Category Archives: Big government is the problem

Crocodile Tears

We often hear that that manufacturing is dying in the US because of unfair overseas competition. US manufacturers are either going out of business or shifting operations overseas. However global competition plays a role across all industries, not just manufacturing. Something else is at play. US tax policy singles out manufacturing (actually nearly any business dealing in tangible goods) with unfair rules designed to extract more tax relative to a service-oriented business with the same income albeit while claiming the same tax rate. As the owner of a small US manufacturing firm, I have sadly gained firsthand knowledge of the severe disadvantage one must contend with if they have the audacity to try and make or sell goods in the United States.

The signs of this are not immediately apparent since the nominal tax rate for all corporations (non-pass through) is 35%. The trick though is in the sleight of hand where the focus is on the tax rate while it is the definition of profit that is critical. The common definition of profit is any money remaining after subtracting all expenses from revenue. And we all know what an expenses is, right? Anything you spend in furtherance of the goal of obtaining said revenue. Well unfortunately it’s not that simple, at least as far as the IRS is concerned. In business there are both overhead expenses and capital expenses. Capital expenses are not immediately deducted against revenue but rather depreciated over many years. So if you buy a $100k piece of equipment you don’t deduct the $100k, you deduct maybe $10k that year and for the next 9 years. There may be legitimate business reasons to view the numbers that way for accounting purposes however beyond a certain minimal size a business may not use the cash method (which does not employ depreciation) for tax computation but instead must employ the accrual method which invariably yields a higher figure by shifting more future income into the present. This puts such businesses (primarily manufacturing which is a equipment intensive industry) at a severe disadvantage insofar as the part spent but not deducted accrues tax. But it gets worse. Manufacturing maintains inventory and the inventory is treated as a capital expenses as well therefore none of it can be deducted until sold. And even when sold it is not taxed at lower capital gain rates but at higher regular income rates. The IRS knows the game of “heads I win, tails you lose” quite well.

Ironically it is a rapidly growing business that is most susceptible to such tax harm as most if not all the profits are invested back into the company in order to grow the inventory to keep up with increasing sales. So if you make a $1 million but use it to buy $1 million in inventory you owe $350k in taxes even though you don’t have $350k on hand. Oops. So you either have to borrow it, incurring even greater costs, deliberately slow your rate of growth, or just go out of business. But wait, it gets even worse. If you do so well that your sales exceeds $1 million the IRS redefines expense once again (Section 263a) and says a certain percentage of your payroll, rent, utilities, insurance, etc that is indirectly associated with producing the inventory must also now be capitalized into the value of the inventory. This shifts even more money from the expense column to the profit column. So based on pure available cash flow you may have made $350k but based on IRS capitalization requirements they say you made $1million. So the entire $350k you made is sent to the IRS on your phantom $1 million income and you end the year with nothing.

Only manufacturing is subject to these absurd redefinitions of expense and profit. Service industries have no inventory and nearly no equipment so their profit more or less equals their cash flow. Farming gets a million loopholes to avoid these issues. The rules governing profit/income are far more germane to ones tax bill then the tax rate itself. If we want manufacturing to flourish in this country again perhaps we should stop punishing those who try to engage in it while crying crocodile tears about how US manufacturers are fleeing this country.

Policy by Prediction

Science is supposed to be the domain of testable (and thus falsifiable) claims the evidence for which is a body of empirical studies that have stood the scrutiny of reproducibility. With the advent of computers that method of science seems to be growing increasingly passé. Why, we don’t need to bother actually doing the grunt work of experimentation, we can just sit back, press a button and let a computer model tell us the results. Of course the fault lies not in our machines but in ourselves (with apologies to the Bard). Computers are but tools that make some of that grunt work easier. But computer models are not so infallible that their output should solely be relied upon. They are imperfect not due to some failing of the technology but rather because they can only do what we tell them, and we humans are far from perfect or omniscient.

The flaw in computer models is two-fold: assumptions and unknowns. Assumptions are made about the contributions of certain factors and those assumptions are often wrong or even if close to being right can still introduces tremendous variability in outcomes from small differences in input. Unknown unknowns are an even greater contributor to the phenomenon known as “garbage in – garbage out” of modeling. We can’t account for the contribution of something we don’t even know exists.

Models are supposed to be part of an iterative process where you do the actual experiment, compare the results to your model’s output and then modify your model. To test the model you then change some of the variables and see how well it holds up in comparison to “real world” results. But, as soon as a new variable is introduced or a new unknown comes into play, then the model’s usefulness must be called into question.

Now by this point you might think I’m going to delve into an indictment of the climate models poor record of prediction but actually I’d actually like to talk about nuts. Or rather how we should all expect the price of nuts along with a host of other crops (pistachios, almonds, soybeans, tobacco, peanuts, cotton, lettuce, alfalfa, tomatoes, watermelon and bell peppers) to increase in price in the coming years due to the EPA banning a pesticide known as flubendiamide.  EPA determined that flubendiamide could break down in the environment and potentially cause harm to a few aquatic species. Ok, sounds like some dangerous stuff, fair enough. But, it turns out this alleged harm is not based on empirical studies but is rather based on computer models that attempt to predict toxicology – “predictive toxicology” they call it. BayerCropScience, the manufacturer of flubendiamide, went on record stating that such models “exaggerate environmental risk.”  Well imagine that, a computer model overstates the likelihood of a deleterious outcome in order to justify governmental intrusion into the market. Although science cannot be manipulated to service political interests, models surely can – click, click, here comes the desired result.

This ultimately is the true danger of such models. It is one thing if scientists want to put all their faith in such models, the worst that can happen is that eventually someone is made to look the fool when actual empirical studies prove them wrong. However it is far more dangerous if the cart is pushing the public policy horse by having bureaucrats and our supposed intellectual superiors run our lives and then justify their actions by pointing at selectively funded model-based “research” that can be tweaked to magically provide an outcome that conforms with the policy prescriptions desired. All that is needed to shut down debate is to claim “it’s science” and that it is “settled.”

Party Time

The American political party duopoly is a curious thing. Every other modern democratically run state has multiple political parties that freely compete for votes in order to establish their representative share of the people’s voice within the government. But that’s not the case in America; here we have two parties that share total control of the state apparatus on a semi-regular seesawing 8-year cycle. The curious thing is that no one questions why this would be? Is it that in other countries there are four, five, or six different more nuanced mixtures of political opinion but somehow when you cross the American border human minds undergo a transformation that imparts upon them the capacity to only hold allegiance to one of two political mindsets?

As you might have guessed there is no magic involved at all. Wherever you find constrained or limited options you will find government pulling the strings from behind black cloth. Political parties are not institutions established by the constitution. Indeed they are not necessary at all for our government to operate. Political parties are private institutions, businesses really, and are the product of the natural tendency of people with similar views to work together for common cause. That is all perfectly fine. The problem occurred over time. Whenever one party gained control, they would pass laws (erect barriers) making it that much harder for opposing parties to gain access to the ballot box. If your opponents can’t get their name on the ballot that tends to increase the likelihood you will remain in office.

Simultaneously they made the process of their campaigning that much easier by passing laws (providing assistance) that authorized the government to use public resources to assist with internal party business (i.e. nominating primaries) thereby supporting the illusion that party business is really state business. That is to say, these private businesses (Democrat Party™ and Republican Party™) have the cojones to get the public to pay for their private primary elections that ultimately are entirely pointless, as it is the party delegates that decide the nominee, not the voter. This process is merely an insidious trick to dupe the people into feeling as though they have a voice in the process so that they come to view the primary process as party of “democracy” when it is nothing more than a privately run, and publicly paid for, straw poll. This process has gone on so long that most people are unaware of the distinction and simply view the “primaries” as part of the normal political process of electing someone to office. They are not. They are private events held in public, paid for by that public, masquerading as democracy in action.

These political parties care not one wit about your vote or what you think. Because they are both private organizations they can ultimately pick whomever they want to be the nominee. They prefer to have the blessing of the voters upon their anointed candidate in order to give the people the illusion of choice. People are more easily controlled if they feel like they have some control of their life – if they feel like they have a choice, even the illusion of choice, they will accept a result even if they do not agree with it.

Duopoly control is further assured since most elections do not require the winner obtain a majority of the vote if by some miracle a third candidate appears on the ballot. This rules out runoff elections, which afford voters the ability to rank their choices. The deck is then further stacked against the third party candidate as people make a pragmatic rather than a principled choice to ensure the “most evil” candidate does not win

Political parties have co-opted the authority of government in order to ensure their continued stranglehold on power in this country. This is not democracy. This is not freedom. False choice is not real choice. We laugh at countries with only one name on the ballot and yet somehow only two names on the ballot seems perfectly reasonable. If you truly believe in democracy then you must demand the people be free to choose from all options. Every flavor of ballot access laws should be repealed, campaigning on the ballot (D or R next to the name) should be banned, all winners must have a majority decided through instant runoff style elections, and the Democrat and Republican parties should either have private nominating conventions or pay for their own public elections.

Waterworld

By now many of you are likely aware of the contaminated water fiasco in Flint, Michigan that has apparently resulted in 77 cases of Legionnaire’s disease (and 10 deaths). It is indeed a tragedy of shattered trust. It is also darkly humorous to witness the acolytes of Statism (i.e. the faith that The State can protect us from all harms and correct all wrongs) are apoplectically flummoxed as to how such a thing could happen: “But, but, the state is supposed to protect us from the depredations of cost cutting profiteers!” The state is supposedly there to protect the weakest among us – so how ironic that those most harmed by this incident is the predominantly poor population of Flint. How could such a thing have happened? The problem is structural. Private ownership weeds out failure; public ownership protects it.

Now one might argue that since there are thousands of municipal water systems across the country that operate without any problems this is simply a fluke, an outlier and is not indicative of any sort of problem with government run water systems. That is a dangerous premise. It’s like arguing that one doesn’t need a seat belt because they’ve never been in an accident. The problem is not that random groups of people do not know how to provide clean water. The problem is that humans are imperfect and eventually a perfect storm of errors will accumulate until a calamity results. This can happen in both public and private entities. It is the response to the calamitous event that distinguishes public from private entities.

First, private entities already have a natural incentive to prevent such events from occurring because the owners and the insurers are financially on the hook for problems. Problems are costly to fix and often results in expensive lawsuits, so prevention is the best medicine. Public entities have no such negative feedback. No one is financially liable. Everybody plays a part in creating the mess, but no one is actually responsible. Worst case someone might lose their job or the town is fined by the EPA (that is, ironically the taxpayers – the customers so harmed – end up being financially on the hook!) Oh well. Losing your job is not nearly the disincentive to preventing harm as would be losing hundreds of thousands if not millions of your own dollars.

Secondly, if something does still occur despite best efforts to prevent it, private entities have a natural incentive to fix it quickly as possible in order to contain the potential financial damage. It is the very greed that so many on the left decry that actually aligns the incentives of the owners with those of the customer. Keeping your customers happy, safe, and healthy is beneficial to the bottom line – otherwise you get sued or lose customers. But as we have seen in the Flint case, the response of the ruling class is more akin to a Three Stooges skit, with each part of that system poking the other one in the blame game – all too busy fighting with each other in order to avoid responsibility than focused on actually fixing the problem.

Lastly, no matter what happens, the public system remains in place. The public can’t “fire” them, they can’t choose another provider. They have no choice but to continue buying a product from a provider that has proven to be unreliable. No is allowed to come in and compete with them (that would be illegal). In many cases you can’t even legally dig your own well – you are obligated to buy from the local utility. With a private system one has options. You can put in your own well. A competitor could come in and “steal” customers – or perhaps the old company is sued into bankruptcy and completely new ownership takes over.

In closing I would ask you to imagine the following: Imagine that the standard in this country was that all water was provided by private entities. Now imagine that the same thing that happened in Flint happened but with a private provider. Would there not be an instant outcry and demand that the government take these systems over, or that they must be regulated for safety? Now realize that the reality today is the exact opposite. And what do we hear? Cries to “privatize” our water systems in order to allow market forces to naturally regulate the delivery safe water? No, instead we get self-righteous politicians (Clinton et.al.) trying to frame this event as some sort of partisan one-ups-man ship that endeavors to prove that the only reason this happened is evil Republicans hate “poor black people”. Well I guess they must hate themselves since it was their own city council (composed of Democrats) who signed off on the plan that ultimately led to the problem.

The closing irony here is that despite long being accused of selfishness and greed, it is the private market that has come (quickly) to the rescue in Flint. Walmart, Coca-Cola, and others have provided (for free) bottled water to the residents.  Why are they doing this? Perhaps they genuinely want to help. Or perhaps they see it as a grand PR opportunity to earn some loyal customers. Even if the latter it doesn’t matter – if “greed” compels people to help their fellow man, then I say bring on the greed!

Market Failure is not an option, it’s not even possible

Proponents of state intervention in markets (managed markets) unfailingly assert the legitimacy of their stance by pointing to “market failure.” Yes, yes, they admit, markets are great at delivering goods and services to people, but, sometimes they inexplicably fail and this consequently requires men with guns (the state) to “fix” them. To put it simply, market failure is a myth. There is a failure however, not of the market, but of their own ability to comprehend the complexities of a natural system whose chaos is brought to order through feedback.

Appeals for regulation by some central authority are predicated on the ideal of “fairness” in ensuring that all who use some resource pay for such use. In other words, if one perceives even the possibility of “free riding” with regard to some economic good then this is all the excuse needed to bring in men with guns to ensure all pay their “fair share.” Free riding is the quintessential example of market failure. Now, as they say, time to bust that myth.

Now rather than choose an example that would be quite easily dismantled as embodying free rider potential (roads, courts, police, fire protection, etc.) I shall choose what is perceived as the most difficult of all: the environment. For this example we shall use the ever-popular environmental whipping boy, carbon dioxide. The output of CO2, it is said, does not factor in the costs of the damage wrought by this “pollutant.” That is, the externality is not internalized in the cost of the product. In fact the truth is exactly the opposite. To see this let’s consider an economy of two actors, Y & Z. Y produces product y and Z produces z and they trade with each other. Now let’s imagine Y can increase his output if he dumps his waste onto Z’s property. Y can now produce more of y, but Z must now devote time and resources to cleaning up the mess (or perhaps it makes him tired or ill) and thus the output of z declines. Y can now only obtain that smaller fraction of z output when trading. Obtaining less for the same cost is equivalent to a greater cost for the same amount. In other words the apparently externalized cost that Y foisted on Z must necessarily be internalized back to Y by virtue of how his actions affect other actors in the economy. No regulation is needed; it is inherent to the system that for every action there is an equal and complementary reaction.

So now extending this metaphorical example to the real world let us assume for the sake of argument that all the doomsayer prophesies of the climate alarmists are true. Is it not obvious that all these bad consequences would negatively impact economic productivity? So all things being equal, if one sells a barrel of oil for $50 that $50 will now only buy the equivalent of say $40 worth of goods (that is, $40 of goods will cost $50, a de facto market “tax” that precisely mirrors the level of damage as reflected in the decreased output). If the damage predicted by the alarmists is real, then it can’t not have this negative effect. In other words, if everything becomes more expensive because there is less of it, then necessarily less will be consumed, including energy derived from CO2. If the damage is real, this natural negative feedback loop will self-correct the problem as profit seeking people strive to innovate their way to greater production. If the damage is not real, then no correction was necessary.

Ironically, carbon taxes, long touted as a “market” approach to solving this issue would do nothing whatsoever. Energy consumption is relatively inelastic and thus higher prices (taxes) for energy would force prices down in other sectors to compensate. Indeed carbon taxes are already touted as revenue neutral (through lower taxes elsewhere or rebates). The only thing that one might superficially assume could work would be a flat consumption tax on all goods. But even if you could impose a 50% sales tax on the entire economy it would ultimately have no effect on consumption at all. If the money is simply removed from the economy, then deflation takes over and all prices drop. That is, output has not declined, only the money supply. The same amount of goods still trade but with fewer dollars. But, if instead the government spends the money, other than productive losses due to government waste, the supply and demand for goods, including energy still won’t change. With natural market feedback the external cost is internalized as reduced supply; with an artificial system (taxes) supply is unaffected, only the identities of those doing the demanding changes.

The market system needs no overseer or committee to function. It is not “targeted”, the entire economy would be affected as if with a fever until the profit motive drives the innovators and entrepreneurs to shed the burden of the internalized costs of decreased output. To say that markets suffer failure is the intellectual equivalent of denouncing a fever as a failure of the immune system.

Under the Hood

One of the apparently more innovative techniques automakers have applied to saving fuel is a concept borrowed from the electric or hybrid vehicle: automatic start/stop. The concept is fairly simple, turn off the engine when the car is stopped (i.e. at a stop sign or traffic light) and instantly turn the engine back on when the driver initiates their intent to commence motion (releasing foot from the break or depressing the clutch). Depending on the traffic patterns one encounters, fuel savings can be as low as a mere 0.5% all the way up to 10%. Truly this would seem to be getting something for nothing!

But as with any government mandated arbitrary standard there are unintended costs and consequences.  For example, prior efficiency decrees have compelled automakers to make their cars lighter – but lowering mass makes a car less crash worthy. To compensate as much as possible it became necessary to beef up the A, B, and C pillars (the front, middle and rear attachment points of the lower portion of the car to the roof) so passengers aren’t squashed in a rollover. That is, these pillars are now much wider and thus much more readily obscure objects behind them at a distance. Don’t believe me? Hold out your thumb at arms length and place it in front of a car 50 feet away; now unfurl all 5 fingers and block it with your hand. Completely disappeared now hasn’t it? Those of us who drove cars from the ‘80s or earlier are well aware of this slow change. Unfortunately anyone younger just assumes it’s totally normal to have a 6-8 inch A pillar blocking one’s view of oncoming traffic as they try to merge. Such actively growing blind spots have ironically led to more accidents, injuries, associated health care costs, repair costs, higher insurance rates and in some cases even death. But hey, what is human life worth when weighed against the “environment”?

In other words, there are costs associated with everything. If it were up to the individual to decide for him or herself how much more safety risk they are willing take relative to increased fuel economy that would be one thing. However it is quite a different story when the choice is taken away and there is only one option allowed for all. That is what government is: the removal of choice. Bureaucrats decide on the “best” route and make all other options illegal. The same removal of choice is now happening with these automatic start/stop systems. Starting with model year 2016 they are becoming more and more prevalent. Why is this? Because of government fuel economy standards like CAFE (or it’s European equivalent) mandate FLEET wide averages. Therefore the ability by the automaker to extract even a few small percent increase in fuel efficiency multiplied by a fleet of thousands or millions of vehicles helps them meet those standards and avoid possibly millions of dollars in fines. The problem, however, is that the cost of meeting those standards is shifted to the consumer. Such systems require larger, beefier starters and batteries – which cost more. Due to more frequent use these components will wear out sooner – which costs more. Ironically the greater the fuel savings, the more the engine will be damaged. Engines are most vulnerable at start up due to lack of oil. The longer it sits off the more the oil drains back down. Obviously an engine that has to be replaced or rebuilt on a more frequent basis is going to be a significant cost to the owner.

In other words, there is no free lunch. Even something seen (fuel savings) has an unseen cost (wear and tear and repairs). Fortunately, for now, we are permitted the ability to override and turn these systems off (although it must be done manually with every cold engine start). But there is no doubt that in order to eke out another 0.1% of CAFÉ fuel savings, automakers will soon remove the option to disable this feature. Then again perhaps it doesn’t really matter as soon enough the government will outlaw human drivers and we’ll all be passengers in self-driving cars within 30 years – cars that some are already discussing whether or not the automated “brain” behind it should sacrifice its passengers if it determines more deaths would result by protecting its occupants. Unintended costs indeed.

Removing all doubt

Poor Bernie, he went and opened his mouth and thusly removed all doubt that he has no grasp of economics. Such ignorance from an internet troll might be expected and can be amusing in the same way that a child’s explanation of something can be so. But when such breathtakingly inane statements emanate from a candidate for President of the United States, well, what can one do but weep for the future. To what perplexing attempt at pontification do I refer? None other than this Dec 26 Tweet from @SenSanders: “You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?”

Now most people would probably look at this statement and not find it particularly outrageous. We as a society have been conditioned to accept the notion that interest rates are arbitrarily set from time to time by some talking head in government. The assignment of these rates is apparently disconnected from any external factors. They are like lotto numbers plucked from the ball machine. We assume other lenders (banks, credit cards, etc) set their rates in a similar pattern.

In reality non-government rates are primarily market driven. That is, the relative difference in rates is market driven while the net value rests on the arbitrarily set Fed rates. Interest rates are not arbitrary digits, they are prices. They are the price people are wiling to pay to not wait. Interest rates are a reflection of supply, demand, and risk. The demand for loaned funds is indicative of high time preference, that is, preferring something now rather than later. The supply of loaned funds is indicative of a low time preference, that is, the willingness to forego consumption in the present and defer it into the future – for a price. To understand high time preference, ask yourself, do you prefer to buy that 72” OLED 4k TV today, or in a year after saving the funds yourself? Most of us prefer to have it today so that we can enjoy it immediately. The cost of that sooner than otherwise realized enjoyment is reflected in the interest rate we are willing to pay. If there are a lot of people willing to supply loaned funds, then the interest rate will be lower (supply goes up, price i.e. interest rate, goes down). If there are few people willing to supply loaned funds then the interest rate will be higher (supply goes down, price, i.e. interest rate goes up). It’s really not that complicated.

The only wrinkle with interest rates relative to regular money prices exchanged for tangible goods is that unlike exchanging cash for a hamburger (where both parties have something after the exchange), with the process of loaning/borrowing, only one party has the thing they desire in the beginning. The other party has a promise to deliver the other half of the bargain at some future date. The future is uncertain and there is always risk that someone may not do what they say, either deliberately or for reasons beyond anyone’s control. That uncertainty is also reflected in the interest rate. If there is a high chance the lender won’t get paid back then the interest rate will be quite high. But, if something can be offered to mitigate that risk, something tangible, like say a house or a car, then the lender can feel more assured that at least they will get some portion of the loaned funds back in the worst case. So that brings the rate back down.

Bernie, this is why loans backed by tangible collateral (like a home mortgage or equity line) have a lower interest rate than a student loan which has no collateral. A student loan is no different than credit card debt – it is unsecured. Now, look at the interest rate on your credit card (likely over 20%) and compare to the 6, 8, or 10% figure being cited – doesn’t look so bad now does it? These rates are so much lower than they otherwise would be because of government intervention in the student loan market.

Now some might say the banks should be willing to invest in such human capital, that a college degree will translate into a high paying job that allows them to pay it off. That can be true. That is why years ago before government involvement lenders did give out student loans, but only to the most academically worthy of students, those that clearly would succeed. But even so, possible future income is not collateral, the bank can’t take possession of the student himself and enslave him or her to get their money; they can take a house or car, they can’t take a person.

If Bernie wants to help students he should promote the idea of removing government involvement from higher education. Every sector the government subsidizes (healthcare, housing, education) has seen explosive price inflation. That is no coincidence. The patient can’t heal until you kill the disease.

No-Rights List

“There are several steps that Congress should take right away. To begin with, Congress should act to make sure no one on a no-fly list is able to buy a gun. What could possibly be the argument for allowing a terrorist suspect to buy a semiautomatic weapon? This is a matter of national security.”– President Barack Obama

 

If I may Mr. President, Mr. Constitutional Scholar, I’ll take that one. The answer is “Due Process” as in the Fifth amendment to the U.S. Constitution which states, in part, “[N]or shall any person . . . be deprived of life, liberty, or property, without due process of law…”. In other words, the use of this list to deprive the individual of his or her rights is a blatant 100% violation of the constitution, no ifs, ands, or buts – but hey, go right on believing that a piece of paper can protect us from the machinations of the state. This list has put the lie to that fantasy. Those in power can do whatever they wish as long as they have mastered the art of fear manipulation.

There is nothing wrong with compiling such a list (e.g. passive monitoring until suspicion is either allayed or heightened), but it is its preemptive deployment that is problematic. Depriving one of their rights is the equivalent to an arrest insofar as arrestees too lose a number of rights. Therefore, a “listee” and an “arrestee” are legally equivalent and so both must be afforded the same opportunity to respond to their accusers. In other words, if there is to be such a list, its content must be subject to due process, that is, a trial. Even though this should be obvious it bears repeating: due process is not some artificial speed-bump on the road to getting the “bad guys” – it ensures that the innocent, you and me, are not erroneously treated as criminals. To believe such a process is not necessary is to believe in the infallibility of man (a most hubristic and dubious proposition). Government is merely a collection of imperfect, fallible human beings. Due process protects us from those failings.

As it stands today, if you are on this list (often people merely with names similar to those of suspected terrorist sympathizers, including small children, active military personnel and even Senator Ted Kennedy!) there is no procedure whatsoever to challenge the inclusion in order to have your name removed. The rationale for inclusion is not divulged due to reasons of “national security”, attempts to demonstrate ones innocence are not allowed due to reasons of “national security”. Do you see a dark pattern here? The government may target anyone for any reason at any time citing the circular tautology of “national security” as justification.

With Obama’s attempt to re-purposes this list into the “one list to rule them all” of unlimited state power a most sinister precedent is being set. One right, two rights, three rights – oh my, soon we are no longer free! There is nothing to stop them from adding a whole litany of rights that one could plausibly argue help terrorists achieve their goals: obtain credit, hold a job, own a business, rent a home, buy or rent a car, open a bank account and so on. Now imagine you have been erroneously placed on this list (like thousands of others) and the nightmare your life instantly transforms into as all your rights are instantly stripped away because of either a clerical error or someone’s hunch. But of course you don’t know it is a clerical error or someone’s hunch, because no one will even tell you why you are on the list..

Once the precedent of rights denial for the “listed” is in place, then the really dangerous component can be activated: arbitrary inclusion. Superficially only “terrorists” are to be included, but here’s the rub: what is the definition of “terrorist”? Most assume it means ISIS types, but as far as the state is concerned it encompasses anyone that it deems a potential challenge to its authority. In other words, whoever is in power will deem whomever is out of power as a threat. This is not hyperbole, it has already happened. Various federal and state agencies have issued reports where they expressed the opinion that anyone expressing “right wing” views such as support for the constitution, opposing the federal reserve or taxation, or showing support for Ron Paul could be potential terrorists. Masterful! Political challengers getting you down? Why simply classify them as “terrorists” and wipe away all their rights – that will shut them up pretty quick!

If private airlines want to compile their own list and bar entry aboard their planes, that is perfectly within their rights to do so. It is their property and they may do with it as they see fit. You are free to fly another airline. In a private system the number of false positives would be nearly non-existent (e.g. no kids would be on the list) since the airlines have an incentive to sell tickets and not bar perfectly safe passengers from handing them money. Various other free-market based systems that can’t legally exist in the current public system would ensure even those few false positives were rectified. The compilers of a public list bear no consequences to any mistakes they make, the compilers of a private list do and thus act accordingly. The lack of accountability in a public system necessitates due process, i.e. a method by which accountability can occur. Interaction with private entities is voluntary whereas interaction with public entities is not. This more than anything necessitates a different set of rules for public entities to ensure that absolute power is not abused.

This Gentle Town

According to Wikipedia, gentrification is “the buying and renovating of houses and stores in deteriorated urban neighborhoods by wealthier individuals, which in effect increases property values and displaces low-income families and small businesses.” At face value this would seem to be a positive turn of events: transforming something of low value into something of high value, just as one might transform sand and carbon into a computer or granite into a statue. But leave it to the SJW’s (Social Justice Warriors) to find the cloud in every silver lining. Instead of welcoming improvements (both aesthetically and commercially) they instead decry these changes as destroying the “character” of a neighborhood or town. As though “character” were a tangible, ownable thing that residents had a right to enjoy ad infinitum. This sentiment is best captured in the following quote from a recent article in The Flagpole (an Athens, Georgia local paper):

“There is still a powerlessness that black residents feel against affluent, mostly white 20-somethings overtaking what’s theirs. ‘There’s a certain community ownership that the long-term residents have,” says Ellison. “… They’re feeling squeezed out of the their communities.’ ”

The attitude expressed in this quote demonstrates a fundamentally flawed view of the world that all too often infects political action. Notice the use of the possessive pronouns and homage to notions of communal property. When people take up residence or frequent certain areas they invariably tend to identify that territory as “theirs”: “my” town, “our” city, “our” park, etc. Although usage is colloquial and people understand they do not hold title to the city in which they reside – they often act as though they do own it. For example, zoning laws are the political manifestation of this view of the world: “we don’t want that in OUR town.” Zoning laws are a way for nearby non-owners to behave as though they were owners. It allows them to exert control over something that is not theirs merely because they happen to live in an ill defined geographical boundary around said property.

Fortunately there are few substantive anti-gentrification measures that can be legally attempted. The only effective measure would be a grossly egregious violation of private property rights. It would entail simply prohibiting the sale of any private property in certain areas arbitrarily identified as worth “saving” – unless of course it is to someone the SJW’s approve of. In other words, it would be a direct transfer of ownership en masse from the individual to the collective. That is straight up communism, and fortunately, for now, America isn’t quite ready for that.

The irony is that the SJW’s think they need the state to “fix” gentrification when in fact it is the state that is the proximate cause of the biggest objection they have to gentrification: the pressure to leave. They typically blame “unbridled capitalism,” for these forced expulsions, but, they are taking aim at the wrong entity. This compulsion to exit is predominantly a function of state influence (i.e. the government). Between eminent domain and property taxes the state has done more harm in the way of pushing people out of their homes then any supposedly free market in real estate. It’s certainly not part of a free market for government cronies to condemn properties, give financial aid to private developers, or to extract a tribute (tax) from the serfs who happen to live on the master’s land.

As property values increase during the gentrification process, so do property taxes. This more than anything accelerates the process of gentrification as residents who would not otherwise sell have no alterative but to leave if they can’t afford the higher taxes. Without property tax there would be no coerced impetus to sell. Likewise property taxes compel landlords to raise rents – those taxes have to be passed onto someone (yes, renters pay property tax, all expenses, including taxes, are accounted for in the cost of every good sold). Although it is true that rents may rise due to higher demand for housing, unless you want slums, rent control is not the answer. Ownership is the answer. Unless one owns the property, then no one has a positive right to live in some particular place. To suggest that someone who has rented a home for many years has a right to live there as long as they wish for whatever price they deem is fair is as goofy a concept as it is to suggest that because I enjoy Fruity Pebbles, Post Cereal has a positive obligation to me to never discontinue it or raise its price – gosh darn it, that is “my” cereal after all!

Backdoors

Computer programmers use the term “backdoor” to describe covert methods the programmer can use to bypass the normal user interface in order to more expeditiously accomplish certain tasks. Normally the motivation behind installing such devices are not sinister; their purpose is to assist in debugging or to clean up other messes. The apparatus of the state has similar backdoors, although the motivation there is usually not so pure. These backdoors are set by legislators but only become apparent to those who possesses a perspicacious view of the state. For example, the way government is supposed to work (at least according to Schoolhouse Rock) is that bills are introduced in Congress, voted on, and then sent to the President to sign into law. If the people don’t like the laws they can vote for new Congressmen or appeal to the Supreme Court to overturn the law on constitutional grounds.

That system does still exists, but government power rarely originates that way. The vast majority of power comes from the backdoor: administrative “law”. Regulations promulgated by the EPA, DOE, IRS, etc. do not come from Congress. They are written, proposed, and approved by career bureaucrats who are as much a part of Washington as the marble buildings. The politicians enter, ride the coaster and then exit, but the bureaucrats, like the coaster operator, remain. Although bureaucrats can’t introduce extensive reforms, they can implement piecemeal changes that ultimately have the same effect. Can’t ban fossil fuels? That’s ok, just require (via regulation) anything that directly or indirectly uses such energy must use less of it. The amount is ratcheted down ever so “reasonably” every few years until fewer and fewer can clear the regulatory hurdle. If the outrageous costs for compliant goods don’t decrease usage, then the constrained supply from manufacturers exiting the market will.

It is the same tactic the left uses to chip away at the 2nd amendment and the right at abortion ‘rights’. If you aren’t allowed to close the gate the only alternative is to erect a series of hurdles and obstacles that make the journey more burdensome. Any performance (not safety) based regulations are a fascistic interference of the state in the functioning of private markets: “sure you own your business, but we’ll tell you when, where, and how to operate it.” I don’t know whether to laugh or cry: educated adults actually come together in the belief that their personal views on how much water it takes to flush a turd down the drain or how many gallons of water are sufficient to de-soil underwear is a compelling interest of the state. But if the state does not appease Mother Gaia, then who will? Faux environmentalism has become the state religion in the 21st century. One is not worthy to pass into the Temple of Political Piety unless they have shown the proper level of obsequiousness before the altar of “sustainability.”

And what has this wrought us? Gas cans that don’t pour, toilets that don’t flush, showers that dribble water, light bulbs that either cost a days pay or require a hazmat unit if they break, and hot water that isn’t – we are moving backwards as a society.  Like the frog in the slowly boiling water the process occurs incrementally enough that the “way it used to be” is lost down the generational memory hole. Younger people today simply assume the way thing are today are the way they have always been. They assume appliances don’t work well because of poor design rather than the imposition of strangling regulations by the state.

Now it is true that many of the products I cited have seen improvements. Some are almost as good as the original product. However that was not without a cost. Consumers played the role of unwitting beta-testers for subpar equipment. Once the bugs were finally worked out there is then an ongoing cost to all who purchase this more “efficient” equipment either upfront or in time loss. But hey as long as the planet will be 0.00001 °C cooler in a hundred years it’s all worth it right?

Since government’s role in society is apparently to “fix” things, then in order for it to justify its continuing existence it must seek out new problems and new victims, to boldly re-fix those things it just fixed last week. Those in government seem to believe we live in an artificial Matrix-esque reality where passing laws is the equivalent of writing computer code than can magically make cars go from 25 mpg to 45 mpg overnight or dishwashers switch from using 6.5 gallons to 5 gallons and soon to a mere 3.1 gallons.  To see how awful that will be, fill your sink with 3 gallons of water and now wash all your dishes by hand with just that water. Yeah, yuck.

So perhaps someday we’ll regale our grandchildren with wild tales of machines that used to wash dishes for us. And as they stare at us in wonderment, we will begin the tedious task of washing the dinnerware by hand – just as our great-grandparents did – except we’ll only be permitted the use of cold water. Hot water is way too damaging to the environment, what with all the energy it uses. Ah, yes, progress.