It's Not Easy Being Pals

If the name “Buddy” gives you the warm fuzzies, then you're going to like this story. In case you missed this morning's news cycle, a great hero dog story is being reported in the media today. “Buddy,” an obviously loyal German Sheppard and family friend, overcame his fears and led police to the scene of a house fire, tremendously shortening the time more police and fire fighters needed to find the blaze. You can see the video here. According to the officer who was intelligent enough to speak dog and follow up on it, Buddy appeared very agitated, spun, ran ahead and looked back repeatedly. He also disappeared once the officer was on the scene – proving that anyone can overcome their fears given the right motivation. Way to go, Buddy. Once again, I'm very proud to be the leader of my pack.

I'm being a bit lazy by posting this quote. But since I haven't posted in some time, and since I'm about to eat lunch, I wanted to do as little as possible while still giving you a bit of pause. It made me stop – twice. The quote below is from a short book I'm currently reading. I'm just curious to know if you can guess the date this statement was made. It's at the bottom. Try not to peek.

“'There cannot be any doubt that this bureaucratic system is essentially antiliberal, undemocratic, and un-American, that it is contrary to the spirit and to the letter of the Constitution, and that it is a replica of totalitarian methods.... It is imbued with a fanatical hostility to free enterprise and private property. It paralyzes the conduct of business and lowers the productivity of labor. By heedless spending it squanders the nation's wealth. It is inefficient and wasteful. Although it styles what it does (as) planning, it has no definite plans and aims. It lacks unity and uniformity; the various bureaus and agencies work at cross-purposes. The outcome is a disintegration of the whole social apparatus of production and distribution. Poverty and distress are bound to follow.'
This vehement indictment of bureaucracy is, by and large, an adequate although emotional description of present-day trends in American government. But it misses the point as it makes bureaucracy and the bureaucrats responsible for an evolution the causes of which must be sought for elsewhere. Bureaucracy is but a consequence and a symptom of things and changes much more deeply rooted. The characteristic feature of present-day policies is the trend toward a substitution of government control for free enterprise. Powerful political parties and pressure groups are fervently asking for public control of all economic activities, for thorough government planning, and for the nationalization of businesses. They aim at full government control of education and at the socialization of the medical profession. There is no sphere of human activity that they would not be prepared to subordinate to regimentation by the authorities. In their eyes, state control is the panacea for all ills.”

Ludwig von Mises "Bureaucracy" – 1944

9/11 Becomes 1984

News in recent weeks has been disturbing enough to make George Orwell proud. On December 22, writer Alan Reynolds posted a good perspective as to why, according to his story, “Death Panels? Sarah Palin Was Right.” And Yahoo! News posted Friday an article, stating “Mind-reading systems could change air security."

Both of these need a little elaboration.

First, the Reynolds story details how reporters have all been parroting not only what Palin actually said, but how they misconstrued what they thought she said, or what they wanted her to say. And second that, believe it or not, the US government has no choice but to economize through “rationing boards,” an idea detailed in a linked story published in July by the New York Times.

The second headline about mind reading security systems should send a shiver down anyone's spine, and send us to our libraries looking to blow dust from our old sci fi classic. But the story goes on to describe not real mind-reading devices, but rather a high tech camera and TV screen system that flashes very specific images at individuals and gages their reactions. Scarrier still, the company promoting this new product calls itself WeCU. All of it seems logical enough. Some muscle responses, facial expressions and so forth are totally involuntary. The implications for the success of such a new tool are tremendous. But so, unfortunately, is the potential for its abuse. As are the mistakes that will undoubtedly be made in learning how to figure out what is a real positive response vs. a false positive response – something that gets lie detector tests kicked out of the court room all the time.

The next kind of “security” scanner, I'm sure, will be neural MRI in its orientation, and probably also part of a combination of new technologies, which is likely to include the already proposed national ID cards, other scanners and computer databases, etc, etc, etc.

If George Orwell and writer Aldous Huxley actually meant “Fear-filled New World” when they made their comments on the “Brave New World,” then they may have been on to something.

The Nolan Chart Is A Little Off

Not too long ago I was happily surfing the web and found “The World's Shortest Political Quiz.” Only a few minutes later I came across something equally interesting – a chart produced by Libertarian David Nolan. It takes personal and economic freedom and charts them out according to a person's political beliefs.

At first blush, it looks correct. I was quite pleased that someone had plotted out that kind of information. But as I considered its meaning, a glaring problem began to reveal itself.

I think, and I'm sure almost every present day and former communist comrade will agree, that personal and economic freedoms are corollaries so inextricably linked that they deserve to be included on the same axis. You can't have much personal or economic freedom if, as in a communist country, the government supplies you with everything they think you need, and taxes you at a “marginal” tax rate of 100%. So I emailed Jean-Francois Minardi, a Senior Policy Analyst at The Frasier Institute. They sponsor the Economic Freedom of the World project.

He was kind enough to respond right away, and told me that he isn't aware of any chart like the one I was considering. So once my googling was over, and I was convinced that I wouldn't duplicate anyone else's work, I decided to make my own chart.

Here's what I came up with. It includes Dick Armey's flat tax low estimate of diminishing government returns, starting at about 15%. It's important, because he's a former public policymaker, Ph'd Economics Professor and has written several books on the subject. I also included Economist Arthur Laffer's diminishing returns estimate of 40%.

For the record, my own estimate of the pivot point between liberty and socialism was a marginal tax rate of 41%. But there isn't much sense in watering down the chart in small increments, so I've kept my conclusion out of it (I'd rather just take credit for the whole chart).

And the last element is the point at which I think socialism is a certainty. It starts at the confiscation, organization and redistribution of 51% of the GDP of a given economy. I suppose anyone can argue the semantics of what socialism is, isn't, what it represents, and at what point it begins. And there are in fact countries in existence today that have marginal tax rates over 50% and still have democratically elected leaders – like Norway (That's probably not a good example, since they're a constitutional monarchy).

But I did find a large problem in an already existing chart. And it's something that I thought needed more attention. So here's my take on it. Hey, there's no sense in complaining about a problem if you're not willing to offer some kind of solution to fix it. Right?

In case you're wondering... the U.S. corporate tax rate currently tops out as the second highest in the world at 39%, while the federal income tax rate is as high as 35% - depending on your income. And this is only those two taxes. This does not include the sales tax, death tax, state income tax, social security and the myriad other payments you make to government all the time. And I don't need to mention to my readers the bailout programs, the "stimulus" program(s?) or the other very large and very public expansions of government that are being carried out in Washington as I write this.

This post reminds me of a book written in 1963 by Murray Rothbard. He called it: "What Has Government Done To Our Money?". But with the current state of affairs in Washington, I think it's about time for a new book title. How about something like: "What Has Our Government Done To Our Government?"

Just Off The Top Of Your Head

Quickly. Take a look at this picture and tell me your first impression. Does this look “sustainable” to you?



Try to remember, the area with the widest gray column is known as “The Great Depression.” Notice the difference? Hardly a dip. And the white area just after 1940 is the time the WWII effort was running at full force. These pro government monetarists scare me.

The Changing Face Of American Capitalism

Yahoo Finance posted an interesting story yesterday morning, one that describes the reasons former GMAC CEO Alvaro de Molina was forced to step down.

In the news are the details of GMAC's years long financial woes. Molina was in charge of the company for only the last two. But that didn't stop the CEO from having a very clear cut difference of ethical opinion in opposition to GMAC's board of directors.

For anyone who's been following the company's difficulties for even a short time, the memories of bailout monies and other government guarantees are fresh. GMAC received $12.5 billion in bailout funds; had $7.4 billion in loans publicly guaranteed by the FDIC; failed the government's stress tests, and still needs to raise another $11.5 billion to get back on its financial feet. But so far it hasn't been able to raise the necessary money, nor has the company cut its costs enough to aid in its own solvency. Which means... the company is back with hat in hand, ready to once again accept government money to the tune of at least another $5.6 billion in greenbacks.

The essence of the issue is this: the board wants the money; de Molina doesn't. So the board has forced him out for a very specific reason. He refused to accept money that his company didn't earn. He refused to take your tax dollars. How ironic. When we read of one man of good conscience, among all of those others who are so quickly willing to sell out their morals, their ethics and their companies, just to prop themselves up for a little while longer, it's in an article that states “...de Molina steps down.”

Say “goodbye” to the large companies that deserve your business because they provide you with everything you want, need and actually use. And say “hello” to the companies that stay afloat due mostly to their political connections.

Laissez-faire has been dealt some serious blows over the course of these last couple of years. Every part of the stimulus program, and every aspect of the TARP program, has made doubly sure of that. But also know that when good people of conscience are being pushed out of the doors of formerly competitive companies because they still believe in laissez-faire, the death noose has been tied. It's just the changing face of what used to be American capitalism.

A Late, Great Interview

Last night Gaby and I did something we thought was fun, even though we also realized that it probably makes us either serious intellectuals, or nerds – or both. We happily sat in bed with my laptop on a Saturday night and watched a Mike Wallace interview from 1959. It was just him and my favorite author Ayn Rand. The video is so basic that I called it high schoolish. Which, by today's standards, it is. There's no scrolling info at the top or bottom of the screen; the camera jumps and wavers; the CG is primitive, and it's shot in black and white. The sound is even bad. But having said that, it's also totally engrossing. I can't remember ever being so drawn into an interview. His questions are tough; and she answers every, single one of them with the practice and fearlessness I would expect from her caliber of intellect. There are so many people who are, after all these years, still misunderstanding what she had to say, and why. But I'm happy to share it anyway.

Is It Still Just A Conspiracy?

In one of my previous posts, I focused on an article published by the British newspaper The Independent, in which the authors stated there are now widespread attempts by many central bankers all over the world to divest their countries of US dollars. The swirl associated with their story is more in regard to public reactions to the information than to the info itself. But ultimately denial will get us nowhere. And, for the second time in three weeks, I'm happy to say that I'm in good company with my concerns about the decline of the dollar. In an article posted on Yahoo Finance titled “Wake Up Washington! China Is Already Dumping the Dollar...” Harvard professor Niall Ferguson shares his view, and states that Washington is too dismissive, and that anyone who thinks the Chinese will be left with no or few alternatives to the American consumer is “slightly naïve.”

The crux of the issue is this: if the Chinese sell dollars, or in this case, trillions worth of US treasuries, the greenback will be devalued enormously. A side effect, however, will be the concurrent inflation of the renminbi (a.k.a. Yuan), China's official currency. But our oriental trading partners have more motivation and less to lose than you might think. First, their trade surplus is down nearly 60% from last year. And second, they have much less loose currency in the marketplace as a percentage of their GDP than the US does. This essentially means that if they are ever going to make a major transition away from American consumers and the dollar, the best possible and least painful time is right now. Couple this with the fact that China's leadership has in recent years been purchasing commodities of all kinds in every corner of the planet, and you can see that any likely increase in commodities will result in a major windfall for China's economy.

So Washington can poo poo this idea all they like. But I'm reminded of the words of my favorite author who said: “There's no denial of reality that can change reality.” It looks to me as though China has much to gain and little to lose in transitioning away from the United States.

And I'm already wondering about one of my future posts, when the dreaded term “economic warfare” will undoubtedly make its way back into common English parlance. That should make for some interesting news.

An Interesting Event From Reason Magazine

I just found a nice link to a program I'll be sure to watch this November. I'm always eager to share my love for laissez-faire capitalism – and for the writings of Ayn Rand – so I thought I would pass it along.

Currency and Conspiratorial Currents

A story published this morning by The Independent has columnists, pundits, economists and die hard politicos frothing over its grandiose doom and gloom implications. The publication stated that, according to its sources, a group of central bankers, mainly those from Russia, China, France, Brazil, Japan and several gulf states, are in the earliest stages of banding together to divest their countries of U.S. dollars.

According to sources, high-level meetings have been taking place in secret, though every statement made since by officials has been one of denial. So far, however, The Independent has not retracted any part of its story, and apparently hasn't been asked to do so. So the fuel on this newest and largest of conspiracies is receiving plenty of time and space to burn – at least in the minds of those who like to worry.

Reaction to the news has been surprise. Reserved surprise. Most pundits are taking the news in stride, even while expressing disappointment with countries like Japan (an American ally) and China (a huge trading partner). Virtually all of the most prominent talking heads have said that any divestiture will take a minimum of “nine years.” Others are stating ten to fifteen is most likely. This is wrong, wrong, wrong. And I can explain why.

Most politicos aren't economists. Nor are they criminally-minded. They don't understand the mentalities of those who deliberately meet in cabal-fashion behind closed doors. When we venture into this deliberate secrecy territory we have to reevaluate our standards. We need the standards of the crime syndicate: protect the family, protect yourself. We come first.

This is where the policy analysts are going astray.

Any group of individuals that would meet secretly in order to overturn a world currency, and throw the world's most prosperous nations into upheaval and bankruptcy, can only be counted on to do one thing predictably – the unpredictable. They are not likely to divest in any way that's orderly. Nor are they likely to respect the economic wishes of any country, even the ones with which they've already made agreements. Rather, they can be counted on to protect themselves. There isn't any leadership in existence that will sit idly by and watch, while other countries purge their unwanted monies. Once the en mass sale of dollars begins, the last country holding any currency will be the country with the least valuable dollars. This is what economists call “the time value of money.” If you have a dollar now, it's worth a dollar. But if you have a dollar one year from now, while all of your “friends” sell four trillion or more as fast as they can, your dollar will be worth a fraction of its current value. The proverbial rush to the door is already evident.

So nine years is rubbish. And so is ten or fifteen. If The Independent is correct, this scenario is probably going to play out more like an ugly mudslide. It will be a solid, unstoppable race to the bottom, with nothing but debris and shocked survivors left in the end. So brace yourselves. If this story is true, we're in for a very fast reversal of fortune, and one nasty and prolonged clean up.

Just For Fun

Go ahead. I dare you. Go ahead. Listen to this song just once, and tell me you don't have it stuck in your head three days from now. I dare you.



I just wanted to let anyone who's interested know that this video is part of a promotion for a game called "Plants vs. Zombies."