A Fresh Look at the Parasitic Class

Political Extortion Racket

by Pater Tenebrarum

A little while ago we discussed 'crony capitalism' (as one of our readers helpfully pointed out, it would probably be better to call it crony socialism, so as to avoid sullying the term capitalism), contrasting the system in which we actually live with free market capitalism. It is highly unfortunate that the press continually gets away with characterizing the current system as a version of 'laissez faire' and blaming events like the 2008 crash on the (non-existent) free market.

We noted at the time that it is actually quite difficult to draw the line between lobbying that is aimed at obtaining privileges from the State or pushing it toward enacting regulations designed to keep competition at bay, and lobbying the aimed at averting legislation or regulations that could harm the business concerned – so to speak a legitimate form of self-defense. We wrote: 

“It is of course well known that large corporations lobby to obtain privileges from the State; however, in a way many also have little choice in the matter, since they may otherwise become the victims of regulations that could severely hamper their business. It is often difficult to tell where a legitimate attempt to ward off statist intrusion ends and crony capitalism begins. It is certainly a fuzzy line that is separating the two.”

It is clear though that whether lobbying serves to obtain privileges or to ward off harm, it is a result of the existence of the territorial force monopolist known as the State and intersects with the interests of those managing it. The parasitic class that is devoted to the 'organization of the political means for obtaining wealth' as Franz Oppenheimer characterized the State, isn't doing it just for fun.

It very rarely happens that the true nature of this parasitic class is openly discussed in the mainstream press, so we were quite surprised when we came across an op-ed by Peter Schweizer in the NYT entitled “Politicians' Extortion Racket”. Mr. Schweizer has decided to take a closer look at the other side of lobbying – i.e., not those paying the bribes (who are normally the main target of criticism) but those receiving them. Mr Schweizer writes: 

“We have long assumed that the infestation of special interest money in Washington is at the root of so much that ails our politics. But what if we’ve had it wrong? What if instead of being bribed by wealthy interests, politicians are engaged in a form of legal extortion designed to extract campaign contributions?

Consider this: of the thousands of bills introduced in Congress each year, only roughly 5 percent become law. Why do legislators bother proposing so many bills? What if many of those bills are written not to be passed but to pressure people into forking over cash? This is exactly what is happening. Politicians have developed a dizzying array of legislative tactics to bring in money.” 

Our betters

United Nations Death Panel

One of the most startling news stories of the season is the dispatch on page one of the New York Times warning that there might be too many Africans. This came in an account of a new forecast on world population issued by the United Nations, which is now projecting that a global population that the Times reports was “long expected to stabilize just above nine billion in the middle of the century” will “keep growing and may hit 10.1 billion by the year 2100.” It predicts that the population of Africa could triple in this century to 3.6 billion — “a sobering forecast for a continent already struggling to provide food and water for its people.”

What in the world does the Times have against the Africans? Population density on the African continent, after all, is, at 65 persons a square mile, one of the lowest on the planet, according to About.com, whose figure we cite because About is issued by another unit of the New York Times Company. It reports that South America has 73 people a square mile, Europe 134, and Asia 203. It makes one wonder why the Times would begrudge the Africans the prospects for growth that are reported by the United Nations. If the continent is “already struggling to provide food and water for its people,” after all, maybe the reason is that it has not too many people but too few.

The error in the Times story is an example of how even the most intelligent of analysts can get into trouble on the population story. One famous example was a dispatch issued in August 2001 by the magazine Nature, which published a forecast that the 21^st century would be the one in which the number of people on the planet would likely stop growing. The authors — Wolfgang Lutz, Warren Sanderson, and Sergei Scherboy — reckoned there was “around an 85% chance that the world’s population will stop growing before the end of the century.” The triumvirate concluded that “the prospect of an end to world population growth is welcome news for efforts towards sustainable development.”

Now the new report from the United Nations suggests that the prediction of Messrs. Lutz, Sanderson, and Scherboy was wrong and that population growth will not peak this century but will keep growing. The United Nations, like the writers for Nature, seems to be under the impression that this is bad news, not good. One can expect that the United Nations report will be used as grist for a vast campaign to increase funding for the population control — and that will lead to a feud between who gets the blessing of more people. Will it be the rich countries, whose populations are growing the slowest or, in the saddest cases, shrinking? Or will it be the poor countries of Africa and Asia who are racing to build their wealth by building their populations?

And who is going to decide which countries or continents get to have babies? If it’s going to be the United Nations, the way to think of the world body will be as a kind of global death panel. Who wants to sit on that board and try to allocate vast population control funds to see who be permitted, and who won’t, the luxury of large families? And why is this happening at all on a planet where, according to the New York Times’ About.com, 90% of the population lives on 10% of the land? The fact is that the religious sages figured out long ago that population growth is good. It doesn’t matter whether it is Africans or Americans or Europeans or Asians. The fear of population growth is a superstition of a secular age, and what an irony that it is one of the principle products of a United Nations that was supposed to bring the world together.  

Nassim Taleb on Fragility and Antifragility

The economy is more like a cat than a washing machine

By Nassim Nicholas Taleb

Several years before the financial crisis descended on us, I put forward the concept of “black swans”: large events that are both unexpected and highly consequential. We never see black swans coming, but when they do arrive, they profoundly shape our world: Think of World War I, 9/11, the Internet, the rise of Google .

In economic life and history more generally, just about everything of consequence comes from black swans; ordinary events have paltry effects in the long term. Still, through some mental bias, people think in hindsight that they “sort of” considered the possibility of such events; this gives them confidence in continuing to formulate predictions. But our tools for forecasting and risk measurement cannot begin to capture black swans. Indeed, our faith in these tools make it more likely that we will continue to take dangerous, uninformed risks.

Some made the mistake of thinking that I hoped to see us develop better methods for predicting black swans. Others asked if we should just give up and throw our hands in the air: If we could not measure the risks of potential blowups, what were we to do? The answer is simple: We should try to create institutions that won’t fall apart when we encounter black swans—or that might even gain from these unexpected events.

Fragility is the quality of things that are vulnerable to volatility. Take the coffee cup on your desk: It wants peace and quiet because it incurs more harm than benefit from random events. The opposite of fragile, therefore, isn’t robust or sturdy or resilient—things with these qualities are simply difficult to break.

To deal with black swans, we instead need things that gain from volatility, variability, stress and disorder. My (admittedly inelegant) term for this crucial quality is “antifragile.” The only existing expression remotely close to the concept of antifragility is what we derivatives traders call “long gamma,” to describe financial packages that benefit from market volatility. Crucially, both fragility and antifragility are measurable.

As a practical matter, emphasizing antifragility means that our private and public sectors should be able to thrive and improve in the face of disorder. By grasping the mechanisms of antifragility, we can make better decisions without the illusion of being able to predict the next big thing. We can navigate situations in which the unknown predominates and our understanding is limited.

Herewith are five policy rules that can help us to establish antifragility as a principle of our socioeconomic life.

Rule 1: Think of the economy as being more like a cat than a washing machine.

We are victims of the post-Enlightenment view that the world functions like a sophisticated machine, to be understood like a textbook engineering problem and run by wonks. In other words, like a home appliance, not like the human body. If this were so, our institutions would have no self-healing properties and would need someone to run and micromanage them, to protect their safety, because they cannot survive on their own.

Do Libertarians Have a Problem With Authority?

Not if they understand the difference between law and legislation

By ROBERT P. MURPHY

A silly episode on Facebook recently underscored one of the tensions in the liberty movement: many people are attracted to libertarianism because they simply don’t like rules. This attitude stands in contrast to conservatives who also disdain big government but who don’t reject authority per se — their problem is with illegitimate authority. Although many types of individuals are united in their opposition to military empire abroad, the drug war at home, and confiscatory taxation, their underlying philosophies of life are vastly different.

A debate on all these matters started innocuously enough. I had put up a frivolous Facebook post telling my “friends” (most of whom are fans of my economic and political writing) that my office phone number was only one digit removed from that of a local pizza shop, and that the people erroneously calling me were “lucky my alignment was Lawful Good.” This was a reference to the role-playing game Dungeons & Dragons, which has an elaborate scheme to classify the ethical and moral views of its characters.

I was surprised to receive a fair amount of pushback, with many people surprised that I had described myself as “lawful.” They thought this meant I endorsed the actions of the U.S. government and that I was letting others tell me how to live my life. How could someone who had written a booklet on “market anarchy” be placed in such a category?

Yet this objection is absurd on its face. In the first place, advocates of “anarcho-capitalism” in the tradition of economist and political theorist Murray Rothbard are forprivate provision of legal services. They aren’t against “law,” they are instead against the unjust and inefficient government monopoly of the judicial system. It is a cheap ploy for left-wing interventionists to accuse critics of the welfare state or of government schools of being “against poor people” or “against education.” Such criticism is obviously nonsense. But by the same token, it is wrong even for fans of someone like Murray Rothbard to assume he would be “against law.”

Nearing The End of Serfdom’s Road

There is hardly a soul left on Earth that experienced life without the gargantuan state

by James E. Miller

In France, Minister for Energy and Environment Delphine Batho recently proposed a light curfew to pertain to “in and outside shops, offices, and public buildings” between 1 a.m. and 7 a.m. beginning next July. Some merchants are up in arms as the rule adds to existing bans such as the forced closing of stores on Sunday and night shopping in general. If enacted, the illumination ban will quickly disperse Paris’s reputation as the “City of Light.”

France’s Commercial Council is criticizing the decision as being anti-business and economically damaging. However, the fact that these assumed defenders of free enterprise are surprised at such a proposal is the real puzzle. In a country run by a government that is happily bloodletting the productive capacity of the people through a hike on the income tax and a tax on financial transactions, this latest nanny-state resolve should be fully expected. It is not a power grab but a mere reassertion of the authority the central state has over the private affairs of society.

The “lights out” edict is just another piece of evidence of a disturbing truth: the road to serfdom is not ahead of the West; we have already reached its end.

Such a statement may be objected to as private property and a certain degree of freedom still exist in the West.  But this is these just a mirage. The property tax effectively nullifies the notion of private property. In many places, police brutes allow themselves into your home and on your land with little recourse possible. Billions of electronic correspondences are collected daily by the Federal Bureau of Investigation of the United States. In 1961, the United Nations released the Single Convention on Narcotic Drugs which has since served as a framework for drug prohibition in all major countries.

As William Grigg points out,

Drug prohibition is a subset of slavery – in both its philosophical premise (the denial of individual self-ownership) and its role in creating a huge and growing population of people in chains.

Ownership of one’s body and those resources to which it appropriates itself is no longer a respected law in Western society. Through years of indoctrination, it is accepted by the greater public that the individual is beholden to the state- not vice versa. Personal identity is now followed by a reference to the government. And blind patriotism is seen as a virtue instead of a demeaning attribute.

Why we must tolerate hate

Racist vandals, run-of-the-mill vandals and thought-crimes

by Wendy Kaminer 

In America, if you decorate your house with anti-Semitic slogans or your clothing with swastikas, you are engaging in protected speech. But paper your neighbour’s car with anti-Semitic bumper stickers and you are guilty of vandalism. Hate speech is constitutionally protected (as the Supreme Court confirmed most recently in Snyder v Phelps). Destruction or defacement of someone else’s property is legally prohibited.

Advocates of censoring ‘hate speech’ might say that we value property more than the elimination of bigotry. I’d say that we value speech, as well as property, more than inoffensiveness. Besides, protections of presumptively hateful speech are not absolute: a prohibited act, like assault or vandalism, accompanied by vicious expressions of bigotry, may constitute a hate crime under law.

Consider this recent incident at Wheaton College in Norton, Massachusetts: anti-Semitic graffiti was scrawled across the back door of the Jewish Life House, where four students reside. The student who discovered it, Molly Tobin, described herself as ‘shocked, angry, and terrified’, according to the Boston Globe. But students and faculty members have ‘come together’ in support of diversity, with a potluck and a Facebook campaign. Campus police are investigating the incident, and the school is offering a $1,000 reward for information about it.

Could the vandals in this case be prosecuted for a hate crime? Perhaps. Massachusetts law provides that assaulting someone or damaging her property with ‘intent to intimidate’ on the basis of race, colour or religion, among other characteristics, is punishable by a $5,000 fine and/or a maximum two-and-a-half-year prison sentence. Whether or not the graffiti on the door of the Jewish Life House was intentionally intimidating is a question of fact; but you can guess how it might be resolved.

The 4th Amendment is dead. The terrorists won.

Public Buses Adding Microphones To Record Conversations

By Mike Krieger

Believe it or not the article itself is actually a lot worse than even the title implies.  These microphones are in many cases being coupled with cameras in order to gain an even greater level of surveillance.  All with grants from the Department of Homeland Security (DHS).  Now honestly, does anyone really think this is for Al Qaeda?  This is a great follow up to my piece from last week titled:  Coming to Your Car: Mandatory Black Boxes That Record Everything.

From Wired:

Transit authorities in cities across the country are quietly installing microphone-enabled surveillance systems on public buses that would give them the ability to record and store private conversations, according to documents obtained by a news outlet.

The systems are being installed in San Francisco, Baltimore, and other cities with funding from the Department of Homeland Security in some cases, according to the Daily, which obtained copies of contracts, procurement requests, specs and other documents.

The systems use cables or WiFi to pair audio conversations with camera images in order to produce synchronous recordings. Audio and video can be monitored in real-time.

Two Forces And Three Bears

Efforts to manage runaway hyper-complexity with more complexity are guaranteed to fail

by James H. Kunstler

In these climax years of industrial technocratic society, two opposing forces shape the destiny of government: the desperate effort to control everything versus the decline of the ability to carry out that effort. The result will be the loss of legitimacy and the collapse of government from the highest levels, moving downward until the real power to make anything work re-sets at a feasible and appropriate level — probably very local. This dynamic is seen very clearly in three spectacles du jour: the “national security” (spying) mess, government-sponsored accounting fraud in finance, and the ObamaCare rollout.

An Imagined Panacea for Economic Ills

A Collective Pining for More Inflation

by Pater Tenebrarum

The John Law school of economics remains alive and well. A recent article in the NYT informs us that “In Fed and Out, Many Now Think Inflation Helps” [sic].

A few excerpts: 

“Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough.

Some economists say more inflation is just what the American economy needs to escape from a half-decade of sluggish growth and high unemployment.

The Fed has worked for decades to suppress inflation, but economists, including Janet Yellen, President Obama’s nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the economy is weak. Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly.

The Culture of Violence in the American West

The Not-So-Wild, Wild West

By Thomas J. DiLorenzo 

In a thorough review of the “West was violent” literature, Bruce Benson (1998) discovered that many historians simplyassume that violence was pervasive—even more so than in modern-day America—and then theorize about its likely causes. In addition, some authors assume that the West was very violent and then assert, as Joe Franz does, that “American violence today reflects our frontier heritage” (Franz 1969, qtd. in Benson 1998, 98). Thus, an allegedly violent and stateless society of the nineteenth century is blamed for at least some of the violence in the United States today.

In a book-length survey of the “West was violent” literature, historian Roger McGrath echoes Benson’s skepticism about this theory when he writes that “the frontier-was-violent authors are not, for the most part, attempting to prove that the frontier was violent. Rather, they assume that it was violent and then proffer explanations for that alleged violence” (1984, 270).

In contrast, an alternative literature based on actual history concludes that the civil society of the American West in the nineteenth century was not very violent. Eugene Hollon writes that the western frontier “was a far more civilized, more peaceful and safer place than American society today” (1974, x). Terry Anderson and P. J. Hill affirm that although “[t]he West . . . is perceived as a place of great chaos, with little respect for property or life,” their research “indicates that this was not the case; property rights were protected and civil order prevailed. Private agencies provided the necessary basis for an orderly society in which property was protected and conflicts were resolved” (1979, 10).

What were these private protective agencies? They were not governments because they did not have a legal monopoly on keeping order. Instead, they included such organizations as land clubs, cattlemen’s associations, mining camps, and wagon trains.

Weeding Out the "Socially Not Useful"

Superman is unimpressed by what Everyman wants

by Anthony de Jasay

... a service is profitable if Everyman, the businessman and the final consumer, buys it. Buying it is the one indisputable way he has to show that he wants it. But Superman is unimpressed by what Everyman wants. He wishes Everyman to get what he needs. For only what he needs is "socially useful" ...

In his classic essay "What is seen and what is not seen" (written in 1848 and published in July 1850) the shamefully underrated and neglected French economist Frédéric Bastiat (1801-1850)1 declares that what distinguishes a bad economist from a good one is that the bad one can only see what is to be seen, while the good one also discerns the as yet unseen consequences that are bound to follow the visible effect of an action. Present benefits must be painfully paid for in future costs, while present sacrifices tend to be generously rewarded in the future. The good economist must, of course, weigh up the merits of a law, a  policy or an institution by taking account both of the effects he (and others) can see and the future consequences he foresees (and others do not).

Stated this way, there is a built-in test that makes it very easy to tell the good economist from the bad one: we only have to watch the consequences as they emerge with the passage of time. Events will show up what the bad economist has overlooked and what the good one has correctly foretold.

Bastiat, in his summary introduction, states the problem in terms of a choice (to change something or to keep it the way it is) and the future, as yet unseen consequences of that choice. However, the choice also involves another, different implication that is unseen but unlike the one that will emerge in the future, is condemned to remain unseen. For the choice of a law, a policy or an institution has one effect that is not seen but will be, and another namely the future state of affairs that would have prevailed had that choice not been made. This is the state of affairs that we forgo, that might have come about but did not, "what we do not see" and never will. It is what in modern economics is called opportunity cost the bad economist tends to ignore and the good one can only approximate by educated guesses, intelligent conjectures. Though Bastiat does not explicitly mention it in his summary of "What is seen and what is not seen," most of his examples also deal with "what might have been." It is probably fair to credit Bastiat with the discovery of the concept of opportunity cost.

Race-Hustling Results

Thought is long overdue. So is honesty. 

By Thomas Sowell

Years ago, someone said that, according to the laws of aerodynamics, bumblebees cannot fly. But the bumblebees, not knowing the laws of aerodynamics, go ahead and fly anyway.

Something like that happens among people. There have been many ponderous academic writings and dour editorials in the mainstream media, lamenting that most people born poor cannot rise in American society any more. Meanwhile, many poor immigrants arrive here from various parts of Asia, and rise on up the ladder anyway.

Often these Asian immigrants arrive not only with very little money, but also very little knowledge of English. They start out working at low-paid jobs but working so many hours, often at more than one job, that they are able to put a little money aside.

After a few years, they have enough money to open some little shop, where they still work long hours, and still save their money, so that they can afford to send their children to college. Meanwhile, these children know that their parents not only expect, but demand, that they make good grades.

Salon: One World After All

"Elites' strange plot to take over the world." 

By Anthony Wile

An article in Salon was recently brought to our attention by Hugo, a feedbacker. It is entitled "Elites' strange plot to take over the world." Thanks, Hugo.

Appearing about a month ago, it is basically an admission of the entire globalist enterprise over the past half-century or so. It clearly admits what we all know – that top Western elites have been in an open conspiracy to merge the world, at least the Western world, under one legislative, economic and military regime.

What makes the article important? Well ... start with its writer, Matt Stoller, who "has a background in financial journalism and was a fellow at the [technocratic/socialist] Roosevelt Institute and an editor of the financial site Naked Capitalism." (Editor's notation in brackets.)

Stoller is well known within his leftist ambit: 

"He contributed to Politico, Alternet, Salon, The Nation and Reuters, focusing on the intersection of foreclosures, the financial system, and political corruption. In 2012, he starred in 'Brand X with Russell Brand' on the FX network, and was a writer and consultant for the show." He's also been a producer for MSNBC's "The Dylan Ratigan Show" and Senior Policy Advisor for [horrible-but-courageous] Congressman Alan Grayson.

A Pax Sinica in the Middle East?

No world power has more to lose from instability in the Middle East than does China

By Spengler 

English-language media completely ignored a noteworthy statement that led Der Spiegel's German-language website October 12, a call for China to "take on responsibility as a world power" in the Middle East. Penned by Bernhard Zand, the German news organization's Beijing correspondent, it is terse and to the point: now that China imports more oil from the Middle East than any other country in the world, it must answer for the region's security. "America's interest in the Middle East diminishes day by day" as it heads towards energy self-sufficiency, wrote Zand, adding:

China's interest in a peaceful Middle East is enormous, by contrast. Beijing is not only the biggest customer of precisely those oil powers who presently are fanning the flames of conflict in Syria; as a VIP customer, Beijing has growing political influence, which it should use openly. The word of the Chinese foreign minister has just as much weight in Tehran and Riyadh as that of his American counterpart.

China's situation, Zand continues, is rather like Germany's after reunification: a state whose economic power is growing will eventually be asked what it puts on the table politically. He concludes:

The time when American could be counted on to secure Beijing's supply lines soon will come to an end - America's budget deficit will take care of that by itself. Whoever wants to be a world power must take on responsibilities.

I have no idea how China envisions its future role in the Middle East. Americans will learn the intentions of the powers who gradually fill the vacuum left by Washington's withdrawal from the world "well after the fact, if ever", as I wrote on September 16 (See US plays Monopoly, Russia plays chess, Asia Times Online). That is why I have retired from foreign policy analysis. It is helpful, though, to take note of what the rest of the world is saying, particularly when not a single English-language source made reference to it. Der Spiegel's public call for China to assume a leading geopolitical role in the Middle East, though, did not appear out of context. 

American commentators have regarded China as a spoiler, the source of Pakistan's nuclear weapons technology, Iran's ballistic missiles, and other alarming instances of proliferation. It is worth considering a radically different view of China's interests in the lands between the Himalayas and the Mediterranean: no world power has more to lose from instability than does China. 

Rebels offer Assad a comeback

Down the road, the partition of Syria, might be the best and the most humane path to stabilizing the country

By Victor Kotsev 

With Saudi Arabia and Russia both flexing muscles and the US-Iranian dialogue in uncharted waters, the bloody Syrian civil war, which has killed at least 110,000 people to date, is undergoing a new profound transformation. The rebels have turned into their own worst enemies, and though the stalemate continues, for the first time since the start of the uprising Syrian President Bashar al-Assad looks relatively comfortable in his grip on power. 

One has to wonder what is left of the Free Syrian Army (by some accounts only a few thousand soldiers) after some of its units recently defected to al-Qaeda and others apparently entered into direct negotiations with the regime. News of the second development was broken by the veteran correspondent Robert Fisk in the Independent late last month, and it seems that even future cooperation between Assad's army and former defectors against the extremists may be in the works. [1]

Nobody yet speaks about Assad winning the war or recovering the territorial integrity of Syria, such as it was two and a half years ago. That would require some very advanced military-diplomatic tricks, such as dealing with the resurgent Kurds and crushing decisively the powerful foreign-backed jihadist juggernaut - the latter a feat that both Cold War superpowers repeatedly failed to accomplish over the last three decades. 

Rediscovering the price of money when things can't get worse

Getting to the bottom is good in one sense: the only way is up.

By Steen Jakobsen

I’ve been starting my speeches for some time now by saying: “I am the most optimistic I have been in almost thirty years in the market—if only because things can’t get any worse.”

Is that true, and more importantly, how do we get a fundamental change away from this extend-and-pretend which prevails not only in Europe but also the world?

History tells us that we only get real changes as a result of war, famine, social riots or collapsing stock markets. None of these is an issue for most of the world—at least not yet—but on the other hand we have never had less growth, worse demographics, or higher unemployment since WWII. This is a true paradox that somehow needs to be resolved, and quickly if we are to avoid wasting an entire generation of European youth.

Policymakers try to pretend we have achieved significant progress and stability as the result of their actions, but from a fundamental point of view that’s a mere illusion. Italian banks today own more government debt than before the banking crisis, leaving them systematically more exposed to their own government, not less. The spread on government bonds between Germany and Club Med is down below historic averages, but the price has been a total suspension of the “price discovery” of money.

The price discovery of money is the cruel capitalistic part of any system. An economics  textbook would call it the modus operandi by which capital is allocated where it can find the highest marginal utility. In practice, this should mean that the market dictates the price of money beyond one year—while at durations of less than one year, the central banks determine the price of money. The beauty of the system is that money is allocated in an auction where the highest bidder for “money” or “credit” gets filled on the price he or she deems to match his expected price of money.

The War On Us

Government’s violent treatment of citizens has become generalized and unremarkable

by Angelo M. Codevilla

Increasingly, the US government’s many police forces (often state and local ones as well) operate militarily and are trained to treat ordinary citizens as enemies. At the same time, the people from whom the government personnel take their cues routinely describe those who differ from them socially and politically as illegitimate, criminal, even terrorists. Though these developments have separate roots, the post-9/11 state of no-win war against anonymous enemies has given them momentum. The longer it goes on, the more they converge and set in motion a spiral of civil strife all too well known in history, a spiral ever more difficult to stop short of civil war. Even now ordinary Americans are liable to being disadvantaged, hurt or even killed by their government as never before.

Government’s violent treatment of citizens has become generalized and unremarkable. Consider.

This month in Washington DC, Federal police riddled with bullets a woman suffering from post-partum depression who, had she been allowed to live, might have been convicted of reckless driving, at most. She had careened too close to the White House and Capitol, but had harmed no one and her car had stopped. In the same month, California sheriffs’ deputies killed a 13 year-old boy who was carrying a plastic toy rifle. It is not illegal to carry a rifle, never mind a toy one. America did not blink. A half century ago, Alabama sheriff Bull Connor’s use of a mere cattle prod to move marchers from blocking a street had caused a national crisis.

In a casual conversation, a friendly employee of the US Forest Service bemoaned to me that he was on his way to a US Army base, where he and colleagues would practice military tactics against persons who resist regulations. A forester, he had hoped to be Smokey the Bear. Instead, he said, “we are now the Department of Provocation.” In fact every US government agency, and most state and local ones now police their ever burgeoning regulations with military equipment, tactics, and above all with the assumption that they are dealing with people who should not be dealt with any other way.

Modern militarized government stems from the Progressive idea that society must mobilize as for war to achieve “the greater good.” Hence we have “wars” on everything from hunger and drugs and ignorance and global warming. Reality follows rhetoric. Since the health of “the environment” is a matter of life and death, the Environmental Protection Agency must deal with “enemies of the planet” with armored cars, machine guns, and home invasions. Apparently, even the Department of Education has SWAT teams.

The general population is increasingly inured to violence. The latest “Grand Theft” video game, for example, involves torturing a prisoner. Fun. That is only one step beyond the popular TV show “24” in which the audience cheered the hero’s torture of terrorist suspects. Contrast this with Dragnet, the most popular TV cops drama of the 1950s, whose Sergeant Joe Friday knocked on doors and said “yes ma’m, no ma’m.”

But governments, including ours, do not and cannot oppress citizens equally.

Persons who possess the greatest power have the larger opportunity to direct blame and distrust, even mayhem, onto those they like least. Since the mid- 1990s, authoritative voices from Democratic President Bill Clinton to Republican New York Mayor Michael Bloomberg, echoed by the media have intoned a familiar litany: America is beset by racism, sexism, homophobia, and religious obscurantism, by domestic abuse, greed, and gun owners. These ills are not so different from those found in backward parts of the world where we fight “extremism” in order to fight terrorism. Indeed these ills argue for fighting extremism, indeed for nation-building in America as well as abroad. Who in America embodies extremism? Who is inherently responsible for social ills, including terrorism? Who will have to be re-constructed? No surprise: the ruling class’ political opponents: the conservative side of American life.

ObamaCare — The Death of Liberalism?

While it represents the culmination of Liberalism’s dream, its failures present an existential threat to Liberalism itself

By Monty Pelerin

ObamaCare may accomplish what Republicans and Tea Party members could not. It may reverse the Road to Socialism that this country has been on for the better part of a century.

A recent post, No Cause For Celebration, argued that nothing has changed from an economic perspective as a result of the recent government shutdown. From a political perspective a major inflection, even turning point, may have occurred.

No Grand Bargain

Talk of a “Grand Bargain” before January 15 is delusional.

Simpson-Bowles provided a framework for a grand bargain early in the President’s first term. Obama and the Democrat Party ignored every recommendation of their own commission. The reaction to this effort suggests that the Democrats did not understand the mathematics of the revenue-spending-promises problem or that they didn’t believe it would blowup on their watch.

Now we are several years deeper into the hole. Today’s version of Simpson-Bowles would have to be substantially more painful to accomplish the same end.

Neither Obama nor his fellow Democrats have any stomach for revisiting this issue.

January 15 is not far away. Spending will continue to rise. Movement further down the Road to Ruin will occur.

There is one possibility, never dreamed of by Democrats that may alter dramatically the political equation. ObamaCare may do what the politicians were unable to — reverse the march toward ever bigger government.

ObamaCare — Political Implications

Politics and its practitioners have never been held in lower esteem. Both parties were diminished by the shutdown as was the President.

In terms of winners-losers, all lost. Most of the pundits believe the Republicans lost more than the Democrats. That may be so, but I am not sure this judgment holds over time. John Hayward provides his opinion on what may happen:

The Democrat “victory” is preserving a disaster that’s only going to get worse once more people can log into it and see their sky-high premiums. A party can be bled to death with “wins” like that. Hearings into the disastrous Healthcare.gov launch – a no-bid contract to a firm with cozy Obama connections – should be percolating right along as the midterm elections get under way. Remind voters, at every opportunity, that this is what Democrats shut down the government to protect.

The Ethanol Scam

Politicians are high on turning food into fuel 

by JEFF GOODELL

The great danger of confronting peak oil and global warming isn't that we will sit on our collective asses and do nothing while civilization collapses, but that we will plunge after "solutions" that will make our problems even worse. Like believing we can replace gasoline with ethanol, the much-hyped biofuel that we make from corn.

The Dark Lord of Coal Country

Ethanol, of course, is nothing new. American refiners will produce nearly 6 billion gallons of corn ethanol this year, mostly for use as a gasoline additive to make engines burn cleaner. But in June, the Senate all but announced that America's future is going to be powered by biofuels, mandating the production of 36 billion gallons of ethanol by 2022. According to ethanol boosters, this is the beginning of a much larger revolution that could entirely replace our 21-million-barrel-a-day oil addiction. Midwest farmers will get rich, the air will be cleaner, the planet will be cooler, and, best of all, we can tell those greedy sheiks to fuck off. As the king of ethanol hype, Sen. Chuck Grassley of Iowa, put it recently, "Everything about ethanol is good, good, good."

This article appeared in the August 7, 2007 issue of Rolling Stone. The issue is available in the online archive.

This is not just hype — it's dangerous, delusional bullshit. Ethanol doesn't burn cleaner than gasoline, nor is it cheaper. Our current ethanol production represents only 3.5 percent of our gasoline consumption — yet it consumes twenty percent of the entire U.S. corn crop, causing the price of corn to double in the last two years and raising the threat of hunger in the Third World. And the increasing acreage devoted to corn for ethanol means less land for other staple crops, giving farmers in South America an incentive to carve fields out of tropical forests that help to cool the planet and stave off global warming.

So why bother? Because the whole point of corn ethanol is not to solve America's energy crisis, but to generate one of the great political boondoggles of our time. Corn is already the most subsidized crop in America, raking in a total of $51 billion in federal handouts between 1995 and 2005 — twice as much as wheat subsidies and four times as much as soybeans. Ethanol itself is propped up by hefty subsidies, including a fifty-one-cent-per-gallon tax allowance for refiners. And a study by the International Institute for Sustainable Development found that ethanol subsidies amount to as much as $1.38 per gallon — about half of ethanol's wholesale market price.

A Code Red World

Central Bankers Gone Wild

BY JOHN MAULDIN

I wasn't the only person coming out with a book this week (much more on that at the end of the letter). Alan Greenspan hit the street with The Map and the Territory. Greenspan left Bernanke and Yellen a map, all right, but in many ways the Fed (along with central banks worldwide) proceeded to throw the map away and march off into totally unexplored territory. Under pressure since the Great Recession hit in 2007, they abandoned traditional monetary policy principles in favor of a new direction: print, buy, and hope that growth will follow. If aggressive asset purchases fail to promote growth, Chairman Bernanke and his disciples (soon to be Janet Yellen and the boys) respond by upping the pace. That was appropriate in 2008 and 2009 and maybe even in 2010, but not today.

Consider the Taylor Rule, for example – a key metric used to project the appropriate federal funds rate based on changes in growth, inflation, other economic activity, and expectations around those variables. At the worst point of the 2007-2009 financial crisis, with the target federal funds rate already set at the 0.00% – 0.25% range, the Taylor Rule suggested that the appropriate target rate was about -6%. To achieve a negative rate was the whole point of QE; and while a central bank cannot achieve a negative interest-rate target through traditional open-market operations, it can print and buy large amounts of assets on the open market – and the Fed proceeded to do so. By contrast, the Taylor Rule is now projecting an appropriate target interest rate around 2%, but the Fed is goes on pursuing a QE-adjusted rate of around -5%.

Also, growth in NYSE margin debt is showing the kind of rapid acceleration that often signals a drawdown in the S&P 500. Are we there yet? Maybe not, as the level of investor complacency is just so (insert your favorite expletive) high.

The potential for bubbles building atop the monetary largesse being poured into our collective glasses is growing. As an example, the "high-yield" bond market is now huge. A study by Russell, a consultancy, estimated its total size at $1.7 trillion. These are supposed to be bonds, the sort of thing that produces safe income for retirees, yet almost half of all the corporate bonds rated by Standard & Poor's are once again classed as speculative, a polite term for junk.