September 21, 2017

Evacuation and the Danger of Mindless Obedience

causeway traffic jamI relocated to Tampa, FL in 2004 for a job opportunity. I moved into my apartment on Saturday, July 31 and started work the following Monday. One week later, the local news was dominated by Hurricane Charley, which was predicted to be the first hurricane to directly hit Tampa since 1921. Sound familiar?

I was told I was in a mandatory evacuation area, meaning 911 calls might not be answered for anyone who refused to leave. Nevertheless, most of my new, local friends told me to ignore the order. “They always say that,” I was told. “It always ends up being a lot of rain, nothing more.”

Something inside told me they were right. Still, I was new and although I never really feared for my life, I had recurring visions of local first responders pulling me out of the rubble as the media ridiculed the “Yankee who couldn’t follow simple instructions.” So, I played it safe and booked a hotel in Orlando.

On August 13, the hurricane turned right and made landfall in Port Charlotte, about 100 miles south of Tampa. It was a Category 4 when it hit, meaning winds of over 150 mph. It then made a beeline for – you guessed it – Orlando.

Read the rest at Foundation for Economic Freedom…

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?

Trump’s Embargo on North Korea Is the Precursor to a War

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Not even President Trump’s harshest critics blame him for creating the North Korean problem. The Kim Jong-Un regime’s nuclear weapons capabilities and willingness to brandish them goes back over a decade, to when Kim’s father was still the ruler.

And while each successive U.S. administration has approached North Korea slightly differently, one thing has remained constant: tens of thousands of U.S. troops on North Korea’s border, maintaining a standoff that just passed its sixty-fourth year.

The other constant, since North Korea’s first nuclear weapons test in 2006, has been economic sanctions imposed on the regime under the auspices of the U.N. Security Council. These sanctions began strictly limited to trade directly related to the regime’s nuclear program and gradually widened to include financial and other trade categories.

One need only read this morning’s headlines to judge their effectiveness.

But over the weekend, President Trump saw every president before him and raised them with this tweet:

Read the rest at Foundation for Economic Education…

 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.

“Price Gouging” in the real world.

waterArt1Whenever there is a natural disaster, we see two things: the best in human generosity, courage and resilience and the worst in economic ignorance. The former includes individuals rescuing stranded neighbors, volunteers lining up to join charity relief efforts, and corporations martialing their vast resources to pour needed items such as food, bottled water and clothing into devastated areas. The latter includes “economists” repeating the age old broken window fallacy and politicians denouncing and threatening so-called “price gougers.”

Emotions run high during disasters, which is a double-edged sword. The outpouring of sympathy for the victims leads to extraordinary efforts in assistance. But it also leads to irrational resentment of those whose actions are often vital to human survival, but whose motives are judged inferior. These are, of course, the aforementioned price gougers.

One of the weaknesses in rational responses to the accusation of price gouging is just that: they appeal to reason when the accusation is born of emotion. And that disconnect is an irrevocable one until the accuser can be persuaded to look at the situation reasonably. But once so persuaded, the accuser often voices the understandable objection that economic arguments rooted in supply and demand charts and theory are too removed from what the accuser considers “the real world.”

Here, then, is a “real world” scenario in which the actors respond to incentives just as anyone in similar situations have countless times in the past:

There is a hurricane and flooding. Drinkable water is in short supply. A man has $100. He needs a case of water to get his family of three through the week.

He walks into the store, where water is $25/case. There are 4 cases left on the shelf. He needs one, but  can afford 4 and he doesn’t know how long the emergency will last. So, he buys all 4 cases.

Immediately afterwards, a family of five walks into the store with $100. There is no water to buy at any price. This family is now in desperate straits and must look elsewhere to procure what they need to survive.

Can anyone dispute the actors in this little parable have acted rationally and precisely as they would in the real world? No. Neither have any acted in a malicious or overly selfish manner. All have made the best choices among the alternatives presented them.

Now, change the price of a case of water in the above scenario to $100/case. What would be different? Of course, the man with a family of three would now only be able to buy one case of water, giving him what his family needs, but not necessarily as much insurance against future uncertainty as he would like. He gives up a little, but the family of five whose survival was in grave danger in the $25/case scenario is now able to purchase at least one case of water.

In the latter scenario, both families have enough to survive and a strong incentive to conserve water, thereby reducing demand and lowering its price, all other things being equal.

The so-called “price gougers” may have acted in their own interests, but they have not only benefited society economically, they have saved the lives of the family of five. Thus, Adam Smith’s 241-year-old “invisible hand” is confirmed by the real world yet again.

But there are still those who claim that, while the price gougers have acted rationally and within their rights and may even have inadvertently benefited others, they have still acted immorally. In the case of the recent hurricane in Texas, many say,

“No, you don’t understand. Many of these people aren’t even from Houston. They knew the hurricane was coming and bought up a bunch of water at regular prices, with the express intent of coming to Houston and selling it for huge profits, while others were giving water away for free. That’s immoral!”

First, anyone selling water at any price is obviously serving people who don’t have access to the free water. If the buyers had access to free water, they wouldn’t pay for it, at inflated prices or not.

Second, this sanctimonious moralizing begs the question, “Why didn’t you buy up a bunch of water and go to Houston and sell it at regular prices?”

The answers to the latter question are many, but they can be summarized as follows: most people do not have the time, capital or expertise to do what the price gougers did. Who can afford to take off from their own job or cease running their own business to start a whole new one on a few days notice, much less donate their time? Some can, but not most, which is why after all those who can be by charitable work are served, there is still a market for those seeking profits.

Lost in all the moralizing is the reality that the so-called price gougers face all the same challenges as anyone else, having to forego whatever income they otherwise would have earned if not for their disaster-relief project, and face the risk of losing future income because they took off from their jobs or put their own regular businesses on hold. These losses and risks must be compensated, which is another reason they sell products at a premium price, in addition to supply/demand realities.

Thus, in the real world, even with as many people as are able acting as charitably as possible, there is a need for those seeking profits from higher-than-normal margins, whose self-interested actions save lives and mitigate the devastating effects of disasters. Yet, the rest of the world condemn them and governments seek to punish them, threatening not only the price gougers, but those whose lives they may save or whose suffering they may lessen during the next disaster.

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.

Both Lincoln and the Confederacy Were Awful

lincolnWe’re fighting the Civil War again. Whenever both major parties drop any pretense of addressing the real problems facing American taxpayers, their constituents revert to having at each other in “the culture wars.” And no culture war would be complete without relitigating what should now be settled history: the reasons for the Civil War.

Americans sympathetic to the Union generally believe the war was fought to end slavery or to “rescue the slaves” from political kidnapping by the slave states, that seceded from the Union to avoid impending abolition.

“No,” say those sympathetic to the Confederacy. The states seceded over states’ rights, particularly their right not to be victimized by high protectionist tariffs, paid mostly by southern states, but spent mostly on what we’d now call corporate welfare and infrastructure projects in the north.

The declarations of South Carolina, Mississippi and Texas don’t mention taxes or economic policy at all.

That the states seceded for a different reason than the war was fought seems to elude everyone.

Read the rest at Foundation for Economic Education…

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 Best Anti-Nazi Strategy Is to Let Them Speak

the_blues_brothers_24While the country is still reeling from shocking images of the violence in Charlottesville, VA last weekend, CNN reports the so-called “Alt Right” is planning nine events for this weekend, including a “free speech rally” in Boston. As expected, counter-protests are being planned, although local police in most areas are planning to take measures to keep the adversarial groups apart to avoid violence.

I’m sure this strategy will be criticized because it will give White Supremacists, Neo-Nazis and others of their ilk a safe space to “spew hate.” That’s right; it will. And that’s precisely why it’s the right strategy, for a number of reasons. It should have been employed in Charlottesville. Everyone involved would have been both freer and safer.

The ACLU Is Right on This

A wise man once said, “We don’t have the First Amendment so we can talk about the weather. We have it so we can say very controversial things.” No reasonable person believes the attorneys for the ACLU have any sympathy for what the speakers at the Unite the Right rally were going to say last weekend. But they recognized how important it was to defend their right to assemble and exercise their rights, even to say things the overwhelming majority of Americans find offensive. So, the ACLU went into federal court to get a local decision to revoke the group’s permit overturned.

The pertinent question isn’t “Why let them speak?” It’s “Why not let them speak?” The answer to the latter question is fear. Well-meaning people are genuinely afraid of these people growing their movement. After all, it happened before, right? And it didn’t happen in some Third World backwater, but in one of the leading industrial nations of the world. There are still people alive today who survived that horror.

Read the rest at Foundation for Economic Education…

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.

13 Reasons Why is an indictment of schools, not legitimization of suicide.

13-reasons-why-netflix-01-1200x800CBS News reports that two fathers are coping with the worst pain anyone can endure in this life: the death of a child. Both fathers believe the Netflix series, 13 Reasons Why, contributed to their daughters’ decisions to take their own lives. They have publicly asked Netflix to cease airing the show and one of the two men has requested a meeting with Netflix.

And before anyone raises concerns about free speech, there is nothing in the report suggesting the men are calling on the government to censor or otherwise interfere with Netflix’s rights, at least at this point. They are simply private citizens seeking to deal directly and peacefully with a private enterprise to discuss a dispute.

The story has already exploded in cyberspace. But it seems that most people (including perhaps the producers of the show and the author of the book it was based upon) miss its real lesson. The story is a pretty accurate representation of the “socialization” homeschoolers supposedly deprive their children of by keeping them out of school.

As 1990 New York State Teacher of the Year John Taylor Gatto put it during his acceptance speech for the award,

“It is absurd and anti-life to be part of a system that compels you to sit in confinement with people of exactly the same age and social class. That system effectively cuts you off from the immense diversity of life and the synergy of variety, indeed it cuts you off from your own part and future, scaling you to a continuous present much the same way television does.”

While there is never-ending debate about what children are taught in schools, whether religion should be completely banned from public school or not, whether sex education should be taught, etc., nobody questions the school paradigm itself.

It’s time to consider the possibility that the entire model is wrong. The culture it creates is just one reason. In the absence of adult culture that is at least for the most part based on the rules of civil society, the children, in their ignorance, create their own culture, which is irrational, merciless and often violent. This is nothing new. We’re just confronted with it more now in the age of phone cameras and social media.

It has been the goal of communists and other varieties of statist since Plato’s time to separate children from their parents and have them raised by the state. They’ve largely succeeded.

How do you like the results?

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.

Trolling Bernie Sanders Part 1

I know. It’s a little like when Kramer was beating up those ten and twelve-year-old kids at his karate school on Seinfeld. But it’s just too hard to resist trolling the commie con man, if for no other reason than to expose him to his confused supporters. So, by popular demand, some highlights from my past few months trolling Bernie.

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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.

It’s Time to Repeal and Replace the Republican Party

Gop slash 2President Trump attempted Friday to put a smiley face on the defeat of the American Health Care Act (ACHA), known to its opponents as “Obamacare Light.” From his perspective, the failure to secure enough Republican votes to pass the AHCA will lead to a “better bill” in the long run, because that future bill will have bipartisan support. The president did not elaborate on how the bill he envisions would be better or what about this bill, which he virtually threatened members of his own party to vote against, he didn’t like.

Opponents of the AHCA opposed it because it was too much like The Affordable Care Act (Obamacare) itself. Trump’s comments beg the question for anyone hoping for less government in health care, rather than more: How exactly will participation by the Democratic Party make the next bill better?

It’s fair to say Trump is far from a typical Republican, especially on health care. He’s supported single payer government health insurance in the past, even as recently as his 2016 campaign. But what about the rest of the GOP? If the House of Representatives is any indication, merely tweaking and renaming Obamacare was a viable solution to what they have denounced for seven years as the first step down the slippery slope to socialism.

This is by no means an isolated incident in the GOP’s history. Despite running on reducing the size and influence of the federal government, Republican presidents and Congresses have consistently presided over more significant expansions than the Democrats. A look at historical data on federal outlays reveals that federal spending increases far more when a Republican is in the White House than under a Democrat, regardless of which party controls Congress.

Beginning with Nixon, federal spending has virtually doubled during the administrations of all three two-term Republican presidents. Even Eisenhower increased it fifty percent, despite two year-over-year cuts in 1954 and 1955, respectively, equaling the percentage increase under LBJ’s “Great Society” (although the latter was accomplished in one term). Spending increased far less under Democratic Presidents Clinton and Obama than under any post-war Republican president who served two terms. It seems unlikely that trend will change under President Trump, who has proposed $60 billion in increases to military and Homeland Security spending.

Republican rhetoric also typically includes “slashing” regulations on economic activity, but the reality rarely bears any resemblance to the rhetoric. Like many of his Republican predecessors, Eisenhower created an entire new department, Health, Education and Welfare, which paved the way for LBJ’s medical entitlements. Nixon created the EPA, which alone is responsible for some of the most stifling regulation on business. Reagan is widely credited for massive deregulation, but most of the meaningful deregulation was passed while Carter was president. George W. Bush’s only two meaningful economic policies were the economically destructive Sarbanes-Oxley Act and the TARP bailout.

Over the entire sixty-four years since 1953, voters truly interested in reducing the size and influence of the federal government have decried what have recently come to be called, “RINOs,” (Republicans-in-Name-Only). This is a term popularized during the Tea Party era to describe Republican politicians who run on shrinking the federal government, but who govern more like liberal Democrats once in office. If only a real Republican could be elected, say the grass roots, then the federal government would finally be brought back within its constitutional limits.

But when have these “real Republicans” ever existed? Once upon a time? If one goes back to its founding in 1854, the Republican Party was the big government party. By 1860, the platform included all the familiar big government planks from its predecessors, the Whigs and the Federalists. And spend big they did, particularly on railroads and other infrastructure, in addition to raising protectionist tariffs.

It wasn’t until Woodrow Wilson and the new Democratic Party leapfrogged the Republicans in terms of big government that Republicans even campaigned on shrinking the federal government, which wasn’t exactly a radical idea following the spending and regulation ramp-up during the largest war in human history to that point. Evidently, Warren Harding and Calvin Coolidge are the only “real Republicans” to have ever occupied the White House. And let’s not forget that both merely returned policy to that of their 19th century Republican predecessors. Harding and Coolidge praised Alexander Hamilton’s economic policies and governed accordingly.

Considering the present Republican administration, there has never been a better time for those truly interested in smaller government to confront reality: the ninety percent of Republican Congressman who would have voted for the AHCA are the real Republicans. They represent what the Republican Party has been about for the entire 163 years of its existence: big government conservatism.

It’s time to repeal the GOP and replace it with a party truly committed to less government, free markets and a peaceful foreign policy. While the numbers associated with third parties are not encouraging, one cannot ignore the vast potential represented by that half of the electorate who don’t vote at all. Together with the large number of Republican and Democratic voters who “hold their noses” and vote for the lesser of two evils, a new party formed from the Libertarian, Constitutional and Reform Parties, marketed to disaffected non-voters, could represent a viable alternative.

At this point, what could those seeking smaller, less intrusive government possibly have to lose?

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 Culture of Entitlement in Medicine

medicare-logoSenator Rand Paul has introduced an alternative bill to what he calls, “Obamacare Lite,” a.k.a. the American Health Care Act, introduced by House Speaker Paul Ryan. Paul’s criticism of Ryan’s bill was mild compared to Rep. Thomas Massie’s. Massie called Ryan’s bill a “stinking pile of garbage.”

While Paul’s plan is more free-market oriented than Ryan’s, no plan is addressing the one elephant in the room that must be slain before anything resembling a free market in health care can emerge: entitlements.

While Medicare and Medicaid’s effect on the federal budget is generally acknowledged, seldom mentioned is the percentage of overall health care spending that is tax-subsidized and the effect that has on prices. A study by the Georgia Institute of Technology found that of over $2.5 trillion in total U.S. health care spending in 2014, Medicare, Medicaid and “Other Public Insurance” accounted for 44% of it. By comparison, spending by private insurance companies accounted for only 33%, with out-of-pocket spending a mere 13%. Most of the remaining 10% was attributed to “other payers.”

In other words, almost half of all health care purchases in the United States occur free from the two strongest price-limiting market forces: the freedom not to purchase and finite demand.

Yes, the patients have a choice of which medical services they utilize. But they don’t buy them; taxpayers do. And the taxpayers don’t have a choice. And “demand” means not only the desire, but the ability to purchase a product at a given price. I may want to purchase a Rolls Royce. But if I don’t have enough money, I don’t represent demand for a Rolls Royce.

Price is determined by the intersection of supply and demand. By adding over $1 trillion to total funds available for health care spending, government health care programs significantly increase demand. When demand significantly increases, supply and other factors being equal, prices go up. It’s Economics 101.

If half of all automobiles were purchased by government programs, the price of automobiles would behave just as health care prices do now. And politicians and other “experts” would be wringing their hands over how to solve the automobile crisis and ensure everyone has the opportunity to exercise their fundamental right to drive to work.

Anyone who points out these rather uncontroversial economic realities can expect to be answered with, “What? You want to let my grandmother just die because she can’t afford health care? Do you believe only rich people should be treated for sickness and injuries and everyone else should just be left to suffer?”

Invariably, opponents of these programs take the bait and respond as if government health care programs were solely entitlements for consumers. They’re not. They’re much more entitlements for providers, who believe they are entitled to fees their markets won’t bear.

Having worked in a past life with physicians, hospitals and other providers for over a decade, I had a unique opportunity to understand their thinking (Disclosure: much of this time was spent in management positions at two of those “evil” HMOs). And while there are many exceptions to what I’m about to say, there are two things I found to be true about most physicians. One, they are among the most generous and compassionate people in society. Two, they share academia’s absolute contempt for the free market.

This results in a kind of Jekyll/Hyde aspect to their approach to reimbursement. On one hand, a physician who encounters a patient with no verifiable ability to pay will nevertheless care for that patient, if the need is serious, without hesitation. Physicians and hospitals provide a considerable amount of care every year for which they are not paid, without complaint.

Yet the moment there is a payment avenue, that same physician suddenly loses not only his compassion, but all connection with reality. Many were the times when a physician would say to me words to the effect of, “I’m entitled to higher compensation in return for the years of training I completed and the money I spent acquiring it.”

No, doc, you’re not. It is true that your skills are scarce and will fetch a higher price on the market than skills less scarce. But you’re only entitled to what others have agreed to pay you, like everybody else.

This culture of entitlement extends throughout the health care industry. How many times have you spoken with the billing manager for a hospital or medical practice who makes some form of this passive-aggressive complaint: “Our billed charges for this procedure are $835.00, but your insurance only pays $520.”

I’ve taken to responding, “Yes, I know how you feel. My billed charges to my employer are $1,000.00 per hour, but my paycheck is only for what he agreed to pay me.”

I’m not suggesting physicians’ salaries necessarily must be cut to restore price reality to medicine. A free market may give them a haircut; it may not. But there are many costs other than the physician’s salary in delivering health care  and there is no real pressure on improving efficiency in any of them.

As just one example, think about how many times you provide your health insurance information to your doctor’s office. They get it from you on the phone before even agreeing to make an appointment. Then, you have to write it on a paper form when you get to the office, sometimes more than once, on more than one form. Why? They’ve already captured that info on the phone. It’s in their billing system. Who’s reading, filing and otherwise processing the paper form(s) and why?

Many medical practices run the way they did in the 1950s for one reason: they don’t have to change. Half their revenues are guaranteed, at any price, by a customer base that can’t say no. Grocery stores, which provide products far more vital to human survival than medical care, operate on razor thin margins. Their prices behave normally, when adjusted for inflation. No one seems curious about why that is.

From time to time, proposals are made to try to phase out Medicare and Medicaid, the assumption being that there can be no major market disruption. That’s just another manifestation of the strange notion that medical care is in some sacred and holy category that more important goods and services don’t occupy.

While there are plenty of government interventions on the supply side that artificially inflate health care prices, the most effective way to normalize pricing would be to abolish Medicare and Medicaid tomorrow. That would cut demand for those services immediately by over $1 trillion per year. With a significant decrease in demand comes a significant decrease in prices.

And guess what? There would still be doctors, hospitals, pharmaceutical companies and other providers who want and need to deliver care and make profits. Only they’d have to adjust their business models to deliver their products at prices their customers could afford. This may sound scary, but industries have demonstrated their resilience to disruption over and over throughout history. And we’re talking about one composed of people at the far right of the bell curve. All experience says the turmoil would be far briefer and less harmful than the hysterical predictions we can expect from those benefiting from the current system.

Abolishing these programs won’t cut off granny. It will cut off McKesson, Merck and a lot of very wealthy physicians (who’d still be wealthy afterwards) from the government till. We’d all be treated much more like customers by the people whose medical services we purchase and health insurance premiums would plummet.

Proposals like Senator Paul’s will produce positive results on the margin, but until the entitlements are abolished, they won’t succeed in restoring normalcy to the health care market.

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.

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.