Events

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”.

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.

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.

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?

Police, Military Begin Door to Door Searches to Hunt Down New Yorkers Seeking Refuge

Police, Military Begin Door to Door Searches to Hunt Down New Yorkers Seeking Refuge

Rhode Island — In perhaps the most unprecedented attack on the Constitution on which the Free Thought Project has ever has ever reported, the governor of Rhode Island has announced that the National Guard will begin conducting house-to-house searches to hunt down New Yorkers seeking refuge in their state.

Not only will cops be violating the 4th Amendment rights of citizens in their homes, the governor also announced that Rhode Island cops have already begun puling over every vehicle they see with a New York license plate.

In a move that is reminiscent to that of Nazi Germany, the governor labeled an entire state a threat. Checkpoints have been set up along the interstate and vehicles with New York plates were being stopped without probable cause on Friday.

“Right now we have a pinpointed risk,” Governor Gina Raimondo said. “That risk is called New York City.”

It is no question that New York is the epicenter of the COVID-19 outbreak and their citizens should remain self-quarantined to prevent the spread of the virus. The state has over 46,000 reported cases and 450 deaths reported as of Saturday morning.

However, police officers and the National Guard have no idea if the person they are stopping or searching has been in the state for weeks or days.

As Bloomberg reports:

Rhode Island has just over 200, and it has begun an aggressive campaign to keep the virus out and New Yorkers contained, over objections from civil liberties advocates.

Raimondo, a Democrat, said she had consulted lawyers and said while she couldn’t close the border, she felt confident she could enforce a quarantine.

This draconian police state action comes in spite of the fact that many New Yorkers own summer houses in Rhode Island and have every right to be there. But the governor could not care less. According to Bloomberg, “many New Yorkers have summer houses in Rhode Island, especially in tony Newport, and the governor said the authorities would be checking there.”

“Yesterday I announced and today I reiterated: Anyone coming to Rhode Island in any way from New York must be quarantined,” the governor said. “By order. Will be enforced. Enforceable by law.”

Those caught seeking refuge, even in property that they own, will be subject to hefty fines and even jail time.

National Guard members will be stationed at the T.F. Green airport, Amtrak train stations and at bus stops. The citizen-soldiers will be following up with people at local residences. The maximum penalty for not complying: a fine of $500 and 90 days in prison.

Naturally, this has advocates of civil rights up in arms, and rightfully so. On Friday, the ACLU lambasted the governor’s unconstitutional measure, accurately pointing out that she has no right to “suspend the constitution.”

“While the Governor may have the power to suspend some state laws and regulations to address this medical emergency, she cannot suspend the Constitution,” Rhode Island ACLU executive director Steven Brown said in a statement. “Under the Fourth Amendment, having a New York state license plate simply does not, and cannot, constitute ‘probable cause’ to allow police to stop a car and interrogate the driver, no matter how laudable the goal of the stop may be.”

This move comes after other Orwellian steps by officials across the country. Earlier this week, TFTP reported that cops were raiding sleeping truckers trying to get some shut eye as they delivered essential supplies to those in need.

Because many rest stops are closed across the country, Truckers have been forced to stop on the side of the road to sleep while hauling these supplies. Instead of realizing this, NYPD cops raided the sleeping truckers, issued them fines and impounded their vehicles — for sleeping on the side of the road.

Completely oblivious to the heinous nature of preying on people trying to keep the nation from falling into chaos, the officers who conducted the raid took to Twitter to brag about it.

What’s more, New York and California are deploying drones to spy on their citizens and ensure they are complying with shelter in place orders. Other states have implemented hotlines for citizens to snitch on their neighbor if they think they are violating a shelter in place order.

Make no mistake, the threat of COVID-19 is real and people should take proper measures to protect themselves. However, as states across the country continue to roll out such tyrannical measures, we are inching closer to the idea of creating a cure far worse than the disease itself.

This is not okay.

Reprinted from The Free Thought Project.

Panic Buying, Medical Rationing Underscore Importance of Free Markets

Panic Buying, Medical Rationing Underscore Importance of Free Markets

The recent coronavirus panic has provided a stark reminder about the scarcity of economic goods. From people hoarding and stockpiling common household items like toilet paper and hand sanitizer to the downright morbid reports of doctors in Italy and Spain having to pick and choose who should receive medical care, the issue of resource scarcity has been thrust front and center.

To be clear, when economists refer to scarcity, it doesn’t just refer to empty shelves or a general lack of supply of something. Instead, we mean that goods are objects of choice: its use for one purpose or user precludes it from use for another purpose or user.

A bottle of hand sanitizer is scarce because when one person uses it for his hands, it is not available for another person’s use. Ventilators and hospital beds are also scarce; if Jane is using a bed and ventilator, it is not available for John’s use.

This leads us to conclude a key economic truth: all goods must be rationed. How a society overcomes this issue of scarcity and the method of rationing scarce goods determines that society’s well-being and standard of living.

 When the method of rationing facilitates efficient allocation of resources toward society’s most urgent needs, while encouraging productive behavior, the economy will flourish. If an inefficient means of resource allocation is used, poverty and shortages follow. 

Moreover, the issue of scarcity gives rise to the dilemma of multiple people desiring to lay claim to the same resource. Therefore, the method by which scarce goods are allocated will determine how people compete to obtain that good. 

So, what are some methods by which scarce goods are allocated, and what does the current crisis reveal about each one?

First come, first served: Under this method, whoever is first to claim or physically obtain the good gets to keep it. Time becomes a currency of sorts in this method, as those willing to forego other uses of their time in order to be among the first in line will be rewarded. It may also involve a little luck as well, with those who happen to be closest to some valuable good having the greatest ease of getting to it first. 

We’ve witnessed this method emerge with the panic buying of toilet paper and hand sanitizer because prices have not been not allowed to adjust due to anti-price gouging laws. Those willing and able to get to the front of the line clear out the shelves, leaving nothing for everyone else. 

When freely adjusting prices aren’t allowed to work, and instead a method of first come, first served emerges, the cost to consumers is time. Those willing to pay the highest cost in terms of time (i.e. spend hours waiting for a store to open so they are first in line) acquire the most goods.

Unfortunately, this method does not allow prices to reflect relative demand and scarcity, preventing valuable signals to guide producers to direct goods where they are most urgently needed.  And this method does not encourage productive behavior, as those consumers who spend more time waiting in lines rather than working are rewarded.

Critics claim that allowing prices to rise rapidly during emergencies may price some completely out of the market for a much-needed product during a time of distress. But empty shelves created by shortages also force many to go without. And the only way to bring prices back down without causing shortages and heavy time costs on consumers (via long lines) is to allow for prices to signal to producers to direct current supplies to where they are in most short supply, and incentivize them to produce more of the good in question. Freely adjusting prices can rapidly enable supply to surge and meet demand, and bring prices back down.  

An authority distributes goods based on “need”: Under this method an authority figure decides who gets what, by determining who is in most desperate need. Concentrating so much power over scarce goods into the hands of a single person or committee invites corruption. As such, people are incentivized to bribe or threaten the decision-makers to obtain what they desire. Lobbying becomes more rewarding than investments in productivity.

Moreover, attempting to distribute by “need” subjects distribution to the arbitrary definition of “need” by the authority figure. Potential consumers are incentivized to remain “needy” according to the definition of the authorities in order to gain access to goods and services. Think of the poverty trap created by the welfare state.

This also gives rise to the rationing of medical care we’ve seen emerge in countries like Italy and Spain, where the authorities are determining that young people are more worthy of scarce medical care during the coronavirus pandemic than older people who have fewer quality years of life left. 

This method also removes crucial price signals that would both incentivize increased production of those goods and services in most urgent demand, and the distribution of these goods to where they are most urgently needed. The costs can be fatal.

People have little incentive to be productive out of fear of losing access to goods and services because the authority may not deem them “needy” enough. 

Neither of those options seems like a particularly efficient (or fair) means by which to allocate scarce resources. Which brings us to:

Exchange of private property with freely adjusting prices: Private property implies that goods have an owner, and that owner is the one with just and legal authority to determine how that good is used. The owner can consume it, use it for productive purposes, stockpile it or trade it. One acquires rights over (already owned) property thru voluntary exchange, whether those exchanges involve goods for goods, goods for money, or money for labor.

Under such a system, in order to compete for desired goods, one must offer something of value in exchange, unlike the other previously mentioned methods. This incentivizes greater productivity – the key to improving the standard of living for a society.

Furthermore, not only does this system create a greater abundance of goods and services desired by society, but it more efficiently allocates them to their most urgent uses. 

Price signals provide valuable information and incentives to market participants. High prices of relatively scarce goods incentivize consumers to economize on the more expensive goods, while also encouraging producers to create more of that good in pursuit of higher revenue and profits. Shortages vanish.

Low prices encourage consumers to buy more, while telling producers that their productive resources are more urgently needed elsewhere. Surpluses are eliminated. 

The method society chooses for how scarce resources are allocated will generate very different types of behavior, and results.

The coronavirus panic has revealed that when government interferes with market prices and the exchange of private property, other means of distribution will emerge. These other methods, however, are far less efficient and more unfair. 

A system based on private property rights and free exchange based on freely adjusting prices provides the framework for the most efficient and fair allocation of scarce resources, while also encouraging more productive activity. The result is a more prosperous society, one far better equipped to meet society’s most urgent needs, especially so during times of emergency.

 

Bradley Thomas is creator of the website Erasethestate.com and is a libertarian activist who enjoys researching and writing on the freedom philosophy and Austrian economics.

Follow him on twitter: Bradley Thomas @erasestate

 

 

Amid COVID-19 Outbreak, Arrests Plummet, Departments Close and Chaos Does NOT Ensue

Amid COVID-19 Outbreak, Arrests Plummet, Departments Close and Chaos Does NOT Ensue

As TFTP reported last week, prisons across the country are facing potential massive outbreaks inside their walls and are being forced to make the decision to release non-violent offenders to stave off catastrophe. Thousands of non-violent prisoners have been released and there has not been an uptick in criminal activity. What’s more, according to multiple reports, arrests are plummeting, and a department in Illinois has entirely shut down.

While the typical fearful citizen might read the above actions and lose their mind, thinking it is the end of the world and crime will run rampant, the reality is much different. Crime is in free fall. According to a recent report out of Buffalo, NY, the number of daily arrests before the pandemic typically exceeded 20 a day, including a recent high of 37 on March 6. Arrests since Thursday have ranged from two to eight a day.

The drop in arrests comes as people are told to stay home and businesses are closed. While the crime drop is attributed in part to the stoppage of commerce, police are also changing their roles during this crisis from kicking in doors to arrest people for a plant to patrolling the streets for safety.

What’s more, Buffalo Police department Captain Jeff Rinaldo pointed to the New York State bail reform that went into effect at the beginning of the year. As a result of the reform, police now issue appearance tickets for most minor crimes, resulting in them taking fewer people into custody.

“Because of bail reform and because we have so many people out of custody, they’re able to care for themselves, care for families, be nimble, flexible, respond to this pandemic,” said Kevin Stadelmaier, the chief attorney for Buffalo Legal Aid’s Criminal Defense Unit.

Imagine that!

By allowing people to remain free for committing entirely victimless crimes — instead of ruining their lives through incarceration — the government is able to stave off the potential for future crime, otherwise known as recidivism.

While Buffalo is reducing arrests, other cities, like Blue Island, Il., have disbanded their entire department. After an officer tested positive for COVID-19, Mayor Domingo Vargas made the decision to shut down the department. Naturally, the mayor is receiving backlash from other elected officials.

State Representative Bob Rita criticized Vargas’ action, saying, “At no point did the Mayor’s office contact my office, any member of the City Council or any other local leaders in making this rash decision.”

Despite the backlash, Blue Island has not seen an uptick in crime.

In New York City, crime has fallen as well. According to the NY Daily News, crime dropped 25% in the five boroughs during the coronavirus shutdown last week — with just one person murdered compared to eight the week before, authorities said Monday.

Each of the seven major crimes that determine the overall crime rate — murder, rape, robbery, felony assault, burglary, grand larceny and grand larceny auto — declined compared to the week before, according to NYPD statistics.

This drop in crime was expected given the fact that New Yorkers are on lockdown, but as TFTP has reported before, even when cops simply refused to do make arrests and write tickets when citizens were on the streets, the city did not descend into chaos.

In September, the NYPD threw a temper tantrum after Police Commissioner James O’Neill fired the killer cop who choked the life out of Eric Garner on video in 2014. The temper tantrum resulted in a plunge in arrests, but it did not lead to a spike in crime or violence — illustrating how most of the “policing” done in the US, is little more than revenue generation.

We saw a similar reaction in December 2014 when the NYPD threw their first temper tantrum over the reaction to Eric Garner’s death and simply stopped doing their jobs.

During the work stoppage, the city set a record for the lowest numbers of murders in the history of the NYPD.

As we reported at the time, the numbers were far more drastic than the current slowdown.

Citations for traffic violations fell by 94 percent, from 10,069 to 587, during that time frame.

Summonses for low-level offenses like public drinking and urination also plunged 94 percent — from 4,831 to 300.

Even parking violations are way down, dropping by 92 percent, from 14,699 to 1,241.

Drug arrests by cops assigned to the NYPD’s Organized Crime Control Bureau — which are part of the overall number — dropped by 84 percent, from 382 to 63.

The decline in crime coinciding with the decline in police activity essentially made the case that most policing carried out in the United States is done so for the purpose of revenue collection and not to fight crime.

Drug offenses, parking violations, and traffic citations are not so much crimes, as they are streams of revenue for the city. They are also the reason for the majority of police harassment within particular communities; harassment that is being proven entirely unnecessary as the COVID-19 crisis continues.

Imagine a police force that acted more like firefighters or EMTs. Firefighters don’t have to go door to door looking for fires, in order to be effective. EMTs, just like firefighters wait for a call before reacting and their services are oft proven invaluable contrary to that of police work. Perhaps this recent chaos can be used to channel this notion to the forefront and completely revamp the idea of policing in the land of the free.

Reprinted from The Free Thought Project. 

No Bailouts

No Bailouts

That adroit member of the British Parliament Enoch Powell once said that “the supreme function of statesmanship is to provide against preventable evils.” This duty, incumbent upon politicians endowed with wisdom, is made difficult because “by the very order of things such evils are not demonstrable until they have occurred.” 

Well, the market crash has finally occurred, and laid bare the “evils” of America’s monetary policy. This month saw the worst stock market crash in nearly forty years. The next month will see hundreds of thousands, if not millions, marching into unemployment. Whole industries find themselves on the brink of bankruptcy. 

Those in power, and their court economists, will scapegoat all problems on the coronavirus pandemic. But the virus, the incidental trigger of the market panic, must not be confused with the cause of the economic bust: a broken banking system. 

In healthy economic growth, businessmen borrow the savings of others—the size and existence of which is indicated by an accurate interest rate—and use it to invest in capital goods and workers. Production increases, and the standard of living rises. 

But in our septic central banking system, real savings are substituted by cheap credit that only exists on a banker’s balance sheet. Dials are twisted as the Federal Reserve system manipulates the rate of interest, causing distortions as businessmen are given false signals. This easy money, confused for real loanable funds, is borrowed and put into malinvestments that distort the structure of the economy. 

The story is the same whether you’re describing 1929, 2008, or 2020. The market inevitably hits its tipping point as businessmen realize that the money they’re playing with is nothing but smoke and mirrors. The bubble bursts, and the boom, toxic from the beginning, busts. 

And now that the good times are over, and the promise of false prosperity has crumbled in their hands, politicians have lined up to bail out big business in the most repulsive form of corporate welfare our system has to offer. The airline industry requested fifty billion dollars from the federal government, more than triple what they received in assistance after the September 11 attacks. Boeing, that behemoth of defense contractors, asked for sixty billion all for itself. Then comes the cruise lines, the hotels, and half a dozen other interests ready to get a handout from a half trillion-dollar slush fund.

The right response, both ethically and economically, would be to let them fail. It’s not right for Main Street to bail out Wall Street, allowing insolvent corporations to feed like vampires on the people’s tax money collected by their crony politicians. And saving them is the start of the same process that created our economic catastrophe in the first place.

The harm bailouts cause goes beyond first impressions. Yes, hundreds of billions of dollars are wasted, as our ominous national debt creaks and groans under its own weight. But it’s the secondary effects that produce the real rot. 

Capitalism is about profit and loss. Businesses succeed or fail on their ability to serve the demands of consumers at the cheapest price. But when you have a policy of “too big to fail,” where you bailout inadequate firms and their managers, you destroy both business incentives and the market’s self-regulating mechanism. Bailouts are a function of state capitalism and corrupt corporatist structures. 

And what would happen if the airline industry was allowed to go bankrupt? Their planes wouldn’t be melted down for scrap. The capital structure wouldn’t disappear. Instead, it would be sold off to younger, more capable entrepreneurs who would be more adept at serving the public. Free markets encourage dynamic and creative change, while bailouts and cronyism only encourage the preservation of dinosaurs and legacy brands.

This sort of clearing house ought to take place in every sector of industry. Malinvestments must be allowed to liquidate and free up wasted capital, instead of being kept on life support, a continuous drain on the economy. President Ronald Reagan and Federal Reserve Chairman Paul Volcker understood the wisdom of necessary, short-term pain in exchange for a return to long-term health. The recession of the early 1980s was deep, short, and politically damaging. But the result was real growth, not another series of cheap credit bubbles. 

Our leaders today don’t have the wisdom of Enoch Powell to prevent disaster, or the intrepidness of Reagan and Volcker to see the disaster through once it occurs. Instead, they make blanket promises that a state intervention will fix all that ails you, as if the piper never has to be paid. Donald Trump and senate Republicans could have done the right thing: refuse the bailouts, allow a much-needed market correction, and take the electoral results on the chin in November. 

They didn’t though. Instead they’ll hand billions of dollars to the big businesses that bankroll their campaigns, while simultaneously sinking trillions more in harebrained stimulus packages. That’s because we’re not ruled by statesmen. No, instead we’re overseen by men like Senator Richard Burr, scoundrels who enrich themselves off the public purse while the national interest be damned. 

Men like that, Powell said, who create and perpetuate these preventable evils, “deserve, and not infrequently receive, the curses of those who come after.”

Australian War Criminals

Australian War Criminals

Australia has a proud military history, even before it was a federation in 1901 it had sent men abroad in service of Empire. Still a new nation while the British fought bitterly against the Boers in South Africa, the Australian military identity was slowly forged in incidents of undeniable heroism and controversy. Famously, the Australian soldier Breaker Morant became an Australian hero, elsewhere he was a revenge minded man who executed unarmed Boer prisoners and likely civilians. He was tried and executed, perhaps as an example by the British as such conduct was not rare in an ugly war. Morant’s legacy however would run on in most theatres for over one hundred years of Australian military service.

In the World Wars the Australians were notorious for heroic conduct and fighting with a respected ferocity. They were not above executing prisoners. This was not unique to the Australian soldier, they were not above it either. Intimate savagery was not unlawful it was expected to be found inside the heat of battle and soon after as the fog of war lingered. It is not a statement of good and evil, merely one of fact. Most if not all sides in war have had soldiers that do this to others. It is the disregard and acceptance of such actions that brings into question the society and culture that not only continues to conduct war abroad but condones all its horrible outcomes with pride. That is the Australian character regarding its wars and war fighters. 

The recent emergence of footage of an Australian SASR troops murdering an unarmed man as he prayed in a field somewhere in Afghanistan has not raised much controversy inside of Australia. It has mildly been reported but mostly buried beneath the concerns about COVID-19 and the potential shortages on toilet paper for most Australian voters. The military however, still abroad, still killing are always above reproach. As with most released footage incidents it beckons just how common such events are, given the confidence of those who are being recorded. To kill an unarmed man as shown in the clip is almost routine. 

In June 2019 the Australian Federal Police raided the homes of journalists, most of those raided worked for the state-run ABC network. The raids were a response to a 2018 report about the Australian intelligence agencies using their powers to spy on Australian citizens. For most Australians such a revelation and the frightening response on journalists was met with apathy and an eager trust in the governments wisdom when it comes to their defense. It was assumed by some that such measures taken by the AFP would not only keep Australians alive, the terrorists at bay but most of all save Australian soldiers lives. Australian soldiers still fighting an unwinnable war inside Afghanistan. 

Australians love war. They always have. Every year in April the nation indulges in a ritual to celebrate the lives of martyrs that served the British empire in a brutal war, the date commemorates the invasion of mainland Turkey in 1915. The heroism is never in doubt, the rationale reason for the war is however never truly sought. It assumed as a righteous destiny of the Australian soldier to be overseas in the service of a larger imperial partner. Korea, Vietnam, Iraq or Afghanistan it does not matter, it is the right of the Australian soldier to be there. That is the imbedded belief of the citizen as they stand for dawn service each April 25.  

So as news reports and whistle-blowing soldiers from both Australia and New Zealand share their experiences in Afghanistan with shaky voices they are met with wary ears and sometimes distain. When former defense lawyer David McBride revealed what became known as the “Afghan Papers” much of it revealing unlawful killings by Australian SAS members he was charged for leaking classified materials, though the content was never disputed or denied. The Australian government simply did not want the truth of bloodshed to become exposed to the public but more importantly to foreigners that have a glowing opinion of the Australian nation. 

Now with such graphic footage of an Australian special forces member murdering an unarmed man it is hard to deny the claims of the whistle-blowers. Even if the executed man was a horrible mass murdering terrorist, he was unarmed and vulnerable. His capture could have provided intelligence and many hours of painful debriefing at the hands of coalition interrogators. Instead it is likely this man had nothing to offer alive, so he was executed by the elites of the Australian military. 

What the outcome is, remains uncertain. Perhaps a tighter grip on the release of such footage. It is alleged that the SAS soldier in the clip was stood down, how would we know given the secrecy of the SAS and how precious trained and experienced soldiers at his level are.  With the COVID-19 pandemic it is likely that the Australian government will use the fear and concerns to help widen its already immense powers over the citizenry’s lives. No matter how incompetent it reveals itself in either health or security it is without competition. 

It would take an elite level of mercenary and psychotic mentality to visit upon a land thousands of kilometres away from home and to then execute a man already on his knees as he prays to his God close to his own house. A stranger In shock, frightened and pleading for his life is then killed. This is the war that continues to be waged in many of our names, and this is the horrors that distant strangers face because it is our foreign policy to kill out of our own insecurities and our governments need to rule in any capacity. 

The Australian Police are investigating the allegations in a recent incident of an SAS soldier Ben Robert-Smith who kicked a handcuffed prisoner off a cliff and ordered his killing. Smith is a highly decorated hero of the war. The outcome of such an investigation and trial will be telling. But what it does reveal is the harshness of those elites pressed into long periods of service in a war that few understand other than it must somehow go on. 

So, for the time being, hidden among the news of pandemic the crimes of war will trickle to the screens of those who care. The few watchdogs that exist will limply bark into a mob desperate for their own creature comforts as they face quarantine. The war, those endless epidemics of government cruelty will go on. The futility of Australia’s mission in Afghanistan will most likely continue, even if in secret. And the recent incident so graphically captured on film is just another contact.

The Unseen Consequences of the Coronavirus Response

The Unseen Consequences of the Coronavirus Response

While sicknesses and death mount from the coronavirus pandemic, the responses by all levels of government have been overwhelming. 

School closings, business closings, cancellations of sporting events and concerts, “stay in place” orders, hysterical panic spread by the corporate press, and massive government “stimulus” and bailout plans have all been justified as a means to save lives and “flatten the curve” of the spread of the virus so the healthcare system isn’t overwhelmed.

These efforts have been made in an attempt to head off what some are predicting would be a historic mass pandemic resulting in hundreds of thousand or possibly a million deaths in the U.S., according to some preliminary, worst-case scenario projections

No doubt such a result would spur sizeable social and economic upheaval. Such a momentous number of deaths and illnesses would cause mass panic and grind the economy to a halt. In strictly economic terms, to the extent that the workforce is reduced (most deaths would be to the elderly population), a supply shock would diminish productivity for a noticeable duration. Supply chains would be disrupted and need to adjust to the new labor market. 

During the outbreak, non-specific capital goods would be converted to the production of medical supplies to address the virus, similar to how factories were converted to producing tanks and guns during WWII. 

There would be at minimum a significant economic downturn during the crisis, and depending on the government’s response, it would take a considerable amount of time for the economy to shift back to normal once the virus subsided. 

The coronavirus’ threat to health and the economy is indeed serious, and the trade-offs of “doing nothing” have been often discussed to justify the unprecedented response.

What seems to be missing from the discussion, however, is the notion of any trade-offs coming from the government’s actual response. The government’s measures are positioned as but temporary inconveniences needed to stave off mass illnesses and save lives. Better to be safe than sorry, goes the justification.

But what if trying to “be safe” comes with dramatic costs as well? Why is nobody talking about those costs?

As Mises Institute Research Fellow Peter G. Klein tweeted:

“I hear ‘lives vs. livelihoods’ as if the cost of shutting down economies to flatten the curve is inconvenience and reduced economic growth. But what about the immediate and long-term public health harms from shutdown?”

To drive the point further home, Mises Institute President Jeff Deist wrote in a Facebook post

“A broken economy, crazed fiscal/monetary responses by Congress and the Fed, not to mention egregious & illegal violations of liberty, are not all justified by this virus. Our actions will kill & impoverish people, perhaps far more people than the virus. The lesson of Bastiat’s seen and unseen remains unlearned.” 

Indeed, it’s easy to see the government’s response and attribute a slowed infection growth rate and lower mortality figures from the virus to those measures.

But what of the negative impacts the government’s response will have? These “unseen” impacts, as Bastiat would frame them because they are much harder to detect, will be numerous and possibly more deadly the coronavirus itself.

Massive job losses may increase suicide, depression, substance abuse

Due to the mass panic being spread by governments and media (not to mention government edicts shuttering the doors of many businesses), many industries are being devastated. Especially harmed is the hospitality industry. Sadly, panic is a result of the government’s response to head off the panic that would result if government failed to act to prevent the spread of the virus.

Some estimates are predicting more than 2 million people will apply for unemployment this week, which would be the highest one-week figure on record. 

The stress and uncertainty of joblessness has numerous negative consequences, some of them deadly. 

A study published by The Lancet found “the relative risk of suicide associated with unemployment was elevated by about 20–30%” in their study period. 

The study further attributed roughly 45,000 suicides per year worldwide to the mental and psychological toll of unemployment.

The hope for many laid-off workers is that their unemployment will be temporary, but there remains great uncertainty just how long this will last. The longer this economic shutdown and its consequences last, the more suicides there will be. 

Moreover, as the substance abuse rehab clinic Recovery Ways notes, “One study from 2017 found that every time unemployment rises by one percentage point in a given county, the rate of opioid deaths increases by 3.6 percent and the rate of emergency room visits increases by seven percent.” 

In sum, research has shown the anxiety of joblessness leads to increased rates of suicide and drug abuse. 

Furthermore, a study published by the National Institute of Health concluded: “Results suggest that unemployment is associated with young adults’ heavy episodic drinking,” This is of particular concern given that the hospitality industry workforce tends to be younger. 

Another NIH study found “Unemployment increases the risk of relapse after alcohol and drug addiction treatment,” and that “Unemployment is a significant risk factor for substance use.”

Shutdown will have much broader economic impact, exacerbate other health problems

The current shutdowns and mass hysteria are having first order effects largely on the travel and hospitality industries. But the negative financial consequences will not be contained.

As economist and financial advisor Doug Casey said in an interview published at LewRockwell.com:

A restaurant closes down, but the owner still has to pay his mortgage. And the staff mostly lives on tips. How are they going to pay the rent—and if they don’t, then how’s the landlord going to pay his mortgage? The consequences of businesses shutting down, and going bust, are just huge.

The economic contagion and domino effect could indeed be very significant. Recall how the bursting of the housing bubble triggered the Great Recession. We may now be facing similar effects, as small businesses struggle to pay their rents and laid-off workers struggle to make rent and mortgage payments. As debt defaults mount, banks lose their cash flow and become extremely cautious about creating new loans. Liquidity freezes and grinds the economy to a halt.  

There is a very real chance that the orchestrated economic shutdown can trigger a much broader economic collapse. Keep in mind, of course, that prior to the virus outbreak the economy was largely propped up by fiat Fed money printing, and that bubble was bound to burst eventually.

The hysterical response to the virus is serving as the pin to pop that bubble, and make things worse.

We’ve already seen how unemployment leads to severe health consequences. Full-blown recession serves to double down on them, and then some.

One study found that the Great Recession was linked to an additional 260,000 cancer deaths in OECD countries alone, with the authors suggesting “increased joblessness during the economic crisis may have limited people’s access to health care, leading to late-stage diagnoses and poor or delayed treatment.”

Moreover, with the stock market taking a major hit, it’s not just Wall Street fat cats taking a haircut. Thanks to decades of absurdly low interest rates driven down by Federal Reserve policy, average workers can no longer set aside their retirement savings into safe, interest-bearing savings accounts. Instead, they have been driven to invest retirement savings into the stock market. The economic shutdown has caused current retirees and those nearing retirement to lose a significant share of their retirement nest egg. Senior citizens facing such high levels of stress will be more likely to suffer ill health effects, like stroke or heart attack. 

Anxiety from mass hysteria weakens immune systems

Politicians and the corporate media are in 24/7 mass hysteria mode. There is no way to avoid constant chatter about the impending doom of coronavirus. 

The most visible signs of this ginned up mass panic can be found in retail stores across the country with empty shelves. Panic-buying of hand sanitizer and toilet paper has been well publicized.

But there is a more serious consequence of spreading mass panic among the populace. In a very bitter case of irony, the anxiety and stress caused by the reaction to fight the spread of the coronavirus can actually weaken your immune system and make you more vulnerable to the spread of viruses. As reported at Healthline.com

But if you repeatedly feel anxious and stressed or it lasts a long time, your body never gets the signal to return to normal functioning. This can weaken your immune system, leaving you more vulnerable to viral infections and frequent illnesses. Also, your regular vaccines may not work as well if you have anxiety.

Panic can also drive up suicides, while panic-stricken grocery shoppers gather in long lines in close proximity to each other holding shopping cart handles that are likely riddled with germs and bacteria

 

Long-term impacts

The federal government’s fiscal response to the coronavirus pandemic and subsequent economic shutdown has been unprecedented. 

The Federal Reserve has slashed interest rates to near zero, while pumping $1.5 trillion of fiat money in an attempt to prop up the economy. A “stimulus” bill to bail out affected industries and send money to households is being negotiated, and seems to grow by the day, with latest reports indicating it could top $2 trillion. With the federal government already $23 trillion in debt and running trillion-dollar deficits, most – if not all – of this stimulus spending will need to be funding by newly-printed fiat money.

By comparison, President Obama’s stimulus package to combat a global financial meltdown was estimated to be less than $900 billion. 

While households will no doubt welcome the financial relief of government checks, this level of new money printing will have dire effects. The new money may help temporarily prop up some industries, but it will ultimately wreak havoc on the economy and hurt low-income households the hardest.

With so much newly-created money sloshing around the economy, price inflation is sure to follow the current shutdown. Price increases will impact low-skilled, low-income workers and those on fixed incomes the hardest, as they will not be able to keep pace with the rising cost of living. More people will fall further behind, exacerbating the mental and physical health consequences mentioned above.

Finally, the mad money printing by the Fed will at best temporarily re-inflate the economic bubble. But it’s during the bubble that the seeds for the next recession are planted, and the current massive money printing will serve to deepen the next recession.

The deeper the next recession, the more deaths from suicide, anxiety and substance abuse there will be.

Conclusion

Bastiat’s warnings about the seen vs. the unseen continue to be ignored. The negative consequences of the government’s hysterical response to the coronavirus stretch far beyond a temporary economic disruption. Higher rates of suicide and substance abuse, anxiety-induced illnesses, and a deeper recession that worsens these public health issues will be among the steep price we pay. 

It may be time for more to question if the cure will be worse than the disease. 

 

Bradley Thomas is creator of the website Erasethestate.com and is a libertarian activist who enjoys researching and writing on the freedom philosophy and Austrian economics.

Follow him on twitter: Bradley Thomas @erasestate

 

This Martial Law Will End, and End Badly

This Martial Law Will End, and End Badly

First, let’s get the three principles for the post-COVID-19 world out there:

  1. If you think COVID-19 is fake, or not really scary, you don’t know science and are an ignorant person.
  2. If you post cavalierly about frolicking socially with your friends, you have no empathy for the elderly and other vulnerable populations and are a horrible person.
  3. If you think we only had two options to fight COVID-19 – “A. Destroy the economy, or B. Grandma dies.” – you are sheeple-level stupid, and the media programming has brainwashed you. There were options C, D, E and F.

Now that I’ve offended everyone on social media, let’s talk about that last principle, which also happens to be the one no one in the media or Washington wants you to talk about. Politicians and their media spokesliars call their policy “social distancing,” but that’s just the political marketing angle for an economic and social shutdown we’ve always called martial law. 

The other options could have included a two-stage isolation of the infected and separately isolating the vulnerable elderly and immuno-compromised populations. The latter self-isolate in their own communities in many cases anyway. For those that don’t already self-isolate, all those empty hotel rooms today could have provided sanctuary, or the federal government could have cleared out all those ICE detention centers and welcomed boomers into them. Today’s closed casinos – already famous for feting seniors – could also have become a refuge for the oxygen-tank-and-walker set. 

Moreover, Trump using his bully-pulpit to call for greater ICU capacity to accommodate COVID-19 cases would have been helpful. The pandemics of a century ago – polio, the Spanish flu, smallpox and cholera outbreaks – should have provided historical clues that increasing hospital capacity is key. The data thus far from Italy and China shows COVID-19 has taxed the capacities of hospitals, as the elderly and the younger with pre-existing conditions need hospitalization many multiples more frequently than the regular flu virus. 

The unfolding disaster of martial law

The plebes – to their credit – know intuitively the economic reality which dictates there is no bottom in a market economy based upon closing the markets. Thus, they knew they had better stock up on food, guns and other necessities. And it will be bad: Great Depression-level bad. Last week, Tyler Cowen of George Mason University rather off-handedly posited that if current policy is maintained until August, the result would be 20 percent unemployment – not for months – but for years. 

This false choice of “a new great depression or grandma and two million more dies” has already aged worse than a dead tuna on a hot summer day, so it shouldn’t be a surprise the Trump administration has already pulled lead on suppressing the dire jobs numbers. It will only stink more as time goes on. But that doesn’t mean people with a brain stem no more complex than a box jellyfish won’t defend the martial law status quo. I turned on Fox News the other night to hear that twit Sean Hannity agree with Sen. Lindsay Graham’s call for the federal government to – not end the closure of markets – but reimburse wages for people being prevented by federal and state mandates from producing the goods and services we all want.  Meanwhile, Mitt Romney and Donald Trump have embraced Andrew Yang’s UBI platitude. With what money, neither pair said. Nor did they have to; there isn’t any money in a federal government already running a $1 trillion deficit whose tax revenue income source is about to hit the far slope of K2. So much for “conservative” small government principles. All politicians and mass media corporate whores are Keynesians now.

Democrats never pretended to have small government principles, but Joe Biden and Bernie Sanders likewise opted to cynically lie to the American people in the most recent Democratic debate rather than tell inconvenient truths. Biden claimed of people who have lost income to the virus shutdown: “We can make them whole now, now, and put in process a system whereby they all are made whole.” Sanders also deployed nearly identical language: “We have got to say to the American people, if you lose your job, you will be made whole.” 

There are now two kinds of people in the world: 1. Those who believe the Democratic candidates for President, and 2. Adults. There’s no going back to the old economy or old jobs, and Biden and Sanders are both knowingly lying to you.

But the above at least confirms we will never have any relief from the politicians of either party in Washington or the establishment corporate media. 

If working Americans want an end to the looming great depression, they’ve got to rise up in a revolution and end it themselves. Expect the stock market to lose a minimum of 5-10% per week and the effective unemployment rate (the unemployed plus furloughed employees no longer receiving a check) to increase 2% per week until that revolution happens. Much of that effective unemployment – maybe even half – will be permanent once the shutdowns are lifted, as leveraged or marginal firms shutter after accumulated fixed costs and no revenue make re-openings impossible. 

The end of martial law will come, as the status quo becomes increasingly unbearable and a new Great Depression emerges. I’m convinced the workers will rise up, even if “social distancing” does make protests and riots more difficult. And the riots will come once the peaceful protests are inevitably ignored by Washington.

This end was known, or at least should have been obvious, owing to the likelihood that Trump had no clue. America is not just ruled by fascists; we are governed by dumb fascists. 

If Trump had possessed the stones, and even a whiff of economic sense, he would have called out Italian President Sergio Mattarella as a lunatic for ruining his country by putting the entire nation on lockdown. He would have quipped that Mattarella is really “Stupid Mussolini”: Mussolini made the trains run on time, but Mattarella is dedicated to making sure the trains don’t run. Trump could have then recommended the voluntary isolation of the elderly in the US, and encouraged the markets to provide spaces for sanctuary to seniors. Instead, America’s Mango Mussolini decided to show solidarity with the Eurocratic democratic socialists ruining their nations by aping their stupid fascist policy of economic suicide. 

This shutdown was probably the inevitable result of letting scientists set government policy: What else would one expect from a socially awkward group of pencil-necks with no knowledge of regular human social interaction, or, for that matter, economics? Of course scientists were going to suggest ruining society; these dweebs never understood human society in the first place. All that mattered was their “human social interaction” computer models about how the virus might spread. Scientists are like Bill Murray in the movie “Caddyshack,” blowing up the whole golf course in order to stop a gopher infestation. But it’s emblematic of any government by so-called “experts,” who will “solve” the problem but inevitably show shortcomings in areas in which they are not experts, creating greater overall misery.

Even Wall Street has also been slow on the uptake; it has certainly been behind the prols mobbing the grocery stores. If you happened to turn on CNBC, Bloomberg or any other financial network last week (or even yesterday), you were treated to the highly-paid and delusional chattering class telling us that the bottom is near. Yes, I’m talking about you, Jim Kramer. All they see are percentages and profit margins, and the directives of their corporate masters. But the plebes knew there is no bottom to a market when nobody is making things or providing services and everybody is still consuming them. The bottom won’t happen until the shutdowns end. 

If there’s a “sheeple,” it’s the media class. Sure, there were lots of people who stupidly accepted the incremental state-based martial law in reaction to the COVID-19 virus, and blindly repeated the political talking points. But most workers intuitively know that’s not true, even when they’re repeating those same talking points. It’s actually the people who are America’s greatest chance for ending the  madness. It’s time those workers lead, and demand an end to the charade and reopen the markets. The longer they wait, the greater the economic damage.

Workers of the world, unite … to reinstate capitalism!

 

Thomas R. Eddlem is a freelance writer, a graduate of Stonehill College, and is enrolled in the applied economics master’s program at Boston College. 

Turning the Handle on the Door They Can’t Breach

Turning the Handle on the Door They Can’t Breach

Space monkeys, art exhibits, Operation Latte Thunder – that was the plan anyways.  Nameless members of Project Mayhem set out to destroy a piece of art and a coffee bar.  It was all part of Tyler Durden’s plot to begin, as Caitlin Johnstone aptly puts it, “disintegrating patterns.”  Things were going as planned until a trigger-happy security guard shot a retreating “space monkey” in the head.  His name was Robert Paulson. Back then, that became the rallying cry for the remaining misfits hellbent on sewing discord in our personalized fishbowls as Fight Club climaxed.  Today, his name was Duncan Lemp.  The new name memorialized after the 21-year old became yet another shooting death in the police-pillaged countryside called The Land of the Free.  Lemp’s last tweet hangs eerily prescient, “the constitution is dead.”  Whatever the investigation bears out, freedom has yet again proven to be nothing more than décor for our fishbowl.

The Siege of Internet Freedom

For now, there remains a final bastion against the eroding waves of bureaucratic ink and jackboots.  The world wide web. On the internet, communication and information dissemination has altered the course of human society completely.  Every relevant inch of guard rail on the “superhighway” is encrypted, or functionally digitally impenetrable. That security is becoming increasingly undervalued as both user privacy demands and bad actors multiply.  Amid the collective fever-dream of the novel coronavirus, the Senate was furiously crafting the EARN IT Act to quietly begin removing the last safeguard to American internet privacy: end to end encryption (E2EE).  E2EE is the code that digitally obfuscates data being sent between two parties so that only they can view it, and has been a thorn in the side of federal law enforcement and intelligence agencies for years.  Passage of the EARN IT Act would be the legislative equivalent to siege towers landing on the wall, allowing for an endless stream of lawmen to pore over your digital private life. 

The Communications Decency Act was passed in 1996.  Section 230 of which has served as the legal cornerstone for internet privacy, ensuring that website owners are not held legally liable for the content their users publish.  In 2018, President Trump signed the Fight Online Sex Trafficking Act (FOSTA) into law, making sites liable if their platform facilitated trafficking, even unwittingly.  This forced sites to make drastic adjustments to ensure compliance, most notably seeing Craigslist remove its Personals section and Backpage being shut down just before passage.  This had the unintended consequence of forcing sex workers offline and back to the streets, unprotected from the rampant violence they often endure.  FOSTA met significant resistance from tech and privacy advocates, but a “watershed” testimony secured its passage, surprising the bill’s opponents per Protocol

The EARN IT Act is the brain-trust alternative to issue-based Section 230 carve outs, mandating a compliance checklist for online companies regarding children.  A newly minted 19-member National Commission on Online Sexual Exploitation Prevention would create a list of “best-practices” co-signed by Homeland Security, the Attorney General, and the Federal Trade Commission.  This list would be made available so, “providers of interactive computer services may choose to implement,” them, or lose Section 230 immunity for their users content. The scope includes anything from comment sections to private messaging, meaning companies like Facebook would be forced to monitor otherwise E2EE protected data.  In other words, tech will be forced to forge the “back door” the feds have long waited for or be hauled into court.  

Children as Human Shields

Child sex crimes facilitated or committed online aren’t trivial – which is precisely why we shouldn’t want Lindsey Graham and Joe Biden sniffing around.  As we well know, government has a history of fostering unintended consequences, or achieving precisely the opposite of their stated goals.  We shouldn’t expect anything different with child sex trafficking regulations for online businesses.

The fight to undo encryption isn’t a new one.  When the phone data of Rizwan Farook – the San Bernadino gunman who killed 14 – couldn’t be accessed by the FBI, they asked Apple to assist in unlocking it.  Apple CEO Tim Cook refused, sparking public debate and a federal lawsuit before the FBI eventually dropped the case; they found a shadowy third-party who could open it.  Cook’s argument for E2EE, it turns out, was evergreen, “Our smartphones are loaded with our intimate conversations, our financial data, our health records. They’re also loaded with the location of our kids in many cases. It’s not just about privacy, it’s also about public safety,” Cook said. “No one would want a master key built that would turn hundreds of millions of locks … that key could be stolen.”  What Tim fails to realize – or perhaps wisely omits – is that the most dangerous hands for such a key to fall into belong to our very own government. The EARN IT Act will necessarily does just that, as co-sponsor Lindsey Graham has said, “Facebook is talking about end-to-end encryption which means they go blind,” Sen Graham said, later adding, “We’re not going to go blind and let this abuse go forward in the name of any other freedom.”  The master key would never be palatable without a chorus of weeping eyes, and no shield from criticism has been more tried and true than victimized children

More “Actionable Intel” Means More Violent Action

From embarrassing revelations of “LOVEINT” where NSA contractors were using systems to spy on lovers to the Snowden revelations that saw forgetful intelligence director James Clapper committing perjury before Congress, the public track record of abuse and dishonesty is terrifying.  With transparency only brought to the surface by leaks and painstaking probes, how deep does the rabbit hole go? Without whistleblowers like Snowden, the American public would still be completely in the dark on intelligence secretly shedding light on our private lives.  Any law that even potentially expands their reach should be roundly rejected. 

American policing is a critical lesson in metastasizing practices and power.  SWAT use has increased 15,000% since the late seventies to now, with 80% of the 50,000 annual raids being warrant executions like the one that killed Duncan Lemp.  The transformation of state and local police into soldiers stems, in part, to the distribution of surplus military gear from the global war on terror, allowing for images of “kitted-up” cops patrolling streets and raiding houses that look plucked straight from Fallujah c. 2004.  As local police agencies continue accessing technology spun out of federal research labs, like drones and social-media geolocating, there’s no doubt that weakened encryption will inflate frontline police capabilities and targets. 

Mission Creep to a Home Near You

As the master key dangles before Congress and their army of spies, American’s are faced with a choice.  They can continue to watch with eyes glazed over as an unrestrained militarized bureaucracy turns the handle to the last unbreachable door, or they can “ride out and meet them.”  The war outside our encryption refuge will rage on no matter the outcome of EARN IT.  Lemp was right, “the constitution is dead,” and has been a long time.  His death is the consequence of a perpetually growing state codified by a legal system equipped to make criminals of us all.  Losing the protection of encryption spells the definitive end to privacy and the age of thinkpol.  Tomorrow, our time in quarantine can be used to dream up paths to victory in this intellectual war.  Today, the EARN IT Act must be defeated, and legislative attempts on encryption along with it.  

 

Police Stole $225K in Cash and Coins, and the Court Said “Okay”

Police Stole $225K in Cash and Coins, and the Court Said “Okay”

Arlington, Va.—Seven years ago, police officers in Fresno, California, executed search warrants on the homes and business of Micah Jessop and Brittan Ashjian, who owned a business operating and servicing ATMs. Police were investigating a report of illegal gambling. Although neither was ever charged with a crime, police seized nearly $275,000 in rare coins the men owned and cash they used to restock their business’ ATMs. When the investigation was over, police said they’d seized only approximately $50,000 in cash; they kept the remaining cash and the coins for themselves.

Most Americans would say this was a clear-cut case of theft, but when Jessop and Ashjian sued the police, the federal courts threw out their case, citing a controversial legal doctrine called “qualified immunity.” Now, the U.S. Supreme Court will soon decide whether to hear their case, and the Institute for Justice (IJ), as part of its recently launched Project on Immunity and Accountability, has filed an amicus brief urging the Court to take up the case and put an end to this dangerous doctrine once and for all.

“No one should be above the law, least of all those who are supposed to be enforcing it,” said IJ attorney Patrick Jaicomo. “And yet, according to the federal courts, police officers who steal money from people cannot be held accountable because the courts have never ruled that it is unconstitutional for the police to steal from someone. No one really believes that theft is a reasonable seizure permitted by the Constitution. The Ninth Circuit’s decision shows how absurd qualified immunity has become.”

After the search, Jessop and Ashjian filed a lawsuit, claiming that government theft violates the Fourth Amendment right against unreasonable seizures. But both the trial court and the Ninth Circuit held that they did not need to address the issue because—even if the theft was a constitutional violation—the officers were immune under the qualified immunity doctrine.

Qualified immunity traces back to 1982, when the U.S. Supreme Court announced a rule that government officials would be liable only if their specific actions had already been held unconstitutional in an earlier court case. They called the new rule “qualified immunity.” The Court’s decision was a drastic departure from the historical standards of government accountability. At the founding and throughout the nineteenth and earlier twentieth centuries, courts simply decided whether a government official’s actions were unlawful and, if they were, ordered a remedy. It was up to the other branches of government to decide whether the official should be reimbursed (if he had acted justifiably) or not (if he had acted in bad faith).

Unfortunately, Jessop and Ashjian’s case is not an outlier. It is the result of forty years’ worth of Supreme Court decisions that make it effectively impossible to hold government officials accountable, even when they intentionally break the law. The courts are so concerned with protecting the government that they are willing to shield even those officers who act in bad faith.

“It’s time for the Supreme Court to end the failed experiment of qualified immunity,” said IJ Attorney Anya Bidwell. “The fundamental purpose of the Constitution and the Bill of Rights is to protect Americans from government abuses. But thanks to qualified immunity, police can literally come into your home and steal from you, and the courts will shield them from liability. In the brief we filed today, IJ is urging the Court to reconsider the entire doctrine of qualified immunity and revoke the license to lawless conduct it provides.”

The Institute for Justice’s Project on Immunity and Accountability is devoted to the simple idea that government officials are not above the law; if citizens must follow the law, the government must follow the Constitution. In addition to filing amicus briefs, like this one, IJ has also filed three petitions with the Supreme Court on behalf of Americans whose rights were violated by police but were barred from seeking redress due to governmental immunity. Those cases are all pending with the Court.

Reprinted from The Institute For Justice.

 

The Money-Printing Gods Have Failed

The Money-Printing Gods Have Failed

Hooray!

Finally even the robo-machines and day traders are puking, not BTFDing. Today’s 3,000 Dow Point Dump says even they have had enough of the craven dolts who occupy the Eccles Building.

You do not need a PhD in economics—or even a night school survey course—to see that COVID-19 is temporary supply side shock which 0.05% money market rates are powerless to combat.

Likewise, you don’t need to be a finance wizard to see that with 10-year USTs at 0.78% and 30-year mortgages at their lowest level in history more QE is a sick joke. Adding another $700 billion of government and GSE debt to the Fed’s already hideously bloated balance sheet can’t possibly drive interest rates meaningfully lower, even if rates were a barrier to activity, which they are not.

In fact, the new barrage of QE5 is nothing more than a blatant financial fraud authorized by the official criminals domiciled in the Eccles Building. Today, and for years in the past, the FOMC has been scurrying about in the dealer markets swapping counterfeit credits plucked from thin air for Treasury and GSE bonds that funded the consumption of real economic resources such as government salaries, purchases and private housing construction.

The traditional argument for central banking, of course, was that a little bit of financial fraud (3% per year balance sheet expansion per Uncle Milton Friedman, for example) could help lubricate the banking system and nudge GDP to steadier performance over time.

But what we have now is epic-scale counterfeiting. That is, upwards of $5 trillion of fiat money liabilities at the Fed and $25 trillion at all the world’s central banks, compared to just $500 billion and $2 trillion, respectively, at the turn of the century; and the latter of which had taken decades, and in some cases, centuries to accumulate.

Moreover, on top of everything else in the last several days, these madmen announced in late morning today a new $500 billion O/N repo to be offered two hours later. Just like that—up to one half-trillion dollars of Fake Credit was to emanate from the Fed’s “buy” key during lunch hour!

Fortunately, only $19 billion got taken down, proving these economic morons and arsonists have absolutely not idea what they are doing.

So not knowing, however, they have succeeded in turning the entire financial system into a cesspool of false prices and destructive gambling rackets, thereby stripping

capitalism of the honest money and capital markets its needs to function and thrive. What lies ahead, therefore, is a no man’s land of statist economic and capital demolition.

Needless to say, you don’t need to be a cynic to understand why the Eccles Building launched this limp baby bazooka last night. The Federal Reserve now, and for many years past, has been the abject handmaid of the Wall Street gamblers, bullies and crybabies.

The Fed heads are deathly afraid of honest stock market prices (i.e. a crash) because they know it will make a mockery of their risible claims that the US economy is in a “good place” or that the consumer is “strong” and that they have delivered the hallowed state of Keynesian full employment, world without end.

In truth, decades of Keynesian central banking have sucked the lifeblood out of main street prosperity, stability and resilience. It has destroyed savers; addicted households to debt-based hand-to-mouth living; eviscerated the purchasing power of wages via its 2.00% inflation obsession; and turned the C-suites of corporate America into stock trading rooms and financial engineering joints in the service of Wall Street speculators, not the construction of resilient, value-creating enterprises.

But now the mask of self-serving rhetoric is being ripped-off the Fed’s (and Wall Street’s) phony narrative about the alleged strength of the main street economy— especially the purported Energizer Bunny of household consumption.

After all, just consider the implications of Nancy Pelosi’s Friday Night Abomination—a mass scale soup line of Washington-ordered handouts that is every bit as insidious as the TARP bailout of September 2008.

That is, anyone on Wall Street back then who was illiquid, deserved to be liquidated; and anyone on main street today who has not had enough common sense to put aside at least two weeks of rainy day funds—which is the amount of sick leave Nancy ordered businesses to pay— might profit from spending 14 days begging, borrowing and scrounging for canned soup.

So let’s be very clear. This isn’t about humanitarian necessity or safety net minimums. There are upwards of 110 million American now receiving welfare, food stamps, Medicaid, subsidized housing etc. and not a dime of it that aid—deserved or not—is imperiled by COVID-19.

For crying out loud, Pelosi’s mandated sick pay covers just 80 hours of work for the minority of American workers who are employed by firms with less than 500 employees and (apparently after the allowed DOL waivers) more than 50.

So consider the median wage earner, who doesn’t work for a Small Business (< 50 workers) or a Big Business (> 500 workers), but got their economic porridge just right, thereby qualifying for Nancy’s bequest.

According to the Social Security Administration, there were 167 million US persons who generated a payroll tax record in the most recent year (2018). Among them, there were 9.29 million workers right around the median wage who generated $330 billion of gross pay or an average of $32,450 each.

That is to say, two weeks’ pay amounted to the grand sum of $1,250. Yet these cats down in the Imperial City insist these workers positively can’t get by for even 14 days by drawing down savings, belt-tightening and selling some excess junk on e-Bay if they get the COVID-19 or the quarantine, as the case may be.

We doubt whether that’s strictly accurate, but are quite sure that Federally mandating employers to provide sick leave—and then paying for it on the other side with a tax credit handout— is just another fatal step down the slippery slope of socialization of economic life that will eventually bankrupt the US Treasury.

The fact is, the entire Keynesian policy regime of the present era encourages households, businesses and governments alike to borrow to the hilt and spend every dollar of income in hand-to-mouth fashion. It has therefore left all economic sectors vulnerable, fragile and, in the metaphor of the day, defenseless against even the short-term dislocations generating by public health measures to contain a strain of flu which is highly contagious but not even remotely a Black Plague scale phenomena.

Indeed, the chart below puts the lie to the “strong” consumer canard. The second set of bars covers households right in the middle of the wage distribution cited above, with annual incomes between $25,000 and $45,000.

At each income interval the bars cover households which actually have savings accounts according to the most recent survey of the Federal Reserve, meaning that even the dark green bars representing median amounts significantly over-state the case.

Accordingly, at best the median wage earning household has cash savings of just $1,400. Yet that is not evidence that households are inherently irresponsible spendthrifts; it’s merely the consequence of central banking policies that positively punish savers and encourage them to shop until they drop.

The evidence for the Fed’s role in leaving large swaths of the working population naked in the face of even a modest interruption of paychecks is dispositive. As shown in the chart below, there have been only 9 months since the eve of the financial crisis in early 2008 during which liquid savings generated a return that even matched the inflation rate.

As it happened, during most of that 12-year period, the liquid savings rate as represented by the 90-day T-bill (purple line) earned well less than 1.0% when the inflation rate was consistently 2.00% or higher.

Moreover, after the brief interlude in 2019 when the T-bill yield crossed above the inflation rate, the positive yield wasn’t even a rounding error, albeit enough for the crybabies of Wall Street and the ignoramus in the Oval Office, respectively, to come down on the Fed with a ton of bricks for daring to raise rates too much, too fast.

Needless to say, these monetary cranks have now gotten their way. Today the 90-day T- bill posted at a ridiculously low yield of just 0.23% at a time when the running core inflation rate (CPI less food and energy) most recently clocked in at 2.37% ( February).

So the real yield on liquid savings is negative -2.14%.

Is it any wonder that households have no savings?

Is it any surprise that the Republican sheeples of the beltway just rolled-over Friday night and voted through the Dems’ latest plank on Bernie’s highway to social democracy?

The fact is, the free market would be more than capable of handling a temporary disruption of the supply side—even in the form of the kind of shutdown hysteria that is now issuing from any and all Federal, state or local officials who can manage to grab and open mike, as we will outline in Part 2. In the meanwhile, Gary Kaltbaum gets the last word:

He’s printing money to buy bonds but bonds are already yielding under 1% on the 10 year and around 1.5% on the 30 year. Mortgage rates are not coming down much more. Loan rates are not coming down much more. But again, Aunt Mary and Uncle Bob are screwed because there goes any return on riskless income investments. You already know what we think of these people. We have highlighted them time and time again. They have done nothing more than distort price and yield, screwed savers, bubbled up asset prices, enabled massive leverage and massive debt and deficits but let’s keep depending on them. What’s next? You deposit money and also have to give them the toaster? Does this compare to 1987? To our eyes, it is worse. In 87,

 

Reprinted from The Future of Freedom Foundation.

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