If society criminalizes large parts of the economy, of human activity, it obviously creates criminals. But if laws are straightforward and widely recognized by a society as being grounded common sense, criminals are few and the cost to taxpayers is small(er.) Everyday people also don’t feel like fat cat crony capitalists are manipulating the law for their benefit as there are few laws to manipulate.
Some thoughts on this from Milton Friedman
View full post on AgainstCronyCapitalism.org
George Will, Michael Gerson, and our own Gene Healy are among the columnists who reminded us – in the wake of the IRS and AP snooping scandals – of President Obama’s stirring words just two days before the IRS story broke:
Unfortunately, you’ve grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity. .?.?. They’ll warn that tyranny is always lurking just around the corner. You should reject these voices.
No road to serfdom here. Just us folks working together, to protect ourselves from sneaky reporters and organized taxpayers.
And now lots of people are noting that a series of scandals in government just might undermine people’s faith in government. John Dickerson of Slate writes:
The Obama administration is doing a far better job making the case for conservatism than Mitt Romney, Mitch McConnell, or John Boehner ever did. Showing is always better than telling, and when the government overreaches in so many ways it gives support to the conservative argument about the inherently rapacious nature of government….
Conservatives argue that the more government you have, the more opportunities you will have for it to grow out of control.
And Paul Begala, the Bill Clinton operative, notes:
This hurts the Obama Administration more than similar issues hurt the Bush administration because a central underpinning of the progressive philosophy is a belief in the efficacy of government. In the main almost all of the Obama agenda requires expanding folks’ faith in government, and these issues erode that faith.
“Faith in government” indeed. To paraphrase Oscar Wilde, putting your faith in government is, like a second marriage, a triumph of hope over experience.
But most particularly this week I’m reminded of Murray Rothbard’s comment in 1975 about what the era of Vietnam, Watergate, and stagflation had done to trust in government:
Twenty years ago, the historian Cecelia Kenyon, writing of the Anti-Federalist opponents of the adoption of the U.S. Constitution, chided them for being “men of little faith” – little faith, that is, in a strong central government. It is hard to think of anyone having such unexamined faith in government today.
Another 38 years later, it should be even more difficult to retain such faith.
View full post on Cato @ Liberty
The Federal Food and Drug Administration (FDA) is keeping busy overhauling the nation’s food-safety system, a legacy of the 2010 Food Safety Modernization Act, which tasked the FDA to prevent food-borne illnesses rather than just respond to them. That means the FDA will have to decide which fruits and vegetables will be subject to new safety standards. In its great wisdom, the FDA wants to target tree fruits such as apples, and pears.
Those who grow apples and pears could be forced into a regulatory regime that calls for stricter testing of their irrigation water, heavier sanitization measures, and more stringent rules on animal abatement. Tree fruit farmers say their product has strong safety record, grows above the ground, and has protective skins. They say the FDA measures defy common sense and would do little to enhance safety. As some argue, the FDA would do better to focus on spinach and cantaloupes, which have caused outbreaks of disease, rather than hang a new regulatory regime on tree fruit.
One Virginia farmer told the Washington Post “what’s being proposed is very onerous and expensive.” Another, from Washington State, said, “Somebody in an office in Washington, D.C., who’s never stepped foot off concrete has decided we need this rule and that rule. . . The market has already taken care of this problem, if it’s a problem. Which it isn’t.”
With good reason, some tree fruit farmers fear that foreign products will not be subject to the same regulation, and that American farmers will be driven out of business. Yet another farmer from Washington State said, “If it ain’t broke, don’t fix it.” The FDA says it is listening, but should also adhere to a different rule: If it ain’t broke, don’t break it.
The FDA is also hitting up Congress for more money, proposing a raise of $821 million to $4.7 billion for 2014. FDA boss Margaret Hamburg said that the FDA “is a true bargain among federal agencies” giving Americans “an extraordinary array of benefits for about 2 cents a day.”
View full post on MyGovCost | Government Cost Calculator
Silver – Keep It Simple!
Posted by Deviant Investor on March 11th, 2013
Nixon dropped the link between the dollar and gold in 1971. Thereafter, the money supply rapidly expanded, consumer price inflation went wild, and both silver and gold increased in price by over a factor of 20 in early 1980.
Volcker raised interest rates, killed both inflation and inflationary expectations, and changed the economic landscape to allow for a nearly 20 year bull market in stocks. Silver and gold dropped below their long-term up-trend. Why put money into silver from 1982 – 2000 when it was easy to make money in stocks?
The stock market crashed in early 2000, and the world changed after September 2001 (9-11). After that event, borrowing, spending, massive deficits, exploding national debt, war, and even bigger government became the norm. Stocks have gone nowhere, on average, for the last 13 years. Silver and gold, anticipating the massive increases in debt and money supply, woke from a two decade sleep and began a bull market that is likely to run for many more years.
The correlation is simple. More debt means higher prices for silver. Examine the following graph. Note that RSQ = 0.916 for smoothed (13 period moving average) monthly silver prices vs. National Debt – a close correlation.
You may not believe the bull market in silver will continue, but I suspect that nearly everyone believes that debt will continue to increase – or until the system resets in some future catastrophic event. I’m not suggesting that increasing debt forever is good or sensible or even possible, but I have seen no evidence that indicates Congress or any president is willing to balance the budget and initiate a sane spending policy.
If silver and gold prices correlate, on average, with the national debt and debt will increase until a crash/implosion/hyperinflation event restructures our economy, then you can bet on much higher silver and gold prices in the future.
Volatility will increase. Gold accelerated into a new high in 2011, and silver almost exceeded its 1980 high that same year. Both markets have been ugly, from a bull’s perspective, since then. Expect future parabolic rallies and vertical drops to become more intense in the next four years.
with Gold & Silver
by GE Christenson – aka Deviant Investor
Expect more frightening and silly statements from Goldman Sachs et al about gold going down to $1,200, while they prepare to book fantastic profits from the rally they will encourage, when the time is right for them. The names differ, the game is the same. It hasn’t changed in hundreds of years.
If you want stress, play the futures market in silver. If you want a long-term investment, buy silver at these low prices and wait for the powers-that-be to devalue the various Dollars, Euros, and Yen that we use. Silver and gold prices will be much higher four years from now, regardless of what you are told via the “party line” from the Goldmans of the world.
KEEP IT SIMPLE! Debt is increasing, money supply is increasing, silver and gold prices are increasing.
There is no political will to make any material change in the system until a crisis forces change upon all of us. After the crisis, would you rather own gold, silver, Goldman promises, paper dollars, or sovereign debt paper issued by an insolvent government? Read Ten Steps To Safety.
Buy silver at depressed prices (like now). Sell some, not all, after a big rally, such as in 2004, 2006, 2008, and 2011. Another big rally is coming. Read commentary from Jim Sinclair.
KISS: Keep Investing and Stacking Silver. Keep It Silver-Simple.
It is your choice. Silver or paper? Physical metal or computer-generated paper equivalents? Thousands of years of history where silver has functioned as a store of value and as valuable money or decades of broken economic promises? Keep Investing and Stacking Silver!
Statistics: Posted by yoda — Tue Mar 12, 2013 9:33 am
View full post on opinions.caduceusx.com
Daniel J. Mitchell
Sigh. I feel like a modern-day Sisyphus. Except I’m not pushing a rock up a hill, only to then watch it roll back down.
Compared to educating journalists about fiscal policy, this is an easy task
I have a far more frustrating job. I have to read the same nonsense day after day about “deep spending cuts” even though I keep explaining to journalists that a sequester merely means that spending climbs by $2.4 trillion over the next 10 years rather than $2.5 trillion.
The latest example comes from the New York Times, which just reportedabout “deep automatic spending cuts that will strike hard” without bothering to provide a single concrete number about spending levels in any fiscal year.
Yes, you read correctly. A story about budget cuts did not have any numbers for spending in FY2013, FY2014, or any other fiscal year.
So, for the umpteenth time, here are the actual numbers from the Congressional Budget Office showing what will happen to spending over the next 10 years if we have a sequester.
I don’t mean to pick on the New York Times. Yes, the self-styled paper of record has been guilty in the past of turning budget increases into spending cuts, but the Washington Post is guilty of the same sin, having actually written in 2011that reducing a $3.8 trillion budget by $6 billion would “slash spending.”
And the NYT story actually has some decent reporting on how Republicans so far have (fingers crossed) avoided the tax-increase trap that Obama thought the sequester would create.
But one would still like to think that Journalism 101 teaches reporters to include a few hard facts when writing stories. Particularly if they’re going to use dramatic adjectives to describe what supposedly will happen.
Anyhow, this is just part of a larger problem. As I explained in these John Stossel and Judge Napolitano interviews, the politicians and interest groups have given us a budget process that assumes ever-increasing spending levels, which then allows them to make hysterical claims about “savage” and “draconian” cuts whenever spending doesn’t rise as fast as some hypothetical baseline.
This is why almost nobody understands that it’s actually relatively simple to balance the budget with a modest bit of spending restraint. My goal is reducing the burden of government spending, not fiscal balance, but it’s worth noting that we’d have a balanced budget in just 10 years if spending grew by “only” 3.4 percent annually.
View full post on Cato @ Liberty
Power Hour: Keep a Close Eye on Land Prices
FEBRUARY 1, 2013
By: Boyce Thompson, AgWeb.com Editorial Director
Purdue University ag economist Brent Gloy discusses farmland value trends at the Top Producer Seminar in Chicago.
Farmland values aren’t in a bubble, but prices could still tumble, says a Purdue University ag economist
Like most economists, Brent Gloy, who directs the Center for Commercial Agriculture at Purdue University, does not believe farmland values are in a bubble. But he also thinks there’s real danger values might fall, especially if the economic winds at agriculture’s back suddenly change direction.
In nominal terms, it doesn’t look like farmland prices have increased as fast as they did during the last bubble, in the 1970s. However, when you take inflation out of the equation, recent increases are "absolutely on par" with what happened in the ’70s, Gloy said at the Top Producer Seminar this week in Chicago.
"We pay about 30 times cash rent for a farm today," Gloy said. "It’s never been that high. It’s high in part because people think that cash rents will keep going up, but it’s also because interest rates are low."
Gloy urged farmers to resist the temptation to buy farmland on credit, which is what led to the farmland bust of the 1980s. He also advised against buying farmland "just because everyone else is doing it." That’s the psychology that precipitated both the technology and housing busts.
Rising land values make plenty of sense given growing demand from the biofuel industry, foreign nations and growing affluence in developing countries, among other sources. "It all comes back to supply and demand," he said. "Have we seen any increases? You bet we have. Persistent demand growth can substantially increase land values and capital investment."
Land investors, particularly the institutional variety, are bullish because they believe world demand will continue to grow, and the productivity of U.S. farms will continue to improve. But he questioned whether the industry has "reached the point where we can’t keep up with demand growth through productivity enhancements."
Low interest rates are a big part of the land equation. Without today’s low interest rates, farm incomes would have to be much higher to support today’s land prices. He urged the farmers in attendance to keep a careful eye on Federal Reserve Policy. "When the fed takes us out of accommodation, pay attention," Gloy advised.
Trade policy is another major wild card. "You don’t hear as much about trade policy. But every major bust in ag has corresponded with a bust in exports," he said, recalling the grain embargo after Russia invaded Afghanistan. "Trade policy is something we forget about. Don’t lose sight of that as a farmer."
If grain demand is boosted by foreign trade, it’s supported by domestic ethanol production as well. Noting that corn demand for ethanol production may have peaked, Gloy noted that "any downward changes would not be good for farmland values."
In the final analysis, Gloy isn’t sure what force might take land values in the opposite direction. "It’s almost impossible to figure out what will take us out of the cycle," he said.
Statistics: Posted by yoda — Sun Feb 17, 2013 2:28 am
View full post on opinions.caduceusx.com
If his election rhetoric, or stories about tonight’s State of the Union, are any indication, this evening President Obama will talk a lot about “investing” in education. And that sounds nice, doesn’t it? I mean, who doesn’t want to wisely and profitably put money into the American people? The problem is, such federal spending has never been wise or profitable, unless the profit you seek is political points.
To demonstrate the dangerous folly of federal education spending, I offer the following chart on higher education. And shortly, Andrew Coulson will be delivering a damning graphic on k-12.
What does this chart show? That inflation-adjusted student aid—the vast majority of which came through the federal government—has exploded over the last thirty years, but probably hasn’t made college more affordable. No, it has fueled a more than doubling of inflation-adjusted college prices, all while median household income has been basically flat. Schools have simply raised their prices to capture the aid.
That’s some investment: students and taxpayers are out bigger and bigger sums of money while colleges—and approval-seeking politicians who want to show how much they “care”—reap the big profits. Probably not the payoff most people had in mind.
View full post on Cato @ Liberty
Michael F. Cannon
Arizona Gov. Jan Brewer (R) recently set aside her vociferous opposition to ObamaCare’s costly Medicaid expansion by announcing she will support implementing that expansion in Arizona. A significant factor in her reversal, she claimed, was that if Arizona did not expand its Medicaid program, then some legal immigrants would receive government subsidies while U.S. citizens would get nothing.
Brewer’s analysis of this “immigration glitch,” and her remedy for it, are faulty. Fortunately, she, Arizona’s legislature, and its attorney general have better options for stopping it.
An odd and unforeseen result of the Supreme Court’s decision upholding ObamaCare is that, in certain circumstances, the law will now subsidize legal immigrants but not citizens. What triggers this inequity is a state’s decision to implement an Exchange – not the decision to opt out of the Medicaid expansion. (Even if a state implements both provisions, legal immigrants would still receive more valuable subsidies than citizens.) The good news is that states can therefore prevent this inequity simply by not establishing an Exchange. If Brewer wants to avoid this “immigration glitch,” there is no need to expand Medicaid. She already blocked it when she refused to establish an Exchange.
The bad news is that the Obama administration is trying to take away the power Congress granted states to block those discriminatory subsidies, and the punitive taxes that accompany them. Contrary to both the statute and congressional intent, the IRS has announced it will impose that witch’s brew in all states, even in the 32 that have refused to establish an Exchange.
Oklahoma attorney general Scott Pruitt has filed suit to stop that stunning power grab. If Brewer is serious about stopping the “immigration glitch,” the way to do it is by filing a lawsuit similar to Oklahoma’s, while adding a complaint that the Obama administration’s illegal subsidies also violate the Equal Protection clause.
How “the Immigration Glitch” Emerged
ObamaCare aims to offer some form of tax credit or subsidy to purchase health insurance to all citizens and legal immigrants below 400 percent of the federal poverty level (about $92,000 for a family of four). Generally, people below 138 percent of the poverty level would receive subsidies through their state’s Medicaid program, while citizens and legal immigrants between 100-400 percent of poverty would receive tax credits and/or subsidies to purchase private health insurance through state-created health insurance “exchanges.”
In a slight departure from those general rules, Congress also made legal immigrants below 100 percent of poverty eligible for those Exchange subsidies. Why? ObamaCare originally would have required states to expand their Medicaid programs to all citizens up to 138 percent of poverty level. But since states have the option of excluding legal immigrants from their Medicaid programs, and could continue to do so under that expansion, Congress made legal immigrants below the poverty level eligible for Exchange subsidies if they live in one of those states. Since ObamaCare supporters expected all states to implement the Medicaid expansion, they reasonably believed all citizens and legal immigrants below 400 percent of poverty would receive some form of tax credit or subsidy.
Then along came Chief Justice of the United States John Roberts.
With six of his colleagues, Roberts voted to declare ObamaCare’s Medicaid mandate unconstitutional. Four of those justices then voted to strike down the entire law on the grounds that the Medicaid mandate was not severable from what remained. But rather than vote with them, Roberts voted with the other four justices—including two who held the Medicaid mandate to be constitutional—to preserve the law and simply make the Medicaid expansion optional for states.
Roberts claimed he was exercising judicial restraint. In reality, he put in place a new law that Congress never would have enacted. ObamaCare still makes the aforementioned legal immigrants eligible for Exchange subsidies, provided their state establishes an Exchange. But under the law as amended by John Roberts, if that state does not expand Medicaid, an inequity appears: some legal immigrants receive Exchange subsidies while otherwise identical citizens, if not already eligible for Medicaid, receive nothing. Given the sensitivity surrounding the law’s treatment of immigrants (remember “YOU LIE”?), there is zero chance such a bill could have passed Congress. So if you want to know whom to thank for this inequity, thank John Roberts. This inequity is one more reason Roberts’ severability analysis was faulty, and the joint dissenters had it right: the Court should have struck down the entire law based on the unconstitutionality of the Medicaid mandate alone.
How States Should Respond
Be that as it may, state officials need to understand what causes the “immigration glitch,” how they can avoid it, and that most of them already have.
- What causes this glitch are the Exchange subsidies, not a state’s failure to expand Medicaid. It is the Exchange subsidies that are available to (some) legal immigrants but not to otherwise-identical citizens. And since Exchange subsidies are available only through state-created Exchanges, it is a state’s decision to create an Exchange that creates this inequity.
- If states want to prevent this inequity, they should do what 32 states have already done and refuse to establish an Exchange. If states don’t create Exchanges, there can be no Exchange subsidies, and thus no inequity. At this point, it appears there are only two states where this inequity might appear: Idaho and Mississippi. Those are the only states that might end up implementing an Exchange but not the Medicaid expansion. They and all other states can avoid this glitch simply by not establishing an Exchange.
- Expanding Medicaid doesn’t really eliminate the inequity because citizens would still receive a less-valuable subsidy than legal immigrants. Legal immigrants would receive subsidies to purchase private insurance, while citizens would get Medicaid coverage, which is notorious for providing inferior access to care. This inequity was present in the original law, and will exist in the 16 or so states that are implementing both an Exchange and the Medicaid expansion.
- This glitch is yet another reason why the Obama administration’s attempt to dispense $500 billion in states that refuse to create Exchanges – half a trillion dollars of subsidies that Congress never authorized – is illegal and wrong. (ObamaCare supporters claim the IRS has the legal authority it needs. To which I say: if you’re so sure, debate me.) Among other evils, the administration is reintroducing this discriminatory provision into the 32 states that have eliminated it. States, employers, and individual taxpayers therefore have one more complaint they can lodge against the administration’s actions in federal court: the unauthorized subsidies the administration is trying to dispense also violate the Equal Protection clause. They are available to legal immigrants but not to otherwise-identical U.S. citizens.
This latest glitch is one more reason why John Roberts’ opinion was ill-considered, why Congress should repeal ObamaCare, and why, until Congress does, states should implement neither an Exchange nor the Medicaid expansion. When a massive new entitlement program unfairly favors one group over another, the proper response is not to enact a second massive new entitlement program. The proper response is to block the first one.
Brewer is correct that it would be unfair for Arizona residents to pay for ObamaCare’s Medicaid expansion in other states, while receiving none of the benefit. (Actually, the inequity is even worse than that. ObamaCare’s Medicaid expansion is entirely deficit-financed. So it is future generations, rather than current Arizona residents, who will pay for it.) The way to stop the “immigration glitch,” and this much larger inequity, is by filing a companion suit to Oklahoma’s. If Arizona expands Medicaid, it will blow a huge opportunity to stop all of ObamaCare’s inequities once and for all.
View full post on Cato @ Liberty
By Mark A. Calabria
Earlier this week the Inspector General (IG) of the Federal Housing Finance Agency released a report documenting the current pay levels of mid-level executives at Fannie Mae and Freddie Mac, those mortgage giants which contributed to the financial crisis and have so far cost the taxpayer over $180 billion. Despite the bail-outs, it seems the GSEs are still a comfortable place to work, all at the taxpayers’ expense.
This chart, reproduced from the IG report, illustrates that the GSEs’ over 300 Vice Presidents actually got paid more in 2011 than 2010, with a median compensation of $388,000. Those poor directors, of which there are over 1,650, had to make due on a median compensation of only $205,300. For running two companies into the ground, these executives seems pretty well paid to me.
One of the arguments against cutting pay at Fannie and Freddie is that all the good employees will leave, ultimately costing the taxpayer even more. First I question whether we want the same people running these companies that ran them into the ground. Shouldn’t we be cleaning house at Fannie and Freddie? Secondly, voluntary employee attrition rates since the GSEs have been taken over aren’t all that much higher than before their bail-outs. If anything these rates are too low. Again given their role in the companies’ failures, we should encouraging long-time Fannie/Freddie employees to leave, not stay.
I have long proposed that since the taxpayer now outright owns Fannie and Freddie, their employees should be paid like federal government employees (who are already over-paid). To continue to allow the same people who stuck the taxpayer with a $180 billion bill to be paid lavishly, is to add insult to injury.
View full post on Cato @ Liberty
By Trevor Burrus
On Tuesday, the Chicago-based 7th Circuit Court of Appeals struck down Illinois’s ban on carrying ready-to-use firearms. Moore v. Madigan is written by Judge Richard Posner, possibly the most famous non-Supreme Court judge in the country, and is an important extension of the Second Amendment right to keep and bear arms. Judge Posner’s decision makes it very clear that the right to self-defense entails more than just allowing people to keep guns in the home.
In the landmark case of United States v. Heller, a case in which Cato was intimately involved, the Supreme Court struck down the District of Columbia’s near total-ban on having guns in the home. Two years later, in McDonald v. Chicago, the Court expanded this protection to the states, striking down Chicago’s equally draconian gun ban.
Ever since those two cases established and expanded the right to keep and bear arms, lawyers have been testing the waters to see how far the Supreme Court’s ruling goes. Heller held that the protection of the home with a reasonable firearm (i.e. a handgun, not a rocket launcher) is the core of the Second Amendment. While that right cannot be totally eliminated by states and municipalities, it is still subject to reasonable regulation. Yet this holding only addressed the Second Amendment right to keep arms, not to bear them. Both words are in the Amendment and both words clearly mean different things.
Up until Tuesday, Illinois was the last state to flatly ban all carrying of ready-to-use guns outside the home. Since the mid-1980s there has been a remarkable proliferation of states that offer concealed-carry permits. As you can see from this nifty animation, in 1986 only 34 states allowed their citizens to carry guns. Moreover, most of those states had “may-issue” permitting, meaning that local officials are given broad discretion in choosing who gets a permit. “May-issue” statutes often contain discretionary language such as, “if the sheriff determines the applicant to be of good moral character and of having proper cause for wanting a permit then he may issue a permit.” While “may-issue” laws are better than “no-issue” laws, they imbue local officials with far too much discretion over whether a citizen is of sufficient “moral character” and has “proper cause” to be allowed to exercise her fundamental right to self-defense. In a decision that Judge Posner criticizes in Moore, the Second Circuit recently upheld New York’s “proper cause” provision.
As you can tell by the animation, the growth in “shall-issue” states is astounding. Today, unless you live in Illinois, you may be surrounded by many legally gun-toting citizens, and while you may not have noticed this, trust me, the criminals have. And despite this massive increase in the legal carrying of weapons, crime is still going down and we are not living in a modern recreation of the Wild West. Instead, as Clayton Cramer and David Burnett documented in the recent Cato study, Tough Targets, those carrying weapons are increasingly using them to protect themselves and to save lives.
In his decision, Judge Posner discusses the evidence on both sides of the debate over the relationship between guns and crime. He also decides that the evidence is more or less irrelevant to the question of whether the Illinois ban can survive:
In sum, the empirical literature on the effects of allowing the carriage of guns in public fails to establish a pragmatic defense of the Illinois law. Anyway the Supreme Court made clear in Heller that it wasn’t going to make the right to bear arms depend on casualty counts. If the mere possibility that allowing guns to be carried in public would increase the crime or death rates sufficed to justify a ban, Heller would have been decided the other way, for that possibility was as great in the District of Columbia as it is in Illinois.
Posner then finds the Illinois ban squarely proscribed by the plain language in Heller and McDonald:
A woman who is being stalked or has obtained a protective order against a violent ex-husband is more vulnerable to being attacked while walking to or from her home than when inside. She has a stronger self-defense claim to be allowed to carry a gun in public than the resident of a fancy apartment building (complete with doorman) has a claim to sleep with a loaded gun under her mattress. But Illinois wants to deny the former claim, while compelled by McDonald to honor the latter. That creates an arbitrary difference. To confine the right to be armed to the home is to divorce the Second Amendment from the right of self-defense described in Heller and McDonald.
The decision is certainly an important victory for the right to self-defense. We will now wait to see if Illinois appeals the decision. While Judge Posner struck the ban down, he delayed his mandate for 180 days in order to “allow the Illinois legislature to craft a new gun law that will impose reasonable limitations, consistent with the public safety and the Second Amendment as interpreted in this opinion, on the carrying of guns in public.”
My prediction is that, rather than risk the Supreme Court affirming the ruling, Illinois will impose a severely limited permitting system. Either way, this is certainly the most important case decided under the Second Amendment since McDonald.
View full post on Cato @ Liberty