What Democracy?

Representative democracy has been replaced by the rule of the unaccountable

by James Miller

A sacred cow is usually defined as that which is regarded as far too valuable or prestigious to even think about altering.  Any proposition that comes close to complete abolition is met with astounding ridicule.  In the realm of legalized harlotry (politics), careers are made out of defending sacred cows no matter how expensive, socially corroding, or intentionally dishonest they are.  Compulsory public education is one of the first to come to mind.  The various vote buying schemes that masquerade as a welfare safety net are another.  Whenever the political class or its apologists in the media find themselves in a bind trying to validate the government’s latest plot to fill its coffers or grind already-undermined liberties further into the curb, they often resort to evoking the greatest sacred cow of all: democracy.

Starting from the earliest years of basic comprehension, children in the Western world are propagandized into believing that without democracy, society would descend into unlivable chaos.  Schools, both public and private, perpetuate the fantasy to millions of forced attendees every year.  They are told that the government which has a hand in practically anything they encounter was formed with only the best intentions.  In America especially, the representative democracy constructed out of the collective genius of the country’s founding fathers is lauded as a gift to humanity.  And though its influence is waning in recent years, the Constitution served as a model for developing nation-states around the globe.  Back in 1987, Time magazine estimated that of the 170 countries that existed at the time, “more than 160 have written charters modeled directly or indirectly on the U.S. version.”

The Constitution is presented as the miraculous creation of divine individuals when, in fact, it was nothing of the sort.  Like any attempt to centralize state power, the Constitution was formed out of the economic desires of its framers.  Thomas Jefferson, John Adams, Thomas Paine, and Henry Adams weren’t even present at the Philadelphia Convention as it was drafted.  Many Americans at the time were suspicious at what ended up being a coup to toss out the decentralized Articles of Confederation in return for an institution powerful enough to be co-opted for the purposes of rent seeking.  As Albert Jay Nock noted:

“The Constitution had been laid down under unacceptable auspices; its history had been that of a coup d’état.”

Forgive me IPCC, for I have sinned…

The rapturous welcome given to a recanted ‘climate sceptic’ exposes the backwardness of green thinking

by Rob Lyons 

‘Call me a converted skeptic. Three years ago I identified problems in previous climate studies that, in my mind, threw doubt on the very existence of global warming. Last year, following an intensive research effort involving a dozen scientists, I concluded that global warming was real and that the prior estimates of the rate of warming were correct. I’m now going a step further: humans are almost entirely the cause.’

So said Professor Richard A Muller in an op-ed for the New York Times on Sunday. Muller’s apparent Damascene conversion is the result of the Berkeley Earth Surface Temperature (BEST) project he founded with his daughter Elizabeth. In the NYT article, he claims that the BEST project shows ‘the average temperature of the Earth’s land has risen by two-and-a-half degrees Fahrenheit [about 1.5 degrees Celsius] over the past 250 years, including an increase of one-and-a-half degrees [about 0.8 degrees Celsius] over the most recent 50 years. Moreover, it appears likely that essentially all of this increase results from the human emission of greenhouse gases.’

There has been much rejoicing among eco-commentators. Leo Hickman in the Guardian declared: ‘So, that’s it then. The climate wars are over. Climate sceptics have accepted the main tenets of climate science – that the world is warming and that humans are largely to blame – and we can all now get on to debating the real issue at hand: what, if anything, do we do about it?’ However, Hickman had to add ‘If only’. Apparently, while Muller is the right kind of sceptic, some pesky critics just won’t accept the ‘facts’. ‘The power of his findings lay in the journey he has undertaken to arrive at his conclusions’, suggests Hickman, but clearly some people don’t get it.

It sounds like a powerful argument: someone who has publicly taken a position for a few years, before putting up his hands and effectively saying: ‘You know what? I was wrong, and my fellow travellers were wrong, and we should just fall into line with the mainstream view.’ The conversion analogy is a good one. Here, instead of the unbeliever falling at the preacher’s feet and accepting Jesus into their lives, no longer able to resist the power of the Lord, we have the sceptic allowing the IPCC to drive out the devil of climate-change denial from within his soul.

Except, like many a modern faith healer’s performance, there’s something dodgy about this widespread interpretation. For starters, Muller was hardly what you would call a climate-change sceptic. By and large, he has been very accepting of the IPCC’s view of the problem of climate change. His claim to being a sceptic seems to relate to his acceptance that the famous ‘hockey stick’ graph, which was the centrepiece of the IPCC’s 2001 report and suggested that current temperatures are unprecedented, was simply the product of some sloppy science.

Enlightened liberals vs chicken-chewing morons

The Chick-fil-A controversy reveals just how intolerant supporters of same-sex marriage are becoming

by Sean Collins 

Supporters of same-sex marriage have opened up a new front in America’s Culture Wars in recent weeks – by targeting a chicken-sandwich restaurant. The call to boycott Chick-fil-A over comments made by its CEO reveal how the debate about same-sex marriage is moving in an increasingly illiberal direction.

Chick-fil-A, an Atlanta-based fast-food restaurant chain with 1,600 restaurants in 40 US states, makes chicken sandwiches that many rave about. When asked if it was true that he did not support gay marriage, CEO Dan Cathy said he was ‘guilty as charged’. He added: ‘We are very much supportive of the family – the Biblical definition of the family unit. We are a family-owned business, a family-led business, and we are married to our first wives.’

In a recent radio interview, Cathy also said: ‘I think we are inviting God’s judgment on our nation when we shake our fist at him and say, “We know better than you as to what constitutes a marriage”.’ Critics note that Chick-fil-A, owned by the Cathy family, donates millions to Christian and pro-traditional family charities, including Focus on the Family, which they consider to be anti-gay.

In response to Cathy’s comments, mayors in Boston, Chicago and San Francisco proclaimed that Chick-fil-A was not welcome in their cities. Specifically, they asked their city councils to deny Chick-fil-A the permits they need to open. ‘Chick-fil-A’s values are not Chicago values’, said Rahm Emanuel, mayor of Chicago and former chief of staff for President Obama. Joe Moreno, an alderman in a ‘hipster’ ward in Chicago, vowed to block the restaurant, calling Cathy’s comments ‘bigoted and homophobic’. Christine Quinn, leader of New York’s city council, said Cathy’s remarks were ‘repugnant and un-American’; she urged New York University to evict Chick-fil-A from its campus.

The reaction by these public officials shows the authoritarian instinct behind many of those who support same-sex marriage – and how such illiberal views are not limited to hardcore activists but rather extend right to the top of the political world. In defending his stance on Chick-fil-A, Boston mayor Thomas Menino said, ‘We’re an open city, we’re a city that’s at the forefront of inclusion.’ But apparently, in the name of ‘inclusion’, it is perfectly acceptable to be intolerant of those who back traditional marriage.

As it happens, many liberal pundits recognised that the mayors had overstepped their authority. Editorials in the New York Times and Los Angeles Times came out against the mayors. Even the super-nanny mayor of New York, Michael Bloomberg, expressed opposition to his counterparts (although he won’t let Chick-fil-A customers in his city have a large-size soda with their chicken sandwiches).

The best way to avoid violence is to reinstate the rule of law

Will We Have to Wait for a 21st Century Peasants’ Revolt Before Seeing Any Real Change?

by George Washington 

While everyone from Tony Blair to Nouriel Roubini is debating whether or not bankers should be hung, the Wall Street Journal and Bloomberg provide some fascinating historical context.

The journal's Jason Zweig reports:

Financial criminals throughout history have been beaten, tortured and even put to death, with little evidence that severe punishments have consistently deterred people from misconduct that could make them rich.

The history of drastic punishment for financial crimes may be nearly as old as wealth itself.

The Code of Hammurabi, more than 3,700 years ago, stipulated that any Mesopotamian who violated the terms of a financial contract – including the futures contracts that were commonly used in commodities trading in Babylon – “shall be put to death as a thief.” The severe penalty doesn’t seem to have eradicated such cheating, however.

In medieval Catalonia, a banker who went bust wasn’t merely humiliated by town criers who declaimed his failure in public squares throughout the land; he had to live on nothing but bread and water until he paid off his depositors in full. If, after a year, he was unable to repay, he would be executed – as in the case of banker Francesch Castello, who was beheaded in 1360. Bankers who lied about their books could also be subject to the death penalty.

In Florence during the Renaissance, the Arte del Cambio – the guild of mercantile money-changers who facilitated the city’s international trade – made the cheating of clients punishable by torture. Rule 70 of the guild’s statutes stipulated that any member caught in unethical conduct could be disciplined on the rack “or other corrective instruments” at the headquarters of the guild.

But financial crimes weren’t merely punished; they were stigmatized. Dante’s Inferno is populated largely with financial sinners, each category with its own distinctive punishment: misers who roll giant weights pointlessly back and forth with their chests, thieves festooned with snakes and lizards, usurers draped with purses they can’t reach, even forecasters whose heads are wrenched around backward to symbolize their inability to see what is in front of them.

Why Privacy Matters Even if You Have 'Nothing to Hide'

Privacy is rarely lost in one fell swoop

By Daniel J. Solove

When the government gathers or analyzes personal information, many people say they're not worried. "I've got nothing to hide," they declare. "Only if you're doing something wrong should you worry, and then you don't deserve to keep it private."

The nothing-to-hide argument pervades discussions about privacy. The data-security expert Bruce Schneier calls it the "most common retort against privacy advocates." The legal scholar Geoffrey Stone refers to it as an "all-too-common refrain." In its most compelling form, it is an argument that the privacy interest is generally minimal, thus making the contest with security concerns a foreordained victory for security.

The nothing-to-hide argument is everywhere. In Britain, for example, the government has installed millions of public-surveillance cameras in cities and towns, which are watched by officials via closed-circuit television. In a campaign slogan for the program, the government declares: "If you've got nothing to hide, you've got nothing to fear." Variations of nothing-to-hide arguments frequently appear in blogs, letters to the editor, television news interviews, and other forums. One blogger in the United States, in reference to profiling people for national-security purposes, declares: "I don't mind people wanting to find out things about me, I've got nothing to hide! Which is why I support [the government's] efforts to find terrorists by monitoring our phone calls!"

The argument is not of recent vintage. One of the characters in Henry James's 1888 novel, The Reverberator, muses: 

"If these people had done bad things they ought to be ashamed of themselves and he couldn't pity them, and if they hadn't done them there was no need of making such a rumpus about other people knowing."

I encountered the nothing-to-hide argument so frequently in news interviews, discussions, and the like that I decided to probe the issue. I asked the readers of my blog, Concurring Opinions, whether there are good responses to the nothing-to-hide argument. I received a torrent of comments:

My response is "So do you have curtains?" or "Can I see your credit-card bills for the last year?"

North Korea Lite

Thoughts on the Olympics’ opening ceremony

by Theodore Dalrymple

My mother saw Hitler in the stadium during the 1936 Berlin Olympics. It was the only fragment of memory of her childhood in Nazi Germany that she ever spoke of and, perhaps illogically, it did not predispose me favorably to the Olympic spectacle.

The opening ceremony of the 2012 London Olympics reminded me of an observation of the Marquis de Custine, the young aristocrat whose father and grandfather were guillotined during the French Revolution. De Custine went to Russia in 1839 in search of the virtues of hereditary autocracy and returned a convinced democrat. Tyrannies, he said, demand immense sacrifices of their people to produce trifles.

It does not follow, of course, that if tyrannies produce trifles, trifles—and the opening ceremony was undoubtedly one—are necessarily the product of tyrannies. But the ceremony, postmodern as it might have been in form—assuming, as it did, that the contemporary mind is like that of a child, in constant need of swiftly changing amusement—was not free of ideological content, even if that content was comparatively restrained and benign compared with that of, say, Leni Riefenstahl’sTriumph of the Will. It was more akin to North Korea lite.

Of course it was impressive, as anything staged on a sufficiently large scale and well-organized is impressive. The fear of almost all Britons, amounting virtually to an expectation, that the games would at once descend into chaos was not fulfilled. On the contrary, the choreography was impeccable, and thousands participated without mishap, with the precision of a military parade. There were even moments of genuine wit, which distinguished the ceremony from the North Korean equivalent.

Nevertheless, the inclusion of happily dancing nursing staff from the National Health Service was precisely the kind of stunt that an ideological state would pull. Who would have guessed that only a few days before in the NHS, here presented as among the greatest of all British achievements, some doctors had gone on strike, not to improve conditions for their patients but to preserve their own generous pensions—of the kind that those unfortunate enough to work in the private sector can only dream about? Western Europeans must either have puzzled over or laughed at this: Britain is universally acknowledged in Europe to have the worst health care on the continent—health care that European residents flee except in extremis. And here were people dancing to celebrate it!

Still, the ceremony itself must be counted a great success in the eyes of the British public because it was not an outright disaster. Yet no thinking person to whom I’ve spoken (admittedly not a representative population sample) expresses anything other than deep unease about the whole Olympic enterprise. The army was engaged not only to provide security after a private company failed to perform as promised, but also to fill empty seats in the stadium and thus prevent the humiliation of showing too many empty spaces. Seats were initially allocated in true corporatist fashion, much of the public being excluded (including relatives of participants) in favor of companies and organizations. When these failed to take up their allocations, it was too late. A specter now haunts the London Olympics: that of public indifference, bought at the cost of billions that future generations will struggle to repay.

No More Quick Fixes

The economy needs rules, not discretionary policies.

By Guy Sorman

Economists, politicians, and pundits looking for answers to the economic crisis fall into two broad categories. Keynesians and statists argue for more aggressive interventions from governments and central banks. Distrusting the free market’s self-regulating processes, they promote public spending to create jobs and low interest rates to rekindle private investment and consumer spending. Thinkers of the classical-liberal persuasion, by contrast, argue that no quick fix can bring the economy out of its doldrums; only when the rules of capitalism appear stable and predictable again will markets revive. Put another way: Keynesians and statists believe in flexible, “discretionary” economic policies; classical liberals believe in set rules.

Economic history proves the superiority of the second approach, but democracy often makes the first more attractive to politicians. After all, in a crisis, people expect their leaders to do something; refraining from action and sticking to abstract principles play poorly to public opinion. As previous recessions demonstrate, however, public pressure for action usually leads to bad decisions that prolong or intensify a crisis. The situation is analogous to what happens on the soccer field when a goalie faces a penalty kick. Statistics show that the goalie should stay in the center of the net to increase his chances of blocking the shot. Yet in most cases, he jumps to the left or right just before his opponent kicks. Why? Because the crowd urges him to act, even though doing so reduces his likelihood of success.

Central Banks Can’t Save the World

A much bigger reality

By Mohamed El-Erian 

The three central bank meetings this week -- the Bank of England, the European Central Bank and the Federal Reserve -- made very good cases for additional stimulus measures, though they failed to specify what these would be.

Equities and certain bonds that had surged on the basis of last week’s verbal assurances by central bankers and political leaders sold off. There was no panic given central bankers’ promises to do more in the future should additional action be needed. This is what the standard narrative has been.

But it misses important context, and there is more at play here. The unfortunate reality is that, unlike during the financial crisis of 2008 and 2009, central banks can’t be the saviors this time around for a struggling global economy. Other government entities, with better-suited policy tools, need to step up to the plate.

Why did central bankers disappoint so many this week? I suspect that they wish to keep pressure on other policy makers who demonstrate none of the necessary urgency. The bankers also realize that their policy tools are increasingly less effective. To quote Mario Draghi, president of the ECB, central banks “cannot replace governments.” There’s something else: Central bankers more than anyone are being careful to keep dry whatever ammunition they still have.

Banking Flexibility

This week’s events also highlight how central banks’ operational flexibility is much less than what is commonly assumed. Here, the ECB is particularly important given the enormous risk that Europe’s crisis poses for the global economy, including the U.S.

Last week in London, Draghi left no doubt as to his commitment to do “whatever it takes” to safeguard the euro. He also introduced a shrewd sequence to bring sovereign spreads and yields within the mandate of the ECB and try to contain borrowing costs for struggling peripheral economies. He did this by suggesting that the “exceptionally high risk premia” are undermining countries like Italy and Spain, and that concerns about the robustness of the euro as a currency are contributing to the fragmentation of the financial system and clogging the monetary policy transmission mechanism -- and that, clearly, this needed to be addressed.

Yet Draghi felt compelled Thursday to make additional ECB measures conditional on countries being allowed to access Europe-wide rescue facilities that aren’t under the purview of the central bank. He questioned how his London speech was interpreted, suggesting that markets misread what he meant. He also had to deal with talk of divisions inside the ECB’s governing council.

All this speaks to the much bigger reality, which is of great relevance for individuals, companies, investors and governments around the world. Yes, central banks may be part of the solution, but increasingly they will play a smaller and smaller role. The tools they have available are losing their firepower. The burden is now on other policy makers and the political leadership. Only they have the tools that can address the fundamental problem of too little growth, too much debt in the wrong places, and too little private capital being channeled to investment and other productive activities.

To solve Europe’s crisis and the world’s intensifying economic malaise -- just witness the downturn in manufacturing - - policy makers and their political bosses need to address issues of competitiveness, fiscal reform, and the retooling and retraining of the labor force. The longer the delay, the more likely these problems will get embedded in the structure of the economies.

Of course, none of this will happen until political leaders abandon their tactical, incremental and partial approaches for issues that require strategic, coordinated and comprehensive responses. Unfortunately, in today’s polarized world, the prospects of this are far from reassuring.

'Government Health Care: The Musical' an infectious hit

The British delusion that the NHS is "the envy of the world" is indestructible

By MARK STEYN

I scrammed out of London a few days before the Olympics began, but after getting an earful on what the locals make of it. On the whole, the residents of that great city would rather the honor of hosting the world's most disruptive sporting event had gone to some joint that needs the publicity more – Alma Ata, or Ouagadougou, or Oakland. In 21st century London, traffic moves at fewer miles per hour than it did before the internal combustion engine was invented without the added complication of fleets of Third World thug bureaucrats and the permanent floating crap game of transnationalist freeloaders being dumped on its medieval street plan. Nevertheless, having drawn the short straw of hosting the Games, Londoners felt it a point of honor that the city be able to demonstrate the ability to ferry minor globalist hangers-on from their favorite whorehouse in Mayfair to the Olympic Village in the unfashionable East End in time for the quarter-finals of the flatwater taekwondo.

The psychology of the traffic cop enters into the opening ceremony, too. One becomes inordinately fearful that the giant Middle Earth trash compactor will not arise on cue, or the dry ice machine will fail to blow smoke up Voldemort's skirt, or one of the massed ranks of top-hatted mutton-whiskered extras recreating the Industrial Revolution in hip-hop will miss a stomp. And you're so grateful to have dodged these calamities that it never occurs to you to wonder whether taking 40 minutes to do the Industrial Revolution in interpretive dance was a good idea in the first place. Britons seem unusually touchy on the subject, touchier than they've been since the week of the Princess of Wales' death, when the prudent pedestrian on the streets of Kensington avoided catching the eye of the natives, lest they club one to a pulp for being insufficiently maudlin and lachrymose. A Conservative Member of Parliament who made the mistake of tweeting his thoughts without running them by the party's focus groups was disowned by his colleagues and forced into groveling public recantation. It seems his now-disowned tweet that the whole thing was a load of codswallop was an unfortunate typing error and that what he'd actually meant to say was that the highlight of the evening, "Government Health Care: The Musical," was far too riveting to be confined to a mere two-and-a-half hours

The Infantile Disorder

American Liberalism

“The approach of a great storm was sensed everywhere. All classes were in a state of ferment and preparation. Abroad, the press of the political exiles discussed the theoretical aspects of all the fundamental problems of the revolution. Representatives of the three main classes, of the three principal political trends -- the liberal-bourgeois, the petty-bourgeois-democratic (concealed behind "social-democratic" and "social-revolutionary" labels), and the proletarian-revolutionary -- anticipated and prepared the impending open class struggle by waging a most bitter struggle on issues of programme and tactics. All the issues on which the masses waged an armed struggle in 1905-07 and 1917-20 can (and should) be studied, in their embryonic form, in the press of the period. Among these three main trends there were, of course, a host of intermediate, transitional or half-hearted forms. It would be more correct to say that those political and ideological trends which were genuinely of a class nature crystallised in the struggle of press organs, parties, factions and groups; the classes were forging the requisite political and ideological weapons for the impending battles.” The years of preparation for revolution (1903-05) Left-Wing Communism: an InfantileDisorderV.I. Lenin, April-May, 1920

by rcwhalen

Grand Lake Stream, ME:  Had good fishing yesterday even as temperatures rose steadily as the group converged on Leens Lodge for evening activities.  Dinner last night featured a brief presentation by ME Governor Paul LePage and also a discussion of Weimar Germany by Madeline Schnapp of Trim Tabs.  The two discussions were good complements for the larger evening discussion.  But sad to say for Persian Economists, there were no Power Point presentations.

Governor LePage started his discussion with a very frank appraisal of the state’s fiscal situation, namely that the Democrats spent and stole the state broke.  Voters in ME recently gave control over the governor’s office and both houses of the state legislature to the Republican Party.   Suffice to say that the main theme of Governor LePage’s comments to the audience at Leens Lodge, which included a number of advisers who own the state’s debt, is that the State of Maine is going to pay its bills and keep its promises.

One interesting part of the Governor’s remarks involved how ME is clearing up the many years of arrears of Medicare payments to hospitals around the state.  He noted thatthe Democrats in the legislature wanted to “negotiate” a settlement for the arrears of 50 cents on the dollar with the state’s hospitals, which would doom many of them to failure.  The consistent objective of American liberals is to destroy the free enterprise system and make the US a monolithic socialist state a la France.  That battle is underway in ME right now.  

Contrary to the Fabian scenario, Governor LePage has insisted on paying the hospitals in full.  “Then we can spend money on other things,” he told the audience.  But more to the point, LePage’s promise to pay the hospitals will thwart Democratic designs to decimate private health care institutions and drive more and more Mainiacs into the arms of the state.  But don’t look for Governor Le Page or anyone in the northern part of ME to go along quietly. 

Gore Vidal and Revisionism

In Vidal's American history, it was the United States, not the Soviet Union, that launched and then prolonged the Cold War

by Jeff Riggenbach

One of the forces involved in the recent heating up of the perennial American-history wars was the brilliant critical and popular success, during the 1970s and early 1980s, of the first three books in Gore Vidal's six-volume[1]"American Chronicle" series of historical novels about the United States. Burr (1973), 1876 (1976), and Lincoln(1984) were enormous successes. They proved beyond any doubt that the public would not rise up in indignation and smite any author who dared to question the motives and the wisdom of even the most venerated American presidents. They proved that there was, in fact, a substantial market for just such skepticism about the glorious American past.

Partisans of the America-as-pure-and-virtuous-beacon-of-liberty-prosperity-and-peace mythology attacked Vidal's novels, of course, but Vidal made it quite clear in a couple of detailed replies to his critics (first published in the New York Review of Books) that he knew at least as much about the history of the periods he depicted in his novels as any of them did — PhD's and members of the professoriate though they might be.

Gore Vidal was born with a silver spoon in his mouth and was educated in expensive private schools in and around Washington DC. He grew up around politics. His father was a high ranking official in the Franklin Roosevelt administration, the director of the Bureau of Air Commerce, the agency known today as the Federal Aviation Administration (FAA). His maternal grandfather, who lived in the Vidal family home, was the venerable, sightless US senator Thomas Pryor Gore (D-Oklahoma), and Vidal recalls the daily ritual of being sent with car and driver to pick up my grandfather at the Capitol and bring him home. In those casual days [ca. 1935–1937], there were few guards at the Capitol — and, again, ["Washington was a small town where"] everyone knew everyone else. I would wander on to the floor of the Senate, sit on my grandfather's desk if he wasn't ready to go, experiment with the snuff that was ritually allotted each senator; then I would lead him off the floor.[2]

We are all Statist now

Unintended Consequences of Well-Intended Policies

by Lacy Hunt

In the early 1960s, when JFK was in the White House and William McChesney Martin was Fed chairman, Keynesian economics was in full bloom. One of its major tenets is the Phillips Curve, which posits a stable inverse relationship between the rate of inflation and the unemployment rate. Yale professor James Tobin and others argued that the social outcome could be improved by a more activist monetary and fiscal policy. Specifically, they contended that the unemployment rate could be lowered while only resulting in slightly higher inflation.

The argument posited the notion that economic policymakers had sufficient knowledge to intervene or fine-tune the economy with tools like those of a surgeon. Presidents Johnson, Nixon, and Carter (two Democrats and one Republican) followed this policy. At one point, President Nixon made the famous statement that "We are all Keynesians now." Moreover, as the White House led, the Fed chairmen of the era – Martin, Burns, and Miller – generally acquiesced.

To judge the effectiveness of this policy, an objective standard is needed. Arthur M. Okun, Yale colleague of Tobin, developed such a standard, which he called the Misery Index – the sum of the inflation and unemployment rates.

Under the activist, Phillips Curve-based policy, some reduction in unemployment was temporarily achieved. However, inflation accelerated much more than was anticipated, and the net result was higher unemployment and faster inflation, an outcome not at all contemplated by the Phillips Curve. The Misery Index surged from an average of 6.7% in the 1950s, to 7.3% in the 1960s, to 13.6% in the 1970s, with peak rates above 20% in the early 1980s.

Many US households suffered. Wages of lower-paying positions failed to keep up with inflation, and when higher unemployment resulted, many of those people lost their jobs. Those on the high end had far more resources that enabled them to protect their investments and earned income, so the income/wealth divide worsened. A half-century later, the United States has never regained the prosperity of the 1950s.

Cocaine Cowboys Know Best Places to Bank

Too-big-to-fail isn’t merely an economic problem 

By Jonathan Weil

To grow up in South Florida during the 1970s and 1980s, as I did, wasn’t your typical American childhood experience. Back then the area was known as the most dangerous place in the country.

Carnage from the drug wars filled the local news long before “Miami Vice” became a hit TV show. By elementary school, my friends and I knew some of the lingo. A Colombian necktie wasn’t a piece of clothing, but a gruesome execution method. When I was 7 years old my barber was murdered in his shop, apparently over a drug deal.

It had been a long time since I thought much about those days. By chance I recently came across a fabulous documentary, “Cocaine Cowboys,” by Miami filmmaker Billy Corben. Then last month a Senate panel held a hearing on the U.K. bank HSBC Holdings Plc (HSBA) and its ties to drug lords, money laundering, al- Qaeda and rogue nations such as Iran and North Korea.

Here’s a bank with $2.7 trillion of assets that flouted U.S. laws for a decade, according to the July 17 report by the Senate Permanent Subcommittee on Investigations. HSBC turned a blind eye to organized crime, Mexican drug cartels and overseas terrorism financiers, and gave them access to the U.S. banking system. HSBC’s main U.S. regulator, the Office of the Comptroller of the Currency, for years tolerated its violations of anti-money laundering laws.

For this, HSBC and the OCC apologized. Justice Department fines are likely. It’s an outrage HSBC hasn’t had its U.S. banking licenses revoked, assuming the Senate panel’s report is accurate -- and there’s no reason to believe it isn’t.

Try This

Let’s try out a novel idea: Banks that help drug cartels launder money and give cover to those tied to terrorism should be put out of business. Is that really so hard for everyone to agree on? Free markets have worked in the U.S. because we have the rule of law. It’s why so many investors from other countries want to do business here. When contracts are breached, courts can be accessed to enforce them. When individuals or companies commit crimes, they’re supposed to be prosecuted and punished.

The Election, the Presidency, and Foreign Policy

Presidents make history, but not on their own terms

By George Friedman

The American presidency is designed to disappoint. Each candidate must promise things that are beyond his power to deliver. No candidate could expect to be elected by emphasizing how little power the office actually has and how voters should therefore expect little from him. So candidates promise great, transformative programs. What the winner actually can deliver depends upon what other institutions, nations and reality will allow him. Though the gap between promises and realities destroys immodest candidates, from the founding fathers' point of view, it protects the republic. They distrusted government in general and the office of the president in particular.

Congress, the Supreme Court and the Federal Reserve Board all circumscribe the president's power over domestic life. This and the authority of the states greatly limit the president's power, just as the country's founders intended. To achieve anything substantial, the president must create a coalition of political interests to shape decision-making in other branches of the government. Yet at the same time -- and this is the main paradox of American political culture -- the presidency is seen as a decisive institution and the person holding that office is seen as being of overriding importance.

Constraints in the Foreign Policy Arena

The president has somewhat more authority in foreign policy, but only marginally so. He is trapped by public opinion, congressional intrusion, and above all, by the realities of geopolitics. Thus, while during his 2000 presidential campaign George W. Bush argued vehemently against nation-building, once in office, he did just that (with precisely the consequences he had warned of on the campaign trail). And regardless of how he modeled his foreign policy during his first campaign, the 9/11 attacks defined his presidency.

Similarly, Barack Obama campaigned on a promise to redefine America's relationship with both Europe and the Islamic world. Neither happened. It has been widely and properly noted how little Obama's foreign policy in action has differed from George W. Bush's. It was not that Obama didn't intend to have a different foreign policy, but simply that what the president wants and what actually happens are very different things.

Street-Sign Statism

Born to be Wild?

By Mark Steyn

I've spent the last few weeks tootling round various parts of Britain and Europe, and, as always, it takes me a couple of days to acclimatize to local driving norms. I quickly appreciate being on a country lane and able to see the country, as opposed to admiring rural America's unending procession of bend signs, pedestrian-approaching signs, stop signs, stop-sign-ahead signs, stop-sign-ahead-signs-ahead signs, pedestrian-approaching-a-stop-sign signs, designated-scenic-view-ahead signs, parking-restrictions-at-the-designated-scenic-view signs, etc. It takes me a little longer to get used to the idea that I'm free to pass other cars pretty much whenever I want to, as opposed to settling in behind Granny for the rest of the day as the unbroken yellow lines stretch lazily down broad, straight, empty rural blacktop, across the horizon and into infinity. Want to pass on a blind bend in beautiful County Down or the Dordogne? Hey, it's your call. Your judgment. Fancy that.

Italian tanks may have five gears for reverse and only one for forward, but in a Fiat the size of your cupholder it's a different story. The French may plant trees on the Champs-élysées because the Germans like to march in the shade, but they'll still pass you at 120 on the Grande Corniche. When you've done your last surrender-monkey crack, that cloud in your windshield is a dinged deux chevaux leaving your fully loaded SUV for dust. Continentals would never for a moment tolerate the restrictive driving conditions of the United States, and they don't understand why Americans do. Mon dieu, is not America the land of the car chase?

Gitcha motor running

Head out on the highway

Looking for adventure . . .

America, the Law-crazed

The zeal for legislating has turned us all into criminals of one type or another

By John Stossel 

Over the past few decades, America has locked up more and more people. Our prison population has tripled. Now we jail a higher percentage of people than even the most repressive countries: China locks up 121 out of every 100,000 people; Russia 511. In America? 730.

"Never in the civilized world have so many been locked up for so little," The Economist says.

Yet we keep adding more laws and longer jail terms.

Lavrentiy Beria, head of Joseph Stalin's secret police in the old Soviet Union, supposedly said, "Show me the man, and I'll show you the crime." Stalin executed anyone he considered a threat, and it didn't take much to be considered a threat. Beria could always find some law the targeted person had broken. That's easy to do when there are tons of vague laws on the books. Stalin "legally" executed nearly a million people that way.

I'm not saying that America is like Stalin's Russia, but consider the federal laws we have. The rules that bind us now total more than 160,000 pages. The Congressional Research Service said it was unable to count the number of crimes on the books. Yet last week the feds added or proposed another thousand pages. States and cities have thousands more. Have you read them all? Have our "representatives" read them all? You know the answer.