Category Archives: Politics

Fundamentalism in Market Economy: The Austrian School and Regulation

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This is the next part in a series on the Austrian school of economics. The previous parts were here and here.

On regulation Jonathan Catalan states:

In the United States, for example, anti-branching laws and growing restrictions on note-issuing, such as taxes on certain banks’ notes, made it increasingly difficult to respond to information runs caused by inflationary episodes also stimulated by government intervention: namely, the circulation of greenbacks between 1862–71, issued to pay for the American Civil War and the resulting debt, and later fiduciary over-issue encouraged by allowing national banks to issue notes backed by government bonds and the manipulation of the exchange value of gold and silver. Eventually, runs and consequent panics, especially that of 1907, led to the formation of the Federal Reserve System. This did little to constrain banks and actually intensified fiduciary over-expansion, ultimately leading to the Great Depression and the creation of deposit insurance.

So restrictions on note-issuing “made it increasingly difficult to respond to information runs caused by inflationary episodes also stimulated by government intervention”. It is hard to tell from this whether Catalan is in favor of local banks issuing notes but it does appear as if he is not in favor of restrictions on note-issuing. I would wonder, if he is in favor of unrestricted noted issuing by local banks, if he would also favor a reserve requirement on these notes. It would seem that anything less than a 100% reserve requirement would constitute a kind of money creation and thereby allow local banks to loan money they do not have.

However, it would seem that Catalan is not in favor of any reserve requirement regulations when he states:

Also popular are capital controls, which are intended to force banks to hold a certain volume of their own capital against their investments. This is what the three Basel frameworks are, in part, intended to do; in the United States, prior to the 2010 adoption of a framework based on Basel III, these efforts were mimicked by the recourse rule. Different assets were rated against their perceived market risks and then organized into buckets and tranches. Ideally, the riskier the asset the more capital banks have to hold against it. In the event of the liquidation of an investment the bank can partially patch the loss with the reserve.

These regulations have not passed the test.

In any case, the loaned money would not come from ‘savings’ but would constitute an “an artificial increase in loanable funds” by the local bank (see this). The artificial increase in loanable funds would have nothing to do with a central bank. The question that arises is why this artificial increase, originated from a local bank, would have different effect on the cost of capital goods for production and the decision process made be entrepreneurs than the artificial increase made by government owned central banks. Wouldn’t the entrepreneurs still be lulled into a false sense of security from the availability of loanable funds regardless of whether it came from local banks or central banks? It seems this specific dynamic would not be affected by the source of the funds. However, the argument could be made that the local banker would be more discretionary about lending if the banker’s created funds were not covered from a lower interest rate loan from the central bank system. The reasoning would be that if the local bankers risk rested solely on his lending decisions then he would be much less likely to make ill-informed loans.

It is interesting that in view of putting the sole risk for the investment decision on the local banker, Catalan would also appear to favor pulling restrictions on bank branching. When banks branch they are owned and operated from a central, corporate agency. They relinquish sole local control of banking decisions with more or less degrees to their corporate owners. The effect of this is to offset risk to the corporate owners, the central bank. At this point we are faced with the question of why the corporate owners of local banks would have a different effect on the dynamic of local bank investment decisions than a government controlled central bank. Perhaps the argument would be made that the government controlled central bank would exercise orders of magnitude more of the de-localized effect on investment banking than the corporate owned central bank. However, if there are no regulations on how large a corporate owned bank could be as the Austrians would certainly favor, the free market ‘faith’ in competition would be the only limiting factor on corporate owned, centralized banks. One problem with this ‘faith’ is the monopoly dynamics that I previously point out in this series. However, another problem rests on a mathematical assumption. If the government controlled central bank is assumed to be much larger than the corporate owned bank then, it is assumed, that the risk off-load by more centralizing is also linear correlated to the absolute size of the central bank. However, it may be that the relationship is not linear at all. It may be that there are discrete jumps in failed risk assessments on the part of bankers in a privately owned corporate bank that make absolute size differences in the government owned central bank and the corporate owned central bank inconsequential.

Another assumption is that the scope of the malinvestment decisions will have a random distribution pattern over the entire market so that bad individual decisions will have a minimum effect on the whole economy. I will reiterate the pointed I made here:

Additionally, institutional investors do not invest equally and randomly over the entire breadth of the market. Institutional investors invest more heavily in businesses and market segments with proven track records. This has a congealing effect on capital investments in less risky, more certain returns on investment. To the degree that this occurs larger businesses with larger capital resources become the instrument of new business start ups and venture capital gets diverted from unaffiliated [with larger corporations] start ups to market conglomeration dynamics. This natural pocketing of capital resists the notion that a randomized investment pattern offsets risks/loses in the market and therefore exercises the least possible negative effects on individual parts of the market making booms and busts not likely [or less likely] to occur. It is quite possible that because of market conglomeration and even more, market monopolizing, that apart from central banking concerns, booms and busts would still occur and their impact might not be mediated by the idealized, random effects of the pure free market, the fundamentalist’s dream.

These issues cannot just go away by Austrian economists wishing them away. The only way to really resolve them would be with empirical data.

Catalan goes on to state:

Deposit insurance takes the place of market processes that accomplish much of the same thing, but by externalizing the burden of failure to the taxpayer. Deposit insurance, much like last resort lending without ex ante restrictions, causes problems of its own. It eliminates the need for market discipline, or constraints placed upon banks by its clients and investors, because these people are essentially insured against the loss of their deposits. Banks are given leeway to make what are perceived to be riskier investments, and regulators soon saw the need to step in to guard against excessive risk-taking by these regulated financial institutions.

This is an astonishing claim. What this claim fails to recognize is that the individual depositor has no role in that actual investment decision the bank makes. If the banker makes the wrong decision and the depositor losses all his deposit, the banker may learn a free market lesson but the banker has learned the lesson at the cost of the depositor not at the bankers own personal cost. Yes, you could say that the depositor has also learned a free market lesson, not to use that bank. However, the lesson the depositor has learned has come at the cost of his entire deposit so he could make a better decision next time if only he had any money to learn it with. The banker could lose his business if he makes many such bad decisions but he has made a good salary and bonuses in the meantime. The free market lesson the depositor has learned has come at a much higher real cost than the free market lesson the banker has learned. It is an equivocation to make all ‘lessons’ equal by virtue of the free market. The difference in these ‘lessons’ was recognized by the creators of the Federal Deposit Insurance Corporation. They also recognized that when masses of depositors called consumers ‘learn the lesson’ in this fashion the economy tanks.

Finally, Catalan states:

Financial entrepreneurs, however, enjoy a crucial advantage over regulators — they are constrained by the market process. The world is replete with people looking to make a profit, as such there is no shortage of potential bankers. Those who make bad decisions suffer losses and are forced off the market; profits, on the other hand, reward good results. The phenomenon of profit and loss is an essential market process that continuously redistributes capital to those who best use it. This is the “market discipline” that early interventions did so well to marginalize.

Here, the free market ‘faith’ of the fundamentalist is most apparent. This is why I started this series highlighting the guiding philosophy of the Austrian economist rather than merely dealing with specific problems. It is assumed here that the financial entrepreneurs learn their lessons and are forced out by “market discipline”. I wonder if Catalan would acknowledge the possibility that the financial entrepreneurs might learn another free market lesson. Perhaps they will learn that if at first they do not succeed in making a 10 million dollar bonus, only of a 5 million dollar bonus, try, try again. To hope that the bad financial entrepreneurs will get redistributed out of the market without any access to capital may happen at times but it may also be that other factors such as the good old boy network may exert a stronger influence on job security. Even if the bad financial entrepreneur is forced out, the sheer size of his bonuses and salaries relative to other free market laborers may not have the same equivalent affect as other laborers that lose all their depository funds with no other financial recourse. The bad financial entrepreneur has no need of insurance against loss because his loss is only a dip in net personal gain whereas the consumer that deposits all their savings in a depository account and had no role in the bad financial entrepreneur’s investment decisions has only his next paycheck (if there is one) to bank on. There is an inequity in loss here that is ignored and ‘believed’ away by the fundamentalist. When the depositors in the Great Depression lost their faith they did not continue to consume they quit consuming and the deflation that resulted took ten years to recover from. Do the Austrians really want us to try it again to see if it works this time? Not all of us have that much faith.

Note: There is a pattern of continual deferral in this fundamentalist thinking that validates the entire free market process by the ongoing deferral itself. The process itself is thought to be a randomized, distribution that is self-correcting. For example, the free market lesson learned by the manufacturing entrepreneur is passed on to the financial entrepreneur. The financial entrepreneur’s lesson is passed on to the bankers. The banker’s lesson is passed on to the depositor and consumer. The consumer’s lesson is passed on to the manufacturing entrepreneur in terms of consumption and thus, a repetitive singularity occurs that is ‘believed’ to be self-correcting. In other forms of science a singularity in calculations is bad science but I suppose in Austrian economics the singularity is deemed as the self-correcting success of the system. This process is purely abstract in that it thinks losses as lessons and self-correction. It fails to take into account or even allow failures in the system as legitimate, proper failures of the system itself and defers the failures to illegitimate, improper interventions in the system. Thus, it rightly achieves the title of ‘fundamentalism’.

Federalism, States, the European Central Bank and Individual European Countries

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With regard to these comments…

It seems to me that the issue with the European Central Bank (ECB) and the individual European countries has a lot in common with our own history here in the US, starting with the highly enlightening debate between Jefferson and Adams concerning states and Federalism. Throughout much of our history this debate has been raging including the present day discussion that the Republican Party wants to have concerning state and federal government and fiscal and monetary policy. It may be informative to think of the European issues in terms of the Fed versus the states. Is it somewhat of a contradiction for Republicans to insist that certain European countries submit to their Fed’s (the ECB) monetary policy on one hand and on the other hand advocate getting rid of our own ECB (the Federal Reserve). From my perspective, these issues form a universal archetype of sorts that has plagued human history ever since there has been any such thing as politics.

Keynes and Austerity

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I believe Lorenzo did and excellent job is his essay pointing out the complex fiscal picture in Greece. He does seem to be a bit at odds with Jeff’s comments in his recent post when he writes this:

As Greece is suffering worst, it becomes the focal point of the crisis. But the Greek austerity measures are cutting so deep, some people may end up paying to have a job. As the Melbourne Weekly reports:

Amid deep humiliation and great uncertainty about what it means to be Greek and, more particularly, European, enraged Athenians are lashing out as the weight of five grinding years of recession and the promise of perhaps decades of crippling reform and restructuring crushes the living breath from them.

And the bailout terms are stark:

The conditions insisted upon by Europe and barely delivered on by Athens, include the axing of 150,000 jobs from an 800,000-strong public sector by 2016 and a 22 per cent slice off the minimum wage – in a country in which average wages have dropped 15 per cent since 2009. The retirement age is to be lifted from 58 to 65 and restrictive closed shops that control the professions and services are to be busted.

However, the austere, tight money policy of the European Central Bank (ECB) seems to be the largest factor for the issues in Europe.

I think that the conservative mantra of Keynesian economics is a bit of a red herring. The assumption they impute to Keynes is that he advocated perpetual government spending and debt to stimulate the economy. This is not accurate and a vast oversimplification. I submit these articles as evidence: New York Times, The Concise Encyclopedia of Economics, and AdamSmith.org

I would also like to highlight a quote from this article:

When does the need for deficit spending end?

There’s something else worth pointing out about an analysis that stresses the role of debtors forced into rapid deleveraging. It helps solve a problem Keynes never addressed, namely, when does the need for deficit spending end?

The reason this is relevant is concern about rising public debt. I constantly encounter the argument that our crisis was brought on by too much debt – which is largely my view as well – followed by the insistence that the solution can’t possibly involve even more debt.

Once you think about this argument, however, you realize that it implicitly assumes that debt is debt – that it doesn’t matter who owes the money. Yet that can’t be right; if it were, we wouldn’t have a problem in the first place. After all, the overall level of debt makes no difference to aggregate net worth – one person’s liability is another person’s asset.

It follows that the level of debt matters only if the distribution of net worth matters, if highly indebted players face different constraints from players with low debt. And this means that all debt isn’t created equal – which is why borrowing by some actors now can help cure problems created by excess borrowing by other actors in the past.

Suppose, in particular, that the government can borrow for a while, using the borrowed money to buy useful things like infrastructure. The true social cost of these things will be very low, because the spending will be putting resources that would otherwise be unemployed to work. And government spending will also make it easier for highly indebted players to pay down their debt. If the spending is sufficiently sustained, it can bring the debtors to the point where they’re no longer so severely balance-sheet constrained, and further deficit spending is no longer required to achieve full employment.

Yes, private debt will in part have been replaced by public debt – but the point is that debt will have been shifted away from severely balance-sheet-constrained players, so that the economy’s problems will have been reduced even if the overall level of debt hasn’t fallen.

The bottom line, then, is that the plausible-sounding argument that debt can’t cure debt is just wrong. On the contrary, it can – and the alternative is a prolonged period of economic weakness that actually makes the debt problem harder to resolve.

And it seems to me that thinking explicitly about the role of debt, not just with regard to the usefulness or lack thereof of wage flexibility, but as a key causal factor behind slumps, improves Keynes’s argument. In the long run we are, indeed, all dead, but it’s helpful to have a story about why expansionary fiscal policy need not be maintained forever.

I think it would be more accurate to assert that Keynes was an advocate of stimulus rather than debt, growth rather than austerity. Keynes would prefer the stimulus to come from the private sector but as a witness to the Great Depression he saw that severe austerity leads to severe depression.

From a personal finance point of view austerity makes perfect sense; the less one spends and acquires debt the faster one can quite paying interest and start to save. However, from a macroscopic economic point when the entire economy is austere no one is hiring, the economy is not growing but shutting down. Private debt and public debt increase under severe austerity.

The 5.1 trillion dollars worth of debt attributed directly to Bush as opposed to 983 billion attribute directly to Obama was in large part due to Bush tax cuts and the vast rate of decline of the economy under Bush. When GDP goes down, debt goes up for both the private and the public sector.

One example of this is how the Republican and Democratic decades old food stamp program which was not changed by President Obama went up dramatically due to the Bush recession from the same link just quoted.

Food stamps have been tied to poverty levels for decades. President Obama has nothing to do with the automatic levels that kicked in due to the recession that started in the Bush administration.

Eligibility for food stamps did not change under Obama. More folks qualified for food stamps under the guidelines many Republicans helped to establish. In any case, the food stamp program is clearly an example of how the slowdown in growth of the economy leads to debt.

Republicans have often sided with the idea of government stimulus. Even Bush cut checks during his administration for individuals up to $600 and couples up to $1,200. This is no different of a stimulus that what Obama did with infrastructure. The idea is that the more money that is available and accessible in the economy, the more likely growth will take place. Keynes did not believe in running public debt forever. He thought it was necessary when austerity prevailed on a macroeconomic level since the private sector was incapable of stimulating itself out of its predicament and continued decline would very likely and historically, demonstrably end in severe depression or recession. When the private sector was growing Keynes was conservative and believed in paying down debt contrary to certain popular beliefs about him.

One more point with regard to austerity, the consumer makes up 2/3 of the US economy. Republicans, Bush and chiefly conservative business folks have vigorously advocated consumer spending NOT austerity to stimulate growth. This is clearly evidence that the notion that Keynes had that stimulus, whether public or private, leads to economic growth. When the economy tanks, private debt grows and the economy slows dramatically. Monetary policy has been created to offset and counter the situation and keep it from worsening. You will also find that the idea that inflation increases with public debt is not historically accurate as this article demonstrates:

What anyone who understood Keynes should realize is that as long as output is depressed, there is no reason increased government borrowing need drive rates up; it’s just making use of some of those excess potential savings – and it therefore helps the economy recover. To be sure, sufficiently large government borrowing could use up all the excess savings, and push rates up – but to do that the government borrowing would have to be large enough to restore full employment!

Keynes would be the idiot Republican’s think he is if what they were parroting was accurate of his thought: eternal, increasing debt whether private or public is the death of a vibrant economy but so is eternal austerity. As is almost always the case, the devil is in the details – oversimplification may make for good emotive politics but tends toward perpetuating mistakes of the past and endlessly repeating histories that we once learned from.

Critical Thinking?

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Here is an anonymous comment in response to this essay I wrote:

You have an interesting spin on this study. The truth however is that “anterior cingulate cortex” Is why liberals are much more malleable and easier to manipulate. This is why its nearly impossible to find a self made successful liberal”statist”. Also the anterior cingulate cortex isn’t exactly “Higher intelligence” that would be the frontal lobe which the anterior cingulate cortex is only partially related. You also don’t seem to grasp from your article that the amygdala is also involved in connect both the right and left hemispheres of the brain combining emotions with logic. example: my dog is emotional not analytical. This is why liberals accept utopian arguments and seemingly disregard reality.

I find this spin not as much interesting as it is perplexing. I bring this up as an example of what I find typical and empty about internet comments in general. I come from an environment where signing your name and referencing your argument to notable sources is essential. A convincing argument must have a real author and real sources to justify its claims. A real author designates the seriousness of the claim and legitimate sources (not mired in mere apologetics) gives substance to the claims. I am not saying I always do this well but I do understand the need for it and make an attempt to do it. I always appreciate when others make me aware of my failing in this regard. In any case, here is a bit of my specific perplexities with this comment.

A statist is the idea that “a government should control either economic or social policy or both to some degree”. It is espoused by fascists in particular. This commenter appears to be conservative to me. Conservatives have mock posters of President Obama to make him look like Hitler. They are also constantly ragging him about using the government to control their lives. On the other hand, the commenter states that this, “is why its nearly impossible to find a self made successful liberal”statist””. Does the commenter want it both ways? Are we to believe that President Obama is one of those “impossible to find a self made successful liberal”statist”” AND “malleable and easier to manipulate”. This is a logical contradiction which is a hallmark of over-emotionality. Additionally, would the commenter suggest that the folks that voted for President Obama are “malleable and easier to manipulate”? If this is so, why is it that the successful conservative “statist” could not manipulate them into voting Republican? Are they not malleable to conservative devices only to liberal devices? The commenter’s statement does not account for the “statist’s” inability to manipulate liberals as they would like. This also appears logically inconsistent as the liberals ‘malleability’ appears not so malleable when it comes to the successful “statist” or the conservative pundit.

Additionally, the QUOTE “Higher intelligence” cannot be found anywhere in the essay I wrote. A quote is always meant to be verbatim. Perhaps the commenter has a private language that defines the quote differently. In any case, to the contrary, in the original comments I stated:

Oh, also, I did not think of these studies as giving any indication of intelligence. I think that was a leap on your part. I think the whole topic of intelligence is a can of worms (emotional, IQ, analytic, logical, poetic/artistic, folksy wisdom, etc.). I personally do not feel like these studies had anything to say about the intelligence of liberals or conservatives merely how they typically, in our particular present situation, handle making sense of their environment. There certainly is no claim to greater or lesser intelligence in the studies themselves…

The fact that the commenter read this article as a statement of ‘intelligence’ means the commenter really did not ‘grasp’ the article but only used it to give an occasion for some emotional issue the commenter must have with liberals.

I did state:

It [ACC] is responsible for higher cognitive learning – error correction is a big function of the anterior cingulate cortex.

It is backed up by this statement from the study:

The ACC has a variety of functions in the brain, including error detection, conflict monitoring1, and evaluating or weighing different competing choices. It’s also very important for both emotion regulation and cognitive control (often referred to as ‘executive functioning’)—controlling the level of emotional arousal or response to an emotional event (keeping it in check), as to allow your cognitive processes to work most effectively. (the source is in the article)

This Wiki link states:

Reward-based learning theory

A more comprehensive and recent theory describes the ACC as a more active component and poses that it detects and monitors errors, evaluates the degree of the error, and then suggests an appropriate form of action to be implemented by the motor system. Earlier evidence from electrical studies indicate the ACC has an evaluative component, which is indeed confirmed by fMRI studies. The dorsal and rostral areas of the ACC both seem to be affected by rewards and losses associated with errors. During one study, participants received monetary rewards and losses for correct and incorrect responses respectively.

Note: I always check WIKI sources for accuracy before I quote it.

I also made the point that the amygdale plays a vital role in long term memory with these quotes from the original sources (cited in my essay):

Although the amygdala is critical for fear conditioning, it also plays a broader, noncritical role in other types of learning and memory. The amygdala can modulate the function of other memory systems, particularly the hippocampal memory system necessary for declarative or episodic memory.

Investigations into the neural systems of fear conditioning have mapped the pathways for learning from stimulus input to response output. One finding that has emerged from this research is that information about the identity of a stimulus can reach the amygdala by more than one pathway. Romanski and LeDoux (1992) have shown that there are separate cortical and subcortical pathways to convey perceptual information to the amygdala. If one pathway is damaged, the other is sufficient to signal the presence of a conditioned stimulus and elicit a conditioned response. It has been suggested that these dual pathways may be adaptive (LeDoux, 1996). The amygdala responds to stimuli in the environment that represent potential threat. The amygdala then sends signals to other brain regions and the autonomic nervous system, preparing the animal to respond quickly. The subcortical pathway to the amygdala can provide only a crude estimation of the perceptual details of the stimulus, but it is very fast. The cortical pathway allows the stimulus to be fully processed, but it is somewhat slower. This crude, fast subcortical pathway may prepare the animal to respond more quickly if, when the stimulus is fully processed and identified by the cortical pathway, the threat turns out to be real.

More recent research with nonhuman animals has emphasized the amygdala’s role in emotional learning and memory. Work by Davis (1992), Kapp, Pascoe, and Bixler (1984), and LeDoux (1992) has shown that while the amygdala is not critical to express an emotional reaction to stimuli that are inherently aversive, it is critical for learned fear responses.

The amygdala is part of the limbic system, the area of the brain associated with emotions. The amygdala is important for formation of emotional memories and learning, such as fear conditioning, as well as memory consolidation. Emotions significantly impact how we process events; when we encounter something and have a strong emotional reaction—either positive or negative—that memory is strengthened.

The sources further states:

Too much emotion gets in the way of logical thinking, and disrupts cognitive processing. This is why in times of crisis, we learn to set aside our emotions in order to problem-solve our way out of a dangerous situation. Those with the ability to maintain low emotional arousal and have high cognitive control are generally better at handling conflict in the moment, plus tend to be the least permanently affected by trauma in the long term2. They tend to be more adaptable to changing situations (or have a higher tolerance for complexity), and have what we call cognitive flexibility.

The amygdala has many functions, including fear processing [11]. Individuals with a large amygdala are more sensitive to fear [12], which, taken together with our findings, might suggest the testable hypothesis that individuals with larger amygdala are more inclined to integrate conservative views into their belief system. Similarly, it is striking that conservatives are more sensitive to disgust [13, 14], and the insula is involved in the feeling of disgust [15]. On the other hand, our finding of an association between anterior cingulate cortex volume and political attitudes may be linked with tolerance to uncertainty. One of the functions of the anterior cingulate cortex is to monitor uncertainty [16, 17] and conflicts [18]. Thus, it is conceivable that individuals with a larger ACC have a higher capacity to tolerate uncertainty and conflicts, allowing them to accept more liberal views.

The commenter further states:

You also don’t seem to grasp from your article that the amygdala is also involved in connect both the right and left hemispheres of the brain combining emotions with logic.

A further source for the description of the amygdale is given here (many different sources are cited at the bottom of this link). There is nothing here suggesting “the amygdala is also involved in connect both the right and left hemispheres of the brain combining emotions with logic”. Perhaps the commenter is thinking about the corpus callosum in a different more evolved part of the brain that does connect the right and left hemispheres. There is also no mention of “combining emotions with logic” with regard to the amygdale. However, this is a primary function of the corpus callosum. I think the commenter may not have “grasped” this. Additionally, since the amygdale is 500 million years old it should suggest something about the “higher intelligence” and “logic” as the commenter writes in this part of the brain. All the sources I have seen suggest it has much more to do with long term recollection and emotion, especially of fear, which are related.

From these wrong premises the commenter concludes with, “This is why liberals accept utopian arguments and seemingly disregard reality”. I would suggest that wrong premises lead to wrong conclusions but this conclusion seems to stand apart from any previous premise and thereby, gives credence to the fact that if the commenter is conservative as it appears, is using the amygdale portion of the brain more than the ACC.

I must admit that I have seen these types of anonymous, un-sourced comments by both the left and right on the internet. Apparently, folks do not seem to realize that making things up off the top of their head is not the same as making a real and serious argument by a real and serious person. This type of behavior confuses readers. I think it is really primarily emotional. I have gone into this detail to highlight what I think is ‘critical thinking’. ‘Critical thinking’ means you lay down a personal, non-anonymous stake in the game and back it up with something outside of personal emotions. Emotion of this type may have a pretense to knowledge but, in the last analysis, is really only wishful and imaginary self-delusion. Additionally, I think an argument must have logical consistency such that conclusions follow from or are reinforced by premises and contradictory statements are avoided. I will grant that reading syllogisms can be really dull so the argument cannot be too formulaic to make it more palatable. I think it is also important to avoid informal fallacies which may be easier said than done. Informal fallacies may make the argument more fun for sympathetic readers but really take away from the formal credence of the argument.

Apple: Price Fixing and Collusion

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In this essay I discussed how price fixing and collusion occurs regularly in the ‘free market’. Here is another recent example of what I discussed.

Here are some lowlights from the article in the Wall Street Journal:

The U.S. accused Apple Inc. AAPL +0.41%and five of the nation’s largest publishers Wednesday of conspiring to raise e-book prices, in a case that could radically reorder the fast-growing business.

In a civil antitrust lawsuit, the Justice Department alleged that CEOs of the publishing companies met regularly in private dining rooms of upscale Manhattan restaurants to discuss how to respond to steep discounting of their e-books by Amazon.com Inc., AMZN +1.40%a practice they disliked. The executives also called and emailed each other to craft a solution to what one of them called “the wretched $9.99 price point,” the suit said.

The five publishers and Apple hatched an arrangement that lifted the price of many best-selling e-books to $12.99 or $14.99, according to the suit. The publishers then banded together to impose that model on Amazon, the government alleged.

As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles,” said Attorney General Eric Holder.

Three of the publishers settled with the Justice Department, agreeing to let Amazon and other retailers resume discounting of e-books. Settlement of a separate suit filed by 16 states and U.S. territories could lead to tens of millions of dollars in restitution to consumers who bought e-books at the higher prices.

A group of 16 states, led by Connecticut and Texas, filed their own suit Wednesday against Apple, Macmillan, Penguin and Simon & Schuster. The states said they have reached tentative settlement agreements with HarperCollins and Hachette. Those two publishers have agreed in principle to provide more than $51 million in restitution to e-book buyers, Connecticut Attorney General George Jepsen said.

My working conclusion is that this happens much more often than many folks think that it does. I base this on my own anecdotal experience of decades in business and management and on cases already mentioned in which I cited specific examples. It may sound trite and clique but I know from personal experience that these guys at the top have huge, inflated egos and they do work out these types of situations in their country clubs and on their golf courses. The Justice Department only pursues a small percentage of these types of activities.

As per Jeff’s recent comment, pure capitalism or socialism does not exist. I have pointed this out in this essay. To think of them as polar opposites in practice is a bit naïve in my opinion. We are individuals and collectivities and as such incorporate both of these components in our politics and economics.

I have no problem per se with selfishness or self-interest. If selfishness or self-interest is given carte blanche in economics the rich and powerful will always make sure that they stay that way at the expense of those that are not. If capitalism is the unregulated or nominally regulated practice of selfishness then what is the practical difference between it and oligarchy, dictatorship, fascism (statist), communism or any system that rules from the top by the powerful?

If practical capitalism is to have a form of democracy (as in the ideal of competition) then the best real hope for impartial rules on how the game is played can only be made by government. To the degree that the rules allow the process to be more competitive is the same degree that capitalism approximates its ideal. As Jeff points out, to the degree that corporatism (crony capitalism) determine the rules is, in my opinion, one factor in turning capitalism into simply another name for the powerful consolidating their hold on power. I have also pointed out that this happens with or without government involvement.

The idea that the government is solely or primarily the culprit may have emotional appeal to some but as far as I can tell is not factual. In a democracy we get the government we deserve. If we prohibit government from intervening in the market with regulation we are effectively handing the market over to the rich and powerful. As Jeff points out they will try to use the government to protect their power but as I have pointed out they will not stop there. They have many tactics for staying in power (as I previously illustrated) and are not above using them.

Those that would have the government stay out of market regulation are effectively playing into the hands of the rich and powerful and doing exactly what they claim the government is doing in crony capitalism – making it easier for the rich and powerful to maintain their hold on power. To ‘hope’ that competition will reign in unregulated or nominally regulated capitalism appears to me to be more like a religious ideal than a realistic practicality. Government should be in the active business of making competition in capitalism real and effective, offering constraints to the monopolizing tendencies of power. Our job as voters is to elect politicians that produce results toward this end and fire those that make big business the real constituents that they serve. If we put the fox in charge of the hen house we should not be surprised when all the hens get eaten.

The Free Market Ideal

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Thank you Jeff for your thoughtful comments…here are some of my observations.

First, I do think we have some agreement on many of your points. Here are some of the differences that I would highlight.

Regulation is not just something that happens in government. Here are some observations from my own experience. At U.S. Robotics one of the engineering groups I managed was responsible for getting regulatory approval not just for the US but for many countries in the world. We called this homologation. In the US we had to get Underwriters Lab (UL) and FCC approvals to sell in the US. We also sold modems into hundreds of other countries and they all had their own similar approval requirements. These requirements were for consumer safety and radio interference issues.

In the 90s Microsoft decided they would implement a hardware certification process. It was practically impossible to sell modems without the Microsoft certification approval. It was also practically impossible to get all our modems every quarter through the huge bureaucracy of Microsoft. They certainly stifled our competitive efforts based on their regulatory approval.

Microsoft has also required a software vendor like myself to pay private regulatory companies a yearly fee which can be very pricey to “digitally sign” our software. They claim this is to keep hackers from infecting software products. However, there are many very good products available for software vendors like ‘obfuscators’ (which I use) that keep hackers out of code. The actual incidents that Microsoft rationalizes its ‘code signing’ process for is statistically very minimal. However, they do get kick backs from their ‘approved’ code signing companies.

Now, with the release of Windows 7, Microsoft has taken another regulatory step by reporting software that does not have a ‘reputation’. This has nothing to do with the code signing. A company may have their code digitally signed and still run into the ‘reputation virus’. Microsoft reports it as a virus. However, if you read what the ‘reputation virus’ is; it only means that Microsoft has never heard of you. Norton and other virus programs take the Microsoft virus alert and automatically delete the downloaded trial software we produce. They report it as a virus. Microsoft readily admits that 90% of the folks that see the virus alert will not install the product. This means software vendors like myself are not permitted to compete in the ‘free market’ of the software business. I have two products for download on the internet. Both are exactly the same code. The only difference is one byte in a text, configuration file that allows the product to come up as either product. One of my software downloads is allowed by Microsoft and Norton, the other is not. It is reported as a virus and automatically deleted. This affects 90% of my new and upcoming business on the Windows 7 platform. I have talked to literally hundreds of other software vendors on the web who are in total agreement with my contention of Microsoft’s market monopolizing practices.

There are many other cases of ‘private market’ regulation that I could cite but this can probably suffice. The idea is that the corrosive effect of regulation is not just a charge that can be levied against the government. It happens all the time in the ‘free market’ as well. Does this effect competition adversely? Absolutely. Is there perhaps some need for regulation by both the government and big corporations? Probably, but as Jeff suggests it is also used as an excuse to kill competition. However, not as a component of government but of the private market itself. I think most folks agree that there is some need for market regulation by an impartial regulatory agency. However, effective regulatory restrictions by large corporations with vested interests are a market distortion that happens often and distorts the ‘free market’ ideal based on competition. When the government becomes a vehicle for the capitalists that do not want competition as Jeff suggest, it is certainly corporatism which is one of the hallmarks of historical fascism.

It is not a matter of is there corporatism or crony capitalism but to what degree it happens not just by government but by big corporations as well. To the degree that this happens, it is not the ideal of the ‘free market’ but a hybrid practical reality of how it actually works. The Bush administration was a perfect example of what happens when regulatory agencies rubber stamp big business. Oil and gas regulation, toy regulations, financial market regulations and more were thrown out the window and companies were given free reign over regulators. Corporations were even discovered to be wining, dining and giving the regulators luxurious trips. This was not the government interfering with the market but giving it carte blanche to do whatever it wanted. The ideal of small footprint regulation, as Jeff espouses, was realized by the Bush administration and it ultimately resulted in the recession. The housing crisis was not caused by too much regulation but the absolute lack of regulation in the derivatives market. One email at Standard and Poor’s stated, “Rating agencies continue to create and [sic] even bigger monster–the CDO [Collateralized debt obligations ] market. Let’s hope we are all wealthy and retired by the time this house of cards falters.” Moody’s and Standard and Poor’s, both private companies, are considered to have elevated ratings on CDO’s which are mortgage backed securities to minimize the risk and, in so doing, increase the profits for investors. See The Housing Crisis – Research Revisted, this and this for more data.

Another tactic of the ‘free market’ is price collusion and price fixing. Individual multinational corporations and conglomerations of individual market segment corporations have often been accused of doing this. The diamond market is notorious for this as well as Oil and Gas (remember Standard Oil, Rockefeller) and railroad industries. While this kind of activity in normally associated with monopolies it is still a reality of the practical workings of the free market. It seems to me that thinking of this kind of activity as a rare monopoly situation allows a sort of effective monopolizing in the actual market. Jeff states that, “Thus, monopolies don’t stay monopolies for long unless they are making consumers happy” but how does this measure up? Remember AT&T, officially deemed a monopoly by the courts, -they monopolized the market for decades…is this a short time? In any case, the kind of activity that goes on daily in the market by Microsoft and others has not acquired the label of ‘monopoly’ but shows that monopolizing activity is not a rare court decided phenomenon of the market; it is an analog, practical reality of the market. Microsoft has been brought to court and found guilty at least once that I know of for market monopolizing practices. This kind of activity has to get extremely severe before a public, official pronouncement is made.

Jeff quotes Smith here, “They often propose new laws and regulations, as Smith points out, that are to the benefit of their companies, but not to the benefit of society as a whole (i.e., to consumers).” However, Adam Smith himself, proposed over one hundred pages of financial industry regulations in the “Wealth of Nations” which have largely been neglected by the modern market place. I suppose Adam Smith himself was one the “they”s that Jeff refers to.

My contention is that it is extremely idealistic to think that the ‘free market’ is, in practice, all about competition. Yes, that is a positive aspect of the real market place but it is still an ideal and does not reflect a large part of how the market works. I also agree that government can become the problem when it effectively acts as a monopolist in the market, corporatism. However, as I have shown this is not just an essential evil of the government but occurs in the private market as well. My contention has always been that the free market works best for the public interest when government and big corporations collide. While the David and Goliath story may be cute, two Goliaths tend to do more damage to each other. The government in a democracy is ideally supposed to be the public defender and not the corporate defender although this ideal too has shown itself to be different from the reality. The answer is not to throw in the governmental towel as we did in the Bush administration but to make sure that we elect politicians that will oppose corporatism and government collusion with capitalists.

I find it interesting that Jeff thinks capitalists are capitalism’s biggest detractors. To me, this is like suggesting that churches are Christianities biggest problem. Capitalists vote Republican for the most part. If they wanted more government it seems to me like they would vote Democrat as the Republicans are fond of laying this charge on the Democrats. Republicans publicly state, almost daily, that they are on the side of business and the capitalists. Therefore, they publicly acknowledge that either they welcome the interference with the market that Jeff denounces or they want to return to the lassie faire capitalism of the Bush administration. While the Democrats may be complicitous in Jeff’s charge as well, they are not so bold proclaiming it which might account for something positive (or not). Are we to believe that the best proponents of a philosophy are intent on its destruction? This certainly may add some credence to some of Nietzsche’s discussion and post modernism but it also is a living demonstration of the inability of the system to rationalize itself based on its members. If major and important members are bent on the destruction of the market, are we suggesting that the only way to redeem the ‘free market’ is by the ideal that it proposes? If the reality has anything to do with some of the practicalities that I have suggested and seen, then ‘free market’ capitalism seems like it gets its validation based on an ‘otherworldly’ idealism not unlike Christianity. Are we supposed to believe that the ‘free market’ liberties in the Bush administration were problems of too much government still and therefore salvage the validity of the ‘free market’ ideal? I think this is a bit much to swallow. It is like continually suggesting that historical Christianity is not the ‘true’ Christianity in order to preserve an ideal Christianity that may appear dubious in practice. At some point, even the best metaphysician must live and breathe and have their existence in the world. Dreams are nice but realties are necessary. I do not advocate overthrowing capitalism but simply dealing with the reality of it without using its ideal as a pretense to justify its inadequacies. I think simple answers that make the government the scapegoat for the failures of capitalism are there to reinforce that idealism of a flawed system and enable us to overlook fundamental issues that need to be addressed. I prefer to address the issues directly and smartly while making the market more of a level playing field and less rigged against the interests of the public; a primary concern for Adam Smith and Karl Marx as well.

For me, the problem is better framed not in terms of government versus the private market but big versus small. Is the ideal of the free market demonstrated in TBTF (too big to fail)? What does competition have to do with propping up a business because it is too big? If competition always produces a better value for the consumer how is it that a ‘big’, that is too big to let the competition kill it can come from the ideal Jeff defends (remember Bush and Paulson)? If the ideal of the ‘free market’ is actually realized in practice, is this yet another glitch in the system that we have to rationalize away? How many times can we look the other way and still pronounce the ‘free market’ holy? What interest is served in ‘free market’ apologetics? My point is that ‘big’ is another name for effective monopoly in many cases. I would also apply this to the government with this caveat…the ideal of the government should be efficiency not small. If we make the government a David I would wager that Goliath will win the battle 99 out of 100 times. We need to make the big of the government our friend and defender because if we give that up we will have the mercy of the ‘free market’ and the legacy of George Bush as our BFFs.

Morality and its Shadow

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The funny thing about “political correctness” is that those that would criticize it do so under the banner of political correctness. Morality is a bit like the Tar-Baby. The more we try to “neutralize” ourselves from it, the more we fall prey to our own ‘bad faith’. From Lorenzo’s argument, we can certainly see the hypocrisy of a double standard with regard to Christianity and Islam. However, how real is the double standard for progressives? Certainly, I have no doubt there are progressives that fall under Lorenzo’s snare but how much of that is a stereotype habitually repeated by the right and how much can empirically be proven true of a majority of progressives? I did not see any reputable polls in the essay but there may be some in his source material. I do not know if I would qualify as ‘progressive’ since I am left of liberal but the Lorenzo box would not apply to me as I acknowledge the logic of his argument and agree that it certainly demonstrates the ‘bad faith’ of morality. Surely, we can suggest that the set of all “moral mascots” is not equivalent to the set of all progressives as that would be the apodictic example of the fallacy of equivocation. So I suppose we must content ourselves with suggesting that some unknown amount of progressives certainly fall under his indictment.

However, I would also suggest that under the guise of this kind of progressive critique there is also another political correctness, -the political correctness of conservatism. After all, painting progressives with the broad brush of hypocrisy is in the implicit interest of conservatism. It would seem that the ‘elitist’ moralists on the left are not the first on the historical stage of moral hypocrisy or perhaps at least the most dominant player in the present drama. If we take a step back from such righteous pontifications we may have to concede that Christianity has certainly had a lead role in the moral passion play and its hypocritical production. A few things come immediately to mind such as the crusades, priests and altar boys, dark age executions for heresy and witchcraft, anti-abortion (‘pro-life’), Republican Christians support of just wars like Iraq and Afghanistan and capital punishment, etc. It seems that shifting the argument to revolve around the lesser case of progressives from the greater case of historical Christianity is a conservative tactic to expunge their own predominate role in the power play of morality. However, I am willing to admit that political disposition may certainly have much to do with the sense of proportionality and number that typically lies dormant in pontificating.

The sort of Tar-Baby circularity I am highlighting really calls for a deeper look at the quagmire. One argument that can be made, Nietzsche made it elegantly, is that morality is really about power. In his view individuals and more importantly religions, politics, cultures preserve and maintain domination on the basis of the moral imperative. All despicable forms of human behavior can be dressed up with the garb of truth, morality and universality. However, the naked truth of the emperor with no cloths is that morality is used to advance and justify the unabashed use of power and domination. While I am not entirely on board with this cynical perspective of morality I certainly cannot deny the legitimacy of such an argument. Historically, we have desperately tried to authenticate our anthromorphic, myopic narcissism on the basis of the ‘eternal’, the ‘true’ and the ‘good’. I believe Foucault provides a rich empirical study for this case. When it comes to morality everyone and every culture thinks their morality is the ‘true’ morality and the ‘others’ demonstrate ‘bad faith’ morality. The logic of this power mongering morality has been proven over and over again and the only escape from contradictory cynicism appears to be neutrality. However, before I get into that I would like to cite one other avenue with regard to the topic of morality.

One way that folks try to escape the quandary of morality is to be a-moral. If we have no morality but only self-interest we can try to justify that on the basis of the best interest of every self or the morality of a-morality but that comes off as mere pretense. Why would a true a-moralist care if others take their ideology as serving the interest of morality as that would be a contradiction of terms; sort of like an atheist needing to assume the existence of God in some fashion in order to disprove it. Perhaps Nietzsche was given a pass to some extent by the mere force of his insights but his tinny sounding disciples remind me of what Nietzsche said about Christianity; there was only one Christian and he died two thousand years ago. The post-Rand era, Darwinian capitalist drum pounding may be cute and dramatic but it has certainly become cliché and over done. I suppose you could admire the pure self-aggrandizing of a Hitler, a Stalin, a Gingus Kahn, etc. but that cannot help but set up the most despicable and ‘bad faith’ form of morality, the morality of might makes right, -the butt of Nietzsche’s problem with (and admiration of) Christianity. He decried Christianity as descendent and decadent but he also credited it with the ingenious invention of eternal Hell and the inferior parishioner’s fear of reprisals for not listening to priests admonitions of how to avoid it. While he may have romanticized the nobility of the Greeks and the warrior he himself lived in a moat by the castle (as Kierkegaard criticized Hegel). Sorry, but I find the chest beating neocon to be a caricature of himself.

On the surface arguments against neutrality could bring up the fascist science of Aryan Nazism or the scientific Stalinism of communism. Ah, but the retort would be that those political sciences were not ‘true’ science. This is reminiscent of the claim that the Crusaders were not ‘true’ Christians. At all costs we must preserve the possibility for truth even if it maintains the necessity for untruth to establish it. Perhaps true science can only maintain a kind of quietism on questions of politics and social science. We could also bring up the argument that for every science there is a scientist, a human with morals and biases. Even if neutrality does offer refuge it appears to not offer refuge for living humans that still must moralize and have personal judgments or biases. As the existentialists were fully aware we must act and make judgments, even scientists. We must intervene against the unjust exercise of totalitarian perceptions, of the morality of power, and yet we can lay no claim to the absolute impartiality of our own judgments. Neutrality at best can only stifle and ignore the need for action when we are not the ones on the adverse receiving ends of the morality of power. I believe the French call the neutral justification for inaction the bourgeoisie. I am afraid that the refuge of neutrality is really only an empty abstraction for those that can afford one, those ordained by the gifts of power and morality. By this I mean that neutrality does not place us above the fray of having to act and make decisions based on our own flawed judgments and moral inconsistencies. If neutrality is used to justify inaction when faced with the need to act it is really only a pretense for conserving one’s own moral ascendency when faced with our inability to establish morality on anything other than, more ‘true’ than, ourselves. The latest cliché for moral hypocrisy may be ‘political correctness’ but its reality was perfected long before progressives came on the scene.

One caveat to this discussion on neutrality is that I do not want to reduce all neutrality to ‘bad conscious’ or bourgeois morality. I do believe that emotions may equally taint and break down the need to act based on our own moral ambivalences; clear thinking is in no way excused from our existential dilemma. The point is that we are offered no refuge from which we can gain a ‘Gods-eye’ perspective and therefore escape bad morality. I propose that instead of the one-upmanship game of establishing our morality on higher divine grounds or morally excusing ourselves from our moral selves perhaps we should look at morality as the small and individual way in which we are, -as having to make judgments, act and have unfounded and inferior opinions.

As humans we have to the possibility of learning and changing as long as we live. We cannot deny that we have morality and that we can and do use it in bad faith but we also have the possibility to learn and grow, to change. We are not utterly and always reduced to the necessity for wrong actions and hypocrisy. We must be politically correct even if we are conservatives in our uniquely conservative fashion but we do not have to universalize and absolutely justify our moral certainties. We are allowed tentative judgments. We must also recognize our clay feet and ‘bad faith’ morality without making it a virtue or ignoring it. To some extent, we are responsible for the plight of others. Each of us has to make a judgment call about where that responsibility lies. Perhaps as Levinas would have it, the other continually faces us and reminds us of our abnegation to their call of our responsibility. We may as well fess up and do what we can in the face of our own hypocrisy. Neutrality never succeeds completely as permanent oblivion is not an option in the face of human tragedy; our indolence always comes back to us in one way or another. I suppose we can justify, rationalize, divine and demon but it also requires constant effort to keep form and chaos in their perspective corners. Perhaps the best we can do is accept the burden of our morality, forge ahead in the need to act and try to listen for the still, small voice that affords us the opportunity to learn.

A Response to a Blog…

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With regard to this…

“The difference is that in free markets, competitive forces tend to minimize waste, fraud, and inefficiency. If you don’t minimize these things and your competitors do a better job at it, their prices will be lower and you will go out of business. No such forces exist in government (in general).”

Normally, I would like to take the time to get empirical studies on my thesis here but since I do not have the time right now I will give you my anecdotal experience. I am not an outsider when it comes to business. I have worked for many years in small, medium and large businesses as engineer, engineering manager and project manager. I helped grow U.S. Robotics from a 50 million dollar a year company to a 500 million dollar a year company in five years.I think the rhetoric of competition and the ‘free market’ is highly overblown. Yes, it does happen but not nearly as much as to justify the reality of the ‘free market’ ideal. Competition is itself an ideal that Adam Smith was keenly aware of but also (as I pointed out previously in part 1 and part 2) fully aware of the corrosive effect that ‘those that live by profit’ had on the ideal. He was also keenly aware of the danger of monopolies. I submit that monopoly is not a digital phenomenon but an analog phenomenon.With regard to competition, companies can, to a point, compete more efficiently by reducing labor cost or production cost and overhead. When a company reduces its labor costs it must stay competitive to retain the best workers so there is only so much room there before you hit a wall. Of course, if you move your labor intensive production to a cheaper labor market (i.e., overseas) you can, in theory, reduce your labor costs. However, that tends to favor more stable products and larger companies. When we were developing and producing hundreds of products a quarter (domestic and international) with ever new technologies we did not have the time to take many SKUs overseas to have them produced. We did take more stable, larger volume products overseas.As a large company no one could compete with the component costs we bargained down due to our large volumes. We also had the dibs on production companies overseas that were maxed out and chiefly catered to the big boys. Semiconductor foundries were also over booked and we were always the first in line because of our volumes. Small companies were a joke if they thought they could compete with us.If we wanted market share we bought it (i.e., Palm Computing). We bought companies for market share and almost always fired the people and wrecked the company. We were really only interesting in buying market share.We also had no problem getting and retaining the best and most talented employees.This may not be the legal definition of a monopoly but it effectively approximated a monopoly. Small companies cannot compete head on with multinational corporations. This is yet another case of the haves and the haves nots. This is not just unique to U.S. Robotics. Recent revelations about Goldman Sachs also demonstrate that large companies can play all sides of a competitive game and continually pummel the competition. To think that the ‘free market’ is an equal playing field is an ideal that is not reflected by reality. “Big” is a huge competitive advantage in every way.Bottom line: the ‘free market’ is rigged. You are kidding yourself if you believe differently.Another topic…When I stated this…

“Another topic, I have wanted to address your criticism of the scientific method as pertains to neuroscience and brain studies but have been really busy lately. Just a question – do you believe the scientific method can provide evidences based on multiple small studies from randomized testing (careful, there is quite an elaborate history behind this) or do you think only an exhaustive large scale, extended time study is credible? Do you think that polls have any credibility? I think this direction of inquiry borders on the real meat of your critical concerns…”

Your response was this…

“Regarding my criticism of the scientific method… Hopefully I have not given the wrong impression in my various posts on this topic. I am a huge fan of the scientific method and think it is basically critical thinking put into action. I have criticized not the scientific method, but rather scientists, for failing to maintain their objectivity in certain (many) cases.”

I am having a hard time reconciling this with this…

“From what I can tell from the studies, enlarged brain structure (of the two different types) are correlated with liberalism or conservatism, but again, the studies (as far as I could tell) do not tell the reverse: whether liberalism and conservatism are correlated with the two enlarged brain structure types. So my original point still holds; it could be the case that 80% of those with an enlarged amygdala are conservatives, but only 0.01% of conservatives have an enlarged amygdala. If I’ve missed something in the studies, please let me know.”

The idea is that you do not have to do a large, multi-year study to exhaustively prove that conservatives are generally going to have larger amygdalas than liberals.

The 2nd amendment as passed by the Congress states:

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A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

As ratified by the States and authenticated by Thomas Jefferson, Secretary of State:

A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed

While this is the law of the land these simple words may defend the right for the “people” or the “militia” to have arms. However, depending on how you approach the topic, the devil (as every good lawyer knows) is in the details. Most folks that are for gun control are NOT trying to take guns away completely; they are trying to “control” them. To insist that “control” is the same as abolition is to ignore the definition of these words and set up a ‘straw man’ argument. It is easy to push the control of arms to an extreme position of abolition and, in so doing, dismiss the argument as unconstitutional. Of course, this is an informal fallacy of logic and, I think, not allowable in pragmatic jurisprudence.

Additionally, while the abolition of arms is not defensible we do have laws about who can own guns. We do not allow felons or mentally ill people to own weapons. These laws have historical judicial precedence and agreement by the vast majority of the electorate. These guidelines are common sense and I do not think even Jefferson would object to them. From a minimalist reading of the second amendment these kinds of laws should not be allowed. However, they are allowed and sustained by Federal and State laws. Accordingly, if cities by democratically supported laws want to place additional regulations and controls on the right to bear arms there is no legal reason why they should be constitutionally prohibited to do so. Apart from whether or not the “militia” is the military or survivalists in Utah, a democracy has every right to interpret the 2nd amendment as they choose. An outright ban of guns may be unconstitutional but there is nothing in 2nd amendment that prohibits control and regulation of arms. It seems to me that judicial precedence would support the idea that a complete ban of guns OR a carte blanche license for anyone and everyone to own a gun has been deemed unconstitutional – as is typical, laws and justice, universals and particulars require continual maintenance to retain pertinence and viability. “Original intent” is a pipe dream, metaphysic the carries the illusion of immutability and permanence but does little to address our lived environment.

A Case for Bashing the Democrats

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Here is one issue I can actually agree with Newt’s recent comments concerning President Obama apologizing for burning the Quran. I do not think we should apologize, I think we should get the hell out! Why are Democrats and Republicans for the most part not saying what Ron Paul has said – what the hell are we doing there? In this case, the Democrats are justifying a war that the Republicans started AND continuing the error they made. This is the kind of thing that gives Democrats a bad name.

JFK (a Democrat) continued the ridiculous war that Eisenhower (a Republican) started in Vietnam. As a result many folks now think that JFK started the war. Historically speaking, JFK took ownership by continuing the domino theory, Republican rhetoric of the day for a tragic war that killed 50,000 Americans and maimed many more. This certainly reinforces the communist idea that liberals only serve the interest of the bourgeoisie by diluting and dulling the narrative that conservatives weave. At least it could be said that the effect is the same – the war is adopted, taken over, justified and thus, becomes a Democratic war.

A war is no small issue – the Republicans and Democrats owe us, the American people, an apology for starting and continuing an enormous mistake and human tragedy. We cannot afford the lives or economic cost of this insanity – STOP THE WARS NOW!!! I speak of wars because we still have active troops and ‘contractors’ in Iraq with casualties. Both Iraq and Afghanistan HATE OUR GUTS. We are occupying their country. Just think if Iraq or Afghanistan invaded our country to stop the anti-Islamic hatred in this country. Would we see them as liberators or occupiers? We are doing exactly that to them – HELLO, they hate us and do not want us over there. We have way overstayed our welcome and have only aggravated the problems inherent to their countries. We cannot make them ‘little Americans’. They have a history that has nothing to do with our history. We are imperialists and colonialists. We are wrong and everyone that is continuing our error is part of the problem. If Ron Paul could handle foreign policy and President Obama domestic policy, I would vote for them.

I do like the way President Obama handled the Libyan (and covert Egyptian aid) issue. We gave assistance to NATO and the Arabs, got in and out with the good guys in Libya (and Egypt) winning. I like his restraint with the ‘Arab Spring’. I think we need to support NATO and the rest of the world when and how they resolve to intercede but unilateral or effectively unilateral actions on our part always backfires on us – we make more terrorists by far than we kill – this is not success or winning folks. I have more comments in this essay that I wrote a while back.

Oh, one more rant, I hate and have resented all along that I have to pay taxes for someone else’s political insanity. Republicans talk about paying for ‘Obama-care’ – at least ‘Obama-care’ does not senselessly, in mass, massacre innocent elderly, women, children, kill our kids, and drive our economy into debt like these two crazy wars (the cost of these wars is much higher even in purely economic terms than ‘Obama-care’ – actually, according to the CBO ‘Obama-care’ saves us 100 million dollars over 10 years). These wars will not help anyone, only prolong misery – at least ‘Obama-care’ has the hope of perhaps, actually doing some good.