Category Archives: Regulation

Review of Ken Burns’ Prohibition

Ken Burns’ newest documentary, Prohibition, is a great look at this very important but poorly understood national test of government’s ability to legislate morality. I found the movie absolutely fascinating, especially the first two parts (there are three parts), which was primarily about how Prohibition was enacted. Here are some interesting things I learned:

  • School systems taught little children the evils of drinking. When those kids came of voting age, many voted for prohibition.
  • The leadership role taken by women’s group in passing and then repealing Prohibition.
  • Prohibition would never have been possible without the income tax amendment ratified in 1913. Prior to 1913, the federal government got much of its revenue from excise taxes on liquor. With the income tax, the government no longer needed that revenue stream and was willing to go along with Prohibition.
  • Anti-German sentiment during World War I helped push Prohibition because most of the beer brewers were owned by German immigrants.
  • While the documentary focuses on Prohibition, it also clearly reveals the dramatic political change that was taking place in the United States at the time: a switch from small-government republicanism to democratic progressivism.

I watched most of this series on my iPod while riding the NYC subway, so was unable to take notes. Therefore, I offer no full review. Hopefully, the interesting tidbits listed above will convince you that this documentary on Prohibition is worth watching.

Jaywalking: Libertarianism in New York City

Everybody knows that New York City is a major center of liberal ideology. A number of New Yorkers decided to remind Glenn Beck of that fact a few weeks back.

But while the residents of New York think liberal, they often act libertarian. Just go to any Manhattan street corner. The government in its wisdom and kindness has install lights that tell the people of New York whether they are to WALK or DON’T WALK. Clearly, any liberal would tell you that such signs are necessary to create order and protect pedestrians from oncoming traffic.

But reality is very different. As half those signs glow DON’T WALK, dozens of people are crossing against the government’s advice. The people of New York realize that they don’t the government to tell them when to cross. They can just look for themselves, see if a car is coming, and decide for themselves. People don’t need the government to organize every aspect of their lives.

In the movie Keeping the Faith, the two main characters are waiting at a corner for a traffic light. The scene, meant to be a metaphor about life and faith, could also be a metaphor about politics and government.

 What the– Why are you standing here?

Oh, my God. You’re right. What am I doing? What am I doing standing here?

Sign hasn’t changed.

– Oh, my God. – This is New York City. Who waits for a sign?

What– Cross the damn street! What, do we all need signs to tell us what to do now?

God does not always give us a sign what to do. We certainly don’t always need signs from the government.

“Men must walk in freedom, responsible for their own behaviour.”  Alexis de Tocqueville, Democracy in America

— Michael E. Newton is the author of the highly acclaimed The Path to Tyranny: A History of Free Society’s Descent into Tyranny. His newest book, Angry Mobs and Founding Fathers: The Fight for Control of the American Revolution, was released by Eleftheria Publishing in July.

A smoking ban does not make a nanny state. Or not entirely.

New York City is about to ban smoking in public parks and beaches. Many libertarian and conservative types are up in arms over this expansion of the nanny state. However, I support this ban. But before you attack me, let me explain what I don’t support and why I support this.

As my readers know, I am no supporter of the nanny state. I oppose the government telling private businesses what they can and cannot do in this area. If a private business wants to allow smoking in their establishment, why not? It is their private property and people can choose not to frequent that establishment. For years, smart business have provided smoking and non-smoking sections. As long as the smoke does not enter the non-smoking section, this worked very well and everybody was happy.

On the other hand, public areas, such as parks, beaches, and streets, are for everybody to use. We obviously have the right to occupy space as we walk through the area or sit/stand in place. But we do not have the right to interfere with other people’s enjoyment of the area. We should not litter, we should not make too much noise that would disturb others, and we should not pollute the air others are trying to breathe. There is no reason that the smoking minority should rule over the non-smoking majority. If smoking is allowed on the public streets, this essentially forces non-smokers to breath in the deadly pollutant or stay home. In modern society, there is no way to live without going into the public thoroughfare and allowing smoking there is dangerous. Besides, what is the point of banning smoking in a bar if I have to walk through smoke-filled streets to get there. If you don’t believe me, walk through the streets of Manhattan. In front on every skyscraper is a group of workers taking a smoke break, to the detriment of the public. Those smokers should stay indoors. The building owners should provide them with a room or area to smoke in. But in NYC, that is illegal. They are forced to smoke out on the street.

The other suggestion is that New York City should have made the vast majority of the parks non-smoking and provided small areas for smokers. This is something that I would support. However, all smoke should be kept away from the public, so smoking should still be banned on sidewalks and streets. And parks too small to have both smoking and non-smoking sections should be totally non-smoking.

Just to clarify, I thinking smoking is pointless, dirty, and unhealthy. But I think people should have the freedom to do as they wish. And on another note, many would point out the costs to society of the health care costs that come with smoking. If that were the issue here, New York City would ban smoking entirely, including in individual homes. But the issue here is the rights of individuals while in a public area.

President Obama: The Health Care Tyrant

The incoming governor of South Carolina challenged President Obama to repeal the health care bill. TheSunNews.com reports:

Obama rejected Haley’s request to repeal the health care bill – but said he’d consider letting states opt out of its mandates if they ran exchange programs, banned insurance firms from denying coverage of pre-existing conditions and enabled people to pool together for better rates.

Now, I must admit that I did not read the 2,600 page health care bill, so I don’t know if there is a provision that allows the President to issue such exemptions under those terms. Either way, this is very disturbing.

According to this story which is based on Nikki Haley’s comments afterward (there is no way to know what exactly the President said), President Obama “said he’d consider letting states opt out of its mandates…” He apparently is under no obligation to do so even if a state complies with his demands.

According to Obamacare or the government interpretation and enforcement of it, the President has dictatorial powers. The President can grant exemptions to whomever he pleases and deny exemptions to others who comply with the very same provisions.

We have already seen the government issue exemptions for individual corporations, but I was under the impression that there were strict rules to follow and those who follow those rules and apply for an exemption would get one. But now, at least with the states and maybe on the corporate side as well, the exemptions require Presidential approval and the President can make up his own rules.

Hail to the Health Care Tyrant!

Classic quotes about Liberty vs. Safety

Montesquieu: No tyranny is more cruel than the one practiced in the shadow of the laws and under color of justice… [Considerations on the Causes of the Greatness of the Romans and their Decline]

Benjamin Franklin: They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.

Alexander Hamilton: Safety from external danger is the most powerful director of…national conduct. Even the ardent love of liberty will, after a time, give way to its dictates. [Federalist #8]

John Basil Barnhill: “Where the people fear the government you have tyranny. Where the government fears the people you have liberty.” [1914]

The Absurdity of Minimum Wage Laws

The current minimum wage in the United States is $7.25 per hour. However, many states have imposed their own minimum wages because living in those states is more expensive. California, for example, has a minimum wage of $8.00. So why not get rid of the national minimum wage and let the states set their own? The Constitution gives the federal government no such power and this should be left to the states.

But even the states have a problem with minimum wages. Within a state, it may be more expensive to live in one city than another. For example, it is much more costly to live in San Francisco, where the minimum wage is $9.79, than in Fresno. So why not have each city set their own minimum wage as is being done in San Francisco? Why hasn’t New York City raised its minimum wage as it is certainly more expensive to live in  New York City than in Buffalo.

But wait. Even within cities there can be a big disparity in the cost of living based on neighborhood. It is much more expensive to live in Manhattan than it is in Queens. Even within Manhattan, it is more expensive to live in the Upper East Side than in Washington Heights. Even within neighborhoods, the cost of living in different buildings varies.

All this may seem quite absurd, but so is the minimum wage. Each person is an individual with their own needs and wants, their own cost of living. Broken down logically, each person has their own minimum wage at which they are willing to work. In other words, no government law can boost the minimum wage of all people. Or more accurately, we would need millions of minimum wage laws to help each state, each city, each neighborhood, each street, and each person or small group of people.

In reality, minimum wage laws creates winners and losers. Those whose incomes increase will benefit from the minimum wage, but at the same time those who can no longer produce enough profit at the increased wage will lose their jobs because of the minimum wage. And all consumers will pay more for goods and services as the government forces up wages.

The minimum wage sounds great in theory (for employees, not employers). Unfortunately we live in a reality where a minimum wage does more harm than good.

Tax and intervention uncertainty killing the economy.

Everybody is talking about the impending largest tax increase in history due on January 1, 2011. In addition to the cost this imposes on the economy, there is the uncertainty this creates. The Giant Wakes writes:

The Bottom Line: Until the uncertainty surrounding the future Federal tax rates is resolved, it will remain yet another factor conspiring to keep businesses sitting in the economic sidelines, waiting for clear signals before committing capital to growth – and, the uncertainty had better be resolved in favor of sustaining the current rates rather than increasing them, if we hope to see an end to the ‘jobless recovery’ and any kind of broad-based improvement in consumer economic circumstances any time soon.

While The Giant Wakes may write about government intervention in a future post within his ten-part series called “Ten Tyrants of Uncertainty,” I thought I’ll jump ahead and add to the discussion.

Which is a bigger deterrent to economic activity: tax uncertainty or the uncertainty of government intervention? When government steps in to bail out one company at the expense of another, economic calculation is thrown out the window. And this does not just apply to corporations where our government may bail out GM thus hurting Ford or give billions to large banks while letting small banks fail. It also applies to each of us an individual. Those of us who are responsible, paying our mortgages each month or not buying a house knowing we cannot afford one, are now paying for those who irresponsibly bought more house than they could afford but whose mortgages have been “modified” by the government.

As a result, we now have a bipolar economy. We have those who have abandoned all risk taking, not knowing what the government will do. And we have those who take extreme risks, believing the government will bail them out if they fail. In the mean time, nobody is taking the reasonable calculated risks that are essential to a productive and profitable economy.

Enumerated Powers Amendment for the Constitution

In addition to repealing the 16th and 17th Amendments and getting rid of the Federal Reserve (all of which began in 1913), I propose this new Amendment:

The federal government shall have no powers beyond those specifically enumerated in the Constitution or absolutely required for the enforcement of those enumerated powers.

The general welfare and commerce clauses do not give the federal government any powers beyond those specifically expressed elsewhere in the Constitution.

All commitments and liabilities of the United States must be honored and paid out either immediately or in their due course. No new commitments or liabilities from unconstitutional programs may be added after the ratification of this amendment.

If anybody has suggestions to improve this amendment, feel free to comment below or email me from the contact page.

Possible new gold disclosure rules. Hurting you in the name of consumer protection.

With gold hitting record highs, it is obviously time for Congress to do something stupid. Seeking Alpha reports:

A press release from Rep. Anthony Weiner, Democrat of New York, not yet (as of this instant) posted on Mr. Weiner’s Web site, announces that a September 23 hearing of the Subcommittee on Commerce, Trade, and Consumer Protection (a subcommittee of Rep. Henry Waxman’s Commerce Committee) will focus on “legislation that would regulate gold-selling companies, an industry who’s [sic] relentless advertising is now staple of cable television.”

From the press release: “Under Rep. Weiner’s bill, companies like Goldline would be required to disclose the reasonable resale value of items being sold.” That’s great. Are Mr. Weiner and Chairman Bernanke also going to agree to print on every dollar the reasonable expectation that its value will be eroded by inflation?

Why don’t they require all companies selling goods to disclose the resale value? The second you drive off the lot with a new car, the value drops by about 20 percent. Why isn’t that disclosed? Of course, the goal here is not disclosure. It’s to put these companies out of business. It would be impossible for a company like Goldline to disclose the resale value in its commercial because the value is constantly changing. Is Congress too stupid to know that or so manipulative as to pretend they are looking out for consumers?

Why can’t the US be like the US of the 1950s?

Sam Zell says Brazil is like ‘US in the 1950s.’ CNBC reports:

Brazil is booming and brimming with business opportunities—like the “US in the 1950s”—billionaire businessman Sam Zell told CNBC Wednesday. He said if Brazil continues on the same course, he predicts that the “fiscally conservative” nation will soon be one of the top two countries in terms of growth.

The real estate tycoon said Brazil has 8 percent debt, compared to 70 percent (of GDP) in the US. The country has a AAA rating from several major credit-rating institutions.

Why must we look for Brazil to be the US of the 1950s? Why can’t the US be like the US of the 50s? Let’s examine some changes that have occurred to the US in the last 50-60 years.

In the 1950s, government spending at all levels averaged 27.0 percent of GDP. Non-defense spending averaged 15.5 percent of GDP. Today, government spending is 43.9 percent of GDP and non-defense government spending is 37.7 percent of GDP. So government spending as a percentage of GDP has risen 62.6 percent in the last 50 years and non-defense government spending has risen 143 percent in that time. (You don’t hear these number reported to you on the news, do you?) Click here to see a chart of non-defense government spending.

The government now confiscates more of your money through taxes to pay for this largess. In the 1950s, government at all levels took in 26.6 percent of GDP. Now, government takes 30.4 percent of our money, a 14.3 percent increase.

But that’s not all. In the last fifty years, regulation has increased dramatically. Back in 1950, there was no Department of Transportation, Federal Highway Administration, Federal Railroad Administration, National Highway Traffic Safety Administration, National Credit Union Administration, Consumer Product Safety Commission, Environmental Protection Agency, Occupational Safety and Health Administration, Federal Energy Administration, Farm Service Agency, Food and Consumer Service, Agricultural Marketing Service, Federal Grain Inspection Service, Animal and Plant Health Inspection Service, Foreign Agricultural Service, Food Safety and Inspection Service, Rural Development Administration, to name just a few. Not only do these agencies cost money, they put an added burden on consumers, businesses, and employees which costs the United States $1.5 trillion each year. That’s like an added hidden 10% tax on the economy, which would bring the real rate of taxation up to 40.4 percent.

In the 1950s, government welfare spending accounted for 1.57 percent of GDP. Today, it accounts for 5.21 percent, a 231% increase. Wikipedia explains how LBJ’s Great Society caused this massive increase:

After the Great Society legislation of the 1960s, for the first time a person who was not elderly or disabled could receive a living from the American government. This could include general welfare payments, health care through Medicaid, food stamps, special payments for pregnant women and young mothers, and federal and state housing benefits. In 1968, 4.1% of families were headed by a woman on welfare; by 1980, this increased to 10%.

Lastly, the United States government has actively pursued a policy of limited oil production. Back in 1950, the US produced 5.9 million barrels a day of oil and had net imports of 545 thousand barrels, 8.4 percent of the total consumptions. In 2009, US production had risen only 21.8 percent over the previous 59 years to 7.2 million barrels a day. But consumption had risen 162 percent to 16.9 million barrels. As a result, imports increased 1,680 percent to 9.7 million barrels a day. At a current price around $70 a barrel, that adds up to $248 billion a year sent overseas, about 1.6 percent of GDP. Thus, over the last 60 years, trillions of dollars have left this country, to be spent primarily by unfree societies overseas. See oil data here.