Wednesday, December 30, 2009

Paul Krugman's Enduring Narrative

Paul Krugman does not like to be confused by the facts, especially if those facts contrast with his own narratives. In a recent column for the Mises Daily page, I look at how Krugman's semi-weekly "talking points" tend to conflict with reality.

One of the things that always amazes me is the utter shamelessness that Krugman demonstrates. As this Youtube video points out, Krugman attempted to use a number of Canadians to shill for their own health system. When most of those present pointed out that they did not much care for Canadian care, Krugman decides that perhaps he needs to change the subject.

Interestingly, Krugman never does allude to this incident in any of his articles. I'm shocked, SHOCKED at his omission.

Get Ready for the "Death Panels"

This past year, Sarah Palin kicked up a media firestorm when she wrote on her Twitter page that the new healthcare measures passed by Congress will feature "death panels." A number of politicians and Obama supporters denied that such "panels" will exist, but I disagree.

In my weekly column for the Foundation for Economic Education, I deal with this subject and point out that when medical care becomes a "collective" good, "death panels" are inevitable.

Sunday, December 27, 2009

Is There a Constituency for Liberty in the United States Media?

When I was a journalism student at the University of Tennessee 35 years ago, one thing we were told over and over again was that journalism served a "watchdog" role in keeping tabs on government. I had assumed (naively, of course) that the term "watchdog" meant serving as a counterforce against the predations of the state.

Alas, what I have found that it really means is that modern journalists and their mainstream organs like the New York Times, Washington Post, Vanity Fair, Time and Newsweek, not to mention a gaggle of numerous smaller wannabe publications, are making sure that the state is using all of its powers and then some to push people into line. As a college professor who works on a faculty that is overwhelmingly left-liberal, the one thing I hear time and again from my colleagues is that people need a tough, "kick-ass" government to make them behave.

The modern mantra of journalists is "comfort the afflicted, afflict the comfortable," and we see that theme pursued time and again. This leads to situations that tell me that the press sees itself as the entity that will ensure that the government keeps all of us in line, as we cannot be trusted with anything as individuals. And Lord help someone who really thinks that the Bill of Rights was a restriction against the powers of the state against individuals; such thinking is "so 18th Century" or worse.

Take the Martha Stewart case, for example. According to the Usual Pundits on both the right and the left, the conviction and imprisonment (albeit rather brief) of Stewart represented a triumphant moment in which we once again affirmed the Principle that No One is Above the Law. Actually, it demonstrated a more fundamental condition fully supported by the mainstream media (or MSM): the state and its prosecutors are above the law, and the press will make sure of that.

Why do I make such a charge? There was no way the feds could charge Stewart with insider trading, and they knew it. Thus, they hatched a plan with the NYT and Wall Street Journal being complicit in lawbreaking: prosecutors fed secret grand jury information to those papers that was designed to damage the stock price of Martha Stewart Living and compel Stewart to meet with prosecutors and investigators in order to stop the bleeding. (In fact, Stewart was convicted of lying to investigators during that fateful meeting.)

It is a felony to leak grand jury information and is punishable by up to five years in prison. Yet, the feds did it and no one -- no one -- in the media complained about this episode of lawbreaking which was done in order to trick someone into committing a "crime" so that the press could have its Big Story and the prosecutors could indict and convict its Big Fish.

So, who is above the law here? The "watchdog" media assured federal prosecutors and their minions that both they and the media could do what they darned well please, and the law be damned. (After all, the law only is for "little people," not for Important People like prosecutors and reporters for the NYT.) There was no mention of this situation on any editorial pages of our "prestigious" newspapers; instead, we saw only the self-congratulations that happens when the media allies itself with dishonest prosecutors to railroad "chosen" people into prison.

Lest anyone think I am simply "defending the rich" (which, apparently, is a crime in and of itself in this present time), I also look at the behavior of prosecutors across the country who regularly violate the law and certainly the U.S. Constitution, all with the blessings of the media, both right and left. It is very rare that any news organization calls for any sanctions to be placed on prosecutors who are exposed as lawbreakers.

Radley Balko time and again has exposed wrongdoing by prosecutors against the poor and African Americans, yet the prosecutors and the fraudulent "expert witnesses" they have employed in order to get false convictions have not had to worry about losing anything. In the wrongful conviction case of Cory Maye, which Balko has done more than than all of the MSM put together to put into the public eye, we see all of the worst elements of the unholy alliance between prosecutors and the media.

Balko is not the only person speaking out. Tom Kirkendall, a Houston attorney who actually cares about the Bill of Rights, has written many posts on his blog about the prosecutorial wrongdoing in the Enron case and the prosecution of R. Allen Stanford. (The only thing the feds have not done in the Stanford case is to declare him an "enemy combatant" and hold him in the same conditions they held Jose Padilla.)

Yet, there is no outrage in the media. Ironically, Stanford's treatment is not much different than the treatment given in Russia to Mikhail Khodorkovsky, a businessman who apparently angered Vladimir Putin. However, the NYT had a lengthy article condemning Khodorkovsky's imprisonment, but apparently believes that denying bail to an American businessman and holding him in conditions reserved for those on death row is perfectly acceptable.

As one who was involved in the infamous Duke Lacrosse Non-Rape, Non-Kidnapping, and Non-Sexual Assault case, I can tell you that the MSM will swallow just about anything from prosecutors, providing it fits the anti-capitalist and anti-Bill of Rights narrative that dominates the American media today. Even though most journalists think of themselves as being far superior in intelligence than most Americans, the leaders of the "Newspaper of Record" were True Believers in the "Magic Towel" that allegedly appeared in the Duke case, a towel that managed to make the DNA of Crystal Mangum appear while not wiping away the DNA of anyone else.

Yes, the same journalists who want us to believe that simple cotton towels have magical properties also want us to believe that it is OK for government-funded "scientists" to fake data and engage in outright fraud just to save us from the fate of "climate change." Oh, and these are the same people who believe that Al Gore is a genius, an "intellectual's intellectual." (Actually, I had some dealings with Gore when I worked in Tennessee and can tell readers that the guy was just another fat, scripted politician who enjoys average intelligence at best.)

Indeed, the MSM is no "watchdog" of government. Journalists are lapdogs of the state, and little more than that. As for the constituency of liberty, I do find it telling that the one politician who does speak out for real liberty, Ron Paul, is derided in the MSM as a "kook" and a "nutcase." Somehow, that makes sense to me, given what I have seen in the media. From Sean Insanity at Fox News to Rachel Mad Dog at MSNBC, we see that the media loves dictators, "take-charge" people who throw around their weight. As for liberty, well, that is passe at best and dangerous at worst.

Friday, December 25, 2009

Paul Krugman's Christmas Carol

It is the year 2014 and Tiny Tim is ill, but he does not need the generosity of Ebenzer Scrooge to bring him back to health. No, as Paul Krugman insists, the Cratchits

have health insurance. Not from their employer: Ebenezer Scrooge doesn’t do employee benefits. And just a few years earlier they wouldn’t have been able to buy insurance on their own because Tiny Tim has a pre-existing condition, and, anyway, the premiums would have been out of their reach.

But reform legislation enacted in 2010 banned insurance discrimination on the basis of medical history and also created a system of subsidies to help families pay for coverage. Even so, insurance doesn’t come cheap — but the Cratchits do have it, and they’re grateful. God bless us, everyone

Now, Krugman admits that this is just a story, but he has seen the Ghost of Christmas Future and declares:

O.K., that was fiction, but there will be millions of real stories like that in the years to come. Imperfect as it is, the legislation that passed the Senate on Thursday and will probably, in a slightly modified version, soon become law will make America a much better country.

Indeed, we know that the legislation that will place more chains upon us than which bedeviled Jacob Marley is going to be costly, much more costly than Krugman will admit, and I am not about to say that imposing new costs and taking the individual out of medical care will make this a better country. In fact, I would not be surprised if it made the USA a place that people will want to leave, if only to find a place where they can receive adequate care.

Being a skeptic about this impending legislation places me in Krugman’s gunsights. You see, the only possible reason that I could oppose this attempt to impose “universal” medical care is that I want the Tiny Tims of the world to become sicker, and ultimately to die. Lest one think I exaggerate, here is Krugman in his own words:

First, there’s the crazy right, the tea party and death panel people — a lunatic fringe that is no longer a fringe but has moved into the heart of the Republican Party. In the past, there was a general understanding, a sort of implicit clause in the rules of American politics, that major parties would at least pretend to distance themselves from irrational extremists. But those rules are no longer operative. No, Virginia, at this point there is no sanity clause.

Actually, he is wrong, as many of the “tea party” and “death panel” folks are not Republicans, at least in the mainstream sense of the word. They are libertarians and supporters of Ron Paul and others like him, but since Krugman considers Paul and other adherents to Austrian Economics to be ignorant nuts and financial illiterates, they obviously are going to be targets of his scorn. Furthermore, the prospects of “death panels” are quite real; they exist in all of the other countries that have the kind of “universal care” that Krugman endorses.

Although Krugman claims that any “horror story” about medical care in places like Great Britain are nothing but lies, I will present a real-live horror story that tells volumes not only about socialist medical care, but also people like Paul Krugman, who believe that egalitarianism is the highest principle of all, even if it leads to someone unnecessarily dying a horrible death.

Debbie Hirst, a woman living in Great Britain, suffered from breast cancer, which had metastasized. As the New York Times explains, the British National Health Service refused to provide her with Avastin, a drug widely available in the USA and Europe, because the government declared it to be too costly. As the NYT (ironically, given that it is Krugman's employer) explains:

…with her oncologist’s support, she decided last year to try to pay the $120,000 cost herself, while continuing with the rest of her publicly financed treatment.

By December, she had raised $20,000 and was preparing to sell her house to raise more. But then the government, which had tacitly allowed such arrangements before, put its foot down. Mrs. Hirst heard the news from her doctor.

“He looked at me and said: ‘I’m so sorry, Debbie. I’ve had my wrists slapped from the people upstairs, and I can no longer offer you that service,’ ” Mrs. Hirst said in an interview.

“I said, ‘Where does that leave me?’ He said, ‘If you pay for Avastin, you’ll have to pay for everything’ ” — in other words, for all her cancer treatment, far more than she could afford.

Officials said that allowing Mrs. Hirst and others like her to pay for extra drugs to supplement government care would violate the philosophy of the health service by giving richer patients an unfair advantage over poorer ones.

Patients “cannot, in one episode of treatment, be treated on the N.H.S. and then allowed, as part of the same episode and the same treatment, to pay money for more drugs,” the health secretary, Alan Johnson, told Parliament.

“That way lies the end of the founding principles of the N.H.S.,” Mr. Johnson said.

Indeed, this is a most telling story, and according to the NYT, Hirst was not alone as many other people had similar tales. (Most likely, Krugman would accuse all of them of lying or, worse, wanting to upset those egalitarian principles that will make these sorry events inevitable.)

Keep in mind that the National Health Service in this case was acting as a “death panel.” (Of course, “death panels” don’t exist under socialist care; Krugman tells us so.) However, because of the adverse publicity, the NHS backed down and paid for Hirst’s Avastin. Nonetheless, this episode gives us an important window in examining the institutional nature of socialist medicine.

As anyone who ever has dealt with a bureaucracy knows, the most important thing is that the people working in those bureaus protect themselves and the government. The real purpose of socialist medicine is not making sure that everyone who needs medical care can receive it.

Instead, the real purpose of such a medical regime is to ensure that all people receive the same care, even if that care is substandard. (There is an exception: people who are politically-connected will be jumped to the head of the line and will find that the finest health facilities are reserved for them. For example, when Michael Moore took Americans to Cuba so they could experience medical care under socialism, he took them not to the facilities that regular Cubans frequent. Instead, they went to the care facility that exists exclusively for political elites, something Moore failed to tell his audience.)

I wish that Krugman’s invective was limited to the “death panels” crowd, but he next turns on those who are concerned about the costs of this legislation:

A second strand of opposition comes from what I think of as the Bah Humbug caucus: fiscal scolds who routinely issue sententious warnings about rising debt. By rights, this caucus should find much to like in the Senate health bill, which the Congressional Budget Office says would reduce the deficit, and which — in the judgment of leading health economists — does far more to control costs than anyone has attempted in the past.

But, with few exceptions, the fiscal scolds have had nothing good to say about the bill. And in the process they have revealed that their alleged concern about deficits is, well, humbug. As Slate’s Daniel Gross says, what really motivates them is “the haunting fear that someone, somewhere, is receiving social insurance.”

How do we know that this bill will “reduce the deficit”? Why, the bill declares it to be so, and the accounting methods contained in this bill “prove” it. Now, according to Mark Hemingway, there are some accounting tricks in this legislation, and I suspect that if private firms used the same accounting methods, some people would be hauled off to prison, and Krugman would lead the cheerleading squad for the prosecution.

For example, according to Hemingway:
In order to make health care legislation sound cheaper than it is, the Senate health care bill begins collecting major tax increases and fees immediately and delays the bill's major spending provision for four years. So cost projections bandied about in media reports are taken from from 2009 to 2019 and appear substanially cheaper than when the legislation's spending is in full effect from 2014 to 2024.

Even this dishonesty is built upon the assumption that the projected revenues of these massive tax increases will match the actual revenues, something that is highly doubtful in the current economic climate. One might recall that Jeffrey Skilling went to prison in part because Enron aggressively counted all accounts payable as present income, as opposed to Enron’s counting the income when the money actually came in. (This was legal, but the government still found a way to criminalize it.)

Furthermore, Krugman commits the logical fallacy of “appeal to authority” in his declaration that since the “leading health economists” have approved this bill and its fiscal language, then there is nothing left to argue. Thus, Krugman reasons, those critics who are concerned about the costs of the bill really are saying this because they want others to get sick and die.

As for “controlling costs,” Krugman demonstrates once again that he is not an economist. No government can successfully mandate “lower costs.” Governments can place price controls and do like the British NHS and deny certain care, which means that individuals suffer and die prematurely. Such actions might show up on official balance sheets as “lower costs,” but economically speaking, that is fiction.

Whenever governments attempt to impose “cost controls,” they create other dislocations that are costly to people who cannot obtain certain goods precisely because of the “cost control” mechanisms. When people must suffer because government authorities have denied medical care, that is a cost borne by the individuals and their families. When people die prematurely, that is a cost that is borne by others, and it is every bit as real a cost as anything that appears on a government spreadsheet.

Given the record of government medical care, it is easy to envision a completely different outcome to the Tiny Tim Cratchit affair. Instead of assuring that Tiny Tim receives the medical treatment he needs to survive, the government health authorities declare that it is too costly to treat the lad and suggest that he take lots of painkillers (which the government provides for free) that will keep him out of pain until he dies (and, thus, stops costing the government so much money).

Outraged at this situation, Ebenezer Scrooge declares that he gladly will pay for all of Tiny Tim’s treatment, only to be rebuffed by the government, which declares that paying for Tim’s care will undercut the very basis of the government’s health policies. The government announces that because Scrooge does not have enough money to pay for everyone’s medical care, then he cannot be permitted to pay for anyone’s care, including care for himself.

When this situation becomes public, Krugman declares that it only is a “scare story” and is patently untrue. And, if it is true, Krugman continues, it is a necessary event, since one “must break some eggs to make an omelet.”

God bless us everyone, for when this bill becomes law, we will need to invoke God’s blessing if only to stay healthy.

Merry Christmas!

I want to wish all of you a Merry Christmas and hope you are doing well. While it seems that our government is doing all it can to impoverish most Americans (in the name of "providing prosperity," of course), nonetheless it cannot change the laws of nature and it certainly cannot change the law of God.

So, on this day when we celebrate the birth of Jesus Christ, let us remember that there is only one savior, and it ain't the guy in the White House.

Tuesday, December 15, 2009

Harvey Silverglate on Volokh Conspiracy

Harvey Silverglate has been an important mentor to me for many years, and I always recommend his comments to people. His post today on the Volokh Conspiracy blog is spot on -- as usual.

In this post, Harvey points out just how vague -- and dangerous -- the so-called terrorism laws have become. Below the terrorism post is a post on "honest services fraud," the favorite tool of federal prosecutors, as it enables them to criminalize what actually is legal behavior.

Read and weep, for we have to understand just what we have lost by permitting federal prosecutors to run amok.

Paul Samuelson, RIP

The recent death of Paul Samuelson, the 1970 Nobel Prize winner in Economics, is ironic, for it was Samuelson who popularized Keynesian economics in this country, and the Obama administration has jumped fully onto the Keynesian bandwagon. Thus, Samuelson dies even as his influence grows, at least among the political classes.

I never was a fan of Samuelson, and while I will try not to speak too much ill of the recently departed, nonetheless I think the guy was bad for economics and he leaves a legacy of economic wreckage and bad theory. However, I will concentrate today on one of his legacies: the transformation of economics from something that an educated layperson could understand to a branch of inferior mathematics.

Samuelson published his doctoral dissertation in 1948 with the title of Foundations of Economics. In that book, he argued that economics had to adopt the analysis of the physical sciences if it was to be accepted as a science at all. While his famous textbook was the standard of college economics classes for many decades, it was Foundations that ultimately helped to create the intellectual morass that is academic economics today.

Before Samuelson hit the scene, the top economic journals published essays that could be read by any educated individual. For example, F.A. Hayek's 1945 essay "The Use of Knowledge in Society" in American Economic Review is a real classic which is timeless in its relevance and has been read by thousands of people, including many who have had no training in higher math. Ronald Coase's "The Problem of Social Cost," published in 1960 in the Journal of Law and Economics, is not written in the usual mathematical style that dominates the journals today, yet it is one of the most cited papers in academic economics.

I can think of no advantage that using high-level math brings to economic analysis. None. There are numerous people who can write mundane and irrelevant papers but use lots and lots of "squiggles," and they can be published. Write a cogent essay, however, and one is relegated to the lower-tier journals because of its "lack of rigor."

Unfortunately, academic economists today confuse difficulty in reading with "rigorous" application. If one can write "Mary had a little lamb" in multi-variable calculus to a point where few people can understand what is written, then according to academic economists, one has engaged in writing "rigorous" analysis. What nonsense.

My sense is that even had Samuelson not lived, academic economics would have fallen into its current state of irrelevance. However, it was Samuelson who really got the ball rolling and it was Samuelson who ultimately was the main influence in destroying many of the real foundations of economic analysis. It is doubly ironic that the book that began this destruction of the economic foundations was entitled Foundations of Economics.

Sunday, December 13, 2009

Global Warming Warriors Expose their Population Control Agenda

I always have contended that the government-caused panic about supposed human-created "global warming" has been a mask for a larger agenda: controlling people. After all, every human being emits carbon dioxide, which the Environmental Protection Agency has declared to be a "dangerous pollutant." Control humans and control the climate, or so the pundits declare.

Today's "progressives" believe that no human being should go uncontrolled by the state, or at least no human being who is not an "enlightened progressive." The latest exposition of this supposed "truth" comes from Canada's Financial Post, which declares that we need some form of world government to enforce a universal "one child" policy.

While China has made huge strides over the past three decades since the death of the world's greatest mass-murderer, Mao, nonetheless it still enforces a brutal population control policy that has been a "progressive's dream." That is just fine with Post columnist Diane Francis:

The "inconvenient truth" overhanging the UN's Copenhagen conference is not that the climate is warming or cooling, but that humans are overpopulating the world.

A planetary law, such as China's one-child policy, is the only way to reverse the disastrous global birthrate currently, which is one million births every four days.

Yes, the "government should not be in our bedrooms crowd" wants, well, government in our bedrooms. And if the "progressives" are endorsing China's policy, don't forget that the government forces women to have abortions, engages in the crime of infanticide, and in so doing has created another crisis: China today is full of young and middle-aged men who has no prospects for marriage because there are so few eligible women. (The one-child policy has led Chinese parents to prefer having male children, which has led to the present crisis. It is called the Law of Unintended Consequences.)

Actually, the "inconvenient truth" has been that standards of living throughout the world have increased greatly as population has increased. However, facts never seem to drive population control discussion. Furthermore, the "progressives" have made it clear that while they believe the rest of us should be subject to the state's permission to have children, the "enlightened" people are to be exempt.

After all, Diane Francis has two children.

Wednesday, December 2, 2009

Climategate and the End of Science

For “climate change” skeptics like me, the recently revealed emails from scientists who aggressively have promoted the current political doctrine are very telling. Not surprisingly, those at the center of this controversy are claiming that the words we have read mean nothing, and that governments must continue their environmental policies – or else.

A gaggle of scientists, journalists, academics, and politicians have been telling us for years that unless governments can push through policies that will end modern life as we know it, then “global warming” will, uh, end modern life as we know it. Another way to put it is that unless the governments of the earth agree with one another to commit suicide, we are going to die.

Perhaps, the best analogy for this entire affair is the Wizard of Oz’s telling Dorothy and her friends to “pay no attention to the man behind the curtain.” When scientists explain in private emails how they try to make sure that only their views are published in academic journals, but now tell us they really are just trying to keep “bad science” out of the discourse, then one only can conclude that this is an update of the famous movie scene.

As one who has published a number of academic papers, I can recognize a rigged system, and what Americans have had foisted on them for the last decade is fraudulent. However, we need to understand how the game is played and how the outcomes are fixed.

In 1998 three researchers published a paper that claimed that for thousands of years global temperatures had held steady, but in the last century, as people allegedly released more carbon dioxide into the atmosphere, world temperatures suddenly shot upward, creating the infamous “hockey stick” effect. For environmentalists and politicians like Al Gore, this was a godsend. We had “proof” that human beings were causing “global warming,” and unless something was done now, we were going to burn up the earth.

A decade earlier, NASA scientist James Hansen had testified before Al Gore’s Senate committee that not only had “global warming” arrived and that it was human-caused, but the drought that hit much of the U.S. farm belt that summer was a direct result of that warming. (That the next summer was relatively cool and wet also was attributed, perversely, to warming. In fact, the True Believers have attributed every cold day and every snowstorm to the same thing: global warming.)

The “hockey stick” was all that was needed to move the process from creating mass hysteria to “doing something,” which has meant draconian environmental policies that already are creating perverse economic effects. Not surprisingly, Gore made the “hockey stick” the centerpiece of his An Inconvenient Truth documentary, which won him both an Oscar and the Nobel Peace Prize.

However, the “hockey stick” itself had huge problems. The first was that other scientists could not replicate the results using the same data. When one publishes a paper with statistical analysis, one is supposed to make the data available so that others can try to find the same results, which is a powerful tool in keeping researchers honest.

It turned out that the mathematical algorithm used to transform the data was created in a way that no matter what one put into the equation, one received the same results. This is fraud, pure and simple, but because the “hockey stick” resonated with environmentalists and their political allies, it became the centerpiece for anyone who wanted to claim that modern economies are killing the planet.

Furthermore, governments have rigged the game by funding most “climate science.” How likely are they to finance studies that don’t justify the political class’s ambition to control the lives of others?

Hansen demanded to Congress that the executives of energy companies be tried for crimes against humanity and nature because they have given the public “misinformation” about global warming. And Gore has called for energy executives to be charged with securities fraud for denying its severity.

Their “science” may be a joke, but these people are dead serious about imposing their will.

Tuesday, December 1, 2009

Radley Balko Comments on the Left-Right "Alliance"

Radley Balko has a new article out that takes a more skeptical view of the left-right alliance on the expansion of federal criminal law, and I think his points are well-taken. Recently, I commented about the New York Times' recent piece on the efforts people have made from these two different sides of the political spectrum.

I believe he does an excellent job of laying the fundamental differences between conservatives, libertarians and liberals, and how libertarians bridge the gap, a gap that always will be there. Of the actual prospects for a meaningful alliance, he writes:


Still, the prospect of any sort of lasting alliance seems unlikely, mostly because conservatives, libertarians, and liberals view the legal system in fundamentally different ways. Conservatives believe the primary purpose of the legal system is to protect property and to promote order and stability. Liberals believe it's to promote equality—or to combat inequality. Libertarians put a premium on individual rights, favoring a limited legal system that serves only to protect society from those who cause direct harm to others or their property.


He follows this with a Venn Diagram which I think is excellent:



Indeed, we are talking about a huge gap. Somehow, I doubt that the people who are protesting the conviction and imprisonment of Lynne Stewart are willing to see that the convictions and imprisonment of Jeffrey Skilling of Enron or Jack Abramoff had no more basis in law than did Stewart's conviction. That is the tragedy, and it is how government uses Divide and Conquer to make sure that prosecutorial and judicial injustices will be a way of life in this country.

Friday, November 27, 2009

Krugman: Blame the Speculators

Paul Krugman sees lots of villains in the current downturn. Of course, there are those people who think that free markets are a good thing, so they obviously are to blame. Then there are the Bushites, who did not believe enough in the wonder and majesty of governmental powers, so they failed to create Paradise on Earth.

But there is more. Krugman on other occasions has blamed the Chinese for our economic malaise, but now he has another culprit: those "socially useless" speculators.

I find it most interesting that Krugman resorts to the Last Refuge of an Economic Scoundrel when he points the finger at those people who do not have everlasting trust in the promises made by politicians. Now, there are times when Krugman rejects the "speculators are at fault" argument. For example, I don't recall Krugman agreeing with Ken Lay's contention that the short sellers brought down Enron, although given Krugman's explanations of the downturn, Lay's point would be as legitimate as anything from Krugman.

(Note: I believe that Lay was wrong. Short-sellers by themselves cannot make a stock price plunge and stay down permanently any more than they can bring down an entire economy.)

When the government of Great Britain 40 years ago was inflating like mad and engaging in all sorts of accounting trickery, currency buyers began to short the Pound. Of course, the officials of Britain's Labor government did not blame their reckless policies; no, it was the fault of the "Gnomes of Zurich." Yes, those bad men in Switzerland were conspiring to bring down the Pound.

Unfortunately, that mentality exists today, and I am not surprised that it is Krugman leading the anti-speculation charge. Anyone familiar with finance know that speculators and short-sellers do not control markets; they expose the shortcomings of market participants. Speculators did not short Enron stock because they thought it would be fun; they shorted it because they believed (correctly) that it was overpriced.

In his column today, Krugman declares that a lot of financial transactions are "socially useless," and should be taxed. My guess is that he would include short-selling among those transactions, and in that he is aping his spiritual mentor, John Maynard Keynes, who believed that the sale of stock in secondary markets also was "socially useless."

Krugman, in his condemnation of the "speculators," ignores the 800-pound gorilla sitting in the room: the moral hazard that government created in the financial markets that ultimately led to the financial meltdown. Why does he ignore things like the "Greenspan Put" and the various bailouts? Easy, government-caused moral hazard does not fit his socialist worldview.

In Krugman's world, private enterprise itself is the cause of instability, and government (as long as the Right People are in Charge) is the white knight. Thus, it hardly surprises me that he resorts to the "Gnomes of Zurich" nonsense.

Thursday, November 26, 2009

Happy Thanksgiving!

I wish all of my readers a happy Thanksgiving day, complete with all the usual fare. As a Christian, I believe every day should be a day of thanksgiving, but nonetheless it always is nice to have a day here and there in which we can celebrate by eating (and eating) good food and enjoying family and friends.

A few years ago, I wrote this piece, reminding the readers that a day in which we are supposed to offer prayers of thanks to God has been co-opted by the state. Yes, it is not exactly the kind of thing we are supposed to say on Thanksgiving, but I also will say that I am grateful the government has not destroyed all of our liberties, at least not yet.

So, Happy Thanksgiving!

Wednesday, November 25, 2009

Bowman: Law is a Weapon, Not a Shield

Besides inheriting the English language, Americans also enjoyed the fruits of the legal system developed in Great Britain which, over time, was to be known as a "shield for the innocent," according to the great jurist William Blackstone. This view of law was reflected in our own Declaration of Independence in which the purpose of government was not to lord it over subjects, but rather to protect the God-given rights that people already owned.

Fast forward to 2009 in which very few people in power believe this about law, and nowhere is contempt for the legal principles of Blackstone and Thomas Jefferson more evident than in American law schools. As prosecutors become the living dictators of criminal law, the very concept of law has been perverted to become something other than a "shield" to protect the rights of the innocent. Law today -- and especially federal criminal law -- is nothing more than a weapon that federal prosecutors wield against people supposedly to keep them in line. As the Great Harvey Silverglate has written in his wonderful book, Three Felonies a Day, federal criminal law today more reflects the law of the old Soviet Union with its "crimes of analogy" than anything we inherited from Great Britain more than two centuries ago.

An unfortunate legacy of this terrible development has been the matriculation of federal prosecutors into law schools, where their own perverted views of law are now taught as being morally and legally legitimate. One such person is Frank O. Bowman, a law professor at the University of Missouri. I came upon this man through an interesting article in The New York Times in which the paper noted in a surprised manner that both leftists and conservatives have joined forces to oppose the abuses that federal criminal law has wrought.

Of course, being that the Times served as the main cheerleader for the disgraced Michael B. Nifong, the now-disbarred prosecutor who pursued charges in the infamous Duke Lacrosse Case that he knew were false, it is not surprising to see the "Newspaper of Record" take the side of the prosecutors. They interviewed Bowman, and he clearly did not disappoint:

Some scholars are skeptical about conservatives’ timing and motives, noting that their voices are rising during a Democratic administration and amid demands for accountability for the economic crisis.

“The Justice Department now acts as a kind of counterweight to corporate power,” said Frank O. Bowman, a law professor at the University of Missouri. “On the other side is an alliance between two strands of conservative thinking, the libertarian point of view and the corporate wing of the Republican Party.”

First, and most important, the notion that "corporate power" is equal to the power of the state is laughable. I don't recall any "corporate" forces from Wal-Mart gunning down innocent people (and paying no price) and Wal-Mart does not enjoy the immunity from being punished for criminal acts, as do the people championed by Bowman and his ilk. Corporations cannot engage in home invasions like your friendly police force, and if someone from a corporation guns you down, the killer -- unlike your friendly police protectors -- is likely to be prosecuted.

In fact, Bowman's former employer, the federal government, recently argued in the Pottawattamie case that prosecutors should be absolutely immune from any legal consequences, even when it is clear that they knowingly tried to frame innocent people. Instead, the government argued that no one has a Constitutional right not to be framed.

Second, the view of law being a "counterweight" violates every foundation upon which Anglo-American law was built. This "counterweight" view is a backdoor way of approving the tactics which prosecutors use to gain convictions of innocent people. As Harvey Silverglate has noted, federal criminal law is so abusive and prosecutors are so powerful (there is no "counterweight" to their power, and they are demanding even more power) that innocent people find it in their own best interests to plead guilty to something because the alternative is too terrible.

Third, as I note in an upcoming article on federal criminal law in Regulation Magazine, the very basis for "white collar crime" law is the elimination of the Constitutional protections that we supposedly enjoy, including presumption of innocence, and the establishment of the mens rea principle. As LSU law professor John Baker noted in an article about the "father of white-collar crime laws," Edwin Sutherland, the law specifically targets people for what they are, not for what they do.

(Sutherland and his followers believed that almost all business transactions should be viewed inherently as being "criminal." It is clear that Bowman follows in that tradition.)

As former Supreme Court justice Robert Jackson pointed out in a 1940 speech, federal criminal law is written in a way that permits prosecutors to target and individual, and then look for crimes with which to charge that person. Keep in mind that in 1940, prosecutors did not have the RICO statutes and most of the "fraud" laws that they can bundle into just about anything.

Thus, Bowman and many other law professors of his ilk are arguing that we in reality need to do away with the Constitution -- and the Rule of Law -- altogether. Instead, they want us to depend upon the good will of prosecutors and, at the same time, give them unlimited power over our lives.

No doubt, Bowman believes that he is morally superior to the rest of us and would make a wonderful and benevolent and fair dictator. However, I prefer the words of Lord Acton, who was a far more learned and good man than Bowman ever could hope to be: Power corrupts, and absolute power corrupts absolutely.

Tuesday, November 24, 2009

Even the New York Times takes notice of our efforts

Over the past several years, I have been part of a movement of people of many backgrounds challenging the near-dictatorship that we have of prosecutors, and especially federal prosecutors. One of the worst offenders of supporting the abuses of prosecutors has been the "Newspaper of Record," a.k.a. the New York Times. However, today the Times has a different take, and has publicized the efforts of people like the Great Harvey Silverglate and Radley Balko in exposing the abuses committed by this untouchable class of prosecutors.

While the Times piece mostly is sympathetic, at the end it quotes former federal prosecutor and now law professor Frank O. Bowman as basically saying that any of us who oppose this federal abuse, especially in the area of "white-collar crimes," is a corporate stooge. The article is worth reading, but I will be dealing with Prof. Bowman in a future post, as his are fighting words, and I am up to the fight.

Sunday, November 22, 2009

Unemployment Nation

The rate of unemployment in this country continues to grow, and in response the government is trying to bankrupt us with even more spending. This map outlines the growth of unemployment county-by-county since January 2007.

Of course, Paul Krugman will claim that this "proves" that the government must print even more money, as all True Keynesians believe that printing money is how an economy generates wealth. For those who wish to learn more about the man who gave us the "Keynesian solution," here is a great piece by Murray Rothbard about John Maynard Keynes.

Saturday, November 21, 2009

ObamaCare: It will be an unmitigated disaster

It now seems inevitable that the Congress will pass the "healthcare" bill, and we are going to be stuck with a huge financial disaster. I wrote commentary for the website of the Foundation for Economic Education, in which I compare this moment to the 1938 disaster at Munich.

One thing we need to understand is this: the government of the United States is broke. It is as broke as the government of California, of Michigan, and of nearly every other state. The notion that the Federal Reserve and Congress have "stopped" the recession by pouring newly-printed money everywhere is pure foolishness. This government cannot take on a new, multi-trillion-dollar program for which the means to pay is going to be invoking confiscatory taxation.

This will be disaster for the U.S. economy. Americans have come to believe that the government can order anything, and it will be done. That is not how an economy works; if that were true, North Korea would be the world's wealthiest nation, and the Iron Curtain never would have fallen.

Furthermore, we can look for massive numbers of new criminal penalties in this "law," and that means that increasing numbers of medical providers will be arrested and imprisoned. Don't think this won't affect you and your family; as the government criminalizes more and more actions that formerly were legal, an increasing number of people will be caught in the federal maw and have their lives destroyed.

What people forget is that when government criminalizes activity that should be legal, we will see less and less medical care provided, and fewer people willing to risk medical careers. Now, most Americans now approve of the fact that the USA has one quarter of the world's prisoners, but some of them will change their tunes when either they or their friends and loved ones will be paraded before the TV cameras wearing chains and orange jumpsuits.

This will be touted as a huge political victory for Obama and the Democrats. However, I predict that as the reality of this horrible bill comes to the fore, there are going to be some Democrats next year who are going to wish they had voted against it.

Thursday, November 19, 2009

Third World Dictators and the Pottawattamie Case

We saw a most extraordinary thing recently in the chambers of the U.S. Supreme Court, where lawyers representing the prosecutors of this country demanded absolute immunity no matter how outrageous and dishonest their conduct. (The Pottawattamie County v. McGee case involves prosecutors who knowingly framed two innocent people for a murder, forcing those men to spend more than two decades in prison before being released.)

As I read through the information, I have come to realize that what prosecutors want is a court system in which they can operate like Third World dictators. In such a system, they are absolute rulers, and whatever they want, they get, and if they are found to have lied, engaged in lawbreaking, suborning perjury, whatever, well, "sh*t happens."

Guess what? If the U.S. Supreme Court grants their wish, look for prosecutors to be even more emboldened in their lying and lawbreaking. From what I can tell, there are a lot of people in this country who want our system of "justice" to reflect what happens in places like Zimbabwe and North Korea.

More than one person has told me something akin to, "I have traveled all over the world and can say that ours is the best system of justice out there." Maybe that is true, but I have a question in reply: If our system is the best in the world, why do so many people want to change it into something from the Third World?

I will say up front that I have absolutely no confidence in the U.S. Supreme Court to do the right thing and affirm the rule of law. Instead, they will tell us what great guys the cops and prosecutors really are and how we need to protect them from the "bad guys."

Wednesday, November 18, 2009

"Arise, Shine" CD Has Arrived!

I received my new Dan Forrest, Jr. CD, "Arise, Shine," yesterday, and it even was better than I had anticipated. If you love good, contemporary choir music, this CD certainly fits that bill.

The music is wonderfully-balanced, and has both sacred and secular texts, including texts from Mark Twain and Robert Louis Stevenson. You can hear excerpts of each track on Dan's website, but trust me when I say that the CD really is good. The singers are from Bob Jones University, which has first-rate departments in music and the arts.

Like all lovers of good choral music, I await the next CD that Dan produces!

Monday, November 16, 2009

Krugman: It is China's Fault

A friend of mine suggested calling this site, "Krugman in Wonderland," but my wife objects, so it is obvious I need to keep peace in the family. Nonetheless, I am grateful to Paul Krugman for providing so much material that helps keep me writing. Granted, this perch is not as lucrative as Krugman's New York Times location on the editorial page, but a person has to do what he can.

The latest outrage comes today in his column that blames China for much of the economic downturn. Granted, today's column is not as outrageous as his column last Friday in which he claims that the way to end unemployment in the United States is for Congress to write laws making it nearly impossible to fire workers. Yeah, they have tried that in Spain, which has had double-digit unemployment for years, as employees carry liabilities that make it a real danger for companies to employ anyone.

Without going into a lot of detail about how currencies work in relation to one another, Krugman attacks the Chinese government for following a policy to keep its currency, the yuan, low relative to the U.S. Dollar. China does this in order to make its goods attractive for export, as the government there is trying to emulate what Japan did in promoting its own export-first policy.

Because I am no fan of government fiat currencies, I am not going to approve of China's policies, which actually punish the Chinese workers who must pay much more for their goods than they would if the yuan could float in a free market. Nonetheless, Krugman contends that somehow China is making itself better off at the expense of everyone else. That simply is not true. He writes:


So picture this: month after month of headlines juxtaposing soaring U.S. trade deficits and Chinese trade surpluses with the suffering of unemployed American workers. If I were the Chinese government, I’d be really worried about that prospect.

Unfortunately, the Chinese don’t seem to get it: rather than face up to the need to change their currency policy, they’ve taken to lecturing the United States, telling us to raise interest rates and curb fiscal deficits — that is, to make our unemployment problem even worse.

And I’m not sure the Obama administration gets it, either. The administration’s statements on Chinese currency policy seem pro forma, lacking any sense of urgency.

That needs to change. I don’t begrudge Mr. Obama the banquets and the photo ops; they’re part of his job. But behind the scenes he better be warning the Chinese that they’re playing a dangerous game.


No, the Chinese are not playing a "dangerous" game; they are playing a stupid game, because they are not permitting themselves to enjoy the fruits of their very hard labor. At the same time, one must remember that the U.S. Government has played a very dishonest game with the Chinese.

Why do I say that? Well, because it is true. For the last decade, the U.S. Government has sold trillions of dollars of debt (which the Federal Reserve System is rapidly depreciating with inflation-ravaged dollars) to China, and in return, Americans get consumer goods. Now that the Chinese realize that they have been played for suckers, our "experts" now accuse them of starting the problem in the first place, as though it was the Chinese who created the housing bubble and run the Fed.

Granted, that kind of logic is hard for someone like Krugman to understand, as he believes an economy is nothing more than a "blob" into which we throw newly-printed money. Like Aaron, who told Moses that the Golden Calf simply appeared after he threw gold jewelry into a fire, Krugman believes that an economy magically appears simply when governments print money. Which story is less believable? I'll let readers decide.

Saturday, November 14, 2009

Some Links to Cheer Us Up

I was doing a web search today and found the website Government Is Good. Now, I always love good satire and figured that whoever put up this thing was going to provide some laughs.

Whaddyaknow? This site is serious! It is put up by a professor of (What else?) politics at Mount Holyoke College in Massachusetts, a bastion of Political Correctness in America's most Politically Correct state. If you read this site -- and it will take a long time, for this guy looks as though he has written this copy for years -- you will discover that GOVERNMENT GIVES US RIGHTS!! According to Prof. Douglas J. Amy, Americans were not free until the government was created in 1787.

Better yet, he claims that the U.S.S.R. (on this 20th anniversary of the demise of the Berlin Wall) failed because it could not adequately tax-and-spend. I am not kidding. You can read it here.

So, the next time you read about police busting into a house, shooting up the family dogs, and maybe killing innocent people, rejoice. Yes, Douglas Amy will tell you that those hooligans are protecting your rights!!

MEANWHILE, THE DEA IN MEMPHIS recently arrested a childhood friend of mine on a charge of illegally writing prescriptions. Now, lest anyone think I have been unfair calling mainstream news organizations whores of the Department of Justice (sic), notice that the article used by this news organization was a DOJ press release.

Why take the time to write "news" copy when government agents will do it for you? Yes, not only does government "protect our freedoms" by arresting us, but the media proudly trumpets the First Amendment by pretending that government PR is "freedom of speech."

I will be writing more about this case in the future, but for now let me just say that from what I already know, it provides more proof that the U.S.S.A. is a place there liberty, justice, and simple fairness no longer have much, if any, of a constituency.

Happy Reading!

Thursday, November 12, 2009

The Day of the Bear

The nasty juggernaut known as the U.S. Department of Justice usually gets it man, regardless of whether or not the man targeted has committed any crimes. Armed with weapons that might even have pricked the conscience of Josef Stalin, federal prosecutors have been on a rampage ever since the economy melted down, as the government seeks to blame business people for the problems caused by the government and its inflation machine known as the Federal Reserve System.

However, every once in a while, there is good news to report, and on Tuesday afternoon, the government’s lousy case against former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin was deep-sixed by a jury that could recognize the prosecutors’ dearth of evidence. I don’t have much confidence in federal juries, and I am sure that I never would be permitted to serve on one (Oh, joy), but on this day, a federal jury in Brooklyn did its job and did it well.

When I first wrote about this case last year, I figured that Cioffi and Tannin would be railroaded into the nearest federal prison. My years in writing about the Abomination Formerly Known as the U.S. Department of Justice (sic) have left me jaded, as I have watched innocent people be tossed into the hell called the U.S. Bureau of Prisons.

However, I did not count on a few things. First, and most important, Cioffi and Tannin had the personalities that would allow them to fight back. Not every person is equipped to go to trial and survive; these men could do it, and they did it beautifully.

Second, they had a legal team that shot down everything that the federal prosecutors threw at them. Third, Judge Frederic Block could smell the dishonesty of the government’s case and he was not afraid to do his job. Unlike most federal judges, Block did not see himself as being an arm of the prosecution, and that made a huge difference in the trial.

Fourth, the government had no case. NO case. The prosecution based their entire case upon snippets of emails that the defendants had sent in which they appeared worried about the state of their hedge funds, which were based upon mortgage securities that soon would have the same value as Confederate money in 1866. In fact, just before the trial began, prosecutors dumped a number of these supposedly damning email snippets in the media to make it look as though they had a legitimate case.

However, once the emails were shown in their entirety, their damning nature disappeared. I closely followed this case and had a sense of where it was headed. (Interestingly, most of the media chose to present a rosy picture of the government’s case, and at the breaks, reporters were seen laughing and joking with the prosecutors.) Only the prosecution’s side was presented in most news broadcasts and stories, although a freelancer writing some pieces for the New York Times did manage to violate his newspaper’s pro-prosecution of business people policy and write articles like this in which he noted many of the government’s weaknesses. (He did fail to point out – as did all of the reporters – that one prosecution witness openly rebelled against prosecutors and told them in no uncertain terms that he had withdrawn a statement to prosecutors he had made earlier after he found out the context of a certain action by Cioffi. In this situation, prosecutors found themselves forced to cross-examine their own witness.)

One of the worst offenders in the media was Forbes, which was a subject for something I recently wrote about how the media covers these government inquisitions. Forbes and CNBC were especially terrible in their coverage, using the execrable Jacob Zamansky as their correspondent of the trial, despite the fact that Zamansky had a huge financial interest in the men being found guilty.

Zamansky’s coverage of the opening day was especially dishonest, and it contradicted what observers in the courtroom knew to be true. For example, Zamansky wrote:

My own view is that the government did an excellent job of keeping the case simple and focused, stressing that "the defendants are not on trial because the hedge funds collapsed or because of the market meltdown. The defendants are on trial because they lied to investors."

The defense, on the other hand, chose to educate the jury on hedge funds, leverage and CDOs. Their strategy appears to be to blame their clients' behavior on the fog of war.

We saw similar strategies in the Enron trial. In that case, prosecutors kept it simple by pounding home the idea that former bosses Ken Lay and Jeffrey Skilling lied to investors; the defense focused on off-balance sheet partnerships and other financial complexities.

What you have just read was a lie. A big lie. A whopper. The government already was on its heels at the opening statements. Prosecutors had their narrative, and like the band in "Animal House" that tried to march through a wall, they stuck to it no matter how many times the defense tore holes in that argument. Given the government’s strategy, a flock of parrots could have made the same presentation.

Most people are going to be shocked at the acquittal precisely because people like Zamansky were feeding them the line that the government had a powerful case and prosecutors were as skillful in presenting their "mountain of evidence" as Itzhak Perlman plays the Suite from "Carmen" on his violin. In reality, the government’s case was about as skillfully presented as my attempts to play the Carmen Suite on a violin. (No one confuses my playing with that of Perlman.)

The fact that the defense was eviscerating the "they lied to investors" from the opening arguments was ignored by most of the pro-prosecution press. However, the biggest howler came from prosecutors Ilene Jaroslaw and Patrick Sinclair, who made off-the-record remarks that the Brooklyn jury was too unsophisticated to understand the intricacies of the case.

This is amazing, simply amazing. First, and most important, the last thing that Jaroslaw and Sinclair wanted was for their presentation to be eye-glazing and they were hoping that the defense would present the argument that securities markets were very complicated and maybe jurors should not try to figure out what constituted a crime and what was not a crime. Zamansky’s quote above was accurate in that the prosecution’s strategy all along was to paint Cioffi and Tannin as liars. (What Zamansky did not do was to demonstrate accurately just how the defense took apart one of the "simple" arguments in its opening statements, using clear language that even a reporter from Forbes should have been able to understand.)

Second, the reason that the trial was held in Brooklyn instead of Manhattan was because the court-shopping prosecutors wanted a Brooklyn jury, reasoning that a jury of working-class people would not be able to relate to a couple of once-wealthy Wall Street traders. Jaroslaw and Sinclair purposely wanted what they believed would be an "unsophisticated" jury that would not understand the information the defense was going to present. Thus, to claim that the jury’s alleged "stupidity" was the reason that they lost is the ultimate proof that federal prosecutors are an arrogant lot.

After the trial, off-the-record interviews with prosecutors yielded such arrogance:

But some inside the US attorney's office think the case was handled perfectly well. The real problem was that the jury just never understood the case. In interviews with jurors after the case, the prosecutors learned that the jury seemed unaware that they had presented clear evidence of certain facts.

"It is frustrating to lose a case not because the jury disagrees with your evidence but because they just aren't able to follow anything," one person familiar with the thinking in the office said.


However, interviews with jurors afterward yielded something quite different than a bunch of rubes that did not deserve to be in the presence of the majesty of the feds. Indeed, jurors looked at everything, from every alleged damning email to the question of whether or not the trial should have been in Brooklyn in the first place, given both men worked in Manhattan.

The jurors asked each other what was the context of each of those emails, refusing to cherry-pick one or two lines, as the prosecution was doing. The following provides an excellent example of what jurors actually did, as opposed to what prosecutors claimed:

One of the main documents in the case was an e-mail message that Mr. Tannin sent from his private G-mail account to the e-mail account of Mr. Cioffi’s wife. He wrote that the subprime market – the market to which the funds were tied – "looked pretty damn ugly," and that if a recent report was correct, "then the entire subprime market is toast." Days later, during a conference call, Mr. Tannin told investors that "we’re very comfortable with exactly where we are."

When the defense asked that the entire e-mail be read before the jury, a different picture emerged, according to a juror, Aram Hong, the director for food and beverage at a hotel. The complete e-mail, said Ms. Hong, suggested that the defendants were considering two options. The first was to close the funds, and the other was to approach the flagging subprime mortgage market as a buying opportunity. "They decided, ‘We need to make a decision now. And we need to be aggressive whichever way we go,’"Ms. Hong said.

Defense lawyers argued much the same throughout the trial.

"The entire market crashed," Ms. Hong said. "You can’t blame that on two people."

If anything, the slanderous and dishonest post-acquittal remarks by prosecutors drive home just how contemptuous federal prosecutors are of everyone else. The jury did not acquit because they were too stupid and vapid to understand the clarity of the prosecution’s case; they acquitted because they did understand that the government’s simple, clear presentation was not true, or, at very best, did not do a good job of meeting the "reasonable doubt" standards.

I was not surprised at the acquittal, given what I knew was presented in court. My only fear was a federal jury being, well, a federal jury that throws sops to those poor, underpaid prosecutors who claim they only are trying to do justice.

In the end, however, the jury did its job, and judge did his job, the defendants were innocent, and the prosecution continued to lie. Oh, and the media will continue to be the media. Like the Bourbons, they "learn nothing and they forget nothing."

Thursday, October 29, 2009

Bernanke Saved the Day? Don't Bet on It!

The final verdict is in. The venerable “progressive” Atlantic has spoken. Ben Bernanke and his “radical interventions,” the publication recently claimed, “may have saved the day.” Yet there are doubters out there; I’m one of them.

Unfortunately, one of the main characteristics of modern “progressives” is their smug self-assurance that they are intellectually and morally superior to everyone else, which comes to the fore in the latest magazine’s “Brave Thinkers” piece. The publication boldly (and arrogantly) declares:

For more than 150 years, the Atlantic has told the stories of people who commit acts of moral and intellectual bravery by espousing unpopular or controversial positions. In a special issue of the magazine, the editors have chosen 27 leaders — from business and politics to science and media — who embody this great tradition today. These are people who are risking careers, reputations, and fortunes to advance ideas that upend an established order.

Ironically, the magazine then lists a number of people who only can be considered liberal-left “establishment” people, from Arthur Sulzberger to Ralph Nader. One of those “thinkers” is Ben Bernanke.

Besides claiming that Bernanke’s actions are “radical,” the Atlantic also declares the following:

He dropped target interest rates to near-zero for the first time in history; made trillions of dollars in government cash available to financial institutions; expanded the Fed’s lending and relaxed its collateral requirements; bought up billions of dollars in securities backed by consumer debt and mortgages; prevented the collapse of AIG, Fannie Mae, and Freddie Mac; and somehow found time to bear the made-for-TV harangues of financially illiterate members of Congress. The particulars of the Fed’s interventions remain lamentably shielded from oversight. But in the Great Recession, Bernanke’s forceful approach may have spared the world from a true nightmare. [Emphasis added.]

All of this radicalism can be summed up in one word: inflation. That is correct. Ben Bernanke’s “radical” actions have been nothing more than jacking up the easy-credit regime that brought us into this crisis in the first place. As for the “financially illiterate members of Congress,” the article obviously is referring to Ron Paul and other critics of the Federal Reserve System. Whenever Paul questions Bernanke at committee hearings, the contempt on Bernanke’s face is obvious. Like the editors of the Atlantic, Bernanke’s visage declares: “How dare you, a mere fool, question my greatness. Don’t you see what I have done? I have saved all of you, and you, Mr. Austrian Economics, are ungrateful and utterly ignorant!”

Yet it is Bernanke and his “progressive” supporters who are “financially illiterate.” Literally everything included in that worshipful portrayal is nothing more than the implementation of inflation. The only thing that Bernanke has done is to print money or engage in its equivalent.

Take his “bold” step of “relaxing collateral requirements,” for example. Why is the system in crisis in the first place? It is because the government “encouraged” lenders to relax their own lending requirements, and when the inevitable defaults became systematic, the entire U.S. financial system went into crisis.

In other words, the Atlantic heaps praise on Bernanke for doing the very things that created the financial crisis in the first place. If that is “brave thinking,” then anyone suffering from a hangover who imbibes in the “hair of the dog solution” is a “brave thinker.”

Bernanke did not “save” AIG, GM, and Fannie and Freddie. He nationalized them, turning them into nothing more than dependents of the financial welfare state. The Fed chairman has “saved” nothing; he only has postponed the day of reckoning, and his interventions guarantee that this inevitable day will be worse than it ever needed to be.

Instead of being “brave,” Bernanke has been reckless, just like a young driver playing “chicken.” There is a huge difference between bravery and bravado, and Bernanke’s actions reflect the latter not the former.

Monday, October 26, 2009

Dan Forrest's CD is Available!

A great moment in the history of music, indeed of Western Civilization, has arrived. "Arise, Shine," the new CD from Dan Forrest, Jr., featuring some of his choral works, now is available. While I have not yet received my copy, I have heard snippets he has made available on his website.

I had not heard many of these compositions before, and when I heard them for the first time, I was stunned. As one who has sung and listened to the music of John Rutter for the past 25 years, I can say that Dan Forrest, Jr., is the American answer to Rutter. You simply have to hear this music to appreciate it.

On another note, our church choir sang Dan's "Hymn of Hope" yesterday, and it was a rousing success. Granted, we could not give the piece the same justice as the Bob Jones University choir has done, but nonetheless I was pleased with it, as it is a powerful piece of choral music.

Wednesday, October 21, 2009

Legal Injustices Continue in North Carolina: Johnny Gaskins

North Carolina is the state that gave us wrongful prosecutions in cases such as the Little Rascals and the Duke Lacrosse Case. It seems that the federal courts in the state have felt left out and so are working overtime to create their own injustices.

First, there was the conviction of Victoria Sprouse in Charlotte, which I have detailed in this post. However, the federal court in Raleigh seems determined to outdo the injustices of the Sprouse case with the wrongful conviction of Johnny Gaskins.

I recently wrote a piece on this conviction, but Ruth Sheehan of the News & Observer has penned what I think is superb commentary. Her point is well-taken: Gaskins has not committed any "crimes," and his actions certainly were understandable, given the harassment the feds have given him. I quote her here:

The feds have been investigating Gaskins for years. He'd successfully defended alleged drug dealers in federal court. So when the feds started poking around Gaskins' finances, they no doubt thought they'd find evidence of money laundering.

They did not.

Instead, they found that Gaskins had earned $355,000 in cash over five years and had filed all the appropriate paperwork on it and had paid his taxes.

But Gaskins had grown paranoid, justifiably or not, over the years. The feds determined that Gaskins, after storing his fortune initially in a home safe (OK, so it wasn't a mattress), was depositing it in increments of just below $10,000 -- the threshold requiring the bank to report the deposits.

That's a reporting threshold that is mainly used to help the IRS track down tax scofflaws. Except, of course, Gaskins had reported all of his earnings on forms that not only included the payments but also the source of the money and who paid it.

"He gave the government more information than the banks ever would," said Dan Boyce, Gaskins' lawyer.


I don't think anyone can say it better.

My hope is that other attorneys in North Carolina stand up and take notice. The government has gone after someone who dared represent clients that the government is trying to put into jail. I suspect that after he convinced a jury not to give the death penalty to someone who had murdered a cop, the prosecutors of the state -- federal and state -- decided it was open season on Gaskins.

As I said in my article, I think that the judge and jury here deserve special blame for this injustice. A jury does not have to do what prosecutors say, and no matter what a judge tells them in his or her charge, a jury is free to decide what it wants.

Unfortunately, jurors decided that a non-crime was a crime. The prosecutors have obtained their revenge, and an innocent man faces what effectively is a life sentence. Way to go, North Carolina! You have done it again!

Wednesday, September 30, 2009

The Stimulus Helped the Economy? Not So Fast!

President Barack Obama, Ben Bernanke, and Paul Krugman claim the “stimulus” and other interventions have “pulled the economy from the brink.” And even that’s not enough, as Krugman notes in a recent New York Times blog post:
In a rational political and policy environment, the implication of all this [the fading economy] would be clear: we need more stimulus. Yes, it would add to federal debt — but isn’t that worth doing to help reduce an output gap that’s wasting our potential at the rate of more than a trillion dollars a year?

The “solution,” Krugman says, is for government to create more debt and print more money. Since he already publicly claims the printing of money creates a “free lunch,” he would approve of nearly any way the money appropriated by Congress would be spent, just as long as there is spending.

Lest anyone think the “stimulus” is spent wisely, think again. One building block of economic analysis is “utility theory” in which people rank their preferences from highest to lowest. For example, while I might want to take a vacation, it is more important that I spend my income first on my house payment, then food and other expenses that will support my family.

If there is money left over, perhaps then I can take my trip. Likewise, when we want governments to spend money on various projects, we assume that the most important items will be first in line. (One can make a case that just about all government spending is foolish and reckless, but for purposes of this article, I will assume that at least some government spending has social value.)

According to the promoters of the “stimulus,” the money has gone to hard-pressed states and localities to fill in the gaps caused by declining tax revenues. In some places this has meant that lower-valued projects have been abandoned or put on the back-burner, which fully reflects the human valuation process.

If the “stimulus” were about helping states and localities through hard times, the government would want them to spend it on the most-important projects, or perhaps even hold that money in reserve to ensure solvency through the recession. Instead, Congress has directed that money be spent on things that local and state governments would never consider to be priorities.

I have to do nothing more than drive to work to see this foolishness in action, as two “stimulus”-funded projects are in my backyard. I live in Garrett County, Maryland, and have to drive over Big Savage Mountain, a 3,000-foot-high ridge, to go to Frostburg State University, which is five miles east of my home. If I take U.S. 40 over the mountain, I often have to stop and wait for several minutes while work crews expand the drainage ditches along the steep road on the mountain’s east side.

If ever there were a make-work project, this is it. In the more than eight years I have lived in this area, I never have witnessed any problems caused by the old drainage ditches and there really did not seem to be any problems there caused by cascading storm water.

However, the other project on I-68 on the east side of Big Savage Mountain makes the drainage undertaking look to be fiscally sound. The interstate highway has a narrow median with a guardrail down the middle. This past week, drivers going east and west were shuttled into one lane to accommodate workers putting down rolls of new sod in the narrow median strip. If ever there were a worthless project, this was it – and even my children commented on its uselessness.

If these “stimulus”-funded undertakings are typical of what the Congress directed for states and localities, then the “leaders” of the U.S. government are even more delusional than I had imagined. Not only are they handing out money in a manner that imperils our future, but they also are demanding that it be spent on phantom things that intelligent people never would need in the first place.

This is not “change we can believe in.” This is government as usual.

Tuesday, September 29, 2009

Free Plaxico Burress!

Although Wilt Alston has written a piece good enough to be the Last Word on the unjust imprisonment of Plaxico Burress, nonetheless, I figure I will do mop-up duty, as well as second his excellent commentary. Indeed, I believe that Burress is a political prisoner who is being disguised by the press as a felon. Given that the mainstream media today is little more than a mouthpiece for the political classes, I think it is safe to say that the press does not "get it," nor ever will.

I was struck by the quote by NYC Mayor Michael Bloomberg that Wilt used at the beginning of the article, and I will present it again:

"If we don't prosecute [him] to the fullest extent of the law, I don't know who on Earth we would. It makes a sham, a mockery of the law. And it's pretty hard to argue the guy didn't have a gun and it wasn't loaded."


Usually, anything that takes Bloomberg’s mind off wanting to establish the anti-smoking policies of Adolph Hitler (as well as Bloomberg wanting to tell the rest of us what we can and cannot eat) is a good thing, but not in this case, as I would rather hear him lecture against Twinkies than hear his flawed reasoning for locking someone in a government cage. Hizzoner’s quote does not tell me that, somehow, the judicial apparatus in the Large Malus Domestica is geared up to give "justice for all." Instead, it seems to me that the government of the city has engaged in selective prosecution – all in the name of "blind justice."

Once upon a time, the authorities would have seen Burress’s wound as being substantial punishment for not having his equivalent of a firearms hall pass, and he would have received a legal slap on the wrist – which would have been less unjust than throwing him into the can for two years. I seem to remember that 40 years ago, Ted Kennedy managed to kill someone, a small detail that the authorities on the Kennedy payroll in Massachusetts seemed to forget when they charged him with a misdemeanor for "leaving the scene of an accident."

That Kennedy received a recent near-million-dollar burial of which the extravagance exceeded that of someone from an actual royal family tells us that the political classes are being held to much different standards than someone who actually is a valuable member of society. (Catching the winning touchdown pass in the Super Bowl is a much greater and more socially-useful feat than ramrodding God-awful bills like "No Child Left Behind" and worse into law and tom-catting with Christopher Dodd through the District, and having sex with a bimbo on a sailboat in full view of the rest of the world.)

No, Plaxico Burress managed to violate a "law" that really should not be a law, period. This is a statute that declares that people in NYC are not permitted to engage in self-defense without permission, while city employees wearing blue uniforms and badges are entitled to empty the clips of their handguns into unarmed people and not go to jail.

New Yorkers were not always so squeamish about firearms. John Lott writes that a few decades ago high school students who were on rifle teams would carry their rifles on the subway and into their schools, where the guns were put into safe keeping until the students went to practice at a shooting range. Unfortunately, New York has political leadership that no longer realizes that just because a person is carrying a private firearm does not mean the person is going to shoot other people.

Bloomberg is fond of saying, "I don’t know why people carry guns. Guns kill people." No doubt, Hizzoner demands that the police that tend to his entourage be disarmed. Oh, I forgot; only privately-owned guns "kill people." Cops never shoot anyone, and they certainly never kill people and certainly not unarmed people.

The imprisonment of Plaxico Burress reveals a real smugness with the New York political classes, as though a Great Deed of Justice has been carried out. In the name of "justice for all," the authorities in New York have carried out selective prosecution, making sure that a high-profile person who has offended the mayor’s worldview goes to prison.

The political classes – and especially the New York City political classes – protect their own. When the city collapsed financially in 1975, it turned out that city officials were selling municipal bonds to pay off previously-issued municipal bonds, an act that clearly broke a host of fraud statutes. However, no one went to jail despite the fact that the city officials clearly were engaged in a financial swindle that would dwarf even what Bernie Madoff did 30 years later.

Far more people were harmed by New York’s financial fraud than were hurt by Plaxico Burress carrying a loaded handgun. New York cops each year kill innocent people, yet they pay no price. Burress is in jail, while city employees who are guilty of far greater crimes go free. That is the lesson of the imprisonment of Plaxico Burress and none other.

Thursday, September 24, 2009

Did Cash for Clunkers “Revitalize” the Auto Industry?

During a recent conversation with a friend, he told me that the Cash for Clunkers program had “done wonders” for the auto industry. Indeed, he hardly is alone.

Automotive News recently editorialized that the program “worked,” and now it is time to “build on its success.” The editorial declared:

The August U.S. light-vehicle sales tally reported last week proves that the government’s cash-for-clunkers program was a huge success. Now it’s up to automakers and their dealers to be clever marketers and salespeople to maintain and build on the clunkers momentum.

From the beginning, there were doubters who, for political or other reasons, said the clunkers program was little more than a federal handout to the Detroit 3. But the rising tide of enthusiasm among U.S. consumers for purchasing new cars lifted many automakers, not just those with a fleet full of fuel-sippers.


The writer adds:

Better yet, dealers say cash for clunkers sparked a positive shift in consumer attitudes that will lift new-car sales in the months ahead, especially if economists are right about positive indicators.


This editorial was written two weeks ago, The industry has come back to earth with a thud since then. The Boston Globe reports that things are rather quiet in the aftermath:

...once the federal money dried up, so did the sales rally. Now, customers at dealerships like Silko Honda in Raynham are few and far between, and inventory is once again accumulating.

Manager Adam Silverleib said business was “pretty intense” as a result of the federal stimulus program, with the dealership hustling to accommodate customers and handle the piles of paperwork required for them to receive reimbursement on vouchers. “Now we’re kind of back to where we were in the spring,’’ he said.


And what was it like in the spring? It was called a recession, with recession-like sales figures to boot. In other words, one can liken the Cash for Clunkers program to throwing lighter fluid on damp wood. Flames will rise up for a few minutes, but unless the wood catches fire, the lighter fluid was next-to-worthless.

Contrary to what Automotive News breathlessly declared, the Cash program pretty much was what anyone with common sense and decent economic training could have predicted. It spurred sales for a while, but after the money dried up, so did the new car sales.

I contend, however, that where Automotive News saw “momentum” for the auto industry, in reality this program has brought long-term economic damage. To understand why the program was, on net, economically harmful, one first must understand Frederic Bastiat’s “broken window fallacy.”

Since most, if not all, readers are familiar with this fallacy, I don’t need to repeat it. However, the most important part is that while the townspeople believed the broken window brought prosperity, it actually reduced their wealth because they were forced to use resources to recreate a window which already had existed, thus depriving the community of the use of those resources elsewhere.

With Cash for Clunkers people turned in vehicles on which they were making small if any payments.. In normal situations, if they had wanted another vehicle, many would have traded in what they had for another used car or truck. Instead, even though they were given a fairly large down payment, many purchased cars that substantially raised their personal debt.

To make matters worse, the government ordered the dealers to destroy the engines of the so-called clunkers, many of which were not clunkers at all. Thus the government managed to destroy a huge amount of wealth, all in the name of creating wealth. Furthermore, if any automakers or dealers used the Clunker program as a reason to engage in new capital expansion, they quickly will find that those “investments” really are malinvestments, which means they will be worse off in the long run because they diverted resources to lines that won’t be profitable.

Like so many government programs, Cash for Clunkers, while creating some short-run benefits for a few people, will have negative effects in the long run. I suspect that even the editors of Automotive News will realize sooner or later that it was a lemon.

Thursday, September 17, 2009

My Recent Letter to a Federal Judge

I recently wrote this letter to a judge who will be sentencing a man who recently was convicted of "honest services fraud," which is based upon a "law" that I believe is unjust and immoral. (I have written about this "law" here.) The names of the judge and the man being sentenced have been omitted.

Your Honor:

I am writing in connection with the recent conviction of "Mr. X" on the charges of "honest services fraud" and "money laundering." While I am an economist (I am an associate professor of economics at Frostburg State University in Maryland), I also have spent many years writing specifically on federal criminal law and especially so-called white-collar crime. My work has been published in academic journals and magazines such as Reason.

First, I need to say that any conviction for "honest services fraud" troubles me. If there is a vague criminal statute on the books, this is it. If there is a criminal statute on the books that is, de facto, an ex post facto law, this is it. About a week ago, "Mr. X," after reading some of my work on "honest services fraud," emailed me and asked if I would write this letter. I’m not receiving a penny of compensation for this, but am doing it, instead, because I am fully convinced that any conviction under "honest services fraud" is unjust and is an affront to our Constitution and the rule of law.

I say this because there is no real hard and fast definition of "honest services fraud." For example, I am writing this letter in my university office on a university computer. I am using my university stationery and letterhead, and one can argue this falls into the scope of what I do, given I have published academic articles on the subject of federal law. A prosecutor who wished to indict me for "honest services fraud" could jump on this and say that I am providing "dishonest services" to my employer.

Have you ever made a personal call while at work? Have you "surfed" the Internet while at your desk to find sports scores or to purchase something for your private use? If so, an enterprising federal prosecutor could try to indict you, although I doubt that would be the case.

For that matter, I highly doubt that your representative in Congress has fully read any of the bills on which he or she has voted, yet I have seen people indicted and convicted for "honest services fraud" because those people had not read every word in every legal document they had signed. Why is no one from Congress indicted? Let’s call it, "professional courtesy."

Second, the U.S. Supreme Court has decided to hear an "honest services fraud" case (involving Conrad Black), and at least some of the justices have publicly said they are troubled by the implications of this very, very vague law (if we can call it "law," as it goes against every principle for which people like William Blackstone stood).

In other words, "Mr. X" very well might have been convicted of a law that really is not a law and might be struck down by the court, which should trouble everyone involved. (Of course, the "money laundering" statutes automatically kick in when there is a "fraud" case involving money. The idea that the feds pile one law upon another for a single act also troubles me and I believe such actions also are affronts to the Constitution and everything for which the rule of law once stood.)

All too often, federal criminal law is little more than a conviction awaiting someone to be charged. As the economy tanks, we now see federal prosecutors effectively criminalizing business failure when, in reality, much of what we see in many cases such as that of "Mr. X" is a situation in which the financial risks that might have made sense when taken in a financial boom turn into huge liabilities in a downturn. An economist already has testified to you that as much as anything, "Mr. X’s" business failure was more due to the general economy than any "fraud" on his part – if there was any fraud at all.

When recessions happen, unfortunately, enterprising federal prosecutors are all-too-eager to claim that a normal business failure really was the result of fraud, and because they have "laws" that permit them to criminalize just about anything, they usually win what I believe are unjust convictions in court. Thus, a case in which people were up front about their finances suddenly turns into "fraud," not because real-live fraud was committed, but rather because the failure was more spectacular.

Now, let me give you another example. This past year, my pension, which is run by administrators in charge of our pension system, lost 25 percent of its value. Now, this is a major loss to many of us in the Maryland university system, yet I don’t see any federal prosecutors hauling our pension administrators off in handcuffs and chains. Substantively, there really is no difference between our pension losses and the losses suffered by "Mr. X" and others in this particular set of business deals. Both sets of losses were due to the steep economic downturn.

So why do prosecutors go after one person and not another? It is that modern phenomenon we know as "selective prosecution." As one trained in the law for many years, you know that historically, "selective prosecution" has been looked down upon by those people who truly cared about rule of law. As a layperson, all I can say is that a regime of "selective prosecution" is an immoral regime. It is not right; it goes against everything we have been taught in our lives about rightness and fairness and the law itself.

Yes, I know that when "Mr. X" was doing well, he spent a lot of money, drove nice cars, and went to Las Vegas. Yet, college professors also go to conferences in Las Vegas and spend university money. (I have gone to a couple conferences there, myself.) Does traveling to Las Vegas make someone a criminal or somehow demonstrates that a person who did so should be sentenced to a long prison term? As far as I am concerned, what "Mr. X" did with the money he made in previous deals is a non sequitur when it comes to dealing with the issues at hand, even if the press makes a big deal out of it.

As I have stated before, I do not know "Mr. X," nor is he paying me to write this letter. I am doing it because I do not want to see one human being going to prison after being convicted of breaking a law that is so vague and so expansive that every one of us could be put in the dock for violating it.

The great civil libertarian and attorney Harvey Silverglate recently published a new book, Three Felonies a Day, and if you have not read it, I would highly recommend it to you. Mr. Silverglate is a friend and has been a mentor to me for many years, and he takes a very jaundiced view of "honest services fraud" and all that it entails, which means that I have some very wise company in expressing my views against this unjust law.

Thank you for taking time to read this letter. I do hope that it will influence you as you face the very difficult task of sending "Mr. X" to prison.

Sincerely,
William L. Anderson