Government Against the People

It Gets Worse in the Late Stages

By Paul Rosenberg

All governments – communist, capitalist, fascist, monarchy, theocracy, whatever – survive on the skim. They take money from productive people, by force or threat of force. However prettied-up or justified this fact may be, it remains the central fact of rulership.

It’s a simple but disturbing truth: A late-stage state’s modus operandi must always be “government against the people” – an MO that is inherently predatory. And it’s not because the participants are all sociopaths (though many are).

At most times, governments try very hard to skim quietly, as with payroll taxes, where the producer’s money is taken away before he or she ever holds it in their hands. That’s also why tariffs were a traditional tax – the average person never saw it, and didn’t feel violated.

But when governments are massively over-extended, they lose the luxury of the quiet skim and become more aggressive. This is simply what happens in long-established, monopolistic institutions, like governments. They spend wildly to make themselves look good, then find they need more money. Not willing to cut their spending, they have two choices:

1.     Debasement of the currency, which they always do first. But this trick never works for very long, since people do engage their minds when conducting commerce and adjust their prices to counteract the debasement.

2.   Squeeze the producers dry, any way they can.

The Problem of Legitimacy

You may wonder why the governments don’t just cut their spending. That would seem an obvious choice. But they can’t cut spending without tarnishing their image as the mighty protector and the great fount of human compassion. People pay taxes willingly because of this high and mighty image; lose the image and you lose tax compliance.

Welfare, Not Full-Time Work, Is Now America's No. 1 Occupation

America, land of the free, has become land of the dependent

by IDB Editorial

"Is Welfare The New Normal?" we wondered in an editorial last Thursday, and we didn't have long to wait for an answer. On Friday an answer came back in depressing new data from the Census Bureau.

CNSNews.com's indefatigable data hound, Terence P. Jeffrey, dug into a few routine Census releases recently and discovered something shocking: More people in America today are on welfare than have full-time jobs.

No, that's not a misprint. At the end of 2011, the last year for which data are available, some 108.6 million people received one or more means-tested government benefit programs — bureaucratese for welfare.

Meanwhile, there were just 101.7 million people with full-time jobs, the Census data show, including both the private and government sectors.

This is a real danger for the U.S. — the danger of dependency. Anytime more people are being paid not to work than to work, it imperils our democracy. No one votes to cut his own welfare benefits. So welfare grows.

In recent years, the welfare state has expanded to create an all-encompassing security blanket to protect Americans from all vagaries of economic life. For everything from losing a job to having trouble paying the rent, there's now a welfare program for it.

Those who say the poor deserve such largess will find no argument here. Sometimes people have such dire need that a helping hand may be necessary, if only for a limited period of time.

But this goes way beyond that.

According to official data from the government, 46.5 million people live in poverty in the U.S. Doing the quick math, that means just 43% of all those on welfare are officially considered poor.

Global Warming: The Wall Street Party Has Begun

The party is on.

by Anthony Wile

And you read it here first.

As we observe this phenomenon, we realize that global warming is going to play a big role in Wall Street's upcoming and ongoing promotion. But let's take it from the top.

Two significant things just happened that confirm a furtherance of this trend.

On November 1st, President Barack Obama signed an executive order instructing states to ready themselves for the "environmental impact" of climate change.

At the same time, one of Hollywood's most successful and power directors, James Cameron, announced he is creating a global warming drama coming to Showtime cable in April and called "Years of Living Dangerously."

April is obviously when this investment party really gets going full-steam. It's blazing hot already. Thanks to the JOBS Act, we're aware that thousands of glossy promotional pitches are being sent via snail mail seeking accredited investors.

We track this stuff. It's truly remarkable. These brochures cost millions and millions to produce. Where's the money coming from? This is a huge promotion. All the big boys are in on it. One last Wall Street blow-off.

That's how they operate. It boggles the mind. People can't conceive of the vastness of these modern promotions. The entire industrial and promotional might of the Western world is seized and put into service – including the President of the United States.

Here's an excerpt from a Yahoo article:

"The impacts of climate change .... are already affecting communities, natural resources, ecosystems, economies and public health across the nation," Obama said in the order. "These impacts are often most significant for communities that already face economic or health-related challenges, and for species and habitats that are already facing other pressures."

Obama named symptoms of climate change as an increase in long periods of excessively high temperatures, more heavy downpours, more wildfires and severe droughts, permafrost thawing, ocean acidification, and rising sea levels.

The task force includes seven Democratic state governors and the Republican governor of Guam, a US territory that is vulnerable to rising sea levels in the Pacific Ocean. Also on the panel are the mayors of a group of major American cities.

Tell your friends and neighbors that the concentrated might of the West's largest corporations is being married to a single, overwhelming promotion buttressed by regulatory changes, advanced by the power of the US president and advertised via Wall Street's most skilled drummers and brokers and they will look at you like you're crazy.

They'll call you a conspiracy theorist.

Why Spy?

Voyeurism as Politics

by Angelo M. Codevilla

Technical prowess notwithstanding, US communications intelligence is dumb congenitally. In a previous column I explained that NSA’s use of sensitive antennas to capt the electronic spectrum, of supercomputers to record “the take,” and of sophisticated algorithms to search it suffer from the same deadly lack of quality control (counterintelligence) that afflicts human collection; moreover that elementary countermeasures reduce even the possibility of capting useful information. The latest revelations that the NSA has been listening to such as German Chancellor Angela Merkel’s private conversations as well as to Cardinals at papal conclaves highlight a more fundamental flaw, namely US government officials’ misunderstanding of intelligence, of the very reason for spying.

Intelligence, by its very nature, is information that you can do something with or about. It is not about reveling in secrets. Trying to learn about secrets apart form plans for action amounts to voyeurism. Worse, intelligence as a giant “fishing expedition” for secrets detracts from focusing on getting information, regardless of source, to accomplish specific objectives. Unfortunately, the very reason why US intelligence in general and NSA’s COMINT in particular gather all they can is that US officials don’t really know what they are doing and foolishly expect intelligence to prompt them.

Officially, all US intelligence, NSA included, works within a “National Intelligence Priorities Framework.” Testifying before Congress James Clapper, Director of National Intelligence, described it as “a huge enterprise… with thousands and thousands of individual requirements.” This “framework” is the end product of the so-called “Requirements Process,” that consists of countless committees and subcommittees from every intelligence agency and executive departments, overseen by the White House.

The Theory of Interest and Prices in Practice

All actions of all men in the markets are various forms of arbitrage

by Keith Weiner

Medieval thinkers were tempted to believe that if you throw a rock it flies straight until it runs out of force, and then it falls straight down. Economists are tempted to think of prices as a linear function of the “money supply”, and interest rates to be based on “inflation expectations”, which is to say expectations of rising prices.

The medieval thinkers, and the economists are “not even wrong”, to borrow a phrase often attributed to physicist Wolfgang Pauli. Science has to begin by going out to reality and observing what happens. Anyone can see that in reality, these tempting assumptions do not fit what occurs.

In my series of essays on interest rates and prices[1], I argued that the system has positive feedback and resonance, and cannot be understood in terms of a linear model. When I began this series of papers, the rate of interest was still falling to hit a new all-time low. Then on May 5,2013, it began to shoot up. It rose 83% over a period of exactly four months. That may or may not have been the peak (it has subsided a little since then).

Several readers asked me if I thought this was the beginning of a new rising cycle, or if I thought this was the End (of the dollar). As I expressed in Part VI, the End will be driven by the withdrawal of the gold bid on the dollar. Since early August, gold has become more and more abundant in the market.[2] I think it is safe to say that this is not the end of the dollar, just yet. The hyperinflationists’ stopped clock will have to remain wrong a while longer. I said that the rising rate was a correction.

I am quite confident of this prediction, for all the reasons I presented in the discussion of the falling cycle in Part V. But let’s look at the question from a different perspective, to see if we end up with the same conclusion.

In the gold standard, the rate of interest is the spread between the gold coin and the gold bond. If the rate is higher, that is equivalent to saying that the spread is wider. If the rate is lower, then this spread is narrower.

The Outrageous Inside Story of the New Billionaire Wildcatters

The US shale revolution is a reminder of the deep pools of ingenuity, risk taking, and entrepreneurship in America

By Mark J. Perry 

I just finished reading an advance copy of a really interesting new book titled “The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters” by Gregory Zuckerman, a financial journalist and special writer at the Wall Street Journal. It’s a fascinating and detailed account of America’s great shale revolution, and I highly recommend it for anyone interested in learning more about what is probably the most important energy chapter in US history.

Zuckerman skillfully presents a very detailed and readable story of the American wildcatters who eventually “cracked the code” for shale oil and gas and revolutionized the US energy sector starting in about 2008. While the major oil companies had given up on finding new oil and gas in America and focused on exploration elsewhere – Africa, Asia, Russia – a small group of US “petropreneurs” were determined to find cost-effective technologies to unlock the oceans of oil and gas they knew were trapped inside shale rock formations saturated with fossil fuels miles below the Earth’s surface.

As the promotional material for the book explains: “Everyone knew it was crazy to try to extract oil and natural gas buried in shale rock deep below the ground. Everyone, that is, except a few reckless wildcatters – who risked their careers to prove the world wrong.”

Here is a slightly edited excerpt from the last chapter of the book that I think captures some of the key points about America’s shale revolution and the petropreneurs who made it happen:

A group of frackers, relying on markets cures rather than government direction, achieved dramatic advances by focusing on fossil fuels of all things. It’s a stark reminder that breakthroughs in the business world usually are achieved through incremental advances, often in the face of deep skepticism, rather than government-inspired eureka moments.

Drones row turns out to be Kubuki theater

Walking on very thin ice

By Ramy Srour

WASHINGTON - Even as Pakistan's prime minister again publicly demanded an end to controversial US drone strikes in his country during a meeting with US President Barack Obama Wednesday, secret documents reveal long-time collusion with the CIA-led targeted assassination program.

Prime Minister Nawaz Sharif's visit coincided with fresh allegations this week by human rights groups that US drone strikes in Pakistan's tribal regions may amount to war crimes.

On Thursday, the Washington Post said it had obtained top-secret CIA documents and Pakistani diplomatic memos explicitly confirming what was already apparent to many - that "top officials in Pakistan's government have for years secretly endorsed the programme and routinely received classified briefings on strikes and casualty counts".

"This whole business of 'they [Islamabad] secretly or tacitly agreed to the strikes' is very, very dangerous," Jeremy Rabkin, a member of the board of directors at the US Institute of Peace, an independent national security institution here, and a professor of law at the George Mason University School of Law, told IPS.

"It doesn't mean very much to us if the Pakistani government can't even endorse the drone programme in front of their own people," he said.

EU Proposal to Monitor "Intolerant" Citizens

 Α dark day for European democracy

by Soeren Kern

"There is no need to be tolerant to the intolerant" 

                    — European Framework National Statute for the Promotion of Tolerance, Article 4

"The supra-national surveillance that it would imply would certainly be a dark day for European democracy." 

                    — European Dignity Watch

While European leaders are busy expressing public indignation over reports of American espionage operations in the European Union, the European Parliament is quietly considering a proposal that calls for the direct surveillance of any EU citizen suspected of being "intolerant."

Critics say the measure -- which seeks to force the national governments of all 28 EU member states to establish "special administrative units" to monitor any individual or group expressing views that the self-appointed guardians of European multiculturalism deem to be "intolerant" -- represents an unparalleled threat to free speech in a Europe where citizens are already regularly punished for expressing the "wrong" opinions, especially about Islam.

The proposed European Framework National Statute for the Promotion of Tolerance was recently presented to members of the Civil Liberties, Justice and Home Affairs Committee of the European Parliament, the only directly-elected body of the European Union.

The policy proposal was drafted by the European Council on Tolerance and Reconciliation (ECTR), a non-governmental organization established in Paris in 2008 by the former president of Poland, Aleksander Kwasniewski, and the president of the European Jewish Congress, Moshe Kantor.

A global cooling consensus

Solar activity is now falling more rapidly than at any time in the last 10,000 years

In the last two years, the scientific community’s openness to examining the role of the Sun in climate change – as opposed to the role of man – has exploded.

By Lawrence Solomon

In the 1960s and 1970s, a growing scientific consensus held that the Earth was entering a period of global cooling. The CIA announced that the “Western world’s leading climatologists have confirmed recent reports of detrimental global climatic change” akin to the Little Ice Age of the 17^th and 18^th centuries, “an era of drought, famine and political unrest in the western world.” President Jimmy Carter signed the National Climate Program Act to deal with the coming global cooling crisis. Newsweek magazine published a chilling article entitled “The Cooling World.”

In the decades that followed, as temperatures rose, climate skeptics mocked the global cooling hypothesis and a new theory emerged — that Earth was in fact entering a period of global warming.

Now an increasing number of scientists are swinging back to the thinking of the 1960s and 1970s. The global cooling hypothesis may have been right after all, they say. Earth may be entering a new Little Ice Age.

“Real risk of a Maunder Minimum ‘Little Ice Age,’” announced the BBC this week, in reporting startling findings by Professor Mike Lockwood of Reading University. “Professor Lockwood believes solar activity is now falling more rapidly than at any time in the last 10,000 years [raising the risk of a new Little Ice Age] from less than 10% just a few years ago to 25-30%,” explained Paul Hudson, the BBC’s climate correspondent. If Earth is spared a new Little Ice Age, a severe cooling as “occurred in the early 1800s, which also had its fair share of cold winters and poor summers, is, according to him, ‘more likely than not’ to happen.”

During the Little Ice Age, the Sun became eerily quiet, as measured by a near disappearance of the sunspots that are typically present. Solar scientists around the world today see similar conditions, giving impetus to the widespread view that cold times lie ahead. “When we have had periods where the Sun has been quieter than usual we tend to get these much harsher winters” echoed climatologist Dennis Wheeler from Sunderland University, in a Daily Express article entitled “Now get ready for an ‘Ice Age’ as experts warn of Siberian winter ahead.”

Sympathy Deformed

Decades of foreign aid have not helped Tanzanians

By Theodore Dalrymple

To sympathize with those who are less fortunate is honorable and decent. A man able to commiserate only with himself would surely be neither admirable nor attractive. But every virtue can become deformed by excess, insincerity, or loose thinking into an opposing vice. Sympathy, when excessive, moves toward sentimental condescension and eventually disdain; when insincere, it becomes unctuously hypocritical; and when associated with loose thinking, it is a bad guide to policy and frequently has disastrous results. It is possible, of course, to combine all three errors.

No subject provokes the deformations of sympathy more than poverty. I recalled this recently when asked to speak on a panel about child poverty in Britain in the wake of the economic and financial crisis. I said that the crisis had not affected the problem of child poverty in any fundamental way. Britain remained what it had long been--one of the worst countries in the Western world in which to grow up. This was not the consequence of poverty in any raw economic sense; it resulted from the various kinds of squalor--moral, familial, psychological, social, educational, and cultural--that were particularly prevalent in the country (see "Childhood's End," Summer 2008).

My remarks were poorly received by the audience, which consisted of professional alleviators of the effects of social pathology, such as social workers and child psychologists. One fellow panelist was the chief of a charity devoted to the abolition of child poverty (whose largest source of funds, like that of most important charities in Britain's increasingly corporatist society, was the government). She dismissed my comments as nonsense. For her, poverty was simply the "maldistribution of resources"; we could thus distribute it away. And in her own terms, she was right, for her charity stipulated that one was poor if one had an income of less than 60 percent of the median national income.

An age where administration has taken the place of the Constitution

The Constitution and the Regulatory State’s Special Militias

by Edward J. Erler 

An article tucked away on the back page of my local newspaper caught my attention: the Library of Congress has become the latest federal agency to acquire a SWAT team. The Library of Congress? We know that only members of Congress and high level executive department officials have check-out privileges, so it is unlikely that SWAT teams will be used to recall overdue books. What then? Is there evidence of a planned terrorist plot to destroy the Madison papers and thereby our memory of constitutional government? Perhaps an assault by Taliban negotiators on some of the still-secret Kissinger papers to learn how Le Duc Tho outwitted the U.S. in the Paris Peace accords? To clear the lobby of the unwashed homeless? Who knows? A call to the office of the Library’s Inspector General did not elicit any satisfactory answers as to why it was so urgent for the Library of Congress to join more than seventy other federal agencies in having a SWAT team. Actually, we should be more precise: these are government militias, equipped and trained in the use of military weapons and military tactics.

Snowden, oil and smell of cat’s pee

After all, friendships are built on respect. And knowledge.

By M K Bhadrakumar

Scientists say cat urine frightens even rats that might never have seen a cat, because the forces of evolution have wired into their brains the smell of enemy’s pee. The Obama administration will be in a similar dilemma. The Kremlin made the announcement that Rafael Correa, president of Ecuador, will be back in Moscow. 

Amongst other things Correa’s talks will touch on “humanitarian” ties. In Langley, Virginia, they’re probably getting the smell of cat’s pee. Humanitarian — that’s how Russia finally treated the case of the ex-CIA whistleblower Edward Snowden. 

The last time Correa flew out of Moscow and was heading for Quito four months ago in July, it turned into a first-rate diplomatic scandal. Washington suspected Snowden would be on board the Ecuadorean presidential jet and prevailed upon the european allies to deny overflight facilities. The plane got grounded in Vienna. 

The issue has since become more messy. It’s highly unlikely any European country would want to collaborate with the US on a matter that reflects on Snowden case at a time when they are bristling they were being monitored like naked apes by the US’ Defence Intelligence Agency.

"Yes, But ... Not On Me!"

Hollande’s Tax Everything Plan Blows Sky High With Riots by Farmers

By Michael Shedlock

President Francois Hollande wants to balance the French deficit by taxing the rich, taxing the poor, taxing trucks, raising the VAT, and increasing the tax on corporations.

That policy blew sky high this week in a storm of riots by Brittany farmers.

Please consider French Gov't Backs down on Truck Tax After Riots [1]

French Prime Minister Jean-Marc Ayrault on Tuesday indefinitely suspended the introduction of a green tax on trucks following riots at the weekend in the Brittany region.

The move comes three days after a protest by hundreds of food producers, artisans and distributors in the western Brittany region ended in the worst riots in the area in years.

One person was seriously injured in clashes between police and a group of around 1,000 demonstrators, who blocked a national road with convoys of vehicles and tonnes of produce on Saturday in protest over the tax.

Bretons say the levy will squeeze the already wafer-thin margins of the region’s struggling chicken, pork and other food producers.

How Can We Have Record Bad Loans And Record Excess Liquidity At The Same Time?

It's all zombies all the way down, as far as you can see. And at the bottom there's you.

By ilargi meijer

We can read these days that Spain has come out of its recession. The Bank of Spain reported last week that GDP expanded by 0.1% in Q3. But in a country with 26% unemployment and 55% youth unemployment, such statements are devoid of any real meaning. They're mere technicality niceties. Because if anything screams recession, it's those kinds of unemployment numbers. Moreover, where do you think that 0.1%, even it you would take it seriously, came from? It's really not that hard. Spain’s return to growth is due to a 15% fall in labour costs since the 2008 financial crisis. In other words: the rich side of the economy gets to look good at the expense of the poor side. A global phenomenon.

And economists then get to spin that as the end of a recession. That sort of spin, generated first and foremost by a government's own spindoctors and spread by its financial media, is not only meaningless gibberish, what makes it worse is that it's demeaning for those who pay the price for it. Who either lost their jobs altogether or saw 15% or more cut from their often low pay. Who have suffered through multiple years of austerity in the form of higher taxes, severely cut services and diminished savings and often lost their homes too. And who, now they're at the bottom of the gutter, see their leaders boast the success of the policies that put them there.

Spain exits recession, but jobs outlook tempers enthusiasm

After more than two years of grinding recession and the destruction of 3.8 million jobs, Spain has returned to growth. But the improvement was so weak that the jobless rate is not expected to fall to pre-recession levels for many years.

The Bank of Spain reported Wednesday that gross domestic product expanded by 0.1% in third quarter. In the previous quarter, GDP shrank by the same amount. Still, the improvement delivered a psychological boost to the centre-right government of Prime Minister Mariano Rajoy, who has been under enormous pressure to provide evidence that austerity programs and the sacrifices that go with them are not the route to eternal recession.

Drone Wars

When it comes to national security, can we trust our public officials ?

by Richard A. Epstein

Right now, the United States and the larger international community is caught in a difficult debate over the use of drones against enemy combatants. Domestically, there is an odd confluence of views. The Obama administration’s policy on drones has been congenial to the conservatives, who oppose him on domestic issues; but his liberal allies, like the American Civil Liberties Union, are dismayed by what they perceive as his administration’s overuse of drones in Pakistan from 2004 to 2012. Has the United States pushed its drone attacks too far or not far enough? Have too many potential targets escaped attack because of an undue fear of excessive “incidental” or collateral damage to the lives and property of innocent non-combatants?

In this debate, the place to start is with libertarian thought, because it puts the use of force front and center. The root premise of libertarian theory is that no individual is allowed to use force or fraud, alone or in combination, to advance his personal interests over those of others—except in self-defense. The same basic rule is also a bedrock principle of international law. That one indispensable but pesky exception of self-defense complicates both domestic and international affairs. The domestic issues are hard; the international ones, almost impossible.

Self-Defense and Just War Theory

The jurist Hugo Grotius, in his 1625 masterpiece De iure belli ac pacis (On the law of war and peace), sought to apply a natural law approach to the problem of just war. Key to his inquiry is the need to reconcile the personal imperative of self-preservation with the due recognition of the like rights of other individuals, without which human society cannot survive.

Welcome To The Third World, Part 4: Boomers Reap What They’ve Sown

The truly sad part of this story is that there’s no solution

by John Rubino 

It was fun while it lasted. We Baby Boomers got to diss our elders when we were young and borrow without restraint through middle-age. Few generations have traveled such a smooth stretch of financial/psychological highway.

But now that we’re…old…the world we created isn’t so congenial. Our savings are inadequate, jobs are scarce, and retirement, as a result, is out of reach for many of us. We are, in short, reaping what we’ve sown these past four decades. From today’s Wall Street Journal:

Oldest Baby Boomers Face Jobs Bust 
Many older Americans fear they will be working well into their 60s because they didn’t save enough to retire. Millions more wish they were that lucky: Without full-time jobs, they are short of money and afraid of what lies ahead.

Deborah Kallick was a professor of biomedical chemistry at the University of Minnesota until she ventured into the private sector in 2000 with a job in genome research. She is now one of more than four million Americans aged 55 to 64 who can’t find full-time work. That number has nearly doubled in five years, according to U.S. Department of Labor figures in October.

Ms. Kallick, 60 years old, has been unemployed since 2007 and lives in the Northern California home of an ex-boyfriend. She has run out of unemployment insurance, used up most of her retirement savings and is indebted to relatives and credit-card companies.

A good job could settle her accounts, she said. Until then, Ms. Kallick relies on generosity, occasional consulting work and the sale of sweaters, purses and other possessions on eBay.

Welcome to the Third World, Part 3 - Disappearing Pensions

Like most of the rest of humanity, you’re on your own

by John Rubino 

One of the things that separate the “rich” world from the rest of humanity is the expectation that a lifetime of work is rewarded with a comfortable retirement. Whether through an employer’s pension or 401(K), or government plans like Social Security and Medicare, citizens of the US, Canada, Europe and Japan take it for granted that some baseline income and healthcare benefit is out there waiting for us when we need it. And we plan our saving and investing accordingly, presumably putting away less than we would if our retirement had to be completely self-funded.

So imagine our surprise when it turns out that pension plans, from company-specific to federal, don’t have nearly enough money to keep their promises. Consider this story on private sector pensions from yesterday’s Wall Street Journal:

Pension Trusts Strapped
Retirement trust funds created to cover billions of dollars in medical costs for unionized workers and their families are running short, forcing the funds to cut costs, trim benefits, and ask retirees and companies to pony up more cash.

The biggest such fund—a trio of United Auto Worker trusts covering benefits for more than 820,000 people, including Detroit auto-maker retirees and their dependents—is underfunded by nearly $20 billion, according to trust documents filed with the U.S. Labor Department last month.

The funds, known as VEBAs, or voluntary employee beneficiary associations, are being hit by rising medical costs and poor investment performance. Their funding comes in part from company stock, rather than just cash payments, making them vulnerable to the market’s volatility.

Welcome To The Third World, Part 2 - Real Lives

Our debts have overwhelmed even zero interest rates and trillion-dollar deficits

by John Rubino 

Yesterday’s Wall Street Journal devoted an entire page to the differences between today’s economy and a typical recovery:

Slow Recovery Feels Like Recession
Americans are two years into a recovery that doesn’t feel much different to many of them from life during the most bruising recession in seven decades. Scenes of the long haul back from the slump show a nation struggling to rebuild after a battering that crossed ages, regions and occupations.

A sobering set of economic statistics is at the heart of tales of Americans moving in with relatives, switching careers and dialing back on spending to cope with straitened circumstances amid the fitful rebound.

One benchmark, income of the median household—meaning the one in the very middle of the middle—declined 3.2% to $53,518 during the 2007-2009 recession and fell a further 6.7% to $49,909 between June 2009 and June 2011, according to an analysis of monthly Census Bureau numbers. According to a study done by former Bureau staffer Gordon Green and others at data-crunching firm Sentier Research, the income of the typical American household, adjusted for inflation and in 2011 dollars, has dropped well below the January 2000 level ($55,836).

Welcome To The Third World. Part 1 - State and Cities

State and City budgets in ruins

by John Rubino 

One upon a time, the US was a place where police came when you called, a basic safety net caught those who fell on hard times, and a lifetime of work was rewarded with a decent retirement. A First World country, in other words. To be born here was to win life’s lottery.

But apparently this was an illusion fueled by borrowing and money printing, and now that we can’t borrow quite so much, many things we took for granted are going away. Consider this video of Chicagoans being dropped from state health care assistance.

And these recent news stories:

O.C. cities reeling from revenue loss, public safety costs

Spiraling public safety costs and plummeting revenues have pushed Orange County cities to the brink. Many can’t pay their bills without raiding their reserves, an analysis by the Orange County Register has found.

The Register also found that the unfunded portion of accrued pension and health care costs for Orange County and its cities now total $8.75 billion — boosted by the cost of retirement for police officers and firefighters.

Most cities do not have a plan in place to address that debt. Like a consumer who has pegged his credit card, they are paying only what’s due immediately.

Declines in city revenue have pushed Costa Mesa to dismantle its two-helicopter air patrol and consider outsourcing half the jobs at City Hall. Stanton has locked the public out of its police station, hoping to reopen the office with volunteers. Anaheim cut $5 million from police and fire budgets, sidelining a fire engine and its crew.

The cuts to come could be worse, experts say. “It has been a painful couple of years and I think it will be painful still,” said Chapman University economist Esmael Adibi.

The Register looked at audited financial reports for each city as well as state pension documents and found:

Twenty-three Orange County cities outspent their general fund revenues during fiscal 2009-10, the most recent audited year.

Santa Ana spent 77 percent of its general fund on police and fire protection. Westminster, Stanton and Garden Grove also spent more than 70 percent on public safety. The city of Vallejo was at 80 percent when the costs of public safety drove it to bankruptcy.

Interventionism

Τhe fundamental difference between freedom and serfdom

by Ludwig von Mises

A famous, very often quoted phrase says, "That government is best, which governs least." I do not believe this to be a correct description of the functions of a good government. Government ought to do all the things for which it is needed and for which it was established. Government ought to protect the individuals within the country against the violent and fraudulent attacks of gangsters, and it should defend the country against foreign enemies. These are the functions of government within a free system, within the system of the market economy.

Under socialism, of course, the government is totalitarian, and there is nothing outside its sphere and its jurisdiction. But in the market economy the main task of the government is to protect the smooth functioning of the market economy against fraud or violence from within and from outside the country.

People who do not agree with this definition of the functions of government may say, "This man hates the government." Nothing could be farther from the truth. If I should say that gasoline is a very useful liquid, useful for many purposes, but that I would nevertheless not drink gasoline because I think that would not be the right use for it, I am not an enemy of gasoline, and I do not hate gasoline. I only say that gasoline is very useful for certain purposes, but not fit for other purposes. If I say it is the government's duty to arrest murderers and other criminals, but not its duty to run the railroads or to spend money for useless things, then I do not hate the government by declaring that it is fit to do certain things but not fit to do other things.