The Javelineer

David DeGraw at Alternet discovers that government power has been misused by the economic elites.

We all have very strong differences of opinion on many issues. However, like our founding fathers before us, we must put aside our differences and unite to fight a common enemy.

It has now become evident to a critical mass that the Republican and Democratic parties, along with all three branches of our government, have been bought off by a well-organized Economic Elite who are tactically destroying our way of life. The harsh truth is that 99 percent of the U.S. population no longer has political representation. The U.S. economy, government and tax system is now blatantly rigged against us.

Current statistical societal indicators clearly demonstrate that a strategic attack has been launched and an analysis of current governmental policies prove that conditions for 99 percent of Americans will continue to deteriorate. The Economic Elite have engineered a financial coup and have brought war to our doorstep…and make no mistake, they have launched a war to eliminate the U.S. middle class.

Well, yes. Paeloconservatives have been saying this for, oh, four decades now.

The next step for progressives is to grasp – and I know it will be painful – to grasp that government power is alway turned against the people. We will never find the incorruptible angels a progressive government would require. We cannot give power to elites. We cannot delegate to “experts” the power to run “society.” Government must be strictly limited to the powers delegated in the Constitution, and no others.

The people must be individually free to prosper or fail, to organize or dissent, to worship or not – as they wish. Society must be free to develop free of government management or even government interference.

Grasping that fact will be a big step for progressives. Wrought by a neo-feudal elite, the coming economic disasters will force some progressives to take it. Welcome back, progressives. No hard feelings.

Update: Jobless Suffer as Corporate Cash Hits $1.18 Trillion. The deck is stacked against us.

Update: Reid Jobs Bill Gives Tax Breaks for Hiring Illegal Workers. Tax breaks for hiring illegals + tax breaks for outsourcing + tax breaks for hiring foreign visa workers = economic, social and political disruption. That’s the goal of the elites. They want to break the political power of the recalcitrant, pro-Constitution middle class.

Supermarket chain Publix hires foreign workers — says local residents don’t want the jobs.

At a time when Lee County’s unemployment rate is almost 14 percent and about 38,000 residents are jobless, Publix is paying people from South America to work at some of its Southwest Florida supermarkets.

For the last three years, Publix has hired hundreds of Peruvians and Brazilians for its stores in south Fort Myers and Naples during tourist season because the company says it can’t find locals to fill those spots.

The South American cashiers, baggers, deli, bakery and grocery clerks work part time at more than 20 area locations, said Publix spokeswoman Shannon Patten. The company began hiring them in late 2008, when Lee’s unemployment was about 6 percent.

“It is our experience that potential workers that live year ’round near our stores are interested in permanent jobs, not temporary ones,” Patten said.

Many Southwest Florida jobseekers and the people who help them disagree.

Are you kidding?” asked Rita Hursell. The 46-year-old nurse’s aide, who’s been out of work since 2007, is on food stamps and lives with her parents in Lehigh Acres [...] she’d be happy to work at Publix even on a part-time, temporary basis. “I wouldn’t mind at all,” she said [...]

Edison State College ethics and philosophy professor Charles Larkin calls the Publix policy disgraceful and unpatriotic.

“With 14 percent unemployment in Lee County, Publix can’t find any local Americans interested in working part time? Give me a break,” Larkin said. “This can hardly have been the intent of the new Kennedy administration in 1961 when it instituted this program for cultural exchanges with Central and South American nations which were, at that time, predominantly military dictatorships.”

14% unemployment. A supermarket chain prefers to give jobs to foreign workers. Huh?

These foreign workers come here on non-immigrant work visas. It makes me angry. In some industries, the number of foreign workers in the US is larger than the number of unemployed US workers! If we just revoked those non-immigrant visas, some industries would have full employment again.

The US government hates you. I suggest that you hate it right back.

This chart is profoundly disturbing.

Many people think that defense spending causes our huge budget deficits. Not so.

Assuming only linear growth, entitlement spending alone will exceed tax revenues by 2052.

Out. Of. Control. Liberals policies will destroy our country.

Kick it with Hayek. Look at that snitch, Keynes.

Sorry if that sounds like invective.
Prepare to get schooled in my Austrian perspective …

That ain’t no liquitity trap,
Just a broke banking system,
I’m done that’s a rap.

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. – John Maynard Keynes

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. – F. A. Hayek

Related: Hayek explains why Milton Friedman is a methodological Keynesian. Monetarism is an example of the more general error of assuming that airy statistical aggregates are a substitute for actual individual judgements. We can agree with Friedman’s ends, but still disagree with his means.

Related: Hayek on so-called intellectuals.

The resistance against being guided by something they [the intellectuals] can’t understand [the free market] is understandable in an intellectual. Go back to theology. Descartes explicitly argued that we should not believe anything we did not understand. But his followers immediately claimed that we should not believe any rules that we do not understand. And the intellectual has this feeling that what is not comprehensible must be nonsense.

Related: Hayek fighting the planners. Part 1. Part 2. Part 3. Part 4.

Related: Read the book, The Road To Serfdom. Watch a BBC documentary: Part 1, Part 2. Or, watch the surprisingly moving Road to Serfdom in Five Minutes. The line drawings express more than any movie could. But for crying out loud, take a Sunday off from watching football and read the damn book, you lazy ass. It’s one of the most important books written in the 20th century.

Whittle exposes the despicable Walter Duranty and the deplorable Walter Cronkite, and then ties it all together with the Frankfurt School and Obama’s ideology. It’s a typically adept presentation.

He even talks a bit about Cronkite’s dangerous ambition for world government. Conservatives are waking up.

(h/t insty)

Benanke is a very, very bad man.

Ben Bernanke’s dollar crisis went into a wider mode yesterday as the greenback was shockingly upstaged by the euro and yen, both of which can lay claim to the world title as the currency favored by central banks as their reserve currency.

Over the last three months, banks put 63 percent of their new cash into euros and yen — not the greenbacks — a nearly complete reversal of the dollar’s onetime dominance for reserves, according to Barclays Capital. The dollar’s share of new cash in the central banks was down to 37 percent — compared with two-thirds a decade ago.

Currently, dollars account for about 62 percent of the currency reserve at central banks — the lowest on record, said the International Monetary Fund.

Bernanke could go down in economic history as the man who killed the greenback on the operating table.

After printing up trillions of new dollars and new bonds to stimulate the US economy, the Federal Reserve chief is now boxed into a corner battling two separate monsters that could devour the economy — ravenous inflation on one hand, and a perilous recession on the other.

“He’s in a crisis worse than the meltdown ever was,” said Peter Schiff, president of Euro Pacific Capital. “I fear that he could be the Fed chairman who brought down the whole thing.”

Investors and central banks are snubbing dollars because the greenback is kept too weak by zero interest rates and a flood of greenbacks in the global economy.

Unfortunately, this is just the beginning.

If a Central Bank is ever created in America- Through Inflation
and Deflation the “Bankers” will Rob The Americans
— Thomas Jefferson

The dollar is dying. The Fed caused it. The Congress abetted it. We will all suffer grievously for it.

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China’s former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. “Bilateral quarrels and clashes are unavoidable,” he told the Asia and Africa Review. “We cannot lower vigilance against hostility in the Middle East over energy interests and security.”

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region’s conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

Remember what Obama promised and what he’s delivered. Epic fail. Epic.

Obama fails to deliver on his promises

These numbers are way too low. The government fakes the analytical process to keep them low. According to some Federal Reserve officials, the real unemployment rate is 16%!

Obama’s “stimulus” was not a stimulus. It was a sedative. Trillions of dollars of productive capital were taken out of the economy to prop up failed businesses. We should have let them go bankrupt. Instead, we’re going bankrupt.

Stimulus funding to date

(h/t Don Surber)

This make sense. Rarely, do people leave the US for treatment. Often, people enter the US for treatment. Think about it.

If you’re not rich and you get sick, in which industrialized country are you likely to get the best treatment?

The conventional answer to this question has been: anywhere but the United States. With its many uninsured citizens and its relatively low life expectancy, the United States has been relegated to the bottom of international health scorecards.

But a prominent researcher, Samuel H. Preston, has taken a closer look at the growing body of international data, and he finds no evidence that America’s health care system is to blame for the longevity gap between it and other industrialized countries. In fact, he concludes, the American system in many ways provides superior treatment even when uninsured Americans are included in the analysis.

“The U.S. actually does a pretty good job of identifying and treating the major diseases,” says Dr. Preston, a demographer at the University of Pennsylvania who is among the leading experts on mortality rates from disease. “The international comparisons don’t show we’re in dire straits.”

Norman Borlaug saved billions of lives and improved the lives of billions more.

Who has saved more human lives than anyone else in history? Who won the Nobel Peace Prize in 1970? Who still teaches at Texas A&M at the age of 86? The answer is Norman Borlaug.

Who? Norman Borlaug, the father of the “Green Revolution,” the dramatic improvement in agricultural productivity that swept the globe in the 1960s [...]

In the late 1960s, most experts were speaking of imminent global famines in which billions would perish. “The battle to feed all of humanity is over,” biologist Paul Ehrlich famously wrote in his 1968 bestseller The Population Bomb. “In the 1970s and 1980s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now.” Ehrlich also said, “I have yet to meet anyone familiar with the situation who thinks India will be self-sufficient in food by 1971.” He insisted that “India couldn’t possibly feed two hundred million more people by 1980.”

But Borlaug and his team were already engaged in the kind of crash program that Ehrlich declared wouldn’t work. Their dwarf wheat varieties resisted a wide spectrum of plant pests and diseases and produced two to three times more grain than the traditional varieties. In 1965, they had begun a massive campaign to ship the miracle wheat to Pakistan and India and teach local farmers how to cultivate it properly. By 1968, when Ehrlich’s book appeared, the U.S. Agency for International Development had already hailed Borlaug’s achievement as a “Green Revolution” [...]

Borlaug, who unfortunately is far less well-known than doom-sayer Ehrlich, is responsible for much of the progress humanity has made against hunger. Despite occasional local famines caused by armed conflicts or political mischief, food is more abundant and cheaper today than ever before in history, due in large part to the work of Borlaug and his colleagues.

More than 30 years ago, Borlaug wrote, “One of the greatest threats to mankind today is that the world may be choked by an explosively pervading but well camouflaged bureaucracy.” As REASON’s interview with him shows, he still believes that environmental activists and their allies in international agencies are a threat to progress on global food security. Barring such interference, he is confident that agricultural research, including biotechnology, will be able to boost crop production to meet the demand for food in a world of 8 billion or so, the projected population in 2025 [...]

“We have to have this new technology if we are to meet the growing food needs for the next 25 years,” Borlaug declared at the dedication ceremony. If the naysayers do manage to stop agricultural biotech, he fears, they may finally bring on the famines they have been predicting for so long.

Environmentalists kills millions of poor people. Free markets and science save them.

Scary. Really scary. Government has made all the wrong moves over the last two years.

The current financial crisis, moreover, has reinforced the trend toward lower seigniorage. Buried within the October 3, 2008 bailout bill, which set up the Troubled Asset Relief Program (TARP), was a provision permitting the Fed to pay interest on bank reserves, something other major central banks were doing already. Within days, the Fed implemented this new power, essentially converting bank reserves into more government debt. Fiat money traditionally pays no interest and, therefore, allows the government to purchase real resources without incurring any future tax liability. Federal Reserve notes will, of course, continue to earn no interest. But now, any seigniorage that government gains from creating bank reserves will completely vanish or be greatly reduced, depending entirely on the differential between market interest rates on the remaining government debt and the interest rate on reserves. The lower is this differential, the less will be the seigniorage. Indeed, this new constraint on seigniorage becomes tighter as people replace the use of currency with bank debit cards and other forms of electronic fund transfers. In light of all these factors, even inflation well into the double digits can do little to alleviate the U.S. government’s potential bankruptcy [...]

All the social democracies are facing similar fiscal dilemmas at almost the same time. Pay-as-you go social insurance is just not sustainable over the long run, despite the higher tax rates in other welfare States. Even though the United States initiated social insurance later than most of these other welfare States, it has caught up with them because of the Medicare subsidy. In other words, the social-democratic welfare State will come to end, just as the socialist State came to an end. Socialism was doomed by the calculation problem identified by Ludwig Mises and Friedrich Hayek. Mises also argued that the mixed economy was unstable and that the dynamics of intervention would inevitably drive it towards socialism or laissez faire. But in this case, he was mistaken; a century of experience has taught us that the client-oriented, power-broker State is the gravity well toward which public choice drives both command and market economies. What will ultimately kill the welfare State is that its centerpiece, government-provided social insurance, is simultaneously above reproach and beyond salvation. Fully-funded systems could have survived, but politicians had little incentive to enact them, and much less incentive to impose the huge costs of converting from pay-as-you-go. Whether this inevitable collapse of social democracies will ultimately be a good or bad thing depends on what replaces them.

Hyper inflation or default? That’s the choice the Democrats give us. Fiscal responsibility lies with the Congress, and the Democratic Congress is insane.

You may think of Whole Foods as a liberal kind of store. It is. But it’s a classical liberal store.

John Mackey, CEO of Whole Foods, he gets it.

Shop at Whole Foods and let them know you agree with their position on health care.

“The problem with socialism is that eventually
you run out of other people’s money.”
—Margaret Thatcher [quote in original!]

• Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs).The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees’ Personal Wellness Accounts to spend as they choose on their own health and wellness.
• Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair.
• Repeal all state laws which prevent insurance companies from competing across state lines.We should all have the legal right to purchase health insurance from any insurance company in any state and we should be able use that insurance wherever we live. Health insurance should be portable.
• Repeal government mandates regarding what insurance companies must cover. These mandates have increased the cost of health insurance by billions of dollars. What is insured and what is not insured should be determined by individual customer preferences and not through special-interest lobbying.
• Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year. These costs are passed back to us through much higher prices for health care.
• Make costs transparent so that consumers understand what health-care treatments cost. How many people know the total cost of their last doctor’s visit and how that total breaks down? What other goods or services do we buy without knowing how much they will cost us?
• Enact Medicare reform. We need to face up to the actuarial fact that Medicare is heading towards bankruptcy and enact reforms that create greater patient empowerment, choice and responsibility.
• Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren’t covered by Medicare, Medicaid or the State Children’s Health Insurance Program.

I have only one thing to add: you damn right!

(h/t Amy Alkon)

Update: The typical, angry, vicious liberals are attacking CEO John Mackey. Whole Foods employees are fighting back.

Christopher Hitchens thinks there’s something good about Leon Trotsky and Trotskyism. Why does Trotsky matter? Robert Service explains,

He’s one of the half dozen outstanding Marxist revolutionaries. He helps to make the October Revolution that brings the communists to power in 1917. He’s a leader of the Red Army that fights the civil war, and he’s the intellectual architect of a lot of aspects of Communism that get laid down in the 1920s and still have an impact in the 40s, 50s 60s to the present day.

Video here.

On balance, I think Trostsky was a very bad man, because he advocated very bad politics. Why should you care about Trotsky? After Trotsky’s assassination in Mexico, his followers, the Trotskyites, became the vanguard of Cultural Marxism. This virulent form of communism is the origin of political correctness, and it is the predominate politics advocated on American college campuses.

Cultural Marxism is still a threat. Linda Kimball explains the history and aims of cultural marxists.

Separately, two Marxist theorists-Antonio Gramsci of Italy and Georg Lukacs of Hungary-concluded that the Christianized West was the obstacle standing in the way of a communist new world order.  The West would have to be conquered first.

Gramsci posited that because Christianity had been dominant in the West for over 2000 years, not only was it fused with Western civilization, but it had corrupted the workers class.  The West would have to be de-Christianized, said Gramsci, by means of a “long march through the culture.”  Additionally, a new proletariat must be created.  In his “Prison Notebooks,” he suggested that the new proletariat be comprised of many criminals, women, and racial minorities.

The new battleground, reasoned Gramsci, must become the culture, starting with the traditional family and completely engulfing churches, schools, media, entertainment, civic organizations, literature, science, and history.  All of these things must be radically transformed and the social and cultural order gradually turned upside-down with the new proletariat placed in power at the top.

Cultural marxists aim at nothing less than total destruction of traditional Western culture. Feminism, an illogical and evil philosophy, has been one of the most successful cultural marxist movements. Feminists have convinced most people that Western civilization has been and is preoccupied with oppressing women. That is completely and totally false. But this is prerequisite belief for feminists to destroy the most successful social arrangement in human history: the traditional nuclear family.

Saul Alinsky was a prominent cultural marxist and former Trotskyite. He organized the Chicago political machine. He is an intellectual hero to Hillary Clinton and Barak Obama. Alinsky dedicated his book, Rules for Radicals, to Satan as the first Marxist revolutionary. Alinsky, Cloward and Piven, and other cultural marxists advocate a strategy to destroy Capitalism and individual liberty.

This strategy has already wreaked havoc.

Rathke acknowledges his support for the Cloward-Piven Strategy, an approach to radical social and political change articulated by Marxist university professors Richard A. Cloward and Frances Fox Piven in a 1966 Nation article, “The Weight of the Poor: A Strategy to End Poverty.” The two academics called for “a massive drive to recruit the poor onto the welfare rolls” in an effort to overwhelm the system. [Italics in original.]

The strategy helped to bankrupt New York City in 1975. Years later, the Big Apple’s mayor, Rudy Giuliani, denounced the academic activists by name.

The push for government control of insurance is undoubtedly the latest attempt to “overwhelm the system.” This precipitates another crisis a few years later. As Obama’s advisor Rahm Emanuel has said, “you never want a serious crisis to go to waste.” Saul Alinsky couldn’t have said it better.

As you can see, Trotsky’s influence was wide, deep, and long-lasting. But it wasn’t good. Neither are his followers.

Before you read this post, just think what would be the media reaction, what would be your reaction, if a Republican President had said this about people protesting his policies,

I don’t want the folks who created the mess do a lot of talking. I want them to get out of the way so we can clean up the mess. I don’t mind cleaning up after them, but don’t do a lot of talking.

Just think about what would have happened. But Obama said it. Think about it. You might even think about why most journalists are liberal, and how that might skew the national debate.

White House supporters were told to “punch back twice as hard.”

Senior White House adviser David Axelrod and deputy chief of staff Jim Messina told senators to focus on the insured and how they would benefit from “consumer protections” in the overhaul, such as ending the practice of denying insurance based on preexisting conditions and ensuring the continuity of coverage between jobs.

They showed video clips of the confrontational town halls that have dominated the media coverage, and told senators to do more prep work than usual for their public meetings by making sure their own supporters turn out, senators and aides said.

And they screened TV ads and reviewed the various campaigns by critics of the Democratic plan.

“If you get hit, we will punch back twice as hard,” Messina said, according to an official who attended the meeting.

They did. Literally. At Democratic Rep. Russ Carnahan’s town hall, Obama’s union thug suppoters beat down a black conservative and kicked him on the ground.

Did you catch that? The black SEUI union thug, the only guy charged in the attack, says “he [the black conservative] attacked America, and I attacked him.” Yeah. To Obama supporters, you’re against America if you’re against socialized medicine.

Listen to Carnahan’s lame response.

The Democrat attack machine is smearing concerned citizens.

Democratic Sen. Barbara Boxer says, the protesters want to “hurt our President and to change the Congress.” If by “hurt our President,” she means to hurt his abominable policies, then yes. Is it about changing Congress? Hell, yes!

That’s how our constitutional democracy works. The people change the Congress when they don’t like what it’s doing. Boxer acts as if democracy is some insane fascist plot.

I there is any astroturfing, it’s astroturfing that’s all liberal, all Democratic, all the time.

But lets look at how liberal Democrats live up to their own standards of civility.

Crazy liberals

Crazy ass liberals

Even more crazy ass liberals

You gotta’ be a complete dumb ass or a complete liar to forget the protest antics of liberal Democrats.

Tell you what, let’s meet the mob that’s opposing socialized medicine.

The scary mob, doing that scary democracy thing.

Wow. Mobbish. Reminds me of this horrifying social problem.

Lately, insurance is on our minds. I’ve spoken with many people about it, especially about health insurance. Almost everyone to whom I’ve spoken simply doesn’t understand the market for risk. Most people don’t have the conceptual apparatus to reason about health insurance or health policy. The risk market results from probabilistic solutions to a stochastic problem.

Here are some helpers.

The indispensable work is Risk, Uncertainty, and Profit, by Frank H. Knight.

1. Uncertainty distinguished from risk

The practical difference between the two categories, risk and uncertainty, is that in the former the distribution of the outcome in a group of instances is known (either through calculation a priori or from statistics of past experience), while in the case of uncertainty this is not true, the reason being in general that it is impossible to form a group of instances, because the situation dealt with is in a high degree unique.

2. Two conditions required to reduce uncertainty

The possibility of reducing uncertainty depends again on two fundamental sets of conditions: first, uncertainties are less in groups of cases than in single instances. [...] The second fact or set of facts making for a reduction of uncertainty is the differences among human individuals in regard to it.

3. Two methods for dealing with uncertainty

We may call the two fundamental methods of dealing with uncertainty, based respectively upon reduction by grouping and upon selection of men to “bear” it, “consolidation” and “specialization,” respectively.

4. Insurance is consolidation

to deal with uncertainty by consolidation. The most obvious and best known of these devices is, of course, insurance [...] The application of the insurance principle, converting a larger contingent loss into a smaller fixed charge, depends upon the measurement of probability on the basis of a fairly accurate grouping into classes. It is in general not enough that the insurer who takes the “risk” of a large number of cases be able to predict his aggregate losses with sufficient accuracy to quote premiums which will keep his business solvent while at the same time imposing a burden on the insurer which is not too large a fraction of his contingent loss. In addition he must be able to present a fairly plausible contention that the particular insured is contributing to the total fund out of which losses are paid as they accrue in an amount corresponding reasonably well with his real probability of loss; i.e., that he is bearing his fair share of the burden.

5. Speculation is specialization

The second of the two main principles for dealing with uncertainty is Specialization. The most important instrument in modern economic society for the specialization of uncertainty, after the institution of free enterprise itself, is Speculation [...] The typical illustration to show the advantage of organized speculation to business at large is the use of the hedging contract. By this simple device the industrial producer is enabled to eliminate the chance of loss or gain due to changes in the value of materials used in his operations during the interval between the time he purchases them as raw materials and the time he disposes of them as finished product, “shifting” this risk to the professional speculator.

From 1, we see that risk can be planned for, while uncertainty can’t be. If we know in advance a good approximation of the expected value of the payout outcomes, then we can allocate resources to minimize the effects of chance. If we don’t know the distribution, we cannot make such a calculation.

From 1 and 2, we get a stunner. Outcomes cannot be insured that are subject to individual choice. We say they are accidental, not intentional. You can insure yourself in case of accidental fire in your house. But, you cannot insure yourself against you setting fire to your house. It’s in your control. Thus, “unemployment insurance” is not really insurance. Sure enough, the government doesn’t even manage like an insurance program. It’s simply a tax benefit, and it’s a very expensive one. For example, I’ve paid in at least ten times the maximum benefit, which benefit is set specifically to prevent anyone else sharing my unemployment risk. This must be the case because I have control over whether I’m employed or not, and my employer is in control over whether he will continue to employ me. The risk distribution cannot be know in advance and there is no distinction between riskier and less risky employment arrangements.

Governments like to fool people into thinking that they are insured, when really they are just receiving a tiny tax benefit.

From 4, we see that most medical insurance isn’t really insurance, either. Insurance works by consolidating uncertainties into classes with similar probabilities. Their exist very few health outcomes which are accidental. Most health risks are subject to full or partial individual control. As Mises wrote in Socialism: An Economic and Sociological Analysis,

To the intellectual champions of social insurance, and to the politicians and statesmen who enacted it, illness and health appeared as two conditions of the human body sharply separated from each other and always recognizable without difficulty or doubt. Any doctor could diagnose the characteristics of “health.” “Illness” was a bodily phenomenon which showed itself independently of human will, and was not susceptible to influence by will. There were people who for some reason or other simulated illness, but a doctor could expose the pretence. Only the healthy person was fully efficient. The efficiency of the sick person was lowered according to the gravity and nature of his illness, and the doctor was able, by means of objectively ascertainable physiological tests, to indicate the degree of the reduction of efficiency.

Now every statement in this theory is false. There is no clearly defined frontier between health and illness. Being ill is not a phenomenon independent of conscious will and of psychic forces working in the subconscious. A man’s efficiency is not merely the result of his physical condition; it depends largely on his mind and will. Thus the whole idea of being able to separate, by medical examination, the unfit from the fit and from the malingerers, and those able to work from those unable to work, proves to be untenable. Those who believed that accident and health insurance could be based on completely effective means of ascertaining illnesses and injuries and their consequences were very much mistaken. The destructionist aspect of accident and health insurance lies above all in the fact that such institutions promote accidents and illness, hinder recovery, and very often create, or at any rate intensify and lengthen, the functional disorders which follow illness or accident.

Misguided regulators force insurance companies to cover risk that is largely or at least sometimes within individual control, and so not accidental and insurable. For example, every state requires insurance companies to cover psychological therapy, pastoral counseling, drug abuse, alcoholism. Many states do not allow insurance companies to take account of lifestyle choices, such as intravenous drug use, that might indicate a higher risk of AIDS.

The government prevents insurance companies from consolidating people with similar risks, forcing us all to pay for the non-accidental choices of others. We have to pay for all kinds of risk that doesn’t apply us. This drives costs up and leads people to forego insurance. That’s perfectly rational. Why pay for aids risk when I’m in the lowest risk group? Why pay for injury risk from skydiving, when I don’t skydive?

I box and wrestle, why should you pay for that extra risk if you don’t box or wrestle? People who practice a more moderate pastime should pay less. Government regulation prevents this kind of risk consolidation in many areas. It’s killing us.

You can also listen to an informative audio lecture on insurance by Hans Herman-Hoppe. You can also read this article on the free market and insurance.

This is scary.

We’re looking at a 15% default rate in commercial real estate. In some industries, like hotels, it could be as high as 20%.

I can hardly believe this.

Election gains in some of these affluent regions have helped give Democrats big majorities in the House and Senate. Of the 25 richest districts, 14 are represented by Democrats, according to Congressional Quarterly. In 1995, Democrats represented just five of those districts.

Recently elected Democrats from higher-income areas also have been cautious about legislation that would make it easier for labor unions to organize, and about legislation imposing tough new rules on banks. Republicans have savaged the new Democrats for supporting legislation to stem global warming by capping greenhouse-gas emissions, then forcing polluters to purchase and trade emissions credits — a “cap and tax,” the GOP says.

But planned tax increases are likely the source of the toughest intra-Democratic tensions.

Let me get this straight. A bunch of rich people voted for Obama, and now they are shocked -shocked! – to discover O! wants to raise taxes, over-regulate business, and punish productivity and entrepreneurship? Seriously? They didn’t know? ROFLMAO

Liberal rich people are stupid. There’s just no other explanation. That’s strange I can believe in.

For the metaphorically challenged: the pit is an economic depression, the prisoner is you, the pendulum is foreign debt, the Inquisition is the Fed, Father Time is Obama, Austrian School economics is the rescuer of the prisoner.

Oh, hell. Just read the charts.

Read it and weep.

Related: Peter Schiff was right

Mort Zuckerman explains why.

The average length of unemployment is higher than it’s been since government began tracking the data in 1948.

The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.

The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.

Christina Hoff Sommers talks about the massive job losses suffered by men and the lame feminist response.

(h/t Dr. Helen)

John Stossel writes about his experiment comparing American and international students.

To give you an idea of how competitive American schools are and how U.S. students performed compared with their European counterparts, we gave parts of an international test to some high school students in Belgium and in New Jersey.

Belgian kids cleaned the American kids’ clocks, and called them “stupid.” [...]

The Belgian students didn’t perform better because they’re smarter than American students. They performed better because their schools are better. At age 10, American students take an international test and score well above the international average. But by age 15, when students from 40 countries are tested, the Americans place 25th.

American schools don’t teach as well as schools in other countries because they are government monopolies, and monopolies don’t have much incentive to compete. In Belgium, by contrast, the money is attached to the kids — it’s a kind of voucher system. Government funds education — at many different kinds of schools — but if a school can’t attract students, it goes out of business.

Belgian school principal Kaat Vandensavel told us she works hard to impress parents.

She told us, “If we don’t offer them what they want for their child, they won’t come to our school.” She constantly improves the teaching, saying, “You can’t afford 10 teachers out of 160 that don’t do their work, because the clients will know, and won’t come to you again.”

“That’s normal in Western Europe,” Harvard economist Caroline Hoxby told me. “If schools don’t perform well, a parent would never be trapped in that school in the same way you could be trapped in the U.S.”

Last week Florida’s Supreme Court shut down “opportunity scholarships,” Florida’s small attempt at competition. Public money can’t be spent on private schools, said the court, because the state constitution commands the funding only of “uniform . . . high-quality” schools. Government schools are neither uniform nor high-quality, and without competition, no new teaching plan or No Child Left Behind law will get the monopoly to serve its customers well.

The longer kids stay in American schools, the worse they do in international competition. They do worse than kids from poorer countries that spend much less money on education, ranking behind not only Belgium but also Poland, the Czech Republic and South Korea.

This should come as no surprise if you remember that public education in the United States is a government monopoly. Don’t like your public school? Tough. The school is terrible? Tough. Your taxes fund that school regardless of whether it’s good or bad. That’s why government monopolies routinely fail their customers. Union-dominated monopolies are even worse.

This sucks. Disband government schools. Privatize the lot.

This fraudulent grabasstic practice has been raised to an art, call it bovine scatology, by tech companies. Now companies in the skilled trades are getting into the cesspool.

A News 8 investigation found that hundreds of aircraft mechanics have been brought into the United States to work at aircraft repair facilities.

Insiders say the companies that are importing the mechanics are so eager to save money, they’re overstating their qualifications. The result may be a threat to safety, abetted by lax enforcement of immigration law.

Hey, officers of San Antonio Aerospace, screw you and the lame horse you rode in on.

(h/t WFAA, who do excellent local reportage. These guys drink their whiskey straight.)

Related: The Archiminister on fraudulent practices by employers
Related: Michael E has the H-1B data

Insty links to a sobering story in The Telegraph about our fiscal future.

The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank

As I’ve written before, the Fed is skewered upon the horns of a dilemma. The Telegraph article understands the problem as government debt. They are correct. But the rise in interest rates is a result of debt combined with the inflationary bailouts of Bush and Obama.

On one horn, the Fed can’t lower interest rates for fear of creating even more inflation, bleeding the citizenry of their wealth. On the other horn, the Fed can’t raise interest rates for fear of illiquidity, bleeding entrepreneurs of financing. But maybe there is a middle way between the horns. Ben Bernanke asks a liberal congress for fiscal conservatism. Fat chance with the fat cats.

The budget deficit this year is projected to reach $1.85 trillion, equivalent to 13 percent of the nation’s economy, according to the nonpartisan Congressional Budget Office.

“Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation,” Bernanke said in response to a question. “The Federal Reserve will not monetize the debt.”

Bernanke speaks as if he could monetize the debt. How long does he think foreign central banks will prop up the dollar? Perhaps anticipating inflation scares, the US government no longer even reports M3. Shadow Government Statistics estimates the rate of growth in M3.

Their estimates show a huge, compounding rate of growth in the money supply between early 2005 and early 2008.

Inflation favors a debtor and harms a creditor, because the debtor can pay back the dollars owed in the less valuable inflated currency. Suppose you loan ten dollars to a friend. Before he were to pay, inflation devalues the dollar by 90%. Now your friend pays you back, giving you ten dollars. Before the trade, ten dollars would have paid for lunch, but now it wouldn’t even buy a cup of coffee. The debtor comes out ahead, because he gets the pre-inflated use of the money.

The US is debtor nation. We like inflation. Our creditors don’t. With the spectre of hyperinflation stalking every Fed policy move, the Chairman wants to ensure the blame lands on Congress. Bernanke plays the hero, refusing to monetize federal debt that he knows no foreign bank will buy anyway! In other words, he refuses to monetize debt that he can’t monetize. Whoopty freakin’ do. And these are the smart guys running stuff.

There is no middle way. Foreign banks are going to stop buying our debt. It’s only a matter of time. When that happens the dollar is going to crash, leading to massive inflation.

The French detest the habit of the English to make a virtue of necessity. Except for a preternatural desire for their women, and for some lovers of France who I wish would check me out like a chilled juice bottle, ahem, with those exceptions in mind, I am no Francophile. Still, Bernanke’s virtue of necessity is a rather sickening cowardice. It’s more like unthinking chest beating than sprezzatura.

Damn the architects of the bailout. All of them. They have fashioned the instruments of our economic decline. Now they act surprised to find the instruments in their own hands. Pfft.

Liam Julian writes a wonderful review of The Beautiful Tree: A Personal Journey Into How the World’s Poorest People Are Educating Themselves, by James Tooley.

The data Tooley unearthed are fascinating. Not only do networks of private schools for the poor exist across the developing world—networks that emerged without any government- or NGO-sponsored help—but their students learn far more than do those of government- and NGO-funded public schools. These private schools for the poor are not only local, entrepreneurial, and efficient: they work.

The Beautiful Tree could have explored one question more thoroughly: when parents pay tuition, does it affect how they and their children perceive education? Tooley does a fine job mining the ways in which tuition creates school accountability, but might the payments not also render a parent more likely to value his child’s schooling and, therefore, to demand that his child be academically diligent? If so, the wisdom of providing free public education might be more tenuous than is generally assumed.

I’m not going to spare you the ugly truth: no one can educate you. No one can educate your kids. People have to educate themselves.

Never in human history has it been easier to get educated. For example, MIT offers its courseware online for self-study – for free. But, you have to do it all yourself. Even if you sit in a university classroom, all the teacher does is point to what you should study. You have to travel the education road on your own two legs.

Poor people don’t need to wait. They can educate their own, by themselves, without government. I have no doubt that many people would volunteer to help out.

Why did this take so long? Why did poor people wait so long to organize for their own education? Hernando de Soto argued in The Mystery of Capital, the government has insulated or excluded poor people from reacting to prices. Economic insulation, especially from prices, misleads poor people about how to organize and employ resources. It’s a downward spiral. Poor people end up working very, very hard at all the wrong things. That’s how people get poor and never rise out of their desperate situation.

Markets are not just a way to coordinate prices. Markets also teach. Steve Horwitz writes,

As interesting as I find the results from modern experimental and behavioral economics, the leap that many make from “actors are irrational” to “therefore markets fail” is one that Austrians should be responding to.  Too many in the discipline believe that the argument for the efficacy of markets is premised on the rationality of actors.  To the contrary, the Austrian argument has long been that “rationality” is not in the actors but in the ways in which market institutions filter in and out certain types of behavior.

Because poor folks have been denied access to the great teacher, the market, they have failed to act in a way that brings supply into equilibrium with demand. That’s why they’re poor. De Soto gives an decent theoretical and an excellent historical account of this in Latin America.

Poor people across the world are applying market thinking, the “filter” of rationality, the great teacher, to their own education. The most feared words in the English language are “I’m from the government. I’m here to help.” We should fear government in education, too. If you don’t believe me, just ask a poor person.

Schiff runs Euro Pacific Capital. He predicted the housing bubble, the recession, its causes, and the disastrous government response – in 2006. Watch Mr. Schiff predict the future. Watch the establishment financial pundits completely miss the coming crisis.

How did Mr. Schiff do it? He is a proponent of the Austrian School of Economics which rejects econometrics as predictive.

If you are inclined to study the problem, read What Has Government Done to Our Money.

It’s also useful to review the difference between Shumpeter’s Creative Destruction and the role of outsourcing and H-1B.

Think of it like this. The government encourages outsourcing and H-1B to create a “service economy” which incentivizes firms to reduce or eliminate their domestic manufacturing base. But services exist to service manufactured products and the manufacturing process. So, what’s left when manufacturing is gone? The government tells us that the high-level design jobs will keep American employed. Not true. It only makes sense that design and management jobs will follow the work overseas. So what’s left? Very little.

We do not build things in the US anymore. We should have been engaged in trade. The Chinese make things for us. We make things for them. That’s trade. But the government keeps our currency very strong, making our exports very expensive and uncompetitive. Why does the government keep the dollar high? So foreign governments and investors will buy our ever increasing debt.

We’ve been trading dollars for cheap Chinese imports. These imports are great for us. Our dollars have been good for the Chinese. But not for long. The Chinese accept dollars because they expect they can be exchanged for wealth in the US economy. What happens when the Chinese stop believing that? Outsourcing and H-1B, by undermining the product economy, will surely lead to a crisis of confidence with foreign investors. Then we’ll have a collapse of the dollar and hyper-inflation. That’s the real risk we face.

We needed the recession to bring government-inflated land and housing prices back into equilibrium with supply. We needed the recession to invigorate savings and investments in manufacturing. We need the recession to pressure the Fed and Congress to change their monetary and spending policies.

The US is in a unique position as the holder of world’s reserve currency. We can finance our debt through a high dollar and inflation. By applying a “stimulus” the government just blew more hot air into the bubble. The US economy is now a balloon in search of a pin.

The Bush-Obama “stimulus” is less like coffee and more like methamphetamine. We’re addicted, and it’s going to kill us.

I understand that science moves slowly and that people at the margin are who eventually count.

But I really don’t think the empirical record of sophisticated empirical work is very impressive. In fact, I think I could make a case that sophisticated empirical work is most productive for publishing papers and less productive at establishing truth or useful findings that are reliable.

via Cafe Hayek: Fancy empirical work.

Is economics better developed with the methods of the empirical sciences or the deductive sciences? I say, the deductive sciences.

Julie E. Cohen, Professor of Law, Georgetown University Law Center, speaks at Case Western Reserve University on copyright, the public interest, and the peculiar legal framework under which we live.

Don’t know what is the DMCA? Why should you be concerned? Also, read An Army of Davids, by Glenn Reynolds. You’ll be better for it.

Susan Dudley and Jeff Rosen write in the Boston Globe about the hidden costs imposed by federal  agencies.

Unlike spending and associated taxes, which are subject to approval by both the legislative and executive branches and are visible to the public, regulatory decisions don’t face the same checks and balances and their effects are far less transparent. They represent a hidden tax, not easy to measure and track, but borne by American taxpayers, consumers, and workers nevertheless. And often, regulations benefit vocal, well-organized interest groups at the expense of the broader public.

Take, for example, the administration’s recent actions to impose Davis-Bacon wage requirements on a wide range of stimulus projects, which will ensure higher-than-market wage rates for a few, and increase costs for all taxpayers. Or, the delay of the Interior Department’s five-year plan for off-shore oil leases, and cancellation of 70 other oil leases on the mainland. The termination of a cross-border trucking arrangement with Mexico may please certain interest groups, but has already led to trade sanctions and will harm imports and exports that benefit American consumers.

In its first 100 days, the Obama administration completed 23 economically significant proposed and final regulations, eight more than the Bush administration during the same period (and more than any president before him).

Some of these regulations will have significant effects, such as two new final regulations from the Department of Transportation. The DOT estimates that its new regulations tightening the fuel economy of new cars and trucks will cost consumers more than $1 billion for model year 2011 vehicles and its new rules requiring stronger vehicle roofs will add another $1 billion or more per year. The Labor Department suspended regulations providing for the employment of temporary agricultural workers. The Department of Interior issued final regulations broadening requirements for its staff to be consulted on any project that might increase greenhouse gas emissions (though ironically, on May 8, it announced it would retain a separate Bush-era regulation circumscribing the role of its staff on such projects). And if Congress doesn’t intervene, EPA’s proposal to regulate global warming under the Clean Air Act could potentially lead to the most far-reaching and costly regulation ever, subjecting tens of thousands of new facilities to such EPA regulations for the first time, most of them small businesses operating in every part of the country.

The Administrative State is dangerous. Tomorrow, I will write a post explaining why.

(h/t Don Boudreaux)

The gray bars are actual deficits under Bush. The red bars are projected deficits under Obama.

Obama's debt problem. (h/t Instapundit)

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