December 11, 2016

In Defense of Henry Potter in It’s a Wonderful Life


lionel-barrymore-its-a-wonderful-lifeDecember is upon us and that means plentiful opportunities to watch the enduring classic, It’s a Wonderful Life. Unfortunately, the overwhelming majority of viewers completely misinterpret heroic Roosevelt-hater and anti-New Dealer Frank Capra’s dystopian nightmare as a heartwarming Christmas tale. And while this writer likely can’t overcome the emotional appeal of angels getting their wings and other fanciful tripe in the film that help convince audiences to accept absurd economic fallacies, perhaps I can at least disabuse them of the vicious slanders they have heretofore accepted regarding the film’s hero, Henry Potter.

We first hear of Potter from George Bailey’s father, Peter Bailey, who badmouths Potter with the usual left wing falsehoods about businessmen. But during Bailey’s envious rant, we learn something important: Henry Potter is a board member of the building and loan. We later learn Potter is, in fact, a stockholder.

That puts a somewhat different light on his subsequent motion to liquidate the business upon Peter Bailey’s death. Yes, we hear George Bailey repeating the familiar socialist tropes his father did: that Potter only wants to close the building and loan because he “can’t get his hands on it” and considers the little people cattle, etc. But Potter responds with some rather inconvenient facts: the building and loan has been making bad business decisions, providing what we’d now call subprime loans to people who can’t pay them back.

We don’t know how Potter became a stockholder, but the Bailey Building and Loan does not appear to be a publicly traded company. The most likely explanation is Peter Bailey asked Potter for capital, just as George Bailey does later in the film, in between rounds of disparaging Potter as a greedy capitalist. That would be perfectly consistent with today’s “progressives,” who rail against capitalists out of one side of their face while sucking up to them for money out of the other.

But regardless of how Potter became a stockholder, Peter Bailey has a fiduciary duty to him to run the business for maximum profit, providing Potter and the other stockholders a return on their investments, something George Bailey confirms they never intended to do. Instead, the Baileys squander their investors’ money on a do-gooder, subprime loan scheme to make everyone a homeowner. It worked out in fictional Bedford Falls about as well as it did in early 2000s America.

Meanwhile, the Baileys constantly slander Potter’s rental houses as “overpriced slums.” These are the same Baileys whose housing opportunities are more expensive than Potter’s.

Their accusations constantly beg the question: If Potter’s houses are so bad, why do so many people choose to live in them? It’s constantly implied Potter’s customers have no other choice, but what exactly does that mean? Why has no one else, including any of the businessmen on the board of the Bailey Building and Loan, developed rental properties that are higher in quality, lower in price, or both?

The inescapable truth is Potter is wealthy because he provides a product that most satisfies his customers’ preferences for quality and price. If there were an opportunity to provide a higher quality product at a lower price than Potter was charging, a competitor would do so and take market share away from Potter, until Potter either raised his quality, lowered his price, or both.

The Baileys burn with resentment that so many residents of Bedford Falls prudently choose to live in Potter’s less expensive housing than buy a house they can’t afford, financed by the Baileys’ Ponzi scheme. Thus, even after shirking their fiduciary duty to run the business properly, the Baileys spend decades assaulting Potter’s character in a transparent attempt to lure away his customers.

When the Depression hits and the Bailey Building and Loan is exposed for the fractional reserve fraud it is, Potter offers to come to the rescue with a generous offer to buy out its customers. It is noteworthy there is a run on the Bailey Building and Loan and the local bank, but Potter is financially secure enough to save them both, proving once again he is the only honorable businessman in the film.

But we must give the devil his due. George Bailey, the ultimate huckster, saves the building and loan without Potter’s help, convincing the yokel mob making a run on his business to keep their money tied up in his fundamentally insolvent confidence game.

That brings us to the one regrettable act Potter is guilty of, which is concealing the $8,000.00 the incompetent Billy Bailey inadvertently handed him while attempting to make a deposit. It’s true this was an underhanded act, although not unprovoked.

We don’t know how much Potter had invested in the Building and Loan to become a stockholder, but suspect it was a lot more than $8,000. One could make the case he was merely getting back some of the money the Baileys had previously defrauded him of, but there are courts for such matters and Potter should have sought their help if he had a case.

Nevertheless, two generations of Baileys had led a decades-long assault on Potter’s good name, resulting in most townspeople disliking him, even though he has quite literally saved their lives on numerous occasions. Without him, a large portion of Bedford Falls would be unemployed, have nowhere to live, or both. It is not an exaggeration to say that without Henry Potter, Bedford Falls would cease to exist. Yet, thanks to the Baileys, he is the most hated man in town.

Compare Potter’s vindictive reaction when George Bailey crawls to him for help after the $8,000.00 is lost to Potter’s reaction at the board meeting at the beginning of the movie. At the board meeting, Potter dismisses George’s unhinged attack upon him and redirects the discussion to the subject of the meeting: what is best for Bedford Falls. By the latter confrontation, Potter tries to have George arrested for embezzling.

Potter’s dastardly act is totally out of character with the Potter of the earlier scene or any other event we know of in Potter’s life. As far as we know, he has always been a hard-nosed, unsentimental businessman, but has never committed a crime or held a grudge, as he does now. Everything we know about Potter up to this point tells us his vindictive attempt to have George Bailey prosecuted is precisely the kind of emotional decision-making Potter has avoided for most of his life. That is why he is so wealthy at the beginning of the film.

Everyone has a breaking point. Potter had evidently reached his. Had he been prosecuted for keeping the $8,000.00, which may have been tricky from a legal standpoint, given that Billy Bailey had handed the money to him, he could easily have plead temporary insanity caused by years of psychological warfare waged against him by the Baileys.

We’ll never know, because before Potter has any opportunity to allow his passion to cool and clear up the misunderstanding, George Bailey sets off on his suicide melodrama, followed by a long, self-aggrandizing hallucination about angels and how Bedford Falls would be worse without him. By the time he concludes his childish escape from reality, the same yokels he previously conned during the Depression are now bailing him out once again, foreshadowing so many future bailouts of dishonest financiers whose assets should have been turned over to better management in bankruptcy court.

In one of the darkest moments of the film, George Bailey’s Christmas tree is jostled and one of the bells adorning it rings. George Bailey, now confident he and his fraudulent real estate scheme are safe, suggests the bell signifies an angel has earned his wings, as if his dishonest business dealings and ruthless defamation of legitimate competitors had divine sanction.

Nothing more is heard of Henry Potter, the man without whom Bedford Falls would not exist. He is left friendless and without the one thing he could cling to before George Bailey, the Devil incarnate, wrested it from his grasp: his honor. As the credits roll, evil has triumphed. The economic fallacies inherent in Baileyism become accepted truth, resulting in disaster after disaster, including the most recent in 2008.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Dickens’ A Christmas Carol Has Too Sad An Ending for the Season

800px-charles_dickens-a_christmas_carol-title_page-first_edition_1843No Christmas season would be complete without plentiful opportunities to watch stage or television productions of Charles Dickens’ unfortunately immortal A Christmas Carol. The classic Reginald Owen and Alastair Sim movies will no doubt play several times on multiple cable channels. We have a live production showing at the Alleyway Theatre here in Buffalo, N.Y. Or, you could always go full-on retro and actually read the book.

I’m going to pass altogether this year on poor Scrooge’s story and hope for a sequel, even though Dickens is no longer with us. It just doesn’t get me into the Christmas spirit to watch a story with such a dark and foreboding ending. Christmas is supposed to celebrate the birth of new hope.

As Butler Shaffer demonstrated in his brilliant defense of poor Ebenezer, Scrooge was an invaluable benefactor to English society before the events of Dickens’ story. We are not given details of his business dealings other than they had something to do with finance. That Scrooge had been in business so many years and had amassed such wealth is enough for us to conclude he had made many more wise decisions on where to direct capital than unwise ones.

Who knows what housing, stores, railways or other benefits to society Scrooge had made possible through his wise judgment? How many thousands of jobs had he created? Dickens is unjustly silent on this. Whatever Scrooge had financed, we know it was something the public wanted or needed enough to pay for voluntarily. Thanks to Scrooge, however crusty his demeanor, the common people of London were far richer than they otherwise would have been without his services.

His only weakness seems to be sentimentality towards the whiny, presumably mediocre-at-best Bob Cratchett. We know Scrooge was paying Cratchett more than anyone else was willing to or Cratchett would surely have accepted a higher-paying job to put additional funds towards curing Tiny Tim. But we really don’t have any evidence anyone else was willing to employ Cratchett at all, at any salary level. Still, we must defer to Scrooge’s judgment on this and perhaps even laud him for finding a way to employ a substandard employee without jeopardizing the firm as a whole.

Thus, all was as well as it could have been on December 23. Scrooge’s customers were happy, Bob Cratchett was at least employed, thanks to Scrooge, and Scrooge himself was as happy as he could be, considering the ingratitude with which his genius had been rewarded and all the panhandlers constantly shaking him down.

Everything changed on Christmas Eve, when Scrooge was terrorized – there really is no other word for it – by three time-traveling, left wing apparitions. It wasn’t enough to frighten an elderly man with the mere appearance of ghosts. They took him on a trip through time, scolding him for supposed mistakes made in the past and blaming him for the misfortunes of others in the present and future. And let’s not forget the purpose of this psychological waterboarding. They are not, as Shaffer observes, pursuing Scrooge’s happiness, but his money. They are William Graham Sumner’s A & B conspiring to force C to relieve the suffering of X. Politicians A & B use the polite coercion of legislation; the spirits make use of more direct and honest threats of violence.

Their plot was successful. Scrooge awoke from his night of terror obviously out of his senses and began making one poor financial decision after another. Perhaps buying the largest turkey in the local shop could be excused on Christmas Day. But then, without any evidence of improvement in performance, he raised Bob Cratchett’s salary and promised to take on the Cratchett family’s medical expenses.

After that, we are told Scrooge was “transformed” completely, which we can only interpret to mean he no longer made the kind of decisions that had previously benefited so many. We are told Scrooge’s subsequent behavior was so foolhardy that some people laughed at him. But even this wasn’t enough to snap him out of the permanent delirium with which the spirits had inflicted him.

The story ends on that foreboding note. We are told Scrooge never again returned to the prudent decision-making that had brought on the supernatural terror attack on Christmas Eve. We have to assume the “transformed” Scrooge eventually went out of business, perhaps solely due to overpaying Cratchett, who is 50% of his labor force, perhaps due to the cumulative effect of the many unwise decisions we are told continued afterwards.

Not only was Tiny Tim’s medical care cut off, but the whole Cratchett family was rendered destitute and starving. As Scrooge had already been paying Cratchett more than anyone else was willing to, even before the imprudent raise, we have to assume Cratchett made less after Scrooge went out of business than he did at the beginning of the story, if he convinced anyone to employ him at all.

Worse even than the misfortune that befell Scrooge, Cratchett and Tiny Tim was the misfortune visited upon society as a whole. How many profitable ventures were never financed, both before and after Scrooge went out of business from investing with his heart instead of his head? How many future jobs were destroyed and children of unemployed fathers left sick and hungry?

Certainly, this horror story would be better told on Halloween than Christmas. Christmas is a hopeful holiday, celebrating the birth of the savior of the world, whose parable of the three servants lauds wise capital investment and condemns unwise use of capital. We can only hope some ambitious writer will pen a sequel to Dickens’ dark tale, in which Scrooge regains his senses, fires Bob Cratchett and returns to making the kind of decisions that once raised the living standards of so many.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Trump’s Job-Killing Carrier Deal

trump-carrierDonald Trump has not taken office and already he is delivering on his promise to keep manufacturing jobs in the United States. Yesterday, he visited Indiana to celebrate his part in persuading Carrier to keep 1,100 jobs slated to move to Mexico at its Indiana facility. Speculation of bullying, tax-funded quid pro quo (Carrier’s parent company, United Technologies, holds large defense contracts) and corporate welfare were plentiful.

Today, Zero Hedge reports Carrier was persuaded by none of the above. Instead, the company received “$700,000 a year for a period of years in state tax incentives.” That means keeping the jobs cost the government about $636 per job annually in tax revenues.

It would seem a win-win. 1,100 Americans keep their jobs, Carrier gets lower taxes to avoid having to pass on the cost difference to its customers and all the local businesses in Indiana benefit from the purchasing power that remains there with the domestic Carrier employees instead of being exported to Mexico.

That, as 19th century political economist Frederic Bastiat would say, “is what is seen.” What is not seen is all the consequences of Carrier not moving those jobs to Mexico, where they could produce their products at a lower cost. When those consequences are considered and the ledger is balanced, the deal will have made the United States as a whole poorer and will have cost it jobs.

Let’s first consider the decision in a vacuum, without the tax incentive. Carrier was moving the jobs to Mexico because it could produce the same air conditioner there at a lower cost, which it could then pass on to its customers. Keeping the jobs in Indiana raises the cost of production above what it would be with the move. That forces Carrier to raise its prices.

And we must assume Carrier would have saved more than $636 per worker per year in tax breaks had they moved those jobs to Mexico, or the move wouldn’t have made financial sense. With each worker on average producing many air conditioners per year, saving $636 per worker works out to a negligible cost savings per unit. So, Carrier is likely absorbing some of the higher costs of keeping the jobs in Indiana, over and above what they are receiving from the government. Those costs must be passed on to customers or taken out of profits, the latter resulting in either lower dividends or less money reinvested in future improvements to production.

“Ah,” says the supporter of this move, “but many people are willing to pay a little more to keep those jobs in America!” Perhaps, but the economic consequences remain. Assuming the price of an air conditioner would be $5,000.00 if produced in Mexico and keeping the jobs in America only raises prices by the $500, Americans are now paying $5,500.00 for an air conditioner instead of $5000.00. They get no more for their money than they would have paying $5,000.00. All they have in exchange for the $5,500.00 is the same air conditioner.

Had the job moved to Mexico and that same air conditioner been available for $5,000.00, the customer would have been able to afford an air conditioner and a bicycle, or an air conditioner and a new carpet, or an air conditioner and a new suit, for the same $5,500.00 he now spends to get the air conditioner only. The consumer is poorer because of the deal. His standard of living is lower. And let’s not forget that for every one employee producing air conditioners, there are hundreds or thousands of people consuming what those employees produce.

At the end of the day, the ledger balances to this: the same number of air conditioners are being produced, but at a higher cost. That difference in the cost of production is lost. The standard of living of everyone who consumes air conditioners is lowered by however much more it costs to produce air conditioners in Indiana instead of Mexico. We assume it is $500, but the exact figure is not important. They are poorer by whatever amount the diminished efficiency increases production costs.

“But kind sir!” says the apologist, “you have missed something. You have forgotten the purchasing power of those 1,100 employees, which will help local businesses and keep that wealth in America. That creates jobs that otherwise would have been lost!”

No, it is not forgotten. It is merely balanced against purchasing power lost by all those consumers of air conditioners and against all the jobs they would have created with the $500.00 they would have spent with local businesses, had they saved it in purchasing the air conditioner. The air conditioner customer who also bought a bicycle, a new carpet or a new suit also created jobs or supported existing jobs, which are now lost. And not one in a million knows where they went. The unseen killer of those jobs is the decision to make the same air conditioner at a higher cost in Indiana than at a lower cost in Mexico.

It doesn’t end there. Let us not forget the 1,100 jobs lost in Mexico, the third largest importer of U.S. exports. Because of the lost purchasing power of Mexican consumers, U.S. companies who export to Mexico lose revenue and must lay off workers.

When the whole ledger is balanced, the jobs lost in the U.S. at least equals those 1,100 retained and likely far exceeds them, as inefficiency grows exponentially as its effects ripple throughout the economy.

Finally, the apologist for the deal makes his last stand. “Yes, good sir, you make many fine points. But this deal involved lowering taxes for Carrier, which bestows upon them the same savings they would have realized by moving the jobs to Mexico. And even you must agree that lowering taxes and paying productive workers is better than allowing the government to use it less efficiently!”

Well, there is the rub. The government is doing with those lost taxes precisely what the apologist said. It is using them less efficiently than the market would have. The market would have moved those jobs to Mexico and lowered the cost of air conditioners. The government has used its taxing power to keep the jobs in Indiana and raise the cost of air conditioners above what it would otherwise be if the jobs moved to Mexico, with or without the tax incentive.

But even on the tax incentive there is more that is not seen. It is not as if the $700,000.00 in tax revenues were left in the hands of the taxpayers, who might use it productively. 100% of it went to subsidize the higher cost of producing an air conditioner in Indiana instead of Mexico. And the government went on spending the same amount as before, simply collecting the $700,000.00 Carrier doesn’t pay from others, now or in the future.

So, while the cost of the tax break is not added to the sticker cost of the air conditioner, the public is still paying that additional $636 per worker per year in the additional taxes collected to make up the government’s loss on Carrier. The public is also poorer by whatever price increase or profit reduction is necessary to offset the additional costs the company agreed to absorb to make the deal work.

No matter what defense the apologist offers, there is no escaping this. By keeping those jobs in Indiana instead of letting them move where the market is directing them, the net effect is the United States as a whole is at least $636 poorer per year for every employee kept in Indiana by the deal. It also loses jobs due to the higher prices it still pays for air conditioners, over and above what the tax break could alleviate, or the wealth lost in dividends or reinvestment Carrier sacrificed to absorb whatever additional cost savings it had to forego to keep the jobs in Indiana.  And this is one little company and just 1,100 jobs. Imagine if Trump delivers on his promise to keep or bring back millions?

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

The Irony Everyone’s Missing in the Hamilton-Pence Controversy

hamilton-penceFour days after Mike Pence was lectured by the cast of the hit musical Hamiltonand booed by its audience, the controversy rages on. President-elect Trump sent out the expected angry tweet demanding an apology. The left melodramatically gasped, “freedom of speech,” even though no one has suggested government action against the actors. And, suddenly, the right is more offended than an SJW at an Ann Coulter lecture. Even Trump whined about the theater being a “safe space.”

The only person who doesn’t have a strong opinion on this is Mike Pence. He handledthe situation with uncommon grace, shrugging off the boos from the crowd with a line for the ages: “That is what freedom sounds like.”

All of this pales in comparison to the supreme irony everyone is missing in this whole overblown controversy. Here we have the cast of a musical that holds Alexander Hamilton in an admiring light expressing deep anxiety about a president who just won a stunning upset victory after running his campaign largely based on the political ideas of – wait for it – Alexander Hamilton.

Read the rest at the Foundation for Economic Freedom…

The Electoral College is Vital to Freedom and Peace

400px-1992prescountymap2Retiring U.S. Senator Barbara Boxer (D-CA) filed legislation proposing an amendment to the Constitution abolishing the electoral college. She and many across the United States believe the president should be chosen by direct popular vote. This would be a huge mistake. The electoral college is vital to freedom in a republic the size of the United States.

Lest this be taken as a partisan argument for Donald Trump, let me clear the air. I did not vote for Mr. Trump. I understand the aversion many in both parties have for his style and even the substance of some of his policies. I understand the disappointment of Clinton supporters. I’m a libertarian from Buffalo, NY. My team never wins, neither in politics nor anywhere else – believe me, I understand!

But regardless of my reservations about Trump, the manner in which he was elected must be preserved as the only way to preserve a nation this large and culturally diverse.

Michael Moore recently called the system antiquated and only created to protect the dubious “rights” of slave states. Not so. In fact, it was created to protect smaller states from domination by the largest, including slave state Virginia. Let’s remember, the people of the original thirteen states did not have to accept the Constitution. Rhode Island, which passed laws to gradually emancipate its slaves from 1784-87, didn’t ratify it until 1790.

It’s primary reason for holding out was the addition of a Bill of Rights to the Constitution, measures which clarified the restrictions on the power of the federal government, but did not protect slavery. What it did ensure was that larger states like Virginia and Pennsylvania were not able to dictate how Rhode Island governed its internal affairs. The very first clause of the First Amendment, properly understood, prohibited the federal government from establishing a national religion, like the Church of England. Rhode Island, founded in the name of freedom of religion by a man kicked out of Massachusetts because of his religious beliefs, was especially concerned about this.

While some of the particulars are different, the underlying principle remains the same. The United States is a diverse federation of drastically different cultures. Those who believe New York City, Atlanta, GA, Boise, ID and Los Angeles, CA aren’t different cultures just aren’t being honest with themselves. As President Obama is so fond of saying, E Pluribus Unum (out of many, one).

There are some laws the federal government enforces within the states, based on its power to regulate interstate commerce. But the executive who enforces those laws must represent the people of every state, especially given how culturally diverse they are. That’s why we have an electoral college. That is why the people of Idaho, many of whom may find the societal values in places like New York or California abhorrent, agree to abide a chief executive who most likely comes from a place like that – because they and their culture have an equal say in electing him, even if they’re outnumbered.

If the shoe were on the other foot and Midwestern evangelical states had a population advantage, you can bet New Yorkers and Californians would be defending the electoral college to the death.

The beauty of our system is that it allows people with vastly different beliefs and values to live together in one federal republic dedicated to protecting their freedom to hold those beliefs, right or wrong, so long as they do not infringe the rights of others. To transform the republic to a pure democracy and allow a few, cosmopolitan states to rule over people who don’t share their beliefs would truly be tyranny and a threat to domestic peace.

The Constitution guarantees “to every State in this Union a Republican Form of Government,” not a democratic one. The founders were wise in this respect. In the name of diversity, freedom and peace, we should keep the electoral college.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

He, She, They, Him, Her. Period.

thomas-more-pronouns

 

 

 

 

 

 

 

 

 

 

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

New York Times already pushing Hillary Clinton’s Internet Regulation Plans

hillary_clinton_by_gage_skidmore_6Hillary Clinton hasn’t even won the general election yet, but the New York Times is already pushing her legislative agenda. And while she is likely to meet stiff resistance on headline issues like immigration and health care, regulating the internet is one even her Republican adversaries might work with her on. As Repubican Sen. Marco Rubio warned, the sword cuts both ways.

“Adolescent suicide as likely as death in traffic accident,” reads the headline of the article, which goes on to describe “an accumulating body of evidence that young adolescents are suffering from a range of health problems associated with the country’s rapidly changing culture.” And just what are some of the elements of the culture that have changed in the past two decades?

Is it the huge increase in prescription of behavioral drugs, which all list “suicidal thoughts” among their side effects?

Could it be the trend towards locking up children in those juvenile detention centers called “schools” at earlier and earlier ages and loading them up with homework for the few hours of leisure time left when they get out?

The pressure of government-mandated tests?

No, neither the Times’ Sabrina Tavernise nor the CDC researchers she cites appear to have been curious about any of these likely causes. For them, it’s all because of social media.

“The pervasiveness of social networking means that entire schools can witness someone’s shame, instead of a gaggle of girls on a school bus. And with continual access to such networks, those pressures so not end when a child comes home in the afternoon,” writes Tavernise.

With the plethora of human activity Hillary Clinton aims to tax and regulate, one might not be aware of her plans for the internet in general and social media in particular. Bullet point three on her five point plan to “Created Safer Schools for our Kids” reads:

Make the Internet a safer space for kids by addressing cyberbullying. While the Internet is essential to helping students learn and communicate, cyberbullying has become a harmful extension of bullying in the classroom. The ease with which demeaning and damaging content can be posted on social media networks like Facebook and Twitter make it difficult for our kids to ever really escape bullying. We need to invest in innovative solutions that allow students, parents, educators, and other adults to make the Internet safer, while respecting First Amendment rights.”

Quite a coincidence, isn’t it, that the New York Times ran a story suggesting a rise in teenage suicides might be caused by something Hillary Clinton plans to regulate? And if you believe that, I have a…

The assault on freedom in the village always starts with the children. It doesn’t take much imagination to anticipate what’s next. First, social media must be regulated to “save the children,” followed by the internet in general to curb the dissemination of false information that “degrades our national conversation.” Or something. Because established media like NBC never disseminates anything blatantly false, right?

So, who benefits from the proposed regulation? For starters, The New York Times and other traditional media benefit. The more their competition is regulated, the less of it there is and the less those competitors can differentiate their content from that offered by traditional media. Limiting competition helps stop the kind of bleeding the Times reported last month while trying to compete with an unregulated, diverse media marketplace.

Government itself benefits, by decreasing the scrutiny unregulated internet freedom subjects it to. President Obama didn’t lament the “wild west media” because he’s concerned about journalistic standards. He did so because for every wild conspiracy theory posted somewhere on the internet, there’s likely three accurate stories on government misdeeds that would otherwise go unreported.

Let’s not forget established social media companies like Facebook themselves. Even if they feign opposition to the initial regulatory proposals that come out, companies like Facebook will eventually embrace and likely help write the regulations that will limit their own activities. Why? Because other existing social media aren’t their most dangerous competition.

Tomorrow’s start-up poses the greatest danger to any established business and for every new regulation, the cost of starting a new business increases. When the cost to launch a start-up goes up, the number of start-ups launched goes down. The established players with existing market share can absorb the cost of increased regulation into their operating expenses. But the company that might have disrupted the whole industry may not be launched at all, if entry costs due to regulation rise high enough.

See how that works?

This is by no means unique to social media or the internet. This is the real story behind the entire regulatory state. When you research the true history of virtually all regulation, whether historically significant like the Sherman Anti-Trust or Wagner Acts or the ones that regulate your light bulbs or toilet bowls, the players and their motivations are virtually always the same.

Unsuspecting citizens generally believe well-intentioned politicians write regulations to protect consumers, especially poor ones, from unsafe products or unfair treatment. In reality, corrupt politicians write regulations to protect special interests, usually wealthy ones, from completely fair competition. And when they can invoke the safety of the children, it always works.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Earth to Washington, D.C.: Russia will never give up ports in Syria and Ukraine

sevastopolThere are four days to go before the election and voters are up to their ears in the usual cries of “most important election of our lifetimes” and “we’re at a crossroads,” the latter suggesting, as usual, that the very nature of the republic is at stake.

In reality, there are very few policy differences between the two major party candidates. Both are protectionists. Yes, Trump presents his protectionism with the rhetoric of a classic conservative mercantilist, while Clinton tries to sound more like a socialist unionist. But in the end, they are both willing to champion destructive trade policies to appease specials interests.

Both promise to sign family leave legislation, forcing employers to provide this compensation, which they will either subtract from monetary compensation or add to the prices of their products. Neither Trump nor Clinton have said anything remotely suggesting they will rein in government spying or protect civil liberties in general. And they both promise yet another war of some sort in the Middle East, this time against paper-tiger-boogeyman-of-the-month, ISIS.

But there is one significant policy upon which the candidates appear to disagree, relations with Russia. Trump has stuck by his position to attempt to negotiate with Vladimir Putin, despite the ammunition it has given Clinton in portraying him as being influenced by a foreign power and even a Putin “puppet.”

Clinton has maintained the Establishment position: Putin is aggressive, seeks to expand Russia’s borders and the U.S. must remain firm on curbing this ambition, including military intefvention in the Ukraine.

There is only one problem with the Establishment narrative: It has no basis in reality. A quick glance at maps of NATO in 1991 and 2016, respectively/ makes it abundantly clear that it is not Russia that has expanded over the past 25 years. On the contrary, NATO has expanded eastward, breaking well-documented promises to then-Premier Mikhail Gorbachev it would not do so if he acquiesced to the reunification of Germany. Gorbachev kept his promise; U.S.-led NATO did not.

With NATO now literally on its border, Russia has two things left to lose: it’s only two warm water ports in Tartus, Syria and Sevastopol, Ukraine. And guess where the U.S. has focused its latest “regime change” efforts? The $100 prize goes to the nice lady in the second row who said, “Syria and Ukraine.”

Aggression doesn’t get any more naked than this and, in case you haven’t noticed with all the e-mail servers and groping dominating the news cycles, the Russian’s have zero sense of humor at this point. Yes, there are cover stories on both sides for what is going on in Syria and Ukraine, but the bottom line is this: Russia is not going to give up those ports without a fight. And with a GDP roughly the size of Italy’s, they can’t fight a conventional war against the U.S.

Do the math.

The scariest part is the indifference with which beltway elites seem to be treating the overt preparations for war in Russia. That any intervention by the “exceptional nation” might be resisted with force by a major power seems completely beyond the comprehension of the enlightened ones, as evidenced by the stunned reaction to joint Chiefs Chairman Gen. Joseph Dunford’s blunt answer to Republican Sen. Roger Whicker on why a no-fly zone over Syria might not be such a swell idea:

Right now, Senator, for us to control all of the airspace in Syria it would require us to go to war, against Syria and Russia. That’s a pretty fundamental decision that certainly I’m not going to make.

Yes, there are many in the national media pooh-poohing “alarmism” over Russia’s recent moves, writing them off as election-year posturing or mere coincidence. Who ever heard of a world war starting due to major powers butting heads over a tiny country, right?

Maps don’t lie. Whatever Washington and Moscow says or does today, they are both involved in conflicts involving assets the Russians are not going to relinquish, in places the United States have no legitimate reason to be in the first place. This doesn’t end well unless the U.S. changes course, something Hillary Clinton has firmly resolved not to do.

She cannot be allowed to ascend to the presidency. If Trump is too flawed, there is still a chance for peace with Libertarian Party Nominee Gary Johnson.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Diana Kastenbaum’s support of Obamacare more outlandish than anything Trump or Clinton has said

kastenbaumJames Madison warned New Yorkers that in a representative republic, Congress posed a much greater threat to liberty than the presidency. Proving his point, here is a jewel from Diana Kastenbaum’s website. She’s the Democratic Party Nominee to represent New York’s 27th District in the U.S. House of Representatives.

“For Diana, health care reform is about giving American families and small businesses — not insurance companies — control over their health care. For far too long, America’s health insurance system has made health care more costly, less accessible, and less efficient for families and small businesses. No one in America should have to declare bankruptcy because they can’t afford to pay their medical bills. Premiums should not be increasing at a rate of six times the rate of our GDP. That is why Diana is a supporter of the Affordable Care Act.”

Statements like this have a way of washing over most people without making more than a vague, emotional impact. Let’s unpack what she’s said here.

First, she says health care reform is about giving American families and small businesses – not insurance companies – control over their health care. This in support of a law requiring every soul in America to purchase health insurance, whether they want it or not. Not only does the ACA mandate insurance, but it mandates the services insurances will cover, meaning a smaller portion of total healthcare is left outside the purview of insurance companies.

Does this give insurance companies more or less control over health care?

She claims insurance companies have “made health care more costly, less accessible, and less efficient for families and small businesses.” Even if that were true, the ACA would only make things worse. But have insurance companies made health care more expensive? No.

Insurance companies reflect rising healthcare costs; they don’t drive them. Health insurers have all the same self-interested motivations of home insurers, automobile insurers and liability insurers.  But we don’t see the premium rates of those other insurers outpacing inflation like health insurance premiums. Why?

Kastenbaum isn’t at all curious about this. But clearly, something besides the profit motives of health insurers is increasing the cost of healthcare disproportionately. Assuming the same laws of supply and demand apply to the price of healthcare as to other products, could it be the artificial limitation of supply caused by medical licensing laws, the FDA and other disproportionate regulatory burdens on healthcare? Could it be the gross artificial stimulation of demand by huge entitlement programs like Medicare and Medicaid?

If the government gave a trillion dollars to clothing shoppers next year, would you expect the price of blue jeans to go down, remain the same or go up?

Kastenbaum says health insurers have made health care less accessible and efficient. But the ACA hasn’t increased the supply of doctors and hospitals; it’s decreasing supply. And major insurers are dropping out of the program en masse, specifically because of the burdens imposed upon them by the ACA. In many states, there will be only one insurance option for consumers next year. All this in exchange for subsidizing coverage for a tiny portion of previously uninsured consumers, some of whom were uninsured by choice.

As for efficiency, the law imposes a one size fits all plan on everyone in the country, prohibiting efficiency-enhancing discrimination on the basis of gender, medical history and local risks. Is it really more efficient to force men without dependents to purchase OB/GYN coverage? Wouldn’t healthcare be less expensive for society as a whole if they weren’t?

Kastenbaum then makes the emotional appeal, “No one in America should have to declare bankruptcy because they can’t afford to pay their medical bills.” Agreed. How is this an argument for the ACA?

Finally, Kastenbaum says, “Premiums should not be increasing at a rate of six times the rate of our GDP. That is why Diana is a supporter of the Affordable Care Act,” which is driving premiums up faster than ever before our very eyes. Media everywhere are reporting premiums increasing as much as 25% for many next year, also specifically because of the ACA.

While Kastenbaum’s ideas on healthcare markets might be particularly obtuse, electing her less delusional Republican opponent is by no means a silver bullet. If Americans truly want to make healthcare affordable again, they’ll have to change their expectations. As long as massive entitlements like Medicare and Medicaid make demand virtually unlimited and massive regulatory burdens severely limit supply, the price of healthcare is going to continue to skyrocket. And as long as we keep sending people like Kastenbaum to Washington, Congress will remain the greatest threat to our liberty.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

What Trump and His Accusers Didn’t Say

trump_in_2013Forget foreign policy, economic policy, civil liberties or “muh roads.” With three weeks to go before Election Day, discussion of the so-called “issues” is over. From here on in, the candidates seem determined to do nothing but fire volleys of character assassination at the two easiest targets who ever ran for office.

Thank goodness for that, too, for as libertarian icon Lew Rockwell, wrote, “In contrast to campaign “substance” which is mostly always wrong, or skewed, the invective is mostly entirely true.” Never has this been truer, as both candidates have made compelling cases the other is unfit to serve as a garbage collector, much less president.

But while the candidates’ accusations have been mostly true, a goodly portion of the media reporting is demonstrably false. The most egregious example is the ubiquitous assertion that Trump admitted to “grabbing women by the …” on a recording made by Billy Bush. Trump never admitted to such on the video and, if you think you heard him do so, then you should watch the video again.

Read the rest at LewRockwell.com…

 

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.