, but international conflict that could ultimately threaten our national survival.

So if our intervention in Iraq is to be salvaged, we need to get our own house in order, comply with our Constitution, and lead the world in the abandonment of fiat currencies.

Now, having said that, it needs to be pointed out that the invasion of Iraq was unconstitutional. Whether it was a good idea in the long run of history, it was still a violation of our Supreme Law. However, it was not the 2003 invasion that was the main offense. It was the Gulf War in 1991. Congress should have declared war in 1990 after Iraq invaded Kuwait. The invasion of Iraq in 2003 was a response justified by Iraqi violation of the armistice agreement that ended what has come to be called the Gulf War, but which was never really ended until the overthrow of Saddam in 2003. It makes no difference whether Saddam actually had weapons of mass destruction. He acted as though he did, and that is sufficient to be an armistice violation. The subsequent occupation is not really a war, nor is the intervention in Afghanistan. Occupations may be violent, but with no opposing national governments or armies, they are not really "wars" as that term is understood in terms of the law of nations, especially after the Peace of Westphalia.

The problem of patriot myths

2010-12-12T13:30:00.000-08:00

During my guest appearance yesterday, Dec. 11, on the Microeffect Hammer & Anvil internet radio show, I made a few points that others might appreciate:

It is a mistake to attack the legal charlatans directly. They are not open to rational argument (if they are not actually fed agents). They are seeking attention by claiming to "know" something no one else does, and giving them attention merely rewards their bad behavior. If you are not in a position to give them a good whack, then it it better to reward only good behavior with attention, and ignore bad behavior.

The focus of criticism needs to be not on the charlatans or those who have bought their snake oil and suffered for it, as on those who have not yet brought it, and therefore don't have an investment they may feel they need to protect.

It is not persuasive to say "The courts have rejected argument x." The courts are not credible, so neither are their rejections. If courts are seen as tools of the enemy, then their rejections can actually confer an aura of merit.

Perhaps the most persuasive arguments that can be made against the charlatans, to those who have not yet bought in, is to show how the activities of the charlatans are harming innocent people who have not bought the myths and may not have ever heard of them. The charlatans don't just hurt themselves or their followers. The harm is much wider and more severe for the remote and seemingly unconnected, except for the courts in which everyone operates. Just as one nut putting a bomb in his underwear is causing millions of people to endure being scanned or groped, so legal nuts are causing injustice to be done to people who have nothing to do with the nuts.

Snake oil salesmen flourished in the Old West for two main reasons: First, there were not enough real physicians available to fill the need for medical treatment. Second, the state of the medical art was not advanced enough to provide treatment for many maladies that afflicted people, and honest physicians didn't promise more than they could deliver. That left the door open to those who promised more. Desperate people will seize on any ray of hope that is presented to them.

Legal snake oil is flourishing because competent practitioners are not adequately meeting the need for justice. Lawyers, by their training and economic interest, tend to focus on particular cases, and someone with money has to pay the high costs for those. When a lawyer sees an injustice, his first impulse is to litigate. Few take a step back and try to organize people to seek legislative remedies, that don't do much for particular cases, but could, if done right, avoid a lot of those cases. Many lawyers might recognize most of the items in my list of Judicial Reforms Needed, but how many of them make seeking such reforms an issue if they seek election as state legislators or members of Congress? How many form and lead organizations seeking reform? How many of them are waving signs at rallies, gathering petitions, or drafting model legislation? Too often that is left to earnest but undereducated laypersons, who too often get it wrong and lead others astray.

Complicit in this dereliction are all the laypersons (and some lawyers) who learn the hard way how unjust the courts can be, and devote much of the rest of their lives trying to fight their own lost cases instead of organizing reform efforts that might help avoid other people being similarly injured. A revolution is needed, and revolutions are not fought and won only by those confined to their own cases.

The Opposition likes nothing better than for us to waste our precious resources on unproductive arguments. They love it when the stooges they have planted among us divert the time we need to be devoting to moving real reforms toward adoption. The future belongs to those who focus.

Deficit Commission: too little, too late

2010-12-12T08:21:00.000-08:00

The report of the Simpson-Bowles Deficit Commission has been variously described as "bold" and "timid", depending on the policy views of the commentator. I contend it is worse than timid, that it aimed for the wrong target, and misconceived its mission.

The apparent mission the members chose to pursue is a recommendation that would be acceptable to policymakers on both sides of the congressional aisle. The fact that the report was not supported by the required number of votes by members of the Commission indicates they failed even in that, something from which the Obama Administration has been trying to deflect attention.

There was never any hope of coming up with a broadly acceptable proposal. No such proposal exists, won't exist until the world economy collapses, and perhaps won't even exist then. Leading policymakers, and the American people, simply do not share an understanding of the situation on which acceptance could be based. In this exercise in futurics, there is no so much disagreement over what alternatives are desirable as over what alternatives are available. As long as too many people cling to the futile belief that endlessly expanding prosperity is available for everyone, the best that can be done is to try to lay out the available alternatives, and show why the "limitless" alternatives are not available.

The appropriate way to do that would be by the old method of "zero based budgeting", which is another way of saying, to begin with no action on anything, and then restore parts of various alternatives, forecasting the impacts of each part, until we get to where we are now. This would require some very advanced modeling. A spreadsheet would not be adequate, because the models have to consider complex feedback loops and the costs of eliminating programs altogether, including some that are very severe.

We can identify a few items that should not be eliminated: paying off the national debt, keeping the courts operating, and national defense (although perhaps not with all the weapons systems that have become largely obsolete). We can proceed to divide everything into constitutional and unconstitutional expenditures.

For some of us, identifying a program as unconstitutional is dispositive. Unconstitutional programs must be terminated, totally and abruptly. There is no need for further discussion, unless or until the Constitution is amended to authorize the program.

However, making a concession to political reality, not everyone, indeed very few, take the Constitution that seriously. They are going to have to learn to take it seriously the hard way, and we will all endure the consequences of their folly. Furthermore, abrupt changes in policies, especially those that involve spending large amounts of money, can be critically disruptive. We don't want to bring down the world economy trying to avoid doing so, and suddenly ending all unconstitutional programs might very well have that result. We need competent analyses of what impacts of reduction or termination of programs can be endured without triggering collapse.

So begin by reducing to zero all unconstitutional spending programs. That would include, but not be limited to, the following:

Social Security
Medicare
Medicaid
Unemployment benefits
Welfare of various kinds
Farm subsidies
Infrastructure
Incarceration for unconstitutional "crimes" like drug and firearms violations

Would even the total and immediate elimination of all those programs be enough to eliminate the deficit and pay off the debt? At this point we don't know, and someone needs to do that analysis. Until it is done, we don't have a policy baseline.

There is an obvious problem with ending Social Security benefits for those already dependent on them. Even if they were phased out over a period of one or two years, the impact would be severe, probably indigency and death for many elderly. However, ending benefits for new applicants would allow them to plan on providing for their own retirement or medical disability, or suffer the consequences.

The big ones that no one seems to want to confront are Medicare and Medicaid. Would elimination of them enable us to solve the deficit/debt problem? Again, we don't know, but assume there is no other way than to end these programs.

Obviously, if medical care were withheld from those who couldn't afford to pay for it, the result would be a lot of people living shorter lives. How much shorter? Is that so terrible? We don't want people to suffer, but we can ease suffering at a much lower cost than we are spending to prolong life, for increasingly short periods of time, at ever mounting cost. Is it worth it to extend a life for an hour at a cost to taxpayers of $1 billion? I don't think so. At some point we have to make a rule, "You get x days of extended life for a maximum $y." No more. We'll try to ease your pain so you can go out with some dignity in the presence of your loved ones. Any more than that you have to pay for yourself.

We have two major problems. The first is an exaggerated fear of death, as something to be avoided at all costs. Other cultures have a more reasonable view of death, as something that is not the worst thing that can happen to a person, only the last.

The second is the present state of medical technology. We didn't have such debates when medical technology couldn't do as much to prolong life. When all that it could do is ease suffering and enable everyone to wait for the end, people accepted the inevitable with some grace.

We are at that awkward stage of advancement of medical technology when it offers us the hope of indefinite prolongation of life, but at an exponentially mounting cost, that we then scramble to find someone else to pay for.

No doubt the time will come when medical technology becomes so advanced that it can make people virtually immortal, at a very low cost. Pop a pill containing a swarm of nanites tailored to our DNA and restore the body and mind to youthful good health. Perhaps even some enhancements, like an advanced post-graduate education imparted by molecular machines that rewire our brains. There is no reason to expect such technology may not eventually be available and affordable by everyone, perhaps as soon as the end of this century.

But we're not there yet. If we were to spend more on advancing such technology, instead of for treating patients, we might achieve it sooner, and eventually save more lives than we can in the short or mid term. Of course research can involve some treatment, but it is only that kind of treatment that can be rationally justified. It is time for hard decisions on this subject, and the way to go is to reduce Medicare and Medicaid to medical research programs, not continue them as medical treatment programs. Experimental treatments only, until the costs can be brought down to a level anyone can afford.

Charlatans

2010-11-23T12:04:00.001-08:00

Charlatans have always been with us, from the false prophets of ancient Israel to the snake oil salesmen of the 19th century. They prey on the gullible in every field, from medicine to engineering to law. It may be worth some effort to expose them, but not too much effort. True professionals need to focus their scarce resources on helping those wise enough to distinguish between honest providers and swindlers. There is only so much one can to to save fools from their folly.

Charlatans flourish when professionals are either unavailable, ineffective, or lack credibility. We now have an upsurge in legal charlatans because the legal profession has become unavailable, ineffective, or lacking in credibility. People are being subjected to legal attack while legal defense is being priced out of their reach. Too often, even if people can afford lawyers, those lawyers can't help them in corrupt courts. Legal jargon has become incomprehensible not only to laypersons, but to lawyers and judges as well. That gets people to the point of saying, "If I'm doomed anyway, at least I can mock and scream."

The danger, of course, is that when they lose, they provide more ammunition for the opposition to use to assault the rest of us. For that reason we may need to cut them off before they can create any bad precedents. We may need to be quite brutal about that.

I prefer to take most of their fulminations as mockery. They throw a twisted version of legal jargon back at lawyers and judges as a protest and an insult. If some of them delude themselves that their cries might bring any real relief, well, at least their delusions bring them some comfort until they get thrown into the pit.

Reply to a critic of the tea party movement

2010-10-24T12:45:00.000-07:00

I do not speak for the "tea party movement" or for "conservatives". No one does. However, to the extent such folks take their guidance from me on interpretation of the Constitution, I can respond on the points of what is and is not constitutional.

Before one can have an intelligent discussion on this topic, we need to establish some ground rules. We are talking about law, not policy. The Constitution is the Supreme Law, not the Supreme Suggestion, or some kind of policy guide, to be compromised like any other. Law is a command. It must be obeyed, or else suffer the consequences. It is binary. Either something is lawful or it is not. There are no degrees of lawfulness. No gray areas. An official has the authority to do something or he does not. A violator of a law is guilty or not guilty. Nothing in between.

Further, official power does not come from need. It comes from a delegation of authority from someone having the power to do so. The Universe may end without the exercise of a power, but that does not confer the slightest iota of authority, unless there is a prior delegation of authority to act if a need arises. There is a logical fallacy that covers this: Necesse ergo praesto. I have the need to do it, therefore I have the (legal) authority to do it. No you don't. If you act without authority to save the world, history may praise you, but it may still be lawful and dutiful to prosecute and execute you for it. After you are dead you will get a statue in your honor. That is the way law works, and is supposed to work.

Now to the points made about various popular services performed by government. The ones cited are minor services that are not really significant issues on the general theme of the exercise of unconstitutional powers. It is not unconstitutional for the federal government to inspect food sold across a state border (but not within a state border). It is not unconstitutional to administer national parks, museums, or the like.

Without going into detail, here are a few unconstitutional activities of the federal government:

Income tax on compensation for labor
Social Security
Medicare
Medicaid
Unemployment
Welfare
Public housing
Public education except for militia training
Veteran health care except for service-connected maladies
Every war not declared by Congress (the president and those under his command are pirates in constitutional terms)
All criminal prosecutions for acts committed on state territory for other than treason, counterfeiting, piracy and felony on the high seas, offenses against the law of nations, violations of military discipline, enslavement, violation of rights by a state agent, or deprivation of the privilege of voting on grounds of race, gender, age 18 or over, failure to pay a tax, etc.
Courts giving more weight to precedent than to the Constitution itself
The de facto delegation of lawmaking authority to an army of bureaucrats
Denial of legal redress on many issues
Government mandated health insurance
Bailouts, especially that don't solve the problems created by the major financial institutions

I could go on and on, but I have a website for that.

The Taxing Clause authorizes taxing and spending only for the exercise of the specifically delegated powers. The phrase "general welfare" is not the delegation of a power, but additional restriction of the power in ways that do not burden or benefit one state, section, or faction over others. It is equivalent to an equal protection clause.

But to understand that you have to learn to read the language in which the Constitution is written, which is not the same language used today.

How lawyers caused the debt crisis

2010-10-14T05:07:00.000-07:00

A major contributing factor to getting into this financial crisis was courts abandoning the "best evidence rule" and accepting affidavits as sole evidence the party trying to foreclose is the "owner and holder" of the mortgage note, instead of demanding the original note be presented in court. Had lawyers and judges insisted all along that creditors present the original notes in court, then it would have forced them to track those notes through the securitization process, and enabled the valuation of mortgage-backed securities to be based on analysis of the particular notes in each tranche. The speculation that has proved to be so dangerous could have been avoided if the values of the securities had not become separated from the values of the particular components.

Another has been the separation of the owning of notes from the collection of payments, producing cases in which the court allows the debtor to lose his house despite making all the payments on time because the collection agent goes bankrupt without passing the payments on to the note owner, making the mortgage debtor just another unsecured creditor of the collector, while the note owner walks away with the property, instead of making the note owner the unsecured creditor.

A third, and more important, factor has been to allow currency that is "backed" only by debt or the taxing power of the government. That allows people to think that money is "theirs" when in fact all they own are certificates redeemable by nothing of durable value. When debts become uncollectable and needed taxation would have to exceed 100% of income and assets, then currency also becomes worthless, not just through inflation, but by the sudden and complete loss of public confidence in the currency system.

The way to resolve the mess is not to call for a moratorium, as some state attorneys general have done. If enough states were to impose such a moratorium, it could cause the collapse of the world financial system that the bailouts were intended to avoid. This is a striking case of "be careful what you ask for". Although well-intentioned, this call by AGs could contribute to bringing down the entire world economy. This is a situation we need to back out of very, very carefully, if it is not already too late. A way to do that is for the courts to return to some of the rules and practices of the past.

Leave them some holes

2010-10-06T06:34:00.000-07:00

One of the most effective writing techniques is seldom if ever taught in schools. Indeed, teachers of writing will often counsel their students to exhaust a topic, leaving no holes unfilled. I learned long ago that is usually not the best thing to do.

When you write, don't try to say it all. Hold back on a few points. The reader will sense them, and fill them in himself, thereby investing in the thesis of your writing, making it his own.

Many academic papers neglect to do this. The reader comes away from them satisfied that everything has been said, but may soon forget what that was, nor is he inspired to build upon it with his own contributions. The best papers not only answer questions, but raise more questions for the reader to answer. Those are the articles that are most likely to get cited.

Like most writers, I have a tendency to fill all the holes in a topic. I resist that, sending my writings into the world before I have finished with everything I have to say, or sometimes even removing some points that I think my readers can supply themselves.

Readers appreciate this kind of writing. They enjoy adding to a conversation. Let a monologue become a dialogue and you can unleash a flood of fervent discourse. That can take the topic in the wrong direction, so you want what you write to so frame the issues that the emergent contributions will reinforce that framing as the conversation spreads. Leave them some holes, but the right holes in the right places.

Control of U.S. territory by foreign criminals

2010-08-05T09:07:00.000-07:00

Growing efforts by Mexican narcotics cartels to gain political control over regions where they dominate trafficking has led to violence in many parts of Mexico, especially in the Mexican border cities and along major shipping routes. But as I have been warning since I wrote in 1995, the money acquired by the criminal gangs is not just going to support their operations. It is being used to buy government, and assume the role of government, on both sides of the border.

The problem was well presented in A Lawyer's View of the Justice System, Joseph H. Delaney, July/August, 1999, issue of Analog Science Fiction and Fact, Vol. CXVIX No. 7 & 8 —

... the proportion of judges who are dishonest, who are on the take, who harbor prejudices against parties or counsel, is far greater than the lay public realizes. ... Corruption is rampant in courts at every level throughout the country. It is equally rampant among prosecutors and law enforcement people. ... The primary corrupting influence is the drug business. ... the dope interests own contemporary justice. ... There is no greater shock than to find that even with both law and the facts in your favor your constitutional rights are worthless because you can't get the crooked regime to enforce them.

There is a territorial issue involved, a threat to the sovereignty of our nation. Foreign criminal gangs are seeking control of territory on the U.S. side of the border, along transshipment corridors, and in our inner cities. It is not just about narcotics trafficking. It is estimated that the gangs are making more money in some places by extortion than by trafficking. Some of them even call it a "tax", and are providing some "services" to gain a measure of public tolerance. In some countries where gangs dominate areas, people are calling them before they call the police, to solve problems the government should be addressing.

From the AP:

President Felipe Calderon said Wednesday that Mexico's cartels in many cases have moved beyond drugs as their main money-earner and are even trying to supplant the government in parts of the country.

Speaking at an anti-crime conference, Calderon said gangs are imposing fees like taxes in towns they dominate, extorting money from both legitimate and unauthorized businesses.

"This has become an activity that defies the government, and even seeks to replace the government," he said. "They are trying to impose a monopoly by force of arms, and are even trying to impose their own laws."

Calderon said cartels may even be taking money from churches. "I do not doubt that they are also extorting money from priests and pastors in this country," he said.

Drugs are becoming less of a focus for the gangs, he said.

"Their main business is not anymore even drug trafficking, sometimes," Calderon said. "Their business is dominating other people."

more ...

Mexico, like many countries, has restrictions on the ownership by foreign nationals of land along its borders and coasts. The United States, and its states, have no such restrictions, and land on the U.S. side of the border with Mexico is being steadily purchased by Mexican nationals, sometimes with some duress on the gringo landowners to sell. This acquisition is an extension of the plata o plomo (silver or lead) method of criminals to bribe or intimidate both officials and private citizens into cooperating with them against their own countries. We may soon see the ability of foreign criminals to operate without interference from border to border, from coast to coast, and in every major city, often without stepping on land, or appearing in courts, they do not own or control.

It is long past time to resurrect the traditional militia system envisioned by the Founders to defend our country from foreign invaders, who intrude not with marching armies, but by slow but steady infiltration and subversion. If we do not, we will lose control over our lives and see it pass under the rule of brutal criminals.

Lurk, fellow lurkers, lurk

2010-06-22T11:11:00.000-07:00

You guys are discovering what I did years ago and warned you to expect.

Note that people do attend tea parties in large (but dwindling) numbers. It is useful to understand why they will attend those events and not our meetups. The answer, in large part, for the greater "success" of the tea parties is that they don't ask participants to think or to commit to personal courses of action. They also allow participants to hide in a crowd and not take a prominent position in front of the pack.

I first observed this in the 1970s when I managed fundraising mailouts for various causes. I found a consistent pattern: A fundraising letter might be successful (bring in at least 5% more than it cost) if it only raised concern about a problem (say, cancer), but would almost certainly lose money if the letter mentioned support for a particular solution (say, a new vaccine).

It goes back to the ways human brains are organized. We have a primitive area of the brain that activates a fight or flight response that can be aroused by presentation of a threat (problem), but less so by presentation of a response (solution).

It makes one wonder how our forefathers ever managed to fight the American Revolution.

The answer is that people then, as now, looked to leadership from their leading citizens, not from others of their own social status.

So who are our leaders today. Interestingly, they are mostly not political figures. The people perceived as "alphas" by most people today are celebrities in other than politics, such as entertainment. Indeed, politics has become just another kind of entertainment or sporting event for most people.

The Roman emperors discovered the same principle. From Caesar onward, power was based on entertainment of the masses. Even wars were an entertainment.

We are more like the early Christians, who lurked in the shadows of the Roman Empire until one emperor had a vision and suddenly imposed Christianity on everyone, and created a Church that then went on to suppress everyone who disagreed with it.

So lurk, fellow lurkers. Lurk until it is our time, until events crush the people into turning to us in desperation. That time is near.

“Beware the leader who bangs the drums of war in order to whip the
citizenry into a patriotic fervor, for patriotism is indeed a double-edged sword. It both emboldens the blood, just as it narrows the mind. And when the drums of war have reached a fever pitch and the blood boils with hate and the mind has closed, the leader will have no need in seizing the rights of the citizenry. Rather, the citizenry, infused with fear and blinded by patriotism, will offer up all of their rights unto the leader and gladly so. How do I know? For this is what I have done. And I am Caesar.” (Attributed to Julius Caesar, although there is no record he said it.)

Perhaps Israel Should Declare War

2010-06-05T08:53:00.000-07:00

Recent controversy involving Israeli interception of ships attempting to run its blockade around Gaza is largely the result of the failure to establish and enforce some version of the ancient law of nations, which included reasonably clear rules for declaring and conducting war, making peace, and dealing with neutral interlopers. Modern nations have either forgotten that standard, or are choosing to deal with the situation using calculated ambiguities that might make some sense among professional diplomats but which make no sense to the private actors that are an increasingly large part of the picture. They pretend the conflict in the Middle East between Israel and its neighbors is not "war" but something between peace and war, with actors that are somewhere between civilians and nation-states, actions that are somewhere between crimes and acts of war, and "resolution" that is somewhere between keeping order with everyone in place, and ethnic cleansing or extermination of one side by the other.

The "law of nations" (jus gentium) is not really "law" as that term in meant within nations. It is akin to the customary "common law" principles of natural justice that were the practice in England until replacement by statutory codifications, especially in the 18th and 19th centuries. There is no law without a sovereign, a supreme lawmaker, so there can be no law among sovereign nations enforcible by anything except trade sanctions or going to war against infractors. It is to be distinguished from jus inter gentes, or "law among nations", which are international treaties, conventions, and diplomatic conferences. Both are studied under the same heading of "international law" but are really very different in theory.

The law of nations was developed by a number of legal scholars, and imperfectly followed, culminating in several treaties about 1648 called the Peace of Westphalia, involving delegations from about 109 nation-states, mostly in Europe, but not all meeting at the same time in a single plenary session. It established a fairly effective "world order" that prevented most war for 155 years.

The main elements of the law of nations established in 1648 were the following:

Each nation-state was sovereign within its well-defined borders, and thus could do anything it wanted to its own citizen-subjects.
Each nation-state has absolute liability for any warlike acts committed from its territory or by its citizens or flag vessels.
No nation-state was to go to war with any other without a declaration of war which justified it as either a response to a provocation (casus belli) or a treaty obligation (casus foederis), defined who is the enemy, and perhaps suggests the terms of peace.
States at war could blockade their enemies and capture or sink any ships, hostile or neutral, that might attempt to run the blockade, with no obligation to save the crews.
Being in a state of war relieved a state of any obligation to be proportional in its responses to warlike actions by the enemy. It could do whatever was necessary to make sure the enemy would never again pose a threat. The lives of every citizen or inhabitant of an enemy were forfeit.
The option of proportional responses, represented by letters of marque and reprisal, was deprecated, by forbidding their issuance to privateers, leaving only issuance to official forces. The perhaps unintended result was to enable any act of war to provoke a total war of extermination, a possible deterrent but one that made things worse if deterrence failed.

The Westphalian order broke down for a time in the Napoleonic Wars of 1803-15, and again, more seriously, with World War I of 1914-18. The latter was provoked by the assassination of Archduke Ferdinand by a single lone assassin, a nonstate actor, and the unavailability of any option of proportionate response. The United States, not a signatory to Westphalia, became involved in large part because it did not recognize the legitimacy of the casus of the nations, mainly Germany, under which they were attacking neutral U.S.-flag vessels. That emphasized the importance of having a really convincing casus before launching all-out war when there is a much stronger power operating in the area that doesn't buy it.

The League of Nations was not intended to displace the Westphalian order so much as to overlay a moderating influence: Nations with a complaint were supposed to take it to that international convention before declaring war, and thus provide an opportunity for other nations to either mediate, intervene, or line up on one side to make the other side back down.

Unbalanced by stronger members such as the United States would have been had it joined, the Axis powers, Germany, Italy, and Japan, left the League and proceeded to engage in expansionist invasions and attacks on then-neutral U.S. shipping, culminating in the attack on Pearl Harbor, demonstrating the poor judgment of picking a fight with a vastly stronger adversary.

Following World War II, the victorious Allies, led by the United States, attempted to resurrect the international convention approach to avoiding war, in the United Nations, again as an overlay on the Westphalian order. However, what seems to have actually worked to avoid war was the nuclear standoff of the Cold War between the Soviet Union and the United States and its allies. The UN became mainly useful in moderating local conflicts that might have escalated into proxy wars or perhaps all the way to thermonuclear Armageddon. The end of the Cold War in 1991 did not end the danger of such a catastrophe, a very Westphalian order in which nuclear attack by any nation can trigger a global war of extermination.

The way all this led to our present situation is that under the deterrence regime the consensus emerged that the way to deter is to be vague about what one's response might be to any given provocation. Keep the enemy guessing. Uncertainty about the response, it was thought, would leave the adversary fearing the worst, and thus have more of a deterrent effect than saying something like "You sink one of our ships, or destroy one of our cities, and we will sink or destroy one of yours." This paradigm carried over into other parts of diplomacy.

It might be said it reached a kind of climax in the "Axis of Evil" phrase of President Bush in his 2002 State of the Union speech. He warned of possible attack using weapons of mass destruction (WMD) by one or more of a list of nations he called the "Axis of Evil", or perhaps by private nonstate actors operating from their territories (and later members of his administration added a few more). To a professional diplomat educated in the Newspeak of deterrence, the translation of that should have been chillingly clear: If the U.S. is attacked by a WMD and we can't tell where it came from, we will have to annihilate every one of those nations on the list. That is a very Westphalian position, but one that seems not to have been understood even by many diplomats, much less by national leaders or their citizens. No one believes the U.S. would actually do that, but if a mushroom cloud appears over an American city and no one can determine the source, a genocidal war of extermination would be the only recourse. If that leads to global thermonuclear war, well, our species had a good run but it had to end sometime.

One problem with resurrecting a Westphalian order on the world is that too many countries that pretend to be nation-states have not accepted its terms that they have absolute liability for the actions of anyone operating from their territories. They are only shaky coalitions of tribal groups that may exercise more statelike power on their small neighborhoods than the ostensible national government does. The idea that any of them could be held liable for the actions of any of the others isn't just not accepted, but is almost unthinkable. Much of what can be said to be happening in many of these nations is the imposition of the penalties that come from failure to accept such responsibility, until they are welded into true nation-states with no tribal divisions that matter.

Now, what does this line of reasoning offer to Israel? The obvious action would be to declare war on Gaza. Leaving aside that doing so may not have occurred to them, there would some arguments against doing so. Israel and its allies are at least rhetorically committed to a "two-state solution", meaning a partition of the land into Israel and Palestine, with well-defined secure borders, and with each governed by a government exercising nearly total control over the actions of persons operating from its territory.

The problem is that there are not two potential states in the area. The Palestinians are divided into at least three main factions, Fatah, Hamas, and Hezbollah, the latter two of which reject anything less than ethnic cleansing and extermination of all Jews from the area. Fatah does not exercise effective control over any territory, being mainly confined to the Israeli-occupied West Bank, and Hezbollah is largely scattered through Lebanon and Syria, where they challenge the national sovereignty of those countries. But in Gaza Hamas is functioning like a national government, even if not with the complete consent of all the people who live there.

It would be argued that declaring war on Gaza would be recognizing it as a nation-state. Essentially, yes, although we need to get away from the notion that diplomatic recognition implies acceptance of legitimacy. It mainly means that they are expected to control the actions of people from their territory, and if they don't, the aggrieved party may invade and do whatever it takes to make sure the provocations stop. It means that if the people are being held hostage, they need to realize their lives are forfeit and take control if they don't want to suffer the consequences.

Under a state of war, Israel would declare the land and waters around Gaza a war zone, and forbid anyone to cross without inspection and consent. Anyone contemplating sailing a vessel to Gaza would be on notice that it would be given one warning to surrender and be boarded and inspected, and if it failed to surrender, the vessel would be sunk and no effort would be made to save any survivors. The items that are to be considered contraband would be published, and if any were found, the vessel and its contents would be seized as a prize of war and used or sold. Passengers and crew would be released at the border with no food, water, or shoes. Any that resisted would be shot.

There must be no ambiguity. Whatever rules Israel or other countries might make, those rules must be brutally clear, so there is no room for misunderstanding. The situation is bad enough without letting ambiguity cause avoidable tragedies.

Corporations, contracts, and citizenships myths

2010-03-06T12:50:00.000-08:00

One of the persistent families of myths that infest the freedom movement revolves around misconceptions (or deliberate misrepresentations) of corporations, contracts, and citizenship. It appears to be an outgrowth of the old "invisible contracts" myth, first developed by George Mercier, about which I comment here. The false premise is that we have voluntarily subjected ourselves to the unconstitutional control of officials by acceding to contracts for benefits or various kinds of "citizenship" which have the same effect, and that "all we have to do" to escape such subjection is to renounce the contracts. Proponents of this myth then strongly suggest that the oppression will then just melt away, that we will win all our cases in court, and won't be subject to any of Their "laws".

This is another in the long line of those who try to make sense of the senseless, looking for a coherent jurisprudential theory of why courts do what they do, in the vain hope that they play by some kind of rules at which we might be able to learn to beat them. Those in power don't play by any rules other than politics. It is about connections and convenience, not contracts. The only way to win in those courts is to acquire more power than your opponents, so your tribal group can pick the judges.

All this is just a modern version of the Ghost Dance movement of Native Americans, which promised immunity to the bullets of the soldiers. We all know how that turned out.

It isn't what we don't know that gives us trouble, it's what we know that ain't so.
-- Will Rogers

Let's get a few things straight.

All governments are public corporations. Always have been, since the first village elders convened. Public corporations are not, however, the same as private corporations, formed under governments (or even without any). The first makes laws governing everyone on the territory it governs. The second makes private laws governing its members, and perhaps over its property to which it has color of title.

Official or sovereign immunity has nothing to do with the limited liability of shareholders or members of corporate entities. They are entirely different things.

Citizenship is not, in general, the main basis for the jurisdiction of laws (despite attempts to improperly extend such jurisdiction beyond national borders). The main basis is subject matter and territory. One is subject to a law if it is on a subject for which power has been delegated, and on the territory of that legislative jurisdiction. It is nothing to do with citizenship. Unless one is a foreign diplomat with treaty-based diplomatic immunity, foreign visitors are just as subject to laws as citizens are, if both are on the territory. The third kind of jurisdiction, personal, is established by due notice. It can be established by certain kinds of contracts, such as an enlistment contract in the military, which then follows the person anywhere in the world, but applying for a Social Security Number is not equivalent to signing an enlistment contract. The Constitution is legally complete, in the sense that there can be no invisible contracts that override it.

Everyone not a foreign national is a citizen of the United States, of the State of his residence, of his U.S. representative and state legislative districts, of his school and utility districts, of his county, of his town, and of his voting precincts -- any geographic region for which there are elected officials for which he can vote, or hold an office. Being represented in elections, directly or indirectly, is the essence of citizenship. Nothing sinister about any of it.

The Fourteenth Amendment did not create some new class of citizenship. It merely extended already existing national citizenship to some groups that had been excluded by some states. However, it incorrectly associated constitutional rights, which it termed "privileges or immunities" to citizenship rather than to personhood, although it did declare natural-born or naturalized persons to be citizens. The error was to omit legal foreign visitors.

Citizens are not collateral for public debts. We may as a practical matter be compelled to pay them, but because we were foolish enough to elect the wrong officials, not because we are collateral.

The social contract that creates a society is not a commercial contract. One is inducted into it by one's parents or guardians as part of normal childhood development. It does not require the kind of sentient consent of a commercial contract. The relationship between algae and fungi in a lichen is a social contract.

We become bound to defend the Constitution by that process of induction into the social contract, because a term of the social contract is to help enforce constitutional public actions. We become subject of the legitimate laws of any polity onto whose territory we enter or remain, but that does not mean to any written constitution that might be adopted. Written constitutions must conform to higher unwritten constitutions of nature, society, and the state, and so must all public acts committed under them. Not only statutes, but constitutions themselves, can be unconstitutional.

Ignorance of basic legal concepts impairs the ability of laypersons to deal with real problems. You don't get close to remedies while you are hung up on misconceptions. Our oppositions loves that, and it is a favorite tactic of theirs to encourage such misconceptions as a way to disrupt us and render the freedom movement ineffective.

Section 1706

2010-02-21T15:25:00.000-08:00

Introduction to Section 1706: Background and Impacts

Section 1706 of the 1986 Tax Reform Act has been the source of much discussion. What it did was remove "safe harbor" presumption from workers, i.e., computer consultants, in the "technical services" industry, thereby creating uncertainty whether one was a contractor or employee, and opening the way to abusive collection actions against anyone who engaged computer consultants, either directly or through an agency.

Background

Investigation of the way Section 1706 was adopted shows it was at the behest of lobbyists for an organization of several leading technical and accounting services firms (mainly the then "Big 8") who had ambitions to corner the market on providing computer consulting services, and sought to discourage their small competitors or drive them out of business.

Operation

For a number of years after Section 1706 was adopted, representatives of the large firms would actually work with IRS agents to "finger" their small perceived competitors for tax audits and penalties, often even if the contract worker had filed and paid his taxes, or even if he was duly incorporated.

The computer consulting business

Computer consulting is a professional practice similar to law, medicine, or accounting, in that most work consists of short-term projects, from six months down to six minutes (usually the smallest practical billing period). The high cost of administering a W-2 employee makes it infeasible to do so for periods of less than six months, so such work only makes sense as contract work, done by professionals who typically have multiple clients, even at the same time.

Immediate impact on computer contractors

Most smaller computer consulting firms went out of business. Most solo practitioners found they had to give the contract to a "broker" or "agency", even if they found the work themselves, and work as a W-2 employee with the agency paying them as little as half of what it billed the client. Some tried incorporating, and that helped some, but not enough, because the IRS would often ignore the incorporated status of workers.

An informal survey of computer consultants during the 1990s found the cost in earnings averaged more than $100,000 per year each, or more than $2 million for a 20-year career. It is estimated that about 300,000 such workers were affected, for a total perhaps greater than $30 billion per year, or a loss of perhaps $10 billion per year in tax receipts.

Small contracts went underground

Increasingly, clients desperate to get work done would conceal their expenditures for such work, or pay in cash and not report it or take a deduction, and ask the contractors not to report the earnings, which could be traced back to the client. The result was to drive much computer consulting underground, and consultants, who had been more tax-compliant than almost any other profession, joined the ranks of occupations like home and landscaping, or sex, services. It can be estimated this caused a loss in tax receipts of more than $20 billion per year.

Or the work went undone

It is difficult to estimate the damage done to clients by not allowing them to do critical computer work, but many small businesses (and some large ones) operate on the edge, and their inability to get such work done at an affordable cost has likely contributed to countless business failures during the decades since 1986. Such potential clients were never prospects for the firms behind Section 1706, who destroyed most of the market they couldn't serve anyway.

Contribution to the dot-com collapse

What precipitated the bursting of the dot-com bubble was mainly the suspension of further funding by venture capitalists before completion of their original business plans could have made them profitable, and a leading cause of their inability to achieve profitability was their inability to engage contract computer workers due to Section 1706. Informal surveys of many of the firms supports this explanation.

Contribution to loss of competitiveness

Surveys have indicated that the increased costs, risks, and uncertainties of Section 1706 have greatly contributed to the inability of smaller U.S. firms to compete in world markets. Union contracts and health insurance may have done that for large enterprises, but it is easy to overlook that most international trade involves smaller firms, who are more affected by regulatory and tax factors. We can estimate the impact on our balance of payments deficit to be as high as $10 billion per year.

Contribution to off-shoring jobs

Informal surveys of executives of firms who have been off-shoring jobs confirms that a leading factor in their decisions has been the risks, costs, and uncertainties introduced by Section 1706. It is difficult to disaggregate all the factors, but the fact they mention it so often, without being prompted, suggests it is a major factor, perhaps of more than 10% of the jobs lost to other countries, which some estimate to run as much as 400,000 jobs a year. Ten percent of that would be 40,000, multiplied by average earnings of $60,000 per year, or $2.4 billion lost to the economy, and a loss of $240 million to tax receipts.

Section 1706 not unique

Section 1706 is not unique. Most regulations and taxes, whatever the reasons given for them for public consumption, are mainly designed to suppress small competitors of larger enterprises, and therefore to achieve an advantage for them they could not have obtained in a free market. However, it is one of the easier to identify and analyze. It has not just been computer consultants who have been harmed, but all of us.

For more see Section 1706.

Why the best and brightest don't serve

2009-05-04T20:20:00.000-07:00

When I went to Washington, DC, to lobby for several causes in the 1970-72 timeframe, I soon became negatively impressed by the low level of intellect of almost everyone I encountered there in positions of power. I soon became aware of how that happened. It was particularly revealed in a conversation between two "intelligence" types, in which the question came up of why some particularly qualified person had not been elevated. The reply was "Because we couldn't control him." There is a screening process at work to exclude talented people.

Janet Reno provides an instructive example. Clinton first proposed Zoe Baird, but the FBI "discovered" she had a "nanny tax" problem, something that the IRS had apparently overlooked, or preferred to file away for use at the right time. Then Clinton tried Kimba Wood, with the same result. Then he tried Janet Reno, and she "passed". But was that because she was clean? No. She had been the point person in the vote fraud that was perpetrated in the 1970 Florida congressional election (and presumably other elections), documented in Votescam, by James and Kenneth Collier, which, incidentally, also documents the key roles of Antonin Scalia and Ruth Bader Ginsburg at an earlier point in their careers.

So, the way things really work, barring some accident, no one gets to a position of power at any level of government in the United States unless the Establishment and their minions have something on them that can be used to control them. That isn't taught in college courses in government.

Militia clauses have many uses

2009-05-02T17:49:00.000-07:00

Is there a "duty to rescue"? Current legal doctrine says no.

This non-rescue doctrine is a change from the way things were in the Early Republic. The common-law rule then was generally that everyone fit to do so had a legal duty to respond to a militia call-up issued by any individual aware of a threat, and that subsumed rescuing people as well as self-defense. It was actually enforced in court with penalties if the call-up, sometimes called "raising the hue and cry", was ignored.

The erosion seems to have begun with the advent of official call-ups and legal penalties for failing to respond to those, but omitting unofficial call-ups or the equivalent.

It is all part of an "officialization" of civic action, hiring "public servants" to do things and discouraging civilians. The end of that road is that those public servants become the masters.

As I have reported in a previous comment some months ago, I was once in a courthouse when an assistant county attorney got knifed by an irate dad in a family law case. I rushed over to give him first aid while everyone else in the courthouse stood by or even ducked out of the area to avoid being seen to stand by. I can't take credit for saving his life: the knife only knicked his heart and internal bleeding wasn't that great, at least after I positioned his body to minimize if.

I never worried about being sued. Just did what I do.

Met the victim in court a few years later. He had advanced to judge. He didn't recognize me and I didn't bring it up.

In case anyone objects that the President does not have the authority, under the U.S. Constitution, to issue a call-up for disaster response, that is correct. However, Congress, under its more general power to prescribe the organizing, training, and disciplining of militia, can require all persons aware of a threat to issue a call-up, including to himself, to respond to a disaster or other threat to public safety. The chain of command for the response would not extend to the President, but Congress can mandate that state or local authorities or civilians command the operations without federal commanders above them.

Many of the things Congress has been attempting to do, unconstitutionally, under the alleged authority of the Commerce Clause can be constitutionally done under the authority of the militia clauses. But there must always be a nexus to an imminent threat to public safety, and response does not extend to ongoing regulatory intervention, other than for things like organizing and training.

This discussion leads to some obvious recommendations:

1. All persons should be trained in militia, including military defense, law enforcement, and disaster response, so that when they perform their duty to respond they also have the skills to do so competently.

2. We need to institute some filtering process to protect defenders from meritless suits, such as requiring consent from a grand jury, which could deny the complaint or decide the defendant should be defended at public expense.

3. Duty to defend and good Samaritan laws need to be combined, not adopted separately (or not) in each state, and there needs to be one, part of a militia statute, at the federal level. This would not be just a duty to "rescue", but to defend from all manner of threats to life and health. If one is aware of a toxic waste spill and doesn't report it he should be prosecuted, as he should if he becomes aware of a threat requiring a public response and fails to issue a call-up. It should also extend to the protection of investigative journalists and whistleblowers.

4. It should be an offense to fail to respond to a call-up issued by any credible person of a threat requiring a response, as well as to fail to issue one. That includes issuing a call-up to oneself.

The Nordyke Case

2009-04-30T15:47:00.000-07:00

In the Nordyke v. King case the 9th failed to properly define "sensitive places", leaving the implication that all public property constitutes sensitive places, including public roadways, sidewalks, and other areas to which access is not restricted, as it might be for government offices or warehouses. Clearly, the notion in Heller on this was that it only meant restricted access places, not public commons or right-of-ways. Unless clarified on this point, the finding on incorporation is really only dictum, even if called a conclusion. It could be cited on a case involving prohibition of firearms on private property, but without the ability to get to private property across a public commons or right-of-way the RKBA would be restricted to contiguous private parcels, and most private parcels are not connected except across public rights-of-way.

This case should be appealed to get the clarification that the ordinance is only properly applied to restricted access government property, not to public commons or rights-of-way.

Barbie: Discrimination against attractive females

2008-10-26T08:10:00.000-07:00

As a candidate for Congress in 1974 I can appreciate how professional handlers can try to steer the campaign. It can become a game of who can control the candidate. Sarah Palin is discovering that her trust in them was misplaced and that she should take charge. While she is at it she should take charge of McCain's handlers as well.

Palin gets support not so much because she is "conservative" but because she shows signs of being independent of the money interests that dominate both major parties, of resisting the tendency to sell out to get re-elected. She is even "liberal" on some issues, such as spending for special needs children. I support her because she takes the Alaska Constitution seriously and I have hopes she would do the same with the U.S. Constitution (after she learns more about it).

But there is something else going on here, what I call the "Kuma syndrome" (from the Tchaikovsky opera): discrimination against extremely attractive females. Men and women alike become fixated on them as the stereotypical "enchantress" or "temptress" and become unable to evaluate them on their merits. I have observed this behavior toward a number of beautiful women in my life, beginning with my mother. I have hired women who couldn't get a job because they were too attractive (or who might be hired by the wrong guys for the wrong reasons), who I correctly perceived would be excellent workers.

My mother, who somewhat resembles Palin, would light up a room, and she had a brilliant mind and a talent for business. Having known so many beautiful women I have learned to see past the beauty to their souls. Evidently, most people have trouble doing that.

Financial collapse not a defect of capitalism

2008-10-12T12:23:00.000-07:00

In the Volokh Conspiracy blog judge Richard Posner commented:

Cycles of boom and bust are intrinsic to capitalism. Government can make them more serious, and sometimes less serious, but if you take away government you will still have periodic economic crises.

No. That is a popular myth. Cycles are the result of mass psychology and too many people pursuing the same investment strategies at the same time. It is entirely possible for capitalism to function without such mass madness. In many times and places it has, with each person seeking a strategy that others were overlooking. Inventors and developers of new products and services do that all the time, seeking to introduce a product that no one else has. Farmers plant crops that other farmers aren't because they perceive they will be offering a product in reduced supply.

I independently discovered the mathematical equivalent of the Black-Sholes strategy, for a different line of investigation (and only later realized its equivalence, or homeomorphism, to use the mathematical term), but unlike those who seized on it for use in hedge funds, because it was seen as a way to insure profit except in a scenario that "could hardly ever happen", also found that if too many players used it what "could hardly ever happen" becomes inevitable.*

But all this reflection fails to identify the more basic cause of this calamity: fiat currencies. When money is backed only by credit, and not by something hard, like gold or silver (or perhaps joules of energy), then its value, and the economies of every nation that relies on it, becomes dependent on unfaltering growth, just like the mortgage market was dependent on unaltering growth of housing prices. Growth ends, and when it does, any that depends on it collapses, and if it is something as fundamental as money, it takes the economy down to barter, and productivity down to a level that cannot even keep everyone alive, must less comfortable.

* My application was computer network design, and strategies for the allocation of resources among the computers on a network by having them negotiate among themselves using tokens which they could accumulate or spend as a measure of demand for the resources of other computers. I assumed peer-to-peer networks in which every computer has the same status and role. What Merton elicited from the Black-Sholes strategy would correspond to a network in which there is one supervising computer that manages allocations among all the others, and uses the strategy to maintain its own privileged role. Where there is no "master" computer or program, the system exhibits unstable behavior.

Motivation for Evil

2008-07-24T10:52:00.000-07:00

The question of why some people do evil things has been the subject of moral philosophers, novelists, and others throughout history. Most recently, it is explored in the movie, The Dark Knight, which examines the motives of The Joker, its villain, but also the dangers of its hero, Batman, becoming a villain himself in the course of fighting villainy. It makes a good morality play and is worth seeing for that reason.

It is not just a lack of empathy. Sociopaths are characterized by the lack of empathy or conscience, but not all of them resort to crime or terror or become tyrants. Most people have limited empathy for people they don't know.

In my own informal discussions with criminals and criminologists, one thing emerges. Most crime and violence is motivated by the thrill of exercising power over others, by destroying their lives, their dreams, by causing them pain. Leaving aside crimes like "mercy killing", one finds that thrill factor predominates, which can overcome empathy or the fear of harming others that prevails in most normal people.

The key, therefore, is to achieve and maintain a civic culture in which children are brought up to fear harming others and never experience a thrill from exercising power other others. Most cultures do that for some others, but not all others, and therein lies the problem. A culture that condones harming some others, whether they are called "infidels", "those kind", or whatever, is pathological, and needs to be treated as such. Ironically, one may have to do so by condoning destroying the intolerant or intolerant cultures, and thereby become an intolerant culture. That is the risk of becoming the enemy we fight.

"The contest is not between Us and Them, but between Good and Evil,
and if those who would fight Evil adopt the ways of Evil, Evil wins."

Universal Ethic: Approaches

2008-04-10T23:40:00.000-07:00

Fred Foldvary's analysis does not adequately discuss the matter of a "Universal Ethic", because it is restrictively expressed in terms of moral issues for one-on-one situations between individuals. In politics we are concerned about decisions that may have many different impacts on many different individuals, some beneficial, some not, some welcome, some not, and many not even known or understood by everyone involved, and not just in the near-term future, but in the mid- and long-term. In consequentialist terms it is about choices among alternative futures that spring from one's decisions, and the desirability of each alternative for the full range of individuals, or even possible future individuals, over the entire course of future history. In political discourse, it is seldom even possible to reach agreement on which alternatives are available, much less how desirable each might be, in an environment in which there is not a single decisionmaker, but in which every individual and every butterfly flapping his wings is a decisionmaker for all the futures of everyone else.

The fallacy of consequentialism is that it presupposes the future is predictable. The fallacy of deontologism is that duties can address the complexities of reality. The virtue of aretaism is that it does not attempt to do the impossible. It recognizes that alternative futures may not be predictable, but they can reasonably be foreseen, to the best of one's imperfect and incomplete information and cognitive limitations, and that we can adopt the general duty to make the best decisions we can, which may include adopting more specific duties that mesh with those of others to make better futures foreseeably more likely to unfold. The environmentalist version of this kind of aretaic stance does one more thing: discounts the interests of future generations at a rate less than about 18% per generation. (That makes the area under the discount curve for future generations beyond the third greater than that for the present and next two generations, meaning one is weighing the interests of remote "posterity" higher than that of near-contemporaries.)

The above summarizes a great deal of ethical theory and may require much thought to appreciate. I am still thinking about it after a lifespan that seems like it began when there was only one continent.

Space Solar Power Alternative

2008-04-09T14:05:00.000-07:00

Whenever the subject of excessive dependence on oil imports comes up, someone always calls for achieving energy independence, but then the discussion gets diverted into such remedies as energy conservation, wind farms, geothermal and ocean thermal sources, ground-based photovoltaic arrays, biofuels, coal, ocean deposits of methyl hydrate, and, of course, the big ones -- nuclear or fusion reactors.

However, there are problems will all of those. No reasonable amount of conservation is going to keep our economy going if energy supplies are cut off. Wind farms, and geothermal and ocean thermal sources, can help in some places, but one can't depend on them as a replacement for fossil fuels. Ground-based photovoltaic systems are still somewhat expensive, although the cost is coming down. Biofuels turn out to cost more energy and other resources than they save, at least if corn is used instead of sugar cane or switchgrass. Coal and methyl hydrate will just accelerate the global warming problem. Nuclear presents the problems of waste disposal and proliferation, and fusion reactors don't work yet.

The one alternative that is seldom mentioned is space solar power: putting photovoltaic arrays in orbit and beaming the power to receiving antennas on the Earth. It is not a new idea. It is estimated that about 40 satellites in geosynchronous orbit could meet the needs for energy of the entire world, and it it was the United States who puts them up and operates them, we would be the energy exporters to the world instead of importers. Once in operation, it is estimated the cost of energy from them would be less than half the cost from other sources, and that it could pay off the investment to put up the system in less than a decade. It requires little new technology, other than ways to bring down the costs for vary large systems. It has much support from leading engineers and scientists, including a team within NASA. And nations like Japan are moving ahead to do it without waiting for us.

So why aren't we doing it? The answer, as usual, is politics. The alternative is opposed by the proponents of nuclear power, who keep making the argument that Earth-to-orbit lift costs are too high, when the proposal has long been to use materials mined from the Moon or an asteroid rather than lifted from Earth. The real problem for them is that such a proposal doesn't make them a lot of money. It would be creating an industrial system in space that they would not control and from which they could not profit.

And of course, they don't hesitate to raise other objections:
1. It is too "Buck Rogers". Silly argument, considering what we have done in the last 50 years, but they make it.
2. It would be vulnerable to attack by space weapons. And oil tankers, refineries, pipelines, and nuclear power plants aren't?
3. It would be vulnerable to space radiation and coronal mass ejections. They can be hardened against that, as we already do with communications satellites.
4. They could become platforms for death rays. Yes, but all the more reason that we put them up instead of someone else.
5. The power beams would disrupt migrating wildlife. The heating effect would be less than sunbeams through clouds, negligible.
6. The satellites would brighten the night sky, impairing ground-based astronomy. But we could move the telescopes out into space, even putting them on the solar power satellites.
7. The space aliens might object. Okay, this is for humor. But since the satellites would support the effort to defend the Earth from impacts with asteroids and comets, one suspects the aliens wouldn't object to us doing that.

Check out some of these links:
Space Studies Institute http://ssi.org/
Sunsat Energy Council http://www.sunsat.org/
NASA
http://grin.hq.nasa.gov/ABSTRACTS/GPN-2003-00108.html
http://www.hq.nasa.gov/office/legaff/solar.html
http://science.nasa.gov/headlines/y2001/ast23mar_1.htm
http://space-power.grc.nasa.gov/ppo/projects/sdp/
Solar Power Satellites http://www.freemars.org/history/sps.html
Wikipedia articles
http://en.wikipedia.org/wiki/Solar_power_satellite
http://en.wikipedia.org/wiki/Microwave_power_transmission
http://en.wikipedia.org/wiki/Future_energy_development
Space.com
http://www.space.com/businesstechnology/technology/solar_power_sats_011017-1.html
http://www.space.com/businesstechnology/technology/space_solar_000908.html
http://www.space.com/businesstechnology/technology/solar_power_satellite_000421.html
Space Daily http://www.spacedaily.com/news/ssp-01a.html
Reinventing the Solar Power Satellite http://gltrs.grc.nasa.gov/cgi-bin/GLTRS/browse.pl?2004/TM-2004-212743.html
Solar Power Satellite Place http://tech.groups.yahoo.com/group/solarpowersatelliteplace/
Space Solar Power Library http://www.nss.org/settlement/ssp/library/index.htm
Space Based Weather Control http://www.borderlands.com/spacewea.htm
Resources for the Future http://www.rff.org/rff/News/Releases/2000/Satellite-Solar-Power-Faces-Considerable-Economic-Challenges.cfm
Access to Energy http://www.accesstoenergy.com/view/atearchive/s76a4466.htm
Lift Elevators to Space http://www.liftport.com/forums/index.php?topic=619.0
MSNBC http://cosmiclog.msnbc.msn.com/archive/2007/09/07/350320.aspx

It is supported by various groups, to some of which I provided links. Main problem has been opposition from the nuclear power industry, which views it as a mortal enemy (and they are correct), and has a lot of money to spend to quash it. However, the technical merits of the proposal keep it alive, and if we could spread the word the public might give us credit for doing so. I don't propose making it a plank, unless we get more specific about technologies, which I do not recommend. However, we can promote the idea through our various forums.

The straw man argument used against it is that it would be too expensive to lift all the materials off the surface of the Earth, but that has never been the proposal. From the beginning the proposal was to mine the materials on the moon or from asteroids, which could also provide materials to industry on Earth. There have also been complaints from astronomers that the satellites would be sufficiently reflective to impair ground-based astronomy. However, the obvious solution would be to put telescopes in space.

The general idea has been to create an umbrella corporation to initiate the program, then put each satellite, and perhaps each ground receiving station, in a separate corporation, and let them operate at a profit. Most investors have indicated that they would want some government guarantees for the startup phase, since the payoff would be 20-30 years in the future, but with that there is some interest.

What you can do is spread this message with the suggestion that everyone write to their favorite media urging them to provide more coverage of this alternative. The time for replacement of fossil fuels is already very late.

Environmental Solutions

2008-04-06T12:41:00.000-07:00

The real problem is not so much contamination as resource depletion. Pollution can be considered a kind of depletion -- of an uncontaminated resource.

But there is a fundamental conflict of interest between the short term and the long term, which the market cannot fix. Markets are only about the short term, regardless of what anyone thinks about long-term investments, which, like life insurance, are based on immediate gratifications of feeling good about ourselves for doing something, which has to compete with other short term gratifications that tend to be stronger, like paying the rent.

Once again I invite people to read my paper Three Futures for Earth. The way to analyze the situation is to imagine that the human life artificial support system, called our capital, is surrounded by a surface or membrane through which critical resources can escape into a state from which they can no longer be recovered at an affordable cost within a reasonable time. Scrap metal can be recovered from junkyards and waste dumps, but not from being reduced to microscopic dust that is scattered over the landscape, except through geological processes that have a timespan of more than 200 million years. For a given level of technology, there is a characteristic cost associated with preventing critical resources from passing through that membrane, and key to that cost is the area of it, so that it becomes critical to reduce it to the lowest value possible, which is best approximated by a sphere.

Most people may not be concerned about the long term future, but any technical civilization that can endure more than thousand years or so (ours really didn't get under way until the industrial age in the 19th century) is going to have to confine itself in urban biospheres, "starship cities", located underground, that recycle all materials and use only a little energy, probably geothermal. Although one can imagine a society within such a city as maintaining many values of importance to libertarians, it won't be a free market that gets us there, or that maintains the strict recycling regimen needed to sustain it.

But first we have to get our political house in good enough order to do anything about the problem. A corrupt tyranny is useless for solving such problems.

The question has been raised, why can't the biosphere consist of the entire "Spaceship Earth". The answer is that to be viable a biosphere can't be so large that it contains "entropic sinks" -- places where critical usable resources, that is, those with a sufficiently low initial entropy, can pass into a high entropy, low usability state from which recovery and re-use is infeasible.

People have argued that resources scattered thinly could be recovered using bioconcentrators, such as plants bioengineered to use available sunlight to extract trace amounts of resources from soil or water and make them available to us in concentrated form. But that doesn't work for sinks like the deep ocean where the resource isn't soluble in water, or for those that leach too deeply into the soil to be recovered by plants, which only extract from soil near the surface. Ultimately, the only concentrator processes are geological, subduction and volcanism, which take about 200 million years to recycle most of the surface or ocean bottom layers. That's why the qualifier, "within a reasonable time".

The biosphere has to be compact enough to enable efficient recovery of scattered materials within it.

What about overpopulation? Is is a real threat, or can the market and the demographic transition manage population growth to avoid starvation, plague, and warfare?

An opponent of the proposition that we have an overpopulation problem, Julian Simon, makes some good points, but there are also some serious defects in his analysis. There are also some serious defects in his opponents' analyses. Both sides are oversimplifying the complex issues in an effort to make them accessible to their audiences, and while that may be necessary to some degree, it also opens them to attacks that do the same thing. No one should accept their arguments on the level they are presented, as conclusive.

So is there a problem of overpopulation? Yes. It is possible, in principle, for the Earth to support as many people as we have now, and many more, but only housed in urban biospheres that are completely sealed and that recycle all their materials. Such biospheres represent a capital investment of many millions of dollars per person. To build them we would have to divert capital investment away from taking care of the people now alive, and it would be impossible to build enough capacity for 6 billion people in time to benefit most of those now alive, or that will be born during the next century. We can expect a rising tide of genocidal conflicts, a taste of which we have seen in Bosnia, Cambodia, Rwanda, and Darfur. People don't wait until they reach the point of starvation to begin to eliminate what they perceive as competitors for perceived scarce resources. The consequences of overpopulation are not something for the future. They are happening now.

Non-aggression Principle (NAP) Inadequate

2008-03-28T11:39:00.000-07:00

Simple formulations like the NAP can never serve as hard rules for making moral decisions in complex real systems. Ideologues sometimes like to pretend, and perhaps convince themselves, that this can be done, but reality is unkind to simplistic rules of action. See Counterintuitive Behavior of Social Systems, by Jay Forrester. I have not found it useful as a tool for trying to distinguish what libertarians seek from what our opponents seek. On its face, ignoring the complexities, most of those opponents would also embrace it, so that it fails as a discriminator function. What I have found useful is the standard of our written Constitution of government, which is better formulated to deal with real world complexities, while embodying the key aspirational idea of the NAP. Of course, unlike formulations such as the NAP, it can't be put on a bumpersticker, except by just referring to it and expecting people to be familiar with it. And the Constitution itself does not contain the entirety of moral or ethical rules, but refers to a huge legacy of law going back two millennia, more than any human being could ever come to know in a lifetime of study. It is not a matter of knowing everything but of learning how to discover important things through diligent research.

While in a political party we need to distinguish ourselves from our opponents with our platforms, statements of principle, or whatever, it is useful to keep in mind the paraphrase of Albert Einstein, that, like theories, they should be "as simple as possible but no simpler". For rhetorical or persuasive purposes, that also means striking a level of complexity that matches that with which most of one's audience is comfortable. Contrary to common assessment, most of our prospective audience is not limited in their comfort level to what can be put on a bumpersticker. Most of them might have trouble formulating their own moral or ethical rules, but can recognize, and reject, excessively simple formulations when they encounter them, and reject the people who use them, especially if they appear to take them too seriously. If you are contemplating hiring someone to do a difficult, complex job, you want to be reassured that the prospective hire can do the job with the complexity of judgment that matches the complexity of the task, even if you, as the employer, lack the skill to do the job yourself, or even especially if you lack such skill. If you are trying to select a brain surgeon to treat brain cancer in your child, you don't have to be able to do brain surgery yourself to lose confidence in a prospective surgeon who arrives at the operating theater carrying a headsman's axe.

One of the main reasons voters vote for Republicans or Democrats (even when only one of those parties nominates a candidate for a position), and not for Libertarians, is because they have the (mistaken) idea that the nominees from those parties represent the best from among the large pool of prospective candidates each party has among its members, and that the nominees have undergone a thorough screening process by those parties. The voters don't know much about the abilities of the candidates, but imagine that the two major parties do, and that they wouldn't nominate total incompetents or crooks. (The truth, of course, is quite contrary to those expectations, but that is another matter.) Their rejection of Libertarian candidates has less to do with disagreement with Libertarian policies than with lack of assurance that if elected he won't embarrass them, and their willingness to re-elect incumbents has less to do with agreement with the incumbent's policies than with a similar assurance that if he hasn't embarrassed them in his past terms of office he won't in a future term. Voters want unsurprising officials.

Now of course we Libertarians want to achieve reform, and we can't hide that purpose, so we can't avoid challenging existing ways to doing things and incurring resistance to change. Voters are not averse to some change in policy, but not too much too fast or without a lot of thorough testing along the way. Voters want smooth transitions with opportunities to reverse course if we get into trouble. We will win by convincing voters that our candidates are the best qualified and prepared to manage such transitions.

Boycott China, not Olympics

2008-03-18T06:28:00.000-07:00

Recent events in Tibet and the resistance of Tibetans to the illegal occupation of Tibet by the People's Republic of China require the response of decent people everywhere. The genocide there is not just cultural. It is physical, and those killed probably number in the hundreds of thousands, in a country that didn't have a large population to begin with. We can't intervene militarily, but there is much else we can do. We can agree with the Dalai Lama not to boycott the Olympics by withdrawing participation of our athletes, as was done for the Olympics in the Soviet Union in 1980 to for its invasion of Afghanistan. That only hurts the athletes. But we can boycott by refusing to attend the games, making them an economic disaster for China. We can also refuse to purchase products made in China. We should publicly call for China to withdraw its troops and people from Tibet and allow it to resume the independence it had enjoyed for millennia. So watch the games on television, but don't go there.

However, I must disagree with the statement by the Dalai Lama that he would have to resign if the violence in Tibet gets out of control. That is only an invitation to the Chinese regime to increase the violence. There is nothing the regime would like better than to have the Dalai Lama resign, because that would open the door to them appointing a replacement, and extinguish the influence he has over events. It is not the protesters who are causing the violence. Initially, they were peaceful. It is the regime that has been causing the violence, and the protesters, if they are violent, are only defending themselves. The last thing that the Dalai Lama should ever do is resign.

But don't neglect all the other human rights abuses being committed by the Chinese regime. The oppression of the Uighurs, Falun Gong, and dissidents of all kinds, deserves more attention by world media than it has received. I urge all readers to learn more about these abuses, and find ways to communicate your concerns to the Chinese regime.

People should also pressure news media and mapmakers to represent properly independent territories like Tibet or Uyghurstan as distinct on their maps and reports. A dateline should be from Lhasa, Tibet, not Lhasa, China. Taiwan should be described as an independent country, no matter what fiction governments might try to maintain about it being part of China. Perhaps it was once, and perhaps it may be again some day, but right now it is an independent country, and the people of the world have no duty to support the fictions of their governments.

We also join in urging people everywhere to wear or display the color orange to signify your protest of oppression of free people in Tibet and elsewhere. See The Orange Ribbon Net.

Mortgage bubble predictable

2008-03-17T11:37:00.000-07:00

As some of my friends can testify, I predicted it. I'm only surprised that so few others did.

Everyone seems to be dancing around the underlying cause of the crisis that threatens to bring another world depression: securitization itself.

There is nothing new about mortgage lenders selling their notes to other investors as a way to raise money to make more loans. Banks and, when they still existed, savings and loan associations, have been doing that for a long time. What has become somewhat new is the bundling of multiple notes into securities that are then traded at prices that have little to do with the value underlying them. That is the classic formula for a bubble, with a history going all the way back to John Law.

This is not a problem confined to the United States. Not only have foreign investors been buying these unsound securities, but lenders in other countries have been feeding the frenzy with mortgage loans to their own countrymen, that they then "securitize" and try to make more money trading in these speculative vehicles than there was ever even the mathematical possibility of making on the interest alone, combined with foreclosing on equities worth more than the principal. Even if every debtor had paid off every note according to its terms, the value just wasn't there. Resetting adjustable rates and the resulting predictable defaults merely triggered a result that was inevitable.

This new variety of securitization, combined with low interest rates from central banks such as the Federal Reserve, encouraged excessive investment in building, which fueled the economic growth we have seen in the last decade, partly as an attempt to overcome the effects of the 2000-2001 tech bubble (which many find it convenient, though incorrect, to blame on the 9/11 attack).

That 2000-2001 tech bubble was itself the result of several causes that are instructive: First, overinvestment in what are essentially business models for marketing beyond what the marketing budgets of all the world's enterprises could support. Second, the failure of venture capitalists to sustain support for the many good companies that might have succeeded if they had not pulled out too soon. And third, the response to the Y2K threat of accelerating the purchase of new equipment, followed by the drop in such purchasing after 2000.

The mortgage bubble was also driven by the pressures on central banks to support their fiat currencies, which are backed only by debt and the ability of national governments to tax their citizens to cover that debt. But debt as a backing for currency only works as long as the economy grows faster than the average prime interest rate, and grows at that rate in each of its major sectors, especially housing and construction. If the rate of growth falters in several or even one critical sector, the house of cards collapses.

It doesn't take a prophet to foresee that growth can't continue forever. Sooner or later, it at least falters for a while. A financial system that is dependent on it never faltering at all is destined to fail.

Is there anything that could have been done to avoid this securitization speculation? At this point it may be too late to avoid a depression, but there are a few things that might help, although they are not likely to be acceptable to investors:

Forbid foreclosure without presenting to a court , if the foreclosure is challenged, the actual, physical, original signed note, and not just an affidavit that one represents the owner and holder of it.
Forbid sale of the note without the written consent of the debtor, not just in the note or deed of trust, but in a specific, separate authorization for the particular sale of that note to a particular investor, who is then required to respond to any litigation on it.
Enable a resident mortgagee to enjoin eviction on the grounds that the mortgagor has breached the terms of the note or deed of trust, and to require him to accept back payments if the breach is cured.
Forbid adjustable rate or balloon notes unless the lender commits to refinancing the note itself, at a rate not more than 2% higher or less than ten years, and with no financing fees.

The above and other measures would go a long way to discouraging the kind of securitization that has created this mess. It should be noted that the first three were once well established in legal practice.

However, regulations to implement such measures are not in the jurisdiction the federal government of the United States. Only the states have constitutional jurisdiction over banking and securities. The Commerce Clause of the U.S. Constitution, as originally understood, confers no such authority on Congress.

Debts from governments are backed by their taxing power, but when banks, including the member banks of the Federal Reserve System, make loans, they are doing so with "money" that is created out of thin air by the central banks, and loaned to them, the loans secured (backed) by the reserves the banks are required to keep, usually as a fraction of their deposit and other accounts (see fractional reserve banking). Those reserves are composed not just of government securities, but also of private debt instruments, including, especially recently, securitized mortgages. Thus, you can see, currency is backed by a mix of public and private debt, and private debt comprises much the greater part.

With persistent government deficit financing and trade imbalances, banks and other financial institutions come under pressure to generate more debt instruments, and, ultimately, less sound ones. This mortgage securitization bubble was not just driven by greed, but by desperation, to cover the overspending of governments, overconsumption of imports by their citizens, and the failure of their citizens to save.

The Federal Reserve/Income Tax system was created to substitute for private savings. The income tax does not fund government. It pays interest on government borrowing, including that which backs its currency. This diverts wealth to investors who invest in economic development, something that would better be done by private investors investing their savings. The net investment is about the same both ways, but the centralized system has the effect of shifting power to a smaller and smaller group of people instead of leaving it dispersed among many. That is a very unhealthy situation, especially when the few screw up, as they have been recently. Dispersed small investors can screw up, too, especially if too many of them follow the same advice or information or use similar strategies, but in principle, if they pursued more diverse strategies, many of the speculative business cycles might be avoided.

Said in passing

2008-03-17T11:28:00.000-07:00

The Latin phrase obitur dictum means "said in passing", and in law is it used to refer to statements in court opinions that are only commentary, and not part of the finding or order. This forum will contain commentary on many subjects, not just those related to the idea of constitution, for which another blog, Constitution, has been created. It is also where I will insert articles related to my campaign activities. For more on constitutional matters see the Constitution Society website.

Spreading Liberty

2007-09-19T19:42:00.000-07:00

Spreading liberty is encouraging learning (called "diffusion" in scientific terms), which depends on the teacher, the student, and on what is to be taught. Both teacher and student have to have a certain talent, and to make a certain effort, and the material has to be teachable for both teacher and student, at a particular time and circumstance.

The subject is discussed under the rubric of "diffusion of innovation". See http://www.constitution.org/col/03317_diffusion.htm .

I sometimes explain the concept by saying that the reason the U.S. lost in Viet Nam is that the idea of republican government had a lower coefficient of diffusion than the competing idea of nationalism. The reason libertarianism is not spreading faster than it does may be partly attributed to our shortcomings as teachers, but also to the higher coefficient of diffusion of the competing idea of statism, at this moment in history. However, as we can see from the candidacy of Ron Paul, a better teacher can, if he teaches the right way, expand the acceptance of libertarian ideas, so the ideas are salable if we do a better selling job. But part of what is happening is that the circumstances that sustain statism are also changing in ways that make people less receptive to it, and the progress of the Paul candidacy, like that of the John Anderson and Ross Perot campaigns before it, show that such circumstances recur and can be exploited to move the cause forward. However, the circumstances can ebb and flow with events, like a wave that we have to be ready to surf. The waves may keep coming, but timing is critical.

The key point of what Jim said is that as the teachers it is the teaching component over which we have control. We can't do much about the students, other than by focusing our efforts on those who are more receptive to our teaching, rather on those who are not ready yet. In terms of diffusion theory, we are the primary adopters, and we have to identify and recruit the secondary adopters, and not waste our scarce resources on the tertiary or quadranary adopters. That is why one-on-one efforts are likely to be more effective than broadcasting.

But the saleability of our ideas is also critical, and somewhat under our control. We need to find ways to express our ideas in ways that will induce people to engage them and make them their own. The key is to express the ideas in clever ways that get the student to invest in the effort to understand the concept.

The obstacle to doing this is the tendency of some advocates to vent their feelings rather than skillfully craft a rhetorical package for the intended audience. Everyone should have or acquire experience in selling some product or service, or teaching in a public school. Those are the kind of training experiences that are needed here. Forget about what you would like the platform to say to sell you, and put yourselves into the position of the people we are trying to reach. To be a good teacher one has to be able to see the subject the way the student does.

Mutual coercion mutually agreed upon

2007-08-21T07:58:00.000-07:00

The social contract is real and almost everyone consents to it, even if one isn't aware of it, by entering or remaining upon the national territory of this country beyond the age of majority. Just as you consent to the rules of the title holder/manager of a piece of real property you step onto, without a formal negotiation of a contract with him, you consent to doing so for the national territory which is the dominion of the people of that country. A "state" is a body of people having exclusive dominion over a well-defined territory. The social contract is not with the government, but with the other members of that society. The social contract precedes government, but provides the basis by which the society can then create a government for themselves, which governs all those who enter or remain on its territory. It is not just about receiving the benefits of being on the territory, other than permission to remain. The only way you can opt out of the social contract is to leave the territory and never return. Never mind that there may be no place else to go. You always have the option of dying.

Now of course there are those who remain who do not comply with the social contract. We call them criminals or perhaps invaders. You can find them in almost any city engaged in warfare over turf and markets in psychotropic substances, or in prisons, or breaking into someone's house or vehicle, or killing or raping someone. They may not comply with the social contract, but we still hold them to a standard of civilized conduct because they did consent to the social contract by being on U.S. territory. It is not a defense for them to claim they can rob or cheat or kill because they didn't consent to the social contract.

To call upon people not to commit acts of aggression is to call upon them to comply with the social contract. That is what the social contract means, if properly understood. See http://www.constitution.org/soclcont.htm