Federalism – The Great Compromise

This note is not intended to delegitimize President Obama’s victory or comment on the quality of the presidential candidates’ 2012 election results. The purpose in using the results of the election is to illustrate just how divided this country is and why the current conversation regarding political compromise at the national level misses the point.

The United States is a country of just under 315 million people. President Obama won the 2012 election with 50.8% of the total vote and a margin of 3.3%. Taken as a whole the results show how narrowly split the country is. Some 400,000 voters in 3 or 4 states determined the future of 315 million people.

However, the depth of the ideological divisions within America is truly revealed when you view the results of the 2012 election at the state level. President Obama won 14 states by a margin of 10 or more points and Mr. Romney won 21. All together 35 states, or 70%, voted for one candidate or the other by a margin of at least 10 points. An astounding 18 states, or 36%, voted for either candidate by a margin of 20 points or more (11 states for Mr. Romney and 7 states for Mr. Obama). The national results mask the fact that Americans are sharply divided, particularly by State, and to speak of a national consensus or compromise is impossible. That’s not to say that the political class cannot find a “compromise” to preserve their own power.

How can our Federal leaders “compromise” on issues that have so deeply divided our our society? Fortunately, by Constitutional design the United States is a country that can accommodate the radically different views Americans have regarding government and government’s role in society. States like California and Vermont are free to create their versions of a socialist workers’ paradise, just as a state like Texas can promote its version of a Wild West free market with a very limited social safety net.  However, this can not be done at the national level. Only Federalism can ensure that a very small majority, or even a plurality, of Americans does not dictate how the other 150+ million Americans live. The very, or mostly, left wing and the very, or mostly, conservative States should be allowed to create a social and economic system that suits their beliefs. With the only limit being the individual rights guaranteed by the Constitution.

The Federal government should only be concerned with the areas clearly assigned to it by the Constitution and those issues that are truly of a national character. A national transportation infrastructure, for example, is a matter of national concern that cannot realistically be handled by the states. It would be very difficult, if not impossible, for all 50 states to cooperate and create an integrated national highway system. This clearly falls under the national concern criteria. Moreover, the construction of highways does not materially infringe on any local prerogatives or notions of individual freedom. Obviously, there are gray areas here, such as including local mass transit or pork barrel spending as part of national transportation projects and spending. There is also the illegitimate practice of withholding highway funds from states to obtain other social policy concessions from them, such as raising the drinking age.

The ever increasing intrusion by the Federal Government into education, which for most of the last 200 years has been a local concern, is an issue that clearly does not require national solutions. Other than the cash the Federal Government has siphoned from the local tax base and then given back to local education systems through grants with many strings attached, there is nothing about teaching children to read that requires national intervention.  Yes, America needs a literate and educated society, however, this is not something outside of the capacity of the States to manage, or something that has to be done right by every state. I don’t see the risk of a third of the States “failing”, whatever that means, to educate their children to arbitrary national standards. So far the nationalization of education in America has not done much to improve performance but has given the Federal Government something it desires most, control.

I used education as an example because it consistently rates amongst the most important issues to Americans. The point being that some very important issues can be competently handled by the States and even local communities. However, there are a multitude of minor issues that occupy our national deliberative bodies. Just about every social or business interest seeks national solutions to their concerns. Rarely a tragedy, blown out of all proportion by the tabloid media we call “the news,” goes by without calls for national action. Portrayals of hungry children or grieving mothers are particularly effective in getting citizens to surrender their rights to the Federal Government.

The troubling fact is that the predominate view of the American left, and even the Republican political establishment, is that Federalism is some sort of dangerous, anachronistic throw-back. Such notions are rubbish. These big government Liberals and big government Conservatives want all Americans to live as they see fit, period. Of course, the Federal political class also wants to preserve their power as Federalism would require them to abandon much of the power and influence they have amassed for themselves. Who benefits from expanded Federal powers? It’s certainly not the citizens. To quote “The Dude” from The Big Lebowski, “It’s like Lenin said… you look for the person who will benefit and, uh, uh….”  Yeah, “uh” about sums it up.

Charity Through Coercion – What Would Jesus Do?

I’m a Catholic, I was born a Catholic, and like many Catholics I am not particularly religious. However, the Catholic Church is a very important cultural institution for the people who share my ethnic background and, therefore, for me as well.

This does not mean I fully subscribe to all of their religious dogmas or that I agree with all of their actions. Like any large institution the Church has its share of controversies and missteps. One criticism I do level at the Church is their perversion of Christ’s message when it comes to, what some like to euphemistically refer to as, “social justice.” I recognize that similar arguments as the ones I am about to make below may be applied to many social contexts; however, my aim here is to comment on the economic aspects of modern Church philosophy.

I went to Catholic schools for 13 years and have read the New Testament many, many times. I am not a biblical scholar but the Jesus portrayed in the New Testament clearly had a message of personal salvation. He certainly never taught that anyone could, much less should, be forced to walk in his footsteps. Jesus did not condemn the prostitutes or tax collectors but called them to him. It was up to them to decide what to do.

Today the Church regularly lobbies for the redistribution of our country’s wealth from some people to others in the form of tax laws and an elaborate social welfare state. They may dress it up as fighting poverty and doing the Lord’s work, but, make no mistake; this is “charity” at the barrel of a gun. If you decide you don’t want to participate in their scheme you will likely spend some time behind bars.

There is simply no Christian justification for compelling charity. First, if you are forced, by the implicit threat of the law, to participate in a charitable scheme you are not obtaining personal salvation. From a religious perspective there is no benefit to you personally for your actions, they were forced and not a genuine act of charity. Second, Jesus would never have countenanced the use of violence even if it were for an allegedly good cause. Every law brings with it the implicit threat of violence. If you violate the law, here most likely a tax law, you can be arrested by armed agents of the state, you can be prosecuted and be incarcerated. You will likely face financial ruin and if you resist perhaps serious physical harm. Just because the Church has a flawed democratic institution and government henchmen standing between itself and the victim does not change the fact that violence was indeed called for to promote what is a very questionable Church objective. That objective is the forcible transfer of money from one individual to another for a “good cause.” Let’s find that in the Gospels.

Republicans Get Owned on the Budget Deal

First let’s get some perspective on the numbers. 78.5 billion deducted from a proposed budget of 3.834 trillion is about 3%. Progressive windbags are gasping as if Medicare itself was axed from the budget. While House Speaker John Boehner (R-OH) is calling it a big first step. I’ll try to bring these massive numbers down to a scale most people can wrap their heads around. When the bank starts foreclosing on your home, cutting out the Starbucks and movie night is too little too late. That’s pretty much what this budget deal amounts too.

Out on the blogosphere Republican Party fan boys are on the offensive, claiming that Boehner got the best of the Democrats. I think the opposite happened. Right after the deal was reached, in addition to screams of bloody murder on the left, Obama got on TV and trumpeted the “historic” budget cuts. Really?! Sounds like Obama really wants the public to get the fact that these are unprecedented and gigantic budget cuts into their heads. Remember, most voters are rationally ignorant. They don’t have the time or energy to keep up to date with the minutiae of American fiscal failure.

This is vital because when the next budget fight rears its head many people are going to have a dim recollection of heavy, nay, “historic” budget cuts that were just passed. It’s going to make it a lot easier to portray the Republicans as uncaring slash and burn budget cutters with this sort of public perception. Republicans will be left trying to explain that the cuts were not actually historic, or even a “big first step.” Good luck with that. To make matters worse, fiscal conservatives already know that the budget deal is a farce and will hold Republican feet to the fire or abandon them during election time as they did 3 years ago. And I wouldn’t blame them.

Republicans risked everything to fight two wars under Bush and massively expand the government. As a result their electoral asses were handed to them. They should have the same courage to stand up for fiscal sanity and smaller government regardless of election results.


Man-Made Global Warming Legislation – California’s Prop 23

First, let’s be clear what this bill does: it only suspends AB32 when unemployment is above 5.5%; it does not repeal the law. Voting “yes” seems like a no-brainer – it tries to balance climate change with economic realities. They have included a handy dandy chart in the voter booklet (provided to California voters) about the state unemployment rates. I was shocked to see how high our unemployment rates typically are. Well, if the government was so concerned about global warming they could cut out the socialism ruining our economy and the unemployment rate will drop and we can all hold hands and stop global warming.

Now for the tirade… If you think global warming skeptics are ignorant then what should we think about people that believe they can control the climate? I think they are morons or, at best, sad, soul-searching people who have fallen under the spell of this nature cult.

The DWP used this statute to justify their recent rate hike. In fact, they said they need to TRIPLE the electricity rates to comply with the mandates of AB32. So go look at your electric bill and triple it. Also, pay attention to that 10% utility tax. Do you think the city will exempt the rate increases needed to fight climate change from the utility tax? Of course not. AB32 will be a massive windfall to local taxing authorities. This law will impact every single business and industry, the tripling of electricity rates is just the beginning. Energy is just another input to the cost of doing business. When it goes up you know something will have to go down and it will most likely be jobs.

Back to climate change. I don’t ever bother arguing whether climate change is happening or whether it is caused by the angle of obliquity of the earth to the sun or whether it’s man-made or nature-made, or whatever. What I do know is that if it is happening, regardless of the cause, how does anyone know what climate change will bring. There must be about a zillion variables. But the climate change cultists behave like they know exactly what will happen everywhere. Additionally, they seem certain their prescriptions will actually put a dent in, or prevent, climate change. How on earth do they know? How can they be certain? Three years ago all the smart people were certain credit default swaps and mortgage backed securities were safe. Look what happened.

I won’t risk my own economic well being, and our whole economy, on some opaque crusade. It seems a lot smarter, and a lot cheaper, to deal with the change as it happens – if it even does happen. If there are going to be more hurricanes then people need to move out of low lying areas. If precipitation is going to decline then we need to conserve water. Keep in mind that climate change is expected to bring some good things too. The cultists admit this but only in footnotes or in whispers. Somewhere, something or somebody will benefit as well.

Think about your most ardent climate change friend. I can almost guarantee their fanaticism for climate change is directly proportional to their hatred of organized religions. I don’t care that they hate religion but I think they have some sort of spiritual psychosis that has turned into nature worship represented by the climate change cult.

Let’s examine the variables:

1) Is there climate change? Who knows, who cares, assume there is.

2) What is causing climate change? Who knows, who cares, assume man is.

3) What, exactly, will climate change bring and when? Nobody knows (I’d say not even remotely).

4) Will these measures actually prevent climate change or prevent some of the harm climate change may bring? Nobody knows.

Yeah, that sounds like a great reason to destroy our economy. People will probably die because this money is not being put to better use or is just sucked out of the economy.


Taxpayers On the Hook for GM’s “Generosity”

The Pension Benefit Guaranty Corporation (PBGC), a Federal agency responsible for insuring private pensions, is on the hook for some of the $6.2 billion (yes, billion) in pension liabilities arising from the bankruptcy of Delphi. Delphi was a spin-off of GM. Prior to the Delphi bankruptcy the PBGC was running a $33.5 billion dollar deficit. .

I am not certain what formulas the PBGC uses to determine the pension payouts in takeovers – usually there are reductions. However, the United Auto Workers Union members have nothing to fear, what the PBGC (the government) does not pick up, GM (owned by the government) will. It warms the heart to see how generous GM is with taxpayer money.

The truth is that GM has always been generous to its unions, as have the other big three auto manufacturers. The average GM factory worker with a high school diploma received $146,520 in wages and benefits in 2006. By contrast the average California attorney is earning $88,135 (I think this number leaves out benefits, but you get the point). Many of these attorneys are burdened with six figures of debt and living in high cost cities like Los Angeles or San Francisco.

What caused this catastrophic economic failure that a worker who is easily replaced with any other worker got paid so much money? What CEO or corporate board would support union contracts that were so economically unsustainable? Certainly the unions themselves and the government that created the blackmail conditions unions thrive in carry much of the blame.

However, the company executives and directors deserve plenty of blame too. In the interests of avoiding the short term disruptions caused by strikes GM pretty much gave the unions what they wanted to keep working. Of course they argued that this was in the interests of shareholders, though recent events have proven them flat wrong. I don’t suppose the impact of a strike on near term earnings and therefore the value of CEO and Director bonuses and stock options had anything to do with it. GM was essentially looted by its Executives and its Unions.

As it stands the shareholders today have zero, the bondholders very little and the Executives and Directors that made these decisions? I am sure they are enjoying the fruits of their leadership. Read more about it at the WSJ.


Socialized Medicine Is “OK With Us” Says Biotech Industry

It was reported last week that the Biotech Lobby is close to being “bought” by Obama and the Democrats in their efforts to nationalize American healthcare. The price: an increase in the number of years companies would receive a monopoly for selling the drugs they invent.

While I have no opinion regarding the number of years Biotech firms should be granted monopoly pricing power, I do agree that innovation requires strong rewards in the form of intellectual property protections such as these. I’d rather be worrying about how to pay for life-saving drugs than not have them. However, it seems Biotech’s desire for us to benefit from innovation stops at their own door step. Thanks a lot!


Legalizing Marijuana – California’s Proposition 19

I thought supporting Proposition 19 would be a forgone conclusion, but it seems not. As someone who definitely supports decriminalization of marijuana, and probably supports legalization through an appropriate legal framework, I am extraordinarily annoyed by this proposition.

I expected the soccer-mom crowd would come out and foretell the end of the world because everyone would become a pothead and we will all die. However, that is not what I really found when I read the arguments for and against it. So I went ahead and read the whole statute. This proposition should be called the “potheads” civil rights initiative. There is one paragraph that I found particularly worrisome:

“No person shall be punished, fined, discriminated against, or be denied any right or privilege for lawfully engaging in any conduct permitted by this act or authorized pursuant to Section 11301. Provided, however, that the existing right of an employer to address consumption that actually impairs job performance by an employee shall not be affected.”

This is really significant. Essentially, this paragraph has elevated pot smoking to race, gender and sexual orientation, amongst other protected classes. Here is one example: we live in an “at will” employment state. You can fire any employee for any reason other than for certain enumerated ones such as gender, race or sexual orientation etc. Well, add pothead to the list. You can’t fire an employee for smoking marijuana unless it “actually impairs job performance.” Well, that is a question of fact and can easily cost employers tons of money to litigate.

I think employers should be allowed to have a “drug free” workplace if they desire and simply refuse to hire people who smoke marijuana. I certainly don’t want “marijuana smoker” to become a protected class of citizens. Ultimately, employers should not have to now suffer because we legalize marijuana. One example is that federal contractors could lose all their federal work by failing to obey “drug free” workplace laws.

If you just want to keep small-time drug users out of our jails this is not the law for you.

After I wrote this I found this article. It appears marijuana has already been decriminalized. Makes this law even less necessary.


Corporate America Is Not Our Friend

Many defenders of free markets out there, conservatives and libertarians alike, and the opponents of free markets on the left, have confused support for “free markets” with support for “big business.”

The left has used this confusion as a very successful weapon against supporters of free markets. The greed of corporate bad actors is often cast as the result of the so called “close” relationship between the political right and big business.

The irony here is that big business can hardly be counted on to defend free markets. Indeed, many of the barbs flung upon big business by the left can fairly be made by the right as well. Corporations are meant to maximize profits. Corporate leaders would violate their duties to shareholders if they were to ignore the chance to attain a government granted monopoly, for example. Would anyone expect Disney or Amgen to do anything but jump at the chance to extend copyright and patent rights on their intellectual property, regardless of its impact on free markets?

It is generally true that free markets benefit big business more than do government regulations. So it comes as no surprise that the ideological supporters of free markets and the self-interest of corporate America are often aligned. Of course the money and lobbying strength of corporate America is welcome in the battle against the ever expanding government blob.

The problem is that, in the political arena, the Republican Party has become lax in its ideological battle with the left regarding free markets. It seems like they depend too much on corporate self-interest and lobbying to produce the desired results. However, the outcome has been devastating to the Republican message, as recent polls and elections have shown. Not only have they failed to educate the public on the importance of free markets, they have been classified by an angry electorate, wrongly in my opinion, as the political arm of corporate America.

Now, to get back to the point, the political right has to recognize, and let the voters know, that our commitment to free markets has nothing to do with supporting corporate America. In fact, corporate America can be counted on to thwart free markets and individual liberty on a regular basis and should be called out on it.

It is the purpose of this blog to expose the complicity of corporate America with the left’s agenda of the ever expanding regulatory state and the destruction of individual liberty.