The 2014 MN Legislature will be taking up legislation on Sunday Liquor Sales. After a comment on that I made on the Facebook page, I was invited by Walter Hudson to speak about unproductive government and the government’s role in promoting cultural decline and the erosion of the middle class at the Republican Liberty Caucus on January 16. This has implications for tax policy generally, including principles to keep in mind when producing legislation on alcohol sales.
Three Types of Entrepreneurship
In my Facebook comment, one of the main points I mentioned was our shift from a productive to an unproductive economy in the United States. Economists refer to three types of entrepreneurship: productive, destructive, and unproductive.
Continue reading →
The Glass-Steagall Act, also known as the Banking Act of 1933 (48 Stat. 162), was passed by Congress in 1933 and prohibits commercial banks from engaging in the investment business. This act is an example of principled regulation of business because it (1) protects private property of citizens, (2) encourages efficient banking practices, (3) eliminates exorbitant Wall Street profits which is the basis of much government and banking system collusion and cronyism, and (3) eliminates the cost of much government oversight and unproductive legal costs.
It was enacted as an emergency response to the failure of nearly 5,000 banks during the Great Depression. The act was originally part of President Franklin D. Roosevelt’s New Deal program and became a permanent measure in 1945. It gave tighter regulation of national banks to the Federal Reserve System; prohibited bank sales of Securities; and created the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits with a pool of money appropriated from banks.
As it turned out, this was very sound legislation that significantly stabilized the U.S. banking system until its repeal in 1999. This was immediately followed by a wave of corporate scandals in 2001, unsound government home loan guarantee legislation that subsidized banks with taxpayer money in 2005 leading to the housing bubble of 2007, and an explosion in fraudulent financial securities and derivatives that led to Treasury Secretary Paulson’s extortion of a $700 million bailout from taxpayers for irresponsible behavior of his Wall Street colleagues.
Continue reading →
“The Blind Leading the Blind” by Sebastian Vrancx (1573-1647)
The metaphor “the blind leading the blind” comes from ancient wisdom and is an apt metaphor for Western politics and higher education today. Not that there aren’t very smart and shrewd politicians or many new discoveries in the sciences. But, when it comes to knowledge of where we want to go and how to get there, our culture is full of statements and policies that reflect the ancient metaphor taught in the Bible, the Upanishads, and Roman Classics that complain of the blind leading the blind. Sextus Empiricus (160-210 a.d.) wrote in Outlines of Scepticism: “Nor does the non-expert teach the non-expert—any more than the blind can lead the blind.”
This saying is just one example of pertinent ancient wisdom discarded in the twentieth century by a rejection of conventional wisdom that followed the rise in faith in modern science and the nation state. This modern faith in science and the state became a basis for the rejection of religion as superstition and an opiate, and the idea that the principles informing the U.S. Constitution could be rejected on the basis that it was “the philosophy of dead white men,” and in this age of pluralism, everyone’s cultural views were as valid as everyone else’s. Continue reading →
Edward Snowden is a lightning rod for when law conflicts with principle
Edward Snowden’s revelations are, in part, a result of the growing divergence of law and principle in the United States. When laws are rooted in political lobbying efforts, or rules created by administrative agencies, and unconnected to principle they increasingly diverge from the principles of respect for others, human rights, and individual freedom.
For him, it is a matter of principle. “The government has granted itself power it is not entitled to. There is no public oversight. The result is people like myself have the latitude to go further than they are allowed to,” he said.—The Guardian
Continue reading →
The Mayo Clinic was rewarded for lobbying the legislature to define Rochester, MN as a “Destination Medical Center,” giving it special favors
The use of legal definition has become a common strategy for legislatures to fund special interests that contribute to political parties. Most people became aware that legal redefinition was going on at some level when marriage was redefined from its biological definition of a union of male and female, to a social definition of two individuals committed to a partnership. But while the legal redefinition of marriage could be defended on the basis of equal rights, despite its ultimate objective related to financial redistribution to a new class of people, much legislation, like Minnesota’s recent aid and tax omnibus bill (HF677), uses new definitions to create special interest legislation that is opposed to equal treatment under the law:
the bill defines a “medical business entity” as a business that “collectively employs more than 30,000 persons in the state.
Continue reading →
Examples of poor feedback:
This year, the government will spend at least $890,000 on service fees for bank accounts that have nothing in them. At last count, Uncle Sam has 13,712 such accounts, each containing zero dollars and zero cents. These are supposed to be closed. But nobody has done the paperwork.(1)
Clarence Prevost, the flight instructor assigned to Moussaoui, began to have suspicions about his student… Prevost was confused as to why Moussaoui would seek simulator time if he lacked basic plane knowledge. After some convincing, his supervisors contacted the FBI, who came to meet with him… Some agents worried that his flight training had violent intentions, so the Minnesota bureau tried to get permission (sending over 70 emails in a week) to search his laptop, but they were turned down. FBI agent Coleen Rowley made an explicit request for permission to search Moussaoui’s personal rooms. This request was first denied by her superior, Deputy General Counsel Marion “Spike” Bowman, and later rejected based upon FISA regulations (amended after 9/11 by the USA Patriot Act). Several further search attempts similarly failed.(2)
WASHINGTON (AP) — An interim report released Tuesday by House Republicans faults the State Department and former Secretary of State Hillary Rodham Clinton for security deficiencies at the U.S. diplomatic mission in Benghazi, Libya, prior to last September’s deadly terrorist attack that killed Ambassador Chris Stevens and three other Americans. Senior State Department officials, including Clinton, approved reductions in security at the facilities in Benghazi, according to the report by GOP members of five House committees. The report cites an April 19, 2012, cable bearing Clinton’s signature acknowledging a March 28, 2012, request from then-U.S. Ambassador to Libya Gene Cretz for more security, yet allowing further reductions.(3)
The above quotes are examples of a problem of feedback in U.S. government processes. They are examples of government processes that are unresponsive to the feedback provided by the real world. Such lack of responsiveness is symptomatic of authoritarian, brute force, systems of governance where power flows from the top down, denying known principles of sound governance. And, these types of systems tend to be standard operating procedure (SOP) for many government agencies, based on a lack of sophistication and refinement of US political processes. They cause financial waste, they prevent followup on terrorist suspects, and they generally produce agencies that fail to either perform their mission well or serve the citizens they were created to serve. Continue reading →
Since the Columbine High School shooting on April 20, 1999, where 12 students and a teacher were killed, there has been increased concern over school safety. But the original intention to improve security at schools has morphed into anti-bully campaigns and legislation that have become increasingly hysterical and politicized. Anti-bullying rules and legislation can be viewed as cover for school officials, a gold mine for political activists, and feel-good activity for legislators. But most of this legislation is harmful to children, costly, and counterproductive.
Anti-bully arguments for campaigns and legislation are full of the rhetoric protecting children, but it’s generally harmful to them and prevents children from working through the normal testing of limits that occurs in childhood development. Imagine two children in the sandbox at a daycare facility. One grabs a toy, the other grabs back, the first one pushes, the second one hits. The second one (who did not grab the toy) is labeled the “bully” and the first one (who grabbed the toy) is labeled the “victim.” The “victim’s” parents refuse to talk to the “bully’s” parents anymore and withdraw their child from any activities the “bully” attended. The “bully’s” parents get isolated from the community. The bully and victim language not only was inaccurate in describing the social dynamic of normal childhood aggression, it labeled one child as evil and the other one as innocent. But worse, it prevented adults from using the situation as a teaching moment to help the kids learn to live with one another and become friends.
Continue reading →
Travelers queue up at the security checkpoint in Denver International
The sequester is supposed to be about government self-control, but Washington has once again made it politics.The mandated reductions of $44 billion, about 1 percent of the budget (which is still larger than last year’s budget), are supposed to be spread out among all departments, each taking a haircut. Suddenly we hear stories of airports with two TSA lines being cut down to one line, a 50 percent reduction. This isn’t math, its politics.
Politicians use scare tactics, threats, and target public services that people need when they want money. If they cut the pork, nobody will care, so they talk about airport congestion and cuts in border security, and other things the government does that are important to people. They do not talk about spurious research grants, reduced building in Washington, congressional staff layoffs, a delayed ramp-up of Obamacare, or IRS layoffs.
American citizens had their taxes raised more than 1% last year, causing them to figure out how to live with less money, and most of them, poor or rich, highly educated or street educated, are able to figure out how to adjust. Taxpaying citizens have been learning how live with haircuts in the form of tax creep since income tax was passed in 1913. The current threats by government officials are a symptom of a government trying to hold its citizens hostage, not a government trying to live with a haircut. Continue reading →
One way we can improve the U.S. system of government is to change the nature of U.S. Supreme Court appointments. Anyone watching the appointment process realizes that there is a bitter partisan rivalry in which the money funding Democratic and Republican interests is highly involved, resulting in judges more serving oligopolic and ideological interests than serving the general society and Constitutional principles, with legal skills as top Constitutional scholars.
Another problem with the Supreme Court, in retrospect, is that it generally serves the consolidation of federal power, having little desire to see the states as a check on federal power. This is, in part, because it is part of the federal government, appointed by federal elites, and the power and prestige of the federal government reflects on the Court. Continue reading →
The U.S. Constitution was to Restrain Government and Consolidation of Power
In a December 30 editorial in the New York Times, Georgetown professor of constitutional law talks Louis Michael Seidman wrote about ideas in his book On Constitutional Disobedience, arguing that the failure of the U.S. government lies in archaic and evil provisions of the U.S. Constitution. I would argue that we should not treat the constitution as an inerrant eternal document that judges prooftext like theologians do sacred scripture, but much of our current dysfunction stems from ignoring the vision and principles behind it and the legal changes made in the two hundred years following its creation. In addition, I agree with him that the Founders could not anticipate many of the changes in technology and society. However, he is offering little hope that he would apply founding principles to these developments like large corporations and a global economy.
In his first example, Seidman argues that we should not care whether the tax plan originate in the Senate or the House. In some respects he is right because the 17th Amendment gutted the original Constitution of the very important reason to have two houses in the first place–the concept of checks and balances on power, with the States appointing Senators, and the populace electing their representatives. In that case it was important that the people paying the taxes–not elites–determine how their own money would get spent. Otherwise there is theft and dysfunction, which we know have in spades. With the passage of the 17th Amendment, the people elected representatives in both houses, so the concept of a Senator became gutted of its meaning except the “representatives” in the Senate serve longer terms. However, they represented the same group, so an important check and balance that helped to keep the system functional was made dysfunctional. In the present case, with no checks and balances, it would be more efficient to have a unicameral legislature. Continue reading →