Bah, spiders...

Summer's an awesome time of year here on the Great Plains, you get thunderstorms and things are green for like three weeks. But the bane of my existence rears its ugly head this time of year: spiders.

I'm not a lumberjack or anything, but I do consider myself fairly manly in general. Reasonably so. But put a spider near me, and I am a little girl. There's the initial shriek of recognition and terror all wrapped in one, and then my mind jumps to ways to contain the situation. Typically containing the situation involves calling for help, but four years at college battling the eight-legged menace has taught me more self-reliance in general. I have my trusty golf club at the ready, my own personal 4-iron exercise of the Second Amendment. I have bug spray in my room (the difference between bug spray and spider spray is minimal-neither can really kill spiders, they just drive them away). You're not supposed to spray it indoors, but I'll take cancer over icky things in my bedroom any day of the week. I have a copy of von Mises' "The Causes of the Economic Crisis" I've been rereading that happens to be excellent at smashing spiders dangling on webs between its pages.

So after that initial girly squeal of Lovecraftian terror, I assemble my wits and think up a plan. This is usually the quick part-a plan is never more complex than "spray and then bludgeon to death"-then the long wait sets in before I muster up the courage to actually do it. I stare the spider in its multifaceted, tiny eyes, its very existence a challenge to my being. There is no room in this bedroom for both of us, I keep reminding myself. Thoughts, nagging, evil thoughts, go through my mind-what happens if I miss?-that don't help my final strike but only serve to delay it. The spider, heaving Dow chemicals through its book lungs and not yet aware that the bipedal ape in the vicinity has discovered its very excellent hiding place, continues in its thoughts of wreaking havok and destruction on innocent humans everywhere.

And then down it comes. Maybe it's von Mises, striking yet another blow for the freedom of humankind. Maybe it's the 4-iron, that has felled many a spider, both great and small, in its day. Maybe it's a shoe or a newspaper. But down it comes, over and over, until it's not just not moving, but in several jellied parts, an avatar of devastation and a message for arachnids everywhere.

God I hate spiders.
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My Common Sense Is Tingling

The whole argument started on Facebook, as these things are wont to do. My old pal from the old days on LFV, Robert Mayer, posted a link to a LewRockwell.com article suggesting that Memorial Day is a shill for state power and America's never fought a single just war. I can imagine what all three of my readers are thinking right now, because it was my same thought. Because Facebook's system is ill-suited for linking, this is what I said:

...I would imagine that the Revolutionary War was for the purpose of defending the freedoms that would later be enshrined in the Bill of Rights. I could be wrong though-it could have been a ploy by the CIA, in bed with the tricorn hat-industrial complex to sell copies of "Common Sense."

I realize the point LRC is trying to make but the absolutism of the statement is preposterous.

The words I snipped out were just me ignoring the inevitable Civil War debate that always happens whenever you ask libertarians about history. That raged, and then Mayer asked me if I thought any American wars since WWII were justified. Now THAT, I can get behind. And I suspect that's what the LRC article's author intended to say, behind the needless sensationalism.

And that's the big issue, in my mind: needless sensationalism. Honesty is the best policy. I have seen plenty of people in the libertarian movement get absolutely fucking hysterical over nothing, or overstate their case, or categorically deny reason and common sense if it doesn't support their argument. I've seen it elsewhere too, but I think we as a movement have drunk way too much conservative Kool-Aid for the past 30 years. We have ceased, in many respects, to be rational. We watch Glenn Beck throw temper tantrums about socialism on national television and, except for the few of us that recognize him for the cynical snake he is, we're right there going "me too." If someone bitches about public fluoridization of water, the bulk of libertarians are right there talking about the Man keeping us down, and someone will inevitably compare it to the civil rights movement. We've even let our brains go to the point where conspiracy theorists are practically synonymous with "libertarian" and a friend of mine, upon discovering that I was a libertarian, was shocked and amazed that I wasn't actually insane.

I'm not advocating statism or the government taking your cheese. I'm advocating common sense. It's so rare in our movement, it's a goddamn super power. Which means that, before you accuse the feds of conspiring with Canada and Mexico to form a North American Union, you first actually check the facts. Which means, before you categorically state that America is an empire, you look into it. Dave Nalle did just that, and, lo and behold, we don't actually have military bases in 130 countries around the world. It's more like 30 or 40, depending on the definition.

Looking into the facts doesn't mean we suddenly become big-government liberals or anything of the like. It means that we can now say "get the troops out of the 30 or 40 countries they're stationed in and reduce all foreign military postings to 20 or so Marines guarding our embassies abroad" instead of blathering on like idiots and cloaking our good ideas in a mantle of oversell and mendacity. It's a lot easier to defend a bad idea against untruth than it is to defend it against truth. Our hyperbole does us no favors.

Ron Paul, for all his general asskickery, is guilty of this. One of the biggest reasons I like his son Rand better as a politician is that he retains his solid core of libertarianism without dabbling in hyperbole and conspiracies like his father does. And I hope to God that the libertarian movement starts taking its cue from his example.

At the risk of creating yet another label for our ever-fracturing movement, I think "common-sense libertarianism" is probably the best term for my political views.
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Portugal proves decriminalization works

Time Magazine had an interesting story today. It investigated the Portuguese success in combatting drug addiction via decriminalization. From Time:

Portugal... in 2001 became the first European country to officially abolish all criminal penalties for personal possession of drugs, including marijuana, cocaine, heroin and methamphetamine.

At the recommendation of a national commission charged with addressing Portugal's drug problem, jail time was replaced with the offer of therapy. The argument was that the fear of prison drives addicts underground and that incarceration is more expensive than treatment — so why not give drug addicts health services instead? Under Portugal's new regime, people found guilty of possessing small amounts of drugs are sent to a panel consisting of a psychologist, social worker and legal adviser for appropriate treatment (which may be refused without criminal punishment), instead of jail.

That's not full-on legalization, since later on in the post it seems that the Portuguese government is still going after major drug traffickers. However, assuming you can get your hands on some drug, you don't face any penalties for it.

Compared to the European Union and the U.S., Portugal's drug use numbers are impressive. Following decriminalization, Portugal had the lowest rate of lifetime marijuana use in people over 15 in the E.U.: 10%. The most comparable figure in America is in people over 12: 39.8%. Proportionally, more Americans have used cocaine than Portuguese have used marijuana.

It looks like this is going to be the next step in the evolution of drug policy, though. The numbers seem to suggest that this soft-on-users policy does save money in the prison system, as well as reduce abuse rates... which means that the intellectually bankrupt status quo will move to this system. It's a perfect way for them to save face, as well as saving the rent-seeker jobs in the DEA.

It will constitute an improvement, but I fear that the majority of this country will stop here. Obama's laughing denunciation of marijuana legalization indicates that he's not quite ready to legalize the drug on the federal level; just turn a blind eye to states that legalize it. But that blind eye is easily reversible should the next President be an ardent Drug Warrior.
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The True Meaning of Sodor

As of right now, I live in a house that has a toddler in it (not mine). His name is Harry, and he likes it when his Uncle Stu pretends to be a dinosaur and chases him around. But he loves Thomas the Tank Engine with an unholy passion.

I had watched "Shining Time Station" growing up, which featured some Thomas shorts, but I guess nowadays they just cut out the annoying bits with Ringo Starr pretending to be a conductor and it's now all semi-anthromorphized trains, all the time. At any given moment in this house, there is usually a Thomas DVD going. I have the theme song burned into my brain, as well as the basic plots of most of the episodes, all absorbed by osmosis as I was busy doing Important Shit on the Internet.

After a while, I started noticing just how Orwellian the world in which the trains lived really was. I brought this up in a conversation with my brother a few days later, and he apparently had come to the same conclusions months before I did. So, for the benefit of anyone living around small children, I now present to you a more realistic take of the island of Sodor.

First off, we have to understand the nature of the existence of the trains. They are, evidently, sentient. As sentient beings, they are largely trapped in a tiny world: they can only advance along certain pre-determined routes (with the exception of Bertie the Bus, Harold the Helicopter, and other such non-train characters, who are freer in their movement). They don't have any real means of manipulating the environment around them, other than ramming into it or asking a human to do it for them. They can't even have sex (in b4 someone Rule 34s this topic).

So, what joy is there in their existence, just on the face of it?

However, the limitations imposed on them by nature are reinforced by a despotic government. Sir Topham Hatt (or the Fat Controller for any Britons in the audience) has unquestioning, godlike authority over them. He can change their routes, dictate what trains they work with, all to suit his own purposes. He can threaten trains with being bricked up in a tunnel if they don't comply. He also, in true totalitarian fashion, creates divisions among his subjects in order to further control them. In a classic example of totalitarian race-baiting that I can't seem to find on YouTube, he exploits the ethnic hatred of "steamies" for "diesels" to get some steam engines to do more work on their own, instead of accepting the help of a diesel they hate. Of course, like any totalitarian attempt to create divisions among its people, it occasionally backfires.

The engines have no say in their future, no vote to elect the Railroad Controller, and they aren't even paid for their work. They are automatons whose only capability is to do the jobs assigned to them, harried and bullied by a totalitarian government that sets them upon each other for its own ends, and threatens them with even worse fates for noncompliance. Therefore, is it any real wonder that in just about every single episode, the engines (all of them) seem to manifest an unconscious desire to commit suicide? They crash, get buried in landslides, fall off bridges, over and over and over again. Sentience in such a context would be a curse, a bitter joke of God. I'd certainly prefer death to that.
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The Obama "cuts"

I'm not going to do the LP's work for them, but the gist of it is that they called the Obama cuts out as bullshit in their latest Monday message. And indeed it is:

Obama’s budget calls for around $11,755.00 in spending for every man, woman and child in America. But his “cuts” -- which aren't even new reductions -- come out to only around 32.7 cents per person.

That much isn't really news-the time has long since passed when the word "millions" as applied to the federal budget lost any real importance. However, what did catch my eye, after the usual dime's-worth-of-difference propaganda, was the list of 12 specific items in the budget suggested as cuts (see them after the jump):

Here are just a few of the reductions we back. You can find more in the Cato Institute’s “Handbook for Policymakers, Seventh Edition.”

• Avert the oncoming fiscal crisis in Social Security by indexing initial benefits to changes in prices, instead of wages. Saves $47 billion annually by 2018. Without reforms like this, the program will go bankrupt or force trillions of dollars in destructive new taxes or borrowing.
• Turn Medicare into a block grant and freeze federal spending, forcing states to pursue cost-cutting reforms. Saves $227 billion annually by 2018.
• Eliminate the Commerce Department’s Economic Development Administration, a $352 million corporate welfare program.
• Eliminate the Commerce Department’s International Trade Administration, another $369 million in corporate welfare.
• Eliminate the Energy Department’s nuclear energy research programs, $695 million in welfare that should be undertaken by nuclear energy investors.
• Turn Head Start over to private charities, saving $687 million annually. Since its inception Head Start has shown no substantive increase in inner-city literacy rates.
• Eliminate the Bureau of Indian Affairs, saving nearly $2.5 billion a year.
• Eliminate funding for the United Nations and other international programs, saving nearly $1.6 billion annually.
• Eliminate the Legal Services Corporation, saving $350 million annually.
• Eliminate the National Endowment for the Arts and the National Endowment for the Humanities, $278 million a year in welfare for wealthy arts patrons.
• Eliminate the Small Business Administration, $530 million in welfare for businesses.
• Eliminate the $935 million a year in Postal Service subsidies and force them to further privatize operations.

Those are just a few cuts, a “twelve step program” if you will, which alone save taxpayers $282.3 billion. That comes out to $921.78 in savings for every man, woman and child in America, and there would be a lot more savings than that to come with even more reductions.

Compare that to Obama’s piddling 32.7 cents.

That's not bad, but I would submit that the math is a little fuzzy there. You can't know exactly what the Medicare reform would save, especially since there would be fifty different solutions to how to deal with those block grants. Some states might choose to supplement falling federal funding with more state funding, keeping the net amount of taxation even or even increasing it as far as that state is concerned.

Also, I don't particularly care how much a given plan saves me in 2018, I want to know what it saves NOW. I also want to know whether those numbers are accounting for inflation... is that $282.3 billion in today's dollars or 2018 dollars?

Also, not every last one of those cuts is a good idea from a libertarian point of view. The Bureau of Indian Affairs is the price we rightfully pay every year for the intermontane West. The treaties concluded with those tribes guarantees them various payments in exchange for the cession of land. All I'm gonna say is that if you're a libertarian and you believe in keeping your word, you can cancel that funding but be prepared to hand North and South Dakota over to the Lakota, Arizona to the Hopi and Navajo, etc. Those treaties are law, not polite suggestions to be ignored when they're inconvenient for the budget.

I'm all for a general reformation of the way we treat Native Americans in this country, namely restoring to them whatever land and sovereignty we can via new treaties with their tribal governments. But that's going to take a lot of research and a lot of negotiation and is beyond the scope of a single unilateral budget cut during a recession.

But anyway, my main point is that it looks like the Cato Institute is aiming to become the next Center for American Progress. CAP did a lot of homework for the incoming Obama administration, giving it several well-articulated policy proposals to implement. CAP won the war of ideas against the neocon think-tanks sometime in 2005, and more and more that intellectual reality became reality for the rest of us.

It is said that in the short term, the stock market is a voting machine; but in the long term it is a weighing machine. In that same sense, in the short term American politics is a battle of parties and personalities; but in the long term it is a battle of ideas. You can win for a time without ideas, so long as you have a well-oiled propaganda machine. The GOP proved this for the past 8 years. But you cannot hope to win in the long term without ideas on your side.

The Cato Institute has seemingly appreciated CAP's role in the ascent of Obama, and is positioning itself to be the thinktank responsible for the eventual GOP comeback. I think this would be an excellent development, especially as the neocons are in disarray. I do believe that Obama will eventually discredit himself if he allows the spending to spiral out of control, and at that point, we have our moment, our victory in the war of ideas, and it's just a matter of letting reality catch up.

(Crossposted at Next Free Voice)
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Rick Perry advocates Texas secession, then abruptly backtracks

Rick Perry has recently spoken out about Texas seceding from the Union. From the New York Times:

“When we came into the Union in 1845, one of the issues was that we would be able to leave if we decided to do that,” he told reporters on Wednesday. “My hope is that America, and Washington in particular, pay attention. We’ve got a great Union. There’s absolutely no reason to dissolve it. But if Washington continues to thumb their nose at the American people, who knows what may come of that?”

Democrats have already begun making disapproving noises:

State Senator Rodney Ellis, a Houston Democrat, said Mr. Perry had not only opened himself to ridicule but also evoked a time most Texans would rather forget. “Texas has become a hotbed of right-wing political activity,” Mr. Ellis said, “but I think even those folks on the far right think this is over the top.”

And Perry has already begun to backtrack:

After the rallies, Perry downplayed his secession comments, amending them in an interview with the Fort Worth Star-Telegram to say, "I'm trying to make the Obama Administration pay attention to the 10th Amendment."

So what's the whole point of this? It's just another Republican establishment figure going out on a limb to try to grab the Ron Paul constituency before what looks to be a nasty primary fight. Of course, the fact that at least part of the GOP now has to sound like hardcore libertarians on what used to be considered fringe issues can be considered encouraging to the movement.

I don't know a whole lot about Perry's record in Texas, so I don't know if he's a worthwhile politician and therefore worthy of our support. I would tend to suspect he's not, just on general principle when dealing with Republicans.

But this, and the broader 10th Amendment movement in general, does represent a sea change in libertarian thought. Back in 2006, the Libertarian Party had a vicious fight between the Radical Caucus and the Reform Caucus. Reform ended up winning, but it seems like a lot of the people in the Radical Caucus ended up reappearing in Ron Paul's presidential bid in 2008, in the GOP. And now, as an effective component of the Paul wing of the GOP, they are sounding more credible and wield more political power than they could have had by winning the fight for the LP in 2006. Maybe Michael Medved was right.
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Economic stimulus, Keynesianism, and pragmatism: Part 7.

Go back to Part 6

So then, now that we've figured out a better way to pay for it all, what do we good libertarians spend this huge stimulus package on? So far, the Obama administration has spent money on:

-transportation infrastructure
-sewer infrastructure
-alternative energy tax breaks/subsidies
-energy conservation
-healthcare reform
-unemployment insurance
-public education
-environmental cleanup
-food stamps
-tax cuts
-block grants to states

These do not fully reflect libertarian priorities, but we shouldn't expect them to. We share this country with many other ideologies. However, a compromise solution that this libertarian could definitely live with would involve the following, in addition to what's been mentioned in previous posts:

Transportation Infrastructure: This needs to be a priority, perhaps the highest priority. Transportation infrastructure in this country sucks hard. We've let it fall to shit. Moreover, it's an investment that, if made, will let us lower our budgets in this area for years to come. But we should invest more intelligently.

The car culture is expensive, more expensive than the rail culture in Europe. Railroads and mass transit are not only cheaper for consumers, they're generally cheaper for governments as well. Less cars on the roads means less oil imports means less money going abroad means more money being invested here. Mass transit, when designed intelligently, means denser urban construction, which makes cities more livable, hits hard at inner-city poverty, and encourages more efficient energy use in buildings.

Railroads, especially the high-speed rails being encouraged by the Obama administration, are actually faster than cars, are less stressful than cars, are safer than cars, are cheaper than cars for the average citizen. Think about how much money you spend on cars every year-thousands to buy it depending on how much you're willing to pay, about $1000-2000 a year in insurance, at least a thousand a year in various and sundry repairs, and anywhere from $20 to $80 for a tank of gas, depending on the price of oil. Mass transit passes are typically less than $100 a month, and railroad tickets were actually cheaper than the gas required for the average American car to travel the same distance last summer during the oil spike. Obama's invested $8 billion in high speed rail. We should increase that, and increase the amount of money being spent on mass transit. If you believe that the government has a moral right to maintain public roads, it isn't that big of a stretch to believe that it has the moral right to maintain other forms of public transportation.

That's not to say that we should abandon our road infrastructure. We shouldn't. Any transition back to rails will take decades, and rightly so. And even then, our interstate highway system should remain well-repaired and well-used. However, we shouldn't go building any new roads; we should just repair those roads and bridges we already have.

Sewer Infrastructure: I'm not an expert on this, but I do know it's a problem we've been letting slide for years. It will have negative environmental effects soon enough if we don't fix it, and I'm not just talking about the effect on animals or plants. I'm talking about the effect on humans who don't have adequately clean drinking water.

Therefore, an investment to repair our existing sewer infrastructure, as well as to build new water purification plants, is eminently appropriate. Also, we should invest in systems to supply more drinking water to the American Southwest. Los Angeles alone is sucking the region dry, and without some kind of additional drinking water supply, the new development in Arizona and Nevada is unsustainable in the long run. What exactly should be done is too complex for our purposes here, but suffice it to say that all the serious options involve a massive outlay of money.

Environmental Cleanup: The Superfund has been underfunded for years. This is one of those things that needs to be done sooner or later. Environmental cleanup provides temporary jobs, so we might as well put a decent down payment on it.

Public Education: Probably the method of furthering public education that's least offensive to libertarians would be federally-subsidized student loans for college. At least then, the money (or a good chunk of it) gets paid back. The Republicans were right in sticking to their guns and getting education largely removed from the stimulus bill. This should be handled at the state and local level, or at least in the normal budget appropriation process.

Block Grants: I liked the idea of making these loans instead of grants. A lot of states have out-of-control budgets, and they shouldn't be rewarded for their profligacy with free money from the rest of the country. However, emergency shutdown of many government services overnight isn't a real solution either. A federal lifeline tied to a regular repayment schedule is probably the best way to go. If the states have to repay the money, chances are it'll encourage greater fiscal discipline. Plus, it means that the federal government will see this money again someday, and can use it to pay down part of the debt.

Tax Cuts: The tax cuts, which ended up being 40% of the Obama stimulus, are probably the most libertarian-friendly part. The most stimulative tax cuts, however, will be targeted on the poor, who are more likely to spend any extra money they have. So, establishing a basement for the payroll tax, say for the first $20,000, would be a good move. Progressive tax cuts like these have been Obama's focus overall, and it's effective stimulus policy.

Anyway, I think that would make for an effective stimulus, a more effective one than what we have now. And while it isn't solidly libertarian, it's more libertarian than the one we have now, in that it involves less spending and less borrowing.
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Economic stimulus, Keynesianism, and pragmatism: Part 6.

Go back to Part 5

Of course, we can't (or at least shouldn't) borrow the kind of money that Obama would like to. Though Keynesian economics does work, there is a limit to what can be done. Massive government spending in downturns is only viable when it's paid back in good times. And that spending hasn't been paid back for years. Consequently, we are going to run up against a wall of what we can borrow before we have to hike interest rates to unsustainable levels to attract investment.

Already, the Chinese are using their holdings of around $2 trillion in Treasury bills as leverage to influence United States policy. They are threatening ill relations if we print money, because it would reduce the value of their savings. They are also threatening to start selling off their T-bill reserves, which would send the value of the dollar plummeting. Even if we could continue borrowing forever, it would be excessively unwise to do so. Every trillion dollars of T-bills held outside of the US is another trillion dollars of sovereignty we lose.

We are, in all likelihood, not far from the "borrowing wall" at which the price of borrowing skyrockets. With the credit crisis, that wall has moved closer to our current financial position, as liquidity in the global marketplace has dried up and there's less money available to loaning anyone, not just the United States Government. Indeed, many long-term market analysts don't expect the borrowing to be able to continue much longer.

Therefore, the funding of any stimulus plan becomes a lot trickier than Obama has made it out to be. It is my honest belief that Obama's stimulus plan, combined with his massive budget, will push us past that borrowing wall, and beyond the wall lies another Great Depression. When consumers and businesses can't spend to stimulate demand, and the government is so deep in debt it can't spend either, and when taxation or inflation will just exacerbate the problem, we will be in what economists call "deep shit."

So, any stimulus plan will have to cobble together funding partially from borrowing, partially from printing money, by raising taxes, and partially from savings elsewhere in the budget. Savings can be achieved in several different ways: by cancelling truly pointless programs, or by administering a simple regulatory fix that will save billions. (Yes, while it is true that libertarians are against regulation in general, I think we'd be against the complete meltdown of the entire economy a little more. Besides, these things can and often are reversed after the crisis is over.) Combing through the budget, these things could be cut:

-$6.5 billion in various parts of the federal anti-drug budget dealing largely with the issue of marijuana-based interdiction, trial and imprisonment
-$21 billion by repealing the unpopular, counterproductive No Child Left Behind Act
-$100 billion in various cuts in the defense budget
-$4 billion in foreign military financing, most of which goes to either Israel or Egypt
-$1.5 billion in international peacekeeping efforts
-$12 billion by de-funding two underperforming and counterproductive parts of the Department of Homeland Security: the TSA and FEMA
-$11 billion by cutting NASA's budget by two-thirds: while space exploration is cool and all, it's a "want to have," not a "need to have." Cancelling Bush's moon push and focusing on exploration probes is cheaper and generally renders better science anyway.
-$1 billion in various counterproductive energy subsidies: hydrogen (which is, in all reality, too volatile and difficult to store to be viable anytime in the next few decades), corn ethanol (which has a negative EROEI), and fossil fuels R&D (which, even now, gets a whopping $754 million in subsidies)
-$23 billion in axing the Small Business Administration. The government is not a bank, it doesn't need to act like one. If the government is truly worried about certain minority groups not being serviced by the private banking industry, they can just strengthen anti-discrimination laws in the banking sector.
-$70 billion in tax cuts for the wealthiest members of society. It wouldn't truly be a tax increase, it would merely be letting part of the Bush tax cuts expire. Taxation is theft, but as it stands, the refusal to pay for government now just increases the burden later on down the road, resulting in an even larger bill for society to pay later on. The true culprit isn't taxation as much as spending. Higher taxes on those who can most afford it in order to avoid this greater evil seems to me an excusable deviation from libertarian ideology, so long as it's phased out later on down the road.

That's $250 billion in savings just by cutting parts of the budget, and that's a conservative estimate. But there is more that can be done, far more.

The Social Security fund has long been a source of T-bill investment for the rest of government, but its receipts have been going down. This means that the share of T-bills held by America will go down. However, lifting the upper cap on the payroll tax, so that the incredibly rich pay taxes on all their payroll, has been promoted as a potential fix for Social Security for quite a while. Moreover, it's a fix that could add money to the fund today instead of slowing the rate of payouts several years down the road. And, because the money is eventually given back, with interest, it's one of the less egregious taxes we have, although most libertarians will still consider it philosophically unjust. I don't dispute that point, but I would consider that since the system is in place already, and since it does provide this unintended but vital financing service to the rest of the government, it would be a slight improvement to make it more progressive and thereby end an indirect subsidy to the rich, and thereby reduce the amount of money we need to borrow from abroad.

The Cato Institute estimates that lifting the cap will generate $1.3 trillion dollars for Social Security over 10 years, and the change would only affect the richest 6% of Americans. I'm not entirely certain about the year-to-year breakdown, but the left-wing thinktank Citizens for Tax Justice says it would generate around $124 billion dollars a year. All the same, that's $124 billion dollars more invested in Treasury bills without increasing foreign ownership. It's still debt and it still will need to be repaid, but as this is a one-time stimulus that will not be renewed in the future if libertarians have anything to say about it, it will be repaid quite shortly.

So with that, we're up to $374 billion dollars we can spend on a stimulus package, or about half of what Obama's stimulus actually was. But wait! There's more. The United States dollar is the most widely-used reserve currency in the world, and so more of the world's wealth is denominated in dollars than any other single currency. That gives us more wiggle room for inflation and money printing. I'm not advocating a wild Weimar Republic-esque inflation spree, but there is plenty of room to maneuver here.



This image represents the total amount of US dollars in circulation in the world. The green section, referred to as "M0" by economists, represents the amount of actual paper and metallic money floating around the United States, used in daily transactions. M1, the white part, represents M0 plus everything in checking accounts denominated in US dollars. M2 is M1 plus savings accounts, money market accounts, and certificates of deposit under $100,000. M3 is M2 plus certificates of deposit over $100,000, plus any non-Treasury bill accounts denominated in dollars outside of the United States of America and therefore out of the direct supervision of the Federal Reserve.

You'll notice that M3 cuts off after 2006. That's because the Fed stopped tracking it. Their excuse was that it wasn't a relevant figure to track in determining the immediate money supply, which is most closely related to inflation. That's true enough as far as that goes, but for various reasons I won't cover right now, it's also an excellent way to cover up any inflationary schemes the Fed might be compelled to try. That's largely irrelevant to our purposes here, but it does illustrate that the federal government has gotten increasingly nervous about the level of debt we've taken on and has considered large-scale inflation as a potential solution to the problem. Indeed, the amount of money stashed away in M3 accounts has steadily increased since the inflationary 70's.

Now, looking at the graph, you'll see that there is about $7 trillion in M2 circulation, which the Fed still considers relevant to inflation. The Obama administration's $700 billion stimulus represents about 10% of that figure. Of course, it won't all be paid out at once, and a lot of that is just moving 0s around in bank databases instead of cold hard cash. Nonetheless, if the entire stimulus were paid by inflation, the real value of the dollar would probably drop by around 9%. Most of the time, the Fed and the Treasury Department try to keep inflation at around 3-4%. Creating $70 billion out of thin air would represent 1% of the money in M2 circulation, and so would only inflate the dollar by 1%-certainly not the stuff that Chinese T-bill runs are made out of.

That brings our stimulus total up to $444 billion without having borrowed anything beyond the $124 billion from Social Security. The remaining amount of money Obama wanted in his stimulus, some $300 billion, could probably be raised by T-bill sales, and that's assuming that the stimulus even needs that kind of money. It may not.

Plus, if a cheaper fix can be found for the credit crisis, all that money that was loaned out in TARP funds can be collected on down the road, and the remainder spent on this. I won't delve too much into that, as it's a completely separate issue, but TIME Magazine had an excellent piece proposing such a fix: an automatic, across-the-board reduction of mortgage principal by 30%. It's estimated that that would let the vast majority of homeowners pay their bills instead of foreclosing, reducing the nonperformance rate for subprime mortgage bonds, and it wouldn't cost the government much more than the ink to sign the bill. Yes, it would represent a dramatic government intervention into the real estate market. Yes, it would be incredibly unfair to those who have already paid off their mortgages. But, it would be cheaper and simpler than most of the alternatives, and most importantly it would permit home values to fall, which is where the unfettered free market would take us anyway.

Some of the healthier banks (like Wells Fargo) are overeager to pay back their TARP loans and thus get out from under the thumb of extra government regulation. According to Fox Business, all but around $135 billion of the TARP funds have been committed to one project or another, but $371.3 billion of it hasn't actually been spent yet as of April 9th, 2009. If the remaining funds were de-committed and repurposed to the stimulus package, then we would arrive at a total of $815.3 billion waiting around to be spent. That's more than Obama's stimulus package amounted to, and all without a single extra foreign T-bill sale.

Continue on to Part 7 in this series.
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Ann Coulter: The Official Libertarian Response - 4/17/2009

This is the first week of the Official Libertarian Response. Predictably, this week Ann has for us a piece on the tea parties.

She starts off accusing liberals of widespread homosexuality for giggling over a gay joke. Then she giggles over Barney Frank's sex life, again:

On MSNBC, hosts Keith Olbermann and Rachel Maddow have been tittering over the similarity of the name "tea parties" to an obscure homosexual sexual practice known as "tea bagging." Night after night, they sneer at Republicans for being so stupid as to call their rallies "tea bagging."

...

But if the Republicans were calling them "tea-bagging parties," the MSNBC hosts would have a fantastically hilarious segment for viewers in San Francisco and the West Village and not anyplace else in the rest of the country. On the other hand, they're not called "tea-bagging parties." (That, of course refers to the cocktail hour at Barney Frank's condo in Georgetown.)

BADA-BING! Oh, that's comedy. She continues with the flow by fitting in the obligatory Hillary Clinton joke, reminds us that Democrats like taxes, and then gets into the meat of her message: trying to outrun the rest of the GOP establishment to the front of the tea party parade.

She raises one valid point...

All Democrats for the last 30 years have tried to stimulate the economy by giving "tax cuts" to people who don't pay taxes. Evidently, offering to expand welfare payments isn't a big vote-getter.

...and then loses any goodwill generated therein by immediately talking out her ass:

Raise taxes and the productive will work less, adopt tax shelters, barter instead of sell, turn to an underground economy -- and the government will get less money.

In all reality, making tax cuts refundable is just a nicer term for welfare. It's good to see the Democrats get called on that bullshit-call it what it is. But by the same token, don't go lying and fearmongering. Raising certain taxes does encourage the things above, in certain situations, but not in most cases. Different levels of cigarette taxation in different states has encouraged an underground economy, but that's a question of taxation differences by state, not a question of basic tax levels. Not that I'm advocating it, because believe me I'm not, but if cigarettes were all taxed $5 a pack everywhere in America, we'd have a far smaller underground market than we do now, even though the tax is larger.

Tax shelters are also the results not of taxation levels, but of taxation complexity. A simpler tax code would largely eliminate tax shelters, even if taxation levels were higher.

The barter economy happens in three instances, as far as I can tell; two of them are as follows: frontier conditions where goods and people are few and far between, and inner-city bartering shops flocked to by trendy anarchists, hippie kids and gun-toting libertarians alike. The first is too desperate and remote to ever really be in the purview of taxation, and its participants too poor to ever really contribute anything to the government in the first place. The second is already taxed and regulated by the government, like any sufficiently large transaction of goods will inevitably be, no matter what foolproof legal trick you think you've come up with. And the third is just another name for the black market.

Black markets are usually not the result of taxation levels as such, but of bans and inept regulation, and occasionally honest-to-goodness criminal activity viewed as illegitimate even in libertarian eyes. The black market for drugs is caused by drug bans, the black market in guns is caused by over-regulation of guns, so forth and so on. The only times in history that black markets have become widespread and for otherwise innocuous items is when regulation of prices or production takes hold. The price controls of Diocletian, Truman and Nixon all saw surreptitious black markets emerge for everything from beef to gold, because the white market was unable to supply the good in the quantity needed at the prices dictated by government. And then we have the Soviet Union, which layered inept price controls over inept production efforts and ended up supplying itself largely through robbing its satellites blind until it fell.

Anyway, all that and we're not even past the first half. Fortunately, it gets better before it ends on a stupid note. She's got some very valid things to say about the Democratic record in California. Particularly this bit:

In just a few years, Democrats had turned California into a state -- or as it's now known, a "job-free zone" -- with a $41 billion deficit, a credit rating that was slashed to junk-bond status and a middle class now located in Arizona.

I lived in California for three years growing up. I have friends that have lived there all their lives. It's true-the Democrats have soaked not the rich of that state but the middle class. As a result, California's been sending out its mouth-breathing yuppies everywhere between San Francisco and the Great Plains, where shit is still affordable. The area from Cheyenne to Boulder is disparagingly called "Colofornia" by the ranchers I went to college with. Arizona was one big latte-sipping suburb before the economic crash... now it's a latte-sipping suburb with no future.

For all that, though, I would make a distinction. California's Democrats represent the Democratic Party at its absolute idiotic worst. There is a significant difference between what they've done and what Obama's trying to do. California's policies were grounded in liberal idealism of the kind that only makes sense in Hollywood films. Obama's are grounded in utilitarianism-a more liberal conception of it than what I hold to, sure enough, but utilitarianism all the same. He isn't asking what makes liberals happy, but what works. He seems to be intending to try liberal solutions first because that's his background, but he's shown an uncanny willingness to embrace conservative, libertarian and populist ideas if it can be demonstrated that they work better.

All of which robs her closing statement of its sting:

California was, in fact, a laboratory of Democratic policies. The rabbit died, so now Obama is trying it on a national level.

That's what the tea parties are about.

That's only half the story, anyway. The tea parties are also about a "fiscally conservative" administration that lied us into a war and jacked up the debt by 5 trillion dollars. But I don't suppose that makes for a good GOP puff piece.
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