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.

What are the social implications of economic collapse?

Since the US economy has been in a fantasy world for so long,  the collapse will be at freefall speed

By Simon Black

For the last few days, we’ve been having an important discussion about the magnitude of the economic challenges in the west; if you didn’t read yesterday’s letter, I really encourage you to do so before proceeding because it’s important to understand why the west has truly passed the point of no return.

Simply put, the United States and much of Europe are borrowing an extraordinary amount of money now just to pay interest on the money they’ve already borrowed. They cannot even self-fund their mandatory entitlement programs without going into the hole, and their options are limited:

Option 1: Continue borrowing, keep the party going.

As long as the government CAN do this, they WILL do this.  Regardless of their intentions, though, more debt only worsens the situation, creating higher borrowing costs in the long run, and even more debt. As this happens, the pool of buyers begins to dry up, especially from overseas.

Option 2: Inflation

The more buyers stop purchasing Treasury securities, the more the Federal Reserve will mop up the excess liquidity. In doing so, the Fed essentially conjures up money and loans it to the government.

No matter what the government monkey statistics say, this is inflationary, plain and simple. The more money they print, the greater the level of inflation in the long-term. Meanwhile, as foreigners simultaneously reduce their US dollar holdings, this inflation will become more acutely felt in the US.

Option 3: Austerity

There’s going to come a time when the US government is forced to face its economic reality and make some incredibly deep cuts that would be felt across society, from Wall Street and the military industrial complex to project housing on the other side of the tracks.

Option 4: Default

Eventually, the debt burden is simply going to be too much, and the most obvious solution will be to default. Politicians will make China out to be the enemy and they will probably invent a war just to have an excuse to default on Chinese owned debt. Americans will wave the flag and celebrate defaulting on their enemies.

Option 5: Economic Cannibalism

In the best traditions of Atlas Shrugged, the government will continue its persecution of the productive class– professionals, investors, entrepreneurs, and skilled workers. Existing taxes will rise, new taxes will be created, trade barriers will be enacted, and a maze of cost prohibitive regulations will be passed.

The first option (keeping the party going) is what has been happening for years. Politicians make small concessions to show they’re “serious” about fiscal discipline, cutting laughably small programs while dumping hundreds of billions of dollars into wars and entitlement programs.

The worse the debt situation becomes, though, the higher the borrowing costs become, and the worse the debt situation becomes. It’s not an enviable position. Existing lenders will continue backing away from the US Treasury market, giving option 1 a half-life measured in months at best.

Why Do Banks Keep Going Bankrupt?

Moral Hazard, Regulation, and a Century of Systemic Bank Insolvency

by KIRBY R. CUNDIFF

The banking industry is unstable. Banks are regularly going bankrupt. Crises in the banking industry have occurred in three distinct time periods during the twentieth century—during the Great Depression of the 1930s, during the Savings and Loan crisis of the 1980s and 1990s, and during the Great Recession from 2007 to present.

Why the banking industry is so vulnerable to bankruptcies and what can be done to correct this problem?

Debt to assets, or leverage, ratios vary significantly from industry to industry. They are typically under ten percent in most high tech industries and go up to forty percent for public utilities. Average debt ratios in the banking and financial services industry are in the fifty to seventy percent range, however, and many banks have much higher leverage ratios.

Firms attempt to minimize their total financing costs or Working Average Cost of Capital (WACC). The component costs of capital (cost of debt and cost of equity) are determined by investors’ perceptions of the risk and return possibilities associated with buying debt or equity in a given company or individual.

A credit card loan has a higher interest rate than a home loan because the credit card loan is riskier—i.e. there are no assets to seize if the money is not paid back. Similarly, a high-risk company normally pays a higher interest rate on its debt than a lower-risk company and increasing leverage is normally associated with increasing risk. Due to deposit insurance, however, this isn't the case with banks.

Moral Hazard

The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 in the United States. Most of the European countries (including Cyprus) have similar organizations that insure deposits up to 100,000 EUR. (See Deposit Insurance.)

Generation Jobless

Spoiled by the Srate

By TOM SLATER

Britain’s unemployed youth need to develop greater self-reliance.

Last week, youth unemployment was once again at the top of the UK political agenda when labour-market statistics revealed that the Lib-Con coalition government’s flagship £1 billion scheme to help young people into work had proved a complete failure.

The Youth Contract aimed to create half a million new opportunities for so-called NEETs (people not in education, employment or training), by offering £2,275 in short-term subsidy to companies willing to take on and train a young person for an initial six months of on-the-job training. However, since launching in April 2012, only 21,000 applications were made out of the 160,000 subsidies allocated.

It’s easy to see why. The idea that cash-strapped businesses, otherwise unable to recruit new employees, much less inexperienced school-leavers, would take part is moronic. Despite the subsidy, one assumes many companies were naturally hesitant about taking on and training staff to whom they can’t offer long-term employment.

Unfortunately, rather than draw a line under the whole silly business, the government and the opposition are angling for new, perhaps more pervasive alternatives. The scheme’s initial advisers are urging the government to follow Labour’s proposals for a full ‘work guarantee’ for those leaving education and entering the world of work. Meanwhile, a report published by the Social Mobility and Child Poverty Commission suggested the creation of a new administrative system that would help allocate jobs to those leaving school – mirroring services like UCAS which serve prospective university students.

Despite the evident flaws of such schemes, this renewed focus on the issue of youth employment has been cheered on by commentators. One writer for the New Statesman celebrated the fact that at least now politicians of all stripes were taking it seriously. However, there’s no escaping the fact that the highlighting of this supposedly ‘jilted generation’ as unique victims of the economic crisis is constantly being spouted by commentators and politicians. Many bemoaned the fact that the vast majority of new apprenticeships created by the coalition have been taken up by those over 25, while there is constant talk of slashing winter fuel allowances for pensioners. This debate assumes that 16- to 24-year-olds, presented as the poor victims of an economy whose failure they had no hand in, are to be held up as worthy of our utmost sympathy and support.

Obamacare’s Magical Thinkers

Not even the coolest president ever can conjure up a national medical regime for 300 million people

By Mark Steyn

If you’re looking for an epitaph for the republic (and these days who isn’t?) try this — from August 2010 and TechCrunch’s delirious preview of Healthcare.gov:

“We were working in a very very nimble hyper-consumer-focused way,” explained Todd Park, the chief technology officer of the U.S. Department of Health and Human Services, “all fused in this kind of maelstrom of pizza, Mountain Dew, and all-nighters . . . and, you know, idealism. That kind of led to the magic that was produced.”

Wow. Think of the magic that Madison, Hamilton, and the rest of those schlubs could have produced if they’d only had pizza and Mountain Dew and been willing to pull a few all-nighters at Philadelphia in 1787. Somewhere between the idealism and the curling slice of last night’s pepperoni, Macon Phillips, the administration’s director of new media, happened to come across a tweet by Edward Mullen of Jersey City in which he twitpiced his design for what a health-insurance exchange could look like. So Phillips printed it out to show his fellow administration officials:

“Look, this is the sort of creativity that is out there,” he said. “One thing led to another and he left Jersey City to come to D.C. and helped push us through an information architectural process.”

Don’t you just love it! This is way cooler than the decline and fall of the Roman Empire: The only “architectural process” they had was crumbling viaducts. I think we can all agree that Barack Obama is hipper than all other government leaders anywhere, ever, combined. Unfortunately, the dogs bark and the pizza-delivery bike moves on, and, in the cold grey morning after of the grease-stained cardboard box with the rubberized cheese stuck to it, Obamacare wound up somewhat less hipper and, in fact, not even HIPAA — the unpersuasively groovy acronym for federally mandated medical privacy in America. Appearing before Congress on Thursday, the magicians of Obamacare eventually conceded that, on their supposedly HIPAA-compliant database, deep in the “information architectural process” is a teensy-weensy little bit of “source code” that reads, “You have no reasonable expectation of privacy regarding any communication of any data transmitted or stored on this information system.”

Democrat members of the House committee professed to be bewildered at why anyone would be either surprised or upset to discover that his information can be shared with anyone in the federal government, including a corrupt and diseased IRS that uses what confidential information it can acquire to torment perceived ideological enemies. And at a certain level the more blasé of the people’s representatives such as New Jersey’s Frank Pallone have a point: If Obama thinks nothing of tapping Angela Merkel’s cell phone (as she had cause to complain to him on Wednesday, in what was said to be a “cool” conversation, and not in the hepcat sense), why would he extend any greater privacy rights to your Auntie Mabel?

Longing for Dictatorship

Their political ideology is steeped in hatred for your liberty and property

by Llewellyn H. Rockwell Jr.

Politics brings out the worst in everyone, which is one good reason to completely depoliticize society. This way we can all busy ourselves in productive work or leisure, instead of wasting vast time watching these clowns on television promise the impossible to us.

What we are being offered on television is two flavors of dictatorship. One party imagines Athens, with fairness and justice for all, international brotherhood and sisterhood, a world free of hate and discrimination in which all wealth is shared and no wealth is made at the expense of nature.

Of course, this is an Athens of their own invention, since the original's culture and accomplishments depended on free trade, private ownership, sound money, and low taxes. What the Democrats are offering is a monstrously larger state that assumes control of all property, the crushing of private initiative, and an end to economic freedom.

Note that they don't talk about this. But that is the core of all their plans for fairness and justice: an increased use of violence in society, and an increased centralization of political power. Often the person who recommends this path imagines that he will be the dictator, and that his plans alone will prevail.

They don't consider that the state they advocate is also wholly capable of doing things that they do not like, like crushing civil liberties and starting wars all over the world. Note that the Left's critique of Bush's big government is not that it is crushing liberty; rather, they believe that government power is being used for the wrong purposes.

Another problem with these people: they can't stand capitalism. They resent the commercial society. They have not come to terms with the fact that without capitalism, most of the human race would starve to death.

Why do they hate it?

Because wealth under capitalism will always be unequally distributed.

They favor a different form of dictatorship.

Now to the Republicans, who imagine themselves creating a modern form of Sparta, with military strength and a disciplined citizenry unified in the drive to national greatness, courage, and heroism. Along with this comes support for national service (the draft) and a demand that Congress stop meddling in executive-branch matters.

Why Obama Should Keep Sebelius

There is something deeply wrong with our republic

By PATRICK J. BUCHANAN

The pots and pans are clanging for the ouster of Health and Human Services Secretary Kathleen Sebelius as the Obamacare website rollout takes on the aspect of that of the Edsel.

Yet, though it is a website that has America laughing, Obama’s legacy legislation itself could, in its entirety, be in peril. As ex-pilot George W. Bush used to say, this thing looks like a five-spiral crash.

Republicans are clamoring for Sebelius’s firing.

Herewith, a dissent. Why not leave her right where she is?

After all, Sebelius’s continuance testifies more eloquently than any attack ad just how far Obama’s beliefs about government and political philosophy are beyond the Middle American mainstream.

In most great U.S. corporations, if an executive had three years to roll out the product on which the company’s future might depend, and delivered this debacle, he would be gone. Panic would ensue. Emergency meetings of the board would be held to determine if more heads should roll and who should be brought in to save the company.

Outside of government, people routinely pay for their mistakes. Inside, there is often no penalty, no price, no punishment for failure.

To Obama, a mess that has members of his own party calling for suspending Obamacare for a year is just the result of “glitches.”

Still good enough for government work.

Here in D.C., many live outside the laws that rule the rest of America. Average salaries are higher and benefits superior to the private sector. Job security is greater. In-grade promotions and pay hikes are routine. And that ruthless meritocratic principle—success brings promotions, failure leads to demotions and departure—is suspended.

While no startup company, symphony orchestra, chess club, or hockey team would, a priori, insist that every racial and ethnic group, gender and sexual preference be represented at birth, such nonsense is serious business here.

Here in D.C., affirmative action comes first, before excellence, diversity before efficiency.

The boom and bust cycle

There is no means of avoiding a final collapse of a boom brought about by credit expansion

By Eugen von Böhm-Bawerk Blog

As is clear to all with half a brain the production of un-backed fiat money distorts the economic system. Simply told, when an entity in society is given monopoly to manufacture medium of exchange at its own discretion they will harness this power. Slowly at first, unsure about its effects, but always testing the limits of the privilege bestowed upon them.

As always, they will overexploit the power. They will manufacture money and give it to the masters that coercively secure the continuation of the power. The masters will obviously spend the money, creating a transaction in which nothing is payment for something. These transactions are by definition unsustainable because they violates Say`s law. We call them “bubbles”

In a free market supply is used to create its own demand. When people spend fiat money they exercise demand without providing supply. Said in other words, spending fiat money is tantamount to capital consumption and makes society poorer.

While the boom that follows money spending feels good, it must inevitably come to an end because the economic system cannot maintain the constellation that was induced by the money printing in the first place. Within the boom lays the seed for the necessary bust.

We have made a metric that sums up fiat money in its purest sense and compared that to the underlying trend growth of nominal GDC.

Our hypothesis is simple: if money growth exceeds the GDC metric a deflationary busts will inevitably come. If authorities refuse to accept reality and print more fiat money at the first sign of bust, they may “save the day” but they will “ruin tomorrow”!

Happiness is being able to wipe one's @$$ ...

A Happiness Bureau for the Bolivarian Paradise!

BY JORGE RUEDA

Americans may insist on the right to pursue happiness, but Venezuela now has a formal government agency in charge of enforcing it.

President Nicolas Maduro says the new Vice Ministry of Supreme Social Happiness will coordinate all the "mission" programs created by the late President Hugo Chavez to alleviate poverty.

Wags had a field day Friday, waxing sarcastic on Twitter about how happy they felt less than 24 hours after the announcement.

Oil-rich Venezuela is chronically short of basic goods and medical supplies. Annual inflation is running officially at near 50 percent and the U.S. dollar now fetches more than seven times the official rate on the black market.

In downtown Caracas, fruit vendor Victor Rey said he's now waiting for Maduro to create a vice ministry of beer.

"That would make me, and all the drunks, happy," he said.

A TV journalist whose show was recently forced off the air after he refused to censor political opponents of the ruling socialists, Leopoldo Castillo, called Maduro's announcement an international embarrassment.

Housewife Liliana Alfonzo, 31, said that instead of a Supreme Happiness agency she'd prefer being able to get milk and toilet paper, which disappear off store shelves minutes after arriving at stores.

"It's a Calvary getting the ingredients for any meal," she said.

Maduro blames the shortages on speculation and hoarding, but merchants say they would go broke if they adhered to government price controls.

Chavez spent billions on social programs, from benefits for single mothers to handouts of apartments and major appliances.

Maduro was elected April 14 as Chavez's chosen successor.