New Book: Toward a Truly Free Market

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Toward a Truly Free Market

Toward a Truly Free Market: A Distributist Perspective on the Role of Government, Taxes, Health Care, Deficits, and More by John C. Medaille (ISI Books, Wilmington, Delaware, 2010) is a genuine contribution to the discussion of how to fix the United States economy. The author is a Catholic economist who has arrived at many of the same conclusions that I developed last year in Life, Liberty, and the Pursuit of Happiness, Version 4.0, particularly the necessity of repealing the federal income tax and structuring society around the principle of subsidiarity. It was very refreshing to read this independent scholarship based on genuine economic research rather than the failed economic theories promoted by large corporations, political parties, and other special interest groups.
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Neoclassical Economics from an Integral Perspective

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I take neoclassical economics to be more the branch of modern economics that renews emphasis on the foundational thoughts of Adam Smith and David Ricardo, than on the synthesis that gives government a role in the economy such as the Keynesian thought so popular the last decades. Hence, I see the Austrian economists Ludwig von Mises and Friedrich von Hayek as better representatives of neo-classical thought than government interventionists like Keynes or Marxists. But, while I believe in the central economic truths about supply and demand and property ownership, neoclassical economics is inadequate for explaining the entirety of today’s economy.

I recently read an excerpt from Ludwig von Mises, titled “The Problems of External Costs and External Economies,” on Ron Paul’s website. This is a brilliant economic talk for its time, and most of the principles von Mises discusses in that article apply today. However, more recent developments in the financial sector are not addressed by this article because ownership of money, rather than ownership of property (land) is a level of abstraction from a neoclassical economy.
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Stages of Knowledge and Creating an Integral Society

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Stages of Knowledge and the Need for an Integral Republic

Knowledge develops through stages, whether it be in individuals or civilizations. These stages relate to the level of perception and experience that evolves through growth and experience. In developmental psychology Jean Piaget referred to stages of development. More recently Alan Combs and Ken Wilber, influenced by Sri Aurobindo, Teilhard de Chardin, and others, have elaborated stages and states of consciousness that can serve as a basis for holding civilizations to higher standards of knowledge. They discuss stages up to “integral consciousness,” or “integral and beyond.” Continue reading →

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Consumer Financial Protection Agency: More Smoke and Mirrors?

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Americans Asked for this, What did they get?

Who Regulates the Regulators?

The people who brought us the 2008 bailout for the real estate bubble, have now brought us the government intervention necessary to create a “consumer bubble.”  The Dodd-Frank Act, signed into law on July 22, has now created the Consumer Protection Agency. That sounds good doesn’t it? We want consumers to be protected from financial industries. The problem? The fox in the hen house is saying he has a new strategy for protecting the hens. We want financial reform, we need financial reform, we are getting financial reform–but is it the right reform?

Real reform puts real checks and balances in place and would prevent the types of  greed and government intervention in the economy that produces financial bubbles. This bill fails to do that. President Obama said the Dodd-Frank Wall Street Reform and Consumer Protection Act “represent[s] the strongest consumer financial protections in history.” This is enough to worry any savvy student of history who knows that almost every government financial guarantee has caused a bubble. We should remember what federal home loan guarantees, coupled with greed, did to the housing market.

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Production and Consumption: The Yin and Yang of an Economy

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Production and Consumption, the Yin and Yang of the economy

The problem with current U.S. economic models is that they focus on consumption. This model is reflected not only in many recent economic “stimulus” plans like auto and appliance rebates, subsidized home mortgages, and government jobs programs, but it is embedded in a U.S. tax structure that deters production in the U.S. and stimulates U.S. companies to produce many products oversees. Implicit in this tax structure is the idea that the United States is a consumer society and that we can endlessly consume without producing enough to pay for it.

Does Consumption Drive Production or Production Drive Consumption? Continue reading →

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Americans should Decentralize both Government and Economy

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Neither Left or Right

Today we have strong movements on both the left and the right that are focused on either big government or large corporations. On the left, we have established liberals and anti-capitalist ideologues attacking Wall Street but unwilling to reform the Fed because they simply want to seize power and take over the economy. On the right, we have large corporations interested, for reasons of improving their bottom line, gobbling up smaller companies and controlling government and its regulatory agencies as much as possible through lobbying efforts that change laws to stack the deck further in their favor. Neither of these groups, which financially control the Democratic and Republican Parties respectively, are interested in the well-being of the United States or its citizens. Neither of these groups are proposing a system of legitimate or sustainable government.

Reacting against this corrupt society are citizens who, after losing their jobs and houses, are beginning to realize that the ruling elites in Washington are neither representing the citizens, who are doing the work and paying the bills of the country, nor the principles of good governance established in the U.S. Constitution. On the grassroots left we have the Huffington Post that is more fixated on economic reform, the end of corruption, and decentralization of the economy. On the grassroots right, you have the Tea Party movement focused on making government smaller because of the out-of-control growth of a Leviathan. These grassroots groups are the decentralizing counterparts of their centralizing counterparts on the left and the right. But, like their counterparts they seek reform of either the economy or the government, rather than seeing the centralizing power has to be removed from both the government and the economy.

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Gulf Oil Spill Another Indication of the Need for Regulatory Reform

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British Petroleum’s disastrous oil spill in the gulf reflects a combination of problems from human laxity and mistakes by BP-hired workers and government agencies to systemic U.S. government problems related to regulatory agencies in general. In this regard, the oil spill is eerily reminiscent of the 1986 Chernobyl nuclear disaster in the Ukraine that raised concerns about the safety of the Soviet nuclear power industry. In both cases there were warnings that went unheeded because human safety and environmental concern were pushed aside for other concerns by those ultimately in charge.

Ship spraying water on fire on oil rig that exploded

All human activity has risks, and large-scale pioneering efforts in new fields contain higher risks than enterprises with a long history whose risks are well understood and safety well-engineered into designs and processes. The survival of the human race and the development of society depend upon such pioneering efforts. What is tragic is when major disasters could have been avoided because safety standards were ignored by corporate leaders or government bureaucrats and perhaps not even understood by less-than-capable workers on the disaster site.

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Terrorist Expatriation Act (TEA): A New Type of Tea Party?

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Reacting to the arrest of the Times Square bomber suspect Faisal Shahzad, a bi-partisan group of  lawmakers in Washington have introduced the Terrorist Expatriation Act (TEA).  This act, which would strip US citizenship from people suspected of terrorism, was introduced by Senators Joseph Lieberman (I-CT), Scott Brown (R-MA) and Representatives Jason Altmire (D-PA) and Charlie Dent (R-PA). The irony of the acronym for the Act, TEA, should not be lost.

The Boston Tea Party

The proposed law would not be implemented by a court of justice or as the result of a trial, but would be result of an administrative decision of the State Department. Since the State Department is under the executive branch of government,  another check and balance on the power of the president, preventing the possibility of him becoming a tyrant, gets eliminated. It opens the door for creating a class of enemies of the state that includes regular middle-class citizens, such as “Tea Party” Activists, who have already been called “terrorists” for simply demanding limited constitutional government and opposing administration policies through freedom of speech and normal democratic processes.

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Idealism and Realism, the Yin and Yang of Society

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Idealism vs. Realism

The Interdependence of Idealism and Realism in Society

My mother used to have a saying posted on the bulletin board in her kitchen. It went something like the following, “If you are not an idealist at age 20 you are not normal. If you are not a realist by age 30 you are not normal.” It reflects a pattern of thought where youth is out to conquer and remake the world as a better place, followed by the realism that sets in when we encounter the necessity of hard work and living with others that do not share our ideals.

Idealists want justice, fairness, prosperity, peace, and happiness for everyone. Idealists want to change the way the world works so that everyone has an ideal life.

Then, under normal circumstances, idealists become realists. They find out that money doesn’t grow on trees,  that not all people feel their ideals can be accomplished in the same way, and that many people will exploit others if they can. This may mean an industry trying to exploit workers for the sake of owners and directors, or it may mean interest groups trying to manipulate the government to take someone else’s property for a group that wants more than it has. This includes the former idealist, that decides, based on realism, that he needs to manipulate the government to obtain his ideal by redistributing the taxes of others for himself or his group.

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Reforming Regulatory Agencies

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Many Agencies are Failing or Counterproductive

Regulatory agencies have the well-intended purpose of regulating industries that may create risks to the public. This is an extension of the idea that the role of government is to protect the citizens and create a safe environment in which they can pursue life, liberty, and happiness. But regulatory agencies rarely live up to this task. They tend to become government lobbies and protectors of the industries they are supposed to regulate.

The $913 million SEC Budget for 2009. Source: U.S. Securities and Exchange Commission FY 2009 Congressional Justification in Brief, Feb. 2008.

The SEC: We are aware of the failure of the Security Exchange Commission (SEC), with a $913 million budget, to prevent the expansion of the derivatives market that led to the collapse of the housing market in 2008. The Moody’s rating agency was incentivized to  overrate securities, and they did nothing. And last week we discovered that some of the $620 million paid in salaries went to employees who watched porn on the internet up to 8 hours a day.

Can such an agency be reformed? Should it exist? Are other regulatory agencies suffering the same problem?

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