Words and their meaning: A lesson for Senator Marco Rubio

At the onset of our nation’s history, two of our wisest, most politically gifted founding fathers instructed Americans, of both their age and ours, as to how to proceed on the stage of international affairs.  Both George Washington and Thomas Jefferson issued the same warnings: avoid entangling alliances, do not engross our nation in the internal strife of other countries, and keep open the lines of trade and communication between our nation and the rest of the  world community.

It is rather curious, then, that Senator Rubio’s attempts to portray Rand Paul’s brand of non-interventionism as “isolationism” can take root in the nation who now stands in the shadow of our founding father’s vision and their philosophical experiment in republican governance.   To be sure, Senator Rubio has gained the approval and admiration of a good number of American voters and members of the American media.  His ability to avoid substance in exchange for platitudes that remind voters of his humble roots, and his ability to out-testosterone other members of the stage through a youthful arrogance, endears him particularly to the hawkish wing of the Republican Party.   What Senator Rubio fails to command, however, is a grasp of the meaning of the word isolationism, and the wisdom inherent in Washington and Jefferson’s positions on foreign affairs.

For those unable to view the debate, the moment I am referring to came after Senator Rand Paul and Senator Marco Rubio engaged one another on the concept of expanding the size of the American military.  Senator Paul questioned how Senator Rubio’s claim of allegiance to fiscal conservatism meshed with his proposed one trillion dollar increase in defense spending.  Rubio, having been exposed, did what all those who lack principle do in a moment of the truth catching up to them: he attempted to camouflage his lack of principles by misrepresenting those of Senator Paul.  He shifted the substantive debate over military spending and continual debt by dismissing Senator Paul as an “isolationist.”

Senator Rubio would be wise to investigate the meaning of the terms he pejoratively utilizes when the truth provides an obstacle to his political aspirations.  As defined, isolationism means “a policy of abstaining from political or economic relations with other countries.”   How, one must ask, can Senator Rubio maintain a straight face while using such a word against an opponent?  Senator Rubio, who has called for a continual trade embargo with Cuba and an end to all diplomatic relations with Iran and Russia, somehow thinks himself qualified to accuse someone else of attempting to “abstain from relations with other countries.”  To quote libertarian media personality (and Rand Paul supporter) John Stossel: “Give me a break!”

Having proven Senator Rubio’s claim preposterous, I contend that in the next debate he seek to use a more appropriate term for Senator Paul: non-interventionist, fiscal conservative, or constitutionalist all provide Florida’s “credit card” Senator with a more appropriate option.

As Senator Rubio continues to struggle to find a world conflict which the United States should avoid, he echoes Hillary Clinton in asking Americans to continually endure the burdens of increased taxation and debt creation to finance rebels whose allegiance we do not know and can not trust.  It was, after all, Senator Paul who warned Americans about the foolishness of arming rebels in Syria, arms and money which quickly found its way to ISIS.  Additionally, Rubio’s unwillingness to engage in diplomatic relations with Russia and Iran, in conjunction with his political brinksmanship that remains committed to enforcing a no-fly zone for Russia in the Middle East, truly threatens the peace and stability of our nation and our world.

I am certain that a number of terms could appropriately be used to describe Senator Rubio.  Unfortunately, fiscal conservative and peacemaker are not among them.    If Republicans seek more wars, more false platitudes, more isolationism shrouded in hubris, and more debt, then Senator Rubio offers them a candidate who can rise to the occasion.   If, however, they seek to elect a pragmatic constitutionalist who rejects the notion that warmongering and the promotion of the military industrial complex serve the interest of the American people, while advocating the policies of open trade and communication first outlined by true statesman like Washington and Jefferson, than I encourage them to take another look at Senator Paul.  If nothing else, let us at least abandon the notion that the rejection of unnecessary, unconstitutional war in any way, shape or form reflects the doctrine of isolationism.  We must be a better nation than that.  Washington and Jefferson, even from their graves, urge us to be.

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Tolerance….the foundation of a free society

With the recent visit of the Pontiff to the United States, it seems as if the culture wars, as well as discussions surrounding American fidelity to the Judeo-Christian principles many claim heavily influenced our nation’s inception, have emerged anew.  The past week has seen countless efforts by both conservatives and liberals alike to paint the Pope as an ally to their side.   While his calls for greater protection of earth’s resources, greater compassion toward the poor, and an end to the barbarity of the death penalty have given liberals assurance that Francis is undoubtedly a progressive thinker wishing to bring the world’s largest Christian denomination into the 21st Century, conservatives insist that his strong condemnation of abortion and his insistence that the traditional family unit is the backbone of a Godly society offers proof that he remains a vibrant defender of their views on matters of social politics.  What impresses me most about the Pope, however, is how flawlessly he seems to remind political leaders of the modern world that the ideology of Christ need not conform to the political ideology of man, and that personal acts of faithful fidelity to God are not to be equated with theocratic pronunciations by secular governments.   As a Christian, I am extremely proud to call myself Catholic in this age, as we currently have a spiritual leader who remains committed to the notion that morality is not relative and that the conscience of Christ transcends political divisions, as it commands people of every nation and way of life to the same acts of compassion and love.   What gives me the greatest pride, however, is the unyielding devotion the Holy Father possesses for the concept of tolerance in society.

Whether it be a reminder of the humanity of migrants or the unwillingness to condemn homosexuals as ill deserving of political rights, the Pope time and again commands members of civil society to demonstrate tolerance toward their fellow man.   While many on the left condemn the Pope for not taking the enhanced step of abandoning moral absolutism and declaring acceptance of sin superior to its tolerance, the Pope seems to provide a perfect example for Christians living in a free society.  By adhering to the precepts of his faith, but meeting with and graciously loving those of differing persuasions, the Pope emulates Christ, while instructing all of us to set aside our differences and embrace the notion that difference of thought and act need not serve as a catalyst of hatred and division.   While we may not agree with the actions or beliefs of our neighbors, friends, or even family members, we are not bound to accept their decisions, but to demonstrate an open tolerance for the efficacy of their own spirit and their inherent right as a creature of God to live in accordance with their own free will.

Too often, the religiously conservative elements of our society believe that tolerance is equivalent to surrender in the political arena.  Nothing could be further from the truth.   As evangelical Christians frequently attempt to impose theocracy upon the American people, they dismiss the long proven notion that coerced belief is hollow, restrictive, and counterproductive.  Only by attempting to set examples by our words and deeds, demonstrating the love of Christ through compassionate relationships, and living a life of fidelity to the moral precepts of our faith in our personal acts and words are we able to witness to the non-believers among us.  For even God, the omnipotent grantor and guarantor of life, chose freedom of thought and freedom of will for his creation.   Despite every right and ability, God chose not to impose his will upon his undeserving creation.   Instead, he wished that they might choose him and eternal life, merely on account of the alluring beauty of his love and grace.   Certainly, in so doing, God demonstrated for mankind that tolerance is a difficult, yet virtuous and sacred practice, and that compulsory belief and acts bring him no glory.

Now, having gained the respect of my more liberal friends, I must do as I so frequently have, and draw their ire.  For, while tolerance is an essential aspect of a free society, it is also necessary that tolerance be mutually exchanged.   Just as the Pope has commanded that those who live in opposition to the teachings of the church be treated with the dignity and compassion they deserve as a condition of their humanity, those who disagree with the Pope, the Catholic Church, and millions of conservatives around the globe surrounding the absolutism of morality must be equally tolerant.  Condemning the Pope as an agent of bigotry or demanding that the Catholic Church abandon its moral precepts is equally intolerant.   Just as the actions of the individual should not fall privy to the precepts of the institution, the institution ought not be condemned for not conforming to the will of the individual.    In a free and just society, difference of thought must be tolerated and celebrated, from every side.    If we wish to make our nation a freer, more just society (and dare I say Godlier one), then we must follow in the footsteps of both Christ and Pope Francis by embracing tolerance and respect toward one another.

Planned Parenthood…A Case Study in Liberty

This week, Congressional Republicans and Democrats finally fulfilled their dream of having Planned Parenthood’s leader, Cecile Richards, testify before a Congressional panel surrounding the now infamous tapes that surfaced earlier this summer detailing alleged for profit schemes of aborted fetal parts.   While much can, and should, be debated surrounding the legitimacy of abortion and the morality of a nation that abandons the sanctity of human life as routinely and apathetically as does ours (whether it be abortion, unjust war, or the death penalty), the legitimacy of resting claims about planned parenthood on the debate of “taxpayer funded abortions” and “for profit fetal schemes” is actually a secondary one.   As Republicans and Democrats hyper focus on the controversies of these tapes and seek to sound entirely more pro life or pro choice than their political opposition, lost in the midst of this debate is the question that few on either side seem willing to entertain: where in the US Constitution does the federal government receive any authority to fund health centers, whether they be participants in abortive services or not.

In 1791, Thomas Jefferson eloquently warned the American people and their posterity of the dangers of arbitrary governance.  Jefferson stated : “I consider the foundation of the Constitution as laid on this ground: That “all powers not delegated to the United States, by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people.” [10th Amendment] To take a single step beyond the boundaries thus specifically drawn around the powers of Congress is to take possession of a boundless field of power, no longer susceptible of any definition.”   While much of the conversation surrounding planned parenthood will continue to revolve around these scandals and the interpretation of planned parenthood as either a “necessary health organization for the poor” or a “butcher shop for the unborn,” we would be wise to find common ground between liberal and conservative factions in the fact that our constitution already instructs us on how to resolve this issue: we are left with little choice but to terminate the illegitimate funding of the organization, and allow state, local, and private entities to determine which type of women’s health centers are worthy of funding.   Allow government and local organizations closest to the people to engage in such debates and reflect the values of the societies in which they live.  If people in New York City find themselves supportive of Planned Parenthood’s programs, and can overlook the abortive portions of their services, than so be it.  Meanwhile, if those in Hudsonville, Michigan believe health centers  which promote adoption or counseling to be a better fit for their locality, than why ought they be compelled to violate their conscience?  This is precisely the nature of our constitutional system.   When we allow the federal government to render matters of morality moot by seeking to standardize them, we position ourselves for division and disunity.   Allowing local and state governments to address such matters permits the democratic process to work as intended and prevents the imposition of the bureaucratic will upon large portions of our society.

I recognize that some people will again roll their eyes at my unyielding position that federal funding of any unconstitutional program merely empowers the federal government to act as supposed benevolent overlords of our private lives, while empowering the institutions of Washington DC.  I can not help but wonder how a government which rests furthest from the people, can be trusted to make decisions most intimate in nature as the healthcare of a woman.  To my liberal friends, I must ask: why do you demand that I overlook my moral and constitutional objections to the financing of planned parenthood?  Why, you ask, do so many people seem to focus on such a small segment of their service, when abortion is “only 3% of the services they provide.”  Further, you ponder, am I really so cold as to leave so many women in our nation without healthcare?   Allow me, then, to engage in such collectivist thought and ask you: Why do you seek to forbid taxpayer funding of religious schools, when religious instruction is only a fraction of the educational services they provide?  Do you truly wish to see so many children left uneducated due to your allegiance to some principle of religious neutrality?   Or, what of religious food bank programs, which left unfunded are not as well equipped to provide nourishment to society’s poor?  Further, I must ask, from where does your religious neutrality doctrine arise?  If it comes from the constitution, then I am left with little choice but to thank you for lending credence to my position.  For, the beautiful nature of constitutional liberty is that it transcends the narrow mindedness of the liberal-conservative paradigm.  It allows for us to stand shoulder to shoulder stating that both matters of religious conscience and matters of reproductive health rest in the realm of individual choice, and therefore the coercive, compulsory funding of either through tax collection and national wealth redistribution runs contrary to the values professed by our founding fathers in the supreme law of our land.

Bias at its finest

In perusing today’s Republican primary news headlines, I find myself again frustrated with a news media that seems determined to fit Rand Paul into their preconceived narrative, which seeks to constantly focus on his “fledgling political campaign.”  The most recent (hit) piece featured today ran in the International Business times.   The article lists Rand Paul, George Pataki, and Bobby Jindal as the most likely candidates to drop out of the Republican primary.   Relying on anonymous surveys of shadowy “party operatives” the website contends that Paul’s three per cent level of support in two consecutive polls demonstrates his inability to effectively campaign or secure the nomination.

In examining the legitimacy of this article, I care little whether Rand Paul is actually destined to be the next of the seventeen original candidates to abandon pursuit of the highest office in our land.   What concerns me more, is how easily the average American voter will be persuaded into avoiding Paul as a candidate as a result of the bandwagon effect, which leads the intellectually feeble minds of many into abandoning the weakest perceived candidate.  How, one ponders, can such hit pieces exist against Paul who polls at or around 5% in both New Hampshire and Iowa, and not against Huckabee, Christie, or Graham?  Not a single poll has placed Lindsey Graham ahead of Paul, and only one of the past ten has Christie outperforming the Kentucky Senator.  In the NBC/Wall Street Journal poll released this morning, Paul also receives more than former Arkansas Governor and part time televangelist Mike Huckabee. Yet, the news media remains committed to lending credence to Donald Trump’s absurd contentions that Paul is undeserving a spot on the debate stage with nine other corporatists, who remain subservient to perpetuating the military industrial complex through their morally and fiscally irresponsible platitudes.   .

Rather than speculating on which candidate may drop next, perhaps the news media would better serve the American populace in its role as guardian of freedom of thought and information by actually investigating the words spoken by the candidates and reporting on substantive issues of constitutionality, history, and economics.   Why, I wonder, has Chris Christie been permitted to further his security state persona by falsely claiming that he was appointed US District Attorney on September 10th, 2001 in every single debate, never to be questioned by a moderator or journalist following such deceitful remarks (http://www.politifact.com/new-hampshire/statements/2015/aug/07/chris-christie/christie-says-he-was-appointed-be-us-attorney-day-/)?  Why does Carly Fiorina go unchecked in her claims of being a wonderful CEO, when she cost Hewlett Packard billions of dollars in profits, while dropping thousands of employees into the unemployment lines in the process?  Why is Rand Paul ostracized for being “outside the party” because he advocates smaller government and fiscally responsible spending on matters of defense and intelligence collection, yet Ben Carson to date has yet to be asked about his comments against the inherent right of citizens to bear arms?

The truth of the matter is that Rand Paul will likely not bow out any time soon.  As the imperfect flagbearer of the liberty movement in this election, his role exceeds that of outlining a single person’s viewpoint on better governance.  He, like his father, represents a segment of the population which remains committed to political and economic liberty, and will remain such regardless of attempts by the mainstream media to disillusion ill informed voters to the notion of a constitutionally limited, fiscally responsible government.   From a horse race perspective, it seems absurd that the media would dismiss Paul. This week, he received a key endorsement of Rep. Mulvaney of South Carolina, won the Mackinaw Straw Poll in Michigan, and distinguished himself in the debate as a leading thinker and statesman.  If you doubt such claims, re-watch the debate, noting how often the moderators returned to Paul for clarification on issues of constitutionality.

If the media desires to continue making the Republican primary a hybrid of circus show and horse race, then Rand Paul certainly will fall outside the narrative.  For. the protection of human life, avoidance of unjust, unnecessary military conflicts, the abandonment of a culture of debt and forcible seizure of property and wealth, and the notion of the supremacy of the individual as the captain of his or her own destiny are no laughing matters.   They are the issues that matter most to those of us who are awake and vigiliant.  We may not be answering landline telephone polls and we will never join propagandist Frank Luntz in his Fox News “focus groups,” but we stand with Senator Paul and all who speak on behalf of actual liberty.

The Party of….Change?

Following Wednesday night’s debate, the political pundits immediately crowned Carly Fiorina the night’s big winner, while others (predictably) targeted Rand Paul as one of the night’s losers.   Aside from a well written piece from the Chicago Tribune, the vast majority of the mass media refused to credit Rand Paul for a performance rooted heavily in substance and principle, as opposed to the showmanship and hubris of many of the night’s “winners.”   Indeed, nothing is more telling in revealing the American electorate’s political ignorance than the fact that among the most tweeted comments surrounding the night’s debate were about the attractiveness of a male audience member and the curliness of Rand Paul’s hair.   Lost in the obsession over Fiorina’s dominance (perhaps if Paul had been given equal time he, too, could have rattled on and on about his own personal greatness) was the substantive debate that the Republican party desperately needs.

A recently released CNN poll revealed that the vast majority of self-described Republicans value a candidate’s status as an “agent of change” above any other quality.  And yet, the one true candidate of change seems to be rebuked by his party, the political elite, and the mainstream media.

Aside from Benjamin Carson and Donald Trump, Rand Paul is the only candidate in the Republican primary who stood against the horrific mistake of invading Iraq.   Indeed, Paul adamantly opposes the interventions that his party and his adherents routinely propose.   History has redeemed Paul, as he warned that arming Syrian rebels in the hopes of defeating Assad would likely lead to the arming of an even greater threat (ISIS).  Despite John McCain, Lindsey Graham, Marco Rubio, and a host of other “establishment” Republicans denouncing Paul’s principled stand, there is little doubt that his warnings proved visionary while his liberal and “conservative” counterparts’ hawkish fidelity to advancing the military industrial complex proved yet again costly in terms of money and lives.  Most damaging to Paul appears to be his stance that ripping up the Iranian nuclear agreement and cutting lines of communication to Tehran is naive and dangerous.   Republicans seem not to buy Paul’s (accurate) reminder that Ronald Reagan spoke to Mikhail Gorbachev of “the evil empire” and signed a host of treaties with a nation that seemed committed to the downfall of our republic.

In addition to foreign policy, Paul offers the increasingly old, white Republican party a candidate who could reach demographics previously untapped.   As Jeb Bush and Carly Fiorina stuck to the age old, pharmaceutical company driven defense of marijuana prohibition, Paul convincingly and intellectually defended the tenth amendment and the right of citizens to treat their bodies in a manner congruent with their own personal conscience.  While Bush and Fiorina called for greater punitive measures and expanded police powers for the federal government, Paul distinguished himself as an actual conservative, favoring limited government and the empowerment of the individual.   In so doing, Paul bravely explained that the current failed drug war disproportionately hurts minorities and the poor, pointing out that while Jeb Bush can jokingly admit to having smoked pot as a youth, such a decision leads to incarceration and a permanent record for those born to less economic advantage.

Finally, a close examination of the words of the bulk of the candidates reveals that aside from Paul, no candidate truly intends to shrink the size of government.  Rubio and Walker seek to expand education programs at the federal level (something conservatives rightly recognize as a function of the states) while Cruz and Huckabee hope to place the Star of David within the confines of the American Flag, sparing no economic or moral expense in “defending” Israel.  Carson supports gun control and mandatory vaccinations, as Trump continues to call for socialized medicine and promote the construction of a “wall” along the Mexican-American border, foolishly claiming that Mexico will pay for it.  Meanwhile, the flavor of the moment, Carly Fiorina, hopes to vastly expand the size of the American Military and station increased numbers of troops as close to Russia as humanly possible.

In all, the Republican debate contained a number of things: immature personal jabs, sappy, hollow stories of personal achievement, calls for expanding the size and scope of the federal government, and attempts to shout over one another.   Yet, at the far left of the stage stood a statesman, eloquently speaking about matters of constitutionality, morality, fiscal discipline, limited government, and individual freedom.   Perhaps such willingness to abandon the warfare-welfare state is actual change, something toward which the typical Republican voter seems inclined to act exactly as the party establishment has done: supporting it in words, while rejecting it in deed.   It appears what they desire most is more of the same: war, debt, and a federal government powerful enough and committed enough to destroy every inherent right so nobly defended by America’s original patriots.

Free Riders

Today, I spent a great deal of time preparing for the school year by familiarizing myself with my new school district, its policies, technology, and staff during our “new teacher orientation.”  As the morning session neared its end, members of our local education association spoke to us about whether or not we intended to join the union or opt out under Michigan’s relatively new “Right to Work” law.   Now, as a libertarian-minded individual, I often draw the ire of my like minded friends for my support of labor unions (although I do not support compulsory membership).  Yet. that is not the topic of today’s post. Regardless of one’s affinity or malice toward the presence of labor unions in American society, today’s experience, coupled with lesson planning, reminds me of how flawed our increasingly compulsory system of governance is in society.   After the five new teachers sat listening to the usual pro-union talking points, the moment came for us to decide whether or not we would be enrolling.   It became extremely clear that four of us intended to enroll, while one black sheep would not.   Immediately, I began to think of him as nothing short of a free rider.  He would be benefiting from the labor union’s work toward negotiating salary, benefits, and the work load.  He seemed to have no problem signing the same contract our paid negotiators helped devised, accepting the perks that my one thousand dollar annual dues would bestow upon him, while not hesitating to refuse to cough up his portion of the money necessary to ensure our collective bargaining powers remained in tact.  Now, to many of my more liberal friends, the solution to such a free rider problem is clear: compulsory membership in the union by law.  Yet, for reasons I will now attempt to explain, I could not join in such a chorus.

Fast forward momentarily to tonight.  I sit at my computer pre-planning economics lesson plans for the upcoming trimester.  Suddenly, the topic of public goods arises.  After crafting a rather engaging simulation for my students, I begin to ponder more deeply the logic behind the seeming;y one sided lesson of externalities, public goods, and the “market failure” free rider dilemma,  For those who fell asleep during Econ 101, it will be beneficial to explain the meaning of externalities. According to liberal economic theorists, there are certain times in a free market where the voluntary exchange of goods and services between consumers and producers becomes impractical, inefficient, or unjust.   Think for example, of attempting to have 90 privately held companies compete to run water pipelines to and from homes.  Digging projects, overlapping, and maintenance would be a nightmare.  As a result of this “market failure,” we are told that government must intervene to collect taxes and provide the good for the community.  One would be hard pressed to argue against the impracticality of  a non-public system.

Yet, proponents of centrally planned economic thought seem not to terminate their lust for increased governmental regulation and taxation there.  Instead, they have conjured up a completely subjective methodology for determining which market failures are “unjust” and therefore necessitate further governmental intervention in the economy.  Enter externalities and the free rider dilemma.  Externalities are defined as benefits or costs bore by someone other than the person who is producing or consuming a good. Negative externalities are, therefore, the costs inflicted upon those not involved in the original exchange.  For instance, when a person chooses to smoke cigarettes, he or she harms the health of those nearby. Although I do not smoke, enough exposure to those who do and I may have to pay for future healthcare expenses.  Conversely, positive externalities result when those who benefit from a transaction need not contribute (and are therefore termed free riders).  For example, when individuals purchase immunizations for themselves or their children, those who do not immunize gain the free benefit of having a safer community to live in.  Additionally, while those without children would generally not be willing to voluntarily pay for local schools, they would no doubt be better off as a result of the fact that youth in their community are kept off the streets and  the labor force is better equipped to produce goods and services from which they benefit.  We are told, therefore, that education must be financed by tax dollars and immunizations ought to be required.  Externalities, therefore, are the justification used by government to continuously expand its scope, size, and power.

The problem with the externality premise, and the Pigovian Taxes (taxes used for the provision of public goods; so named after British economist AC Pigou) and regulations they spur, is that they hinge upon subjective interpretations of benefits and costs, while undermining the concept of limited government and free markets.  Just as the “necessary and proper” clause of the Constitution has been used to justify the federal government’s intrusion into the realm of education, externalities allows government to issue mandates and taxes at will.  Yet, such subjectivity leads me to similar questions like those posed by Austrian economic supporter Gene Callahan in his article for the Mises institute, ” What about socks? Doesn’t the fact that other people wear socks, and I don’t have to smell sweaty feet all day, provide me with a benefit for which I’m not paying? Must socks, therefore, be considered a public good?”   Callahan further explains that the theory of externalities is not only dangerous in permitting expansive government, but that it often fails the test of economically sound theory as well.  He writes that “an oft-used example of a positive externality in economics is in the production of fruit trees and beekeeping. The growers of fruit trees provide a benefit to beekeepers: flowers. And beekeepers provide a benefit to the growers: pollination. The standard analysis, however, contended that neither party had an incentive to take account of the benefit to the other. Thus, there would be “too few” orchards and beekeepers. Economist Steven Cheung has studied these markets, however, and has found that the parties involved had accounted for the externalities quite well, contracting with each other to raise production to optimal levels.”

The point I am making, then, is not that there is no place for governmental provisions of public goods.  It is rather that we ought to be on the look out for one-sided theories and approaches to solving some of the problems that exist within a free market.     Why must coercive force always be the default response for so many in our society? What other seemingly necessary governmental programs could better be handled by the free market? As Congressman Ron Paul often contended, how many governmental regulations would be moot if property rights were taught and valued and the court system treated parties equitably regardless of power or position?  Unfortunately, we often fail to discover the answer to such questions, as government rarely gives true economic freedom a chance.

As for my non-union, teaching colleague, he is indeed a free rider.  Yet, why not allow the scorn and judgment of his peers to serve as pressure for abandoning his free riding ways?  I say, let’s give the freedom of influence a chance.

Want to read more on this topic? Visit: https://mises.org/library/what-externality and http://truthonthemarket.com/2010/04/19/some-warnings-for-modern-pigovians-from-pigou-himself/

“I warned you” says Triffin…

Triffin’s Dilemma.  Until just a few days ago, such a concept never appeared on my radar.  Four years of college spent attaining a degree in history/political science, and an additional year of social studies economics and geography courses later, my high priced education left me ignorant to an important concept surrounding the current currency wars and exponentially growing national debt within the United States.

In order to best understand this essential economic concept, we must first address the notion of reserve currencies before we can proceed.  As most high school students can describe, the two world wars left much of the “developed” world in turmoil, with the tattered legacy of the war equipping the United States with the world’s greatest economic and military hegemony.  In seeking to re-establish themselves, many nations of the world determined that the United States’ dollar was best suited to serve as their nation’s reserve currency.   As the 20th and 21st century unfolded, additional nations viewed the US dollar as the most stable of world currencies, and therefore held dollars in reserve as assets to finance their own liabilities (economic speak for financing deficits), while some even took the (dangerous) step of pegging their currency to the US dollar, meaning the value of their currency was fixed to the value of the US dollar.

As the world’s reserve currency, the United States experienced benefits as well as drawbacks.  As a reserve currency, the US dollar experienced considerable purchasing power, equipping Americans to buy imports (the exports of other nations) at considerably low prices.   Additionally, the United States was able to issue securities to finance its own spending, with a ready market of buyers hoping to hold American debt as valuable assets in their own country’s reserves.  This led to the high life in the United States.  Government furthered the welfare-warfare state with continuous deficit spending while the American people quenched their lustful appetite for more and more goods by purchasing high volumes of imported goods at cheap prices.

Now, enter Robert Triffin.  In 1960 economist Robert Triffin testified before the US congress with stark warning about the unsustainable practice of utilizing the US dollar as the world’s reserve currency, particularly when it exists as a fiat currency (backed by nothing).  He (rightly) argued that as the world’s reserve currency, the US dollar needed to stay in circulation in order to keep liquidity in the world market high.  Without large amounts of dollars in the world system, the health of the global financial system would be irrevocably harmed.  The United States, through tremendous deficit spending and subsequent debt accumulation, seemed prepared to rebut any danger from such a warning.  Yet, that was only half of Triffin’s warning.  Triffin continued that by continuing to finance the world market with dollars to keep liquidity high by running deficits, the US threatened confidence in the dollar, and such a lack of trust would eventually erode, undermining the world’s confidence in it as a reserve currency.  This, argued Triffin, would also threaten the stability of the international system.  It appeared the US would either have to continue trade and spending deficits into perpetuity, or prioritize increased exports and diminishing debt while watching an increasingly valuable dollar harm the world market.

In the 1970s, the United States attempted to address Triffin’s prediction and temporarily prevent it from becoming reality. President Nixon took two important steps to delay the day of reckoning from occurring.  First, the US federal reserve had long tried to battle the liquidity problem by printing US dollars at rates that had exceeded what was permitted as a result of their gold reserves.   When attempting to fix the US dollar to gold, the US found itself unable to keep up with the liquidity necessary to meet the currency demands of the world.   As a result, Nixon removed the US from the gold standard, permitting the Federal Reserve to produce dollars out of thin air, simultaneously financing bigger government spending and enhancing liquidity in the world.  Next, Secretary of State Henry Kissinger traveled to Saudi Arabia to explain in plain English (or broken English) the situation and a mutually beneficial compromise for Saudi Arabia and the United States.  Kissinger promised the Saudi royal family US protection and foreign aid in exchange for their promise to base the price of oil in terms of dollars.   The dollars exchanged by nations for oil, then, came to be known as petrodollars, as they helped to finance liquidity in the world without the inflation damaging US domestic prices or undermining the confidence the world held in the dollar.

Now, fast forward to 2015 and the US finds itself in a peculiar situation.   Having continued to finance unconstitutional governmental programs through deficit spending, all while running considerable trade deficits, the US had ensured that liquidity in the world continued at sustainable rates.  A recent problem, however, arose when the environmentally and morally ambiguous practice of fracking helped US domestic production of oil increase at a rate that lowered US expenditures on foreign oil by nearly a third.   Such a reduction in US imports in oil, therefore, reduced the flow of US dollars in the international market.  This reduction in liquidity constrained other nations, particularly emerging markets like Brazil, from continuing to finance their economic growth and governmental expenditures through US reserve currency accumulation.

It appears, then, that the US dollar’s ability to remain both liquid and trusted now faces an impasse. As China attempts to promote its economic production and export growth by devaluing its own currency, nations and their investors look to the US dollar as a safe investment in a scary economic financial system.   The result has driven the value of the US dollar up and up, threatening US producers as American goods become more and more expensive to a world already lacking necessary liquidity.   We have the proverbial pie of a strong, trusted dollar, but our eating of  the benefits of such a situation seems to be in question.  Having already bottomed out interest rates, what tools can the federal reserve use to “quantitatively ease” a world market in need of increased dollar flow?

Earlier this year Federal Reserve Chairwoman Janet Yellen signaled that the federal reserve may be increasing the interest rate in the coming months.  With petrodollar liquidity already harming financial flows in the world market, will she dare take such a contractionary step? What impact would raised rates have on US deficit spending, when interest payments already gobble up a large portion of US governmental expenditures?

For now, we will have to wait and see.  In the meantime, maybe we ought to re-evaluate Professor Triffin’s warning and rethink the wisdom of having established an arbitrary medium of exchange such as the fiat dollar as the world’s reserve currency.  Attempts at manipulation can only last so long.  One thing, though, is certain: finding solutions to such problems appears to necessitate considerable thought, and much more than a college education.

Is that Henry Ford I hear?

In this era of the Tea Party and Occupy Wall Street, it is clear that unrest exists among the American people regarding the distribution of wealth in our country.  While the Tea Party advocates less collusion between government and business and promotes freer markets as the solution to our ills, Occupy Wall Street equally denounces governmental subsidization of big business, but demands increased governmental regulations and social programs to balance the inequality that exists within wealth distribution in our nation.   Regardless of which camp one finds him or herself, one fact is clear: wealth inequality in the United States is at disturbingly high proportions and our economic prosperity is suffering because of it.

While people often think of “income inequality,”  wealth inequality should equally be the focus of our attention.   Income reveals the exchange of dollars within a given year, but wealth inequality gives a clearer picture as to the actual distribution of all assets across the economy.   With that being said, the Washington Post ran an article in March of 2013 that analyzed the findings of a study by Dan Ariely and Michael Norton, in which Americans were asked to describe what they estimated the wealth distribution of the nation to be, and what they thought ideal distribution should be.  While Americans estimated the top 20% of Americans to possess 55% of the nation’s wealth, in reality that segment of the population controlled over 80%.  To analyze the findings even closer, consider this: The top 1% of Americans (roughly 3.2 million people) possessed 17.2% of national income, but 35.4% of national wealth.  Additionally, the top 10% of Americans (roughly 32 million people) received 44.5% of national income in 2013, but controlled 76.7% of all wealth in the United States.

Now, I harbor no intentions of perpetuating “class warfare.”   Indeed, it appears class warfare is already under way, with the haves winning big.   What does concern me is the impact such wealth distribution has on the overall prosperity of our republic.   Having already examined wealth distribution, another enlightening fact is found in examining the inflation (increase in amount) of what is known by economists as the M3 money supply in proportion to price inflation, which reflects how much the price of goods rises from year to year.   The M3 Money Supply (which includes total coins/bills in circulation, demand deposits, traveler’s checks, money markets, and corporate liquid assets) is generally considered by economists to be the truest measure of the total money supply of a nation.  Since 2011 (the last time the M3 growth was below 0%) M3 has been on the rise.   As of 2015, estimates placed M3 growth at over 5%.  This means that the growth in the money supply in the past year has been steadily increasing.   According to Milton Friedman’s definition of price inflation, this increased money supply should yield a nearly equivalent rise in prices.   Yet, that trend has not occurred.  In fact, since peaking at 2.1% in July of 2014, price inflation has remained at levels near 0% throughout 2015. This naturally leads to a questioning of why such drastic increases in money supply have not been accompanied by drastic changes in price levels of consumer goods.  The answer to such an inquiry? Velocity.

Velocity in general terms is defined as the rate of change of an object’s position with respect to a frame of reference (time).  When examining velocity and the money supply, velocity can be described as the frequency with which dollars change hands.  In a booming economy, rooted in growth, we would expect a high velocity of money.  With an increased supply of M3, a steady velocity of exchange of dollars would yield price inflation.   As stated, the answer to our inquiry regarding price inflation, then, can be found in the failure of the money supply to experience steady velocity.  When wealth is concentrated in the hands of so few people, we do not expect those dollars to travel quickly through the economy.  For, as former Labor Secretary Robert Reich explains, no matter how wealthy a person may be, he or she still only needs one haircut, so many pair of jeans, and one bed.  With the wealth concentrated into so few hands, dollars are not circulating through the economy.  The result of such stagnation in circulation is a lack of economic growth.

It is not by coincidence, then, that wealth distribution in the United States in the year 2008 rivaled that of 1928 (the year prior to the Great Depression).   When wealth distribution reaches a “breaking point,”  wealth sits dormant and economic growth tumbles.  As a believer in free markets and capitalism, I do not call for wealth distribution limitations to be imposed by government.  What I hope for, however, is that those who possess such exorbitant amounts of wealth will wake up to the lesson Henry Ford so adeptly taught to the corporate producers of his era: high wages and the free flow of money exist to the benefit of everyone.   Ford’s payment of five dollars per day may have been intended to retain workers, as his turnover rate was high; but, regardless of the motives of Ford’s pay rate, one thing remained clear: it was necessary that his workers possessed the purchasing power to own one of his cars.   By paying his workers a comfortable wage, Ford  contributed to a booming middle class who enjoyed the opportunity to return their dollars to business through the purchase of goods.   Such an exchange and velocity of money worked to the benefit of everyone.  Producers experienced a market of buyers equipped to finance their entrepreneurial production of goods, while consumers possessed the ability to acquire increased material goods and improve their quality of life.

According to the US Census Bureau, real household median income in the United States has been in steady decline since it peaked in the late 1990s.  This is not due to any lack of wealth production.   Instead, it is an indicator of how the money has slid upward.  If the wealthy elite of our nation today can not be driven to battle wealth distribution inequality through moral arguments (it appears greed has no limits) such as those offered by Pope Francis, they would be wise to protect their own interest by restoring the most essential class in terms of economic growth: the Middle Class.  Failure to do so threatens catastrophic results for all of us:  you know, the “United” States of America.

Breaking the Laws….of Economics

Perhaps author Ray Thomas acted wisely when he selected the axiom “Pay attention to politics; Politics will pay attention to you” as the title of his expose on American politics.  Routinely in my day to day interactions with friends, family, and acquaintances, I encounter the phrase “I just don’t have time for politics” or “I just am not interested in politics.”  Such willful separation from the knowledge of our system of governance often troubles me, as any person who claims to be free while knowing nothing of their governmental institutions, systems, and occurrences fools only him or herself.

As I applied for a refinancing of my mortgage this week, I was greeted by the wonderful news that interest rates had fallen. The cause of such changes?  My mortgage broker informed me that the drop in ten year treasury bond yields was the primary cause of such changes.    Such a response, while accurate, did not even begin to address the true nature of processes and policies at play. By delving deeper into the trade and currency wars, I hope to free myself from the damaging effects of being a pawn in the hands of the economic puppet masters.  As for all of you, if you continue following my blog, well then you too will hopefully be armed with a greater understanding of the historical and economic factors that have driven our financial system.
Those who have even quickly glanced at world events in the past couple of days have no doubt heard that China has devalued their currency.  At a basic economic level, the devaluation of currency is designed to increase exports out of a nation and help domestic job growth and productivity.  Imagine as a businessman (or woman) in the United States you are looking to purchase industrial nails for your company.  If the exchange rate of dollars to Chinese Yuans permits you to purchase one package of nails for every one dollar in China, or one package of nails for every $1.10 in the US, you may decide to purchase the American product in the hopes of securing greater quality.  Yet, once China devalues its currency, you are now able to exchange your dollar for even more Yuan, and can now afford two packages of Chinese nails for the same price.   The result?  American nail producers must find a way to compete or else find ways of cutting costs, primarily through the reduction in labor.   In eseence, the score reads China: 1 The United States: 0.

Only in the past week have the term’s Triifin’s Dillemma, Kondratieff Wave, and Yuan devaluation been a part of my daily reading and discussion.  Thankfully, I feel I now stand on the precipice of better understanding the causation of global financial and monetary fluctuations.  As any teacher would, I will work diligently to educate myself about the historical and economic factors that have brought us to this point.  As my level of knowledge unfolds, so too will my explanations of the overlapping layers that converge to create the instability our global economy now endures as a result of economic theorists and greedy financial “experts” controlling a system of economic laws that was never intended to be manipulated.

In order to best understand these issues, we must begin first with a recognition of the meaning of fiat currency and the dangers inherent in it.  Fiat currency is any currency whose value derives not from its relationship to anything which serves as a retainer of its value (such as gold) but is rather a valueless medium of exchange whose value is magically created upon the issuance of law that it is to be accepted as the chosen currency.    In short, the money is only valuable because the government has decreed it to be so.

Perhaps no greater danger accompanies the existence of fiat currency than the fears of hyperinflation.   Take for example, the German Weimar Republic and its financial collapse following World War I.   As France sought to crush the German nation-state under the heavy burden of war reparations (payments for having started the war), the government of the newly created “Weimar Republic” responded by unceasingly printing papiermarks (German ‘dollars’).   The result? A loaf of bread could only be purchased after a wheelbarrow full of the currency was presented.  In fact, price inflation in Germany reached such shocking heights that stories of people burning the currency to stay warm still surround the Weimar’s financial history.

Now, the role of fiat currency in stifling economic prosperity and the general welfare is only one piece of an enormous interplay of economic theories and practices.   For now, suffice it to say that when President Richard Nixon removed the US from the gold standard in 1971, he utilized the power of American economic and military might to violate a law even more supreme: the inherent laws of economics.  With American dollars acting as the world’s reserve currency, the American (and indeed world) population now found itself at the mercy of the Federal Reserve (our central bank, founded in 1913) and its arbitrary ability to manipulate an economic system long intended to be driven by the invisible hand of supply and demand, not the morally vacuous minds of speculators and bankers.

While economists this week continue to understand how best to manipulate the international system of currency exchange in an effort to respond to Chinese devaluation, they would do well to remember one clear economic law: no fiat currency has ever survived into perpetuity; indeed all of them possessed a lifespan much shorter than that of commodity based currencies. We ought to all be concerned at how long it will be before we find ourselves serving a sentence for having violated this law. And to those who continue to say that “they just don’t care about politics,” when the economic system caves under the pressures of these manipulations, I will simply reply: ignorantia juris non excusat: ignorance is no excuse.

Hypocritic Oath?

Jess C. Scott once quipped that “hypocrites get offended by the truth.”   Perhaps that is why Senator Rand Paul fares so poorly in the Republican primary.  In evaluating the (early) poll numbers that seem to emerge on a daily basis, few trends have been as apparent as the fact that Republican voters seem enamored most with candidates whose principles shift and whose lives needn’t coincide with the values they espouse.  Take for instance the revelation today that Dr. Ben Carson used aborted fetus material in 1992 medical research.  When pressed by the media on whether such acts conflicted with his stances on abortion and planned parenthood, Carson dismissed any insinuation that his use of fetal parts was not inherently more justifiable than Planned Parenthood’s.  Rather than focus on the morality of using such parts, Carson shifted responsibility to those who harnessed the parts and claimed to merely be ensuring that “samples” would not “go to waste.”   While Carson’s apparent hypocrisy will most likely do little to jolt Republican voters from their infatuation with the soft spoken Carson, one hopes his other stances will.   For, how many Republicans have (rightly) chastised President Obama for his assaults on the Second Amendment, yet now consider casting their ballot for Carson, who told Glenn Beck that “people who live near other people have no right to own semi automatic weapons.”   This is all little surprise, though.  Carson’s friendly smile and intellectual superiority complex mask his history as a recipient of welfare.  While he talks a good game about ingenuity, self empowerment and “pulling yourself up by the boot straps,” his personal story does not reflect such platitudes.  It is nice that he fits nicely into a narrative of the Republican Party about a self made black conservative, so much so that the self made and conservative aspects are not requisite.

Carson, no doubt, is not the only Republican candidate who embodies the nature of the presence of the hypocritic oath within the Republican Party.  Donald Trump, the media personality and bloviating ego with a mullet, seems to have convinced evangelical voters in Iowa that his multiple marriages and admission that “while I believe in God, I’ve never felt the need to ask him for forgiveness” align with their notion of family values and Christianity in practice.   Yet, who should be surprised?  Trump, who now fulfills the role of angry, anti government conservative, has just recently embraced the notion of conservatism, and yet he draws his greatest support from “very conservative” voters.   There is no doubt that his past statements and political donations demonstrate a belief in the right to choose, support for universal healthcare, and affection for Hillary Clinton, who Trump lauded for doing a “good job” as a Senator in New York.   Unfortunately the lunacy does not end there.  Republican voters appear to think “who better to rock the Washington establishment and free it from the corrupting influence of special interests and corporate money than one of the largest political manipulators in recent times?”  Perhaps they think Trump best suited to deal with fiscal responsibility as well, as his four bankruptcies assuredly prove his financial prowess.   Aside from intellectually devised, principled stands like “You’re stupid” and “Rosie O’Donnell is a fat pig,”   Trump seems to be struggling to clearly outline his vision for America.  So much so, in fact, that his current official website lacks a section explaining his position on issues.  Rest assured, though, his leadership as President will be inspirational. Who else in America can claim a catch phrase as the third most popular in television history?  When it comes to our spiraling debt, the assaults on our God given natural rights, and a growing bureaucracy of inefficiency, who among us would dare to demand solutions to our problems when personality and chauvinism make good television?  Rand Paul  is attempting to.  This weekend he has launched a massive ad buy in New Hampshire and Iowa to remind Republicans of the principles they claim to represent.   Unfortunately, so far Paul’s demeanor and personality seem not to be “Presidential enough” for an electorate who desires shouting when defending chauvinism and anti-Christian egoism, not when defending the Bill of Rights.   Carly Fiorina further proves that a solid performance in a debate, seemingly a vacuum from past actions and principles, will lure the mindless masses to follow a failed CEO as the agent of economic change for a nation enduring a prolonged recession driven partially by the greed she embodies.

Hypocrisy is one of the greatest vices humanity knows.  It clouds our ability to recognize our own faults and leads us to arbitrary, unprincipled acts.   I suppose it should come as no surprise, then, that self described conservatives appear to be more likely to accept government “entitlements”  than their liberal counterparts (http://www.pewsocialtrends.org/2012/12/18/a-bipartisan-nation-of-beneficiaries/).  They also appear at least as equally as willing to pick candidates who stand for little beyond self promotion as does the party of HIllary Clinton.   One continues to question the devotion of a party who proclaims to be for “freedom and limited government” yet denounces attempts at reining in the NSA and denies individual rights to people whose choices conflict with their definition of morality.

Perhaps Rand Paul’s sinking campaign can be attributed to his fidelity to the constitution, instead of taking the Republican hypocritic oath.