Wednesday, November 30, 2011

One more precedent for tyranny

From the minute the Affordable Care Act was signed into law it was destined for the Supreme Court. Lower courts are split on the issue, with some contending ObamaCare oversteps federal authority while others accept it as the central government's legitimate function. The stakes will be high when the Supreme Court hears arguments next summer. Either ObamaCare will be scraped, establishing precedent to dismantle years of unconstitutional federal actions, or it will be upheld and liberty will again yield to tyranny.

From a limited government perspective it's difficult to see how the law can stand. The Constitution was written to restrain the central government, insuring it could legally act only within specified guidelines. Yet when courts, which are part of government, are the last arbiters of constitutionality, the guidelines are often blurred. Legalese supplants original intent, ensuring the Constitution lacks solid meaning. Jurisprudence is reduced to a legal playground where obvious liberties and logical conclusions yield to manipulation.

District of Columbia Court of Appeals Judge Laurence Silberman's recent opinion upholding ObamaCare's individual mandate represents such an abuse of judicial oversight. And lest Silberman's decision be dismissed as another wacky ruling from a pinko judge, understand that he's a Reagan appointee, an associate of Clarence Thomas, and considered a forceful conservative jurist. However, his decision represents nothing liberty can admire. In fact, Silberman's opinion confirms how the federal behemoth consumes those who enter its lair, regardless of said person's original ideals.

Federal authorities -- whether legislators, executives, or judges -- become part of a governing apparatus where there's no benefit in limiting federal power. Fueling the bureaucracy becomes the goal and the central authority is enabled to act as it wills. On
page 29 of his ruling Silberman concludes that Congress has the right to force citizens to purchase health insurance under the Commerce Clause. If he's correct, every conceivable economic transaction is subject to congressional oversight. In fact, according to Silberman's opinion, people retain neither economic liberty nor individual rights. We aren't endowed by our Creator with unalienable and self-evident rights, but are granted privilege as the central authority finds pleasure. The entire experiment in self-government is turned upside-down.

Consider Congress' constitutional authority to "regulate commerce . . . among the several states," found in Article 1, Section 8. In Judge Silberman's opinion, "to regulate" means "to adjust by rule or method . . . to direct . . . to order; to command." The definition is technically accurate, prompting Silberman to assume an unlimited ability for Congress to affect commerce, even to the point of forcing citizens to engage in commerce that doesn't yet exist. However, Silberman's opinion flies in the face of the Founder's vision.

James Madison, considered the Father of the Constitution, would reprimand Judge Silberman. Madison described the federal government's constitutional powers as "few and defined" while recognizing those remaining in state hands as "numerous and indefinite." Madison found Congress' authority to regulate commerce only within its enumerated powers and not beyond. Consider, too, his assessment of the General Welfare clause:

With respect to the words general welfare, I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators.

If the Framers considered Congress' ability to promote the general welfare constrained only to specifically delegated constitutional authorities, why would they empower Congress to regulate commerce at every turn? The idea is preposterous when liberty is held as a right of human existence. Yet it's perfectly sensible when the purpose is expanding government at freedom's expense.

While Silberman recognizes the Framers' distinction regarding what commerce Congress can regulate (
p.29), he invokes judicial precedence to override the Founder's vision. To support the decision he writes, "Supreme Court jurisprudence over the last century has largely eroded that [the Framer's] distinction." What should be apparent is the lack of judicial authority to amend the Constitution through convenient interpretation and erroneous application.

Doubtful Judge Silberman meant to highlight a problem inherent to judicial activism, yet he did just that. Relying on precedent involves a fatal flaw. If one foolish ruling precedes a second foolish ruling, a foolish precedent is established. Subsequent rulings based on the foolish precedent will necessarily be of equal or greater folly. Precedent is therefore no substitute for original language when ruling on constitutional matters. Ironically, Silberman cites one of the most foolish, anti-liberty precedents in U.S. history to support his ruling.

According to Silberman,
Wickard v. Filburn (1942) confirms Congress' power to force citizens to purchase health insurance. Filburn, a farmer, violated federal law when he grew more than his allotted quota of wheat, not for open sale but for his family and livestock. The Court unanimously upheld the law under the pretense that had Filburn not grown the excess wheat he would've purchased it on the open market. His action contradicted Congress' interest in preserving the national wheat price and supposed authority to stimulate commerce. Remember, foolish precedent equals foolish rulings, and foolish rulings produce foolish regulations.

If Congress can force the public to purchase health insurance because health care affects the overall economy, it can force the public to purchase anything. Automobile sales affect GDP. Can Congress then compel a citizen to buy a car? Can Congress also force an individual to buy a subsidized model from a subsidized manufacturer, say a Chevrolet Volt? Under such a pretence, the economic decisions the central government can force upon the public are infinite.

What's more, in light of Silberman's ruling based on Wickard v. Filburn, there's no private act government cannot manage. A homeowner has no right to remodel their residence due to the work's affect on the construction market. A car owner has no right to perform maintenance due to the affect on repair businesses. A landowner can't even grow tomatoes for personal consumption without undermining produce prices. Every economic act becomes a matter of privilege rather than right. The Court's decision on ObamaCare thus carries implications far beyond health insurance. At issue is whether citizens enjoy inalienable rights or the federal government holds unlimited authority.

Rejecting the individual mandate would undo a century of federal expansion based on foolish judicial precedent. Rulings like Wickard v. Filburn would be exposed as twaddle and the concept of constitutionally limited government would gain a foothold. Overturning ObamaCare means far more than overturning ObamaCare. It offers a sliver of hope that liberty has not perished.

Upholding federal authority to force individuals to buy government approved products is yet another blow to freedom. The foolish precedent will become further entrenched and every American will suffer as a result.

The stakes are high. The Legislative and Executive branches, combined with a generally complicit Judicial branch, have placed the Framers great experiment in self-government on life support. The question is whether the Supreme Court will establish a new trend based on liberty or follow the century-old precedent toward greater tyranny.

Sunday, November 27, 2011

A case for free market bank regulation

Bank of America (BAC) has rescinded its plan to charge customers a $5 monthly debit card fee. Shall we praise bank regulators for their swift action in preventing the exorbitant charge? Well, no. Then we'll credit politicians for legislating against greedy, big bank profiteering, right? Wrong again. The free market drove BAC to drop the debit card fee.

Several banks have floated similar debit card fees -- some already assess the monthly charge -- and each met the same fate as BAC. Customers informed their financial institutions that they would rather pull their assets than pay the fee. Banks responded in predictable fashion. Banks need customers to remain solvent; therefore they heed their customers' complaints and outrages, whether or not they are reasonable. That's the free market in action. Unpopular fees and programs are abandoned just as surely as profits are taken. Everything depends on what the market will bear.

The $5 debit card charge was never a product of free market capitalism. It was the result of political machinations, most notably on the part of
Sen. Dick Durbin. Durbin's amendment to the Dodd-Frank bank reform legislation placed an arbitrary cap on debit card interchange fees, which banks impose on retailers for each swipe of a customer's card.

Banks collect this fee to maintain their electronic networks, retailers distribute the fee among their customers, and customers enjoy the convenience of cashless transactions. Such business-customer relationships aren't invariably perfect, but they are at least agreeable between the involved parties. Once politicians meddle in that relationship, as Durbin did, unintended consequences become the norm. Enter the debit card fee. Yet the fact that Durbin made matters worse didn't stop him from telling BAC customers to "vote with their feet."

Well, bank customers have voted with their feet, or at least threatened to do so. I'll wager that not a single disgruntled customer walked into their bank and said to the teller, "Dick Durbin told me to withdraw my money." Blowhard politicians aren't necessary for customers to decide what fees they should or shouldn't accept. Customers needn't occupy public parks for banks to hear their complaints. The only thing necessary to kill the monthly debit card fee was for customers to exercise their free choice in an open marketplace.

Markets compel businesses to please their customers or risk losing them to more amenable competitors. Banks couldn't collude on behalf of debit card fees, even if they so wanted, because they're more interested in retaining current customers and attracting new ones from institutions that assess unpopular charges. The mere threat of losing customers was enough to render debit card fees a poor business decision. When market forces reign there's no need for protests, tents, and signs, nor is there a need for pandering politicians with superhero complexes to deliver customers from corporate evil.

However, markets move both directions. Just as the market wouldn't tolerate debit card fees, which are noticeable, the market may tolerate other fees that aren't as noticeable, just as it once tolerated the higher interchange fees. No one considered the interchange fees retailers paid on debit card transactions until government placed price controls on them. The banks then looked to other areas to recoup the lost revenue, which led to the debit card fee. Since the market has rejected the debit card fee, banks will look for another way to boost revenue.

Frankly, a $5 debit card charge is benign in and of itself. If a customer uses their card 50 times per month the average cost per transaction is a paltry 10 cents, a rather innocuous expense for the convenience of using a debit card system. And make no mistake; customers aren't paying the banks for the privilege of using their own money, as the populist argument holds. Customers pay for the use of the bank's computer and network systems, all of which cost money to purchase, operate, and maintain.

There's little purpose in defending or criticizing the banks, their customers, or the debit card fee. The marketplace spoke and a verdict was rendered. Customers preferred to seek new institutions rather than pay their banks a monthly debit card stipend. Banks would rather have more customers paying smaller, less recognizable fees than have fewer customers paying larger, high-profile charges. Both entities weighed their options and arrived at a conclusion with which they could live. Markets may not always react as swiftly as they did in this case. But they will always react, and they will produce the best possible compromise in any given situation.

All businesses attempt to maximize profits while all customers seek the best value for their money. These interests combine in a free market, making astute businesses profitable while rewarding prudent customers with quality services, all at an agreeable price. Government interference upsets that balance, imposing undesirable results on everyone.

First Published at Mises Daily )

Sunday, November 13, 2011

Will Perry's fumble put him on the bench?

Did Rick Perry's fumble -- forgetting the name of an agency he wants to eliminate -- seal his fate? The pundits think so; there's just no way Perry can recover. Even though he has campaigned for months, stating his opposition to education, commerce, and energy bureaucracies on innumerable occasions, he's finished. But does a momentary brain freeze disqualify someone from high office?

There are better reasons for voters to avoid checking Perry's box. His position on illegal immigration rubbed many conservatives raw. Perry widened that rift when he said opponents of granting in-state tuition to illegal aliens "have no heart." Rick Perry's campaign has unquestionably stalled. But he isn't losing conservatives because he fumbled at one debate.

The GOP hierarchy would love to make Rick Perry disappear, too. Bluebloods have little time for candidates whose platform centers on eliminating entire federal agencies. They have no time whatsoever for candidates who overtly flirt with seceding from the union. Such posturing doesn't sit well with the Republican powers that be, the same powers who've stuck us "staunch conservative" presidential candidates like Bush I, Bob Dole, Bush II, and John McCain.

There is precedent for believing Perry's campaign is finished. One blunder cost Dan Quayle his political career. He misspelled "potato" and no one has seen or heard from him since. However, the Quayle story unfolded in a different era. Recent history suggests a change of attitude since his day.

One fumble is no longer an automatic ticket to the electoral bench. "Qualified" politicians and great orators routinely drop the ball. Yet they've lived to gaffe another day. Barack Obama, oft-hailed as the most articulate and intelligent President in American history, has put the ball on the ground more times than
Brett Favre.

Obama once claimed his
healthcare overhaul would bring greater "inefficiencies to our healthcare system." He told a suburban audience that his health insurance reforms would reduce premiums by 3000-percent. Obama expressed his desire to campaign in all 60 states and equated his bowling skills to a Special Olympian. What's more, the Orator-in-Chief is quite ordinary without his teleprompter. None of these fumbles placed Obama on waivers.

For Rick Perry it's a different story. One fumble means he's unqualified to be president. Why? Because he isn't glib? Because he isn't a great debater? Because he isn't polished, focus-grouped, and completely canned? I'm not endorsing Perry. But if that's the reason he's out of the race it's time to re-examine the qualities we seek in a President.

Substance, ideas, and honor trump style, platitudes, and empty promises -- the common fare dished out by "articulate" candidates -- every time. Have we become so superficial as to admire candidates who speak in sound bites and parrot rehearsed answers to scripted questions, both with rapid-fire predictability? If one memory fumble sends Perry to the bench, I say it speaks worse of the voters' intellect than of his.

Wednesday, November 9, 2011

Herman Cain has arrived

Political candidates are nowhere until their ethics are challenged, their morals are questioned, or their character is assassinated. No one can be considered a viable candidate for elected office until they're targeted for destruction. Judging from this week's news, Herman Cain has arrived.

A story that began with
two women alleging "inappropriate behavior" has grown to include a third woman, female staffers from a conservative talk radio show in Iowa, and hush money from the National Restaurant Association. Yet the details about what occurred, if anything, have thus far been silenced, if they're known at all. With each "revelation" the Cain saga seems more and more like Clarence Thomas' confirmation hearings.

If you'll recall, Anita Hill offered no credible evidence of "inappropriate behavior" on the part of Thomas. It was a case of "she said" so "he did." The seriousness of the charge trumped the nature of the evidence. But at least we knew the accusations against Thomas, and his accuser. All we know about Cain is that anonymous women once accused him of misconduct, which could mean anything from a passing compliment, to a wink, to a grope.

No claim against Cain has, as yet, become
public. But the lack of details hasn't prevented the media -- namely Politico -- from running with the story. Funny how the public's need to know is quickly served whenever scandal descends on a conservative, especially when that conservative's popularity has been steadily rising.

The media had little interest in Bill Clinton's sordid and sundry escapades. Juanita Broaddrick was treated like a stalker, Paula Jones was dismissed as trailer trash, and media outlets had to be dragged kicking and screaming into the Lewinsky affair. Reporters and anchors marveled at Clinton's uncanny aptitude for misrepresentation. The dominant media also ignored John Edwards, at least until the National Enquirer broke Edwards' sleazy story and it grew too big to cover-up.

Not even the civil rights activists will come to Cain's defense; he'll have to exercise his demons alone. If he were a proper black man, one firmly planted on the leftist plantation, he could play the race card. But as a black conservative, Cain isn't black enough to charge racism. He's fair game. Assassinating a conservative's character is always in season, regardless of their race.

I'm not necessarily defending Herman Cain's innocence or endorsing his candidacy. But he does exhibit some likable qualities. For example, he's a Washington outsider without political experience. We need another politician with experience in creating trillion dollar deficits and multi-trillion dollar debt like Eliot Spitzer needs a dose of Cialis.

Everyone has skeletons in their closet. A political candidate's skeletons are held in reserve until said candidate gains momentum. There's simply no need to waste time and effort demeaning an also-ran. The fact that Herman Cain is the eye of a media storm means he's now considered a viable candidate.

Wednesday, November 2, 2011

Reagan speaks on deficits, spending, and debt

Government spending and national defense are among the key topics whenever Ronald Reagan's legacy is discussed. Reagan is credited with rebuilding the military into a force capable of projecting America's presence anywhere in the world. He is also criticized for increasing the national debt even though federal revenues increased during his administration, which is an indictment of Congress' long-term lack of fiscal discipline.

Today's America can only
long for the late Ronald Reagan's leadership. Then again, perhaps he's still on the job. A portion of his legacy can help us appreciate our military prowess while simultaneously understanding our unimaginable indebtedness.

The Gipper would certainly be pleased with the USS Ronald Reagan (CVN-76), a state-of-the-art warship right down to the life rafts. The USS Reagan epitomizes the term "
supercarrier." With a 90-aircraft air wing, fire and forget missile defenses, and various radar, jamming, and countermeasure systems, the Reagan is adequately equipped to fulfill the former President's defensive strategies.

Since its commission in 2003 the Reagan has indeed impressed America's military might on all who see her. She's a crowning achievement in technology, maneuverability, speed, and reliability. For some Americans the Reagan represents the nation's commitment to excellence and innovation, and complements the former President's "peace through strength" ideology. But the USS Reagan stirs emotions on the other side of defense spending, too.

To Americans critical of military spending, the USS Reagan represents waste and a bully mentality. She is a $4.5 billion floating testament to misplaced national priorities. A progressive peace activist might argue that the USS Ronald Reagan is a budget-busting monument to America's military-industrial complex.

The Reagan is justified in Congress' constitutional duty to "provide and maintain a navy" (Art. I, Sect. 8). Even so, for the purpose of honest debate, a few points must be conceded to the Pentagon's detractors. Certainly there's waste in the defense budget, waste that can be trimmed without sacrificing needed upgrades, unit cohesion, or overall preparedness. Also, $4.5 billion is a pile of bucks no matter how you stack them, meaning the Reagan can illustrate our record budget deficits, federal spending, and national debt. But not in the way defense critics think.

What could each American household do with its share of the Reagan's $4.5 billion price tag? You might take the family out for pizza, but that's about all. Based on Census Bureau
statistics for 2003, the USS Reagan cost each American household only $40.43, meaning the ship's construction had little impact on Washington's chaotic finances. However, it can help us understand the vastness of federal spending.

Any attentive person knows the federal deficit has grown unchecked, reaching
$1.3 trillion in both 2010 and 2011. What isn't so obvious is that each $1.3 trillion in deficit spending would buy 288 aircraft carriers built to the same specs as the USS Reagan, with spare parts to boot. The federal government spent $3.6 trillion last year alone, a total that could build the Reagan 800 times. Based on the accumulated national debt -- currently $14.8 trillion and closing in on 100-percent of GDP -- we have borrowed enough money to provide the USS Ronald Reagan with 3,288 sister ships, again with spare parts leftover.

If many aircraft carriers are a good policy, are bigger aircraft carriers a better policy? Just how big would the USS Reagan be if its size were measured in federal spending? Dividing the ship's final construction cost by its overall length ($4.5 billion/1092 feet) shows that each foot of the Reagan cost the taxpayer $4.12 million. How much carrier can we then buy? Well, that depends on the chosen model.

The "Annual Red Ink" class, based on our $1.3 trillion deficit, could build a "supercarrier" measuring 315,533 feet from bow to stern. And that's the dove version. A more hawkish model, the "Yearly Expenditures" class (based on $3.6 trillion in annual spending), sails at an overall length of 873,876 feet. Now that's a "super-supercarrier." Not enough? Try the "National Debt" class, a genuine "super-duper-supercarrier," boasting a flight deck 3,592,233 feet long.

The USS Reagan's actual 1092-foot long flight deck is impressive. But the enormity of a carrier deck based on the aforementioned numbers is unimaginable. For ease of comprehension let's convert the feet into miles and apply the results geographically.

The "Annual Red Ink" class of aircraft carrier would be 59.75 miles long, approximately half the length of Long Island, NY. The "Yearly Expenditures" class, at 165 miles long, would stretch from Atlanta, GA to Montgomery, AL. Saving the best for last, a pilot on the "National Debt" class could travel from New York City to Myrtle Beach, SC and never leave the flight deck.

The point of this illustration isn't that America should've constructed 3,288 aircraft carriers. The point is to highlight the central government's disregard for its fiduciary duties. Washington spends a trillion dollars like the rest of us put change in a Coke machine. Slick-talking politicians can continue their lies, pretending to understand the fiscal mess they've created. But thanks to the USS Ronald Reagan and a 13-digit calculator, politicians can't continue bankrupting this country while believing the public is ignorant of the disservice they're committing.