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Timothy McVeigh, Suspects, Visit Strip Club in Weeks Before Bombing

Timothy McVeigh, Suspects, Visit Strip Club in Weeks Before Bombing

Saturday, April 8th, 1995, Timothy McVeigh and two other men paid a visit to a Tulsa strip club called Lady Godiva’s. The three men were reportedly there for several hours, from around 8 or 9 until around midnight. 

The club’s owners were Floyd Radcliffe and his wife, Julie. They had an audio/video security system in the dancer’s prep room and the surveillance system captured a cocktail waitress, Tara, talking to a dancer about her encounter with Timothy McVeigh that very night.

On video, Tara can be overheard telling the dancer all about it:

One of them said, ‘I’m a very smart man.’ I said’ You are?’ and he goes ‘Yes, I am. And on April 19, 1995, you’ll remember me for the rest of your life!’ I said ‘Oh really?’ and he says ‘Yes, you will.’

Owner Floyd Radcliffe, upon discovering the footage, phoned the FBI who showed up a week or two later and confiscated the film. Oklahoma investigative reporter J.D. Cash had begun his investigation of the event before the FBI arrived. Cash made a copy of the security tape before the FBI got it, knowing that once the FBI got their hands on it, it would probably disappear.

Cash provided the tape to Canadian Broadcasting Corporation’s news program ‘The Fifth Estate,’ and together they carried out an investigation, interviewing staff at at the club.

The dancers identified Timothy McVeigh from a photo spread as the tallest of the three men, the one who boasted to the cocktail waitress about April 19th.

One of the other men with McVeigh was identified from a photo spread as Andreas Strassmeir. Strassmeir was described as quiet, but easily identifiable due to his buck teeth and German accent. Owner Julie Radcliffe told journalist Jon Ronson that all “the girls identified Strassmeir. They all did identify that gentleman.”  Strassmeir has denied he was ever at the club, but the witnesses are certain of it: after all, it isn’t every day in Tulsa, Oklahoma that a stripper talks to a man with a German accent. One could say that’s a rarity, and something that might stand out in ones’ memory.

Likewise, the other man with McVeigh was also identified. He was described as the man paying for the drinks that night, flashing a wad of $100 bills and talking a lot to the girls. That man, described as 5’8 – 5’9, 170-180 pounds, muscular, dark hair, brown eyes, tan complexion, in many ways fit the description of the FBI’s ‘John Doe #2’ suspect. One dancer, stage name ‘Cassie’, told Washington Post reporter Peter Carlson that the man looked like the John Doe #2 sketch. Upon seeing the sketch she said “I recognize him; he’s the one who was sitting in a back booth, talking with other girls.” He too was identified out of a photo spread, described by the dancers as “very good looking, but full of himself.” The dancers all picked out a photograph of Michael Brescia, identifying him as the third man, the one who did the most talking.

At the time, Brescia was Andreas Strassmeir’s roommate and a member of a domestic terrorist organization called ‘The Aryan Republican Army’ which had enriched themselves through a spree of 22 midwestern bank robberies from 1994 to 1996–perhaps explaining the unemployed Brescia’s wad of $100 bills.

As of April of 1995, the FBI had not caught on to the group, and none of the members had yet to be arrested for the series of bank robberies that they carried out across the midwest. These robberies were later cited by law enforcement sources in news reports as having possibly financed the April 19th, 1995 Oklahoma City bombing. What’s more, an FBI document unearthed later described the domestic terrorist group, to which Brescia belonged, in interesting terms: the gang was referred to by the FBI as ‘McVeigh and his associates.‘ 

What’s more, Dale Culpepper, the club’s bouncer, remembers spotting a faded older model Ryder truck in the parking lot with its logo painted over. This was before McVeigh had rented the ‘bomb truck’ (on April 17th) but it aligns with other witness sightings who spotted an older, faded yellow truck at Geary Lake between the 10th and the 13th–later that very week–and again at the Dreamland motel on the 14th, 15th, and Easter Sunday the 16th — all before McVeigh rented the larger 20-foot Ryder truck from Elliott’s body shop on Monday the 17th.

Based on numerous witness sightings, it becomes apparent that more than one Ryder truck was used by the bombing’s perpetrators, although what became of the second truck isn’t clear. What is clear, is that people saw it, and it stood out.  Just like the three men at the club stood out that Saturday in April.

J.D. Cash published a piece about this story on September 15th, 1996, and the CBC aired the results of their investigation on the CBC news program ‘The Fifth Estate’ in the fall of 1996. By that time, one of the dancers who had identified McVeigh had been found dead in her apartment. Dancer Shawntelle Farrens was found dead in Tulsa the week Cash had begun his investigation, her death ruled a suicide by accidental or intentional drug overdose. The other dancers and cocktail waitresses, however, had gone on record: the men seen with Timothy McVeigh that night were Andreas Strassmeir, and his roommate, Michael Brescia.

Both men would later become central figures in investigative reporters’ efforts to track down just who McVeigh’s accomplices might have been. This encounter, just over a week before the bombing, fits into that puzzle and may shed light on who at least two of those accomplices were.

In the 25 years since the bombing, Andreas Strassmeir has fled the country, moving back to Germany. He’s denied knowing McVeigh, or having visited the strip club, but those denials stand in stark contrast to the memories of the witnesses at the club that night. The most Strassmeir is willing to admit is that he once met McVeigh at a gun show. As evidence of this encounter, Strassmeir produced Timothy McVeigh’s Desert Storm uniform. He bought it from McVeigh for a few bucks. The uniform still had the name-patch on it: “MCVEIGH” in bold letters across the chest pocket.

So too has Michael Brescia slipped away. He was arrested in 1997 for his role in the Aryan Republican Army bank robberies.  Brescia cooperated with authorities and was given a comparatively light sentence, serving only five years in prison.

The other members of the bank robbery gang, described by the FBI as ‘McVeigh and his associates’ in an internal memorandum, weren’t so lucky.  One man, Richard Guthrie, was found dead in his prison cell the day after telling reporters he was going to write a book about the gang and speak to a grand jury about it’s activities. Another member of the gang, Pete Langan, is serving a life sentence for his role in the robberies.

If anything, the encounter at Lady Godiva’s serves to illustrate a distinct link between Timothy McVeigh and some rather unsavory characters who deserve scrutiny. 

Just what was Timothy McVeigh doing with Michael Brescia and Andreas Strassmeir in April of 1995?

Sources:

* Cash, J.D. “Is A Videotape From A Tulsa Topless Bar The “Smoking Gun” In Oklahoma Bombing?” McCurtain Daily Gazette [Idabel, OK], 25 September 1996. Print.

* Cash, J.D. “Canadians Air Club Film” McCurtain Daily Gazette [Idabel, OK], 23 Oct 1996. Print.

* Ronson, John. “Conspirators.” The Guardian, 4 May 2001. Web. 13 Feb 2013.

* “The Company They Keep.” The Fifth Estate. The Canadian Broadcasting Company. 22 October 1996. Television.

* Carlson, Peter. “The Shadow – Did He Ever Really Exist?” Washington Post Magazine. 23 March 1997. Print.

* Jason Van Vleet. “Terror From Within.” MGA Films, 28 August 2002. Television documentary, VHS.

* Evans-Pritchard, Ambrose. The Secret Life of Bill Clinton: The Unreported Stories. Washington, D.C.: Regnery Publishing, 1997. pp 87-88

Re: Strassmeir and Brescia w/ McVeigh:

“they also picked out Michael Brescia and Andreas Strassmeir from a montage of photos” … “Brescia, they recalled, was very good looking, but full of himself. He was the one paying for the drinks and flashing hundred dollar bills.”

* Ridgeway, James. “Beyond McVeigh: What the Feds Won’t Tell You About Oklahoma City.” The Village Voice, 15 May 2001. Print

* Fritz, Sara and David Savage. “FBI Turns Focus to Unsolved Bank Heists.” LA Times, 28 April 1995. Print.

* “Sister Ties McVeigh to Bank Robbery.” Tucson Citizen, 19 July 1995. Print & Digital.

* “Separatist Admits Role in Robberies.” The Philadelphia Enquirer, 21 May 1997. Print.

* “Ex-Eagle Scout Sentenced in Hate Group Bank Heists.”  The Philadelphia Enquirer, 14 March 1998. Print.

* FBI memo describing the Aryan Republican Army as ‘McVeigh and his associates’: FBI Insert E-4206 04 May 1995

https://www.youtube.com/watch?v=6vnAW_875aA

Week Before The OKC Bombing, 3 Suspects Visited Club

Evil Blossoms Where Conscience Shrinks: The Unforgivable Tragedy of Bush’s Iraq War II

Evil Blossoms Where Conscience Shrinks: The Unforgivable Tragedy of Bush’s Iraq War II

During Iraq War II (2003–2011), in addition to thousands of American soldiers and contractors who died, more than 100,000 Iraq civilians were killed. This number is consistent with independent counts as well as leaked Pentagon data (sources available at Wikipedia). However, more sophisticated studies which combined data sets and methodologies from multiple independent efforts have produced a total estimate of deaths (from 2003-2018) of 1.5-3.4 million people. This does not count the combatants who died fighting against what many consider to have been a foreign invader conducting an illegal occupation (or those fighting in unavoidable civil conflict caused by the invasion).

There’s no question about this war being a massive human tragedy, a catastrophe of choice, a milestone of unholy slaughter in the early history of the 21st century. This slaughter is intimately associated with the leader who started it: George W. Bush. The question remains, how could one man be so evil?

Bush’s guilt can be evaluated by examining his motives. Why did he do it? Did he really believe that WMDs were in Iraq? Did he want to avenge his daddy? There is in fact a clear answer to this question.

The purpose of the Iraq war was to flex American muscle. The neoconservative vision of American hegemony seeks to use American military power to enforce its desired policies abroad. Neocons believe that if the military is never used in pursuit of American policy objectives then it’s a waste of money and a sign of weakness that would invite predators of their ilk from other powers to prey on the so-called free world. In the post-Cold War environment where America had emerged as the world’s sole superpower, Iraq was the ideal opportunity to show the world that America means business. This rationale is cold, cynical and indifferent; neoconservatism is a policy position, possessing a realist morality that washes its hands of any concern for common people.

According to neoconservatism, the harm caused to common people by military intervention is morally unimportant. Neoconservatives believe that people who live in geopolitical problem areas would face moral deprivations from their own bad governments anyway. They believe that it doesn’t matter – really – whether one dies by Saddam Hussein’s secret police, or by an American bomb. To neoconservatives, the world is a better place when America is in charge. With a single rationalization, neocons willfully exclude concern for common people from their policy formulations.

The cynical moral view of Neoconservatism is consistent with Hannah Arendt’s notion of, “The banality of evil.” This phrase comes from a book Arendt wrote about the Jerusalem crimes against humanity trial of Holocaust facilitator Adolf Eichmann, an SS officer who coordinated the logistics of moving populations of Jews into eastern camps. In the book, she points out how average Eichmann was. He did not possess high intelligence and lived his life as a joiner. He was not particularly anti-Semitic, showed no signs of psychopathy and generally got along well with other people. He had carried out his role in the Holocaust purely out of a quiet commitment to his bureaucratic duty in the larger society in which he took part. Arendt calls evil banal because it is, in this case, neither a product of psychopathic or hateful intent nor can the mild-mannered conduct of Eichmann be remotely morally justified. In the end, Arendt claims that Eichmann’s evil is connected to his profound moral stupidity.

Hannah Arendt’s analysis of Eichmann’s moral status provides insight into George W. Bush’s moral guilt.

With perhaps over a million innocents dead because of a policy-driven, unnecessary war, Bush has the status of a moral monster. Yet, Bush’s evil is particularly banal. This kind of evil would not be recognized by its vicious fangs or wicked scowl. It is an evil that is unassuming, bungling even. Preventing this kind of person from having power requires special attention to what makes them so evil.

In 2013, Ron Fournier penned an article in The Atlantic arguing that George W. Bush was a good man. During a 2002 press conference, Mr. Fournier and a colleague stood to mark Bush’s entrance to the room, while other journalists and foreign press remained seated in smug protest. Bush handwrote a note to each man, thanking them for at least honoring the dignity of the office of the Presidency. Bush was known for small gestures of respect, from punctuality, to requiring a simple dress code for the Oval Office. Fournier argues that Bush had a sense of decency, not wanting to interrupt Fournier’s family time for an interview, for example, and also taking time to visit with the families of slain soldiers.

It seems incredible that a man guilty of such crimes against humanity could be perceived as decent. This represents a clue to understanding banal evil. The gestures to which Ron Fournier refer hardly absolve George W. Bush of his status as a possible moral monster, but they do hint at the possibility that Bush has some sort of moral compass. What’s the relationship between Bush’s crimes and that compass? If Bush truly has any sense of decency, how could he have launched the Iraq War? Philosophy can provide an answer.

Stanford University’s philosophy department runs an online encyclopedia of philosophical definitions. One entry discusses the conscience, or moral compass.

Through our individual conscience, we become aware of our deeply held moral principles, we are motivated to act upon them, and we assess our character, our behavior and ultimately our self against those principles.

Conscience involves one’s own self-awareness of one’s deeply held principles. Being aware of some moral principles does not imply that one would be aware of all possible moral principles. Everyone has a unique moral self-identity, a sense of what’s right and good, and a sense of where one stands on the spectrum of good and evil. Conscience is a connective tissue. It relates the moral principles in which one believes, to one’s perception of one’s own identity. Through conscience, one constructs a sense of identity out of chose moral principles. A moral compass serve not only to guide choices, it also is a tool for self-reflection.

Our moral beliefs also contribute to how we perceive others. We judge others based on where we believe they stand on the spectrum of good and evil, and in some cases we use our perception of others to reflect back on our own sense of moral identity.

More recent psychological studies have suggested that people tend to link the identity of others not so much to their memories, as traditionally believed, but to their morals: it is the loss of one’s moral character and moral beliefs, rather than of one’s memory, that leads us to say that a certain individual is not the same person anymore (Strohminger and Nichols 2015). These findings provide empirical support to the idea that conscience is essential to one’s sense of personal identity and to attributions of personal identity.

According to the psychological research discussed above, one’s sense of identity can have less to do with actual actions, and more to do with one’s chosen moral beliefs. If someone could associate their own identity with the identity of others holding a particular moral worldview, then one could calibrate their moral compass to reflect differently on their own life. If you tie your identity to those you morally admire, you can partially absolve yourself of a degree of moral accountability. You concede moral responsibility to a larger group, which also means conceding moral reasoning – including feelings of guilt or accountability – to that group. When confronted with the guilt of your particular actions, you simply defend the tribe’s power, and ignore morality.

In recent years, George W. Bush has taken up painting at a hobby. This past autumn, some of Bush’s paintings were displayed at an exhibit at the Kennedy Center. These painting featured scenes of America’s military veterans, including many wounded warriors. This Portraits of Courage exhibit demonstrates Bush’s quiet obsession with the men and women wounded in wars, many of whom he sent off to fight.

Command Sergeant Major Brian Flom was wounded in the face by a rocket attack in Iraq in 2007.

“‘That was the easy part,’ he said, standing beside a painting in which he appears with fellow military personnel, one of dozens of works on display at the Kennedy Center in Washington, DC.

“‘The challenging part was the TBI [traumatic brain injury] and the post-traumatic stress that accompanied a lot of time spent in a combat zone.’

“Recovery is ‘still going on – it’s an everyday process, right, and some days are better than others.’

“Flom was selected to go on a mountain bike ride with Bush in 2015 and has now met him ‘many times,’ including dinner at the former president’s house.

“Bush ‘decided one day to paint people that he had a connection with and meant something to him, and here I am.’

Bush is spending his retirement connecting to the people who were wounded in wars. This connection is interesting, because it relates to the perceived moral identity of these people. These paintings are a way for Bush to tie his identity to the moral status of veterans.

Bush’s painting hobby began much earlier. Infamous among leaked images of the former president’s early paintings are bizarre self-portraits of the man in the bathtub and shower. The images portrayed are toes sticking up from the water, and also one in which the back of his head is shown, his face barely appearing in a mirror. These paintings show a sense of detachment, unclear identity, and a desire to wash away something unclean.

It’s possible that ‘W’ himself has been facing a small crisis of conscience, and uncertainty about his own moral identity, spurred by a sense of moral guilt. The paintings might have been a therapy, to concretize the feelings. As he developed the hobby, Bush sought to relate to the moral identity of the soldiers he admired. 

By connecting to the moral values of those who sacrificed themselves in war, Bush heals his own guilt. Bush is guilty of crimes against decency, by ordering a war – he is a warmonger. However, wounded veterans have a different perceived moral relationship to war. War provides veterans with honor through valor. Their sacrifices are interpreted as a form of service to the greater society. By connecting to an identity that valorizes war, Bush can reframe the relationship of his own identity to war.

Starting a war made Bush into a monster, so he seeks to heal his conscience by surrounding himself with those his war has made into heroes.

It’s pathetic that a man who held as much power as George W. Bush would attempt to free ride off of the moral status of those his wars has harmed, all to make himself feel a little better about himself. Showing some love to a few veterans couldn’t hardly make up for the pain Bush caused. Yet, all that matters in this case is Bush’s own sense of identity in the context of his own moral values. Evil doesn’t usually take the form of a comic book villain. A person can have a sense of decency, a moral compass, commit acts of compassion, possess empathy, and still be evil. To diagnose Bush’s evil, one has to first examine the history of his moral self-identity.

During the campaign for the 2000 Presidential Election, the Washington Post ran an article exploring Bush’s youth, his past and his values. George W. Bush’s simple and idealistic view of his own father, George Herbert Walker, seems to have been the anchor of his worldview.

Today, of course, Bush has embarked on trying to duplicate his father’s greatest accomplishment – becoming president of the United States. Relationships between fathers and sons are never simple, but the close parallels between their two careers, Bush’s fierce loyalty to his father and his thin skin whenever his father is criticized suggest something particularly complex.

Bush 41 was a paragon of moral rectitude to 43. 43’s sense of right and wrong was entirely received from his father, with very little personal effort devoted to developing his own independent view of the world.

One of the things that Bush often talked about was his family, especially his father. Several of the Bonesmen said Bush described him in ‘almost God-like’ terms.

“‘I can remember one instance of him using his Dad as an example of resilience, saying my father had a great disappointment in not winning the Senate seat, but this is what you do, you bounce back. So you’re down, you just get back up. His attitude was you gave it your best shot. And he used his dad to show this,’ recalled Robert McCallum, now an Atlanta lawyer.”

Even Bush Sr.’s position on war was uncontroversial, simply correct to Jr.

“‘He believed that his father’s position was correct – we’re involved, so we should support the national effort rather than protest it,’ recalled Robert J. Dieter, a Yale roommate for four years who is now a clinical professor of law at the University of Colorado.

George W. Bush was a social creature, but he didn’t seem to be a boundary pusher. His time at Andover private school showed him to be extroverted.

Within months of his arrival, Bush was seen as a campus mover, not on the strength his intellect or his athletic achievements, but by sheer force of personality. Bush was nicknamed ‘Lip’ because he had an opinion on everything – and sometimes a tongue sharper than necessary.”

At Yale, he partied, but not too hard.

“‘George was a fraternity guy, but he wasn’t Belushi in ‘Animal House,’’ recalled Calvin Hill, who was in DKE with Bush and went on to play professional football. ‘He went through that stage in his life with a lot of joy, but I don’t remember George as a chronic drunk. He was a good-time guy. But he wasn’t the guy hugging the commode at the end of the day.’” 

Bush was known to think of others, and act according to an internal sense of dignity.

Like his father, Bush could display good breeding along with his rough Texas edges. Several former classmates recall him going door to door with a sympathy card for a classmate from the West Indies – one of the few blacks on campus – who had lost his mother. Another classmate who hailed from a public school said he was struck by Bush’s efforts to reach out beyond his social circle.”

Bush, a famous Skull and Bones member, was a joiner.

“‘George moved seamlessly among all the different groups,’ recalled Ken Cohen, today a dentist in Georgia. At the same time, Cohen noted, ‘he was a Bush and he had a sense of who he was … his family tradition. He was not a rebel.’”

During the chaotic years of the Vietnam War protests, Bush seemed unphased. His attitude was conventional and maybe even disinterested.

In a recent interview, Bush said he has no recollection of any anti-war activity on campus during his undergraduate years – an extraordinary statement considering that [Reverend] Coffin was by then a leader of the national anti-war movement and was arrested for aiding and abetting draft resistance during Bush’s senior year.

Altogether, the portrait of George W. Bush painted by his history is very clear. He was a relatively simple man, uninterested in the depths of political thought. He respected his father and upheld him as the quintessential example of what respectable thought and behavior looked like, but he himself never deeply considered what that meant. He was a social guy, a clear extrovert, but hardly a remarkable social presence.

Bush was a boring guy. Friendly, social, possessing a mild sense of dignity, but ultimately having a forgettable character. He held a belief that morality and respectability were important, because of his father, but he never deeply examined the question beyond this conviction.

As a regular man, Bush was not a monster, but neither was he a giant. He was kind of a chump, a man who does have a conscience, but one about which nothing special can be said. He took all of his moral cues from his social superiors. Bush is a lot like Adolf Eichmann.

Eichmann was described as a profoundly average man of profoundly average intelligence. His intellectual conception of the world relied on clichés and official bromides. He deferred his moral thinking in all things to the system and his superiors. He had no particular interest in these questions himself and no real ability to generate his own personal insights about them. He was a joiner and liked to belong to groups where others could feed him a sense of identity and meaning. When he noticed his social betters endorsing seemingly evil plans, he consoled himself that as a lesser man this surely absolved him personally of any guilt. Consequently, he hardly had any guilt. Eichmann even bragged about what he did, oversold his own role, valuing notoriety and his sense of belonging — to Nazi social circles which no longer existed. He was able to live in the moral worldview of those he admired, unwilling to exercise any meaningful personal conscientiousness. He believed that conceding moral responsibility to others was a good enough excuse to absolve himself of personal moral accountability.

George W. Bush does possess a sense of guilt, or at least a little regret. He has at least some moral injury and seems to seek to heal it. As a simple person, his paintings and meetings with soldiers seem sufficient as therapy. Bush’s moral worldview permits him to feel guilt, just not in proportion to the great evil he has perpetrated. Bush’s evil lies with the fact that he is a man who is capable of guilt and regret, who is not a psychopath, but who is simultaneously able to remain completely unconcerned or uninterested in the trauma his choices have caused in millions of innocent lives.

Bush’s guilt recalls the fictional Colonel in Apocalypse Now who burned down a village in order to go surfing. Despite the monstrosity of the act, this colonel goes out of his way to provide water and empathetic comfort to a mortally wounded Viet Cong soldier. While the Colonel here is no Eichmann level mental midget, the literary metaphor refers to selective morality driven by contrived moral self-identity. It is an absurdist take on evil, but banal evil is somewhat absurd.

Bush’s evil is not the product of a person with a wicked heart. Rather, like Eichmann, Bush’s evil is a product of his stupidity. As a profoundly average man, a joiner who never questions much and concedes all moral and intellectual accountability to his social superiors, Bush simply allowed evil to happen. He is accountable for this, he is deeply guilty. However, his moral self-identity will never process that guilt. He is capable of understanding that his war has harmed brave soldiers whose lives he values, but because the world of his social and intellectual superiors – his father, the writers at National Review – does not care about Iraqi lives, neither does Bush. Make no mistake, this is profoundly evil, a profound moral lapse. Yet, the cause is Bush’s profoundly average nature. 

Bush is worse than a monster, he is middling.

Altogether, George W. Bush’s conscience stands as a refutation of the Great Man or chieftain theory of national leadership. Conscience is a powerful force within humans. However, conscience is not built to bear the guilt of a nation. Conscience doesn’t process the magnitude of suffering caused by war. There’s a reason why it is said that one death is a tragedy, but one million deaths is a statistic.

Gut instinct, the heart and the individual conscience alone are not sufficient tools to evaluate the propriety of a given war. Humans are not qualified to make moral judgments of this magnitude. It’s making Sophie’s Choice a million times over for people we’ll never know. It is above our pay grade. 

Instead, we humans should seek to avoid war, and pour our wealth and energy into actions which serve as alternatives to war. We should never trust human authority figures to have the moral capacity to make reasonable, good judgments about when to go to war or not.

In my opinion, Eichmann’s banal evil is actually a prototype for all evil. Men like Eichmann and Bush exemplify evil in its purest form. Humans are moral beings, and the concession of moral responsibility to others is the greatest form of surrender of which a human soul is capable. The social superiors who created the monstrous policy in which Bush and Eichmann merely operated — they may be smarter, more psychopathic — nevertheless are guilty of the same banality. They all hold a middling moral self-identity, and their moral world view is held deliberately narrow. 

Cheney, Rumsfeld, Wolfowitz all. They all have a little Bush in them. Joiners, team members. The idea that sweet cool ninja spec-ops teams will solve world social problems is stupidity. The idea that you can start a little war, make some oil bucks in Iraq, then just move on is willful ignorance of the condition of and dynamics affecting other people. Thinking that a mere purple-fingered election will make immediate, deep changes to a centuries-old culture — more stupidity, on its face!

I’d be inclined to think that the truly wicked — the real psychopaths — tend to fit into the world with the rest of us much better than the idiots. They’re usually smart enough to know the limits, to understand that you have to pretend to be good around most people most of the time to get by in life. This type will order quiet assassinations, wipe villages off of maps in ways such that no one would notice. They’re the types that quietly execute the Salvador Option, and for better or worse restore stable conditions without history noticing. They’re evil too, they’re insidious, but their impact is less.

The truly evil who kill millions are always bungling idiots. Bush, the tantrum throwing Hitler types, the self-satisfied Roosevelts of history, joiner Truman, bone-brained Mao — all a bunch of morons, smug Idi Amins, who caused immense damage every time they were allowed to set policy direction in lieu of their subordinates. These subordinates, evil psychopaths like Curtis LeMay, or Reinhard Heydrich, they never started any wars, they didn’t appoint themselves, they didn’t carry out their own orders. Psychopathy limits itself. The stupid idiots, the banal evil, is what gives license to psychopathy.

Hitler was a self-aggrandizing, bungling chump. Eichmann was a midget of a man. Heydrich was evil, but his evil needed Hitler and Eichmann. LeMay bombed 1 million Japanese to death, but he needed Truman and the naïve, ever unrepentant farm-boy pilots on both sides of his psychopathy. Psychopathy is the seed of evil, but stupidity is the fertile ground in which it grows.

In Bush’s mind, he did the best job he could as president of an America which he views as an always good country, which has to fight wars sometimes. In his heart, he regrets that people he respects faced harm. He surrounds himself with people that are in all ways better than him, the soldiers he sacrificed. He feeds off of their valor to heal his moral injury. Yet, there seems to be very little concern in his heart for the true victims of his wars – the hundreds of thousands of dead innocents from foreign lands. Bush is an average man whose conscience is not equipped to conceive of that guilt. He is profoundly evil, because he is stupid.

The only justice Bush will ever face must come from the lessons we learn from him. One lesson stands out. Only idiots start wars. Another is that evil blossoms where conscience shrinks and shirks.

Why Do We Trust Politicians to Run Our Lives?

Why Do We Trust Politicians to Run Our Lives?

I became a journalist because I love to write.

In fact, most people tend to pursue career paths related to things that interest them if they have any choice in the matter. A person who likes to bake might become a baker. A person who likes numbers might become an accountant. A person who loves animals and biology might become a veterinarian.

So, what does a person who likes to control other people do?

Become a politician. read more…

Anarchism and Pandemics

Anarchism and Pandemics

Anarchists face the question: Without nations and states wouldn’t a free society be especially ravaged by pandemics? Who would enforce quarantines without rebuilding a centralized institution of violence?

It’s a fair question.

Anarchism isn’t about a finite goal, but an unending vector pointed towards increasing liberation. We’re not in the habit of “good enough” compromises, we want everything. However it’s always worth talking about prescriptive or aspirational visions to shake out what is and isn’t possible with freedom. “How might we solve this without depending upon the state or relationships of domination?” is always a useful question.

And anarchists should take pause and consider the situation with fearless honesty. While freedom solves many problems very well, there is no law of the universe that it will inherently solve every conceivable problem better than alternatives.

No ideology or society will do everything with perfect efficiency. There is no reason to suspect, for instance, that an anarchistic society would be great at industrialized genocide. It is also possible that there are some legitimate issues that a state would solve quicker than a free society. Organized and centralized violence is a blunt and destructive tool — but there occasionally problems for which blunt and destructive means excel.

As anti-statists it is our assertion that the inherent downsides to the existence of a state vastly outweigh any such positives. These downsides are manifold and many of them are inclined to make a pandemic situation worse.

The nationstate is founded on the twin evils of hierarchy and separation. Nationstates slice up the world’s population into separate prisons and impose hierarchies within them.

  • This division is self-reinforcing and creates inefficiencies. The nationstate system disincentivizes global collaboration, instead encouraging rivalry as power loci see each other as threats. Nations are disinclined to communicate the entire truth quickly to one another, they are also game theoretically incentivized to exploit many situations of relative weakness. Unlike individual humans who have opportunities for reflective and adaptive agency, states are ossified masses built upon the suppression of human agency –an institution inherently dependent upon selfish domination is far less capable of defecting from that strategy and truly selflessly collaborating. While some small privileged nationstates relatively removed from fierce geopolitical pressures as well as some larger nationstates attempting to build soft power may donate some resources to other nations, there are harsh limits to overall collaboration.
  • States must secure the continued existence of their constituent power structures against their own populations. This means lying to their populations and coercing them in ways that prioritizes the maintenance of power over the best interests of the population. These interests partially coincide — a state entirely devoid of population ceases to be — but in no sense do they perfectly overlap. States and their attendant ecosystem of reinforcing power structures frequently have interests that conflict with minimizing the net life lost. Further, even if a state’s long-run survival is entangled with the survival of its population, the desperate psychology of domination bends towards short-term and limited thinking. Rulers are inclined to strategies — thanks to their struggle for power, remove from more rounded experience, and the precarity of the structures they depend upon — that are otherwise out of step with collective survival. And states tend to secure their existence by shaping a broader hierarchical society that pushes this kind of thinking on all scales — eg precarious wage laborers are conditioned into short-term and zero-sum thinking.
  • Since a state has a local monopoly on violence it must also calculate overall solutions and impose them sweepingly without a lot of nuance or attentiveness. To maintain its own existence a state cannot fully decentralize many tasks related to the collecting and processing of information. This leaves states relatively disconnected and sluggish. And because states actively work to suppress internal competition there aren’t robust ecologies of social projects and protocols by which a population can pick up the slack. The state atrophies civil society and constrains or enslaves what organizations are allowed.

To summarize: States are sluggish and hamfisted, their hierarchies inherently create incentive structures where power (whether a politician, ruling party, ruling class, or geopolitical contra other nations) interferes with most efficiently saving the population.

Conversely it’s worth noting freedom is quite good at communication, adaptation, and resiliency — societal virtues of significant value in a pandemic.

  • The mistake that became Twitter aside, Anarchists are good at building communication networks. In the absence of centralized coercive institutions, societies fall back on more decentralized bottom-up means of networking and reporting. Social freedom inherently implies freedom of information, not just through the absence of censors but via emergent network topologies that avoid centralized logjams. And thus different social mores, norms, habits, associations, and protocols are forced to emerge to fluidly handle news, tracking, alerts, etc. This means critical information doesn’t flow through state monitors or media institutions, but eventually becomes much more natively handled in a decentralized and specifics-attentive way that robustly filters out deception. Rather than relying on dishonest states, or tentatively trying to figure things out in their shadow, a truly decentralized society routes critical information more efficiently.
  • Beyond communicating the details of the crisis, anarchists use information instead of violence wherever possible to solve social problems. We don’t brutally imprison dangerous people — we collaborate in watching them and alerting other community members to the risk they pose. This sousveillence is facilitated by information technologies, but it is a continuation of the shame and reputation dynamics that stateless Indigenous societies have long used. “Dave was in contact with someone who tested positive” is a crucial bit of information to relay to the mutual friend who would otherwise have invited him over. Decentralized communication is a matter of granting informed agency to individuals, and it’s also the most natural way to apply social pressures towards net positive ends. Where a purely selfish individual might otherwise defect in everyday prisoners dilemmas, the old lady watching him go out in the pandemic from her kitchen window and shouting down that she knows his mom and friends is far more effective at instilling prosocial, positive-sum results and less brutal than a truncheoned gang of pigs beating random joggers.
  • Our present society is suffering severe epistemic breakdown. The centralized hierarchical institutions imposed upon us that once held a tight monopoly on claims to knowledge and expertise are clearly rotten, but these zombified dinosaurs continue lumbering even as the flesh falls from their bones. A chaos of conspiracies, grifters, and bubbles of delusion have proliferated because robust antibodies and verification systems haven’t had time to grow from the bottom up. But the other half of this is on academia and how it has withdrawn and signed pacts with the existing rulers. When scientific experts aren’t captured servants of power — marginal in number, socially isolated, and subverted by the needs of power — more people begin to listen to them. To be truly free science needs to not just be open in the sense of technically operating in the public domain, it must be accessible, rather than walled off in expensive academic ponzi schemes.
  • Economic, technological, and infrastructural adaptation is relatively quite hard in a divided, hierarchical and centralized society. To serve the need for control much is ossified into rigid forms and traditions, as well as capturing oversight and twisting it towards the interests of those with power. The freer the people the quicker the processes of discovery, invention, and implementation.

There will always be exceptions. What we are talking about is inclinations to behavior. A free society — particularly a young one with insufficiently developed liberatory infrastructure or habits of organization — might seize up unproductively. A state — particularly one relatively insulated by happenstance from the vicissitudes of its power — might act quickly, openly, and largely for the sake of human life.

In the face of COVID-19 there have been a wide array of responses. A rebel network under siege in Chiapas may not be able to rapidly produce their own ventilators. A technocratic quasi client state like South Korea may see institutional alignment with quick and honest mass testing. These are however statistical exceptions to easily trackable general tendencies.

On the whole COVID-19 has been a dark parable of the dysfunction of power structures and the advantages of freedom.

In a free society the experts issuing initial warnings wouldn’t be silenced and suppressed.

In a free society tracking the movement of the infected wouldn’t be left to impossibly disconnected and overwhelmed central authorities.

In a free society the production changes needed to quickly build things like testing kits, ventilators, and respirators wouldn’t be impaired by closed borders, intellectual property law, as well as rigid and centralized production chains, to give just a few examples.

In a free society the research needed to cure diseases wouldn’t be impaired by intellectual property and national secrecy.

In a free society robust bottom-up community safety nets and general economic fluidity would make disruptions easier to weather.

In a free society experts wouldn’t be widely distrusted because they wouldn’t be systematically enslaved under the boot of self-interested authorities.

In a free society where people are used to the responsibility of personal decisionmaking and have grown accustomed to evaluating risks, experts wouldn’t feel the need to transparently lie about things like masks “for the greater good” — nor would people be barred from participating in trials and experimentation.

In a free society enforcement of social distancing wouldn’t be arbitrarily and brutally handled by state planners and police, but instead use social pressure via shame and reputation.

Freedom of association isn’t just a matter of the fluidity and breadth of our connections, it means having agency in who we associate with, it means taking responsibility, rather than having those hard choices taken from us.

Reactionaries like Ben Shapiro think that borders are magic blankets that protect from everything. In response to COVID-19 Shapiro wrote “if we had no countries, we’d all be dead today or in the very near future. Every major country has shut its borders.” Similar absurd proclamations are without end in reactionary circles. The state, the nation, are seen as comforting simplicities that inherently wipe away all complexity and danger. If only we had stronger states/borders there’d be no bad things to fear.

Much could be written about this psychology of mewling bootlicking, but I want to focus on the broad notion that borders protect us from pandemics.

It’s worth emphasizing from the start that strong borders are a relatively recent invention. No state in history has had non-pourus borders. Even massive constructions like Hadrian’s Wall and the Great Walls of China were geared towards impeding armies, not absolutely stopping the movement of individuals. While walls are used by states to better enslave their own captive populations, no political border in history has prevented the eventual transmission of pandemics. Absolutist “strong borders” like the USSR tried in vain to completely erect are a science fiction concept, an abstract aspiration — at least as much as anarchist prescriptions. People and materials always slip through. (And we’ll always help them.)

Borders at best buy a given nation a little longer to watch a pandemic overwhelm their neighbors before it overwhelms them. With new surveillance and militarization technologies it may well be possible to establish “strong borders” capable of entirely and permanently sealing out a pandemic (that’s not air or water borne), but the costs are immense authoritarianism as well as the societal suffering and dysfunction that comes from such. Borders infringe upon freedom to untold degrees and inflict catastrophic social dysfunction.

One might protest “isn’t the whole point supposed to be slowing the spread of the virus?” But productive slowing isn’t measured in relation to the solar rotations, but in relation to the creation of infrastructure, treatments, and cures. It does you no good to slow the arrival of a plague a few months if you don’t get anywhere developing and deploying what you need in that time.

The critical processes are scientific and economic, and anything that slows them effectively speeds up the transmission rate. Nothing else matters besides the race between those processes.

Borders impede both economic and scientific processes.

A large nation like the US has a large border — and thus a particularly porous border that is very expensive to seal. But in the other direction — as you approach the fascist dream of a patchwork of micronations — you have less economic and scientific capacity on your own. In particular sealing a small nation’s borders means curtailing the very same trade necessary for a flourishing and dynamic economy.

Self-sufficiency, internally closed supply chains, localized production, etc, do have benefits for resiliency, but they have serious consequences for efficiency. On the far end of this, if we follow certain contemporary fascists’ suggestions and retreat to closed ethnotribes of around 150 people, not only is that tribe not going to have full hospital facilities when a pandemic eventually strikes — it’s not going to have hospital facilities at all, for anything. Such inefficiencies end up killing a hell of a lot more in the long run than a pandemic.

There’s an inherent tradeoff here: the more trade a nation tolerates the faster it’s possible to mobilize and coordinate rapid production of the equipment, facilities, materials, etc necessary to save lives. But also the faster it will be infected. And once a nation gets breached by infection the growth rate internally is going to be the same global growth rate we’d otherwise see.

The wider our networks of collaboration the more shock absorbent we have overall AND the greater resources we can muster AND the faster we can do it.

The other thing to note is that borders actually provide very minimal and arbitrary prunings of the social graph that don’t necessarily line up with what would actually be needed in a given situation to curtail a pandemic.

The connectivity you want severed in a pandemic is not clumsy aggregate clusters but personal interactions. This is where tracing points of contact, carriers, etc, becomes vitally important. Setting up military roadblocks around a city — while cinematic — isn’t anywhere near as useful as getting everyone inside that city to temporarily limit their interactions and tracing vectors. Borders-style approaches create arbitrary and capricious kill zones, guaranteeing that regional resources will be overwhelmed, not an efficient reduction of harm.

The reality is that no pandemic in history has looked like zombie films and yet conservatives rush to the comforting reactionary simplicity of the zombie premise. Pandemics are complicated messy things that take expertise and collaboration; nationalism and war promise simple straightforward conflicts with straightforward prescriptions. This is why such infest our media narratives. We like clean, reassuring stories filled with quick “commonsense” fixes. It’s easier to imagine a pandemic in war terms with familiar, conventional war solutions.

This is not to say that violence is never justified. Violence may in fact be justified to save net lives in a pandemic. For example using force to stop likely carriers from irresponsibly entering dense populations makes sense, especially early on when containment is still plausible. Many people are not, by default, altruistic. And the mere abolition of nations and states would not be the victory of anarchism. A significant percentage of the population are selfish pricks, pickled in the zero-sum perspective of power. In a pandemic one asshole can kill thousands. Violence can clearly be justified to curtail such actions. But when and if such situations arise in a free society it is unlikely to look anything like the violence of the state.

Reactionaries facilitate slaughter and then present their own slaughter as the only safety. And people who are afraid, who are made precarious, start longing for stability and simplicity at any price.

As with so many things, so it is with pandemics: the state creates problems and then, having demolished or forbidden all other solutions, embraces the few things it actually is good at. The state breaks your legs and then offers you shoddy crutches. It impoverishes you and then provides foodstamps. But that doesn’t necessarily mean you should reject foodstamps. A prisoner’s first obligation is to escape, and sometimes that means accepting the warden’s poisoned meals. There may be pandemic situations while the state still reigns where brutal quarantines are the lesser evil, even while we must acknowledge the longterm poison they represent.

Benjamin Tucker said it a century ago, “The State is said by some to be a ‘necessary evil’; it must be made unnecessary.”

Fighting to save lives inevitably obliges fighting to destroy the state, and we must be mindful that we don’t make that longterm task harder. But strategy is complex, triage is complex. There are no simple pat answers, the state is always our enemy, but it is not always our worst enemy. We mustn’t lose sight of how it created and worsened this situation, but that doesn’t mean always prioritizing resisting it rather than a virus.

Reactionaries isolate into prisons and fixed traditions. Anarchists build connections and possibility. They have the benefit of one path, we have the burden of having to evaluate many.

That’s why so many of them didn’t see this coming. And it’s why they won’t see us coming.

Reprinted from the Center for a Stateless Society.

How the CARES Act Will Delay Economic Recovery

How the CARES Act Will Delay Economic Recovery

The economic fallout of the government’s shutdown in response to the coronavirus pandemic has been unprecedented.

Nearly ten million people have filed for unemployment benefits in just two weeks. The 6.6 million claims from the last week of March doubled the previous week, and both weeks smashed the previous one-week record of 700,000 claims in 1982.

To mitigate the damage of this mass level of unemployment, the federal “stimulus” bill, called the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), includes two key provisions that will serve to prolong the negative economic impact of the shutdown: bailouts to big businesses and the $600 a week in unemployment benefits in addition to state level benefits for eligible recipients.

The bailout payments to big businesses, like the airlines, not only rewards risky behavior but will just delay the inevitable restructuring that will need to take place.

For instance, American Airlines and Boeing, rather than building up cash reserves during the past ten years of flush economic times, instead leveraged low-interest rates (courtesy of mad Fed money printing) to engage in billions of dollars worth of stock buybacks to benefit from the stock market bubble. Now, rather than selling their stocks to raise liquidity as the prices tumble, they will rely again on a taxpayer-funded bailout.  

Furthermore, the bailouts will largely just enable big businesses to stay afloat during the remainder of the shutdown, delaying layoffs that will likely be necessary as the travel industry will be slow to recover due to a public remaining uncertain about the health risks of travel. 

So at a time when the economy is attempting to “re-open,” the businesses that had been propped up during the shutdown will need to engage in another round of layoffs, prolonging any recovery efforts. 

Also damaging to the labor market as the economy attempts to re-start will be the enhanced unemployment benefits. 

 “The $600 weekly unemployment compensation boost included in the CARES Act will provide valuable support to American workers and their families during this challenging time,” said Secretary of Labor Eugene Scalia.

Indeed, the financial support will be critical for those laid off through no fault of their own.

Such benefits, however, will significantly hamper any effort to “re-open” the economy once the pandemic fears erode, and may prove to be very difficult to eliminate.

A cursory look at the data shows that many of those out of work will be getting paid more not to work than they did to work.

Examining Bureau of Labor Statistics data, this article in The Street found “the median income for a full-time wage or salary worker on a weekly basis was $936. For a 40-hour work week, this translates to a yearly income of approximately $48,672.”

Comparatively, a 2019 USA Today article evaluating 2018 state unemployment benefits data reported the average national weekly unemployment payout of $347 a week. Add to this the $600 a week from the CARES act, and that comes to $947 per week, or $49,244 on an annualized basis.

In other words, the average unemployed person receiving benefits due to the coronavirus shutdown would be receiving more income than the national median income from working. Granted, these figures are broad aggregates, but still illustrate the point that many will be receiving more income being unemployed than they would if they chose to return to work.

The federal supplements are currently scheduled to last four months – roughly to the end of July.

Now imagine, using an optimistic scenario, most of the nation begins to wind down their economic shutdowns by mid-May or early June, meaning many workers would still have four to six weeks of eligibility to receive the generous unemployment benefits.

Of those businesses seeking to re-hire workers to help ramp up production and services to customers, many will find it difficult to do so. Unemployed workers who can receive more income staying at home instead of returning to work will choose to stay at home as long as the unemployment checks continue to roll in. Most states have waived the requirement to be seeking work to receive unemployment benefits, so there would be no pressure to do so. 

Returning to work for many would make them financially worse off. Some employers would also offer benefits like health insurance, but many jobs in the hospitality industry – where the majority of jobs have been lost – do not. While many would be eager to return to work to regain a sense of purpose, many others would make the economically-rational choice to continue receiving the higher level of income while avoiding the disutility of work. 

And this effect would reach beyond more than just those that could receive more income staying at home. For some, even the opportunity to earn more money working rather than remaining unemployed would not be deemed to be worth it, once we take the marginal benefits and costs into consideration.

Say someone receiving $947 per week in unemployment benefits has an opportunity to return to a job paying $1,000 a week. Obvious choice, right?

Maybe not.

The choice isn’t simply between receiving $947 a week versus $1,000 a week, but also working 40 hours a week versus zero hours. On the margin, this person would be receiving $53 more a week, but having to work 40 hours to earn that marginal benefit. On the margin, returning to work would yield this person about $1.33 per hour. Many would find this unappealing.

The federal government’s paying out of these additional benefits will surely provide a much-needed financial lifeline to millions forced out of work. But it’s also important to acknowledge how they will make it far more difficult to get the economy going again. Many businesses will find it difficult to once again staff their operations while the benefits continue. 

The notion of generous unemployment benefits discouraging work is not some right-wing, or free market ideological talking point. Even the New York Times resident left-wing economist Paul Krugman acknowledges that extended unemployment benefits will likewise extend higher levels of unemployment. In his 2010 economics textbook, Krugman stated “Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect.” He explains that granting more generous benefits “reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of ‘Eurosclerosis,’ the persistent high unemployment that affects a number of European countries.”

Moreover, these benefits will likely prove to be very politically difficult to end. Indeed, before the first checks have even been cut, Nancy Pelosi has been promoting the idea of extending the benefits through September. 

Imagine if unemployment remains high, perhaps in or near double digits, and Congress finds itself debating whether or not to cut millions of out of work American off from these federal benefits just two months before a national election.

Any guesses how that turns out?

The government has shut down the economy, forcing millions out of work. It’s understandable for them to also take measures to cushion the financial blow dealt to those made unemployed because of their decision.

What’s also important is to understand that these actions will most likely prolong any desired “re-start” of the economy, and these supposedly temporary unemployment benefits will prove to be very difficult to eliminate in an election year. 

Crisis Exposes Devastating Consequences of Fed Policy: Americans Have No Savings

Crisis Exposes Devastating Consequences of Fed Policy: Americans Have No Savings

Two weeks ago, during a March 17 address to the nation in response to the COVID-19 outbreak, President Donald Trump asked that Americans work from home, postpone unnecessary travel, and limit social gatherings to no more than 10 people.

And last week, on March 27, Trump signed a stimulus package of over $2 trillion dollars to provide relief to an economy on the precipice of collapse.

The aid package includes handouts and loans to individuals, small businesses, and other distressed industries.

Despite Trump’s “having created the greatest Economy in the history of our Country,” when the markets tanked, massive and immediate government intervention was the only thing left to forestall a total collapse.

So why can’t greatest economy in the world can’t handle a temporary shock without needing trillions of dollars injected to stay afloat?

The Federal Reserve and its vicious and ongoing war on savers are to blame.

Using the Federal Reserve Note – commonly (but incorrectly) referred to as the dollar – introduces a dilemma. Because of inflationary monetary policy, Americans have long been forced to select among three undesirable options:

  1. A) Save. Hold Federal Reserve Notes and be guaranteed to lose at least 2% in purchasing power every single year.
  2. B) Consume. Spend Federal Reserve Notes on immediate goods and services to get the most out of current purchasing power.
  3. C) Speculate. Try to beat the Fed’s deliberate inflation, seeking a higher return by investing in complicated and unstable asset markets.

With businesses and Americans defaulting on their rent and other obligations only days into the collapse, the problem is clear: Few have any savings… and why should they when saving their money at negative real rates of return has been a sucker’s game?

Lack of sound money, or money that doesn’t maintain its purchasing power over time, has discouraged savings while encouraging debt-financed consumption.

American businesses and individuals are so over-leveraged that once their income goes away, even briefly, they are too often left with nothing.

Fiat money is especially pernicious in the way it harms its users. To some, small 2% losses can go easily unnoticed, year to year. Over 100 years, the loss has been well over 97%.

And who can save for emergencies when you’re being forced to work and spend more – simply to maintain the same quality of life?

Over 100 years, the Federal Reserve has destroyed more than 97% of our currency’s purchasing power.

With the Fed slashing short-term rates to zero, the US Federal Reserve Note has been further destroyed as a method of preserving savings. (And negative nominal interest rates could be coming next.)

Inflationary economic policy, absent the guardrails of sound money, has created a situation with an obvious and deadly conclusion: that many Americans lack savings to protect themselves against downturns.

This situation isn’t necessarily the fault of the people, but rather the fault of a system in which discouraging and punishing savers is a crucial tenet of the entire framework.

The Federal Reserve, the U.S. Treasury, and the White House are trying to reassure the public that everything is “under control,” that “the U.S. economy’s fundamentals are still strong,” and that the economy will skyrocket once COVID-19 is taken care of. What if they’re wrong?

Maybe the greatest monetary experiment in history is coming to an end. Maybe sound money can still save the day, but we must not waste any more time in restoring it.

Airline Bailouts Destabilize the Economy and Inflate Asset Prices

Airline Bailouts Destabilize the Economy and Inflate Asset Prices

In the end, after all of the political posturing and all of the speeches and exhortations for Congress to “do something,” a $2 trillion “coronavirus stimulus” bill landed on the president’s desk for The Donald to sign. And sign he did, uttering all of the platitudes and everything else that comes with “historic” spending legislation that never should have seen the light of day. Although COVID-19 has helped expose vast weaknesses in public health systems in the USA, it also has shown that with much of corporate America, the emperor has no clothes.

Although tracking where the money goes is not an easy thing, we do know that the airlines will receive about $50 billion in cash and loans, while Boeing will receive a share of $17 billion earmarked for industries favored by Congress. Another $500 billion will go to cruise lines, hotels, and other firms that have lost business because of travel restrictions and the economic shutdowns.

Politicians of both parties heaped praise upon themselves for their “bipartisan” efforts, which in real life only can mean that Congress cleaned out what was left of the IOUs in the till. Rep. Thomas Massie, a Republican from Kentucky, drew attacks from all sides as he tried to force a roll call vote (as opposed to the voice vote that the members wanted) and announced his opposition to the bailout. President Trump called for his expulsion from the Republican Party while Democrats declared him to be an unsavory ideologue.

There is not much to do but to wait for the results, and they will unfold over time. However, much of this bill’s harm is invisible, the way that termites quietly but surely destroy a house when homeowners fail to detect them. The politicians and the pundits, along with corporate executives, are hailing this infusion of public funds to business as a lifeline to the economic system itself, when, in reality, it will weaken these firms in the long run.

This commentary deals mostly with the airlines, but what we say here applies to any firm receiving rescue funds and loan guarantees. While some of these essentially bankrupt firms gain some relief as taxpayers and consumers pony up to pay the companies’ bills, the temporary cash infusion allows them to kick the financial can down the road and not deal with the underlying problems that they are facing, at least for now.

In a recent New York Times op-ed piece, Tim Wu of Columbia University asks the following: “Are taxpayers rewarding a decade of bad behavior?” If he is asking specifically about US airline firms, the answer is a resounding yes. Wu notes that in recent years the airlines have been very profitable but that instead of building defenses against possible downturns that are not easily predicted (such as the coronavirus crisis), they have used much of their profitability to buy back their own stock.

Obviously, stock buybacks are controversial, and as long as stock prices rise, company officials look like financial geniuses. However, if the markets crash or if bears loom on the horizon, all of that value vanishes very quickly and the companies are left in worse shape than when they began. As a financial strategy, stock buybacks are inherently risky and tie up cash that could go toward capital development or even the “rainy day” fund for the inevitable market downturn. Writes Wu:

During the past decade, flush with cash, most of the companies in line to get taxpayer money did not prepare for a downturn. Instead, they spent enormous sums on stock buybacks, which reward shareholders and increase executive pay. For example, the airline industry, which is prone to booms and busts, collectively spent more than $45 billion on stock buybacks over the past eight years. As recently as March 3 of this year, with the crisis already beginning, the Hilton hotel chain put $2 billion into a stock buyback.

Such behavior is especially galling given that the airlines received a major bailout in the immediate wake of the 2001 September 11 attacks that severely damaged that industry. Likewise, Congress spread out the rescue money in 2008 and 2009 to deal with the infamous housing bubble that the government and the Federal Reserve System created. Yet here are the Usual Suspects once again gathering around Washington, collective hats in hand.

Airlines this time are promising (or at least say they are promising) not to use the newest amount of rescue money to engage in stock buybacks, but that hardly is reassuring. There is a larger problem, and it is not limited just to overvaluing their stock or their inability to learn any lessons from past disasters.

The greater problem of which we speak the Federal Reserve’s ongoing policy of pumping up the system the way that nineteenth-century cattle ranchers would “water” their herds shortly before sales by feeding them salt. The overly thirsty cattle would drink more water than usual, and when they would be weighed during a sale, would seem heavier—and fatter—than they really were.

While Fed pumping (and simultaneous suppression of interest rates) inflates the value of stock—providing a façade of an economy performing better than it really is—it also inflates the capital assets of companies, and airlines are no exception. Because of past bailouts, glorified money printing by the Fed, and corporate practices such as stock buybacks, the nominal values of these firms are substantially higher than they would be in a more free market.

It is not difficult to see the vast network of market misrepresentations that has come with these policies. Wu notes:

The past decade was also an “easy money” decade, thanks to federal monetary policy that favored liquidity and low interest rates. Many of the firms now asking for bailouts took advantage of low interest rates to borrow heavily. For their part, many creditors lent money at rates that did not fully reflect the risks to these industries. The debt loads have created their own fragilities during the economic downturn.

In other words, one set of policies to get around natural market constraints has led to one distortion after another. We now are at the point where airlines—and the banks that have been underwriting them—are hooked on cheap money, inflated stock prices, and overvalued capital assets. If Congress, Trump, and the Fed actually were to step back and let market forces work, the short-term results would be devastating—to current airline management. Yes, the airlines would be bankrupt, but in real terms, they have been bankrupt for a long time and the COVID-19 crisis now has exposed this industry for the financial fraud that it has been.

Given that the various players previously mentioned have decided to keep the fraudulence afloat, what does that mean for the future of the airline industry? One cannot necessarily predict future events and when they will happen, but one can say with utmost certainty that the airlines soon enough will bring a new generation of management to Washington bearing the same tin cups that their forebears carried.

There is no doubt that airlines, along with Boeing and almost certainly Airbus, will find themselves in a future crisis that keeps them at least partially grounded. It could be another pandemic, a terrorist attack, or just awful political leadership, but one can be sure that something will occur to significantly reduce airline ridership. Reduced ridership means reduced funds, and a similar scenario to what we see currently playing out is sure to follow. At some point, however, the financial damage will be so great that not even the Fed will be able to “water” airline stock anymore and the cold water of massive bankruptcies will follow, imperiling the entire financial system.

These bailouts don’t just reward irresponsible business behavior, but they also impose restrictions that will create future problems. Airline firms receiving federal funding are not permitted to cut worker pay or lay off workers until at least September 30, which means that the aid is a glorified welfare check to labor unions representing airline workers. (The bailout rules also forbid stock buybacks and freeze executive pay at 2019 levels.) Bloated union contracts also are part of the problem with airline financial policies, so, in the end, Congress and Trump have managed to reward most, if not all, of the bad actors in this sorry saga.

What is done is done, but at least we can take a look at what would have happened had Congress just said no to the airlines this time. Unlike the current situation, in which we will see the “good” effects first and the “bad” effects down the road, a “solve your own problems” approach to the airlines would result in immediate layoffs, bankruptcies, and at least some airlines would completely go out of business.

Although most politicians and airline executives want us to believe that airlines are an “essential” industry that is the equivalent of the “thin blue line” between prosperity and a depressed economy, the markets see things differently. First, and most important, with the current situation there is no way that airlines can meet their loan payments, issue stock dividends, or even pay all of their employees at current rates (including their executives). Faced with that situation, the healthier companies would most likely come to terms with their creditors and restructure their finances.

The unlucky firms, however, would go into Chapter 7 bankruptcy, with all assets sold to pay off their creditors. That means massive layoffs, fewer flights—and realistic valuation of their assets. If the economic need for airlines really were as great as airline executives and political pundits claim, then whoever has purchased those assets at bargain prices would be able to put them to use in no time. The industry will have had its necessary cold-water bath, and asset values, along with prices of airline tickets, would settle at true market values, not the bloated numbers that pollute current airline balance sheets.

Because the “bad effects” of allowing airlines to go under would result at first in massive layoffs, bankruptcies, and fewer passengers in the air, the media and political classes would be condemning those who voted down the federal largess. “Bad effects,” not surprisingly, are quite visible and the plight of the newly unemployed and of stranded travelers plays well on the news.

The “good effects,” however, are less visible. By the time airline assets were sold at bankruptcy auctions and new companies hit the airport runways with market-priced capital and market-paid employees, the media would be on another crusade and the resurrection of airlines would not receive the coverage it deserved.

By shoveling out cash to the airlines and more promises to the banks whose unsteady solvency always lurks in the background, Congress and Trump have perpetrated a financial fraud greater than much of the mess we saw on Wall Street more than a decade ago. Yes, they will receive praise in the media and votes from those grateful to have taxpayers pay their wages and salaries, but they have solved no problems and have created a generation of new ones. Almost surely we will be covering the next crisis on these pages.

Reprinted from The Mises Institute.

Judicial Engagement & National Emergencies

Judicial Engagement & National Emergencies

A Curious Quote & A Historical Lesson

“We repeat what was stated in Block v. Hirsh, as to the respect due to a declaration of this kind [an emergency] by the Legislature so far as it relates to present facts. But even as to them a Court is not at liberty to shut its eyes to an obvious mistake, when the validity of the law depends upon the truth of what is declared.”

Can you guess which judge made this statement against blind judicial deference to a Congressional determination of an emergency? You are probably thinking Justice Peckham or one of the Four Horsemen, right? Nope! It was none other than the infamous, and in some corners famous, Oliver Wendell Holmes.

This quote comes from a 1924 case in which the Court rejected a rent control law originally passed in 1919. This was the second time in three years the Court addressed a version of this law. The first time, in 1921, Justice Holmes, writing for a 5-4 Court, upheld the rent control law because it was a temporary measure intended to address the housing shortage in Washington D.C. after World War I.

In that 1921 case, Holmes reasoned that the Constitution’s restrictions were loosened during an emergency situation. But in the 1924 case he explained that once the emergency ended, the restrictions snapped back into place. Thus, a law that otherwise violates the Due Process Clause and the Takings Clause of the Fifth Amendment can be upheld during a temporary emergency but not once the emergency ends. Moreover, and surprisingly coming from Justice Holmes, the Court held that there was a role for the judiciary in determining whether an emergency still existed. That is, legislative assertions that go against the facts will not be granted broad, irrefutable deference.

The dissenters in the 1921 case, including Justices Van Devanter and McReynolds, argued that the Constitution’s limitations and restrictions always apply. Even during wars or national emergencies. In other words, the Constitution is absolute.

This dissent is correct both as an originalist matter and a theoretical matter. But as a practical matter, judges rarely argue that the restrictions in the Constitution are absolute. History shows that judges are willing to read a little bend into the Constitution during a true national emergency. However, it is also the case that they are willing to call the government on extending the “emergency” once it is obviously over.

Coronavirus and the Judiciary

An emergency is currently imperiling both the country and the entire world. The pandemic caused by the novel coronavirus has effectively brought most of the world to a stand-still. Sports organizations have cancelled their own seasons, even the 2020 Summer Olympics were postponed, and entire countries have been put on lockdown. Such drastic action by both private actors and government entities is unparalleled in recent memory.

But some people in the United States are clamoring for the federal government, and the President, to adopt even more drastic measure. People are not only demanding action to help stop the spread of the virus, but also that the federal government remedy the societal harms caused by the pandemic.

The main economic harm caused by COVID-19 is rampant and unprecedented unemployment. This level of unemployment means that many individuals, and many corporations for that matter, will be unable to pay their bills, including rent. This has led to pleas for pauses on evictions, and some cities and states have enacted such policies.

Both federal and state governments have enacted many other measures to limit the economic harms. This includes the passage of a 2.2 trillion-dollar stimulus package with direct payments to Americans. The longer this emergency has persisted the more restrictive the actions state governments take. Many have issued stay at home orders and required the shuttering of non-essential business—which has led to debates over whether gun stores or places of worship are “essential.”

There is also a large vocal crowd of people calling on the federal government to issue a national stay at home order. Most constitutional scholars believe such an order is beyond the powers of the federal government. But that has not stopped the calls for such a move. Further, even if the government did issue such an order, would there be courts that stand against it? Looking at history, I doubt it.

The Switch in Time

Now you may be wondering whether courts look at emergency situations differently. That is, whether courts generally hold that constitutional restrictions loosen when the government confronts an emergency—as Justice Holmes did.

Maybe implicitly. But the Supreme Court in A.L.A. Schechter Poultry Company rejected that idea. The Court argued that the 10th Amendment decisively counters the assertion that the federal government has greater authority during a time of emergency. Moreover, the fact that the Constitution specifically allows for the restriction of some rights (like habeas corpus) proves that there is no implied “emergency constitution.” That is, a constitution with lessened restrictions during an emergency.

The Constitution creates a government of enumerated powers against a backdrop of rights and powers reserved by the people and the states. The drafters of the Constitution had recently won a war and the country under the Articles of Confederation was enduring many hardships. But they did not write a release valve into the Constitution that allows the federal government to expand its power in an emergency.

And even if such inherent power is in the Constitution, such a grant would belong to Congress, not to the Executive Branch. But currently, in emergency situations it is the Executive Branch which takes the most drastic actions.

So, while the Court’s opinion in A.L.A. in 1935 was likely correct, it opened the door for much greater deference as a whole due to the later “switch in time that saved nine.” When the Court shifted and began upholding F.D.R’s New Deal programs it did so not based on a doctrine of emergency powers or the theory that the Constitution’s restrictions loosened during an emergency. Instead it simply held that the Constitution allowed for a more powerful federal government in general.

Thus, there was a theory that the Constitution’s restrictions on the federal government waned in times of emergency. The Court rightly rejected that theory, and then the Court changed course and held that the Constitution was not as restrictive as thought.

Whatever its merits, as a practical matter it is interesting to note that we might be better off if the Court had stayed with its smaller incorrect decision that the Constitution’s restrictions loosened during an emergency because some New Deal programs could have approved under that doctrine rather than being approved through a reworked understanding of federal power.

Going Forward:

As IJ’s President and General Counsel Scott Bullock recently stated in response to the DOJ’s request for Congress to suspend the right of habeas corpus: “History demonstrates again and again that governments use a crisis to expand power and violate vital constitutional principles. And when the supposed emergency is over, the expanded powers often become permanent.”

Because of this, the judiciary should be extra vigilant after the emergency ends. The courts have often engaged in blind deference to the “political” branches in many categories of cases since the New Deal Era, especially when it comes to economic and property rights. But the tide is beginning to turn, especially in state courts. This is important because many of the restrictions currently being contemplated deal with economic liberty and property rights. But courts should see this as a special circumstance requiring extra attention because government tends not to act like George Washington (or Cincinnatus) and voluntarily lay down power heaped upon them in an emergency.

Because governments rarely follow the path laid down by these two legendary men, courts should be extra vigilant and ensure that constitutionally dubious actions taken because of a national emergency are not carried forward once the emergency has ended. Moreover, and shocking as it may be for an IJ attorney to say, judges should take a cue from Justice Holmes and see a role for the judiciary in determining whether an emergency is still ongoing—though they shouldn’t look to Holmes for much else.

Reprinted from The Institute for Justice

How Z-pak Could Slay COVID-19

How Z-pak Could Slay COVID-19

Z-Pak, also known as azithromycin or Zithromax, could be a critical tool in preventing and treating COVID-19 coronavirus, according to Professor Michael P. Lisanti, MD-PhD and Chair of Translational Medicine at Salford University in the UK. I recently spoke with Professor Lisanti to unpack his hypothesis and call for immediate clinical trials of Z-pak and other extremely inexpensive, generic antibiotics for COVID-19 patients. 

Watch my detailed interview with Dr. Michael Lisanti on antibiotics for COVID-19 and cancer here:

Individuals may have heard of Professor Lisanti’s work as it relates to groundbreaking experiments targeting cancer stem cells and senescent cells—chronic disease-related cells created by aging. With over 90,000 citations and over 563 published papers, Professor Lisanti is one of the world’s most cited researchers—dead or alive—according to Google Scholar.

New drugs cost a billion dollars and 10-15 years to make it through the FDA approval process. This regulatory hurdle precludes natural substances that cannot be patented from being properly researched and tested for illnesses because companies cannot afford the cost to prove the efficacy of something that any organization would be able to sell afterwards. This top-down monopoly approach to medicine can leave the world on its heels—not enough clinical trials on natural substances and patent-dependent, new FDA-d drugs and vaccines years away—during a pandemic like the one we are in now.

Professor Lisanti has specialized in identifying FDA-approved generic antibiotics like Z-pak and doxycycline that are extremely effective in killing senescent cells at the heart of aging-related diseases. 

As the world is painfully aware, COVID-19 coronavirus is particularly dangerous for the elderly or those with aging-related senescent illnesses like diabetes, cancer, heart disease, and lung disease. As Professor Lisanti said in a statement on his new paper in the journal Aging, “If you look at the host receptors of COVID-19, they are related to senescence. Two proteins have been proposed to be the cellular receptors of COVID-19: one is CD26 – a marker of senescence, and the other, ACE-2, is also associated with senescence. So, older people would be predicted to be more susceptible to COVID-19, exactly as is observed clinically in patients. This could increase their probability of infection, and would explain the increased fatality of COVID-19 infection in older patients. All of this could be related to advanced chronological age and senescent cells.”

Lisanti’s laboratory has previously demonstrated that Z-pak selectively removes 97% of senescent cells. Without those cells acting as host receptors, it may be harder for COVID-19 to take root in the body and cause serious damage. 

Lisanti’s lab goes on, “Clinically, it appears what is leading to fatalities in older [COVID-19] patients is the very strong inflammatory reaction and the resulting fibrosis. Azithromycin inhibits inflammation-induced fibrosis, by targeting and removing senescent cells. The cost would be minimal, as the drug is off-patent, widely available and considered safe.”

Z-pak has made headlines after doctors around the world such as the widely publicized French clinic trials and New York and New Jersey physicians have found promising results on the front-lines of coronavirus using it in combination with another generic drug hydroxychloroquine. President Trump publicly championed the combination as a potential “game-changer” which has created a knee-jerk politically-charged push-back from media outlets. Some have dismissed the notion that an antibiotic like azithromycin could be effective against a virus. Antibiotics treat bacteria not viruses, the common refrain goes. 

But Lisanti’s understanding of the medical literature is compelling. “Azithromycin is known to stop the production of cytokines, a torrent of inflammatory mediators that trigger life-threatening lung inflammation in coronavirus patients. Azithromycin has also been shown to block the production of other viruses, such as the Zika and Ebola viruses.” 

Other FDA-approved generic antibiotics such as doxycycline (which costs around 10 cents per dose) that target senescent cells could also be fruitful to study in clinical trials. Indeed, some doctors are already implementing doxycycline into their protocol. Doxycycline has demonstrated the ability to prevent protein synthesis and IL-6 levels associated with viruses.

America’s greatest moments happen when individuals have the courage to step up and challenge groupthink-confined consensus to solve problems. We need medical groups, philanthropists, and entrepreneurs to support and develop clinical trials using Z-pak and doxycycline to investigate treatment and prevention of COVID-19. If Z-pak or doxycycline alone or in combination can be clinically shown to fight coronavirus, it may be an easier protocol to scale since these antibiotics are extremely inexpensive and are some of the most widely prescribed drugs in the world today. 

For our historic fight with COVID-19, we must take action in pursuing clinical trials for these potentially revolutionary antibiotic therapies right under our noses. 

Less Driving Amid Outbreak is Hurting Red Light Camera Revenue — Which is Great

Less Driving Amid Outbreak is Hurting Red Light Camera Revenue — Which is Great

Since states began locking down in mid-March, unemployment has skyrocketed, businesses have shuttered their doors, and these uncertain times have grown more worrisome by the day. There is one industry that is hurting, however, that shouldn’t bother many of us and that is the Red Light Camera industry.

Anyone whose been self-quarantining over the last few weeks likely knows that their trips to the gas station have been minimal simply because they are driving less. When people drive less, predatory and unconstitutional Red Light Camera companies like Redflex — who stalk unwitting drivers on the roads — make less money. This is a good thing.

As Business Insider points out, fewer drivers on the road is good for everyone: air pollution is falling, crashes are down, and there’s no blood-pressure inducing congestion.

But one industry in particular is feeling the pain in their bottom line. According to the report:

Redflex, an Australian company that operates “traffic safety programs” in roughly 100 US and Canadian cities, warned that less traffic and suspended construction amid the pandemic will be a stress on its balance sheet.

“Approximately 15% of group revenue is dependent on volume-based contracts,” the company said in a regulatory filing Monday first spotted by The Wall Street Journal, hinting at its business line that includes enforcement cameras. “We anticipate our revenue from these contracts will be impacted broadly in line with the reduction in traffic volumes as well as the duration of the disruption.”

Can I get a “Woooohoooo!!!”?

Shares of the unconstitutional predatory company’s stock have been in free fall since the beginning of the year, toppling near 50%. The company’s CEO, Mark Talbot told investors that travel restrictions are hurting plans for future installations and therefore impact the ability of the company to profit off due process-removing red light camera tickets.

“So far, there have been no terminations to contracts,” he said, according to a transcript compiled by Sentieo. “We are, of course, undertaking cost initiatives where possible to mitigate the impact of reductions or risk of delay. In addition, the Board and executive team will be taking a reduction in compensation effective April 1 for the duration of the disruption.”

For those who don’t recall, Talbot’s predecessor, Karen Finley was sent to prison in 2016 after being found guilty of bribing politicians to implement her due process-removing red light cameras.

After her sentencing, Finley described the company perfectly when attempting to deflect blame for her bribery scandal. “Redflex was a toxic and soul-sucking place to work. I worked over ten hours a day, almost every weekend and never saw my family,” she said — completely ignoring the fact that her job as the CEO was probably the largest contributing factor to the ‘soul-sucking place.’

However, the problem goes much deeper than Redflex, it is industry wide.

Take away the political corruption, bribery scandals, increased accidents, and police state issues with Red Light Cameras and we are still left with a system that is rooted in the removal of due process. The good news is that after the corporatist red light camera industry spread through the nation like a cancer for more than a decade, people are finally beginning to realize their inherently despotic nature.

As a result, people have been fighting back.

As the Newspaper reported, a group of three lawyers had filed suit in 2013, arguing that New Miami, Ohio’s automated ticketing ordinance gave vehicle owners no realistic opportunity to defend themselves against the demand for a payment of up to $180 that arrived in the mail. Optotraffic, a private vendor, sent the tickets to motorists passing through the less-than-one-square-mile town on US 127, a major highway that links Cincinnati with points north.

During that period of Optotraffic extortion, the city robbed drivers of $3,066,523.00. After Butler County Court of Common Pleas Judge Michael A. Oster Jr.’s ruling, the city was forced to pay back all of it in 2017.

On top of the unconstitutional nature of Red Light Cameras is the safety factor. These companies and the corrupt and greedy politicians who accept them know that they are about revenue generation — not safety — as these cameras increase the likelihood of an accident or death.

In February, TFTP talked to Stephen Ruth, aka, Red Light Robin Hood, who risked his very freedom to expose this madness..

Ruth was arrested and was facing years in prison for exposing the deaths of several people, including children who were killed as a result of these shortened yellow lights, through disabling the cameras.

In May 2015, sixteen-year-old John Luke was killed crossing the street when an SUV hit him. Less than a year later, a 64-year-old legally blind man named Warren Karstendick was killed in a hit-and-run when an SUV struck him. After visiting the scenes of their deaths and several others, Ruth concluded that these innocent pedestrians were losing their lives due to cars speeding up to avoid red light tickets.

Although the New York City’s Department of Transportation claims that all of its traffic signals provide a minimum of three seconds per yellow light, the AAA of New York released a 2012 report that found every tested traffic camera had a yellow light shorter than three seconds. Despite the fact that governments claim red light cameras are solely used to prevent accidents while modifying driver behavior, the revenue generated from traffic cameras can grow exponentially if yellow lights are shortened. As a result of the government’s greed for red light revenue, the safety of the driver took second priority.

While the Free Thought Project would never celebrate the decline of a legitimate business, the corporatism-rife red light camera industry is anything but legitimate. During at time when Americans are having to choose between paying rent and eating, the fact that a corrupt and unconstitutional company like Redflex is unable to financially prey on them is comforting.

Warren Harding and the Forgotten Depression of 1920

Warren Harding and the Forgotten Depression of 1920

It is a cliché that if we do not study the past we are condemned to repeat it. Almost equally certain, however, is that if there are lessons to be learned from an historical episode, the political class will draw all the wrong ones — and often deliberately so.

Far from viewing the past as a potential source of wisdom and insight, political regimes have a habit of employing history as an ideological weapon, to be distorted and manipulated in the service of present-day ambitions. That’s what Winston Churchill meant when he described the history of the Soviet Union as “unpredictable.”

For this reason, we should not be surprised that our political leaders have made such transparently ideological use of the past in the wake of the financial crisis that hit the United States in late 2007. According to the endlessly repeated conventional wisdom, the Great Depression of the 1930s was the result of capitalism run riot, and only the wise interventions of progressive politicians restored prosperity.

Many of those who concede that the New Deal programs alone did not succeed in lifting the country out of depression nevertheless go on to suggest that the massive government spending during World War II is what did it.1 (Even some nominal free marketeers make the latter claim, which hands the entire theoretical argument to supporters of fiscal stimulus.)

The connection between this version of history and the events of today is obvious enough: once again, it is claimed, wildcat capitalism has created a terrific mess, and once again, only a combination of fiscal and monetary stimulus can save us.

In order to make sure that this version of events sticks, little, if any, public mention is ever made of the depression of 1920–1921. And no wonder — that historical experience deflates the ambitions of those who promise us political solutions to the real imbalances at the heart of economic busts.

The conventional wisdom holds that in the absence of government countercyclical policy, whether fiscal or monetary (or both), we cannot expect economic recovery — at least, not without an intolerably long delay. Yet the very opposite policies were followed during the depression of 1920–1921, and recovery was in fact not long in coming.

The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.

Instead of “fiscal stimulus,” Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.

The Federal Reserve’s activity, moreover, was hardly noticeable. As one economic historian puts it, “Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction.”2 By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.

It is instructive to compare the American response in this period to that of Japan. In 1920, the Japanese government introduced the fundamentals of a planned economy, with the aim of keeping prices artificially high. According to economist Benjamin Anderson,

The great banks, the concentrated industries, and the government got together, destroyed the freedom of the markets, arrested the decline in commodity prices, and held the Japanese price level high above the receding world level for seven years. During these years Japan endured chronic industrial stagnation and at the end, in 1927, she had a banking crisis of such severity that many great branch bank systems went down, as well as many industries. It was a stupid policy. In the effort to avert losses on inventory representing one year’s production, Japan lost seven years.3

The United States, by contrast, allowed its economy to readjust. “In 1920–21,” writes Anderson,

we took our losses, we readjusted our financial structure, we endured our depression, and in August 1921 we started up again.… The rally in business production and employment that started in August 1921 was soundly based on a drastic cleaning up of credit weakness, a drastic reduction in the costs of production, and on the free play of private enterprise. It was not based on governmental policy designed to make business good.

The federal government did not do what Keynesian economists ever since have urged it to do: run unbalanced budgets and prime the pump through increased expenditures. Rather, there prevailed the old-fashioned view that government should keep taxation and spending low and reduce the public debt.4

Those were the economic themes of Warren Harding’s presidency. Few presidents have been subjected to the degree of outright ridicule that Warren Harding endured during his lifetime and continues to receive long after his death. But the conventional wisdom about Harding is wrong to the point of absurdity: even the alleged “corruption” of his administration was laughably minor compared to the presidential transgressions we have since come to take for granted.

In his 1920 speech accepting the Republican presidential nomination, Harding declared,

We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life.

Let us call to all the people for thrift and economy, for denial and sacrifice if need be, for a nationwide drive against extravagance and luxury, to a recommittal to simplicity of living, to that prudent and normal plan of life which is the health of the republic. There hasn’t been a recovery from the waste and abnormalities of war since the story of mankind was first written, except through work and saving, through industry and denial, while needless spending and heedless extravagance have marked every decay in the history of nations.

It is hardly necessary to point out that Harding’s counsel — delivered in the context of a speech to a political convention, no less — is the opposite of what the alleged experts urge upon us today. Inflation, increased government spending, and assaults on private savings combined with calls for consumer profligacy: such is the program for “recovery” in the 21st century.

Not surprisingly, many modern economists who have studied the depression of 1920–1921 have been unable to explain how the recovery could have been so swift and sweeping even though the federal government and the Federal Reserve refrained from employing any of the macroeconomic tools — public works spending, government deficits, and inflationary monetary policy — that conventional wisdom now recommends as the solution to economic slowdowns. The Keynesian economist Robert A. Gordon admitted that “government policy to moderate the depression and speed recovery was minimal. The Federal Reserve authorities were largely passive.… Despite the absence of a stimulative government policy, however, recovery was not long delayed.”5

Another economic historian briskly conceded that “the economy rebounded quickly from the 1920–1921 depression and entered a period of quite vigorous growth” but chose not to comment further on this development.6 “This was 1921,” writes the condescending Kenneth Weiher, “long before the concept of countercyclical policy was accepted or even understood.”7 They may not have “understood” countercyclical policy, but recovery came anyway — and quickly.

One of the most perverse treatments of the subject comes at the hands of two historians of the Harding presidency, who urge that without government confiscation of much of the income of the wealthiest Americans, the American economy will never be stable:

The tax cuts, along with the emphasis on repayment of the national debt and reduced federal expenditures, combined to favor the rich. Many economists came to agree that one of the chief causes of the Great Depression of 1929 was the unequal distribution of wealth, which appeared to accelerate during the 1920s, and which was a result of the return to normalcy. Five percent of the population had more than 33 percent of the nation’s wealth by 1929. This group failed to use its wealth responsibly.… Instead, they fueled unhealthy speculation on the stock market as well as uneven economic growth.8

If this absurd attempt at a theory were correct, the world would be in a constant state of depression. There was nothing at all unusual about the pattern of American wealth in the 1920s. Far greater disparities have existed in countless times and places without any resulting disruption.

In fact, the Great Depression actually came in the midst of a dramatic upward trend in the share of national income devoted to wages and salaries in the United States — and a downward trend in the share going to interest, dividends, and entrepreneurial income.9 We do not in fact need the violent expropriation of any American in order to achieve prosperity, thank goodness.

It is not enough, however, to demonstrate that prosperity happened to follow upon the absence of fiscal or monetary stimulus. We need to understand why this outcome is to be expected — in other words, why the restoration of prosperity in the absence of the remedies urged upon us in more recent times was not an inconsequential curiosity or the result of mere happenstance.

“The central bank is in a war against reality.”

First, we need to consider why the market economy is afflicted by the boom–bust cycle in the first place. The British economist Lionel Robbins asked in his 1934 book The Great Depression why there should be a sudden “cluster of error” among entrepreneurs.

Given that the market, via the profit-and-loss system, weeds out the least competent entrepreneurs, why should the relatively more skilled ones that the market has rewarded with profits and control over additional resources suddenly commit grave errors — and all in the same direction? Could something outside the market economy, rather than anything that inheres in it, account for this phenomenon?

Ludwig von Mises and F.A. Hayek both pointed to artificial credit expansion, normally at the hands of a government-established central bank, as the nonmarket culprit. (Hayek won the Nobel Prize in 1974 for his work on what is known as Austrian business-cycle theory.) When the central bank expands the money supply — for instance, when it buys government securities — it creates the money to do so out of thin air.

This money either goes directly to commercial banks or, if the securities were purchased from an investment bank, very quickly makes its way to the commercial banks when the investment banks deposit the Fed’s checks. In the same way that the price of any good tends to decline with an increase in supply, the influx of new money leads to lower interest rates, since the banks have experienced an increase in loanable funds.

The lower interest rates stimulate investment in long-term projects, which are more interest-rate sensitive than shorter-term ones. (Compare the monthly interest paid on a thirty-year mortgage with the interest paid on a two-year mortgage — a tiny drop in interest rates will have a substantial impact on the former but a negligible impact on the latter.) Additional investment in, say, research and development (R&D), which can take many years to bear fruit, will suddenly seem profitable, whereas it would not have been profitable without the lower financing costs brought about by the lower interest rates.

We describe R&D as belonging to a “higher-order” stage of production than a retail establishment selling hats, for example, since the hats are immediately available to consumers while the commercial results of R&D will not be available for a relatively long time. The closer a stage of production is to the finished consumer good to which it contributes, the lower a stage we describe it as occupying.

On the free market, interest rates coordinate production across time. They ensure that the production structure is configured in a way that conforms to consumer preferences. If consumers want more of existing goods right now, the lower-order stages of production expand. If, on the other hand, they are willing to postpone consumption in the present, interest rates encourage entrepreneurs to use this opportunity to devote factors of production to projects not geared toward satisfying immediate consumer wants, but which, once they come to fruition, will yield a greater supply of consumer goods in the future.

“Popular rhetoric notwithstanding, government cannot be run like a business.”

Had the lower interest rates in our example been the result of voluntary saving by the public instead of central-bank intervention, the relative decrease in consumption spending that is a correlate of such saving would have released resources for use in the higher-order stages of production. In other words, in the case of genuine saving, demand for consumer goods undergoes a relative decline; people are saving more and spending less than they used to.

Consumer-goods industries, in turn, undergo a relative contraction in response to the decrease in demand for consumer goods. Factors of production that these industries once used — trucking services, for instance — are now released for use in more remote stages of the structure of production. Likewise for labor, steel, and other nonspecific inputs.

When the market’s freely established structure of interest rates is tampered with, this coordinating function is disrupted. Increased investment in higher-order stages of production is undertaken at a time when demand for consumer goods has not slackened. The time structure of production is distorted such that it no longer corresponds to the time pattern of consumer demand. Consumers are demanding goods in the present at a time when investment in future production is being disproportionately undertaken.

Thus, when lower interest rates are the result of central bank policy rather than genuine saving, no letup in consumer demand has taken place. (If anything, the lower rates make people even more likely to spend than before.) In this case, resources have not been released for use in the higher-order stages. The economy instead finds itself in a tug-of-war over resources between the higher- and lower-order stages of production.

With resources unexpectedly scarce, the resulting rise in costs threatens the profitability of the higher-order projects. The central bank can artificially expand credit still further in order to bolster the higher-order stages’ position in the tug of war, but it merely postpones the inevitable.

If the public’s freely expressed pattern of saving and consumption will not support the diversion of resources to the higher-order stages, but, in fact, pulls those resources back to those firms dealing directly in finished consumer goods, then the central bank is in a war against reality. It will eventually have to decide whether, in order to validate all the higher-order expansion, it is prepared to expand credit at a galloping rate and risk destroying the currency altogether, or whether instead it must slow or abandon its expansion and let the economy adjust itself to real conditions.

It is important to notice that the problem is not a deficiency of consumption spending, as the popular view would have it. If anything, the trouble comes from too much consumption spending, and as a result too little channeling of funds to other kinds of spending — namely, the expansion of higher-order stages of production that cannot be profitably completed because the necessary resources are being pulled away precisely by the relatively (and unexpectedly) stronger demand for consumer goods. Stimulating consumption spending can only make things worse, by intensifying the strain on the already collapsing profitability of investment in higher-order stages.

“Mises compared an economy under the influence of artificial credit expansion to a master builder commissioned to construct a house that (unbeknownst to him) he lacks sufficient bricks to complete.”

Note also that the precipitating factor of the business cycle is not some phenomenon inherent in the free market. It is intervention into the market that brings about the cycle of unsustainable boom and inevitable bust.10 As business-cycle theorist Roger Garrison succinctly puts it, “Savings gets us genuine growth; credit expansion gets us boom and bust.”11

This phenomenon has preceded all of the major booms and busts in American history, including the 2007 bust and the contraction in 1920–1921. The years preceding 1920 were characterized by a massive increase in the supply of money via the banking system, with reserve requirements having been halved by the Federal Reserve Act of 1913 and then with considerable credit expansion by the banks themselves.

Total bank deposits more than doubled between January 1914, when the Fed opened its doors, and January 1920. Such artificial credit creation sets the boom–bust cycle in motion. The Fed also kept its discount rate (the rate at which it lends directly to banks) low throughout the First World War (1914–1918) and for a brief period thereafter. The Fed began to tighten its stance in late 1919.

Economist Gene Smiley, author of The American Economy in the Twentieth Century, observes that “the most common view is that the Fed’s monetary policy was the main determinant of the end of the expansion and inflation and the beginning of the subsequent contraction and severe deflation.”12 Once credit began to tighten, market actors suddenly began to realize that the structure of production had to be rearranged and that lines of production dependent on easy credit had been erroneously begun and needed to be liquidated.

We are now in a position to evaluate such perennially fashionable proposals as “fiscal stimulus” and its various cousins. Think about the condition of the economy following an artificial boom. It is saddled with imbalances. Too many resources have been employed in higher order stages of production and too few in lower-order stages.

These imbalances must be corrected by entrepreneurs who, enticed by higher rates of profit in the lower-order stages, bid resources away from stages that have expanded too much and allocate them toward lower-order stages where they are more in demand. The absolute freedom of prices and wages to fluctuate is essential to the accomplishment of this task, since wages and prices are indispensable ingredients of entrepreneurial appraisal.

In light of this description of the postboom economy, we can see how unhelpful, even irrelevant, are efforts at fiscal stimulus. The government’s mere act of spending money on arbitrarily chosen projects does nothing to rectify the imbalances that led to the crisis.

It is not a decline in “spending” per se that has caused the problem. It is the mismatch between the kind of production the capital structure has been misled into undertaking on the one hand, and the pattern of consumer demand, which cannot sustain the structure of production as it is, on the other.

And it is not unfair to refer to the recipients of fiscal stimulus as arbitrary projects. Since government lacks a profit-and-loss mechanism and can acquire additional resources through outright expropriation of the public, it has no way of knowing whether it is actually satisfying consumer demand (if it is concerned about this at all) or whether its use of resources is grotesquely wasteful. Popular rhetoric notwithstanding, government cannot be run like a business.13

Monetary stimulus is no help either. To the contrary, it only intensifies the problem. In Human Action, Mises compared an economy under the influence of artificial credit expansion to a master builder commissioned to construct a house that (unbeknownst to him) he lacks sufficient bricks to complete. The sooner he discovers his error the better. The longer he persists in this unsustainable project, the more resources and labor time he will irretrievably squander.

Monetary stimulus merely encourages entrepreneurs to continue along their unsustainable production trajectories; it is as if, instead of alerting the master builder to his error, we merely intoxicated him in order to delay his discovery of the truth. But such measures make the eventual bust no less inevitable — merely more painful.

If the Austrian view is correct — and I believe the theoretical and empirical evidence strongly indicates that it is — then the best approach to recovery would be close to the opposite of these Keynesian strategies. The government budget should be cut, not increased, thereby releasing resources that private actors can use to realign the capital structure.

The money supply should not be increased. Bailouts merely freeze entrepreneurial error in place, instead of allowing the redistribution of resources into the hands of parties better able to provide for consumer demands in light of entrepreneurs’ new understanding of real conditions. Emergency lending to troubled firms perpetuates the misallocation of resources and extends favoritism to firms engaged in unsustainable activities at the expense of sound firms prepared to put those resources to more appropriate uses.

This recipe of government austerity is precisely what Harding called for in his 1921 inaugural address:

We must face the grim necessity, with full knowledge that the task is to be solved, and we must proceed with a full realization that no statute enacted by man can repeal the inexorable laws of nature. Our most dangerous tendency is to expect too much of government, and at the same time do for it too little. We contemplate the immediate task of putting our public household in order. We need a rigid and yet sane economy, combined with fiscal justice, and it must be attended by individual prudence and thrift, which are so essential to this trying hour and reassuring for the future.…

The economic mechanism is intricate and its parts interdependent, and has suffered the shocks and jars incident to abnormal demands, credit inflations, and price upheavals. The normal balances have been impaired, the channels of distribution have been clogged, the relations of labor and management have been strained. We must seek the readjustment with care and courage.… All the penalties will not be light, nor evenly distributed. There is no way of making them so. There is no instant step from disorder to order. We must face a condition of grim reality, charge off our losses and start afresh. It is the oldest lesson of civilization. I would like government to do all it can to mitigate; then, in understanding, in mutuality of interest, in concern for the common good, our tasks will be solved. No altered system will work a miracle. Any wild experiment will only add to the confusion. Our best assurance lies in efficient administration of our proven system.

“We must proceed with a full realization that no statute enacted by man can repeal the inexorable laws of nature.”

– Warren G. Harding

Harding’s inchoate understanding of what was happening to the economy and why grandiose interventionist plans would only delay recovery is an extreme rarity among 20th-century American presidents. That he has been the subject of ceaseless ridicule at the hands of historians, to the point that anyone speaking a word in his favor would be dismissed out of hand, speaks volumes about our historians’ capabilities outside of their own discipline.

The experience of 1920–1921 reinforces the contention of genuine free-market economists that government intervention is a hindrance to economic recovery. It is not in spite of the absence of fiscal and monetary stimulus that the economy recovered from the 1920–1921 depression. It is because those things were avoided that recovery came. The next time we are solemnly warned to recall the lessons of history lest our economy deteriorate still further, we ought to refer to this episode — and observe how hastily our interrogators try to change the subject.

Reprinted from The Mises Institute

Why Demographics is not Destiny

Why Demographics is not Destiny

“Demographics is destiny” is a phrase uttered in some rightwing circles and quietly believed in some leftwing ones. In political terms, the phrase suggests either cultural or genetic determinism, or both—namely, that people of a particular culture, ethnicity, or race will (statistically) vote in a particular way. Although the highly politically incorrect words won’t leave Leftist lips, some of their common narratives can only be true if they also believe that that three-worded devil is, too. For example, in 2019, Sabrina Tavernise of the New York Times wrote that “Once the heart of the confederacy, Virginia is now the land of Indian grocery stores, Korean churches and Diwali festivals…It is also significantly less white.” Beyond Virginia, Tavernise goes on to credit this browning of America for other Democrat victories when she writes, “Democrats took control of the House and elevated Nancy Pelosi to speaker in 2018 because of victories in these fast-changing parts of of America, and both parties are preparing for battle over these voters in 2020.”

Meanwhile, there was recently a civil war in American conservatism, largely surrounding the intersection between demographics, culture, immigration, and voting patterns. Mainstream conservative voices argued that race is irrelevant, illegal immigration should be curbed, and that culture transcends race. The more dissident wing questioned whether or not a freedom-minded American Republic could survive mass legal immigration from third-world countries, since their cultures and genetics lend themselves to voting for larger and larger government.

I sometimes roll my eyes at “both sides are wrong” assertions, especially when their champions are driven by a desire to appear fair-minded and above the fray, rather than by a desire to pursue the truth. Alas, feel free to accuse me of the same, but in this case, it’s true: both the Left and the Right are wrong that demographics is fundamental to the political future of America (or of any other society). Demographics is not destiny.

As I’d said, demographic determinism comes in two forms: biological and cultural. Although the latter is more important, the former is in some ways a more egregious error. Biological determinism—the notion that people’s behavior, actions, or physical characteristics, is determined by their genes—is false. This can seem counterintuitive, since genetic determinism is true for other living creatures. But the defining characteristic of people is that they are capable of creating explanations of the world around them, of creating knowledge that hitherto had not existed. In the words of physicist David Deutsch, who expounded on this concept in his 2011 book, The Beginning of Infinity, people are “universal explainers”. This capacity to explain and understand the world is intimately connected with our corresponding ability to control it. 

And that power is why people are not genetically determined: given adequate wealth and technology, any genetic condition may be compensated for by technological innovation. For example, a child born with no limbs may be equipped with prosthetic ones so indistinguishable that the mutation which caused the condition in the first place is moot. Poor vision is already compensated for by glasses, contacts, and surgery. Even something as seemingly determined as height may in principle be modified, and some individuals have undergone so-called leg-lengthening surgery in recent years. The same logic applies to inborn diseases, susceptibilities, disabilities, and any other problem that Nature may not have solved for us.

One really has an obligation to let the imagination fly here—in general, if a solution to a problem of the human condition is possible in principle, then people can procure it, given only that we create the knowledge of how to do so. 

So physiology poses no fundamental limitations on what people are capable of achieving in the long run. This is a blow against some strands of genetic arguments surrounding immigration, especially with respect to the supposed importance of race. To emphasize: any perceived shortcoming owing to genetics can be compensated by the requisite technology. Even if such an innovation has not yet occurred, it is always discoverable by knowledge-creating people.

“Fair enough,” the determinist says, “but culture still matters, and immigrants who come to America still vote Left.” But culture is merely a set of ideas put into practice, and those are also not set in stone. History alone makes this clear, as the practices of your own ancestors from merely a few generations ago, with whom you share most of your genes, would likely horrify you today. The fact that cultures can improve at all proves that they are not some unstoppable, unchanging force. And, perhaps ironically, while genes propagate in only one direction—from parent to offspring—culture travels every which way imaginable, thus allowing for a plasticity and adaptability of which genes are utterly incapable. 

The fact that people are universal explainers rules out cultural determinism as it did biological determinism—because people are capable of creating ever-more accurate explanations of reality, of resolving errors in their worldview, no culture is ever deterministically linked to any group of people. Just as the unbounded creativity of people renders our own genetics merely a background canvas on which we may paint whatever manmade environment we desire, so too does our creativity lend itself to modifying and, hopefully, improving any cultural milieu in which we find ourselves. 

A salient example of deterministic thinking on questions of immigration is that of Muslim migration into Western nation-states. As Adrian Michaels of The Telegraph wrote in 2009, “Europe’s low white birth rate, coupled with faster multiplying migrants, will change fundamentally what we take to mean by European culture and society…Muslims represent a particular set of issues.” More recently, in 2017, the Pew Research Center published projections of Muslim percentages of European populations over time, under various possible scenarios. The scenarios differ by birthrate and migration levels, implicitly assuming that the number of Muslims in Europe is determined by these variables. 

But ideas don’t travel through the birth canal, nor are they shielded from their environment—Muslims who migrate to Europe are exposed to new ideas, new cultures, new criticisms of their most cherished beliefs, and their European-born children even more so. Muslim immigrants and their children may adopt the new culture in which they find themselves, or they may radicalize, or they may do anything in between—the future patterns of people and their ideas cannot be prophesied.

Having said that, we should not idly sit by and merely hope for cultures to improve themselves from the inside, as it were. Some ideas are better than others, and some cultures lend themselves to progress and error-correction more so than others. Since the memes occupying one’s wetware are not immovably fixed by either gene nor by the culture into which one was born, we have a moral obligation to try to improve them—both our own and others’. And we do so by criticizing them, by explaining their deficiencies, by offering modifications. 

So no, demographics is not destiny. Neither immigrants not those of particular genetics are predetermined to vote in some predictable manner. All people are universal explainers, and as such, are capable of unbounded improvement in thought and action. While it might be comforting to learn that race and other background are not determinative, the other side of the ledger is that since people can improve by acquiring new knowledge, we should not treat anyone with kid gloves. If demographics is not destiny, then the bigotry of low expectations is similarly unacceptable. This is exhilarating, for it means that people are not fundamentally divided by genetics, nor must our cultures be permanently incompatible. Civilizational progress of all kinds will always be, to quote David Deutsch, at the “beginning of infinity”.

The Fed Is Running Out of Bubbles to Create

The Fed Is Running Out of Bubbles to Create

The Fed came out with a series of unprecedented measures on March 22, 2020. They announced the Fed will buy an unlimited amount of Treasurys and mortgage-backed securities (MBS), or as Peter Schiff refers to it, “QE infinity.” This has been very positively welcomed by many in the mainstream media and by businesses. Yet, what many are ignoring is that the Fed has to do this to keep the bubbles that it has created going. Recently, I wrote that the Fed has created many structural problems in the mortgage market, corporate bond market, and the car loan market. These issues have only been “waiting” for such a situation to come to the surface and severely hurt the economy.

Reinflating the Mortgage Bubble

After the recession of 2001 the Fed decreased interest rates substantially, and this along with other government policy led to the housing bubble that burst in 2007. Instead of allowing the market to adjust and get rid of the structural problems created by artificially low interest rates, the Fed decided that what they had to do was to reinflate the housing bubble. The Fed bought massive amounts of MBS to lower mortgage rates and reinflate the mortgage market. This was largely unsuccessful until mid-2012, but then house prices began to rise faster as the economy became more stable. As can be seen from the graph below, house prices have increased by about 50 percent since then and are now at an all-time high.

FRED House Price Index

The graph above may show that the Fed was successful in inflating another housing bubble, yet prices alone do not reveal the whole picture. In the graph below, I show debt-to-GDP ratios for a variety of debts. The red line represents mortgage debt as a percent of GDP, and as it is clear from the graph as a percent of GDP, mortgage debt is decreasing. In fact, it has already decreased by about 20 percent since its all-time high. This shows the Fed was less successful in recreating the housing bubble of the early 2000s.

This is not to say that the housing market is not in a bubble, but the bubble is not in the levels it was last time. Hence, the Fed was less successful in using the housing market to create artificial economic growth. Yet, the Fed’s actions have led to many issues in the mortgage markets. These issues had the president of Ginnie Mae very worried as early as 2015. Here is what he said in his remarks at the Ginnie Mae Summit at the time:

Also, we have depended on sheer luck. Luck that the economy does not fall into recession and increase mortgage delinquencies. Luck that our independent mortgage bankers remain able to access their lines of credit. And luck that nothing critical falls through the cracks.

Debt to GDP

A New Bubble Post–Great Recession

As the graph above shows the only private sector debt that the Fed was able to substantially increase, as a percentage of GDP, was the corporate debt. Corporate debt has increased by about 67 percent since the end of the Great Recession, from about $6 trillion to $10 trillion in just ten years. This has led to an increase of the corporate debt-to-GDP ratio by about 6 percent, to an all-time high of 46 percent. What is more, the quality of this debt has been deteriorating. Nearly half of the $4 trillion that was added postrecession are BBB rate bonds, or the lowest ratings of investment-grade bonds trench.

Corporations are not alone in this. All other businesses have now accumulated about $5.5 trillion in debt too, bringing the total debt of all businesses (nonfinancial debt only) to about $15.5 trillion. This makes percentage of total debt to GDP about 74 percent, which is higher than the mortgage debt-to-GDP ratio at its highest point in 2009, when it was about 73 percent. Hence, this time around the Fed has been more successful in fueling a business debt bubble.

Will the Fed Be Able to Fuel Another Bubble?

As discussed above, the Fed replaced to a large degree the mortgage bubble with the corporate bubble. But this happened because corporate debt and collateralized debt obligations (CDOs) did relatively well during the last recession. This may not be the case in the recession that many say has already started. In fact, this is very clear when one considers how the Fed has responded to the current economic situation brought about by the COVID-19 epidemic. The Fed now will be lending directly to corporations by using the Treasury to secure these loans. They argue that this is due to the shock the economy is in because of COVID-19, but what they are worried about is that the bubble they created is about to burst given the weakness in the corporate debt markets. The Fed knows that the corporate debt market is not in a good shape, since this has now become clear to many (see herehere, and here for a few examples). It remains to be seen whether they can stop this bubble from bursting or not, but if it does, and if what happened in the mortgage market after the last recessions can teach us anything, the business debt-to-GDP ratio will most likely decrease after the recession that we may be in already.

Before the Great Recession, we had the housing bubble fueled by the Fed. Then, the Fed replaced the housing bubble with the business debt bubble. The question that arises is: what will be the next bubble if the business debt bubble bursts? Looking at the graph above, the only other major debt category left that is big enough to play a role in the economy is government debt. The national debt-to-GDP ratio increased by about 40 percent during the last recession. However, since about 2013 the government debt-to-GDP ratio has stabilized somewhat, but now with the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), some estimates place the deficit for 2020 alone will be $4 trillion. This will lead to at least an 18 percent increase in the government debt-to-GDP ratio in one year alone.

It seems the Fed’s last hope in fueling the next recovery will be government debt. In fact, the Fed has played a major role in the government debt increase, but now they are doing this at another level. Jim Bianco in an article at Bloomberg recently wrote that the Fed’s plan “includes a hard-to-understand $625 billion of bond-buying a week going forward. At this rate, the Fed will own two-thirds of the Treasury market in a year.” Hence, it is clear the Fed, intentionally or not, is going to make the government debt bubble worse than it is.

Conclusion

The Fed-fueled economy is unstable, and as the Austrian theory of the business cycle teaches us, sooner or later is bound to suffer from recessions. With each passing recession, the Fed finds it harder to refuel the last bubble, but the market moves on to the new bubble, as the Fed keeps interest rates artificially low. The problem the Fed is facing now is that since the last recession they have been unable to fuel good economic growth with artificially low interest rates, since GDP increased at about 1 percent below the post-World War II average of 3.2 percent. This may be because even with artificially low interest rates total debt has decreased as a percentage of GDP, as the graph below shows.

Total Debt

If this trend continues, the Fed will find it even harder to fuel economic growth by lowering interest rates. The problem here is: how far are they willing to go to keep the bubble economy going? Jim Bianco seems to be worried about what they are doing. He closed the article mentioned above by saying: “Fed Chair Jerome Powell needs to tread carefully indeed to ensure his cure isn’t worse than the disease.” Only time will tell what the results of the Fed’s actions will be, but it sure seems like they will not find it easy to fuel another private debt bubble. With only government debt left to increase, the Fed may have reached its limits in affecting the economy via interest rate manipulation.

Reprinted from The Mises Institute

Coronavirus Being Used to Scare You Away From Using Cash

Coronavirus Being Used to Scare You Away From Using Cash

Cash has been the target of the banking and financial elites for years. Now, the coronavirus pandemic is being used to frighten the masses into accepting a cashless society. That would mean the death of what’s left of our free society.

CBS NewsCNN, and other mainstream outlets are fearmongering again. Alarmism is nothing new in the media world, but this time, it’s not about triggering panic buying or even pushing a political agenda.

The war on cash is about imposing a new meta-narrative. As economist Joseph Salerno explains, the cashless society forces all payments to be made through the financial system. It doesn’t end with monopoly control over transactions, though.

Being bound to computers for transactions kicks the door wide open to hardcore surveillance of personal activity and location data. Being eternally on the grid means relentless taxation and negative interest rates, which the Federal Reserve is already gearing up for.

None of this bothers the well-heeled boosters of a cashless society or their lackeys in the media. They want Americans reading about the threat of coronavirus cooties on their cash, which is absurd.

Germs, of course, can loiter all over credit and debit cards, smartphones, ATMs, and every other cash alternative device. Too bad implanted microchip technology isn’t further along, the banksters must be thinking.

In another CNN article, readers are practically shamed for withdrawing cash to save during a crisis. Every sentence, every word, every letter of the article is nuts.

It begins by reassuring the reader that their bank account is insured by the Federal Deposit Insurance Corporation (FDIC). There’s no mention of moral hazard from CNN. The fact that the federal government guarantees every bank account up to $250,000 encourages reckless financial and banking behavior. Not worth mentioning, CNN?

Prior to the end of World War II, there were $500, $1,000, and $10,000 bills in wide circulation. This cash was dissolved by the Federal Reserve in the name of fighting organized crime. This same argument is now being made against $50 and $100 bills by Harvard economics professor Kenneth Rogoff.

In the Wall Street Journal, Rogoff also wrote that a cashless society would offer such benefits as “greater flexibility for the Federal Reserve to stimulate the economy when necessary.”

He wrote those words in 2017. And these too:

“The Federal Reserve should be able to implement negative nominal interest rates vastly more effectively in the absence of large bills, which could prove quite important as a stimulative tool in the next financial crisis.”

Prophetic. And indeed, negative interest rates would require the assistance of outlawing cash, so that banking customers don’t cheat by simply drawing out on their accounts.

Pardon the pun, but it’s absolutely sick how COVID-19 is being used now as a launching pad for this cashless agenda. There’s nothing to fear about using cash during this time of social distancing.

Wash your hands after handling cash, but don’t give up your moolah. Preserve your health, your privacy, and your liberty.

Reprinted from The Advocates for Self-Government.

America, We Have To End the Wars Now

America, We Have To End the Wars Now

The Coronavirus Crisis Makes It Clear

Can anyone think what our society might have spent six and a half trillion dollars on instead of 20 years of war in the Middle East for nothing? How about the trillion dollars per year we keep spending on the military on top of that?

Invading, dominating and remaking the Arab world to serve the interests of the American empire and the state of Greater Israel sounds downright quaint at this point. Iraq War II, as Senator Bernie Sanders said in the debate a few weeks ago, while letting Joe Biden, one of its primary proponents, off the hook for it, was “a long time ago.” Actually, Senator, we still have troops there fighting Iraq War III 1/2 against what’s left of the ISIS insurgency, and our current government continues to threaten the launch of Iraq War IV against the very parties we fought the last two wars for. This would almost certainly then lead to war with Iran.

The U.S.A. still has soldiers, marines and CIA spies in Syria, Afghanistan, Somalia, Libya, Mali, Tunisia, Niger, Nigeria, Chad and only God and Nick Turse know where else.

Worst of all, America under President Donald Trump is still “leading from behind” in the war in Yemen Barack Obama started in conspiracy with Saudi then-Deputy Crown Prince Mohammed bin Salman back in 2015. This war is nothing less than a deliberate genocide. It is a medieval-style siege campaign against the civilian population of the country. The war has killed more than a quarter of a million innocent people in the last five years, including at least 85,000 children under five years old. And, almost unbelievably, this war is being fought on behalf of the American people’s enemies, al Qaeda in the Arabian Peninsula (AQAP). These are the same guys that bombed the USS Cole in the port of Aden in 2000, helped to coordinate the September 11th attack, tried to blow up a plane over Detroit with the underpants bomb on Christmas Day 2009, tried to blow up another plane with a package bomb and launched the Charlie Hebdo attack in Paris, France since then. In fact, CENTCOM was helping the Houthi regime in the capital of Sana’a target and kill AQAP as late as January 2015, just two months before Obama stabbed them in the back and took al Qaeda’s side against them. So the war is genocide and treason.

As Senator Rand Paul once explained to Neil Cavuto on Fox News back before he decided to become virtually silent on the matter, if the U.S.-Saudi-UAE alliance were to succeed in driving the Houthi regime from power in the capital city, they could end up being replaced by AQAP or the local Muslim Brotherhood group, al-Islah. There is zero chance that the stated goal of the war, the re-installation of former dictator Mansur Hadi on the throne, could ever succeed. And yet the war rages on. President Trump says he’s doing it for the money. That’s right. And he’s just recently sent the marines to intervene in the war on behalf of our enemy-allies too.

We still have troops in Germany in the name of keeping Russia out 30 years after the end of the Cold War and dissolution of the Soviet Empire, even though Germany is clearly not afraid of Russia at all, and are instead more worried that the U.S. and its newer allies are going to get them into a fight they do not want. The Germans prefer to “get along with Russia,” and buy natural gas from them, while Trump’s government does everything in its power to prevent it.

America has expanded our NATO military alliance right up to Russia’s western border and continues to threaten to include Ukraine and former-Soviet Georgia in the pact right up to the present day. As the world’s worst hawks and Russiagate Hoax accusers have admitted, Trump has been by far the worst anti-Russia president since the end of the last Cold War. Obama may have hired a bunch of Hitler-loving Nazis to overthrow the government of Ukraine for him back in 2014, but at least he was too afraid to send them weapons, something Trump has done enthusiastically, even though he was actually impeached by the Democrats for moving a little too slowly on one of the shipments.

We still have troops in South Korea to protect against the North, even though in economic and conventional terms the South overmatches the North by orders of magnitude. Communism really doesn’t work. And the only reason the North even decided to make nukes is because George W. Bush put a gun to their head and essentially made them do it. But as Cato’s Doug Bandow says, we don’t even need a new deal. The U.S. could just forget about North Korea and it wouldn’t make any difference to our security at all.

And now China. Does anyone outside of the U.S. Navy and Marine Corps really care whether the entire Pacific Ocean is an American lake or only 95% of it? The “threat” of Chinese dominance in their own part of the world exists only in the heads of hawkish American policy wonks and the Taiwanese, who should have been told a long time ago that they are on their own and that there’s no way in the world the American people or government are willing to trade Los Angeles and San Francisco for Taipei. Perhaps without the U.S. superpower standing behind them, Taiwanese leaders would be more inclined to seek a peaceful settlement with Beijing. If not, that’s their problem. Not one American in a million is willing to sacrifice their own home town in a nuclear war with China over an island that means nothing to them. Nor should they. Nor should our government even dream they have the authority to hand out such dangerous war guarantees to any other country in such a reckless fashion.

And that’s it. There are no other powers anywhere in the world. Certainly there are none who threaten the American people. Our government claims they are keeping the peace, but there are approximately two million Arabs and Pashtuns who would disagree except that they’ve already been killed in our recent wars and so are unavailable for comment.

The George W. Bush and Barack Obama eras are long over. We near the end, or half-way point, of the Trump years, and yet our former leaders’ wars rage on.

Enough already. It is time to end the war on terrorism and end the rest of the American empire as well. As our dear recently departed friend Jon Basil Utley learned from his professor Carroll Quigley, World Empire is the last stage of a civilization before it dies. That is the tragedy. The hope is that we can learn from history and preserve what’s left of our republic and the freedom that made it great in the first place, by abandoning our overseas “commitments” and husbanding our resources so that we may pass down a legacy of liberty to our children.

The danger to humanity represented by the Coronavirus plague has, by stark relief, exposed just how unnecessary and therefore criminal this entire imperial project has been. We could have quit the empire 30 years ago when the Cold War ended, if not long before. We could have a perfectly normal and peaceful relationship with Iraq, Iran, Syria, Korea, Russia, China, Yemen and any of the other nations our government likes to pretend threaten us. And when it comes to our differences, we would then be in the position to kill them with kindness and generosity, leading the world to liberty the only way we truly can, voluntarily, on the global free market of ideas and results.

That is what the world needs and the legacy the American people deserve.

Scott Horton is editorial director of Antiwar.com, director of the Libertarian Institute, host of Antiwar Radio on Pacifica, 90.7 FM KPFK in Los Angeles, California and podcasts the Scott Horton Show from ScottHorton.org. He’s the author of the 2017 book, Fool’s Errand: Time to End the War in Afghanistan and editor of the 2019 book, The Great Ron Paul: The Scott Horton Show Interviews 2004–2019. He’s conducted more than 5,000 interviews since 2003.

Scott’s Twitter, YouTube, Patreon.

Yemen Is Shattered And The U.S. Helped The Saudis Break It

Yemen Is Shattered And The U.S. Helped The Saudis Break It

Five years ago the Kingdom of Saudi Arabia invaded neighboring Yemen. The conflict was supposed to be quick and simple, over in a few weeks. Now the once-haughty Saudi royals have offered a ceasefire, after their opponents, Houthi irregulars, captured the province of al-Jawf.

The conflict has created a horrific humanitarian crisis. Yemen, which has long been divided, impoverished, and embattled, is wrecked, and is unlikely to emerge as one complete nation. The cost has been roughly 100,000 dead in combat (nearly 20,000 of them civilians); another 130,000 dead from the consequences of the conflict; a million people suffering from Cholera; 20 million Yemenis facing food insecurity; sixteen million regularly hungry; and ten million at risk of famine.

Read the full article at The American Conservative.

The Crisis Has Exposed the Damage Done By Government Regulations

The Crisis Has Exposed the Damage Done By Government Regulations

As we watch in real-time how governments respond to the novel coronavirus pandemic, some of the most predictable forms of state overreach—from restrictions on the freedom of assembly to the suppression of regular commerce—have been rolled out. Thankfully, there is no unified world government, so there exist various examples of how certain countries are dealing with the crisis that we can closely examine and learn from.

Pessimism and cynicism are generally warranted under the political climate we’re living in. However, there are some silver linings we can take away from America’s response to the coronavirus. In a previous article, I noted that several states have started adopting deregulation on a whole host of issues. With the coronavirus still raging on, now elected officials are slowly beginning to recognize the absurdity of some of America’s regulations.

Despite how much the experts downplay people’s ability to coordinate on a voluntary basis, civil society is stepping up to face the crisis in a heroic manner. However, regulation has largely hamstrung their and state and local governments’ ability to work in a synergistic manner to stem the crisis without the federal government putting its boot on our throats. Americans have caught somewhat of a break now that some elected officials are behaving rationally by reconsidering some of America’s most misguided regulatory policies.

Several reasonable deregulation actions stand out in the last month.

FDA Loosens Up Some Restrictions, Still Has a Lot of Work to Do

The Food and Drug Administration is treated as unassailable by some, and if you dare speak out against it, you clearly want millions to die because of defective products. Well, the real world shows that the FDA’s lengthy approval process—which is consists of three phases of drug trials that can span years—actually puts many lives at risk. In the current coronavirus context, people do not have the luxury of time, so bureaucracy is quite literally killing them when they can’t access restricted treatments or medicine.

Although we’re not seeing the FDA’s budget getting trimmed or a private organization such as Underwriters Laboratories take its place anytime soon, politicians are starting to at least notice that its requirements are patently absurd in certain regards. Cooler heads have prevailed at the FDA, for the time being, as the agency gave a new coronavirus testing kit emergency use authorization (EUA) after weeks of delays.

However, we should not let the FDA completely off the hook. As is to be expected from a government agency, the FDA is taking its sweet time in approving at-home testing kits for the COVID-19 coronavirus. On a similar note, billionaire Elon Musk was able to acquire over one thousand ventilators from China and ship them off to hospitals in California along with other supplies such as respirator masks. But no entrepreneurial story is complete without its section on red tape. Musk initially hit a snag when the masks were held up at Los Angeles International Airport. Fortunately, everyone could breathe a collective sigh of relief after both customs and the FDA cleared the supplies.

Let’s not kid ourselves, though. Close calls like these could be lethal in circumstances where time constraints are even less flexible.

Texas Offers Level-Headed Deregulation Actions

Various states have issued orders to shut down restaurants and bars, which has compelled many businesses to limit their services to takeout. Some governments, such as that of Texas under Governor Greg Abbott, have been reasonable in their approach to dealing with the coronavirus crisis by lifting regulations on alcohol delivery and letting restaurants deliver alcohol along with food purchases, which was previously prohibited.

Additionally, Abbott made sure to waive regulations that would have weakened Texas supply chains in the face of this crisis. Trucks generally confined to delivering alcohol to liquor stores are now able to deliver grocery supplies to supermarkets. This move serves to bolster Texas supply chains during a time of uncertainty. “By waiving these regulations, we are streamlining the process to replenish the shelves in grocery stores across the state,” Abbott declared.

Healthcare systems across the country are under great pressure, which has prompted state legislatures to become more flexible with their otherwise stringent medical regulations. The Lone Star State has fast-tracked temporary licensing for doctors, assistants, and nurses coming from out of state to help Texas health professionals. States such as Maryland and South Carolina have taken similar approaches, recognizing that their medical restrictions may put them in a deadly bind as more coronavirus cases pop up and they don’t have enough staff to handle them. The federal government soon caught up with the states when Vice-President Mike Pence announced a new directive coming from the Department of Health and Human Services (HHS) that now lets healthcare providers treat patients across state lines.

Surprise! Some Reasonableness from the TSA

Quite possibly one of America’s most hated government agencies, the Transportation Security Administration (TSA) showed a shred of human decency by allowing travelers to have twelve-ounce bottles of hand sanitizer in their carry-ons. This well exceeds the 3.4-ounce limit that other liquids are subject to. Talk about an earth-shattering exemption. It’s almost as if the TSA’s security measures are theater at best and only make travelers’ experiences a total headache. But these days, we’ll take what we can get.

Any civil liberties–respecting person should always be skeptical about the role the government plays during a crisis. The ratchet effect is no joke, and any powers that government agencies obtain during this crisis will be maintained and likely expanded after it has subsided. To prevent such abuses of power, the case should not only be made for decentralized approaches to governance, but also for deregulation by showing how there is so much regulation on the books that private actors and civil society are kept from bringing a solution to the many problems mankind must muddle through.

Liberating these actors allows them to cooperate in a symbiotic manner with local and state entities to tackle these crises. If we just concede that the government should have total monopolies over health responses, we make centralization inevitable and let the federal government steamroll state governments, municipalities, and individuals further down the line.

The Moral Case for Deregulation

Politicians’ present-day fetish for regulation subjects hundreds of thousands of Americans to unjust criminal penalties, and further expansion of government overreach will put the country on the road to bureaucratic despotism.

This is a time when free market advocates should go beyond their mundane talking points about tax policy and start talking more about the regulations that make people’s everyday lives a hassle. Deregulation saves lives, and we should use this chance to demonstrate how free people who are allowed to cooperate can find solutions to societal problems.

Organizations such as the Competitive Enterprise Institute have already established that regulations cost the country a significant amount in economic activity—$1.9 trillion to be exact. Imagine what America’s most entrepreneurial citizens could do without those constraints. In terms of human costs, regulations can turn out to be deadly in pandemic scenarios. So we’re not just talking about numbers or abstractions here. Real, flesh-and-blood lives are on the line when we entrust the regulatory state with dominion over our activities.

The road to sound policymaking won’t be smooth, but we can only hope that the coronavirus will be the final pin that pops the regulatory balloon that politicians have recklessly inflated during their time in office. Crises do not have to automatically be associated with power grabs. Instead, they can provide opportunities for us to move forward and correct some of the errors of the past.

Reprinted from The Mises Institute

How Uncle Sam Will Spend $2.3 Trillion on Coronavirus Relief

How Uncle Sam Will Spend $2.3 Trillion on Coronavirus Relief

Before the coronavirus pandemic and the response to it triggered an economic meltdown, the U.S. federal government was planning to spend nearly $4.8 trillion in its 2020 fiscal year. Last week, President Trump signed a $2.3 trillion relief package aimed at mitigating an economic disaster.

How the government will be spending such a gargantuan sum of money via the CARES Act of 2020, and identifying who will benefit from it, are tough to visualize in a meaningful way. Hopefully, the chart below, which builds on analysis provided by the Committee for a Responsible Federal Budget, makes it easier to follow how panicky politicians have chosen to divvy up trillions of borrowed dollars in the largest aid package ever approved by the U.S. Congress.

How the U.S. Government Will Spend $2.3 Trillion for the Coronavirus Relief Package (CARES Act of 2020)

How the U.S. Government Will Spend $2.3 Trillion for the Coronavirus Relief Package (CARES Act of 2020)

Each of the boxes in the chart above contains a lot of details that will take time to unpack, but there is one main takeaway that all Americans should understand about what this spending means. Because all the $2.3 trillion being spent in this bill will be borrowed, which is coming on top of the $1+ trillion deficit the government was already going to run in FY 2020, the tax burden on Americans will be going up and government-provided benefits are going to be reduced.

Moreover, all that will happen much sooner than any politician or bureaucrat in Washington, D.C. will ever acknowledge.

As a case in point, consider that the CARES Act of 2020 was intended to prevent Americans from being laid off from their jobs because of government-mandated business closures aimed at slowing the spread of coronavirus infections. By providing loans and grants for both large and small businesses, as well as federal government-supported entities, the idea was to keep them paying Americans who have been blocked from earning incomes because of the government’s actions.

The bill provided $25 million to the Kennedy Center for the Performing Arts, which hours after President Trump signed the bill containing the provision bailing out the Kennedy Center into law, chose to lay off all the members of the National Symphony Orchestra anyway.

Kennedy Center President Deborah Rutter told the 96 musicians who make up the orchestra on Friday that their last paychecks were coming on April 3 and that they will not be paid again until the center reopens. The Kennedy Center has so far canceled performances through early May.

“This decision, from an organization with an endowment of nearly $100 million, is not only outrageous—coming after the musicians had expressed their willingness to discuss ways to accommodate the Kennedy Center during this challenging time—it is also blatantly illegal under the parties’ collective bargaining agreement,” Ed Malaga, president of the Local 161-710 of the American Federation of Musicians, slammed the move….

The payroll for the National Symphony each week is $400,000. Rutter said the $25 million would go toward “essential personnel to ensure we can reopen the Center.”

The CARES Act of 2020 also provided $260 billion in expanded unemployment insurance benefits for Americans who have been furloughed from their jobs. How likely is it that the bureaucrats of the federal government-supported Kennedy Center’s compared that line item in the spending bill to theirs and thought “we should have been given more” before deciding that since the money is all coming from the same place, they might as well provide their orchestra members the opportunity to collect unemployment benefits? They might also reason, “it’s not like they will be able to get such high paying jobs anywhere else anytime soon.”

With the federal spending spigot now fully open, will the Kennedy Center’s directors have the chutzpah to go back to Congress to demand more money to keep such high cost musicians on its payroll? If they do, will the musicians and their union change their tune and join them in supporting the effort? In the past, it has been hard for politicians to resist such joint efforts, which explains why we came into 2020 expecting to have a trillion dollar deficit.

Emergencies have a way of prioritizing what’s really important in a way that bureaucrats looking after their fiefdoms cannot. The question that must now be asked is whether Americans will be willing to pay higher taxes to pay off the money that’s been borrowed and will continue to be borrowed to support the Kennedy Center? Or might ordinary Americans look at the whole situation and ask, “What do we need a Kennedy Center for Performing Arts for in the first place?”, making it an excellent candidate for the chopping block.

Either way, it comes down to a choice between having to pay higher taxes or having fewer benefits provided by the government. The massive borrowing just unleashed by the coronavirus epidemic ensures those choices will be made.

Will Coronavirus End the Fed?

Will Coronavirus End the Fed?

September 17, 2019 was a significant day in American economic history. On that day, the New York Federal Reserve began emergency cash infusions into the repurchasing (repo) market. This is the market banks use to make short-term loans to each other. The New York Fed acted after interest rates in the repo market rose to almost 10 percent, well above the Fed’s target rate.

The New York Fed claimed its intervention was a temporary measure, but it has not stopped pumping money into the repo market since September. Also, the Federal Reserve has been expanding its balance sheet since September. Investment advisor Michael Pento called the balance sheet expansion quantitative easing (QE) “on steroids.”

I mention these interventions to show that the Fed was taking extraordinary measures to prop up the economy months before anyone in China showed the first symptoms of coronavirus.

Now the Fed is using the historic stock market downturn and the (hopefully) temporary closure of businesses in the coronavirus panic to dramatically increase its interventions in the economy. Not only has the Fed increased the amount it is pumping into the repo market, it is purchasing unlimited amounts of Treasury securities and mortgage-backed securities. This was welcome news to Congress and the president, as it came as they were working on setting up trillions of dollars in spending in coronavirus aid/economic stimulus bills.

This month the Fed announced it would start purchasing municipal bonds, thus ensuring the state and local government debt bubble will keep growing for a few more months.

The Fed has also created three new loan facilities to provide hundreds of billions of dollars in credit to businesses. Federal Reserve Chairman Jerome Powell has stated that the Fed will lend out as much as it takes to revive the economy.

The Fed is also reducing interest rates to zero. We likely already have negative real interest rates because of inflation. Negative real interest rates are a tax on savings and thus lead to a lack of private funds available for investment, giving the Fed another excuse to expand its lending activities.

The Fed’s actions may appear to mitigate some of the damage of the coronavirus panic. However, by flooding the economy with new money, expanding asset purchases, and facilitating Congress and the president’s spending sprees, the Fed is exacerbating America’s long-term economic problems.

The Federal Reserve is unlikely to end these emergency measures after the government declares it is safe to resume normal life. Consumers, businesses, and (especially) the federal government are so addicted to low interest rates, quantitative easing, and other Federal Reserve interventions that any effort by the Fed to allow rates to rise or to stop creating new money will cause a severe recession.

Eventually the Federal Reserve-created consumer, business, and government debt bubbles will explode, leading to a major crisis that will dwarf the current coronavirus shutdown. The silver lining is that this next crisis could finally demolish the Keynesian welfare-warfare state and the fiat money system.

The Federal Reserve’s unprecedented interventions in the marketplace make it more urgent than ever that Congress pass, and President Trump sign, the Audit the Fed bill. This would finally allow the American people to learn the truth about the Fed’s conduct of monetary policy. Audit the Fed is a step toward restoring health to our economic system by ending the fiat money pandemic that facilitates the welfare-warfare state and the unstable, debt-based economy.

Reprinted from the Ron Paul Institute for Peace and Prosperity.

Liberty and Slavery

Liberty and Slavery

Among the common beliefs of libertarians, opposition to slavery is one of the least controversial. Yet, the moral argument against slavery is one of libertarian philosophy’s most enlightening topics. Considering the “why” of libertarian opposition to slavery is profoundly instructive. Libertarianism approaches the question of individual rights in a unique way. 

In my opinion, the cornerstone of libertarian philosophy lies with its answer to the is-ought dichotomy presented in David Hume’s skepticism. From the far right, idealism is an absolute that tramples upon those who are different. From the far left, anti-idealism destroys morality, community and tradition – leaving behind an unprincipled bureaucracy that tramples in the name of expediency and arbitrary intellectual fashions. The best course lies with a balance, where absolute idealism and subjectivity exist only in context with one another. This context can only be found within the individual mind.  Morality, therefore, is a product of individuals reconciling the rational and emotional within themselves, and then confronting the consequent social reality. Libertarianism proposes a social environment where personal morality is respected and reconciling the individual right to moral self-determination between people with different beliefs and ideas is the core principle of politics.

The reconciliation of is and ought was a project of the Scottish Enlightenment, in the school of Common Sense (Thomas Reid). This school was heavily influential among the French liberals who later influenced both Bastiat and eventually the Austrian school of economics. The Common Sense school also served as the intellectual and religious foundation of New England’s revolutionary liberty movement. 

The American revolution must be seen as an alliance between Virginia old England aristocrats, seeking to maintain ancient yeoman rights, and New English Christian anarchists who possessed a religious ideal of human liberty. The former felt that society’s rights were protected in its Anglo-Saxon traditions and were to be defended existing, enlightened aristocratic social structures. They conceived of the US Constitution’s form without perceiving a need for enumerated rights. The State was the political society – the tobacco lords and their custom of mutual political equality. Jefferson broadened the notion by conceiving of a yeoman farmer class related to a romanticized vision of England’s past and Virginia’s present. 

New England, on the other hand, saw individual rights as derivative of holy truths discerned by the heights of enlightenment and Christian thought. They demanded the Bill of Rights.

The school of Common Sense led to a short-lived tradition within British liberal Christianity which held that science and religion must, according to the nature of each, exist in perfect harmony. If science and religion stood in contradiction, it meant that the interpretation of evidence or scripture must somehow be flawed. Out of this thinking, the Common Sense school developed a sophisticated moral science with an extensive vocabulary describing a person’s moral duties in the context of unalienable rights given by God. As science and religion ultimately diverged in the late 19th century, this philosophy fell out of favor.

Common Sense philosophy and the moral ‘science’ of the so-called Christian Enlightenment should be more widely appreciated within libertarian community. The content of this ‘science’ applies to modern questions, so long as one possesses a key to interpret the religious concepts in secular terms. This isn’t very difficult to accomplish, since the Christian Enlightenment was already quite ameliorable to science.

The question of is-ought is simply a question of mind and soul. Reason and emotion. The answers of the Common Sense school are self-evidently superior, and the reason for its decline in popularity is clear.  The question of soul and mind is one philosophy grappled with, using great energy, for two hundred years before the question was finally swept aside by the great and terrible intellectual winds that accompanied imperialism.  Imperialism, the systemization of pure war, the categorization of all into a utilitarian, all-consuming whole; a system of mortal contest between powers, a race to the bottom, a fiendish quest to consume, destroy, repeat. This gave us the atomic bomb and the Holocaust, among other outcomes.

In contrast to 20th century’s outcomes, the spirit of 1776 was fueled by a philosophy of freedom. The people learned from New England preachers teaching of the unity of mind and soul within the individual, who stands as a moral self-sovereign. The importance of liberty was self-evident to them, as real as the green grass and God above.

The philosophical spirit of 1776 is the same spirit that abolished slavery. This does not refer to the American Civil War. While it’s true that the Civil War was fought in the context of slavery, it was a war over tariffs and power. Its concern with slavery was related to the treadmill of empire building, as a more efficient, modern version of empire overthrew an earlier less efficient system of slavery and exploitation. 

In this political environment, it was the moral philosophy of the anti-slavery movement which made ending slavery an absolute condition of the Empire’s progress. We can disdain empire, but we ought to respect the manner in which it was compelled to extend rights to freed slaves. The Emancipation Proclamation freed few slaves, as those areas under federal control were not subject to emancipation. It was the 13th Amendment which freed the slaves, and it was the moral stubbornness of the anti-slavery movement that mandated the necessity of the 13th Amendment.

Whether in the American anti-slavery movement, or in the efforts of William Wilberforce in the UK, it was the moral and philosophical foundation of the British Christian Enlightenment which made slavery morally and politically anathema. Never before in history had an absolute moral argument against slavery been made. Even the New Testament apostles didn’t condemn the practice utterly. The basic foundations of anti-slavery, democracy and human rights are found in the Christian Enlightenment of British Liberalism. 

Although the world today couldn’t care less about liberty, the so-called ‘liberal world order’, pretentious as it is, derives from the Christian Enlightenment. The moral science derived from Common Sense more or less conquered the world. While Locke might speak of civil and property rights, John Stuart Mill of personal liberty, it is Common Sense that speaks of the moral worth and essential spiritual equality of man. 

William Ellery Channing was a New England preacher from the early 19th century. He was a Unitarian, and was trained in the moral science of the Common Sense school of philosophy – the staple teaching at Harvard University before the arrival of continental (Prussian) influence. He was the key figure of his movement in the age just prior to Unitarianism’s digression into bizarre Transcendentalism. He took the moral science of the Common Sense school and the liberal interpretation of Christianity to their absolute heights. Naturally, he had things to say about slavery.

Channing’s thoughts about slavery, penned somewhat early than any major political tensions emerged surrounding the issue (outside of Massachusetts high society), were recorded in a sermon treatise released in 1833 simply titled, Slavery.

Channing’s argument against the practice of slavery invokes some of the core principles of his moral philosophy. I will review what he wrote and relate it to modern day society. Although the subject is slavery, which is non-controversially bad, the arguments against it serve to defend against modern day political ideas which are sometimes quite popular. By understanding the moral argument against slavery which was used by Common Sense school philosophers, one can have a deeper comprehension of the philosophy of individual rights.

Lofty and Pure Sentiment

As Channing begins his treatise on slavery, he frames the core belief behind his argument: the central importance of human morality, it being derivative of a power greater than any which can be constructed by man.

There is but one unfailing good; and that is, fidelity to the Everlasting Law written on the heart, and rewritten and republished in God’s Word.

Whoever places this faith in the everlasting law of rectitude must of course regard the question of slavery first and chiefly as a moral question.

There are times when the assertion of great principles is the best service a man can render society.

A community can suffer no greater calamity than the loss of its principles. Lofty and pure sentiment is the life and hope of a people.

Such ought to remember that to espouse a good cause is not enough. We must maintain it in a spirit answering to its dignity.

Although the introductory portion of Channing’s argument invokes religion, the philosophical point he hopes to convey is central to his entire critique of slavery. His religious belief equates that which is written on the heart to that which is recorded in religious scripture. In Unitarian moral philosophy, the conscience is the center of all moral decision making. The conscience represents the union of rational thought with sentiment. It combines the oughts of life – our desire for happiness – with the logically deduced principles and rights which support happiness. Devotion to morality, or “the Everlasting Law,” is nothing more or less than a principled commitment to the rational pursuit of that which motivates us as individuals, including that which we have in common between us as human beings.

Channing claims that a community can suffer no greater, “…calamity…,” than the loss of its principles. Later in his sermon, he exalts the moral worth of a society above its material and economic worth. He argues that wealth serves a higher cause, and that it has no inherent value beyond the cause which it serves. While for some the cause of life might pertain to a higher supernatural plane, in Channing’s moral science the principles and aspirational sentiments associated with what we call heaven can be expressed and achieved also on Earth (not meaning to build heaven on Earth, but to strive to be nearer to worthiness of heaven while on Earth). This comports to an easy secular interpretation.

Life’s value is ineffable. We can’t scientific prove why it matters or not. However, most of us place value on living life. We aspire and experience longing. Though the object of our longing differs in form from person to person, the essence of longing is the same. We live life in search of something which is valuable to of us. That thing, that value, and the longing for it in the form of sentiment, represent the lofty and pure heights to which we aspire. Channing’s moral argument is that if a society cannot resolve to devote itself with clear mind and conscience to whatever it is we long for, then our life is a waste.

Only societies which prioritize moral principles as bedrock values will be worthy of obtaining the object of their longing. By stating this, Channing sets out stakes. If slavery cannot be considered moral, it cannot be permitted by a society which hopes to thrive.

Why Humans Can’t Be Property

Channing’s first substantive topic is about property. Here he argues that a human cannot be property. He presents the notion as a fallacy, reviewing many reasons why the concept of ownership of humans is morally and logically incorrect.

His first argument proposes that slavery depends upon a contradictory principle, relying on a notion of inequality which is not present in the Lockean philosophy of property rights.

It is plain, that, if one man may be held as property, then every other man may be so held.

If there be nothing in human nature, in our common nature, which excludes and forbids the conversion of him who possesses it into an article of property; if the right of the free to liberty is founded, not on their essential attributes as rational and moral beings, but on certain adventitious, accidental circumstances, into which they have been thrown; then every human being, by a change of circumstances, may justly be held and treated by another as property.

The consciousness of indestructible rights is a part of our moral being. The consciousness of our humanity involves the persuasion, that we cannot be owned as a tree or a brute. As men we cannot justly be made slaves. Then no man can be rightfully enslaved.”

This argument applies especially to Americans, who had in living memory defended their natural rights against a tyrant (the treatise was written in 1833). The American assertion to liberty invalidates the logic of slavery. If some men can be enslaved, then any man could be; in an environment that permits slavery, American claims to liberty and rights are invalid.

The natural rights associated with American liberty come from the philosophies of British Liberalism, which has all but died out among governments and academics and is dying out among Western professional organizations. However, the formal world order is ironically grounded in these same principles as the foundation of the premise of universal human rights. 

The flaw of modern political trends lies with their overreliance on experts wielding power, which contradicts the premise of universal human rights. Any technocratic order which seeks to deny rights to people via removing their privacy, taxing them without recourse, denying them the right to self-defense and so forth, must nevertheless be led by a class of experts. Human rights, in this environment, must be gifted by the experts. The clear implication is that human rights can be modified if the experts deem it necessary. 

The depravities of communist regimes give plentiful examples of the principle of conditional rights. If American society will go towards a direction where more and more elements of society are managed by technical experts, then it must do so while preserving individual self-determination. If experts aren’t managing at the pleasure of the managed, then human rights can’t exist. Human rights assume a fundamental moral equality between humans, and the concept of expert rule flies in the face of that assumption.

Channing’s next argument references rights. It is a bit archaic. In Southern slavery, slaves were considered nevertheless to be men who held rights. For instance, it was illegal to murder slaves. Channing takes for granted that his audience has already conceded some rights to slaves.

A man cannot be seized and held as property, because he has Rights.

Now, I say a being having rights cannot justly be made property; for this claim over him virtually annuls all his rights. It strips him of all power to assert them. It makes it a crime to assert them. The very essence of slavery is, to put a man defenceless into the hands of another. The right claimed by the master, to task, to force, to imprison, to whip, and to punish the slave, at discretion, and especially to prevent the least resistance to his will, is a virtual denial and subversion of all the rights of the victim of his power.

This argument is more profound than it first appears. Generalized, the argument says that if some rights are possessed by a man, then he must possess all the rights which are natural to all men. Later, Channing discusses rights in greater detail, devoting an entire chapter to them. He includes a deeper discussion of where rights come from. Suffice it to say that rights are purposeful. Rights are not entitlements, being only a stronger version of privileges. In Channing’s moral worldview, rights are instruments or tools which pertain to the purpose of man’s being. Rights exist to provide man a means to carry out that purpose. If one ounce of that purpose is acknowledged, if any means to accomplish that purpose are permitted, then one must permit them all, or else invalidate the both the man’s purpose and existence.

If a man doesn’t exist to fulfill his own happiness within his means, then his life is null. To enslave a man is to murder a man, from the perspective of the moral guilt of the perpetrator. It is to deem the fulfillment of happiness of one person to be irrelevant, while simultaneously pursuing one’s own fulfillment of happiness. It is a moral contradiction that can only persist in an environment of unmoderated lusts and unlimited violence. While slavery in its heyday purported to be within a moral framework, the abundant rape and violence committed by slavers against slaves, without punishment, is proof of the harms stemming from slavery’s contradiction of moral principles.

The principle of moral consistency supports the notion of the equality of man. There is no scientific proof that life matters. Consequently, the value of life exists only as a subjective assertion on the part of any individual human. Logically, morally and legally, the assertion of life’s value from one man to the next is inherently equal. Human inequality cannot be supported morally, and systems that assert moral inequality can only be sustained through perpetual violence.

Channing explains why even outward differences between men, in ability and birth, do not abolish the fundamental moral equality of men.

Another argument against property is to be found in the Essential Equality of men.

All men have the same rational nature, and the same power of conscience, and all are equally made for indefinite improvement of these divine faculties, and for the happiness to be found in their virtuous use. Who, that comprehends these gifts, does not see that the diversities of the race vanish before them? Let it be added, that the natural advantages, which distinguish one man from another, are so bestowed as to counterbalance one another, and bestowed without regard to rank or condition in life. Whoever surpasses in one endowment is inferior in others. Even genius, the greatest gift, is found in union with strange infirmities, and often places its possessors below ordinary men in the conduct of life. Great learning is often put to shame by the mother-wit and keen good sense of uneducated men. Nature, indeed, pays no heed to birth or condition in bestowing her favors. The noblest spirits sometimes grow up in the obscurest spheres. Thus equal are men; and among these equals, who can substantiate his claim to make others his property, his tools, the mere instruments of his private interest and gratification? Let this claim begin, and where will it stop? If one may assert it, why not all?

Who of us has no superior in one or the other of these endowments: Is it sure that the slave or the slave’s child may not surpass his master in intellectual energy or in moral worth? Has nature conferred distinctions which tell us plainly, who shall be owner? and who be owned? Who of us can unblushingly lift his head and say that God has written ‘Master’ there? or who can show the word ‘Slave’ engraven on his brother’s brow?”

The equality of man, taken together with Channing’s point about rights, proves that government must serve at the mercy of the people. Government cannot legitimately defend a vision of society that it synthetically imposes upon that same society. The progressive notion of shaping society in a better direction (coercively) is immoral. It establishes an inequality, where one class of intellectual superiors arbitrarily designates those with whom they disagree as lesser, who only exist to serve the aspirations of their betters. Even when the aspirations of the betters purportedly include the betterment of the lessers, the principle still holds. 

One may not keep a man in slavery simply because one asserts it is for the slave’s own good. Likewise, a coercive progressive state has no right to impose whichever intellectual fashion of the age upon the masses. This notion is morally indefensible, and again the progressive state truly realized will always collapse into violence and tyranny.

The foibles of the ‘uneducated’ must be tolerated by a moral society. They have a moral right to their ignorance. The harm that ignorance causes to society must be addressed in non-coercive ways. The experts also, from the perspective of the future, are themselves perfectly ignorant. There is no moral proof that the latter may rule over the former. We are all striving to do our best, and all of us are failing, though some of us may be ahead of others. Mutual betterment can only occur cooperatively.

Persuasion, rights-respecting boundaries and assertion of rights all serve as tools with which the more enlightened can interact with the less endowed. Both parties have rights, and within the scope of those rights, both are free to act how they choose.

Channing’s next argument relates to the theory of property itself.

That a human being cannot be justly held and used as property is apparent from the very nature of property. Property is an exclusive, single right. It shuts out all claim but that of the possessor, What one man owns cannot belong to another. What, then, is the consequence of holding a human being as property? Plainly this. He can have no right to himself. His limbs are, in truth, not morally his own. He has not a right to his own strength. It belongs to another. His will, intellect, and muscles, all the powers of body and mind which are exercised in labor, he is bound to regard as another’s. Now, if there be property in any thing, it is that of a man in his own person, mind, and strength. All other rights are weak, unmeaning, compared with this, and in denying this all right is denied.

This argument speaks for itself in a straightforward manner. A man and his body already belong to himself, his very birth the act of homesteading. No system which respects property rights can infringe upon this self-ownership and be taken seriously.

Even so, Channing exposits the principle beautiful. In his explanation, there are foreshadowed hints of Ayn Rand’s better angels, among parallels to the ideas of libertarian property theorists. Channing’s argument, though, adds a moral dimension. Property exists to serve man’s moral purpose, which is higher than his economic purpose. His moral purpose is the ultimate aim of his life as he sees it, the purpose for which he lives. By placing economic rights into the greater moral context, Channing shows that the greater right – moral self-determination – trumps any property right.  Property in context only serves moral purpose.

Contextualizing property rights within moral self-determination represents an interesting argument that is not usually discussed in libertarian philosophy. Most property theory derives from the pure logic which results from examining a conflict situation. Property is simply the outcome of applying logic consistently to the nature economic behavior and conflict resolution. We must take an extra step, however, to ask why we care about pure logic. It’s true, the answers come easy: we want a peaceful, orderly society, among other arguments. Still, Channing’s answer is also very compelling.

Channing presents economic activity – what Austrian Economics calls human action – as an outcome of moral purpose. Channing presumes a longing – an ineffable ought – behind human action. The Austrians are somewhat ambivalent here. They admit that there must be some force behind human action, plainly acknowledge it, but they are neutral about what it must be. Channing’s worldview is at least substantively neutral. We are permitted to long for what we choose to long for. Yet, Channing introduces his own sentiments, assuming that there is some common feeling which can be observed as common between people. It is a sense of universal love and aspiration towards personal betterment. Regardless, even he would admit that he himself only wishes for this to be the outcome of society. It was his aspiration to establish a common sense of universal love in the human heart. His pursuit of this aim was through persuasion, not force.

Irrespective of the object of human longing, the presence of a greater, moral impetus behind human action slightly modifies libertarian thought. We can’t just take human purpose for granted and evaluate human action neutrally. Instead, we can observe the consequences of human action, and evaluate whether these consequences are consistent with whatever moral purposes were behind the action. It is a more holistic approach. 

In politics and law, we establish systems to achieve ends. Political thought is rife with discussions of means and ends. However, rarely do we hear about motives. Channing’s worldview focuses first and last on motive, not neglecting means or ends.

Isn’t the slave motivated by the same feelings as the slave master? Do not both aspire to personal happiness as they see fit?

In libertarianism, our belief in freedom of the markets, in combination with the materialistic emphasis of our focus on rational thought, cause most of us to place great weight on the value of material wealth. We shouldn’t make the mistake, however, of thinking that it is material well-being which primarily motivates us as libertarians. 

The values which motivate us as libertarians – or ought to: the commitment to moral self-determination – are why we support free markets and rational thought. The importance of wealth is derivative of economic freedom and reason. 

If wealth must conflict with permitting moral self-determination, we must remain true to our principles. Moral freedom trumps. This is true for an obviously controversial practice such as slavery, but also true for subtler practices. Perhaps there are times when the landlords’ rights might not always trump the squatters’, or at least times when the landlord might discover a heart full of charity.

Libertarianism is odd among economic philosophies in that it values the principle of wealth more than wealth itself. Certainly, this attitude does always not contribute well to the movement’s influence in society.

Slavery in antebellum America existed in a context where the slave trade was considered immoral and abhorrent. There were self-serving reasons why the Southern slavers banned new slave imports (it increased the value of domestic slaves). Even so, the official moral position of the slaver society was that the creation of new slaves was illegal and immoral. Many defenders of slavery insisted that theirs was an inherited, unwanted stewardship over a lesser, unruly people. Even those who saw Africans as essentially equal to Europeans still concluded that the conditions of being raised in slavery would prevent a population from safely integrating into the American system of personal liberty. The slavers argued that they were ultimately guilty of no crime, and the only guilt lay with the original perpetrators who first engaged in the slave trade. Channing addresses this argument.

We have a plain recognition of the principle now laid down, in the universal indignation excited towards a man who makes another his slave. Our laws know no higher crime than that of reducing a man to slavery. To steal or to buy an African on his own shores is piracy. In this act the greatest wrong is inflicted, the most sacred right violated. But if a human being cannot without infinite injustice be seized as property, then he cannot without equal wrong be held and used as such. The wrong in the first seizure lies in the destination of a human being to future bondage, to the criminal use of him as a chattel or brute. Can that very use, which makes the original seizure an enormous wrong, become gradually innocent?

The principle of moral philosophy espoused above deals with chains of guilt. It is an anti-conservative argument. If a situation derives from a crime, some restitution of the original crime, in proportion to that crime, must be undertaken.

In my opinion, calls for federal cash to be doled out as slavery reparations is absurd. However, a more aggressive level of social assistance to impoverished black communities is morally appropriate. From a moral point of view, American society was guilty of coercively immigrating black slaves, then perpetually reaffirming the minority status of their descendants on the basis of skin tone. That deserves a moral redress. It should occur or should have occurred in the form of more engagement. The current strategy for reconciling cultural differences within America takes the form of welfare checks and long-term prison internment, along with various forms of discrimination, nasty and subtle, combined with probably ineffectual academic support.

Much can and should be said about academic affirmative action. The political state of academia is miserable. Affirmative action in education is meant to improve the socio-economic conditions of an underserved community. Instead, young minority students have their resentments intellectually entrenched, while they receive expensive training that is unlikely to improve their future economic condition.

The majority community in America fails both to show mercy and penance adequately, while simultaneously lacking the ability to be tough. Persistent racism clashes with overly agreeable idealistic denial of endogenous problems facing minority communities. Even so, Channing’s appraisal of slavery’s moral status provides us with a moral solution this conundrum.

Morally, most of the problems within black communities have to be solved by black communities. However, it is appropriate to argue that it is impossible to morally disentangle black endogenous guilt from the moral history of the majority community which effectively created the condition of black society within America. It might be easy to say that enough time has passed, that it is now appropriate to leave the black community to solve its own challenges. Yet, the creation of black American society itself is the product of never addressed moral guilt. If immorality was ignored in the past, it cannot also be ignored in the future. Irrespective of the policy questions, the majority culture in America has a special moral obligation to not turn a blind eye to minority struggles.

Generalized, libertarians should not invoke individual rights as a moral absolution of the responsibility to be concerned with the condition of other people. We may not legally owe money or property to redress past social injustices, however, we do owe our concern and effort to help other humans. The spirit of charity should be morally inherent in libertarian philosophy. The reason is simply that justice is imperfect. While we would never go as far as John Rawls does, demanding legal institution of perfect justice, we can acknowledge that history and life are full of messy moral guilt. Therefore, in general, it is good to be charitable to one another. Rawls is partly correct.

The reason why Rawls is wrong lies embedded in Channing’s logic. Past guilt must be redressed in proportion. If modern day practices are just, and we argue that the injustice of past circumstances is the cause for reparations, then we can just as easily argue the reverse. Some portion of past actions may indeed have been perfectly just, and so the existence of some past injustices should not be license for present injustice. Rawls’ logic supports the morality of a general spirit of voluntary charity, as an important personal principle. It doesn’t support coercive reparations.

To reiterate, coercive charity is against libertarian principles, but a spirit of charity as a personal moral impetus ought to be a fundamental aspect of libertarian morality. Again, the reason is that the past is far too messy for anyone to make any absolute claims about justice. There will have been injustices, and will continue to be injustices, and that proposes a moral obligation on all members of society to do what they can to redress what they can.

Rights

Another argument against the right of property in man may be drawn from a very obvious principle of moral science. It is a plain truth, universally received, that every right supposes or involves a corresponding Obligation. If, then, a man has a right to another’s person or powers, the latter is under obligation to give himself up as a chattel to the former. This is his Duty.

He is bound to be a slave; … because another has a right of Ownership, has a Moral claim to him, so that he would be guilty of dishonesty, of robbery, in withdrawing himself from this other’s service. … Ought he not, if he can, to place himself and his family under the guardianship of equal laws? Should we blame him for leaving his yoke? Do we not feel, that, in the same condition, a sense of duty would quicken our flying steps? Where, then, is the obligation which would necessarily be imposed, if the right existed which the master claims? The absence of obligation proves the want of the right. The claim is groundless. It is a cruel wrong.”

If a man must be whipped and chained so that he remains a slave, doing what his master commands, then one cannot say that these commands represent the slave’s duty. The way Common Sense philosophy conceives of duty, it is intrinsic and related to rights as a natural foil. If people possess rights themselves, then intrinsically they have an attendant duty to respect the rights of others. 

In libertarian philosophy we focus on that which is coercive. If so-called duty has to be enforced through coercion, then rights can’t exist. In short, no government can claim a moral right to tell anyone what their purpose is, or what they must do to be happy. Progressives claim a moral high ground, believing expert-run government to have a moral impetus to improve society. The unspoken implication is that humans must, by way of moral duty, support and sustain the government’s efforts to create the common good. However, if government doesn’t respect the moral self-determination of its citizens, then citizens have no conceivable obligation to sustain the moral authority of the government. It’s a matter of simply consistency and equality.

Channing, in a later chapter on rights, dismantles the government’s pretense at moral authority. Specifically, he discusses whether claims at improving the common good can supplant rights.

Rights are made to depend on circumstances, so that pretences may easily be made or created for violating them successively, till none shall remain. Human rights have been represented as so modified and circumscribed by men’s entrance into the social state, that only the shadows of them are left. They have been spoken of as absorbed in the public good; so that a man may be innocently enslaved, if the public good shall so require.

Still the question will be asked, ‘Is not the General Good the supreme law of the state? Are not all restraints on the individual just, which this demands? When the rights of the individual clash with this, must they not yield? Do they not, indeed, cease to be rights? Must not every thing give place to the General Good?’ I have started this question in various forms, because I deem it worthy of particular examination. Public and private morality, the freedom and safety of our national institutions, are greatly concerned in settling the claims of the ‘General Good.’ In monarchies, the Divine Right of kings swallowed up all others. In republics the General Good threatens the same evil.

What, then, are the consequences of making the building of the “General Good” the supreme law of the land?

It is a shelter for the abuses and usurpations of government, for the profligacies of statesmen, for the vices of parties, for the wrongs of slavery. In considering this subject, I take the hazard of repeating principles already laid down; but this will be justified by the importance of reaching and determining the truth. Is the General Good, then, the supreme law to which every thing must bow?

Yet, if the common good is not to be the supreme aim of the state, what ought to be?

The supreme law of a state is not its safety, its power, its prosperity, its affluence, the flourishing state of agriculture, commerce, and the arts. These objects, constituting what is commonly called the Public Good, are, indeed, proposed, and ought to be proposed, in the constitution and administration of states. But there is a higher law, even Virtue, Rectitude, the Voice of Conscience, the Will of God. Justice is a greater good than property, not greater in degree, but in kind. Universal benevolence is infinitely superior to prosperity. Religion, the love of God, is worth incomparably more than all his outward gifts. A community, to secure or aggrandize itself, must never forsake the Right, the Holy, the Just.

Moral Good, Rectitude in all its branches, is the Supreme Good; by which I do not intend that it is the surest means to the security and prosperity of the state. Such, indeed, it is, but this is too low a view. It must not be looked upon as a Means, an Instrument. It is the Supreme End, and states are bound to subject to it all their legislation, be the apparent loss of prosperity ever so great.

Channing boldly asserts what might be called the deontological argument over the consequentalist view of libertarianism. Yet, I believe he transcends the debate. By framing morality as an end, not a means, naturally Channing’s view opposed consequentialism. Yet, in Channing’s perspective moral rectitude is almost an economic product. It is not material, and yet, it is the outcome of a life dedicated to laboring for self-improvement. A society must labor, through education, endurance, mutual support and amidst material activity, to uphold moral principles. In this light, his argument is partly consequentialist. Since morals are the desired product and outcome of society, then moral consistency is the means to produce them. Moral rectitude is a consequence of moral self-improvement. 

This argument may appear pedantic, even tautological to committed philosophical skeptics. Even so, the aim of Common Sense philosophy is to harmonize is and ought and consider them together. Morality is not merely perfecting our obedience to an arbitrary set of rules, to Common Sense thinkers, morality is harmonizing natural laws with inborne desires, and self-derived aspirations. Morality is inclusive of material ends, contextualizing them with human motives that inspire, incentivize and produce material ends.

If we exalt morality as the great End of human action, we are merely exalting our motivation for pursuing material ends along with the ends themselves.

My questions for all communists who wish to build heaven on Earth is: and then what, for what purpose, and, how do you know? The same can be said concerning the frailty of the consequentialist position.

Channing continues his discussion of society’s purpose and why the state’s infringement of rights cannot be justified by appeals to the common good. He addresses the idea of the state using its power to support national economic well-being.

“National wealth is not the End. It derives all its worth from national virtue. If accumulated by rapacity, conquest, or any degrading means, or if concentrated in the hands of the few, whom it strengthens to crush the many, it is a curse. National wealth is a blessing, only when it springs from and represents the intelligence and virtue of the community, when it is a fruit and expression of good habits, of respect for the rights of all, of impartial and beneficent legislation, when it gives impulse to the higher faculties, and occasion and incitement to justice and beneficence. No greater calamity can befall a people than to prosper by crime. No success can be a compensation for the wound inflicted on a nation’s mind by renouncing Right as its Supreme Law.”

It is interesting that Channing’s frame of the moral background to national wealth so closely refers to early 21st century economic malaise in America. Wealth which has accumulated contrary to the virtue of the nation, via empire, exploitation and greed, leads to negative outcomes. In other words, exploitative systems are fragile, unsustainable, and only benefit a few. So-called virtuous wealth is gained when a system is anti-fragile. Channing correlates his notion of virtuous wealth to a well-developed level of human capital, balanced institutions, a healthy distribution of wealth, and so forth. Even a consequentialist or a minarchist libertarian would agree that de-centralized economies with strong human capital are more likely to produce a better standard of living.

In Common Sense morality, virtue and consequence are harmonious concepts. That which is good is that which is natural and vice versa. Channing doesn’t propose a list of arbitrary moral precepts which must be followed. His morality requires that moral precepts must be continually adjusted to remain in harmony with natural consequences. Morality is the great End, but it is meant as a product of what is naturally right, and should contribute to what is naturally good.

After discussing the importance of putting morals before money, Channing discusses the dangers of doing the opposite. In doing so, he offers a stunning rebuke of policy wonkery and state economic intervention – over a century before public choice theory, and a half-century before laissez-faire economic theory.

Let a people exalt Prosperity above Rectitude, and a more dangerous end cannot be proposed. Public Prosperity, General Good, regarded by itself, or apart from the moral law, is something vague, unsettled, and uncertain, and will infallibly be so construed by the selfish and grasping as to secure their own aggrandizement. It may be made to wear a thousand forms according to men’s interests and passions. This is illustrated by every day’s history. Not a party springs up, which does not sanctify all its projects for monopolizing power by the plea of General Good. Not a measure, however ruinous, can be proposed, which cannot be shown to favor one or another national interest. The truth is, that, in the uncertainty of human affairs, an uncertainty growing out of the infinite and very subtile causes which are acting on communities, the consequences of no measure can be foretold with certainty. The best concerted schemes of policy often fail; whilst a rash and profligate administration may, by unexpected concurrences of events, seem to advance a nation’s glory. In regard to the means of national prosperity the wisest are weak judges. For example, the present rapid growth of this country, carrying, as it does, vast multitudes beyond the institutions of religion and education, may be working ruin, whilst the people exult in it as a pledge of greatness. We are too short-sighted to find our law in outward interests. To states, as to individuals, Rectitude is the Supreme Law. It was never designed that the Public Good, as disjoined from this, as distinct from justice and reverence for all rights, should be comprehended and made our end. Statesmen work in the dark, until the idea of Right towers above expediency or wealth. Wo to that people which would found its prosperity in wrong! It is time that the low maxims of policy, which have ruled for ages, should fall. It is time that Public Interest should no longer hallow injustice, and fortify government in making the weak their prey.

In summary, Channing says that people are stupid and planners never get it right. To base a government off of planning for the public good is to see plans fail, and in this vacuum, special interest assert itself. For this reason, governments are only really equipped to protect rights, and let the people use them to create the common good on their own. For Channing, morality is that which is common and clear.

What about pragmatism?

Perhaps it will be replied to all which has now been said, that there is an argument from experience, which invalidates the doctrines of this section. It may be said, that human rights, notwithstanding what has been said of their sacredness, do and must yield to the exigencies of real life, that there is often a stern necessity in human affairs to which they bow. [During a crisis] All rights are involved in the safety of the state; and hence, in the cases referred to, the safety of the state becomes the supreme law.”

If rights are conceded to the state, then the state’s self-preservation and self-serving interest are made supreme. If a crisis becomes too big for society to solve, it’s unlikely the state itself – with its coercive power – would be any better at solving it. When civil society faces a crisis, it seeks to save itself. If it fails to do so, it may turn to the state. However, the state would react in the same way – it will act to save itself. The state will not save civil society, if civil society itself gives up.

After his discussion of property, including how rights relate to humans-as-property, Channing devotes an entire chapter to rights themselves. This section is the most instructive of his treatise.

First, Channing defines rights as intrinsic to man’s nature as a moral being. As previously discussed, rights are not meant to be thought of as entitlements, but rather as instruments or abilities. He connects rights and duties as unified, co-dependent concepts. A basic conception of general rights can be used to deduce specific rights.

Man’s rights belong to him as a Moral Being, as capable of perceiving moral distinctions, as a subject of moral obligation. As soon as he becomes conscious of Duty, a kindred consciousness springs up, that he has a Right to do what the sense of duty enjoins, and that no foreign will or power can obstruct his moral action without crime.

The sense of duty is the fountain of human rights. In other words, the same inward principle, which teaches the former, bears witness to the latter. Duties and Rights must stand or fall together. It has been too common to oppose them to one another; but they are indissolubly joined together. That same inward principle, which teaches a man what he is bound to do to others, teaches equally, and at the same instant, what others are bound to do to him. That same voice, which forbids him to injure a single fellow-creature, forbids every fellow-creature to do him harm. His conscience, in revealing the moral law, does not reveal a law for himself only, but speaks as a Universal Legislator. He has an intuitive conviction, that the obligations of this divine code press on others as truly as on himself. … Accordingly there is no deeper principle in human nature than the consciousness of rights. So profound, so ineradicable is this sentiment, that the oppressions of ages have no where wholly stifled it.”

I have always felt that individualism is less selfish than collectivism. Individualism is not egoism. It, instead, perceives humans in general as having an individual existence. The implications of individualism to the self pertain also to all other human beings. An individualist who demands certain rights would also intrinsically accede those same rights to all others. Collectivists on the other hand, are quick to harm and hurt individuals in the name of a common good. The collective good is meant to benefit individuals, and yet, great harm to individuals is a frequent product of efforts to establish the collective good. Anecdotally, collectivist societies tend to be more superficial and face oriented. Charity is a phenomenon that applies when others are looking. Individualist societies tend to express charity even when no one is watching.

 

What are our rights? Channing offers an answer.

Volumes could not do justice to them; and yet perhaps they may be comprehended in one sentence. They may all be comprised in the Right, which belongs to every rational being, to exercise his powers for the promotion of his own and others’ Happiness and Virtue. As every human being is bound to employ his faculties for his own and others’ good, there is an obligation on each to leave all free for the accomplishment of this end; and whoever respects this obligation, whoever uses his own, without invading others’ powers, or obstructing others’ duties, has a sacred, indefeasible right to be unassailed, unobstructed, unharmed by all with whom he may be connected. Here is the grand, all-comprehending right of human nature. Every man should revere it, should assert it for himself and for all, and should bear solemn testimony against every infraction of it, by whomsoever made or endured.

Rights are related to the non-aggression principle. As stated at the beginning of this article, the value of human life is a product of an individual subjective assertion. Logically, all subjective assertion is equal, and so the value of all human life must also be equal. Our own promotion of our own and others’ happiness is a choice that is equally valid between all humans, thus we have a right to it, and also a duty to honor others’ right to it.

Channing also explains how this principle can lead to the derivation of specific rights, concluding with a condemnation of slavery for violating them.

Having considered the great fundamental right of human nature, particular rights may easily be deduced. Every man has a right to exercise and invigorate his intellect or the power of knowledge, for knowledge is the essential condition of successful effort for every good; and whoever obstructs or quenches the intellectual life in another inflicts a grievous and irreparable wrong. Every man has a right to inquire into his duty, and to conform himself to what he learns of it. Every man has a right to use the means, given by God and sanctioned by virtue, for bettering his condition. He has a right to be respected according to his moral worth; a right to be regarded as a member of the community to which he belongs, and to be protected by impartial laws; and a right to be exempted from coercion, stripes, and punishment, as long as he respects the rights of others. He has a right to an equivalent for his labor. He has a right to sustain domestic relations, to discharge their duties, and to enjoy the happiness which flows from fidelity in these and other domestic relations. Such are a few of human rights; and if so, what a grievous wrong is slavery!

A government or system which does not leave man free to pursue his own happiness has no moral justification. Moreover, not only must man be free, but specifically he must be permitted broad and particular freedoms which relate directly to that pursuit. The implication of freedom to pursue own’s own happiness is a set of uncountable shackles on government.

Channing describes the ideal government.

That government is most perfect, in which Policy is most entirely subjected to Justice, or in which the supreme and constant aim is to secure the rights of every human being. This is the beautiful idea of a free government, and no government is free but in proportion as it realizes this. Liberty must not be confounded with popular institutions. A representative government may be as despotic as an absolute monarchy. In as far as it tramples on the rights, whether of many or one, it is a despotism. The sovereign power, whether wielded by a single hand or several hands, by a king or a congress, which spoils one human being of the immunities and privileges bestowed on him by God, is so far a tyranny.

Democracy is not inherently good, and Channing explains why representative government even matters at all from the perspective of liberty – something American liberty lovers, and liberty lovers around the world ought not forget.

The great argument in favor of representative institutions is, that a people’s rights are safest in their own hands, and should never be surrendered to an irresponsible power. Rights, Rights, lie at the foundation of a popular government; and when this betrays them, the wrong is more aggravated than when they are crushed by despotism.”

If a people lose the ability to withdraw consent from a governmental system, then that system is not consistent with liberty. The degree to which a government relies on voluntary consent rather than coercion, is the degree to which it is consistent with liberty. Wherever one stands on the spectrum of support for state power, this principle is true. A government can always be either more free or less free than it presently is simply by becoming less or more coercive in achieving its ends.

Conclusion

Channing concludes with his most powerful argument against the holding of men as property. He assumes, as always, the equality of men in determining for themselves what is right. However, he also injects his own aspirational hopes for how men should use their moral agency, as part of his subjective interpretation of what men are by nature. In contrast to modern day progressive politics, Channing’s desire for society to improve is based on hopeful aspiration combined with persuasion, through appealing to a common hope in equally morally sovereign fellow human beings. By emphasizing the moral sovereignty of human beings – himself counted among them – he obliterates any possible argument that defends slavery.

I come now to what is to my own mind the great argument against seizing and using a man as property. He cannot be property in the sight of God and justice, because he is a Rational, Moral, Immortal Being; because [he is] created in God’s image, and therefore in the highest sense his child; because created to unfold Godlike faculties, and to govern himself by a Divine Law written on his heart, and republished in God’s Word.

Into every human being God has breathed an immortal spirit more precious than the whole outward creation. No earthly or celestial language can exaggerate the worth of a human being. No matter how obscure his condition. Thought, Reason, Conscience, the capacity of Virtue, the capacity of Christian Love, an Immortal Destiny, an intimate moral connexion with God,—here are attributes of our common humanity which reduce to insignificance all outward distinctions, and make every human being unspeakably dear to his Maker.

The capacity of Improvement allies him to the more instructed of his race, and places within his reach the knowledge and happiness of higher worlds. Every human being has in him the germ of the greatest Idea in the universe, the Idea of God; and to unfold this is the end of his existence. Every human being has in his breast the elements of that Divine, Everlasting Law, which the highest orders of the creation obey. He has the Idea of Duty; and to unfold, revere, obey this is the very purpose for which life was given. Every human being has the Idea of what is meant by that word, Truth; that is, he sees, however dimly, the great object of Divine and created intelligence, and is capable of ever-enlarging perceptions of Truth. Every human being has affections, which may be purified and expanded into a Sublime Love. He has, too, the Idea of Happiness, and a thirst for it which cannot be appeased. Such is our nature. Wherever we see a man, we see the possessor of these great capacities. Did God make such a being to be owned as a tree or a brute? How plainly was he made to exercise, unfold, improve his highest powers, made for a moral, spiritual good! and how is he wronged, and his Creator opposed, when he is forced and broken into a tool to another’s physical enjoyment!

Such a being was plainly made for an End in Himself. He is a Person, not a Thing. He is an End, not a mere Instrument or Means. He was made for his own virtue and happiness. Is this end reconcilable with his being held and used as a chattel? The sacrifice of such a being to another’s will, to another’s present, outward, ill-comprehended good, is the greatest violence which can be offered to any creature of God. It is to degrade him from his rank in the universe, to make him a means, not an end, to cast him out from God’s spiritual family into the brutal herd.”

Channing exalts man’s consciousness of morality and hope, invoking what in my opinion is actually a double-edged sword of moral consciousness. A tree or rock has no happiness, no sense of purpose, no agency and consequently no rights. There is no inherent moral crime in chopping a tree or smashing a rock, nor do either protest. Humans, on the other hand, are quite upset when their lives are threatened, and tend to act aggressively to protect their own existence. Humans perceive a meaning to life, and the possibility of happiness. Nevertheless, the human desire to live and the human sense of happiness only exist within the human mind as a subjective assertion, and only matter because human will self-asserts the importance of human life. Take away the subjective human agent, and human life has no meaning. In other words, human life is meaningless until humans assert life’s meaning.

Philosophically, asserting meaning for life when that meaning is found only from within (and not out in nature), is an act of creation. In this sense, even a secular mind can appreciate the metaphor that man is in God’s image. Human action itself is an assertion of meaning, the creation of meaning – taking internal truth and attempting to externalize it. Human action is therefore sacred. 

If human action is not sacred, then nothing on Earth can be sacred. Therefore, to take a man who is capable of divine action – the conception and pursuit of meaning – and deny him his own path to that meaning is a nullification of meaning itself. To say that a man cannot create meaning, is to admit that you yourself must also not be so able. To say that man creates meaning, but to deny him that right, is ugly sin.

The deeply religious should understand the meaning of man being in God’s image. Nature – creation – was born and will die, it is temporal, dust, and must fade. The goal of the religious is to seek both eternal life and union with God’s presence, and this goal is nothing short of aspiring to higher meaning that transcends that which is temporal or arbitrary. In philosophy, it is simply a quest to justify the idea that life is at least something more that totally meaningless.

Channing’s emphasis on religious, lofty sentiments is appropriate to his task. In arguing against slavery, he saves his best argument for last. Channing connects the lowest aspects of human nature to its highest. He proves that the conditions which might justify moral coercion cannot exist. Though many humans are brutish, ignorant, low and so forth, they possess a spark of awareness that objects and creatures do not. 

Humans perceive meaning to life and seek out the fulfillment of life’s purpose. This connects them automatically to the highest possible aspirations any mere man could conceive. While the ignorant might not consider lofty philosophy in their daily choices, nevertheless, there is nothing that the greatest philosopher or sermonizer could invoke that is outside of the scope of what the lowest man can connect with. The implications to morality are clear. Men are equal.

The simple way of summarizing Channing’s argument is to say that human life is sacred. Life includes the individual perception and pursuit of life’s meaning, since it is individuals who self-endow their lives with a sacred character. The desire to live is all it takes. Likewise, the desire to be free is all that is required for a man or creature to deserve freedom. It’s a take-it-or-leave-it proposition for anyone who asserts their own freedom. 

Any slaver or government which denies the human desire for freedom and moral independence, denies the fundamental value of human life. Human life becomes arbitrary. That’s no way to go.

It is interesting that Channing, in arguing against slavery by invoking moral principles, so often digresses through the same reasoning to rebuke what is now called progressive politics. Libertarians should come to understand that the same moral reasoning which argues against slavery also argues against progressivism. By the same logic, progressive morality ultimately could justify slavery. The progressive opposition to slavery lies entirely with an inconsistent and logically detached appeal to empathy, focusing on the subjective pain and distress felt as part of the experience of being a slave. If, then, slavery could facilitate the comfort and pleasure of the slaves, would progressives support it?  The answer must be yes.

Progressivism is slavery exactly, if we imagine a non-existent world where slaves, by having their material needs taken care of, were consequently happy. Yet, there’s a reason why slaves experienced physical pains and emotional distress, which is intimately connected to the moral nature of slavery. As discussed at length in this article, moral self-sovereignty is the right to pursue happiness no more nor less. Abandon that principle, and power inequality will, through violence and accidental outcomes, develop systems of exploitation where happiness is crushed. Whether we observe this in systems of slavery or within communist states, it is the same. Progressivism is merely the first step on the path.

In understanding rights, libertarians perceive an important truth. With is and ought reconciled inside the individual, the common truth of society is clear. Economic action services moral action. Moral action is sacred, inviolable. This is should be the basis of libertarian thought, and the guiding principle of human society.

 

US Supreme Court Will Hear Police Accountability Case

US Supreme Court Will Hear Police Accountability Case

Arlington, Virginia—This morning the U.S. Supreme Court announced it would review the case of James King, an innocent college student who was savagely beaten in 2014 by a police officer and FBI agent in Grand Rapids, Michigan, after being unreasonably misidentified as a fugitive. The officers were working as members of a joint state-federal police task force. Ever since the unjustified assault, the government has played what amounts to a shell game to prevent King from holding the officers to account. Now, the nation’s highest court will weigh in on whether to provide the government yet another tool to shield its agents from accountability. The Institute for Justice (IJ), which represents King, will urge the Court to instead allow King to get compensation for his injuries.

This case is fundamentally about the obstacles that the government and courts have placed in the way of citizens trying to make law enforcement pay for intentional, outrageous abuses. In King’s case, he brought two kinds of federal claims because he was uncertain of the officers’ status as joint agents. First, King brought constitutional claims against the officers themselves. Second, he brought claims against the U.S. government under a statute called the Federal Tort Claims Act (FTCA). Bringing different kinds of claims is normal in American law. But now the U.S. Solicitor General is taking the position that because James brought claims under the FTCA, he cannot also bring constitutional claims against the officers. In other words, the government is asserting that simply bringing an FTCA claim is like stepping on a tripwire that destroys your constitutional claims.

“We hope the Court will reject the government’s request for yet another way to shield officers from constitutional accountability,” said IJ Attorney Patrick Jaicomo. “Because members of joint federal-state task forces have power under both state and federal law, they should be more accountable, not less, when they use that power to violate the Constitution.”

The government first argued for this novel immunity from liability before the 6th U.S. Circuit Court of Appeals, where the court rejected the argument and also held that the officers were not entitled to another form of immunity under the doctrine of “qualified immunity.” But before the case could proceed, the U.S. Solicitor General petitioned the Supreme Court to carve out a new form of immunity under the FTCA that would preclude plaintiffs like King from bringing alternative claims under the FTCA and Constitution.

“In short, the government is asking the Court to provide another shell for its shell game that would make it harder for plaintiffs to bring claims against government officers and easier for officers to avoid accountability for their constitutional violations,” said IJ President and General Counsel Scott Bullock.

“If our constitutional rights mean anything, we must be able to enforce them,” explained IJ attorney Anya Bidwell. “People shouldn’t face a system rigged against them when they are trying to vindicate their rights, especially when those rights have been so clearly violated, as in King’s case.”

IJ will ask the Court not to create another means for the government to shield officers from constitutional accountability.

“There are already too many, and we are hopeful the Supreme Court will agree,” Bidwell said.

Although the Court accepted the government’s appeal, it did not accept King’s cross-petition in this case.  This is the first U.S. Supreme Court case the Institute for Justice will argue before the High Court as part of its Project on Immunity and Accountability, which seeks to hold government officials more accountable when they violate individual rights.

Reprinted from the Institute for Justice.

Outraged at Thomas Massie?  You Shouldn’t Be

Outraged at Thomas Massie? You Shouldn’t Be

Thomas Massie, U.S. House of Representative from Kentucky’s 4th District, took a lot of heat for trying to force a voice vote on the House floor to pass the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.  In a glorious show of bipartisanship, both sides of the aisle poured out their vitriol on the double-degreed MIT graduate. 

Rep. Peter King, (R-N.Y.) said in a tweet Friday morning: “Because of one Member of Congress refusing to allow emergency action entire Congress must be called back to vote in House. Risk of infection and risk of legislation being delayed. Disgraceful. Irresponsible.” 

Rep. Steve Cohen (D-Tenn.) told the NY Post, “It was not cool, not cool at all.  We’ve all got to wait 14 days to see what happens. Hopefully, none of us get ill. If it weren’t for him, we wouldn’t have had to come [back]. He put people in jeopardy, there’s no question about it.”

John Kerry said, “Breaking news: Congressman Massie has tested positive for being an ass*&@#.  He must be quarantined to prevent the spread of his massive stupidity. He’s given new meaning to the term #Masshole.” 

Never one to pass up a Tweet-able moment, President Trump tweeted, “throw Massie out of [the] Republican Party!” Later, he supported, via Twitter, a the Kerry authored tweet aimed at Massive when he said, “Never knew John Kerry had such a good sense of humor! Very impressed!”

For his actions, Massie stands on pretty sure constitutional grounds.  Article 1, Section 5, Clause 1 of the U.S. Constitution says: “Each House shall be the Judge of Elections, Returns, and Qualifications of its own Members, and a Majority of each shall constitute a Quorum to do Business; but a smaller Number may adjourn from day to day, and may be authorized to compel the Attendance of absent Members, in such Manner, and under such Penalties as each House may provide.”  

In defense of his actions Massie said the following on Twitter:

I  swore an oath to uphold the constitution, and I take that oath seriously.  In a few moments I will request a vote on the CARES Act which means members of Congress will vote on it by pushing “yes” or “no” or “present.”

The Constitution requires that a quorum of members be present to conduct business in the House. Right now, millions of essential, working-class Americans are still required to go to work during this pandemic such as manufacturing line workers, healthcare professionals, pilots, grocery clerks, cooks/chefs, delivery drivers, auto mechanics, and janitors (to name just a few). Is it too much to ask that the House do its job, just like the Senate did?

Massie went on to say:

I am not delaying the bill like Nancy Pelosi did last week.  The bill that was worked on in the Senate late last week was much better before Speaker Pelosi showed up to destroy it and add days and days to the process.

This bill should have been voted on much sooner in both the Senate and House and it shouldn’t be stuffed full of Nancy Pelosi’s pork- including $25 million for the Kennedy Center, grants for the National Endowment for the Humanities and Arts, and millions more other measures that have no direct relation to the Coronavirus Pandemic. That $25 million, for example, should go directly to purchasing test kits. The number one priority of this bill should have been to expand testing availability and creation of tests so that every American, not just the wealthy and privileged, have access to testing. We have shut down the world’s economy without adequate data. Everyone, even those with no symptoms, needs immediate access to a test.

This brings us to the crux of the matter and why you, as an American citizen, should direct your outrage at everyone but Rep. Massie.  The CARES act is, on its face, unconstitutional. Where in the U.S. Constitution does it authorize Congress to conjure up $2.2 trillion dollars, then hand it out to the American people?  Notice the response that politicians (or more accurately) statesmen gave in response to calls for aid during an earlier part of the country’s history.  

1794: Congress undertook to appropriate $15,000 ($352,740 in today’s dollars) to assist French refugees.  In response, James Madison, one of this country’s founding fathers, said, “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.”  

1796: U.S. Representative William Giles of Virginia was not in favor of extending relief to fire victims saying that Congress didn’t have a right to “attend to what generosity and humanity require, but what the Constitution and their duty require.”  

1854: President Franklin Pierce vetoed an appropriation bill to assist the mentally ill saying, “I cannot find any authority in the Constitution for public charity.”  

1887: President Grover Cleveland said, “I find no warrant for such an appropriation in the Constitution, and I do not believe that the power and the duty of the General Government ought to extend to the relief of individual suffering which is in no manner properly related to the public service or benefit.”  Cleveland said this as part of his vetoing of a bill appropriating money to aid farmers in Texas who were suffering from a severe drought.  

What the House and Senate did in passing the CARES Act is bad enough.  President Trump invoked something called the Defense Production Act.  

Today, I signed a Presidential Memorandum directing the Secretary of Health and Human Services to use any and all authority available under the Defense Production Act to require General Motors to accept, perform, and prioritize Federal contracts for ventilators.  Our negotiations with GM regarding its ability to supply ventilators have been productive, but our fight against the virus is too urgent to allow the give-and- take of the contracting process to continue to run its normal course.  GM was wasting time.  Today’s action will help ensure the quick production of ventilators that will save American lives. (emphasis added)

Enacted by the 81st Congress on September 8, 1950 in response to the Korean War, the act was put in place to: establish a system of priorities and allocations for materials and facilities, authorize the requisitioning thereof, provide financial assistance for expansion of productive capacity and supply, provide for price and wage stabilization, provide for the settlement of labor disputes, strengthen controls over credit, and by these measures facilitate the production of goods and services necessary for the national security, and for other purposes.  The act basically gives the president broad and sweeping control of the economy for the purposes of national defense (i.e. during war time). He can compel, with the full force and weight of the federal government, private companies to do as he says (in the name of national defense) in direct violation of said companies’ property rights. And I have yet to mention the fact that the government will need to create trillions of dollars out of thin air and borrow trillions more to fund CARES Act relief. The money creation and government borrowing will ultimately decrease American citizens’ standard of living through ballooning price inflation and a diversion of resources from businessmen and women.

For the umpteenth time, unscrupulous, unprincipled, and downright deceitful politicians managed to manufacture an overreaction to the coronavirus using it to justify harming the country by their passage of unconstitutional legislation.  Our so-called “public servants” truly never let a crisis go to waste.  

As an American citizen you ought to be outraged.  However, your outrage should be directed at Trump, his administration, and Congress, not Thomas Massie.  

The $2 Trillion Stimulus Package Is Funding Your Own Surveillance

The $2 Trillion Stimulus Package Is Funding Your Own Surveillance

From corporate bailouts to endowments for art, the $2 trillion stimulus package signed into law last Friday has been roundly criticized as a smash-and-grab robbery perpetrated by the country’s elite.

And rightly so.

However, there is another provision in the 1,000-plus page legislation that should concern Americans just as much as any of its negative fiscal or economic implications: funding for what seems to be a massive surveillance program.

Tucked away in a section labeled “emergency appropriations for coronavirus health response and agency operations” is a $500 million allocation to the CDC for “public health data surveillance and analytics infrastructure modernization.” There are few details, other than a line saying that the CDC will report to the House and Senate appropriations committees on the development of a “public health surveillance and data collection system for coronavirus” within 30 days of the law’s enactment.

This reporter asked for more details from a press officer at the CDC National Center for Health Statistics, but has not received a response.

Based on the numerous reports, it’s reasonable to assume that the allocation has something to do with collecting geolocation data from smartphones – ostensibly to track the spread of coronavirus, and to make sure all of us good boys and girls are practicing social distancing. Indeed, this is happening in numerous other jurisdictions, including Israel, Australia, and at least four European countries.

Another clue that the system will entail geolocation tracking is the exorbitant price tag, which leads one to believe that the program will be highly technical. At $500 million, the surveillance system is five times what the NSA spent over a three-year period on its failed bulk data collection scheme.

If these assumptions are correct – and to be sure, this is only speculation – we could be looking at the beginning of a government tracking system the likes of which we’ve never seen. 

Either way, it’s hard to fathom how an agency that has failed so miserably in its response to the global pandemic would be rewarded with a $500 million influx – though even Andrew Yang has come to the realization that public bureaucracies are rewarded for failure.

Yes, it’s true that covid-19 tracking in the US is a mess, largely due to a lack of uniform reporting standards amongst the states. Not all states report the number of negative covid-19 test results, which has prevented researchers from estimating contraction rates. And not all report the number of coronavirus carriers that have had to be hospitalized, which would be helpful to know how dangerous this pandemic is.

But this could be addressed by the CDC mandating uniform reporting requirements among the states – low-hanging fruit that should hardly cost anything, let alone the GDP of a small Caribbean island.

And when it comes to tracking geolocation data, there’s no reason why that can’t be left to the private sector. The startup Tectonix Geo, for example, has already wowed Twitter with its demonstration about how a single Fort Lauderdale beach party can lead to the virus spreading around the country.

Many people said they were creeped out by Tectonix Geo’s demonstration, even though the company claims to be complying with privacy laws like Europe’s GDPR and the California Consumer Privacy Act.

If the thought of a private company tracking smartphones is hair-raising, then whatever the CDC plans on doing with that $500 million should be downright terrifying. 

Stimulus Bill Lets Fed Operate in Complete Secrecy

Stimulus Bill Lets Fed Operate in Complete Secrecy

I guess we’re just supposed to have faith that Jerome Powell will do the right thing. I don’t know about you, but I don’t have that kind of faith in anybody when it comes to passing out billions of dollars in cash or creating government policy.

-Mike Maharrey, TAC

Last week, Congress passed a $2 trillion stimulus bill in an effort to offset the economic impacts of the coronavirus. Most people have focused on the $1,200 checks to Americans and bailouts for industries hard-hit by the economic shutdown.

But the 883-page bill does a lot more than that, including empowering the central bankers at the Federal Reserve to hand out billions of dollars to their Wall Street buddies in complete secrecy.

The stimulus bill authorizes the Fed to create $454 billion out of thin air and loan it out. The provision gives the central bankers complete autonomy when it comes to deciding who gets the money.

Not more than the sum of $454,000,000,000…shall be available to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system….”

The money will allow the Federal Reserve to create what are known as special purpose vehicles (SPVs). An article in CounterPunch explains that an SPV was the same device used by Enron to hide its toxic debt off its balance sheet before it went belly up.

With the taxpayers’ money taking a 10 percent stake in the various Wall Street bailout programs offered by the Fed, structured as SPVs, the Fed can keep these dark pools off its balance sheet while levering them up 10-fold.”

During the 2008 financial crisis, the Fed used SPVs to buy toxic debt from Bear Stearns to facilitate its takeover by JPMorgan Chase and to prop up AIG.

In other words, they are a vehicle for federally-backed corporate bailouts.

The Federal Reserve has already established an SPV in response to the coronavirus meltdown. On March 17, the Fed announced the creation of a Commercial Paper Funding Facility (CPFF) “to support the flow of credit to households and businesses.”

The Treasury will provide $10 billion of credit protection to the Federal Reserve in connection with the CPFF from the Treasury’s Exchange Stabilization Fund (ESF). The Federal Reserve will then provide financing to the SPV under the CPFF. Its loans will be secured by all of the assets of the SPV.”

One could argue that the Fed needs the power to create establish these programs in the midst of a major financial crisis. But does it need to do so in complete secrecy?

A provision of the stimulus bill throws a big shroud over the activities of the central bank. The bill repeals the sunshine law as it relates to Federal Reserve board of governors’ meetings until the end of 2020 or when the president determines the coronavirus crisis has passed, whichever comes first.

SEC. 4009. TEMPORARY GOVERNMENT IN THE SUNSHINE ACT RELIEF. (a) IN GENERAL.—Except as provided in subsection 8 (b), notwithstanding any other provision of law, if the Chairman of the Board of Governors of the Federal Reserve System determines, in writing, that unusual and exigent circumstances exist, the Board may conduct meetings without regard to the requirements of section 552b of title 5, United States Code, during the period beginning on the date of enactment of this Act and ending on the earlier of— (1) the date on which the national emergency concerning the novel coronavirus disease (COVID–19) outbreak declared by the President on March 13, 2020 under the National Emergencies Act (50 20 U.S.C. 1601 et seq.) terminates; or (2) December 31, 2020.”

In other words, Jerome Powell doesn’t have to let you know what the Fed is doing. All he has to do is assert “exigent circumstances” and a veil of secrecy descends over the central bank.

Practically speaking, the new law effectively empowers the Fed to hand out money to whomever it pleases and nobody will ever be able to find out the whos, hows and whys.

I guess we’re just supposed to have faith that Jerome Powell will do the right thing.

I don’t know about you, but I don’t have that kind of faith in anybody when it comes to passing out billions of dollars in cash or creating government policy.

This looks like a recipe for cronyism and corruption on a massive scale. Even is you accept the veracity of central bank bailouts of Wall Street, it’s difficult to understand the benefit of doing so in secret.

Whenever civil libertarians complain about government surveillance, the response is always, “If you have nothing to hide, you have nothing to fear.” So, what is the Fed hiding? And what does it fear?

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