The Political Science of Global Warming

The U.N.’s latest climate-change report should be its last

By RUPERT DARWALL

 “Human influence extremely likely to be the dominant cause of observed warming since the middle of the last century,” was the headline from Friday’s release of the first instalment of the Intergovernmental Panel on Climate Change’s fifth assessment report. “Extremely likely”—indicating a 95%-100% likelihood—was ratcheted up one notch from the 2007 fourth assessment report’s “very likely.” Yet compared to 2007, the IPCC widened its estimate of the responsiveness of the climate system to carbon dioxide by reducing the lower band to a 1.5°C increase from 2°C, qualifying the new estimate as only “likely.”

This is a glaring discrepancy. How can the IPCC be more confident that more than half the temperature rise since the mid-20th century is caused by greenhouse-gas emissions when it is less sure of the climatic impact of carbon dioxide? The explanation is that IPCC reports, especially the summaries for policymakers, are primarily designed for political consumption. And as if on cue, British Prime Minister David Cameron commented on the IPCC report, “If someone said there is a 95% chance that your house might burn down, even if you are in the 5% that doesn’t agree with it, you still take out the insurance.”

But poke beneath the surface of the IPCC’s latest offering and the confection is revealed for what it is. The IPCC’s quantification of the separate components of the warming since 1951 (greenhouse gases, cooling from aerosols, internal variability) is deemed only “likely” (66%-100% likelihood). Only at the IPCC could the sum of these components be given a greater likelihood than the individual building blocks. Perhaps the most revealing aspect is that none of the climate scientists involved seems embarrassed at this nonsense or protests at the manipulation of science for political ends.

Obamacare And The Tyranny Of Democracy

In a republic, there are things we have no right to vote on

By Clyde Wayne Crews Jr.

Increasingly, limited government is illegal in America. What are you going to do about it?

We’ve had decades to observe statism vs. market capitalism, to compare central planning with entrepreneurial freedom.

We’ve had centuries to ponder the fruits of power hungry, lawless and dictatorial politicians, in contrast to our often smeared founders.

Unfailingly, excesses of the state were and are grotesque.

And yet here we are in the 21st Century with Obamacare’s futility characterized as “glitches” and “hiccups” by the Washington Post and NPR.

Those aren’t “glitches.”

They are, as one title by the great Ludwig von Mises put it, an inevitable manifestation of the impossibility of Economic Calculation In the Socialist Commonwealth.

In modern America, this abomination should never have even been suggested, let alone enacted.

In this showdown over Obamacare in the continuing resolution and debt ceiling debate, we are continually reminded by Barack Obama that the public “voted” for the law, particularly via his re-election.

Political rulers can violate the laws of morality, but they can’t overturn the laws of economics

SHOCKER: Price Controls Lead to Shortages in Venezuela

By bob murphy

The news is rife with stories of the awful shortages of basic essentials in Venezuela. For example, the BBC World Service did an extended report, and the following comes from a Guardian article:

It’s the rainy season in Venezuela and Pedro Rodríguez has had to battle upturned manhole lids, flooded avenues and infernal traffic jams in his quest for sugar, oil and milk in Caracas.

…

In Avenida Victoria, a low-income sector of Caracas, Zeneida Caballero complains about waiting in endless queues for a sack of low-quality rice. “It fills me with rage to have to spend the one free day I have wasting my time for a bag of rice,” she says. “I end up paying more at the re-sellers. In the end, all these price controls proved useless.”

In 2008, when there was another serious wave of food scarcity, most people blamed shop owners for hoarding food as a mechanism to exert pressure on the government’s price controls, a measure that former president Hugo Chávez adopted as part of his self-styled socialist revolution.

School Days in Denmark

Boko haram and old Europe

By Mark Steyn

The other day, members of Boko Haram, a group of (surprise!) Muslim “extremists,” broke into an agricultural college in Nigeria and killed some four dozen students. The dead were themselves mainly Muslim, but had made the fatal mistake of attending a non-Islamic school. “Boko Haram” means more or less “Learning is sinful,” this particular wing of the jihad reveling more than most in the moronic myopia of Islamic imperialism.

But hey, that’s Africa, right? What do you expect? Up north, in the crucible of liberal social democracy, City Hall in Copenhagen held hearings earlier this year about the bullying of Jews in heavily Muslim public schools. Seventeen-year-old Moran Jacob testified:

In eighth grade, his teacher told him to say that he was Palestinian and that his mother was Russian. “I had to lie about who I was,” he recalls. But it didn’t work. They knew. Eventually, a group of his classmates ganged up on him and stabbed him in the leg. “You can’t go here anymore,” his teacher said. “I have scars,” he told the hearing. “Not on my body, but on my soul . . .”

“Jews have learned to keep a low profile,” Max Mayer, president of the Danish Zionist Federation, told the hearing. “To not exist in the city…” And they teach their sons to do the same: wear the skullcap at school, but take it off when you leave. This, Mayer said, has become standard practice for Danish Jews: “Don’t see us, don’t notice us.”

The Fed Gave Congress A Bottle Of Whiskey And The Car Keys

The Fed fools have just told the political fools to let the good times (for them, not the economy) to continue to roll

By Monty Pelerin Blog

At the last Fed meeting, Bernanke’s decision to not taper even a little bit damaged what little credibility he and his Fed have left. If one discounts stupidity (not something that should be relinquished easily when dealing with government decisions), then what remains for an explanation of such strange behavior?

As I see it, the most likely justifications and the ones most frequently used in the past no longer hold:

• The government needs the Fed to continue buying in order to keep paying its bills.
• The Fed believes it is helping the economy with this policy.

The first reason is not plausible, at least in the short-term. For a while, Fed bond buying appeared to be necessary (indeed was almost equal to the government deficits) in order to fund the government’s shortfalls. Deficits have dropped recently, providing room for a token taper. Had the Fed wanted, they could have tapered without putting undue pressure on the federal government’s ability to fund its deficits. Indeed, putting some pressure on Congress would probably have been wise.

The second reason is also invalid. The Fed has fired most of its weapons (zero interest rates, money creation, etc.) at various levels of intensity for five years. It quadrupled its balance sheet during this period. The economy remains stalled. There is little evidence that the Fed boosted the economy. Of course one cannot know what would have happened or where we would be had the Fed’s actions been less aggressive.

Regarding Fed effects, there is no question that they saved banks who would have (perhaps should have) failed. In doing so, they prevented a collapse of the financial system and the ensuing havoc that would have occurred in the economy. But saving these banks was done in the beginning of the crisis. The last several years presumably has been targeted at the economy with no apparent effect.

Sadly, these same banks are now bigger than they were when they were deemed too big to fail. No meaningful regulation or policies were enacted to downsize them and prevent the same scenario from recurring. Next time it will be on a larger scale.

Benjamin Constant on Liberty

Benjamin Constant, The Liberty of Ancients Compared with that of Moderns (1819)

Gentlemen,

I wish to submit for your attention a few distinctions, still rather new, between two kinds of liberty: these differences have thus far remained unnoticed, or at least insufficiently remarked. The first is the liberty the exercise of which was so dear to the ancient peoples; the second the one the enjoyment of which is especially precious to the modern nations. If I am right, this investigation will prove interesting from two different angles.

Firstly, the confusion of these two kinds of liberty has been amongst us, in the all too famous days of our revolution, the cause of many an evil. France was exhausted by useless experiments, the authors of which, irritated by their poor success, sought to force her to enjoy the good she did not want, and denied her the good which she did want. Secondly, called as we are by our happy revolution (I call it happy, despite its excesses, because I concentrate my attention on its results) to enjoy the benefits of representative government, it is curious and interesting to discover why this form of government, the only one in the shelter of which we could find some freedom and peace today, was totally unknown to the free nations of antiquity.

I know that there are writers who have claimed to distinguish traces of it among some ancient peoples, in the Lacedaemonian republic for example, or amongst our ancestors the Gauls; but they are mistaken. The Lacedaemonian government was a monastic aristocracy, and in no way a representative government. The power of the kings was limited, but it was limited by the ephors, and not by men invested with a mission similar to that which election confers today on the defenders of our liberties. The ephors, no doubt, though originally created by the kings, were elected by the people. But there were only five of them. Their authority was as much religious as political; they even shared in the administration of government, that is, in the executive power. Thus their prerogative, like that of almost all popular magistrates in the ancient republics, far from being simply a barrier against tyranny became sometimes itself an insufferable tyranny.

The regime of the Gauls, which quite resembled the one that a certain party would like to restore to us, was at the same time theocratic and warlike. The priests enjoyed unlimited power. The military class or nobility had markedly insolent and oppressive privileges; the people had no rights and no safeguards.

In Rome the tribunes had, up to a point, a representative mission. They were the organs of those plebeians whom the oligarchy -- which is the same in all ages -- had submitted, in overthrowing the kings, to so harsh a slavery. The people, however, exercised a large part of the political rights directly. They met to vote on the laws and to judge the patricians against whom charges had been leveled: thus there were, in Rome, only feeble traces of a representative system.

Egalitarianism as a Revolt Against Nature

A profoundly evil and morally corrupt ideology

By Murray N. Rothbard

For well over a century, the Left has generally been conceded to have morality, justice, and “idealism” on its side; the Conservative opposition to the Left has largely been confined to the “impracticality” of its ideals. A common view, for example, is that socialism is splendid “in theory,” but that it cannot “work” in practical life. What the Conservatives failed to see is that while short-run gains can indeed be made by appealing to the impracticality of radical departures from the status quo, that by conceding the ethical and the “ideal” to the Left they were doomed to long-run defeat. For if one side is granted ethics and the “ideal” from the start, then that side will be able to effect gradual but sure changes in its own direction; and as these changes accumulate, the stigma of “impracticality” becomes less and less directly relevant. The Conservative opposition, having staked its all on the seemingly firm ground of the “practical” (that is, the status quo) is doomed to lose as the status quo moves further in the left direction. The fact that the unreconstructed Stalinists are universally considered to be the “Conservatives” in the Soviet Union is a happy logical joke upon conservatism; for in Russia the unrepentant statists are indeed the repositories of at least a superficial “practicality” and of a clinging to the existing status quo.

Never has the virus of “practicality” been more widespread than in the United States, for Americans consider themselves a “practical” people, and hence, the opposition to the Left, while originally stronger than elsewhere, has been perhaps the least firm at its foundation. It is now the advocates of the free market and the free society who have to meet the common charge of “impracticality.”

In no area has the Left been granted justice and morality as extensively and almost universally as in its espousal of massive equality. It is rare indeed in the United States to find anyone, especially any intellectual, challenging the beauty and goodness of the egalitarian ideal. So committed is everyone to this ideal that “impracticality” – that is, the weakening of economic incentives – has been virtually the only criticism against even the most bizarre egalitarian programs. The inexorable march of egalitarianism is indication enough of the impossibility of avoiding ethical commitments; the fiercely “practical” Americans, in attempting to avoid ethical doctrines, cannot help setting forth such doctrines, but they can now only do so in unconscious, ad hoc, and unsystematic fashion. Keynes’s famous insight that “practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist” – is true all the more of ethical judgments and ethical theory. 1

The unquestioned ethical status of “equality” may be seen in the common practice of economists. Economists are often caught in a value-judgment bind – eager to make political pronouncements. How can they do so while remaining “scientific” and value-free? In the area of egalitarianism, they have been able to make a flat value judgment on behalf of equality with remarkable impunity. Sometimes this judgment has been frankly personal; at other times, the economist has pretended to be the surrogate of “society” in the course of making its value judgment. The result, however, is the same. Consider, for example, the late Henry C. Simons. After properly criticizing various “scientific” arguments for progressive taxation, he came out flatly for progression as follows:

The case for drastic progression in taxation must be rested on the case against inequality – on the ethical or aesthetic judgment that the prevailing distribution of wealth and income reveals a degree (and/or kind) of inequality which is distinctly evil or unlovely. 2

Another typical tactic may be culled from a standard text on public finance. According to Professor John F. Due, “[t]he strongest argument for progression is the fact that the consensus of opinion in society today regards progression as necessary for equity. This is, in turn, based on the principle that the pattern of income distribution, before taxes, involves excessive inequality.” The latter “can be condemned on the basis of inherent unfairness in terms of the standards accepted by society.” 3

No Idea is Too Stupid …

The Welfare State Incarnate Strikes Again

By Pater Tenebrarum

You have to hand it to French president Hollande. He is actively eradicating discrimination against bad ideas. He lets even the most stupid ones live, breathe and take wing. The following is from Austrian newspaper 'Die Presse': 

“In the fight against industrial decline and high unemployment, France's socialist government enacts a bill against the closure of factories. Entrepreneurs with more than 1,000 employees could in future be threatened with a big fine if they close a factory that has been deemed as still economically viable.

According to the law passed on Tuesday by the National Assembly, companies with more than 1,000 employees are forced to conduct an intensive search for buyers for factories that are under threat of closure. If the company cannot sufficiently prove that these efforts have been undertaken, it can be charged with 20 times of the minimum wage of €1,430 per fired worker.” 

They named the law after Florange, where Hollande and his industrial renewal clown Mountebank tried to interfere with Arcelor Mittal's decision to close an unprofitable steel factory. In the process, they were exerting a great deal of pressure on the company, but ultimately found out they were legally unable to force it into subsidizing Hollande's voters. 

From now on, they can. We wrote a long time ago that Hollande was erecting a 'Zwangswirtschaft' in France – an economy that it is still nominally capitalist and based on property rights, but where government bureaus decide what entrepreneurs may or may not produce, whom they may fire or hire, etc. – in other words, 'property rights' would only exist on paper, but not in reality.  Basically the type of economy Hitler's national socialists put in place in Germany. Frankly, at the time we thought we were exaggerating a bit for effect. We're not sure if that assessment is still appropriate.

We have a few questions: who decides what is still 'economically viable', and how do they go about it? What constitutes 'proof' that one has 'actively searched for a buyer'? This sounds like a very expensive, despotic and bureaucratic nightmare of major proportions could await employers in France. In addition to the already existing despotic and bureaucratic nightmare that is – a nightmare-within-the-nightmare, so to speak. It will of course be bureaucrats arbitrarily deciding all these issues. The new vistas for graft that are opening up here probably have a number of people already salivating (if anyone sees an unidentified trail of slime in Paris, that's where it comes from).

Hollande isn't doing this only due to his truly appalling economic ignorance. As the paper also mentions, he is angling for votes from the 'worker's camp' prior to municipal and European elections.

Keeping these cynical realpolitik deliberations aside though, we think it can be stated that there probably has never been an utterly atrocious economic idea that Hollande didn't somehow like. One can only hope that he hasn't had the time to read Marx' tome 'Das Kapital' yet. In spite of the book's fearsome reputation of putting to sleep even people stricken with a severe case of insomnia, some people have actually read it.

It is almost as if Hollande were actively and deliberately seeking to completely f*** up the hollow shell of an economy that is reportedly still left in France. He cannot be that ignorant, can he?

A False Choice Between Tyranny and Anarchy

The Resolutionary War

By Mark Steyn

Further to my post below on the specific point of the power of the purse, it’s worth noting more generally that government-by-continuing-resolution is a real banana-republic racket entirely unbecoming to any mature society. Robert Stacy McCain in extremely-extreme-extremists:

Here’s a simple question: Why are we currently funding the federal government through a series of short-term measures known as “continuing resolutions”?

The answer is that the budgeting process has completely broken down in recent years, and the two men most responsible for that breakdown are President Obama and Senate Majority Leader Harry Reid. For three consecutive years — 2010, 2011, and 2012 — the Democrat-controlled Senate did not pass a budget bill because Reid knew that it would be a political liability to do so. Passing a budget that detailed the Democrats’ plans for spending and revenue as official policy would have exposed the “something for nothing” swindle that Reid and his colleagues are perpetrating on the American people.

That’s true. The first term of the Obama era gave us Scandinavian levels of spending with American levels of taxation — an unsustainable contradiction that would have been more difficult to pass off without the Dems’ we-don’t-need-no-steenkin’-budgets feint. But, again, they were only able to pull that off because of the utter degeneration of the broader budgeting process. Angelo Codevilla:

Since the Middle Ages, the first and most basic restraint on arbitrary government has been the people’s power to decide how much money the government will spend, and for what purposes. The US Constitution puts it this way: “No money shall be drawn from the Treasury but in consequence of Appropriations made by law” (Art. I sect.9). Nowadays however our bipartisan ruling class limits the Congress’ opportunity to approve, disapprove, or modify what the government does, to voting on “Continuing Appropriations Resolutions” – single, all-inclusive bills crafted behind closed doors. Then it cynically asks the people’s representatives: “will you agree to laws no one has read, to programs on the continuation of which you have not voted, and to regulations that haven’t been written yet, or will you shut down the government?” This turns democracy into a choice between tyranny and anarchy.

America’s much vaunted “checks and balances” are only as good as the political class’ deference to them. In Congress, the constitutional order has been largely replaced by procedural legerdemain by thug operators. It’s unseemly and pathetic. 

The Continuing Appropriations Resolution Scum

Continuing Appropriations Resolutions Subvert Limited Government

by Angelo M. Codevilla

The current battle over whether the 2013 Continuing Appropriations Resolution (CR) should de-fund Obamacare or not is the latest instance in which the CR mechanism is being used on behalf of a big government program the demise of which would be certain were Congress to play its Constitutional role by following its “regular order” as the keeper of the people’s purse – a role fundamental to democracy.

Herewith, a brief explanation of how new the CR system of funding the US government is, and how radically subversive of republican government. Important to America as Obamacare’s fate may be, the current battle’s stake is nothing less than whether the people can control government through their representatives or whether government can define its own scope and powers.

Since the Middle Ages, the first and most basic restraint on arbitrary government has been the people’s power to decide how much money the government will spend, and for what purposes. The US Constitution puts it this way: “No money shall be drawn from the Treasury but in consequence of Appropriations made by law” (Art. I sect.9). Nowadays however our bipartisan ruling class limits the Congress’ opportunity to approve, disapprove, or modify what the government does, to voting on “Continuing Appropriations Resolutions” – single, all-inclusive bills crafted behind closed doors. Then it cynically asks the people’s representatives: “will you agree to laws no one has read, to programs on the continuation of which you have not voted, and to regulations that haven’t been written yet, or will you shut down the government?” This turns democracy into a choice between tyranny and anarchy.

Until circa 1990, Americans had taken seriously the relationship between appropriations and democracy. House and Senate used to divide the Executive departments’ requests for funds and programs into multiple categories and sub-categories. Then many committees and subcommittees held hearings on each item, followed by “mark-up” sessions in which each would be modified and voted on. Thereafter, the full House and Senate would debate, amend, approve or disapprove them, one by one. This was “regular order” – more or less as described in civics books.

This changed at first gradually in the 1980s, when Democrats (and Republicans) who were resisting the Reagan Administration’s efforts to trim government figured out that individual appropriations bills delayed until the end of the fiscal year could be rolled together into “omnibus” bills. These could be advertised as merely “continuing” the current year’s programs and spending levels. In reality, these all-in-one bills 1) protected current programs from scrutiny, amendment, or repeal 2) were stuffed with new favors, programs, provisions and priorities that could not have survived an open process. Since 1989, the Congress has followed mostly “regular order” only twice: in 1995 and 1997. Not since 2000 have the people’s representatives voted and taken responsibility for each of the government’s activities. In this century, the US government has been funded exclusively by single, omnibus “Continuing Resolutions” (CRs).

Extremely Extreme Extremists

Liberal “shutdown” rhetoric ignores the irresponsibility of Democrats

By ROBERT STACY MCCAIN

Democrats and their media allies have spent the past week labeling Republicans “anarchists,” “fanatics,” “radicals,” and “terrorists” who are wholly to blame for the situation that we are told will soon lead to a government shutdown. And if all you know about this situation is what you get from the media, you might actually believe that this is a crisis created by Texas Sen. Ted Cruz and his fellow conservatives who sought to use the vote on a short-term spending bill as a means of preventing implementation of the Affordable Care Act (ACA), otherwise known as Obamacare.

Here’s a simple question: Why are we currently funding the federal government through a series of short-term measures known as “continuing resolutions”?

The answer is that the budgeting process has completely broken down in recent years, and the two men most responsible for that breakdown are President Obama and Senate Majority Leader Harry Reid. For three consecutive years — 2010, 2011, and 2012 — the Democrat-controlled Senate did not pass a budget bill because Reid knew that it would be a political liability to do so. Passing a budget that detailed the Democrats’ plans for spending and revenue as official policy would have exposed the “something for nothing” swindle that Reid and his colleagues are perpetrating on the American people. Republican challengers campaigning against Democrat senators could have cited their votes for the budget bill, saying that the incumbent voted for this, that, or the other unpopular component of the measure.

Reid and the Democrats knew this. They knew very well that the federal deficit was spiraling out of control, that there was not enough tax revenue to pay the mushrooming cost of entitlement programs (Medicare, Medicaid, food stamps, unemployment, et cetera), and certainly there wasn’t enough revenue to pay for all the boondoggles and giveaways the Democrats voted for in the name of “stimulus.” Adding to this, there was not enough revenue to pay the cost of Obamacare, which Democrats rammed through Congress in March 2010 on a party-line vote. Passing an actual budget would have made clear the unsustainable fiscal nightmare into which Democrat policies have plunged the nation during the Obama Age, and so Harry Reid simply didn’t pass a budget for three years.

Inevitably, there will be serious fiscal and economic consequences for what has been done in Washington since 2009. Democrats, however, cared less about such real-world matters than they did about the short-term political gain to be had by promoting the pleasant fiction that liberal “generosity” with taxpayer money (including trillions of dollars in deficit spending) had no real cost. The political project of electing and re-electing Democrats required this exercise in fiscal unreality, and so began Reid’s policy of avoiding the painful choices inherent in the budget process. As a direct result of Reid’s irresponsible policy, Americans are now faced with what is being described by many in the media as a “budget” battle, but is in fact about the short-term alternative to an actual budget, a continuing resolution which would authorize the government to keep spending more money than it has, by borrowing billions of dollars it has no feasible plan to repay.

Is Wall Street Really the Heart of Capitalism?

Blaming the Wrong People for 2008

by DOUGLAS FRENCH

The other night I tuned into The Flaw, a 2011 documentary about the 2008 financial crash. 

While telling the crash story, the movie flashes in and out of a street tour offered by an ex-mortgage bond trader. The young man has the required effervescence to keep a dozen tourists entertained while they look at nothing more interesting than office buildings. He cleverly lets members of his tour touch a toxic asset. Well, a page of the legal document of a collateralized debt obligation (CDO), anyway. 

The camera pans to tourists taking pictures next to “Charging Bull,” the 7,100 lb. bronze sculpture closely associated with Wall Street. The guide starts his tour saying what has become a worn out cliché. “Welcome to Wall Street; this is the heart of American capitalism.”    

But is Wall Street really the heart of capitalism? 

If we understand capitalism as a social system of individual rights, a political system of laissez-faire, and a legal system of objective laws, all applied to the economy with the result being a free market, is Wall Street really capitalist?  

The laws that govern the securities industry start with the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940, The Investment Advisors Act of 1940, the Securities Investor Protection Act of 1970, the Insider Trading Sanctions Act of 1984, the Insider Trading and Securities Fraud Enforcement Act of 1988, the Private Securities Litigation Reform Act of 1995, and the Sarbanes-Oxley Act of 2002. Of course all of these acts weren’t enough to prevent the crash of 2008, so we now have the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the Jumpstart Our Business Startups Act of 2012. That seems like a whole lot of regulating for something that’s supposedly a capitalist marketplace.

Back when lawmakers were pithier in writing legislation, the Securities Exchange Act of 1934 ran 371 pages. Dodd-Frank totals 848 pages. This mountain of paper and regulation is anything but laissez-faire. Thousands of government employees are charged with enforcing these byzantine rules. Does this sound like the deregulated, Wild West Wall Street we’re told brought the nation to its knees?

When investment banks Goldman Sachs and Morgan Stanley were in danger of failing in September 2008, they applied to become commercial banks; their applications were quickly approved. Even in the boom times, bank charters normally took a couple of years to be approved. Now, it’s impossible. The last de novo charter was approved in the fourth quarter of 2010. While The New York Times made a big deal of the additional regulations the banks would have to endure, these banks were rescued as the FDIC insured their deposits, stemming a possible run. The change also allowed the banking behemoths to borrow from the Fed against a wide array of collateral. No one can call this “survival of the fittest” capitalism.  

Bankrupt Ideas Lead to Bankrupt Governments

Washington politicians are intellectually bankrupt when it comes to fiscal responsibility

By Richard W. Rahn

 “There is nothing left to cut,” said House Minority Leader Nancy Pelosi last week when referring to the federal budget. Again, she displayed a complete disconnect with reality — a disconnect reinforced by all those other fantasy land souls who make her their leader.

As we listen to the budget battles among the political class over the next few weeks, it is important to keep in mind that federal spending is at record levels in nominal terms and near the all-time high as a percentage of gross domestic product (GDP), except during World War II. During the second Clinton administration, federal spending was about 20 percent lower as a percentage of GDP than it is now. Yet I do not recall starvation among the American people, nor the acutely ill being thrown out of hospitals because they could not pay, nor children not finding schools to attend. It did not happen, nor did it happen from the end of the Civil War until World War I, when federal spending was only about 3 percent of GDP, in contrast to today’s 22 percent.

Outside of government, almost every good or service becomes better and less expensive in real terms each year. Government, though, is most heavily involved in education and health care. In both cases, costs have risen far faster than inflation for decades. With education, there has been almost no measurable improvement in quality as measured by what students know. The teachers unions love to talk about how much is being spent per pupil, while ignoring the fact that there are many high-spending school districts with lower achievement levels than many lower spending districts. The private sector — unlike government — constantly reduces costs and improves its products because of competitive pressures, and that creates real wealth. Those in the public sector measure success by the amount spent, not by what is accomplished.

Mrs. Pelosi may think there is nothing more to cut, but her own government continues to find huge waste. Medicare fraud and abuse alone now costs more than $115 billion per year, and even though the problem is well known, it persists decade after decade, as Mrs. Pelosi and her colleagues do nothing to stop it. But then, again, it is not their money that is wasted. According to the Congressional Research Service, the U.S. government has 77,000 unused or underused buildings that cost taxpayers $1.67 billion annually to operate and maintain. The list goes on and on.

It is not only the fraud and waste that needs to be eliminated, but also the endless duplicative and counterproductive programs. It is worth noting that when good economists carefully analyze any given federal program as to its costs and benefits, and properly include the extraction of costs of taxing and borrowing to fund the program, they most often find that the costs outweigh the benefits.

Regulatory costs have been soaring, yet the benefits of many of the regulations are questionable at best. The great Nobel Prize winning economist, Ronald Coase, who just passed away at age 102, gained his reputation, in part, by showing that almost all government regulations could be better and more effectively handled by private parties.

Government Looking for Witches Will Find Them

Show me the man and I will find you the crime

By Andrew P. Napolitano

While the nation’s political class has been fixated on a potential government shutdown in Washington this week, the NSA has continued to spy on all Americans and by its ambiguity and shrewd silence seems to be acknowledging slowly that the scope of its spying is truly breathtaking.

The Obama administration is of the view that the NSA can spy on anyone anywhere. The president believes that federal statutes enable the secret FISA court to authorize the NSA to capture any information it desires about any persons without identifying the persons and without a showing of probable cause of criminal behavior on the part of the persons to be spied upon. This is the same mindset that the British government had with respect to the colonists. It, too, believed that British law permitted a judge in secret in Britain to issue general warrants to be executed in the colonies at the whim of British agents.

General warrants do not state the name of the place to be searched or the person or thing to be seized, and they do not have the necessity of individualized probable cause as their linchpin. They simply authorize the bearer to search wherever he wishes for whatever he wants. General warrants were universally condemned by colonial leaders across the ideological spectrum — from those as radical as Sam Adams to those as establishment as George Washington, and from those as individualistic as Thomas Jefferson to those as big-government as Alexander Hamilton. We know from the literature of the times that the whole purpose of the Fourth Amendment — with its requirements of individualized probable cause and specifically identifying the target — is to prohibit general warrants.

And yet, the FISA court has been issuing general warrants and the NSA executing them since at least 2004.

Last week we learned in a curious colloquy between members of the Senate Select Intelligence Committee and Gen. Keith Alexander and Deputy Attorney General James Cole that it is more likely than not that the FISA court has permitted the NSA to seize not only telephone, Internet and texting records, but also utility bills, credit card bills, banking records, social media records and digital images of mail, and that there is no upper limit on the number of Americans’ records seized or the nature of those records.

Why Saudis are upset with Obama

When it comes to Arab Spring, Obama and the Iranian leadership happen to find themselves largely on the same page

By M K Bhadrakumar

The Saudi Foreign Minister Prince Saud Al-Faisal used the meeting of the Friends of Syria ministerial forum meeting at New York on Friday to launch an attack on the US-Russian initiative on chemical weapons. He said the initiative should have been followed up with a UN Security Council resolution under Chapter VII so as “to guarantee the Syrian regime’s commitment without any delay or procrastination”, and as things stand, the Syrian regime intends to take advantage of the initiative “to impose more killing and to torture its people.” 

Faisal also warned against using the Geneva process “as a way to legitimize Assad regime.” Instead, he called for the intensification of political, economic and military support of the Syrian opposition in order to enable it to defend itself and change the balance of powers on the ground, which will push the political solution.” 

Clearly, the Saudi Arabian regime is seething with anger over the US-Russian initiative on Syria’s chemical weapons as well as President Barack Obama’s overture to the Iranian leadership (WSJ). Saudi Arabia can be expected to step up the support for the rebel fighters in Syria and it may not care to do any hair splitting between “moderate” Islamists and extremist groups. 

Conceivably, the newly-formed islamic Alliance in Syria may have tacit Saudi backing. Turkey is known to keep underhand dealings with extremist groups who act as counterweight to Syrian Kurds. 

All these cross currents come out vividly in the sharp criticism of Obama’s policy featured in the Saudi establishment daily Asharq Al-Awsat today, here, under the byline of Abdul Rahman Al-Rashed, who is also the general manager of Al-Arabiya television — “Obama would be committing an irreparable error if he lets Iranians fool him with Rouhani’s smiles and sweet words…” 

It seems the Saudis have been taken by surprise. They probably didn’t expect a direct contact between Obama and Iranian president Hassan Rouhani or the great thaw to begin in right earnest so soon. 

Obamanomics, RIP

An autopsy of an idea

By Arthur Laffer & Stephen Moore 

AN OLD SAYING sometimes attributed to Mark Twain goes: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” And so it is with the current view that government spending stimulates the economy. It doesn’t. Government stimulus spending, paid for by running up the federal credit card, is why we have the never-ending Great Recession, though the left keeps fantasizing that spending “saved us from a second great depression.”

Now for the good news: The spending spree is over and Barack Obama is a lame duck. He is legislatively paralyzed. The signature achievement of his first term, the Patient Protection and Affordable Care Act, is under steady fire, and his job approval rating continues to slip. But the best evidence of his shrinking agenda is the trend in federal spending. It’s falling, and not at a trickle. Think Niagara (figure 1).

Washington is experiencing one of the biggest fiscal retrenchments in modern history, and almost no one is paying attention. In the wake of the Bush-Pelosi-Obama spending splurge from 2008-11, federal spending has fallen by 3.1 percentage points of GDP. In the second quarter of 2009, according to National Income Products Account data, federal spending hit 26.5 percent of GDP, thanks to the Obama stimulus and the Bush recession. As of the second quarter of 2013, just as the sequester was beginning to take effect, federal spending as a share of GDP is down to 23.5 percent and, barring some unforeseen emergency, is on track to fall to around 23 percent by the end of this year. The turning point in spending from the binge years of 2009 and 2010 came when the Republicans took control of the House in 2011.