"The Law"

Time and circumstance permit me a very little of the former to share something with you in the middle of the week. However, you're in luck.  Over the years and with the help of some pretty damn smart people that I've been lucky enough to know, I have slowly been gaining a bit of knowledge. Such knowledge, when acquired at all, is usually done by reading the words of much smarter people than me (a list almost as long as that of the National Register). The best of that knowledge was acquired by reading original source material.

Thanks to their advice, I am  able to say that I am becoming a good deal closer to the thinking of such giants as Thomas Sowell, Walter E Williams, Henry Hazlitt, and Milton Friedman (among others) whose books I have read. Many of these scholars and pundits have in turn referenced a writer from the 19^th Century, Frederic Bastiat, in tying their efforts to those of the past. More specifically they reference an essay of his first published in 1850, “The Law”.

With these limitations in mind, I am would like to share some brief part of that which I am currently reading. I hope that you appreciate it in the same way that I have, and promise to come up with something more original for the weekend.

“Since everybody traffics in law for his own profit, we should like to do the same. We should like to make it produce the right to assistance, which is the poor man's plunder. To effect this, we ought to be electors and legislators, that we may organize, on a large scale, alms for our own class, as you have organized, on a large scale, protection for yours.”

“Yes, as long as it is admitted that the law may be diverted from its true mission, that it may violate property instead of securing it, everybody will be wanting to manufacture law, either to defend himself against plunder, or to organize it for his own profit.”

“This plunder may be only an exceptional blemish in the legislation of a people, and in this case, the best thing that can be done is, without so many speeches and lamentations, to do away with it as soon as possible, notwithstanding the clamors of interested parties. But how is it to be distinguished? Very easily. See whether the law takes from some persons that which belongs to them, to give to others what does not belong to them. See whether the law performs for the profit of one citizen, and, to the injury of others, an act that this citizen cannot perform without committing a crime.”

“And this is what has taken place. The delusion of the day is to enrich all classes at the expense of each other; it is to generalize plunder under the pretense of organizing it. Now, legal plunder may be exercised in an infinite multitude of plans for organization; tariffs, protection, perquisites, gratuities, encouragements, progressive taxation, free public education, right to work, right to profit, right to wages, right to assistance, right to instruments of labor, gratuity of credit, etc., etc. And it is all these plans, taken as a whole, with what they have in common, legal plunder, that takes the name of socialism.” 

  

Banking Confusion

I have been trying to follow the government handling of the banking bailouts lately, but I must tell you that I am beginning to find the whole thing rather confusing. 

Let me see if I have this right. It was the injudicious use and improper lending of money that got the banks in trouble in the first place. Much of this improper lending was done under threat from the Justice Department of the Clinton Administration in the first place (but I only throw that out as a sidelight). 

Having overextended themselves, these banks then found themselves in a rather precarious capital position when the those people to whom they lent money couldn't pay it back. The stock market responding in turn, then found itself in an equally precarious position, which made the bank's position even worse. The government agreed to loan these banks government (taxpayer) dollars in order to remain solvent, in exchange for “preferred stock”, a position which would place the government (taxpayers) first in line for receiving any dividends from the bank’s return to profitability. The government (taxpayers) would not however, receive the same voting rights as those owning common stock, and would therefore have little to say in how the bank ran from day to day. Being a government however (especially a progressive one), ours was unwilling to be in a position where they could not control how these businesses were run and reneged on their promise to not interfere. 

The banks, realizing that they were in yet another bad deal, this time at the hands of the government (remember the cause now), decided that in the choice between the rock and the hard place, they preferred the rock. Many therefore announced that they would like to give the government (taxpayers) their money back. 

Now you would think that the government would welcome a repayment of monies that were at serious risk, would take their money (with interest), and would go back to the business of government (which is normally bad enough). Instead, the government refused repayment (of taxpayer money remember), and announced to the banks that they would like to exchange the preferred stock for common stock. This meant that we would be far less likely to get this money paid back (HEY!), but that the government would now have a voting interest in how the banks were run from day to day. 

So starting out with an issue caused by government interference with the operation of banks on a day to day basis, they attempt to fix the problem by throwing government (taxpayer) money at it. When this solution proves even more egregious than the original problem to these businesses, those businesses decided to step back from this fix. The government, which remember again caused the problem in the first place, rejects getting its (our) money back, and in turn chooses more of the same and perhaps even greater control than that which caused the problem in the first place. The sum total of this assistance program in fact, is that in the name of capitalism, our government would like to commit the socialist act of nationalizing the banking industry. See my confusion?

 

Fulfilling The Promises - A Better Take

While I was scribbling away on my own posting for the weekend, Maggie Thurber was assembling the notes from a visit that she had on WSPD by phone yesterday afternoon with Congresswoman Virginia Foxx (R-NC). The interview ended up providing some interesting information about how things in government work these days, and Maggie's insights and conclusions about the information shared are well worth reading. 

Nationalize Oil Companies?

Congress has been grilling the major oil companies in recent days, taking full advantage of our frustration over increasing gas prices to continue to demonize them. This lame attempt to gain political advantage in a awful situation is incredibly heinous, since it is government regulations that have prevented both new drilling and the building of new refineries in the US; both of which would aid the supply side of the equation. Such grandstanding by politicians was bound to backfire sooner or later. This appears to have happened. 

I never thought I would hear it admitted by a liberal politician but Maxine Waters, Democratic Senator from California, threatened John Hoffmeister, the president of Shell Oil with nationalizing oil companies in the US. In fact, she almost used the dreaded "S" word (socialize) as this Fox News coverage of the hearings illustrates. http://youtube.com/watch?v=PUaY3LhJ-IQ&feature=related 

It has long been suspected that radical liberals, especially those in California, were attempting to turn the US into a government ruled by socialism in principle if not in fact. In this nonsensical diatribe, Sen. Waters finally confirms it for the microphones.  

As a side note here, at a time when this country is crying out for more oil and more refining capabilities, the talk of nationalizing their companies should certainly inspire American oil companies to make major capital investments in infrastructure and long-term speculative drilling.

 

A Hope For Change

With a little luck, the last of the political primary debates were over this week. The election process is not over by any stretch of the imagination however. With the economy in the doldrums, gas and oil prices at an all time high, and inflation rearing its ugly head; naturally everyone hopes that things will change. Coming out of eight years of a Republican president, the Democratic candidates have based a lot of their campaigning on both hope and change. Even the Republican candidate, facing a disgruntled electorate, recognizes that hope for some kind of change is essential. The question is, "What kind of change?" 

So many things are timing in our lives, and in my case this manifested itself in a book that I recently completed reading, "A Time For Truth" by William E. Simon, written in 1978. Mr. Simon was a Treasury Secretary under Nixon and Ford, and the Energy Czar during the oil crisis of 1973-74. The clear thinking that he brings to the subject of energy and the US economy both as it existed then, and as he saw it evolving some 30 years ago is astonishing, and makes the book well worth putting on your reading list. 

More astonishing still in this book is the reference that he makes to a quote from one of my heroes, Winston Churchill. Being pushed out of office by the Socialists in England back in 1945, Mr. Churchill had some rather interesting insights on those who were taking power and where he saw it leading. These are thoughts that in the current debate over the potential coming to power of the social progressives of this country is worthy of now repeating:  

"I do not believe in the power of the state to plan and enforce. No matter how numerous the committees they set up or the ever-growing hordes of officials that they employ or the severity of the punishments that they inflict or threaten, they can't approach the high level of internal economic production achieved under free enterprise. Personal initiative, competitive selection, the profit motive, corrected by failure and the infinite processes of good housekeeping and personal ingenuity, these constitute the life of a free society. It is this vital creative impulse that I deeply fear the doctrines and policies of the socialist government have destroyed. Nothing that they can plan and order and rush around enforcing will take its place. They have broken the mainspring, and until we get a new one, the watch will not go. Set the people free - get out of the way and let them make the best of themselves. I am sure that this policy of equalizing misery and organizing scarcity instead of allowing diligence, self-interest and ingenuity to produce abundance has only to be prolonged to kill this British island stone dead." 

With the current struggles in the US economy and the coming changing of the guard that will inevitably occur no matter which way the election goes, my hope is that these words bring pause in the headlong rush. Hope is always a good thing. Change, not always so much. 

Government's role in this hope and change is a delicate and a dangerous one. Remember the inflation, unemployment, and chaos that Great Britain suffered for many years after World War II and which didn't truly end until Margaret Thatcher took the reigns of government. Take heed as you ask for government to take control of things and make it all right. And as always, be careful what you ask for, you might just get it.