Monday, October 26, 2009

The Best of Times, or the Worst of Times?

Gambling on the outcomes
I was forwarded a very interesting article (a newsletter by John Mauldin, that is worth getting, here's the preview link) on the prospects for our economy, which sees some coming economic hardship and impending gloom, but is essentially optimistic for the coming years... and if the actions of the FED and businesses in the marketplace were the critical ones affecting the health of our economy, I'd agree with his optimism.

But, IMHO, they are not. Personally, I don't think the future of the financial markets lies with the financial markets.

I've no doubt that they would eventually recover and adjust... if they are not held back. But I think Mauldin would do better to look outside the financial, Internet and manufacturing sphere's, if he wants to see their future - because they don't control it. What does control them, what can hold them back, is the government enacting controls over what they can and cannot do, and the chances of their best intentions not holding the markets back, is, I think, nil.

I watched the epitome of a little bureaucratic nullity on CSPAN this morning (the passage begins at 18:10-18:55), talking about interfering in the Internet through the Orwellian 'Net Neutrality' issue. Dem member of the FCC, Michael Copps, gave a 'don't worry, we're in control' speech that begins by noting that the Internet has enormous power, and has developed and spread to the unimaginable degree it has, without controls... but that growth has been only an 'infancy', and that infancy must now be guided, it's openness must now be 'controlled', so that it will remain open.

Logic check anyone?

Throughout his grey little monotonous-olog, he repeatedly utters the word 'transparency' like a bad case of the hiccups... and I've no doubt he means the same 'transparency' which candidate Obama spoke about promising to provide in the development of automotive, financial and healthcare policy - none whatsoever.

His telling phrase, the sum of all D.C. pontifications, is this one, "History tells us that when technological capabilities to exercise control, combined with the financial incentive to do so, some will try to turn this power and this opportunity to do so, to their own advantage. That doesn't mean I expect this to become normal business practice, but even if it is only a few who try, the risk to our interconnected and interdependent Internet, is too great to take. I'm not into riverboat gambles that everything will be fine, if we just look the other way."

In other words, the integrated system of financial incentives of providers and consumers to deliver services and satisfaction such that it results in profits, which built the Internet into the scope which no 'expert', private or public, foresaw even 10 years ago... is now seen in this 'transformative age' as fraught with would be tyrants - in the business world. Methinks if you dared play the roulette wheels on his riverboat, you'd best look under the table to be sure there were no levers running from them to where he is standing... but if you could look under his table, I don't think you'd find the view to be transparent at all.

Government bureaucrats, who invariably see themselves as fully knowledgeable and capable of creating rules and regulations to 'guide' the growth of what they don't understand, in this case the Internet, and despite the fact that it is government whose core focus and reason for being, is power, rather than profit, IT, Govt, being in control of the enormous power of the Internet, with its ability to affect and control hundreds of millions of lives, lifestyles, ideas and business, that power can be trusted to the Govt to NOT be tempted to turn that enormous power, in its control, to its, and its supporters and friends, advantage.

That is a bit of thinking without any hope of explanation, justification or even a shred of decency. Did Copps miss the Twentieth Century? Lenin? Mussolini? Hitler? Stalin? FDR? Castro? Mao? What history tells us, is that when technological capabilities can be used to control a people, it will be government that will step up and seize that power, if it is not prevented from doing so, by its own people. Unfortunately, the only point in time where the people have that possibility of checking their government, is during it's initial growth, where the people are so enamored of governments promises of aid and benefits, they ignore what will obviously result.

That is the mindset that is now intent on taking control of the Internet, the auto industry, the financial industry and the medical care industry - and any corner of any industry not affected by those, will surely be overwhelmed by Cap and Trade and other Glowbull Warming regulations and taxes.

There are very few serious historians and economists, who don't acknowledge that FDR's New Deal policies (A relatively kind critique from UCLA is here, or a more realistic and comprehensive look can be found in FDR's folly) extended a sizable recession of likely 1 to 2 years duration, into the 12 year Great Depression.

FDR too had pay czars, and too-big-to-fail justifications for interfering in every aspect of the economy, in order to prevent business from suddenly doing what it has little or no incentive to do, by instead giving total power to govt bureaucrats and politicians in the hopes that they won't do what they have every incentive, including ignorance, to do - abuse their power.

The housing industry, financial industry, manufacturing industry, Internet, etc, I have no long term fears for... if they are allowed to operate as they see fit - keeping in mind their core focus is the growth of their products and profit.

The govt, whose core focus is control, power and dispensing of favors, if it is allowed continued control, or even further powers, over our industries, will continue to pursue its interests - gaining more control, power and dispensing of favors - and to the extent it is successful in doing so 'to benefit the public', our liberty, prosperity and financial forecast will be bleak, with ever more crippling effects and extending the duration of those effects.

Just like the 1930's... but probably worse. Btw, do you know how FDR succeeded in controlling aspects of Americans lives that the constitution was NEVER intended to even enter, let alone control? By the proregressives favorite passage, the interstate commerce clause.

Know how they're intending to mandate, compel, force, you to sign up for Govt healthcontrol? Yep, interstate commerce clause... but only after laughing at your daring to think that the constitution would in anyway hinder their using their power to do whateverthehell they felt like doing... such as Nancy Pelosi, Speaker of the House, sworn to uphold and defend the Constitution of The United States of America, when asked by a reporter

“Madam Speaker, where specifically does the Constitution grant Congress the authority to enact an individual health insurance mandate?”
Speaker of the House of Representatives Pelosi answered “Are you serious? Are you serious?”When the CNSNews reporter replied “Yes, yes I am.”, Pelosi only shook her head before taking a question from another reporter.

Her office later replied to a follow up email, with a reference to a press release entitled, “Health Insurance Reform, Daily Mythbuster: ‘Constitutionality of Health Insurance Reform.’” which states that Congress has “broad power to regulate activities that have an effect on interstate commerce. Congress has used this authority to regulate many aspects of American life, from labor relations to education to health care to agricultural production.”

Steny Hoyer, majority leader of the House of non-Representatives hinted on just what power he thought he didn't have, when asked the same question, answered with reference to the proregressives other favorite interpretation of open candy store clause, the General Welfare clause,

"House Majority Leader Steny Hoyer (D-Md.) said that the individual health insurance mandates included in every health reform bill, which require Americans to have insurance, were “like paying taxes.” He added that Congress has “broad authority” to force Americans to purchase other things as well, so long as it was trying to promote “the general welfare.”

Here are the Founders understanding, key documents that informed their understanding, and early relevant Supreme Court commentaries on the Interstate commerce clause, Article I, Section 8, Clauses One (General Welfare),

"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;"

and Three ,

"To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"

pay special attention to James Madison to Professor Davis, and Joseph Stories commentary), and the General welfare clause, or Madison's recounting of the writing of the section during the Constitutional Convention,

"...That the terms in question were not suspected in the Convention which formed the Constitution of any such meaning as has been constructively applied to them, may be pronounced with entire confidence; for it exceeds the possibility of belief, that the known advocates in the Convention for a jealous grant and cautious definition of Federal powers should have silently permitted the introduction of words or phrases in a sense rendering fruitless the restrictions and definitions elaborated by them.

Consider for a moment the immeasurable difference between the Constitution limited in its powers to the enumerated objects, and expounded as it would be by the import claimed for the phraseology in question. The difference is equivalent to two Constitutions, of characters essentially contrasted with each other--the one possessing powers confined to certain specified cases, the other extended to all cases whatsoever; for what is the case that would not be embraced by a general power to raise money, a power to provide for the general welfare, and a power to pass all laws necessary and proper to carry these powers into execution; all such provisions and laws superseding, at the same time, all local laws and constitutions at variance with them? Can less be said, with the evidence before us furnished by the journal of the Convention itself, than that it is impossible that such a Constitution as the latter would have been recommended to the States by all the members of that body whose names were subscribed to the instrument?

Passing from this view of the sense in which the terms common defence and general welfare were used by the framers of the Constitution, let us look for that in which they must have been understood by the Convention, or, rather, by the people, who, through their Conventions, accepted and ratified it. And here the evidence is, if possible, still more irresistible, that the terms could not have been regarded as giving a scope to Federal legislation infinitely more objectionable than any of the specified powers which produced such strenuous opposition, and calls for amendments which might be safeguards against the dangers apprehended from them...."

See if you can spin those original meanings, into their modern meaning. Betcha Kant.

The greatest observer of American mind and practices, was de Tocqueville, his observations are such that they can, and are, often used by democrat, republican & (classical) liberal, but generally speaking, if you read a quote from him that sounds optimistic, it was probably taken out of context. In this, from Democracy in America Pt 1, he makes an observation about the American tendency to manage problems they face, one mode stems from the ground up (Tempting to mention 'Tea Parties'), the other from the top down Statist mode,

"...The partisans of centralization in Europe are wont to maintain that the Government directs the affairs of each locality better than the citizens could do it for themselves; this may be true when the central power is enlightened, and when the local districts are ignorant; when it is as alert as they are slow; when it is accustomed to act, and they to obey. Indeed, it is evident that this double tendency must augment with the increase of centralization, and that the readiness of the one and the incapacity of the others must become more and more prominent. But I deny that such is the case when the people is as enlightened, as awake to its interests, and as accustomed to reflect on them, as the Americans are. I am persuaded, on the contrary, that in this case the collective strength of the citizens will always conduce more efficaciously to the public welfare than the authority of the Government. It is difficult to point out with certainty the means of arousing a sleeping population, and of giving it passions and knowledge which it does not possess; it is, I am well aware, an arduous task to persuade men to busy themselves about their own affairs; and it would frequently be easier to interest them in the punctilios of court etiquette than in the repairs of their common dwelling. But whenever a central administration affects to supersede the persons most interested, I am inclined to suppose that it is either misled or desirous to mislead. However enlightened and however skilful a central power may be, it cannot of itself embrace all the details of the existence of a great nation. Such vigilance exceeds the powers of man. And when it attempts to create and set in motion so many complicated springs, it must submit to a very imperfect result, or consume itself in bootless efforts...."

de Tocqueville did such a good job observing not only the America of his time, but the nature of it, what it required and meant,

"It is not, then, merely to satisfy a legitimate curiosity that I have examined America; my wish has been to find instruction by which we may ourselves profit. Whoever should imagine that I have intended to write a panegyric will perceive that such was not my design; nor has it been my object to advocate any form of government in particular, for I am of opinion that absolute excellence is rarely to be found in any legislation; I have not even affected to discuss whether the social revolution, which I believe to be irresistible, is advantageous or prejudicial to mankind; I have acknowledged this revolution as a fact already accomplished or on the eve of its accomplishment; and I have selected the nation, from amongst those which have undergone it, in which its development has been the most peaceful and the most complete, in order to discern its natural consequences, and, if it be possible, to distinguish the means by which it may be rendered profitable. I confess that in America I saw more than America; I sought the image of democracy itself, with its inclinations, its character, its prejudices, and its passions, in order to learn what we have to fear or to hope from its progress. "

"If America ceases to be good..."
There's a quote that's attributed to de Tocqueville, "America is great because she is good. If America ever ceases to be good, America will cease to be great.", which I was surprised to find he didn't actually say. It doesn't appear in Democracy in America, or in his letters - I could swear I'd read it as well. But while those words don't appear, it is interesting that the gist of it does, between, from his letters

"According to continental notions, a nation which cannot raise as many troops as its wants require, loses our respect. It ceases, according to our notions, to be great or even to be patriotic. "

And from Democracy in America,

"It is no doubt of importance to the welfare of nations that they should be governed by men of talents and virtue; but it is perhaps still more important that the interests of those men should not differ from the interests of the community at large; for, if such were the case, virtues of a high order might become useless, and talents might be turned to a bad account. "

together with this observation (which also calls up an earlier discussion here about Authority) from Chapter XIV, in the section on 'Notion Of Rights In The United States',

"No great people without a notion of rights-... After the idea of virtue, I know no higher principle than that of right; or, to speak more accurately, these two ideas are commingled in one. The idea of right is simply that of virtue introduced into the political world. It is the idea of right which enabled men to define anarchy and tyranny; and which taught them to remain independent without arrogance, as well as to obey without servility. The man who submits to violence is debased by his compliance; but when he obeys the mandate of one who possesses that right of authority which he acknowledges in a fellow-creature, he rises in some measure above the person who delivers the command. There are no great men without virtue, and there are no great nations—it may almost be added that there would be no society—without the notion of rights; for what is the condition of a mass of rational and intelligent beings who are only united together by the bond of force?

...The same thing occurs in the political world. In America the lowest classes have conceived a very high notion of political rights, because they exercise those rights; and they refrain from attacking those of other people, in order to ensure their own from attack. Whilst in Europe the same classes sometimes recalcitrate even against the supreme power, the American submits without a murmur to the authority of the pettiest magistrate. "

, which boils down to that quote - in short, if he didn't say it, he should have!
And again, he was also impressed by our ability to "Tea Party", to spontaneously form associations amongst ourselves in order to resolve a situation, he noted that,

"In no country in the world has the principle of association been more successfully used, or more unsparingly applied to a multitude of different objects, than in America. Besides the permanent associations which are established by law under the names of townships, cities, and counties, a vast number of others are formed and maintained by the agency of private individuals.

The citizen of the United States is taught from his earliest infancy to rely upon his own exertions in order to resist the evils and the difficulties of life; he looks upon social authority with an eye of mistrust and anxiety, and he only claims its assistance when he is quite unable to shift without it. This habit may even be traced in the schools of the rising generation, where the children in their games are wont to submit to rules which they have themselves established, and to punish misdemeanors which they have themselves defined. The same spirit pervades every act of social life. If a stoppage occurs in a thoroughfare, and the circulation of the public is hindered, the neighbors immediately constitute a deliberative body; and this extemporaneous assembly gives rise to an executive power which remedies the inconvenience before anybody has thought of recurring to an authority superior to that of the persons immediately concerned. If the public pleasures are concerned, an association is formed to provide for the splendor and the regularity of the entertainment. Societies are formed to resist enemies which are exclusively of a moral nature, and to diminish the vice of intemperance: in the United States associations are established to promote public order, commerce, industry, morality, and religion; for there is no end which the human will, seconded by the collective exertions of individuals, despairs of attaining."

A Founding Father Speaks To Us Still
All of which is the exposition of the summing phrase that been attributed to him,
"America is great because she is good. If America ever ceases to be good, America will cease to be great.",
and the heart of which, long before de Tocqueville made his observations, John Adams explained why it was so, and how it would become so. A Defence of the Constitutions of Government of the United States of America. In this he examines the following line,

“The people never think of usurping over other men’s rights.”

What can this mean? Does it mean that the people never unanimously think of usurping over other men’s rights? This would be trifling; for there would, by the supposition, be no other men’s rights to usurp. But if the people never, jointly nor severally, think of usurping the rights of others, what occasion can there be for any government at all? Are there no robberies, burglaries, murders, adulteries, thefts, nor cheats? Is not every crime a usurpation over other men’s rights? Is not a great part, I will not say the greatest part, of men detected every day in some disposition or other, stronger or weaker, more or less, to usurp over other men’s rights? There are some few, indeed, whose whole lives and conversations show that, in every thought, word, and action, they conscientiously respect the rights of others. There is a larger body still, who, in the general tenor of their thoughts and actions, discover similar principles and feelings, yet frequently err. If we should extend our candor so far as to own, that the majority of men are generally under the dominion of benevolence and good intentions, yet, it must be confessed, that a vast majority frequently transgress; and, what is more directly to the point, not only a majority, but almost all, confine their benevolence to their families, relations, personal friends, parish, village, city, county, province, and that very few, indeed, extend it impartially to the whole community. Now, grant but this truth, and the question is decided. If a majority are capable of preferring their own private interest, or that of their families, counties, and party, to that of the nation collectively, some provision must be made in the constitution, in favor of justice, to compel all to respect the common right, the public good, the universal law, in preference to all private and partial considerations.

The proposition of our author, then, should be reversed, and it should have been said, that they mind so much their own, that they never think enough of others. Suppose a nation, rich and poor, high and low, ten millions in number, all assembled together; not more than one or two millions will have lands, houses, or any personal property; if we take into the account the women and children, or even if we leave them out of the question, a great majority of every nation is wholly destitute of property, except a small quantity of clothes, and a few trifles of other movables. Would Mr. Nedham be responsible that, if all were to be decided by a vote of the majority, the eight or nine millions who have no property, would not think of usurping over the rights of the one or two millions who have? Property is surely a right of mankind as really as liberty. Perhaps, at first, prejudice, habit, shame or fear, principle or religion, would restrain the poor from attacking the rich, and the idle from usurping on the industrious; but the time would not be long before courage and enterprise would come, and pretexts be invented by degrees, to countenance the majority in dividing all the property among them, or at least, in sharing it equally with its present possessors. Debts would be abolished first; taxes laid heavy on the rich, and not at all on the others; and at last a downright equal division of every thing be demanded, and voted. What would be the consequence of this? The idle, the vicious, the intemperate, would rush into the utmost extravagance of debauchery, sell and spend all their share, and then demand a new division of those who purchased from them. The moment the idea is admitted into society, that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If “Thou shalt not covet,” and “Thou shalt not steal,” were not commandments of Heaven, they must be made inviolable precepts in every society, before it can be civilized or made free.

If the first part of the proposition, namely, that “the people never think of usurping over other men’s rights,” cannot be admitted, is the second, namely, “they mind which way to preserve their own,” better founded?"

And the answer is no, it cannot. All of our Rights, rest upon our Right to our Property, it is the foundation of all of our political rights, and it is a very great mistake to consider it as being a ‘economic right’.

Just as the current assault of government healthcontrol has nothing whatsoever to do with Healthcare, but with the enabling of government to control more of our lives, it is being done so in precisely the manner that control of the internet is being taken, and in which Article 1, Section 8 of the Constitution have been misused - they operate solely on the basis of obfuscating, infringing upon and downright destroying your Right to hold and dispense of your Property as you see fit - none of the Statists plans can be accomplished without that, and even more fundamentally, it denies your right to make the choices you deem necessary and desirable for, and in, your own life.

The internet has grown and spread at the phenomenal rate it has, precisely because it has been free of government regulation and control. The range of opinion and content available on the internet already includes every conceivable viewpoint, and more still, and it is in no need of government aid or assistance.

The same can be said of America itself. Freedom will not be aided by weighing it down with government controls, regulations or any other forms of 'assistance'. As Calvin Coolidge said,

“…About the Declaration there is a finality that is exceedingly restful. It is often asserted that the world has made a great deal of progress since 1776, that we have had new thoughts and new experiences which have given us a great advance over the people of that day, and that we may therefore very well discard their conclusions for something more modern. But that reasoning can not be applied to this great charter. If all men are created equal, that is final. If they are endowed with inalienable rights, that is final. If governments derive their just powers from the consent of the governed, that is final. No advance, no progress can be made beyond these propositions. If anyone wishes to deny their truth or their soundness, the only direction in which he can proceed historically is not forward, but backward toward the time when there was no equality, no rights of the individual, no rule of the people. Those who wish to proceed in that direction can not lay claim to progress. They are reactionary. Their ideas are not more modern, but more ancient, than those of the Revolutionary fathers….”

Such ideas are not of progress, but of regress, from freedom and down to tyranny. Despite the silliness of statists such as Copps, this is not a gamble at all, it is a case of the house doing its best to fix the tables in favor of the House.

It must not be allowed to stand. Please, in one of the very few worthwhile French phrases: "Laissez-faire", leave us alone!

Talk to your neighbors; interrupt comments and jokes that support trading liberties for goodies. Contact your Senators and Representatives. Make yourself heard, and assure them you will do the same come 2010.


Sal said...

Y'know, Van, it is a great comfort to those of us who are Not As Smart As Van (it needs a little TM sign, but I don't know how to do one)that you are.
To read one of your thoughtful, sensible posts and to compare it to the emotion-driven non-logic of the Left...
The good-hearted, but inarticulate, among us are very grateful.

Anna said...

"...That doesn't mean I expect this to become normal business practice, but even if it is only a few who try, the risk to our interconnected and interdependent Internet, is too great to take. I'm not into riverboat gambles that everything will be fine, if we just look the other way.""

Two things in particular come to mind --

One, Hayek's chapter on the rule of law in The Road to Serfdom. You don't need to monitor specifics when you have laws in place.

And two, it touches on one of the essential ingredients (or principles) of an open system - risk.

I haven't had a chance to watch the clip but am very curious. Is this (potential) censorship or a thoroughly economic issue? So far I've found this article for a summary of the situation:

Net Neutrality: Toward a Stupid Internet

I haven't read it fully yet but did skip to the final paragraph:

"America morally must recognize the rights of Internet service providers to manage their property as they see fit. We must undo the relatively few controls already placed on the Internet, repudiate net neutrality, and keep the government’s stupid hands off this brilliant private property."

Anna said...

This is my word to the leftists:

Is the idea [of your position] that business has become the danger and not the government? The idea of that business threatens liberty and not the government? The idea that the individual threatens general welfare? If that is your idea, how do you account for that, how do you show it to be true?

The complaint seems to stem (in this current wave of statism) from the abstract qualities of the dollar, its value, printing, and the Fed. All that to say that the Net Neutrality issue sounds like another attack against the perceived bullies of big business and the stock market. However, if there has been in recent times a problem in the financial/market transactions, it is not the fault of capitalism/the free market, which is what leftists suggest and some claim.

Van Harvey said...

Thank you Sal, from you that is much appreciated and very humbling.

Van Harvey said...

Anna, the article you linked to at The Objective Standard is quite good and puts the issue into stark relief.

Net Neutrality is a bid to do nothing less than nationalize the private property, services, and intelligence of those who have had the 'misfortune' of becoming successful in a field the Govt see's a valuable tool for controlling public behavior, commerce and thought.

Businesses like Comcast are finding themselves in the same position as are Doctor's - people want their services, and Govt intends to paint those wants as rights that it should control.

It has nothing to do with a 'free and open internet', any more than govt 'health care' has to do with Health - what both are about is gaining and brandishing power.

Van Harvey said...

Btw, The Objective Standard has a number of excellent articles available for download on a range of issues.

I subscribed for the first year, and would resubscribe... but their price is a bit too steep by half though, IMHO.

xlbrl said...

First, I seem to have found a man who loves Tocqueville as much as I do.

Net neutrality. Heh. As Tocqueville said of the net of the day, "It is an axiom of political science in the United States that the only means of neutralizing the effects of newspapers is to multiply their numbers. I cannot imagine why such a self-evident truth should have not have become more commonly held in Europe."
Inotherwords, "ambition must be make to counter ambition" due to the lack of better or reliable motives.

It is not neutrality the Obots seek, it is neutrality they seek to neutralize.

Van Harvey said...

Xlbrl said "First, I seem to have found a man who loves Tocqueville as much as I do. "

Hard to find friends in better places than in de Tocqueville's writing, welcome! He was so good at taking those (classical) Liberal ideas, which were those same ideas Madison had in mind writing the Federalist Papers, and which animated the Founders in general, and which were familiar to others such as Blackstone, Montesquieu, and so on..., and applying their principles to what he observed in travelling across America - he didn't just recount principles, he observed them, applied them, and didn't shy away from pointing out what didn't seem tidy around the edges. An absolute treasure.

Btw, from Madison in Federalist #51

"But the great security against a gradual concentration of the several powers in the same department, consists in giving to those who administer each department, the necessary constitutional means, and personal motives, to resist encroachments of the others. The provision for defence must in this, as in all other cases, be made commensurate to the danger of attack. Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to controul the abuses of government. But what is government itself but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controuls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: You must first enable the government to controul the governed; and in the next place, oblige it to controul itself. A dependence on the people is no doubt the primary controul on the government; but experience has taught mankind the necessity of auxiliary precautions. "

"It is not neutrality the Obots seek, it is neutrality they seek to neutralize."

Aint' that the Truth.