Sunday, July 29, 2012

Captian's Doctrine # 1

Individual freedom requires individual responsibility and accountability; the complete ownership of all of one's mistakes. If you can't take it, you don't get it.

Monday, July 23, 2012

Fascism by any other name...

They're not calling it fascism, but it's been all the rage, especially in the last decade. The new and improved term is State Capitalism. I guess that's supposed to make it more palatable to actual capitalists.

China is the poster child for state capitalism. Many economists have predicted that China will be the world's new global economic power, replacing the United States, as they posted impressive GDP numbers and managed to avoid the calamity of 2008 to a great extent. The U.S. may be unseated as King of the Economic Hill one day, but it wont be by China.

What the experts forgot to tell you was that China avoided economic turmoil in the short term by investing billions and billions of dollars into the construction of cities that nobody lives in. They're still doing it, both in China and abroad. Yet their growth rate for this year will officially drop below 7.5% (that's assuming you trust the communist parties official data), which is well below their stated target. China is about to experience a real estate bubble burst of Biblical proportions.

The idea behind State Capitalism is that the government owns all or part of major industries. This enables these companies to bypass a lot of the red tape and regulatory burdens that privately owned companies have to deal with. Another distinct advantage is that whether the company is run well or not, they're back stopped by the full taxing power of the nation's government. How can the free market compete with such a thing?

Well, let's look at what the growth of "State Capitalism" has brought us; chronically high unemployment worldwide, unprecedented debt levels, lower standards of living and disposable income. In fact, even in the United States, where the government saw fit to become shareholders in GM, Chrysler and AIG to name a few, the percentage of Americans living in poverty is at a 20 year high.

Fascism by any other name is still fascism. It's both a rival and a cousin to communism. Both are based on the premise that a select enlightened few can do a better job of directing resources, natural, human and intellectual, than a bunch of free individuals running around freely associating and trading all willy nilly. In the case of running a prison camp, perhaps that would be so, but it's no way to create a thriving, growing economy.

State run companies may have access to unlimited financing and bureaucrats at their command, but free market, privately held companies have the incentive to excel, innovate, create, make things better, cheaper, faster, stronger. Giving consumers what they want and need in an efficient, cost effective manner is directly tied to their personal advancement. The state run business and its employees have only the incentive to obey their superiors in order to keep that state sponsored paycheck coming.

If private enterprise is allowed to continue (not a guarantee by any means) it will prove superior to the state run enterprise. It may not seem so now, because state run companies didn't have to go to investors to get a mountain of operating capital. They can print it. But in the end, you've got to produce and perform to stay in the game. They can dominate a market by force, but they wont dominate if freedom of choice has anything to do with it. If they successfully force private enterprise out of the arena, look for living standards to get progressively worse.

In the meantime, in the name of transparency, let's dispense with the "Capitalism" moniker for what is really just another flavor of fascism.

Sunday, July 1, 2012

Is Chief Justice John Roberts crazy a fox?

When Chief Justice John Roberts sided with the more liberal side of the Supreme Court bench to uphold the Affordable Health Care Act (Obamacare) under the taxing authority of the Federal government, a lot of Conservatives, Libertarians and Tea Party types thought he had lost his mind, if only temporarily. I must admit, that was my gut reaction. However, after hearing some of the punditry opine on the matter, I'm beginning to think the John Roberts opinion may some day be seen as the Trojan Horse that put the breaks on runaway Federal spending.

The Obama administration and Democrats in Congress did not want this law regarded as a taxing legislation. In fact, they rejected a version that referred to it as a tax. What the Roberts ruling does, is establish that a piece of legislation that requires individuals to make a payment to the Federal government is a tax, no matter what you call it or don't call it. This is important because a tax bill only takes 51 out of 100 votes in the Senate to undo. Other types of legislation can require a super-majority (60 votes) to accomplish a repeal. Whether the Obamacare bill survives or not, this will make it tougher to enact spending programs in the future, at least ones based on "fees", "surcharges", "penalties" and the like.

Perhaps more important, or at least equally important is the ruling on the expansion of Medicaid. Many states have opposed this portion of the law because it requires them to expand their Medicaid rolls through new eligibility rules. The Federal government, under the law as it stood before the ruling, would force states to comply by threatening to take away all of their Medicaid funding if they refused. The ruling says that's a no go. The Federal government can withhold funding for that particular program, but cannot take away existing funding. This is big, because other government programs have been forced on states using the same tactic. If you didn't raise your drinking age to 21 for example, you would have lost highway funds.

What this part of the ruling could enable is true state laboratories for government spending programs. States get to choose on their own, without the threat of force, whether or not to participate on an a' la carte basis. Good programs would be adopted by other states in the future. Bad ideas would gradually go away. More immediately, programs already in force are vulnerable. States may be able to now opt out of existing programs within programs without fear of reprisal.

Now, I think it's still possible that Roberts simply dropped the ball on this one. But whether unintentionally or with brilliant forethought, it's also possible that Chief Justice Roberts has opened up two new fronts in the war on over-reaching government. Fronts that big government fans were not prepared for.