The Kim is dead, long look the Kim!

- commenter Alisa

In a collective existential state, society is one living organism: society and its members are one, and individuals exist only as inextricable parts of collective society. Society itself is alive – so by extension, the rights to liberty and property are
...continue Not getting it yet]]> The state of nature is not the halcyon, bucolic life of myth. Existentially, the state of nature is a place of predators and prey. To escape that uncertainty, predators or prey can join together in mutual association, forming societies. Associations of individuals seeking escape from the state of nature can take one of two existential forms: Collectivist or Individualist.

In a collective existential state, society is one living organism: society and its members are one, and individuals exist only as inextricable parts of collective society. Society itself is alive – so by extension, the rights to liberty and property are also vested in society. Collective societies may grant privilege to members, but they may not recognize individual rights. All rights fall to the living collective society.¹

Probably one reason they think “Hope®” it will work is because it is “legal”.

In this article, I
...continue A good day for limited government]]> There is a lot of conflicting opinion being fired at the US Supreme Court’s ruling(PDF) on “Obamacare”. It is certainly a curious ruling both on first and subsequent reads. I think the opinions in the decision make a great deal of, perhaps complete, sense when viewed in the terms of ‘doing a Marbury v Madison‘. That was a decision written by Chief Justice Marshall in 1803. From that decision, Marshall is regarded as the founder of the Supreme Court and the Judicial branch as it came to be understood and accepted in the balance of powers.

In this article, I am not addressing the merits of the Affordable Care Act, I am speaking to the Constitutional elements at work in the decision.

Roberts declares his view of judicial legislating in one succinct sentence. “It is not our job to protect the people from the consequences of their political choices.” Notice he said “political” choices. If something can be allowable under the Constitution, then a restrained Court goes out of its way to accommodate it to the Constitution. If something is Constitutionally permissible, then whether or not to do it is entirely within the sphere of politics, not Constitutional law. We will never find perfect masters and expecting the Supreme Court to attempt that role is contrary to limited government. Roberts appears to be channeling Mencken with this declaration. Roberts’ opinion allows the ACA “penalty” as a taxing authority of the Federal government. The wide scope of the taxing authority is in the Constitution and, with the help of the 16th amendment, almost unlimited. Congress has long used this power to enact “sin” taxes on things like alcohol, cigarettes and even luxury yachts. Congress has long used the tax code to incentivize politically favored behavior, for one example, taking out a home mortgage. Regardless of the “exemption” language, in actual consequence the failure to take out a mortgage results in a tax penalty paid by those who do not take out mortgages. Low enough income thresholds make this “penalty” for not taking out a mortgage meaningless, just as they do for the healthcare “penalty”. Roberts sees the two as a distinction without a difference and was conceding no ground that hasn’t already been long lost, if ever held.

What is the up side? First, by finding this to be a tax the Court has left it wide open to legal challenge on the grounds that it originated in the Senate. Under the US Constitution, Article I, Section 7, Clause 1, “All bills for raising Revenue shall originate in the House of Representatives“. This bill originated in the Senate. The first time somebody challenges the origination of this tax, it must fall on that “technicality” and to enact it, the House must originate and pass the taxing element as a separate bill and the Senate must concur. Allowing for complete severability (the parts that don’t violate the Constitution are allowed to continue unimpeded), that enforcement tax will need to come up as a new bill in the House and be passed by the Senate and signed by the President. Just a long shot guess, but I don’t see that happening. I see at least 5 SCOTUS justices who will grant cert (or more likely let a lower court ruling stand) and strike down the ACA tax on origination basis if the President continues to pursue enforcing it, especially since the decision explicitly permits pre-collection legal challenges that are normally not permissible for tax challenges. To pass a tax of that magnitude after 2010? Not gonna happen. We are safe from this particular “mandate”.

What else happened in this ruling? To the best of my recollection (but I’m not a lawyer) this is the first time I have seen such a clearly enunciated explication of enumerated power to the Federal government and plenary power to the States. In this case, Roberts refers to the “police” power as being exclusive to the states. “Our cases refer to this general power of governing, possessed by the States but not by the Federal Government, as the “police power.” See, e.g., United States v. Morrison, 529 U. S. 598, 618–619 (2000).” That was an interesting choice of cases to cite as it referenced Lopez favorably and rejected Wickard. I wonder if this is telegraphing the future reining in of out-of-control Federal police powers. I suspect so. In the very next sentence, he references New York v. United States. This paragraph is worth quoting in its entirety. I provided the Wikipedia links.

“State sovereignty is not just an end in itself: Rather,federalism secures to citizens the liberties that derive from the diffusion of sovereign power.” New York v. United States, 505 U. S. 144, 181 (1992) (internal quotation marks omitted). Because the police power is controlled by 50 different States instead of one national sovereign, the facets of governing that touch on citizens’ daily lives are normally administered by smaller governments closer to the governed. The Framers thus ensured that powers which “in the ordinary course of affairs, concern the lives,liberties, and properties of the people” were held by governments more local and more accountable than a distant federal bureaucracy. The Federalist No. 45, at 293 (J. Madison). The independent power of the States also serves as a check on the power of the Federal Government: “By denying any one government complete jurisdiction over all the concerns of public life, federalism protects the liberty of the individual from arbitrary power.” Bond v. United States, 564 U. S. ___, ___ (2011) (slip op., at 9–10).

Previously, I quoted what I think is Roberts’ enunciating statement of this opinion. Here is the quote in full context.

[...] Members of this Court are vested with the authority to interpret the law; we possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our Nation’s elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices.

Our deference in matters of policy cannot, however,become abdication in matters of law. “The powers of the legislature are defined and limited; and that those limits may not be mistaken, or forgotten, the constitution is written.” Marbury v. Madison, 1 Cranch 137, 176 (1803). Our respect for Congress’s policy judgments thus can never extend so far as to disavow restraints on federal power that the Constitution carefully constructed. “The peculiar circumstances of the moment may render a measure more or less wise, but cannot render it more or less constitutional.” Chief Justice John Marshall, A Friend of the Constitution No. V, Alexandria Gazette, July5, 1819, in John Marshall’s Defense of McCulloch v. Maryland 190–191 (G. Gunther ed. 1969). And there can be no question that it is the responsibility of this Court to enforce the limits on federal power by striking down acts of Congress that transgress those limits. Marbury v. Madison, supra, at 175–176.

The questions before us must be considered against the background of these basic principles.

Did you catch that bombshell that slipped in there? “The powers of the legislature are defined and limited“. This may be transparently obvious to those of us who take contracts, and in particular the Constitution as a contract, seriously, but once FDRs eight SCOTUS appointments took control, that statement became ideological heresy. To hear it once again stated by a Chief Justice writing a majority opinion in a landmark case is grounds for celebration. When Pelozi notoriously responded “Are you serious! Are you serious!” when questioned whether the legislature had the Constitutional authority to mandate the purchase of healthcare, she wasn’t playing politics. She is from the school of thought that believes that the Commerce Clause, the Necessary and Proper clause and a couple of other clauses mean that Congress may do anything it pleases if it first recites a magical liturgy containing one or more of those phrases. It is the same sort of thinking that lead them to believe that calling a tax a “penalty” could make it not a tax; for them words mean what you need them to mean. There have been signals that the Court has been heading towards limiting the Federal scope for some time now but with this decision, the Court’s change of course is firmly established. The clear and unequivocal statement that will ring longest from this decision is that there really are limits on what the Federal government may do. To this Court, the Constitution really does appear to mean something.

I’ve run out of steam here, but Randy Barnett, Tom Scocca, Jay Cost, Ezra Klein, and Walter Russell Mead have some interesting takes on the decision and I probably could have saved myself the time of writing this if I had found Sean Trende’s article sooner.

In conclusion, I think this has been a very good week for limited government. For the first time in the history of the United States, a US Attorney General has been held in both criminal and civil contempt for concealing information from Congress. This is the strongest check I have seen on the imperial presidency in my life time, far more significant than Watergate IMO. A traditionally compliant Congress is demonstrating that it takes its oversight responsibility seriously. With a vote of 255-67 including 17 Democrats, this truly is the people speaking and not the Republican party hierarchy (who probably do not like the precedent). The very same day the House cast those votes, the Supreme Court hands down a decision that is a major step in the process of placing the Federal government back within its Constitutional restraints. A good week indeed.

If this bastard wins the Wisconsin Republican gubernatorial primary, expect all hell to break loose.

His platform is available courtesy of Occupy Wisconsin.

I didn’t know about the Republican primary and thought that what everybody is calling “The Democratic Primary” didn’t have any Republican elections on the ballot. I hadn’t planned on voting.

That bastion of unbiased neutrality, aka Wisconsin Public Radio, even put up an article saying that “Gov. Walker
...continue If this bastard wins …]]> The Wisconsin Recall election on June 5 is national news and a much discussed political watershed moment. And, conveniently, voter ID laws have been temporarily blocked during the recall.

If this bastard wins the Wisconsin Republican gubernatorial primary, expect all hell to break loose.

His platform is available courtesy of Occupy Wisconsin.

I didn’t know about the Republican primary and thought that what everybody is calling “The Democratic Primary” didn’t have any Republican elections on the ballot. I hadn’t planned on voting.

That bastion of unbiased neutrality, aka Wisconsin Public Radio, even put up an article saying that “Gov. Walker is urging Republican voters not to meddle in the Democratic primary recall elections on May 8th” . Notice the NPR article has the exact same date that the Government Accountability Board (notice 5 to 1 Democratic appointees) announced that they had qualified an additional 369 petition signatures that they had previous determined to be ineligible and Kohl-Riggs would be running against Walker.

Their plan might even work. If it does, expect what we’ve seen so far to look like it was a warm-up.

- Patrick Henry, March 23, 1775, at the second of the Virginia Conventions.

The full speech is available here It’s not long so, as Glenn Reynolds would say, “read the whole thing.”

Although this trend is very much a good thing, I do have some concerns. One of them is for intellectual property protection. All advances in technology and the arts are the result of intellectual endeavors, and assuring the rewards and return on investment of those endeavors is essential to continue the advances. Another concern I have is for ‘real’ property rights. I would very much
...continue System ‘D’]]> For any of you who may be feeling particularly depressed about the state of the economy, politics and the regulatory leviathan in general, this will cheer you up greatly. It certainly improved my overall outlook.

Although this trend is very much a good thing, I do have some concerns. One of them is for intellectual property protection. All advances in technology and the arts are the result of intellectual endeavors, and assuring the rewards and return on investment of those endeavors is essential to continue the advances. Another concern I have is for ‘real’ property rights. I would very much like to hear from any of the Samizdata commentariat who have access to, and perhaps even do business in “l’economie de la débrouillardise.”

As the dollar and the Euro flare off into nothingness like the methane from a decomposing landfill, I presume System ‘D’ is Plan ‘B’ for advanced Western societies as well. How will that unfold?

In the early seventies my high school participated in a program that allowed students to access the Illinois Institute of Technology computers for instructional purposes. In a room off of the school library sat two Teletype 33 terminals, one of them equipped with foam telephone ear cups and a modem. We would code our programs onto paper tape and then, during our school’s allocated time, feed them into the IIT mainframe for compiling and executing. The second thing I learned after how
...continue Institutional Will]]> Do institutions have a will that transcends, and can run contrary to, those who create and staff them?

In the early seventies my high school participated in a program that allowed students to access the Illinois Institute of Technology computers for instructional purposes. In a room off of the school library sat two Teletype 33 terminals, one of them equipped with foam telephone ear cups and a modem. We would code our programs onto paper tape and then, during our school’s allocated time, feed them into the IIT mainframe for compiling and executing. The second thing I learned after how to get the mainframe to understand that I was sending it a program, was that computer programs have a will of their own that is totally apart from my will. My will is to get the answers to the formulas I am trying to solve. The program’s will is to follow the next instruction. Occasionally, to the programmer’s embarrassment and the rest of the computer club’s amusement, an errant program would set off in a Quixotic attempt to consume all of our allocation of CPU clock time, empty the box of paper and wear out the printer ribbon, in an infinite pursuit of pointless activity. An example of this might be if I told the program to stop when a particular value reached “25″, but then inadvertently instructed it to count up in units of two. Since the counter stepped from “24″ straight to “26″, it never did reach “25″ and the program tripped merrily along, consuming all of the resources it could acquire. Later I was employed working on a Burroughs computer. It had a lovely missile-launch style red button labeled “CLEAR MEMORY” shielded underneath a spring-loaded, hinged, clear plastic cover. When programs ran amok, we could lift the cover and administer an instant memory wipe to the CPU, returning control to the system operator.

How does computer programming pertain to Institutional Will? Institutions, whether they are small temporary government programs, or über institutions like a constitution, are nothing but computer programs executing procedural instructions on a societal mainframe. Just like electronic programs, institutions can evade their constraints and wildly consume resources, until a counter-procedural force stops them.

Years ago I promised to Veryretired, a long time denizen of the Samizdata commentariat, an essay on why civil disobedience is wrong. He has yet to receive that essay from me – and he never will, because I encountered the problem of Institutional Will. When institutions, like errant electronic programs, slip their intended constraints, it is only through disobedience to procedural instructions on the part of human individuals that they can be stopped.

I am not saying that institutions have any moral presence: as an individualist I believe moral presence and agency must be assigned exclusively to individuals. Institutions do, however, have a will that transcends the wills of the individuals acting within them. How can this happen?

Legislation is horrifically complicated in these later times of our republic. But even worse, much of it is “enabling legislation” that puts in place institutions that set their own parameters in pursuit of an ambiguously defined goal. Whether through complexity or non-specification, there exists the possibility that institutional “programmers” will create a runaway institution, freed from all constraints.

Usually institutional errantry is the result of a complex interplay of processes, where no single individual understands them all, but it is possible to demonstrate it with a simple hypothetical case. Imagine that an institution’s governance puts in place a policy called “Policy F”. “Policy F” specifies that anybody who challenges “Sub-chapter XII(b)” is to be terminated from any further participation in that institution. Perhaps because a different sub-committee moved “Policy F” to page 231.76.0.1(A(c)) of “Sub-chapter XII(b)”, the rule has been put firmly in place without open and thoughtful review. Eventually somebody reads down to page 231.76.0.1(A(c)) and says “Hey! Wait a minute! This is a really bad idea!” At this point, in order to comply with the rules, he is immediately expelled from the institution. After all, “rules are rules”, “of laws and not of men”, etc. This happens a few more times, and that institution is soon disproportionately staffed with people who by nature are disinclined to challenge the system. An institutional mindset is forming that diverges from that of the institution’s creators.

In any living organism, some mutations are beneficial and some are not. In an institution, procedural mutations that serve to perpetuate the institution’s existence will be selected for, whereas the absence of self-perpetuating mutations will allow an institution to eventually fade, as the underlying need it serves fades. As time passes, institutions form and dissolve, but some of them will mutate to serve their own continuance. After enough time passes, we will be (in fact, are) overwhelmed by the accretion of institutions whose sole remaining function is to perpetuate their own existence. It is not that procedural mutations will lean in that direction, only that the long-term institutional survivors are the ones whose mutations prioritized institutional perpetuance over the original purpose their creators assigned to them.

To be clear, my point is that Institutional Will is, and can be, neither benign nor malevolent, merely that it exists. Institutional Will is to amorally follow the decision tree; to apply at every decision point the specified action and to proceed onward to the next decision point. Whether in a computer program or in a major governmental institution, this process will continue until it either terminates itself or is terminated in defiance of its internal processes. When an institution is no longer beneficial and yet refuses to be terminated, that defiance must sometimes take the form of civil disobedience. Civil disobedience is the opposite of unquestioningly following orders. Civil disobedience is a sometimes necessary application of one’s moral agency, required of anyone capable of knowing right from wrong.

So in case you were wondering, Veryretired, I have reversed myself on civil disobedience. Sometimes it is not merely acceptable, it is imperative to defy errant institutions that have rejected their Constitutional bindings and are trampling original intent. It is about the survival of individuals qua individuals in the face of an institutional leviathan.

The floats are the most strictly regulated of any parade and all of them deserve prizes for genuine awesomeness but still, there is unmistakable ‘all must have prizes’ going on. One of those prizes is awarded by the governor of California. It is awarded to the parade float “that best represents life in California.” This year the winner
...continue Life in California]]> Oh my. I am laughing. It is an American New Year’s Day tradition to watch the Tournament of Roses Parade. The granddaddy and the best of all American parades, the Rose parade is even older (1890) than the Rose Bowl game (1902).

The floats are the most strictly regulated of any parade and all of them deserve prizes for genuine awesomeness but still, there is unmistakable ‘all must have prizes’ going on. One of those prizes is awarded by the governor of California. It is awarded to the parade float “that best represents life in California.” This year the winner is the Sierra Madre association float. It is very beautiful to look at.

One small problem. It broke down. It blocked up the parade route and needed a tow truck to move. While it apparently does happen from time to time, I’ve never before seen a Tournament of Roses Parade float behind a tow truck. And there goes the float “that best represents life in California” being dragged down the parade route behind a tow truck. Like Bernie, dead but still going through the motions. Someone has posted some video.

As they say, “you couldn’t make it up.”

On October 3rd of 2008, Republicrats and Democans responded to the failure of Lehman Brothers, bankruptcy of Bear Stearns, incipient collapse of AIG Insurance, threatened insolvency of other major financial institutions, and general panic in the financial community, by passing Public Law 110-343. This law contained two basic sections. The most infamous brought us the first of the ‘TARP-ulus‘ genre. But a very important offsetting function was contained in another place in that same
...continue Money supply, the stimulus & where is the inflation?]]> This is a quick thumbnail of money supply for those of you having trouble finding understanding in the tsunami of Keynesian Kool-Aid coming from our ‘betters’.

On October 3rd of 2008, Republicrats and Democans responded to the failure of Lehman Brothers, bankruptcy of Bear Stearns, incipient collapse of AIG Insurance, threatened insolvency of other major financial institutions, and general panic in the financial community, by passing Public Law 110-343. This law contained two basic sections. The most infamous brought us the first of the ‘TARP-ulus‘ genre. But a very important offsetting function was contained in another place in that same law that is known as the Emergency Economic Stabilization Act of 2008. Way down in the fine print, it authorized the Federal Reserve Bank to begin immediately paying banks to not loan out money. That was not their exact choice of words. In fact, read Section 128 where they did it and it is almost impossible to tell what exactly they were doing.

Three days later on October 6th of 2008, the Federal Reserve Bank announced it would begin paying banks to not lend money. Again, not their exact choice of words.

Within less than a month the Federal Reserve Bank began discreetly ‘monetizing’ by purchasing Fannie and Freddie debt.

By March of 2009, attempts at discretion fell by the wayside and the Federal Reserve began buying US Treasurys outright. Put simply this means that the Federal Reserve began ‘printing’ money and giving it to the United States Treasury to spend.

During this period of time (from September 2008 through current) the St Louis Adjusted Monetary Base went up by approximately 1 trillion dollars.

Since that time, consumer prices have anomalously trended flat (click ‘view data’ for specifics) in spite of the adjusted monetary base more than doubling. How can this be? First it is necessary to know what the ‘St Louis Adjusted Monetary Base’ is adjusted for. The ‘adjusted’ part is calculating Federal Reserve issued money and factoring in the fractional reserve multiplier. The adjusted monetary base is the amount of money that would be in circulation if the banks were lending the maximum amount they are allowed to. Banks have consistently lent close to their allowed maximum from at least January of 1959 through August of 2008. But something fundamental changed in September, October and November of 2008. After first faltering far into the red, bank excess reserves went through the roof and punched a hole in the sky.

To be precise, excess bank reserves went up by over a trillion dollars almost overnight. A curious number when recalling that the adjusted monetary base also went up by over a trillion dollars in the same period and consumer prices trended flat. Some detail history.

How was this accomplished? By paying banks interest on unused funds deposited with the Fed. Previously, the Fed had only paid interest on reserves which banks were required (under our fractional reserve banking system) to maintain there; as a matter of policy “excess” reserves received no interest so banks would have an incentive to put those funds to productive use (i.e., to make loans). But as of October 9, 2008, the Fed began paying interest on all reserves, required and “excess” alike. And not just nominal interest, but interest at a rate which is higher than the “Fed Funds Rate” (the rate banks pay to each other for overnight loans), and even higher than current short-term Treasury yields. At a stroke the Fed eliminated for banks interest-rate risk, principal risk, counterparty risk, and even the capital cost of maintaining an extremely high degree of liquidity. The “cost” to banks of non-lending was driven down substantially.

So to put this thumbnail in a nutshell, the Fed has inflated the available money supply by 1 trillion dollars while simultaneously paying banks to not loan 1 trillion dollars. While there is no obvious connection between these two acts, the effect is a simple one. The FRB/Treasury is competing against the free market, effectively borrowing banks’ consumer lending funds to keep the band playing while the lower decks of the nation slip beneath the waves. Killing loans is how they are hiding the evidence and disguising the potential hyperinflationary effect of monetizing. The Fed/Treas has to smother the private loan market or all of that new money they are creating and giving to special interests would show up in the form of doubled consumer prices. Not only is the TARPulus not doing any good, it is doing almost all of the harm. The TARPulus and excess-reserves-interest transactions are taking vast sums of money out of the private sector and distributing it to political factions.

Think of our politically managed economy as a health club with power junkies in charge. Money is power. After cleaning out the checking account and the safe, they are now emptying the cash register. Next step, our lockers will be stripped of valuables (UK pensions, anyone?) and after that, the power junkies will throw us up against the wall and empty our pockets (remember this?)

The problem is not and never was ‘market failure’. It was and continues to be incorrigible government and inevitably corruptible politicians and regulators. This economy could and would have recovered quickly from even the most recent policy created bubble, the real estate ‘boom’, had the advice and opinions of some of us (even here on Samizdata threads) been heeded. The cause of this continually worsening crisis is the repairs the self-anointed experts are inflicting. Paralyzing the lending market, taking money out of the free economy and using it to fund government sector favorites, is like giving muscle relaxants and pain killers for an asthma attack. Sure the stridor of economic desperation diminishes, but that momentary relief is called ‘dying’. And in the end, all the campaign donors’ politicians and all the campaign donors’ cash will only buy them a place on the top deck of the sinking ship.

(My gratitude to Samizdata reader Laird. Without his extensive help researching, phrasing and proof reading, this article simply would not have happened. Thanks, Laird.)