Liberty Economics

Laissez-Faire News & Commentary

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MSNBC supports Congressman Joe Heck

MSNBC has a piece that proves what I wrote many months ago to be totally correct. MSNBC helped construct Joe Heck’s conservative credentials which were otherwise non-existent. See:

Last December, I wrote a piece undressing the bipartisan sellout, explaining how the establishment left and establishment right are firing blanks at one another. Not to claim accolades, but I did so about as well as anybody. See:  How right was I in what I wrote back in December? It wasn’t too many days later that the CRomnibus bill passed with Joe Heck’s approval.

One method the establishment uses to misdirect its opposition is to “attack” a faux opponent, helping to construct opposition credentials for an insider. While the establishment media will criticize Joe Heck, how often do you read about, say, Congressman Walter Jones? You see, criticizing Congressman Jones would be placing real opposition on stage.

The Welfare-Warfare Party maintains its death grip on the body politic by ensuring the stage is occupied by actors, and only actors. People who play-act like they are opposed to omnipresent government. Politicians who do things like call Social Security a ponzi scheme, to then later recant, helping to discredit the very idea. By singling out Joe Heck, MSNBC is helping to select members of the “opposition”, keeping the stage occupied with actors.

The word conservative implies an ideology. An ideology implies ideas. While people can disagree on what’s conservative and what isn’t, it’s impossible for two contradictory ideas to both be conservative. At least that’s how it’s supposed to be. Today, our political lexicon is a bit different. The word conservative has been used so promiscuously that it no longer has any objective meaning, other than wanting to grow government at a slightly slower pace than the other party – or maybe just in slightly different ways as the other party. That makes conservatism, at best, a relative position, impossible to define absent the presence of politicians like Harry Reid.

I can assure you that Joe Heck is doing nothing to downsize government. The points of criticism aren’t even nexused with reality. Josip Tito would probably be considered too “laissez-faireish” to MSNBC. In MSNBC’s paradigm, no matter how big government Joe Heck is, he can always be portrayed as a far right conservative. How? All that’s necessary is for Harry Reid to move further to the left than he was the day before. And since conservatism isn’t a stationary anchor, he tows big government Republicans like Joe Heck right along with him.

No wonder Harry Reid now runs around claiming that women not only have the right to get abortions, but to do so with other people’s property through taxpayer funding. I myself have written about how taxation undermines property rights, and how property rights are nexused with civil rights. The exact inverse of being a taxpayer is being a tax consumer. The exact inverse of being a tax consumer is being a taxpayer. If failing to grant somebody taxpayer subsidies is oppressive, pursuant to Harry Reid, then how much more so must it be to actually impose a tax? Does this mean Harry Reid is secretly with me on the issue of taxation?

Suppose I started some Republican version of Planned Parenthood. Rather than promoting abortion, say I promoted torture. After all, if torture works at bases overseas then I’m sure it would work right here at home to curtail crime. Suppose I started an organization called, say, Committee to Repeal the Fifth Amendment. There’s an issue Republicans like Joe Heck would agree on. I could even make Joe Heck the spokesperson, since I’m sure he could do a much better job at explaining why the Fifth undermines our security. Clearly, the framers had no idea what they were thinking by putting that Amendment into the Bill of Rights (facetiously). Would I be entitled to taxpayer funding for my organization? If I don’t get taxpayer funding, would that mean I’m being oppressed? Pursuant to Harry Reid’s calculus, yes.[1]

Of course, there is no right anybody has to taxpayer subsidies. Don’t believe that Harry Reid uses taxpayer money to fund abortion because Harry Reid cares about women’s rights. Harry Reid uses taxpayer money to fund abortion because Harry Reid is a eugenicist – a lot like Dick Cheney and Adolf Hitler.

In order to subsidize somebody, that requires taxing somebody else. But don’t expect the delusional criminal Harry Reid to sit down and confront these paradoxes in his paradigm. There’s no reason for him to do so, because Republicans like Joe Heck aren’t trying to stop him because they need him. Without Harry Reid, it would be impossible to see just how “conservative” Joe Heck is by supporting slightly smaller government. Joe Heck is a “conservative” only by juxtaposing himself with Harry Reid. Politicians like Joe Heck and Harry Reid are mutually dependent upon each other for survival.

This piece on MSNBC is not only an example of how the establishment left and right collude by fabricating credentials for one another, but it’s an excellent example of the gentlemen’s agreement between the two parties to not engage on the right issues. We’re supposed to keep ourselves occupied by discussing immigration, which is the same diversion used in 2010. The misfeasance of both parties is too great for either one to engage on the right issues.

If Democrats were serious opposition, they wouldn’t be helping Republicans buttress their support amongst the conservative base. Instead, they would be trying to cut into Republican support by exposing Republicans for being big government statists. It’s very easy to do. They can start by pinning Republicans like Joe Heck down on the issue of torture, which is an attack on due process.

If Democrats were serious opposition, they could be using arguments like the one I put forth in this piece right here:  I can’t think of a more compelling argument, from a libertarian perspective, for a big government Democrat in certain races to bring about divided government than the one I make. But in order to make the argument it requires disrupting the political paradigm. If you believe I am mistaken, that I am getting something wrong, then why won’t they listen to me? Why am I ignored?

Democrats could easily explain that as long as Republicans control the House, a Democrat controlled Senate can’t spend one dime absent the consent of Republicans. That undermines the hollow argument for Republicans from a free market perspective. And then they could capitalize on issues like torture, explaining why divided government would be preferable to a homogeneous government consisting of a neoconservative Republican White House, Senate, and House. Why isn’t that happening? Why is MSNBC, an ostensibly left wing organization, not making that case? Why does it seem as if the establishment left is on the verge of throwing 2016 to a neoconservative Republican supermajority?

If it isn’t Democrats supporting the murder of babies, then it’s Republicans supporting the use of torture. I’m convinced that the two parties have some kind of gentleman’s agreement on how politicians will support different evils, so any good a politician supports is offset by being amalgamated with evil. This makes it impossible to stop evil within the two party system. A Republican can be good on abortion, but then deviates on torture. Or a Democrat can be good on torture, but deviates on abortion. Both parties have given us a gigantic menu of different evils to select from.

Evil is smuggled past the electorate by being amalgamated with goodness. But the problem is we never get the good. Compromise doesn’t imply that Democrats abandon their support for abortion and Republicans abandon their support for torture. No. Instead, compromise implies we end up with both baby murdering and torture – torturing of babies even. Democrats abandon their opposition to torture and Republicans abandon their opposition to abortion. When they do raise objections to torture or abortion, it’s demagoguery to score political points, while the program is left intact and accountability remains elusive. Compromise means we end up with both a big welfare state and a big warfare state. Congressman Joe Heck will do nothing to stop the program of metastasizing government and hold people accountable. MSNBC knows that, which is why he has been selected as their “far right opponent”.

[1] – There actually is an organization the Republicans want to fund with taxpayer money to not just promote torture but to practice torture: the Central Intelligence Agency.

Is selling silver bullion terrorism?

I was never a fan of Bernard von NotHaus’s “liberty dollar”. The same reason I wasn’t a fan and never bought any is why the government had no business prosecuting him. The free market would have been entirely capable of putting him out of business. If he should have been prosecuted, then makers of faux novelty money, which is backed by no silver at all, should definitely be prosecuted.

All Bernard von NotHaus did was sell silver bullion. Nothing more and nothing less. Objectively, selling anything has the same economic impact as does selling silver bullion. Historically, all sorts of commodities have been used as money. Tobacco has been used as money. Does this mean cigarette sellers are creating a counterfeit currency by selling cigarettes?

When selling silver bullion, NotHaus was buying dollars, consequently helping to prop up the value of the dollar. He wasn’t trying to pass “liberty dollars” off as government issued dollars. He was exchanging “liberty dollars” for government issued dollars. Contrast that with people who engage in direct barter, in which case no dollars are purchased. The entire “liberty dollar” ploy was merely a marketing gimmick for selling silver bullion with a high markup over spot price.

I have always told people that if their desire is to hedge against inflation, stick with bullion. Unless you are a coin collector, avoid numismatics. To get a price as close to spot as possible, go with rounds (i.e. privately minted coins) rather than government minted coins with face value. I never would have advised anybody to buy “liberty dollars”, which is why I never advised anybody to buy “liberty dollars”. Bernard von NotHaus’s weakness was selling silver rounds at prices too high over spot, which he was successful at doing because of his “liberty dollar” marketing gimmick. By using his “liberty dollar” marketing gimmick, he confused the prosecutor and judge into believing he was doing something other than selling silver rounds.

NotHaus complicated the process of selling silver and did things in terms of marketing that I wouldn’t have felt comfortable doing, but nothing that should have been considered a crime. Things that could have been easily corrected by removing the “liberty dollar” value from the round, or adding a disclaimer saying that it’s not referring to U.S. dollars on the round. Objectively, it was printing a price in terms of “liberty dollars” onto the object. Certainly not a criminal act.

The real crime was in prosecuting NotHaus. If the prosecutor’s purpose was to defend the value of the dollar, as alleged by the prosecutor, then it’s politicians in Washington who should have been prosecuted.

In no way did NotHaus counterfeit anything. Using the word dollar in no way infringes upon official currency. Other countries issue currencies called dollars. The government doesn’t have a copyright on the word dollar. The word dollar descends from the Thaler, which is short for Joachimsthaler. Thalers were coins that originated in Joachimsthal, Bohemia, minted by Count Hieronymus Schlick in 1518. Unlike official currency, NotHaus was selling real silver. The only thing that would have made his operation a criminal enterprise is if he were issuing ownership certificates (i.e. “liberty dollars”) that he promised to redeem for silver but had no intention of doing so.

If NotHaus had no intention of fulfilling his obligation to deliver silver, that would have been a crime. But it appears that the government’s prosecution is the only thing that jeopardized NotHaus’s ability to fulfill his obligations.[1] He had no obligations to me, because I recognized you could have done better by shopping with another bullion dealer. But it does make me wonder what kind of country we live in when selling silver bullion becomes tantamount to a criminal act, and that the federal government would use the force of law to compel people to use a currency that it’s debasing as a matter of policy.

[1] – Confiscating NotHaus’s silver and gold bullion would have actually had a deleterious effect on the value of the dollar in relationship to silver and gold by pushing up the price of silver and gold.

A prediction on police body cameras

As if there’s no problem that can’t be fixed with a government program and money, President Obama is requesting funds to equip police officers with body cameras in order to curtail police brutality. If politicians in Washington told us they needed to fund a government program to make certain the sun rises in the morning, you could take it to the bank the sun will stop rising in the morning.

One reason I am opposed to President Obama’s idea is because the Constitution doesn’t permit the federal government to exert this kind of control over local LEOs. Even if funded and initiated entirely at the local level, I would disagree with the government usurping the role of private citizens.

Historically, government has been incapable of holding itself accountable. The video of Eric Garner’s murder demonstrates the inadequacy of cameras as a means to achieve accountability. Body cameras are not the end-all solution to a morality problem and could engender a false sense of security for the citizenry. I’m all for private citizens having the right to record police, and it’s they who need to hold government accountable. I also support the right of individual police officers to record themselves in order to defend against spurious accusations. But a government camera will hold police accountable to the government, not the people.

If the government’s track record is any indication, body cameras could worsen the problem of police brutality. To believe that body cameras, imposed on officers by a flawed system, will morph bad police officers into good ones rather than good ones into bad ones requires a certain amount of naivete.

Consider the case of Eric Garner. His murder was captured on video – the evidence is about as empirical as it can get. The murderer will not be held accountable. Contrast that case with the case of former police chief Willie Lovett. See: Supporting the police who enforce Sheldon Adelson’s racket. For doing the right thing, Lovett is going to jail.[1] The trend is not for the government to administer justice but to drive up its cost (i.e. drive up the cost of a “bribe” or protection). My rule is to look for the means to further that trend in every political plan.

How will body cameras impact officer discretion? Suppose an officer wants to be courteous by not enforcing an unjust statute – say, letting somebody off with a warning – will that officer be unable to deviate from policy? I believe it will be less likely that body cameras will be used to curtail brutality than to enforce compliance with prevailing policies, which will compel the use of unnecessary force.

I see the proposal for body cameras as the new front line in the battle for our civil liberties. If the plan for police officers proceeds, this will be merely the first step of an Orwellian scheme on steroids. Here’s my prediction: The program, if implemented, will only metastasize. Why not compel everybody to wear cameras? If people have nothing to hide, then why not? If we can place body cameras on police officers, why can’t we “help” veterans by compelling VA employees to wear them? (I would be opposed to such a scheme.) Why not compel all government employees to wear body cameras to ensure they are properly executing their duties? We will then have one huge government full of employees being held accountable by the government.

But then what do I know? Pursuant to the VA, everything I wrote above would no doubt be charted as the manifestation of extreme delusional thinking. Perhaps I can overcome this “delusional” thinking by getting with the program and calling for cameras on all government employees (jestingly). And then the government will be able to ensure VA employees comply with prescribing dangerous psychiatric drugs to veterans for having impermissible beliefs (e.g. believing the profit and loss test on the free market is the best way to ensure accountability to consumers).

[1] – Lovett’s “crime” (he had no victims) was functioning as a de facto tax collector independent of the regime, while Garner’s assailants were functioning as de jure tax collectors on behalf of the regime. From these two cases, one might conclude that violating policy to protect liberty without inflicting injury upon anybody is a greater “crime” than is needlessly taking a life if done in service to the state.

Supporting the police who enforce Sheldon Adelson’s racket

Recently, Senator Harry Reid criticized the Koch brothers for being motivated by the pursuit of wealth while defending his nexus with the billionaire casino mogul Sheldon Adelson. Senator Reid’s apologia of Sheldon Adelson is that Adelson is not motivated by the pursuit of wealth. Adelson doesn’t seek money. Money seeks Adelson. See:

Let’s start with this axiom: there’s a distinction between what’s illegal and what’s criminal. In other words, just because something is illegal pursuant to statutory law doesn’t make it a criminal act. Just because something is legal doesn’t make it lawful or moral. In many instances, enforcing a statute is itself a criminal act. When the government does whatever it wants, that’s called lawlessness.

Gambling is not a criminal activity. If it were, then Sheldon Adelson has a lot of explaining to do. If something is a criminal activity, it shouldn’t be legal under any circumstances. The government ought not selectively grant permission to people to rape one another through a licensing scheme.

I’m not saying gambling is a good thing to engage in, but it shouldn’t be illegal. Gambling is legal in Nevada and on Indian reservations. Apparently, the former police chief of Savannah-Chatham, Georgia, agrees with me that it would be immoral to enforce anti-gambling statutes. For that, he is now being prosecuted. See:

Former Savannah-Chatham Metro police chief Willie Lovett is being prosecuted for having taken payoffs from an “illegal” (i.e. non-government-accredited) gambling enterprise to not enforce anti-gambling statutes. He received money in exchange for protecting the enterprise from the LEO that he ran. Repealing anti-gambling statutes would remove the demand for the protection services sold by the former police chief.

Let’s establish another axiom: as Murray Rothbard saliently articulated, bribery isn’t inherently wrong. When an employer pays an employee to work, that employer is bribing the employee. If somebody pays a neighbor to mow their yard, that person is bribing the neighbor to mow their yard. If somebody pays somebody to murder somebody, that’s totally immoral and criminal and needs to be stopped. The consequential issue is not that a person paid somebody to do something. The consequential issue is what the person paid to have done.

In the case of Willie Lovett, his “transgression” was in not enforcing anti-gambling statutes. From a moral point of view, it would be wrong to jail people who voluntarily engage in a victimless activity. Unless somebody was forced to gamble against their will, it makes no sense to call gambling a crime. From an economic point of view, shutting down the gambling enterprise would not be in the interest of the local government. Instead, it would make more economic sense for the local government to leave the enterprise intact and collect taxes – kind of like what the former police chief was doing. Objectively, the former police chief is being prosecuted for behaving like a tax collector rather than a kidnapper.

Prosecuting Willie Lovett for doing the right thing by not enforcing unjust statutes against gambling makes sense only from the point of view of Nevada casinos. Objectively, Nevada casinos benefit by having the federal government wage a war on gambling in other jurisdictions. The real racketeering is the prosecution of Lovett, suppressing competition for casinos in other parts of the country.

Pursuant to Sheldon Adelson, statutes against online gambling have nothing to do with his own economic interests. Instead, online gambling exploits vulnerable people. To prevent that exploitation, people should travel to Las Vegas and visit one of his casinos. See:

But then Adelson does say that he’s in favor of gambling. It’s just that online gambling he’s against. Then perhaps Adelson can use his political pull to help repeal anti-gambling statutes in Savannah-Chatham and then cover the legal defense of the former police chief. Or does he only support the police who enforce his racket?

Senator Dean Heller’s swing and a miss

Pursuant to a recent news article in the Las Vegas Sun, Senator Heller faults speculators on Wall Street – the in vogue practice – for rising oil prices, and consequently rising fuel prices. Heller’s remarks can be interpreted in one of two different ways. He’s scapegoating speculators for rising prices. Or he’s implying the subsidized speculator – speculators who have been beneficiaries of bailouts, objectively allowing risk-free trading and speculating. If it’s the latter, I fail to see how anybody could disagree. Do you want people getting bailed out with your money for bad decisions? But this transcends futures traders. Homebuyers made bad choices when they longed homes at pseudo prices with borrowed money. For the record, I sounded the alarm at that time. Meanwhile, the prudent savers were being priced out of the market.

I believe I know a thing or two about the futures market. I believe I also know a thing or two about economics. I’ve never gone into debt to buy a house nor a car, save a Mustang that I paid off over a decade ago. I stood on principle and refused to take anything from the taxpayer to go to school, while living well below the poverty line. Far from being rewarded, I’ve been penalized since only college graduates have the cognition to qualify for jobs that I don’t (e.g. as a legislative aide for economic policy).

Pursuant to conventional wisdom, I’m a speculator, rather than a hedger. It’s very misplaced to stigmatize speculators. Objectively, speculators are hedgers. Pursuant to prevailing orthodoxy, the distinction between the two is that a hedger enters the futures market to mitigate risk from assets already held, while the speculator is assuming new risk by entering the futures market. But it’s not that simple.

Suppose there’s a farmer who grows corn. For sake of illustration, he anticipates a crop size of 5000 bushels of corn. He wants to lock in the price of corn at, say, 615 cents per bushel (the present July 2012 contract price, which I’m long at 609 on the mini). He then takes a short position in the futures market that will offset his position in the cash, or spot, market.

When I went through my Series 3 course, I detected a flaw with prevailing orthodoxy when it comes to hedging. Prevailing orthodoxy says that farmer need not mind his business when placing futures trades. The futures trade is no different than wearing a life vest when out at sea. Since the short position in the futures market offsets that “risky” long position in the cash (i.e. spot) market, his position in the futures market is said to be a hedge. There’s a problem with that calculus. In an inflationary paradigm (i.e. the real world), the farmer’s true hedge is not his futures position, but his cash market position.

Saying that the farmer’s losses in the futures market will be offset by gains in the cash market is merely a different way of saying that his gains in the cash market will be offset by losses in the futures market. By taking a losing position in the futures market, the farmer…lost. To argue for indiscretion in the futures market is altogether chimerical. Rather than plagiarizing myself, I would refer the reader to a piece I wrote back in 2009: Just to make clear, there are long hedge trades as well.

Now let’s consider the “evil” speculator. The speculator who trades, say, corn futures, but does not grow corn. Guys like me. I’m not wealthy. I’m far from wealthy. Due to horrible healthcare at the VA, where I was considered to be delusional for believing things like hypothyroidism is symptomatic, that couldn’t have possibly contributed towards landing a meaningful job. After all, I’m totally “delusional”. I could go blow all my money on partying and travel and booze and be broke, but I would rather not, although pursuant to prevailing orthodoxy that would stimulate the economy since the problem with the economy is savers. I would rather better myself so that I can help not only myself, but others. So how do I better myself without taking anything from the taxpayer? I’m compelled to do things like speculate, which everybody does in every transaction. The pizza shop owner is speculating that people will feed themselves with the pizza he’s selling.

I have dollars – not alot, but some. I’m long cash. Everywhere I look, I see prices rising. How do I keep up with rising prices if I don’t generate a return that equals or surpasses the rate of inflation? By choosing to trade, say, corn futures, I’m hedging myself against dollar destruction, which is the present policy of Washington. If I stay long cash, I will be a certain loser since the value of the dollar will continue to go down as long as people blame speculators. Eventually, I will be compelled to use up what little savings I have on living expenses.

All “liquidity” has to go somewhere. By being in the futures market, I’m not driving up prices in the spot market. Would Senator Heller rather I go out and buy physical bullion? Or stockpile cans of corn? Furthermore, speculators don’t just take long positions. There are speculative short positions. Is a short position just as dirty and sinful as a long position? What if I wanted to short corn at the market bid, thus helping drive down the price of corn?

In a futures trade, like every other transaction, every long position requires a short position. Every short position requires a long position. There can’t be a buyer without a seller nor a seller without a buyer. There can’t be hedgers without speculators. If speculators are removed from the futures market, this will necessarily remove hedgers. Which prompts the question: If hedgers are saints, how can speculators be sinners? Furthermore, for the speculator, every long position eventually becomes a short and every short position eventually becomes a long, since the speculator offsets the position.

It isn’t speculators that create inflation. Inflation is central bank policy. We can’t debase the currency, suppress interest rates, combat deflation, say that spending and consumption stimulate the economy, preach about the virtues of conservation, preach about the “twin evils” of both inflation and deflation, demand higher prices of just some things (e.g. equities and homes, making them unaffordable), inflate even more to subsidize low income and affordable housing because people can’t afford higher priced homes, but then blame “sinful” speculators on Wall Street because prices are rising. Hell no, Heller.

There’s something fundamentally wrong when present policy has been crafted to prevent housing prices from falling, while simultaneously blaming speculators for rising oil prices. Scapegoating speculators for rising prices is not only wrong, it justifies faux solutions that engender greater problems.

If Heller really cared about rising fuel prices, he would be preaching about the need for monetary tightening. Priced in real money (i.e. gold) fuel prices have fallen. Fuel prices have gone up only when priced in dollars, not gold. Heller needs to tell us what he means when he blames speculators for rising oil prices. Does he mean that speculating in the futures market causes rising prices? Or does he mean creating inflation to subsidize politically-connected speculators causes rising prices? Until he explains this one, I’m saying it’s time to draft Kim Kardashian for a senatorial race in Nevada.

My proposal for economic restoration

“The art of economics consists in looking not merely at the immediate, but at the longer effects of any act or policy; it consists in tracing consequences of that not merely for one group, but for all groups.” -Henry Hazlitt


Former Federal Reserve Chairman Paul Volcker, whom I have much respect for, pointed out that a 2% inflation rate means confiscating half of one generation’s wealth. In the end, he settled with price stability for the Fed’s mission. Far better than inflation targeting.

Federal Reserve Vice Chairman Donald Kohn promised that the Fed would turn off inflation if it happens (is the guy myopic, since it’s here already?). Ben Bernanke was talking about “green shoots” many months ago. Politicians were talking about a “glimmering of hope.” The Fed tells us it will stay loose until there’s an economic recovery, as though artificially low interest rates are therapeutic in nature. The parlance used engenders confusion, and it’s my purpose here to deconstruct a few fallacies.

Let’s start with this axiom: prevailing economic orthodoxy is wrong. If prevailing economic orthodoxy is so great, then how did the orthodox practitioners get us into this mess? Even I saw this one coming. See:

What is it that we are all pursuing and seeking? The betterment of our lives (i.e. economic growth). When government officials and politicians speak of economic growth, they should be able to define the phrase. If they can’t define it, then they have no business talking about economic growth. So what is economic growth?

Wealth is that which satisfies demands. Inasmuch as businesses satisfy consumer demands, they are being productive. Within the construct of the unhampered market, productivity can be measured by income, since income is earned by satisfying consumer demands. The government, on the other hand, does not sustain itself by satisfying consumer demands (i.e. earning its income). The government uses the threat of violence, or actual violence, to obtain its revenue (i.e. compulsory taxation). Thus the government can’t get away with saying that the more it taxes and spends the more productive it’s becoming.

The technocrats had to invent a different excuse for government: its spending is productive! So government spending – as well as private sector spending – has been placed into the GDP. The kleptocracy tries to camouflage itself with Keynesian formulas (e.g. the “multiplier effect”).

Nevermind the fact that if the “multiplier effect” held truth, so long as nobody saved anything – meaning zero-liquidity preference, in which case we would have hyperinflation – the “multiplier” would be infinity!

If you look at the textbook definitions of economic growth, objectively, it’s defined as a rising GDP. A rising GDP means we are having “economic growth,” because the GDP supposedly measures “economic growth,” and “economic growth” is defined as a rising GDP. Do you see any tautology here whatsoever? Even I noticed the tautology all on my own without anybody to point it out to me in any book. This is “Mark original” analysis.

Before economic growth can possibly be measured, it must be defined. Defining economic growth as a rise in the very indicator that supposedly measures economic growth is self-evidently flawed. Look at it another way. Measuring wealth in terms of a depreciating currency is akin to changing around the definitions of inches and feet in order to say that a person is changing in size. If the technocrats and politicians in Washington can’t figure this one out, then everything is hopeless.

The simplest definition of economic growth is a lessening of the unsatisfaction of wants or demands. We are diverse, and our wants, or demands, are subjective. Politicians and econometricians are not psychics. There is no way to quantitatively measure economic growth. Even Alan Greenspan wrote a piece – even while maintaining the fiction that the Fed is blameless – in which he claimed the Fed is blameless because it’s impossible to model malinvestment. See: If it’s impossible to model malinvestment, then it’s impossible to model economic growth.

Prevailing economic orthodoxy tells us that there are two kinds of GDP growth: nominal and real. This is where thinking on the subject becomes dubious at best. Real GDP growth is defined as nominal GDP growth discounted for inflation, which is determined by the unreliable GDP deflator (I won’t belabor the reasons why in this piece, but I have done so before and will do so again).

Let’s start with what should be a self-evident absolute: economic growth need not be discounted for inflation. Either we are having economic growth, or we aren’t. If the GDP must be discounted for an inflation component, then this means that some GDP growth is good, but other GDP growth is bad. But if the GDP is measuring the same thing(s) constantly, this makes little sense. Either the GDP measures economic growth and any rise in the GDP is good, or the GDP measures inflation and any rise in the GDP is bad. If the GDP can rise, but only in nominal terms, then this must mean that it can fall, but only in nominal terms.

When Fed officials and other D.C. technocrats speak of “economic growth,” they’re talking about rising prices in absolute terms, which is not inflation but the result of inflation (i.e. monetary expansion). If a person conflates rising prices with economic growth, they’re boxed into an awfully awkward position. The only way to have a fast economic recovery would be to have prices rise fast (i.e. hyperinflation).

Real economic growth engenders falling prices. Falling prices increases the ROR (rate of return) in real terms. I remember when I was growing up during the 1980s, and if I wanted to make a photocopy, I had to walk down to the drug store to use the big, bulky copy machine. If I had to send a fax, I went to Kinko’s, or another commercial location. At that time, nobody would have thought that the average household might have its very own fax/copy machine. Today, you can get an all-in-one for under $100. Who would have thought a century ago we would go from horses and buggies to automobiles?

Undoubtedly, this is a positive development. Albeit demand for the copy machine at Kinko’s and horses and buggies has dropped. But those things have been replaced by at-home copy machines and automobiles. This drop-off in demand for Kinko’s and horses and buggies would be detected by the GDP as economic decline. The political response would be to bailout Kinko’s and the horses and buggies industry, as though market share is supposed to remain static. One man’s loss of market share is another man’s gain of market share.

Conversely, if the western part of the United States went to war against the eastern part of the United States, the GDP could rise exponentially. But would that be a positive development for the economy? Hardly.

For the Fed to keep the price level the same in nominal terms requires inflation (i.e. an expansion of the money supply). Thus, even if prices were to remain stagnant, we can still be suffering from the effects of lost deflation. The question is: what would prices otherwise be absent central bank manipulation? We don’t know, but it’s safe to say prices would be a lot lower.

It’s the effort to prop up prices through stimulus that’s preventing the economic recovery. People are losing their homes because homes are unaffordable (not because they are too cheap). Thus deflation is the cure (not the problem). What sense does it make to provide somebody with a cheaper mortgage – by interest rate manipulation through loose monetary policy at the FOMC – on a more expensive house that costs more to maintain? But that is what present policy is aimed at pursuing. What sense does it make to stimulate more home building when housing isn’t clearing the market as is?

No matter which way the government inserts itself into the housing market, this diminishes the need for sellers to set prices pursuant to supply vs. demand (i.e. market-clearing prices). Whether the government buys up bad mortgages, bails out the homeowner or the bank, this interferes with the price mechanism.  If we continue down the current policy path, one will have to be politically connected to get an “education,” get a job, get healthcare, and…get a house!

Suppose there’s a shop owner whose inventory is piling up because nobody can afford to pay for his prices. What does the shop owner have to do? Lower prices. But suppose the government inserts itself into the picture and subsidizes the shop owner. No longer is the shop owner’s sustenance dependent upon having to satisfy consumer demands, thus diminishing the need to set market-clearing prices. Within the construct of the unhampered free market there can’t be price gouging any more than there can be wage gouging, since vendors can’t short inventory at prices above what consumers are both willing and able to pay.

Let’s try another scenario. Suppose the government distributed “credits” or “vouchers” to this shop owner’s customers. This would be perceived as an “enlightened” form of welfare for the shop owner’s customers. However, this is yet a different way to subsidize the shop owner, by letting the shop owner sell at artificially high prices. A move like this prices the poorer, non-recipients of “credits” or “vouchers” out of the marketplace. No surprise that education and healthcare – two of the most government subsidized cartels – have also had the highest levels of price inflation. This begets the erroneous perception that the problem is a dollar shortage for the one who didn’t receive “stimulus.”

The mistaken conclusion is that we need these subsidies and stimulus rather than understanding that it’s the subsidies and stimulus pricing the little guy out of the marketplace. The poor person has been priced out of the marketplace. The problem isn’t a dollar shortage, but a dollar leakage thanks to promiscuous spending.

I’ve always said that, by rights, the impoverished belong to the free market movement. With the government as large as it is today, would it not be a fair assumption that many people who are poor are so precisely due to big government, whereas many people who are wealthy are so precisely due to big government? You see, big business uses big government to manipulate the marketplace on its behalf.

The flawed assumption made by some progressives is that big government is somehow less dangerous than big business. This begets the erroneous conclusion that the problem is an absence of regulation. It’s paramount to understand that we can’t regulate away insolvency. We can’t regulate away past mistakes. But we sure can regulate everybody except the big cartels out of existence.

Furthermore, it’s loose monetary policy that engenders speculation, as lenders/investors are compelled to hedge against a depreciating currency. Holding (i.e. investing in) dollars guarantees losses. Politicians have no right debasing the currency to then regulate away that behavior. The simple solution is to stop the printing press. Politicians have no right to punish us for their past transgressions through cumbersome regulations. The most efficient way to mitigate excessive risk taking is by letting the market set interest rates pursuant to the true supply of savings. Subsidizing risk taking while privatizing the profits is not a real free market. Size-capping should not be conflated with risk-capping.

Ludwig von Mises and Eugen von Bohm-Bawerk saliently articulated how labor can’t increase its share at the expense of capital. Nobody can argue against capital without arguing for a reduction in their own standard of living. Thus the problem for the progressive should not be with capital per se, but that capital is so inaccessible to the common person.

Why is capital so inaccessible to the common person? Every tax, every regulation, every government program drives up the cost of capital. Politicians love this, because they get power. Big business loves this, because it creates barriers to competition. Big government creates monopolies, as a monopoly is a state of imperfect competition, and imperfect competition is begotten by government interference in the marketplace.

The situation with housing is no different than that of the shop owner I described above. In a market unhampered by government, sellers are sustained by selling inventory. When the government inserts itself into the picture, sellers are no longer dependent upon having to satisfy consumer demands by selling inventory. Sustenance is disconnected from the satisfaction of consumer demands. In the case of housing, the government and the Fed are subsidizing the loan market to hold back inventory. See:

Simultaneously people are living in tents. The mission of politicians in Washington is literally to keep people homeless. Do not let those kleptocrats masquerade as philanthropists. It’s not their money they’re spending; it’s your money they’re spending – and on themselves. So long as the government keeps trying to prop up prices, as it has done with healthcare and education, real estate won’t clear the market and we won’t have a recovery.

Economic recovery rests upon a smooth-functioning price mechanism, where the market can discover real prices. How is Ben Bernanke or anybody else supposed to know what prices of everything are supposed to be? Would politicians mind telling me what housing prices are supposed to be? How is it good to stimulate home building when there are homes on the market not clearing?

The pursuit of price stability means the Fed will constantly be chasing its own tail. The Fed doesn’t want to allow deflation, so it deliberately tries to create inflation. But then the Fed also promises to intervene if inflation surpasses some level that central planners supposedly have the wisdom to know is wrong. This makes no sense. It’s impossible for the Fed to fight both deflation and inflation. If inflation is good, then bring it on Zimbabwe-style. If inflation is bad, and must be turned off after it starts, then why start the inflation to begin with? In other words: central planners have promised to do an intervention on their own intervention.

If prices fall, this isn’t a bad thing. If we had propped up the economy of, say, 1900, we would still be riding around in horses and buggies. While Paul Volcker is right that expanding the money supply by 2% every year wipes out at least half of one generation’s wealth, the Fed should not be pursuing price stability. We should, instead, be concerned with monetary stability.

Inflation is not economic growth. Just as inflation begets a negative RRR (i.e. real rate of return), deflation begets a positive RRR. Falling prices means rising real incomes. No nation has ever succeeded in substituting a printing press for income-generating investment.

Our only ticket out of this mess is to stop the printing press, which will bring false economic activity to an end, allowing for what remains of the productive and profitable elements of the economy to lead us into an economic recovery. The government is leading us over a cliff. There can’t be a systemic collapse without a systemic cause. Until systemic changes are made to Washington (not the private sector), there will be no economic recovery.


Myth: The problem is “toxic” assets (e.g. mortgage-backed securities) which have created systemic risk

When a hospital can’t collect payment, the hospital sells this debt to a collection agency. This doesn’t create booms and busts. The risk is asystemic unless the government bails out every debtor and/or creditor.

Myth: Present problems were caused by bad lending (i.e. sub-prime loans)

Promiscuous lending is a symptom – not a cause – of economic conditions. Take bad lending to its own logical conclusion: creditors give away money as an act of charity, getting nothing in return. Does charity cause booms and busts? No. Promiscuous lending is a symptom of loose monetary policy at the Fed, which tricks the loan market into consummating unjustifiable loans.

It’s primarily through FOMC operations that interest rates are determined (until the Fed loses control, which will eventually happen). By expanding the money supply, this increases the supply of loanable funds without an expansion of genuine savings. In doing so, the loan market appears to be more solvent than it truly is, tricking the loan market into consummating unjustifiable loans. This artificially suppresses nominal interest rates below their natural level (i.e. where they should be pursuant to the true supply of savings). By expanding the money supply, this allows debtors/borrowers to pay lenders/creditors with devalued dollars, thus lowering the real rate of interest.

A credit transaction involves trading present goods for future goods. If there are no present goods (i.e. savings, which aren’t created on a printing press), then credit has to be curtailed. The problem isn’t a credit crunch, but a savings crunch. Investment can only come out of savings because producers must consume in order to sustain the process of production. In order for the baker to make more bread, the baker himself must eat. Thus somebody must forego present consumption in order to fund credit expansion.

The rate of interest is the discount rate of future goods as against present goods. An example would be what an investor pays for a printing press. Suppose the printing press will generate five-hundred thousand dollars in net income throughout a ten-year life. The entrepreneur will certaintly not bid up the price of the capital equipment to five-hundred thousand dollars. The entrepreneur is willing to invest, say, fifty-thousand dollars for the printing press and the vendor is willing to part ways with the printing press in exchange for an immediate fifty-thousand dollars. The entrepreneur and capital equipment vendor mutually settle upon fifty-thousand dollars – a sum far less than the five-hundred thousand dollars – in exchange for the printing press.

How much present income (i.e. present goods) is an entrepreneur willing to invest in order to garner five-hundred thousand dollars in future net income (i.e. future goods) over a ten year period? Reflected in the transaction is the rate of interest as determined by time preferences. Interest rates represent an agio on present goods since present goods are more valuable than are future goods. A person would rather eat an apple today than eat an apple ten years from now. Interest rates must be set pursuant to the true supply of savings and are determined by time preferences. If everybody wants to consume without saving, then interest rates must rise to reflect time preferences.

There is no right way to extend credit at negative real rates, which is a negative rate of return in real terms. It’s a calculus for the loan market to go bust. Any person, firm, or institution (e.g. government) that’s dependent upon inflationary credit expansion is, by definition, insolvent (i.e. a non-income generator). Failure has to be an option for bad business decisions. That’s the check on excessive risk taking.

Capital naturally gravitates to lower priced, higher-yielding economies. It’s called arbitrage. Artificially low interest rates engenders capital outflow. Capital goes racing overseas. The problem isn’t a dollar shortage, but a dollar leakage. The dollars are out there; they’re just piled up in foreign reserves. The way to repatriate these dollars is for the Fed to tighten, interest rates rise, prices collapse to reflect wages, which will then beget capital inflow thus lowering the natural rate of interest. If I give you $10 in exchange for a book and you turn around and give me that $10 in exchange for a DVD, the real means of purchase for the book was the DVD and the real means of purchase for the DVD was the book. Increasing the quantity of dollars creates no benefit for the economy.

Myth: The FDIC is good for depositors

The FDIC offers deposit insurance for bank customers, which is really a backdoor way to bailout insolvent banks. Could you imagine being able to run a ponzi scheme (e.g. fractional-reserve banking), knowing that when your insolvency is exposed the government will pay off your customers (i.e. a de facto bailout of you)? This creates yet another layer of moral hazard on top of the central bank injecting “liquidity” into the loan market. Thus FDIC’s true purpose is designed to keep the unsustainable intact.

Needing to insure bank deposits should raise questions in and of itself. Unlike natural disasters, economic risk can’t be pooled. It’s one thing to guarantee one’s solvency should they get wiped out due to, say, a flood. It’s quite another thing to guarantee solvency, per se. It’s impossible to insure against economic miscalculation and loss. If I were to go into business and you offered to insure me against business failure, you become the true entrepreneur in the deal by underwriting/assuming risk.

The FDIC (insolvent) is backed by the Treasury (insolvent) which is backed by the Federal Reserve (insolvent). The Federal Reserve is backed by a printing press which is backed by the savings of Americans. Not only is the concept of insuring economic risk altogether chimerical, but there’s a reason why only a government-backed entity would offer insurance to banks. Inflationary credit expansion makes banks inherently insolvent. Demand deposits are payable on demand, while banks are lent long. Thus the time structure of assets and liabilities does not match.

At the end of the day, the FDIC/Treasury/Federal Reserve – all three of which are insolvent – can guarantee depositors pull money out of their bank, but there’s no guarantee of the currency’s value. By guaranteeing solvency, this inherently places the currency’s value at risk. Deposits are guaranteed in nominal terms, but not in real terms.

When one scrutinizes the role of the FDIC more closely, they can see that its entire purpose is keeping the good ole’ boy network intact, leaving Americans with nothing. If the free market were allowed to function, the government’s role would be limited to enforcing contracts. If homeowners default, the bank would foreclose. But if the bank defaults, the bank’s creditors – i.e. its depositors – would become receiver for the failed bank’s assets. Depositors should be senior to all other creditors. Thus, in the event of a bank run, depositors have the first legal claim to a bank’s housing inventory.

What does the insolvent FDIC do? If a bank fails, the FDIC sends in federal regulators to protect the bank’s assets from its depositors by becoming receiver for a failed bank’s assets. In many instances, the FDIC has arranged shotgun mergers with investment banks on Wall Street, turning investment banks into bank holding companies.

So we can see this sleight-of-hand trick – under the guise of protecting depositors – is designed to transfer real assets (i.e. housing inventories) from failed banks to Wall Street, while promising depositors nothing more than globs of Ben Bernanke’s “liquidity.”

There’s no way the FDIC/Fed can guarantee the solvency of the banking system or depositors, which will destroy the currency (measure purchasing power in terms of gold) thus destroying the very depositors (anybody holding dollars) those institutions are supposedly designed to protect.

The solution, then, is to put a failed bank’s assets into the receivership of its depositors. Any other efforts to prop up the housing and/or bond market will prevent the market from clearing and block those who have already lost homes from ever regaining possession. We are now doing to the housing market the same thing that has already been done to healthcare and education.

If you want to figure out how to get your homes back, then make an inquiry into where they’ve gone. The Fed is sitting on at least $1 trillion worth of Mortgage Backed Securities. We can go a long ways towards saving the dollar and getting people back into homes by having the Fed liquidate the MBS on its balance sheet.

In my estimation, any other plan will engender homeless people and peopleless homes.

My problem with Brian Sandoval, Mike Montandon, and Governor Jim Gibbons

My intention in this piece isn’t to make the constitutional case against Arizona’s immigration law – i.e., appeal to authority. Suppose the law is constitutional, the statute still fails to pass my morality test. Instead, I make the moral case against the immigration law.

The events that took place on 9/11 have been used as a battering ram against the civil liberties of Americans. Since that horrific event, the federal government has implemented CAPPS II and the “No-Fly List.” What is the “No-Fly List” for? Supposedly to prevent terrorists from boarding flights. This is a perfect absurdity. Why would terrorist suspects be told they can’t fly? Wouldn’t – and shouldn’t – a terrorist suspect be apprehended? Apprehending a terrorist suspect would also suspend the right to freely travel, which means it isn’t necessary to suspend particular freedoms without due process of law.

It is self-evident that the “No-Fly List” was never aimed at terrorists. Indeed, politicians, political activists, and tax delinquents have all ended up on the list. Objectively, their right to freely travel has been suspended contra legem. Travel restrictions are the hallmark of totalitarian governments. Does anybody remember the Berlin Wall?

Now, in the name of stopping the “brown peril,” right wingers agitate for deporting Mexicans and building fences. In light of the travel restrictions already in place, it would be a legitimate concern that a border fence and heightened border security can be used to trap people in – a far more dangerous prospect than living amongst individuals who don’t carry their federal papers.

The populist indictment of immigration is that immigrants “drive down wages.” Not true. This argument dovetails with arguments in favor of minimum wage law. The welfare-warfare state drives down wages. The problem is not the immigration, but the welfare state. Furthermore, let’s take this argument to its logical conclusion: capital controls.

The government could inflict injury upon every employer of Mexican immigrants (legal or illegal). However, this would do absolutely nothing to create or save a job. If employing inexpensive labor at home is curtailed, this begets one of two possibilities: the job is destroyed altogether, or the employer flees the country altogether.

What next? Criminalize capital flight? Pursuant to the statutory case against hiring illegal immigrants, the de jure case for capital controls is already in place. If it’s illegal to hire an illegal immigrant at home, then why is it legal to do business with “undocumented” workers abroad? (In that case, one becomes the de facto employer of foreigners living abroad.) For the sake of logical consistency, outsourcing should be criminalized. All international trade and commerce should be criminalized. Let me remind you that if the government can trap capital in, it can trap people in.

How would I approach this issue? Let property rights prevail. If two people wish to engage in peaceful, voluntary and mutually beneficial exchange, whose right is it to interfere? That somebody is an “illegal alien” is a faux concept constructed by statutory law. Unlike politicians and bureaucrats, most Mexican immigrants hold real jobs. (Maybe we should deport politicians and bureaucrats instead.) I will never again travel through Arizona until that law is repealed.

Recently, I was down in Puerto Vallarta. It’s a beautiful place and Mexicans are some of the most wonderful people on the planet. When Americans travel to Mexico, they see themselves as – and are treated as – tourists. When Mexicans come to the United States, Americans see them as invaders. I plan on moving to Puerto Vallarta. Don’t forget that there are plenty of American expats living in Mexico. Just wait until the Mexican government goes tit for tat and decides to expel American expats. And what would Americans say if Mexicans decided to do just that to the gringo? Maybe I’ll take that idea to…”my Congressman in Puerto Vallarta” (I say that jestingly). Let’s send all them silly Americans back to…Arizona.

Puerto Vallarta is peaceful. The crime is along the border. Why? The drug war, which empowers drug cartels by fueling demand for cross-border transportation. Last time I checked, there are no problems with cigarette smugglers at the border. End the drug war and you end the violence.

Barrick Gold Corporation lifts hedge, gold hits $1200

Gold hit $1200 an ounce as Barrick Gold Corporation, a mining company, has lifted its short “hedge” in its entirety. As one who has held the NFA Series 3 license, which I voluntarily withdrew so that I could return to trading futures personally, I detected huge problems with prevailing hedging theory. I did very well on my Series 3 exam (obtained my Series 3 license) because I knew what the answers are supposed to be, but the prevailing theory on futures hedging is wrong.

Pursuant to prevailing hedging theory, one is to take a position in the futures market that is opposite to the cash (i.e., spot) market. Thus if somebody is long 100 ounces of gold in the cash market (i.e., owns 100 physical ounces of gold), then one would take a short position in the futures market. This is considered to be a short “hedge.” The argument in favor of such a short “hedge” is that losses in the futures market will be offset by gains in the cash (i.e., spot) market.

There is one big problem with this analysis. This analysis takes for granted that somebody even has an inventory to begin with. Furthermore, if your losses in the futures market are being offset by gains in the cash market, this is a different way of stating that gains in your cash market position are being offset by losses in your futures position. In an inflationary paradigm, firms will have a difficult time replacing inventory if they are merely breaking even in nominal terms.

As I thought this through carefully, I realized that the futures industry abuses the word hedge. As one can see in an inflationary scenario with a short “hedge,” the true hedge is not the futures position, but the inventory.

As one who has held the Series 3 license, it is my humble opinion that the futures market should be looked at as less of a hedging vehicle than merely an efficient way to buy and sell without having to make or take delivery. The real hedge in the gold/silver futures market is the physical inventory. Of course, nothing moves up or down in a straight line. Rather than sticking with a short “hedge,” bullion producers just may want to take time to exercise more discretion when plotting entry and exit points – viz., buy low and sell high. The dollar is on its way down thanks to central bank policy, and Barrick Gold did good to lift its short “hedge.”

California’s broken justice system

A few days ago, I was watching a true crime story on Investigation Discovery about two serial killers named Lawrence Bittaker and Roy Norris. The duo was responsible for such horrific crimes that I was overwhelmed with sorrow to the point that I couldn’t sleep for the rest of the night. It is hard to describe the feelings I experienced while watching the re-enactments. I wanted so badly to be able to change the past and save the victims by talking aloud to the television, trying to tell the victims not to get into the van.

Both Bittaker and Norris had long rap sheets. They met in prison, only to be released to go on their killing spree in 1979. It seems to me that there was enough evidence to sentence both Bittaker and Norris to death. Bittaker was sentenced to death almost 30 years ago. Unfortunately, the prosecutors exchanged a much lesser sentence for Norris’ testimonty against Bittaker. Norris is eligible for parole beginning 2010. To my shocked disbelief, Bittaker is still awaiting execution at San Quentin 30 years later!

So here is my proposal to Governor Schwarzenegger and the State of California: stop collecting death row inmates. Execute them. That Bittaker could die of natural causes defies both common sense and justice.

From watching some of these true crime stories, a frequent common denominator is drugs – both recreational and psychiatric. This would make sense, since drugs dull emotions, thus dulling the conscience. There are some things that people should get angry over, e.g., if a loved one is harmed by somebody like a Bittaker or a Norris. There are some things that people should feel sorrow over, e.g., if a loved one dies. There are some things that people should feel guilt and remorse for, e.g., bad behavior. Without emotions, one can’t empathize. Emotions play an important role in governing the conscience. Dulling emotions dulls the conscience, and thus engenders irrational behavior. Both recreational drugs and psychiatric drugs subdue emotions, i.e., subdue the conscience. That some people can’t control their emotions is undeniably true. But psychiatric drugs and people with homicidal tendencies don’t mix. It is a calculus for disaster.

Something else is usually involved in these cases, which is also a part of the broken justice system: so-called psychiatric diagnoses and “treatment” for bad and evil behavior. Doctors morph evil behavior into diseases. I’m sorry, but evil behavior is not a disease. The “remedy” is then to drug the criminal with psychiatric drugs, i.e., dulling the conscience. Norris, a serial rapist prior to his release from prison, would have been better “treated” with castration way back in 1975, rather than treated as a “patient” with a “disease.”

I propose that the criminal justice system be reformed by separating itself from psychiatry. The state of California could save money by firing psychiatrists who prescribe crime-inducing drugs, and then hiring surgeons to castrate people like Norris instead.

Vote buying monopoly

First, let me preface my remarks by noting that my intention is not to advocate any particular position so much as it is to highlight paradoxical election laws.

The prevailing script against verifiable voting says that paper trails lead to “vote buying” schemes. My protest to that answer goes beyond a healthy skepticism of electronic voting.

Candidates are bound by a plurality of election statutes, including disclosure laws. If you make a financial campaign contribution to any member of your Congressional delegation, that information will be put out for public consumption. But what good is a financial campaign contribution unless it can be used to collect votes? Which brings us to the following self-evident absolute: voting is nothing other than the ultimate campaign contribution.

The preceding truth prompts me to ask: if we should have a secret ballot, then why not secret financial contributions? After all, the distinction between a contribution at the polls and in monetary form is merely an arbitrary legal one.

I suppose the refrain to my question might run as follows: well, see, politicians can be “bought,” so we need to err on the side of transparency for financial contributions. But that only prompts me to ask this question: then why not err on the side of transparency for contributions at the ballot box (i.e. voting contributions) as well?

In fact, not only do politicians sell their votes in “vote buying” schemes for campaign contributions, but routinely I see politicians promising taxpayer funded favors in exchange for votes. Pursuant to the argument against verifiable voting, I guess the way to curtail that would be to have Congressmen and state legislators cast secret ballots on legislation. Anybody wish to propose that idea?

Also, anything short of absolute and complete disclosure for voting makes it inherently impossible to know whether or not the aggregate vote count is accurate.

If we are going to take the argument against verifiable voting to its own logical conclusion, not only should legislators cast secret ballots, but, come to think of it, most campaigning I see should be outlawed as well.

Let me explain. If you voluntarily choose to exchange your own property (i.e. money) with somebody in order for them to vote for a certain candidate, no matter how just the cause, that would be called “vote buying.” However, candidates running for office can promise largesse from the public treasury (i.e. other people’s property) in exchange for votes, and that is perfectly legal. What is the real objective difference, other than the latter inflicts far more injury since it is robbery?

What about government workers, government contractors, and paid campaign staffers? Could their votes possibly be motivated and influenced by financial incentives? I guess if you sell your vote to a common man, whose interest may even be just, that is bad, but selling your vote to politicians is fine.

In essence, politicians have a legalized vote buying monopoly. Unfortunately, we will never know what people are voting themselves subsidies (i.e. selling their vote), since voting is done by a secret ballot. The politicians better get a handle on this ASAP!

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