From protector to destroyer

Overreaching regulators are squeezing liberty out of existence

By Richard W. Rahn

Did you ever buy a game or device for which the rule book or instruction manual was so thick and detailed that you were not able to comprehend it in a reasonable period of time, so you either discarded or failed to use the product?

Have you noticed that many government regulations are so complex and vague that it is impossible to know if you are in compliance? Examples are the 70,000-plus pages of Internal Revenue Service regulations and the reported 30,000-plus pages of Obamacare regulations. Who do you think has a self-interest in all this complexity and vagueness?

Food and Drug Administration Commissioner Margaret Hamburg does not think you have the right to get a reading of your own DNA by sending a sample of your saliva to 23andMe, a company that has developed a genotype screening test. The following is from a letter the FDA sent to 23andMe: “The Food and Drug Administration (FDA) is sending you this letter because you are marketing 23andMe Saliva Collection Kit and Personal Genome (PGS) without marketing clearance or approval in violation of the Federal Food, Drug and Cosmetic Act (the FD&C Act).” The FDA is unable to cite one example of users being harmed by voluntarily obtaining information about their own bodies. Still, the company was ordered to cease marketing its highly beneficial product last month.

The Food and Drug Administration was set up to protect us from consuming bad food or drugs. It has morphed into an agency that keeps potentially beneficial drugs from us, and now is even banning our ability to know what diseases to which we may be prone, and thus, blocking our ability to take potential corrective or preventative action. The FDA has gone from being a protector to a destroyer of health and liberty.

The IRS was set up to collect taxes. It now has become a government agent to deny the right of free and protected speech, as shown not only in the harassment of Tea Party groups, but in last week’s sleazy action of demanding that certain (but not all) traditionally tax-exempt groups start providing their contributor lists to the IRS. Groups that most often stand for liberty and less government are the primary targets. What a coincidence.

One of the basic functions of money is to serve as a “store of value,” which the U.S. dollar did from 1789 until 1913 (despite occasional ups and downs, there was very little change in the wholesale-price level over that 125-year period). However, with the advent of the Federal Reserve in 1914, the dollar no longer serves as store of value, now being worth only about one-twenty-third of what it was worth in 1914.

No, America Doesn’t Have Too Many Banks

But it does have far too many pundits who have absolutely no clue what they're talking about

By Sean Davis

“America has 6,891 banks,” Slate blogger and certified financial non-expert Matthew Yglesias writes in his Moneybox column. “And that’s too many.”

Why is that? According to Yglesias, it’s because small banks are poorly managed, unregulated, and can’t compete. It’s an interesting argument, to the extent that 2+2=7 is an interesting argument, but Yglesias fails to support a single assertion with a verifiable fact or source citation. Not one. Of the seven assertions made in the first two paragraphs (spanning a whole five sentences), not one has a supporting citation.

It’s no wonder, as the very first assertion made by Yglesias — that there have been no new bank charters in the U.S. in “quite a few years” — isn’t even true, as a simple FDIC search reveals that 

four new banks have been chartered so far in 2013. But don’t let that dissuade you from the notion that Yglesias is an expert on financial regulation.

The complete lack of citations almost leads one to wonder whether the school Yglesias attended as a child banned “Show and Tell” in favor of “Tell, Don’t Show.” Oh, you got a pony for Christmas but don’t have any pictures? You’d totally introduce us to your supermodel girlfriend if she weren’t on a photo shoot in Fiji? Cool. His simple citation of the number of banks in the U.S. isn’t even backed up with a link to a source document (e.g., his figure includes the 5,937 commercial institutions and 954 savings institutions in the U.S., but excludes the 6,620 credit unions throughout the country).

But let’s look at each of his arguments about the utter uselessness and moral depravity of small community banks to see how they measure up.

First, Yglesias argues that small banks are poorly managed. How does he prove this? He starts by suggesting that the best and brightest go to Wall Street, while the “less-bright” and “not-as-good guys” end up working for small banks in cities that aren’t Manhattan. Then he assumes that they must suck at their jobs. Or as the underpants gnomes from South Park might put it: “Phase 1: Assume that only stupid people work for small banks. Phase 3: Assume bank failures.”

Now, a better writer whose abilities qualified him to work for a major publication like the Wall Street Journal (remember, the smartest people all go to work for Wall Street firms) might have gone with the alliterative and far less awkward “dumbest and dimmest” to contrast with the clichéd  ”best and brightest.” Yglesias is not that writer. And we’ll ignore for the moment what Yglesias’ little dig about where the truly smart people end up says about his career as a blogger for Slate, or as Jeff Bezos likes to call it, “The Center For Kids Who Can’t Write Good And Who Wanna Be Less Not-As-Good At Other Stuff Too.”

Pettiness aside, does his argument have any merit?

Not even close. Compared to big banks (defined as those with more than a billion dollars in assets), small commercial banks (those with under $100 million in assets) have a higher ratio of equity-to-assets, a lower ratio of volatile liabilities-to-assets, a lower percentage of non-current loans and leases, and next to zero derivatives. As of September 30, 2013, derivatives totaled a mere 0.15 percent of the cumulative assets of small banks. But for the biggest banks, derivatives were nearly 2,000 times higher than their cumulative asset base (1,960.53 percent of assets, to be precise). In the words of Vice President Joe Biden, the difference between those derivative numbers is a big f—ing deal.

The Global Retirement Dilemma

Very Slowly and Then At Once

by Barry Ritholtz

What The Pope Gets Wrong About Capitalism

Hint: Just about everything

By David Harsanyi

Pope Francis’s first apostolic exhortation, Evangelii Gaudium (“The Joy of the Gospel”) is a beautiful document and a joy to read. I’ll leave its theological implications to those who live in the Church. What’s got many people praising the Pope today, though, isn’t his plea for good works, but rather his critique of capitalism. Ed Morrissey argues that many in the media misunderstood the Pope’s point. And Bishop James D. Conley tells us that The Joy of the Gospel was a rejection of “idolatry of any economic system as a panacea” rather than a specific rejection of capitalism and consumerism.

Maybe.

As fascinating as the context of Pope’s message might be, there is — or seems to be — something new about this rhetoric. You could always detect a pinch of socialistic seasoning in the Church’s theological stew. This, no doubt, is why God saw fit to create Robert P. George and Robert Sirico. In this case, the Pope didn’t simply point out that the wealthy weren’t doing enough to help alleviate poverty. He used the recognizable rhetoric of the Left to accuse free-market systems of generating and nurturing that poverty. And these platitudes — things that run wild in the liberal imagination like unfettered capitalism and “trickle-down” economics — were clearly aimed at the United States.

The Pope condemns the “new tyranny” of “idolatry of money,” not only reasonably arguing that economic systems should not be accepted with blind faith, but that “as long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality, no solution will be found for the world’s problems or, for that matter, to any problems.”

For starters, it’s troubling that the Pope fails to make any genuine distinction between Western poverty (terrible) and the poverty of the Third World (unimaginably terrible). But is it really true that “absolute autonomy of markets and financial speculation” arethe driving reasons for poverty and inequality? People in places like Congo, Burundi, Eritrea, Malawi, or Mozambique live under corrupt authoritarian regimes where crippling poverty has a thousand fathers — none of them named capitalism. The people of Togo do not suffer in destitution because of some derivative scheme on Wall Street or the fallout from a tech IPO.

“While the earnings of a minority are growing exponentially,” the Pope goes on to say, “so too is the gap separating the majority from the prosperity enjoyed by those happy few.”

In truth, global inequality has been dropping for years. The World Bank estimates global poverty was halved from 1990 to 2010. In fact, according to the World Bank, the United Nations’ “millennium development goal” of cutting world poverty in half by 2015 came in five years ahead of schedule despite a major global recession. The decline in poverty coincides, not coincidentally, with developing nations embracing more market-based systems.

Moreover, the Pope falls into the trap of conflating inequality and poverty. Some countries enjoy income parity because most citizens are rich and others because most citizens are poor. Put it this way:  Egypt, Pakistan, and Mongolia all enjoy more economic equality than the United States. The GDP per capita here is $49,800. In a country like Argentina, the Pope’s homeland, a place where wealth is more fairly distributed, it’s $18,200.

Now, no reasonable person believes any economic system is a cure-all. But how many reasonable people argue that market-based economies — and the underlying morality that drive them — haven’t done more to alleviate poverty worldwide than any other system? For the most part, in fact, the more unfettered a nation’s economic system is the prosperous the population becomes, and consequently the more it spends on charity and safety net programs. When we match up the Cato Institute’s Index of Economic Freedom with the World Bank’s measure of per capita income, we find that the countries with the most unencumbered systems and the most financial “speculation” usually have the least of amount of poverty:

Hong Kong — $51,946

Singapore — $61,803

Australia — $44,598

New Zealand — $32,219

Switzerland — $53,367

Canada — $42,533

Chile — $22,352 (Chile’s score has jumped considerably since unfettered capitalism took over)

Mauritius — $15,649

Denmark — $42,086

Rather than credit those who do their best to balance this imperfect system that lifts millions out of impoverishment, the Pope attacks them for the prevalence of imaginary economic Darwinists who callously keep equality from blooming. “Consequently,” these people “reject the right of states, charged with vigilance for the common good, to exercise any form of control,” Pope Francis contends.

Any form of control? Really? The Federal Registry of the United States regularly comes in over 60,000 pages. Or, to put it another way, it’s longer than all 46 books of the Old Testament, the 27 books of the New Testament and every gospel the Council of Nicaea decided to toss, combined. And the United States, a place teeming with these economic Darwinists, also happens to be one of the most charitable places on the planet — even before we begin counting per capita spending on safety nets.

Theorists lose the plot

If poor economic performance produces even worse politicians, the downside risk to living standards is essentially unlimited

By Martin Hutchinson 
Add Milton Friedman to the list of economists whose solutions have come under fire. Predictors - including this column - have been confounded by strange economic behavior in the five years since the 2008 downturn. 

For monetarists, whether Friedmanite or Austrian like me, the strangest feature has been the failure of inflation to re-emerge, in spite of massive overstimulation of the money supply and prolonged negative real interest rates. For others of different persuasions, the Great Recession has surprised by failing to produce results from massive Keynesian stimulus, by the prolonged failure of labor force participation to return to its pre-recession levels and by the persistent decline in real wages even in a time of economic recovery. Existing economic theories of all political shades have failed to predict the course of reality. 

The biggest casualty of the last few years should surely be Friedmanite monetarism. M2 money supply in the United States is currently expanding at 6.5% over the last year and 11% over the past two months, and has been expanding at a steady 7% over the past five years, much faster than nominal GDP. Yet, rising consumer price inflation is nowhere to be seen. 

Add to that Friedman's own apostasy in the last few years of his life, when he praised then Federal Reserve chairman Alan Greenspan's mad expansion of the money supply, at a time when he could really have helped sound-money believers, and the man's credibility is shot. (Maybe not as badly shot as Maynard Keynes's, but dented nevertheless.) 

Friedmanites will make two responses to this. First, they will claim that we should be looking at M4, which has been expanding much more slowly than narrower measures, rather than any of the narrower measures of money supply. While the Fed has been expanding the monetary base like madmen, the banking system has not been making business loans aggressively, but instead has placed over US$1 trillion of extra reserves on deposit with the Fed. 

There is a certain amount of truth to the above claim, but there is a lot more to the Friedmanites' second claim, that inflation has been rampant over the last five years, but has manifested itself in asset prices and (until 2011) commodity prices. 

There is no question US stocks, in particular, are in a major bubble that shows increasing similarities to that of 1997-2000, while the prices of such assets as farmland and collectibles are reaching levels never before dreamed of. But to some extent this isn't a very helpful response; arithmetically, the gigantic money creation has to go somewhere, and it isn't clear at first glance whether rising prices of miscellaneous assets are particularly significant or damaging. 

Karzai’s India visit is a defining moment

A leap of faith is necessary

by M K Bhadrakumar

The visit to New Delhi by Afghan President Hamid Karzai on December 13 will be taking place against an ominous backdrop of regional and international security.

India has not reacted to the flare-up of tensions in the Asia-Pacific over the past week. It didn’t have to. India could anticipate the developments.

Prime Minister Manmohan Singh said with remarkable prescience last week in his address to the Combined Commanders’ Conference in New Delhi that “just as the economic pendulum is shifting inexorably from west to east, so is the strategic focus, as exemplified by the increasing contestation in the seas to our east and the related “pivot” or rebalancing” by the US in this area. This, to my mind, is a development fraught with uncertainty. We don’t yet know whether these economic and strategic transitions will be peaceful.”

Clearly, the US’ “pivot” has destabilized the Asia-Pacific. The “pivot” devolves upon a diplomatic and military build-up throughout the Asian region centrally aimed at isolating and encircling China and checking its growing challenge to American dominance in East and Southeast Asia.

The US is encouraging its key allies such as Japan and the Philippines to take a tougher stance toward Beijing and the latter has begun reacting to the calibrated escalation of the military provocations and pressure from Washington.

The stage is set for risky military confrontations, encounters or even outright war through miscalculation or deliberation. The year is 2013 and it bears an uncanny resemblance to 1913 when, too, the deepening crisis of capitalism culminated in war.

It may seem the US has lost the panache for wars but Washington is only extricating itself from overstretch in the Middle East so that it can focus optimally on the “pivot” to Asia. Of course, this is not a “strategic retreat,” as the Saudis and Israelis allege, but is a reorientation of global priorities even as the timeline is shortening by the day when China would overtake America as the world’s number one economy.

The Pentagon’s vast military assets in the Persian Gulf are integral to the “pivot” to Asia as they operationally mesh with the US’ presence in Diego Garcia, its control of the Malacca Straits and its dominance of the Indian Ocean sea lanes. The logic of the deployment of the US missile defence system in the Persian Gulf region is also obvious.

War On Democracy

Spain And Japan Move To Criminalize Protests 

By Michael Krieger

As might be expected as political and economic policy failures pile up and citizens become increasingly mad, the status quo is becoming increasingly authoritarian (recall blogger “Mish” was just fined 8,000 euros for a blog post).

In the latest disturbing news from a desperate power structure, the conservative government in Spain has passed an Orwellian bill titled the Citizens’ Security Law, which allows for fines of up to 600,000 euros ($816,000) for “unauthorized” street protests, and a 30,000 fine for merely having signs with “offensive” slogans against Spain or for wearing a mask.

This law is a perfect example of the increasing neo-feudalism being implemented across the globe by a corrupt, decadent and depraved status quo. Such laws must be immediately resisted or they will only get worse, much worse. It is quite obvious what the power structure in Spain in trying to do. It is putting into place an egregious punishment framework that could bankrupt a person by merely protesting. Such a threat is intended to make people not even consider their rights as human beings to express grievances to a crony government.

Instead of eye for an eye, it is like 25 eyes and a limb for an eye. If this does’t tell the Spanish people all they need to know about their government I don’t know what will. Below are some excerpts from a Reuters story covering the law:

(Reuters) – Spain’s conservative government agreed on Friday to toughen penalties for unauthorized street protests up to a possible 600,000 euro ($816,000) fine, a crackdown that belies the peaceful record of the anti-austerity protests of recent years. 

Street protests and strikes have became increasingly frequent in recent years following huge cuts to education and health spending aimed at shrinking Spain’s public deficit to adhere to European Union demands. 

But in contrast to Greece and elsewhere, where many similar protests have turned violent, Spain’s have remained largely peaceful, despite unemployment of 26 percent, rising poverty, and changes in labor laws that make firing easier. 

Among other measures, protesters who cover their faces at demonstrations could be fined up to 30,000 euros while “offensive” slogans against Spain or its regions could reap a similar sanction. 

The Pope's Rhetoric

Ignorance is not always an excuse 

I see that the pope has decided to weigh in on economic issues:

“Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world,” Francis wrote in the papal statement. “This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system.”

A few reactions:

First, throughout history, free-market capitalism has been a great driver of economic growth, and as my colleague Ben Friedman has written, economic growth has been a great driver of a more moral society.

Second, "trickle-down" is not a theory but a pejorative used by those on the left to describe a viewpoint they oppose.  It is equivalent to those on the right referring to the "soak-the-rich" theories of the left.  It is sad to see the pope using a pejorative, rather than encouraging an open-minded discussion of opposing perspectives.

Third, as far as I know, the pope did not address the tax-exempt status of the church.  I would be eager to hear his views on that issue. Maybe he thinks the tax benefits the church receives do some good when they trickle down.

Second, "trickle-down" is not a theory but a pejorative used by those on the left to describe a viewpoint they oppose.  It is equivalent to those on the right referring to the "soak-the-rich" theories of the left.  It is sad to see the pope using a pejorative, rather than encouraging an open-minded discussion of opposing perspectives.

Third, as far as I know, the pope did not address the tax-exempt status of the church.  I would be eager to hear his views on that issue. Maybe he thinks the tax benefits the church receives do some good when they trickle down. 

2013: The End of History Ends

The ‘axis of weevils’

By WALTER RUSSELL MEAD

Sometime in 2013, we reached a new stage in world history. A coalition of great powers has long sought to overturn the post Cold War Eurasian settlement that the United States and its allies imposed after 1990; in the second half of 2013 that coalition began to gain ground. The revisionist coalition hasn’t achieved its objectives, and the Eurasian status is still quo, but from this point on we will have to speak of that situation as contested, and American policymakers will increasingly have to respond to a challenge that, until recently, most chose to ignore.

Call the challengers the Central Powers; they hate and fear one another as much as they loathe the current geopolitical order, but they are joined at the hip by the belief that the order favored by the United States and its chief allies is more than an inconvenience. The big three challengers – Russia, China and Iran — all hate, fear and resent the current state of Eurasia. The balance of power it enshrines thwarts their ambitions; the norms and values it promotes pose deadly threats to their current regimes. Until recently there wasn’t much they could do but resent the world order; now, increasingly, they think they have found a way to challenge and ultimately to change the way global politics work.

This is not, yet, a pre-war situation. The Central Powers know that they can’t challenge the United States, the EU, Japan and the various affiliates and associates of what we might call the Maritime Association head on. The military and economic facts on the ground would make such a challenge suicidal. But if they can’t challenge the world system head on, they can chip away at its weak spots and, where the maritime powers leave a door unlatched or a window open, they can make a quick move. They can use our own strategic shortsightedness against us, they can weaken the adhesion of our core alliances, and they can use the mechanisms of the international system (above all, the United Nations Security Council where Russia and China both wield the veto) to throw bananas in our path.

Lacking the strength for a head on confrontation, they are opportunistic feeders. They look for special circumstances where the inattention, poor judgment or domestic political constraints of the status quo powers offer opportunities. Russia’s strike against Georgia was one such move; both Russia and Iran have skillfully exploited the divisions among the Americans and their allies over the horror in Syria.

Think of the Central Powers as an ‘axis of weevils’. At this stage they are looking to hollow out the imposing edifice of American and maritime power rather than knock it over. This is not the most formidable alliance the United States has ever faced. Not everything the Central Powers want is bad; like all revisionist powers, they have legitimate grievances against the status quo. They don’t always agree, and in the long run their differences with one another are profound. But for now, they have not only agreed that they have a common interest in weakening the United States in Eurasia and disrupting its alliances; increasingly, with the United States government still largely blind to the challenge, they are pushing ahead.

Economic Science and the Underworld

The individual needs freedom and the free market. The socialist alternative threatens to blot him out of the equation.

BY JR NYQUIST

While economics depends on man’s rational side, humanity nonetheless clings to the irrational. We want to have our cake and eat it. We want a free lunch, free health care, free schools, and free retirement. But nothing is free. Someone must pay. Economic science says so.

When we say economics is a science, the ordinary man thinks of physics and biology. But economics is a different kind of science. According to the Austrian school, economics is an a priori science which assumes that purposeful behavior can alleviate a “felt uneasiness.” The process by which the greatest alleviation is made possible is called capitalism, or the free market. Whatever anyone wishes to say against market freedom, there is no workable alternative.

According to Mises, writing in his book The Anti-Capitalist Mentality, 

“The emergence of economics was one of the most portentous events in the history of mankind. In paving the way for private capitalistic enterprise it transformed within a few generations all human affairs more radically than the preceding ten thousand years had done.” 

Yet more amazing still, economic science and the capitalist transformation of human life was accomplished by a very small number of authors whose books influenced a similarly small number of statesmen. As Mises explained, 

“Not only the sluggish masses but also most of the businessmen who, by their trading, made the laissez-faire principles effective failed to comprehend the essential features of their operation. Even in the heyday of liberalism only a few people had a full grasp of the functioning of the market economy.”

It was a freak of history that a handful of thinkers began to understand economic science. It was rarer still, in terms of politics, that a handful of statesmen were able to make use of that understanding. As Mises explained, 

“Western civilization adopted capitalism upon [the] recommendation … of a small elite.” 

As such, capitalism has always hung by a slender thread. For how often do we find sufficient intelligence within ruling elites? How often does genius go unrecognized? After all, every man is a genius in his own mind. Consider how the many geniuses who produce so little of worth from their swollen egos today must naturally malign anyone whose thinking stands on higher ground. In fact, the grim history of humanity suggests that a true and worthy social science (or economic science) is as unlikely as a mouse chasing a cat. For that which touches on society and institutions must necessarily fall victim to powerful interests and political passions.

Yet economic science performed its miracle. Wonders of technology and wealth now abound. Our ancestors could hardly imagine the modern world. At the same time, a dark cloud approaches. The intelligent few seem to have been overwhelmed by the many-too-many. None should be naïve enough to imagine that history is only a story of progress. If we have been paying close attention, we might remember the saying, “What goes up, must come down.”

The Slow Death of 'Traditional' Families in America

More than 20 percent of non-college grads are raising their kids alone

by DEREK THOMPSON

Thanksgiving is perhaps the quintessential American family holiday, but what, exactly, does the quintessential American family look like today? Gay marriage laws have happily extended legal rights to same-sex couples, but over the last half century, a less auspicious family development has been the rise of single moms and dads and the decline of two-parent households, particularly among lower-income and less-educated families.

New Census numbers help tell the story:

The big takeaway here is that college graduates overwhelmingly raise children together (88 percent have a married spouse present). Non-college-grads are more than twice as likely to raise their child alone.

I took the Census figures and turned them into pie charts to accentuate the percentage difference in family arrangements by education. What you might call the "traditional" family structure (two parents raising their kids, together) dissipates as you move down the education ladder.

The blue slice represents what some people might consider a traditional family: Two married parents raising kids together.

Education and income go hand-in-hand, and so it will come as no surprise that richer individuals are more likely to married, regardless of race and education, and poorer individuals are much less likely to be married. This graph shows *all* Americans over the age of 15.

The point here isn't that marriage should be universal, or that we should abolish divorce, or that married two-parent households are the only possible way to properly raise a child. Rather, the big idea is that rich, educated people are more likely to marry, more likely to marry each other, and more likely to use their resources and the obvious time benefits of a two-parent household to produce educated (and rich) children. This is a virtuous cycle, and it turns vicious for the poor. Across the income spectrum, single parents have a tough time balancing work and child-rearing, especially when work earns them very little money. You don't have to be a cultural conservative to acknowledge that the disintegration of the traditional family structure at the bottom of our economic ladder means thattoo many kids have fallen behind before they set foot in school.

Being raised by both parents should not be a rich kid's exclusive privilege. And it isn't, yet: More than 60 percent of high-school dropouts still raise their children in two-parent households. But that figure is inching dangerously downward.

Rescuing the Bottom Billion From the Pope’s Peronist Economics

It is very easy when appalled by one’s fellow human beings to want impose virtue (or taste) upon them, but this is a temptation that should be resisted

by Theodore Dalrymple

It is not difficult both to dislike and to criticize consumerism. It is often as vacuous as it is unattractive. Last week, for example, my wife took me to something called an ‘outlet village,’ an expanse of shops built in faux Eighteenth Century style that sold designer products at allegedly low prices (though, wanting nothing in particular, they seemed high enough to me). There was actually a queue to obtain entry into Prada whose products are hardly those of first or primary necessity. However deep our economic crisis, this was no queue for rations in wartime; and though I am far from an egalitarian I felt uneasy that there were so many people wanting and even eager to pay hundreds or perhaps thousands for what seemed to me to be aesthetically cheap and vulgar gewgaws while so many people await their heating bill with extreme anxiety and trepidation.

If I am honest, however, what really appalled me about the ‘outlet village,’ which, incidentally, proclaimed itself a ‘community,’ was the appalling taste of the moneyed masses. Though they shopped all day for clothes – you couldn’t buy so much as a newspaper, let alone a book, in the ‘community’ – I didn’t see a single smartly dressed person among them, let alone an elegantly dressed one. On the contrary, they were to a man and woman attired in expensive slum- casual garments whose brands alone distinguished them from what the poor would wear. As consumers, then, they weren’t even very good at what they did, namely consume. They wore brand names as if they were medals awarded in the war to distinguish themselves as individuals from others in some way. If the justification for disparities in wealth is that the wealthy beautify the world, these people failed utterly to justify their prosperity. Purchasing power without power of discrimination is (at any rate for me) dispiriting to behold; but I am under no illusion that if income and assets were more equally distributed in society things would be any better from the aesthetic point of view, irrespective of the economic or social effects of redistribution.

Appalled or even disgusted as I was by what I thought was this vast outdoor exhibition of mass vacuity and spiritual emptiness, to say nothing of absence of taste, I kept enough control of my gut reaction not to suppose that it would be a very good guide to or motive for economic or social policy. It is very easy when appalled by one’s fellow human beings to want impose virtue (or taste) upon them, but this is a temptation that should be resisted. Deeper reflection is necessary; intemperance and impatience usually end in something worse than they were designed to amend.

In France, the Far Right Rises and Rises

France Accelerates Descent Towards Fascism

By Walter Russell Mead

President François Hollande is now the most unpopular French leader of the Fifth Republic. Opinion polls put his approval rating at just 21 percent. French citizens find his strict tax plans deeply upsetting and fear that his policies are weakening the economy and selling out the country to Brussels and Berlin. “Opinion poll after opinion poll reveals that the French are pessimistic about their future,” writes Jeremy Jennings, a professor at Kings College in London.

Hollande appears to be in real trouble. “Attempts to reassert his authority before the French electorate have unfailingly backfired,” Jennings writes. “Even members of his own party have taken to booing and whistling when Hollande’s name is mentioned. Not only this, but his government looks to be disintegrating…. Ministers frequently and publicly disagree with each other. Measures are announced, only to be withdrawn days later after the latest round of popular protests. The impression is one of confusion and panic.”

As Hollande slips the popularity of Marine Le Pen, the head of the far right National Front party, is growing, despite her controversial views on immigrants, Islam, and European integration. “Only last month a poll published in the left-wing Nouvel Observateur revealed that in next year’s European elections more people intended to vote for the Front National than for any other party.”

Le Pen has worked hard to take her party into the mainstream. Her father, Jean-Marie Le Pen, the founder of the National Front, was successfully prosecuted for denying the Holocaust, a legacy that still haunts the party. When Marine proposed an alliance with the similarly anti-EU UK Independence Party, Nigel Farage said his party would never “get into bed” with the National Front and its “deeply embedded” elements of anti-Semitism. Nevertheless, Le Pen has managed to broaden her support by appealing to voters’ sense of patriotism and championing strong defense and security policies, while railing against the euro (“a German invention”), the weakening of French industry and agriculture by “pot-bellied emirs” and ”voracious big bosses,” and the rising number of immigrants (“itinerant thieves”) taking jobs and housing from true French. The National Front, she has suggested, should be described not as “far right” but as the “patriot party.”

It’s working. Her popularity is growing—a recent poll found that 56 percent of French voters think Le Pen is the most capable politician to take on Hollande—and so is her political influence. Sarkozy’s former prime minister has spoken publicly about the prospect of an alliance with the National Front. “We will be in power in the next 10 years,” Le Pen told Bloomberg last month.

It is disillusionment with the moderate parties of both the right (Sarkozy) and the left (Hollande) in France, occurring at the same time as an economic decline and harsh austerity (?) imposed by Brussels (and reality), that is causing many French voters to find some comfort in Le Pen’s message of national strength and pride. Though still held at arm’s length by most voters, she is growing increasingly popular and her rise could have resounding implications for French politics, France’s role in the EU, and for the EU itself.

An Idiot’s Guide to Unpacking the Courts

Looking for a new Robert Taft

by Angelo M. Codevilla

“Abortion Cases in Court Helped Tilt Democrats Against the Filibuster.” This New York Times front-page story was a press release rather than an investigative report. Through it, the Obama Administration and the Democratic Party cast aside their pretense that they had turned the Senate into a purely partisan body for any public-spirited reason, and broadcast to their most faithful supporters a powerful message: We are packing the Federal Courts for you! Democrat constituencies whose daily bread comes from partisan regulations – the alternative energy industry, for example – knew that already. But less sentient parts of the “base” needed to have it spelled out that the Party uses absolutely all its powers to serve them.

Which brings us to the really interesting part: The Republican Establishment has responded to the Obamian Democrats’ seizure of parliamentary power and, prospectively, of the judiciary, with mere calls to “vote Republican.” The reason such calls are unconvincing is that the Republican Establishment has no intention of using any of the powerful powers it has to prevent court-packing, and indeed to unpack the courts.

It is no little indictment of our Mitch McConnells, John Boehners, and Chris Christies that they leave it to a poor columnist to point out the obvious.

Yes, the Democrats can name and confirm their faithful Felix the Cat to any court in the land. But Felix can exercise that judicial power only if he is paid, his clerks are paid, and his expenses are paid. That takes money from the Treasury. Art. I:9 of the Constitution says that money can come from the Treasury only by law passed by both Houses and signed by the President. Republicans can negate Felix’s appointment by not funding his position.

There are several ways of doing that. If the government were to be funded by regular appropriations bills, the Republican House could simply not increase (or even decrease) the amount allotted to the court on which Felix was to sit. So long as the Democrats insist on funding the government by the noxious device of Continuing Resolutions, the Republican House can write the budget for each of the courts into the CR – which it has every right to do. If it really, really wants to drive a stake into Felix, it can place this staple of Congressional power into the law: “no funds authorized herein shall be spent for…” To make triply sure, it can add this other staple: “notwithstanding any other provision of law or administrative action…”

These devices can be used as well to un-pack courts that are already packed. Here, Continuing Resolutions can be used for positive leverage. Either house of Congress can add language setting the number of judges on any court. If it reduces the number of judges, it can designate the class of judges (the earliest confirmed, or the latest, for example) placed on inactive status.

Revolutionary France’s Road to Hyperinflation

Paper money eventually returns to its intrinsic value — zero

by Frank Hollenbeck

Today, anyone who talks about hyperinflation is treated like the shepherd boy who cried wolf. When the wolf actually does show up, though, belated warnings will do little to keep the flock safe.

The current Federal Reserve strategy is apparently to wait for significant price inflation to show up in the consumer price index before tapering. Yet history tells us that you treat inflation like a sunburn. You don’t wait for your skin to turn red to take action. You protect yourself before leaving home. Once inflation really picks up steam, it becomes almost impossible to control as the politics and economics of the situation combine to make the urge to print irresistible.

The hyperinflation of 1790s France illustrates one way in which inflationary monetary policy becomes unmanageable in an environment of economic stagnation and debt, and in the face of special interests who benefit from, and demand, easy money.

In 1789, France found itself in a situation of heavy debt and serious deficits. At the time, France had the strongest and shrewdest financial minds of the time. They were keenly aware of the risks of printing fiat currency since they had experienced just decades earlier the disastrous Mississippi Bubble under the guidance of John Law.

France had learned how easy it is to issue paper money and nearly impossible to keep it in check. Thus, the debate over the first issuance of the paper money, known as assignats, in April 1790 was heated, and only passed because the new currency (paying 3 percent interest to the holder) was collateralized by the land stolen from the church and fugitive aristocracy. This land constituted almost a third of France and was located in the best places.

Once the assignats were issued, business activity picked up, but within five months the French government was again in financial trouble. The first issuance was considered a rousing success, just like the first issuance of paper money under John Law. However, the debate over the second issuance during the month of September 1790 was even more chaotic since many remembered the slippery slope to hyperinflation. Additional constraints were added to satisfy the naysayers. For example, once land was purchased by French citizens, the payment in currency was to be destroyed to take the new paper currency out of circulation.