Southern Bread Blog

My criticism of Glenn Beck’s use of Lincoln in his rally material brought out the haters. Evidently I’m a “bigot” and an “idiot” for not believing everything I was told by the state educational appendage known as public school. Modern conservatives claim to want smaller government, and they constantly rail against taxes and intrusive government. But, the minute you criticize one of their beloved state institutions like government schools or the military, watch out. Those are evidently sacred. But, I’ll say it again: If we don’t trust the government to do something as simple as postal delivery correctly, why in God’s name would we trust them with WMD’s and the education of our children? Is that such a wacko question? It seems reasonable to me.

So, really, the name calling comments I received(and I’ve gotten some before in email) weren’t really about Glenn Beck. They were more about my being a threat to what conservatives currently see as their salvation: namely, getting Republicans back in office. Most “Hot Air” conservatives will say things privately such as “they all need to go”, speaking of Congress. Or, “we need to vote every last one of them out and get some fresh blood in there.” But, what they really mean is that we need to vote in all “real” Republicans and vote out the RINO’s. The problem with that line of thinking is that it’s backwards from reality. The RINO’s are the real republicans. They always have been. Reagan and Goldwater were anomalies, just as JFK was an anomaly within the Democrat party.

When I criticize Glenn Beck, people hate on me because they think I’m jeopardizing the potential for a return to a Reagan style takeover of D.C. But, what I’m saying is 1). that won’t happen anyway and 2). even if it did, we are playing on a totally different ball field than Reagan was in 1980. He was only a few years removed from the gold standard, which Nixon ended in 1971. Thus, an inflationary balloon to boost the economy was something he could get away with without too many immediate negative consequences. Things are completely different now. The economy is literally on the brink on a daily basis. Government employee unions have a stranglehold on public budgets. And, the national debt vs. GDP is completely unsustainable. There is no easy fix.

What we need now isn’t Reagan. We don’t need another leader who will just try and nudge the system in a different direction. We need radical changes to take place if we are going to avoid financial ruin. Politics just isn’t the answer any more. The free market must be set loose and allowed to work in full force. We must stop giving life-time pensions to government employees. We must abolish the Federal Reserve. We must bring all the troops home and stop policing the world. We must open up competition in our currency and repeal legal tender laws. All of these things will hurt. They will hurt bad for a while. And that’s why there is no politician, Republican or Democrat, that will be willing to do them. It would be political suicide.

Now don’t get me wrong. I think any anti-Washington rally is a good rally. I never said I was against it, or that it shouldn’t have happened. But, Glenn’s problem is that he still thinks the Constitution is what’s going to save us politically. But, when has a bunch of words on paper ever kept a government from over stepping it’s bounds? He goes on and on about how we need to return to a strict adherence to the Constitution and the founding fathers. But, he must not realize that Alexander Hamilton(a founding father) had as his personal crusade to undermine the Constitution. He hated it. Almost from day one, he and his successors down through the generations have sought to redefine the meaning of the Constitution to give the Federal government limitless power. To make the Feds the sole arbiter of the limits of their own power. Putting your hopes and dreams on the Constitution is a fruitless venture.

Thomas DiLorenzo gave a really good lecture on this topic at the Las Vegas Mises Circle. I’ll post it below. It’s really worth your time to listen to. I approved the name calling comments on the last post just for kicks, but I’ll be deleting them in the future. I don’t plan to waste my time on comments that just call me an “idiot” without ever backing it up with facts or cordial discussion. Please continue to comment, but if you are going to disagree with me, do it in a way that opens the floor for a good, robust debate. Don’t just name call. That wastes everybody’s time.

DiLorenzo – The Fatal Conceit: The Myth of Limited Constitutional Government:

I found it interesting that Glenn Beck had his “Restoring Honor” rally at the Lincoln Memorial, and had pictures of Lincoln plastered on all the rally material. I guess Glenn forgot that Lincoln ordered the deaths of about 250,000 southern men and women during the War to Prevent Southern Independence, and then set the ball rolling for a brutal decade-long occupation of the former Confederate states. Exactly how is that “honorable?” My, how conservatives worship at the feet of dictators and tyrants. As long as they have an “R” after their name.

So many people give Lincoln an out by blaming the brutality of the post-war Southern occupation on the “radical republicans” in Congress. While that’s true, they would have never been so emboldened if it hadn’t been for Lincoln’s complete disregard of the Constitution and slaughtering of tens of thousands of Southerners at the hands of criminally insane generals like Sherman. When the President shreds the Constitution, what do you expect his successors to do? The same thing. Just like Bush completely disregarded the Constitution on a dozen occasions, now we have Obama doing the same thing.

So, Glenn. At your next rally, it’d probably be a good idea to steer clear of mass murderers as the face of your P.R. campaign. It sends a slightly wrong message. There are plenty of Americans from history that actually cared about freedom and liberty. Lincoln was absolutely not one of them.

Is it possible to think that the proposed mosque near ground zero is much ado about nothing and at the same time not hate America? The media, and the politicians they hack for, would like you to think not. As is usual with the MSM, they are presenting only two diametrically opposed views to the building of the mosque and saddling them with left and right monikers. Just another day at the CNN/Fox/NBC/CBS/ABC office. Take a simple issue, split it into two views at some arbitrary point, then present it as a political right vs. left argument. It’s stupid. The truth is so much easier. It’s even intuitive.

There really is only one issue: should a private property owner have to ask the government’s permission to use his own property in whatever way he wants? The answer is no. If you said yes, have fun on that slippery slope down towards the government dictating every move you make.

That mosque site is none of “our” business. If the owner(s) wants to build a mosque, they can build a mosque. If they want to build a church, they can build a church. If they want to leave it vacant, so be it. It’s nobody’s business but the owners’. If the people in the surrounding area don’t like it, they have ways of making life miserable for the tenants. It’s called social pressure. And it’s much more desirable than government fiat at the point of a gun. Maybe, the people living near the mosque put up posters saying “Get Out!” or something like that. I don’t know. I think that would be a bad idea, but then again, I don’t live near the 9/11 site, so I don’t know what their mindset is. The point is, that’s up to them if they want to be that way. But, I prefer that to giving away that social power to the state, never to be reclaimed. Then it ceases to be a local issue and begins to encroach on us all.

And that’s the secondary issue to keep in mind. It’s one that so many conservatives tend to ignore. Namely, the permanent giving away of social power to the state. I hear conservatives saying things like, “we shouldn’t let them build a mosque there next to the 9/11 site. It would be disrespectful to the memory of 9/11.” I don’t think they understand just how pregnant with consequences that statement is. For one, who is the “we” here? The “we” seems to indicate some amalgamation of themselves with government in deciding the fate of the mosque developer. But, as is always the case, what will really happen in reality isn’t we. It’s they. Because, of course, it’s the all-powerful state that will be the one to ultimately force the developer into obedience. And, that’s a very, very short sighted decision on the part of conservatives, because once the precedent is set that it’s the state that gets to control what kind of religious activities go on, on a piece of private property, you’ve opened the flood gates of religious discrimination.

We saw the same kind of short sightedness during the Bush years. So many conservatives (myself included) were quick to jump on board with horrible laws like the Patriot Act, without ever thinking through the consequences for future administrations. So what we’re left with now is an all powerful executive branch with a war mongering, liberal fascist in charge. We handed the pervues of society over to the state when “our guy” was in charge, not realizing that he was never “our guy.” Nobody has a “guy” who’s on their side in politics.

But, stepping back over to the mosque issue for a moment, we now see politicians, like Nancy Pelosi, coming out and stating opinions on it publicly. This is a bad sign. Pelosi is something of a political bellwether. When she starts talking, it’s a good indicator that everybody else in Washington is thinking the same thing. And, what are they thinking? That this is a win-win issue for them. If it wasn’t, they wouldn’t be openly discussing it. You see, as we’ve talked about before, politicians only state opinions about issues in which both sides of that issue benefit them. Then they can safely take a position, because if they “lose”, at least their base saw them fighting the good fight, and if they “win” then their base is stoked that they won. This mosque issue is a classic example.

Think about it. If Pelosi takes a pro-mosque stance, the Democrat base will love her automatically. If she takes an anti-mosque stance, she still wins because she is reaffirming the legitimacy of the state to make such decisions. Thus, she increases her own power. It’s a win-win. The only people who lose are you and me. Because, a decade from now when someone wants to build a church near predominantly gay community, it might be denied a permit since doing so might cause “emotional tension” in the community. See how that works? Sometimes it’s absolutely necessary to defend the freedoms of others you might disagree with in order to preserve freedom for yourself. The state has no business at all in this issue.

This is a rhetorical question that Bob Murphy recently asked during one of his lectures at this year’s Mises University. He was posing it rhetorically, since the answer is that it’s a completely fake number. Setting interest rates to zero is absurd precisely because it would never arise naturally from the market. It’s a meaningless number. But, in order to understand this, we need to go over what interest rates really are. Let’s get into it.

At it’s core, interest is the cost of renting money. Since money acts conjointly as a medium of exchange and as a commodity, we rent capital(i.e. money for investment or spending) in the same way we rent any other good or service. If you rent a car, you expect to pay it’s owner a fee for it’s use. In the same way, if you rent money by taking a loan, you will pay an interest charge to the money’s owner. This may seem straightforward, but in the past, this practice has been challenged on a regular basis. Especially by those in the church. They called the practice of charging interest on loans “usury,” and it was hotly debated.

But, if interest is just the cost of renting money, then how is the interest rate determined. Is it just a random figure? No, it arises as a market price, the same way the price of any other good is determined. If there are five lenders on the street and 2 of them lower their rates, the other three will have to follow suit or lose business. Likewise, if the current market conditions become very risky, lenders will raise their rates to cover the new risk. Those that don’t risk serious defaults on their loans. This is the same way that any other price is determined. But, there is another factor about interest rates that is often overlooked by non-austrians, and that’s the effect of “time preference.”

Time preference is the idea that people almost always prefer having a good now to having a good later. The strength of this preference per individual is said to either be high or low. A person with a high time preference is somebody that strongly wants a certain good right now. Conversely, someone with a low time preference is less concerned with the immediate acquisition of a good. Time preference is a major influence on interest rates since a low time preference would drive rates down in order to entice borrowers. Likewise, a high time preference will raise rates since more pressure is being placed on the supply of lendable funds.

So, with those ideas in place, we can now look at the Fed and it’s manipulation of interest rates for what it really is: price controls. Just like Nixon putting price controls on things like meat, having a central bank “set” the interest rate to a certain level is a price control on the loan market. And we all know what happens when price controls are enforced. First, market players will come up with loopholes to get around the price controls. We saw this en’ masse during the housing boom with the popularity of so-called “exotic” financial instruments. And secondly, when price controls are applied to a sector of the economy, you always see a “black market” pop up. Again, we see this right now with the derivatives market. All the politicians are screaming about how bad the derivatives market is since it’s unregulated. It’s a black market. Which is to say, it’s the real market trying to work.

And, hopefully, now you can see pretty easily why the Fed setting the interest rate to 0% is so hazardous. The Fed’s rate setting places an artificial cap on the market price of borrowing money. It’s equivalent to passing a price control law that sets the wholesale cost of beef to zero. That means that the local grocery store would be getting it’s beef stock for free and selling it at 100% profit for an artificially low price. Of course, this would never work with beef since producers wouldn’t raise cattle for free, but it does work with banking since the central bank is creating money out of thin air at zero cost. Obviously, the ramifications of this type of price control are bad.

Given our beef scenario, what do you think will happen if all of the sudden steaks were .10 cents per pound? That’s right, people would be buying beef like mad. In the same way, artificially low interest rates entice people to borrow money when they otherwise wouldn’t in a free market. Just like increasing the price for any other good is a check on the overconsumption of that good, increases in the market interest rate are a check on the overconsumption of borrowed money. As more and more people are borrowing money, the interest rate would naturally rise and detract more borrowers. But, when the central bank sets the rate at some arbitrary amount, it negates this natural market check and balance system and creates the boom and bust cycle.

We can’t know what exact effect a zero percent interest rate will have in the short term(although Japan offers up some decent examples), but in the long term the effect is clear. There will be another huge boom. Let’s just hope it isn’t the so-called crackup boom. We’ll talk about that next time.

At a time when the economy is literally hanging in the balance, we get this story from USA Today:

At a time when workers’ pay and benefits have stagnated, federal employees’ average compensation has grown to more than double what private sector workers earn, a USA TODAY analysis finds.

Federal workers have been awarded bigger average pay and benefit increases than private employees for nine years in a row. The compensation gap between federal and private workers has doubled in the past decade.

Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis. The data are the latest available.

The federal compensation advantage has grown from $30,415 in 2000 to $61,998 last year.

…

What the data show:

• Benefits. Federal workers received average benefits worth $41,791 in 2009. Most of this was the government’s contribution to pensions. Employees contributed an additional $10,569.

• Pay. The average federal salary has grown 33% faster than inflation since 2000. USA TODAY reported in March that the federal government pays an average of 20% more than private firms for comparable occupations. The analysis did not consider differences in experience and education.

• Total compensation. Federal compensation has grown 36.9% since 2000 after adjusting for inflation, compared with 8.8% for private workers.

–Dennis Cauchon, USA Today

While it’s understandable that stats like this will make your blood boil, it’s more important to understand what’s going on with these numbers. Specifically, why is this “wrong.” It’s not enough to just get mad that somebody is making more money than you are. And, while legitimate, it’s also not enough to get mad that so many public workers appear to be such lazy freeloaders. You have to give reasoned arguments as to why it isn’t right for government employees compensation to be that high. And, that argument happens to be an economic one.

Why is it not ok for a mid-level beauracrat to make $100k, but it’s ok for a mid-level V.P. at Microsoft to make $100k? The principle reason is that Microsoft is actually giving you something that you have determined is valuable to you in exchange for your money. Remember rule number one in market economics: value is subjective. When you make a transaction with a private institution, it’s because you think that the good or service you’re getting in exchange benefits you more than the potential goods and services you are foregoing by giving them your money. Another way of saying it is that, at a particular moment in time, you’d decided that the particular good or service you are purchasing is more valuable than the exchange potential of the money in your pocket.

Because of this, a privately employed individual’s salary is based on how well he satisfies the consumers of his goods and services. That means that, all things being equal (i.e. in a truly free market), private employment wages are linked directly to consumer satisfaction. Obviously, this isn’t the case with public employees. Government wages aren’t reliant upon satisfying the consumer. Instead, government entities increase their budgets, and thus their salaries, through lobbying and political entrepreneurship – drawing their funds from taxation and inflation(i.e. theft). There is no connection to consumer satisfaction whatsoever. Indeed, many times when a government office or department does a horrible job, the call goes out to increase that department’s budget. They will say it’s the lack of funds that’s causing them to do a poor job.

I think all of this is probably pretty obvious, but it helps to keep a proper perspective. The problem with government salaries in general is not how much they are(obviously the lower the better), but the fundamental lack of connection to how they produce anything of value.

A perfect example of all of this is my wife’s recent license plate payment. We bought a van a couple of weeks ago for about $6000. It’s an older van with a lot of miles, but it meets our needs. Essentially, we decided that, at this time, having a van was more valuable to us than any other potential purchases we could make with $6000 dollars. Now, fast forward to two weeks later. My wife takes the van down to the DMV. They inform her that she must pay them $400. That’s $58 for the license plate, $240 for sales tax, and some other fee crap. Could she have told them, “You know, $400 seems a bit steep when there are potholes all over the road on the way over here. I think I’ll just go down the street to your competitor and see if they can give me a better deal?” Of course she couldn’t say that, because the DMV is a monopoly. There is no competition by fiat. If we didn’t pay them the $400 I would eventually wind up in jail.

In this way, government wages are completely devoid of any job performance evaluation, because there’s nothing to evaluate. You’re job consists of showing up, demanding people give you their money and then going home. Government wages aren’t just bad because they are high. They’re bad because they exist at all.

I know that it’s pretty presumptuous of me (just a humble network admin.) to name a post “The Truth About Iran.” Like I know stuff. But, I don’t mean it that way. What I mean when I say “the truth” is simply that what we are constantly bombarded with by the MSM is not it. I don’t claim to know anything about Iran, but the fact is, I don’t have to. It doesn’t take a PhD in Persian Historiography to know that the “IRAN BAD, AMERICA GOOD” tripe that we get bombarded with is childishness. The world doesn’t work that way. Reality is a little more complex than cowboys and Indians.

So what is the truth? Is Iran ruled by a madman with a lust for nuclear weapons to nuke Israel with at the first opportunity? Well, first off, it’s worth watching Scott Horton’s recent comments about Iran’s nuclear ambitions. Tom Woods posted this over at LRC:

I’m not saying that Iran is no threat to anybody and that they don’t do bad things. And, that’s not what Scott is saying here either. They could bomb some country tomorrow for all I know. But, of course, so could we. We drone bomb Pakistan almost every day. What he’s saying here is that the information about Iran we get in the news is a clipped, highly generalized version of the truth, so that it’s no longer truth. When MSNBC reports that Iran is “enriching Uranium,” they conveniently leave out all of the details.

But, even all of that isn’t necessary to get a good feel for what is up with Iran. It’s obvious. Just look at a map:

Iran is completely surrounded by the U.S. allies, and Turkmenistan is neutral. Even if they do have a super secret nuke program that the IAEA doesn’t know about, who could blame them? I’ve yet to hear anyone give a cogent argument for why Iran isn’t allowed to have nuclear weapons when so many other countries have them already. Even Pakistan, to their south has nukes. If I was Iran, I would want some nukes too.

The only argument you ever hear for why Iran shouldn’t have nuclear weapons is that they might nuke Israel. But, for that to happen, they would have to be completely insane. Why would they nuke Israel when there is no doubt that nuclear retaliation from multiple countries would be immediate and total. It’s called mutually assured destruction. It’s not just a quaint notion from the 80′s. Mutually assured destruction is logical. Adheminijad may have some odd beliefs and be a total anti-semite, but he isn’t stupid. He, like every other politician, wants power. And it’s hard to have power over a country laid waste by retaliatory nuclear strikes.

Like I said, I don’t claim to know a great deal about Iran, but I know enough about human nature and logic to know that the probability of them getting a nuclear weapon and firing them off at Tel Aviv unprovoked is pretty slim. It would be suicide.

I made two posts a couple of weeks ago about Russell Moore’s recent comments on the oil spill. I won’t rehash all of that here, but I thought it would be a good idea to point something out. Here is how he started off his original remarks about the spill:

I’ve left my hometown lots of times. But never like this.

Sure, I’ve teared up as I’ve left family and friends for a while, knowing I’d see them again the next time around. And, yes, I cried every day for almost a year in the aftermath of a hurricane that almost wiped my hometown off the map. But I’ve never left like this, wondering if I’ll ever see it again, if my children’s children will ever know what Biloxi was.

As I pass that sign on Highway 90 telling me I’m leaving Biloxi, I can look out behind the water’s horizon and know there’s a Pale Horse there. A massive rupture in the ocean’s floor is gushing oil into the Gulf of Mexico, with plumes of petroleum great enough to threaten to destroy the sea-life there for my lifetime, if not forever. Everything is endangered, from the seafood and tourism industries to the crabs and seagulls on the beach to the churches where I first heard the gospel of Jesus Christ.

This is more than a threat to my hometown, and to our neighboring communities. It is a threat to national security greater than most Americans can even contemplate, because so few of them know how dependent they are on the eco-systems of the Gulf of Mexico. This is, as one magazine put it recently, Katrina meets Chernobyl.

–Russell D. Moore, Moore to the Point Blog [em. mine]

Really? Katrina meets Chernobyl? So the oil spill was equivalent to a category 5 hurricane combined with a nuclear meltdown? You think those comments might be a little bit hyperbolic? Well, that’s my point. We now know that since they capped the broken well, most of the oil spill has simply vanished:

The oil slick that was supposed to devastate lives and livelihoods in the Gulf of Mexico region is starting to disappear. The New York Times reports that the once massive spill has all but vanished from the surface waters in the Gulf.

As it turns out, the Gulf of Mexico is amazingly adept at dealing with oil spills.

Naturally occurring leaks have given rise to oil-eating bacteria. Storms also have helped dissipate the oil. And while the jury is still out on the damage from oil that has already washed ashore, and on the impact of chemical dispersants that were used during the cleanup, there’s reason to be optimistic that the long-term ill effects will be minimal.

But the news is being met with some chagrin and stubborn skepticism. Environmental activists are reluctant to lose the spill as a tool to force a radical anti-oil agenda on America. And fisherman and other businesses in the region worry the subsidies promised by the government and BP LLC will dry up.

–Nolan Finley, Detroit News Blog

So, now Dr. Moore looks as if he was just another shill in the cacophony of media overreaction about the oil spill. Let me be clear, I don’t think he’s a shill at all. I just think, and I said it at the time, that he let himself be used by the media(especially that NPR interview) to push their meme’ and then cast aside. That’s what they do. And he fell for it. I don’t know if Dr. Moore knows anything about oil spills or if he was qualified to speak in the catastrophic terms that he did. But, he stuck his kneck out in the media, and that’s always a bad idea.