Saturday, October 4, 2008

September Explosion in Federal Reserve Bank Credit

Are you eager to pay 30% higher prices in order to subsidize Wall Street? During the past two months there has been much media hoopla about a supposed depression. Yet, the chief problems that the media describes are failures of poorly managed investment banks and insurance companies, not unemployment. Moreover, if there were high unemployment, which there isn't, the problem would be best handled by unemployment insurance and similar transfers to tide over the unemployed, not a trillion dollar subsidy to banks and Wall Street firms. This recent boondoggle is an example of the complete and utter failure of regulation in action. The public is unable to evalute fake claims by millionaire bankers, and the result is unveiled on Howard S. Katz's blog .

Howard observes the Federal Reserve Bank statistics. Ordinarily, Federal Reserve Bank Credits increase in the magnitude of .75% per month. In September, they increased 56%. That means that the money supply just increased better than 30%. Are you eager to pay 30% higher prices in order to subsidize Wall Street? And that's BEFORE the bailout has been approved.

Yes, we have been well advised by the mass media, haven't we?

Howard's chart follows:

Jim Crum, Patriot, E-mails Department of Justice, Requesting Investigation of Barack Obama

I just received a copy of this e-mail addressed to the Department of Justice from Mr. Jim Crum, patriot.

>Please consider this email a formal request to investigate the source of funding into Mr. Obama's campaign.

This has been a point of discussion by many ordinary citizens who have a vested interest in who is funding our politicians. Such a large sum of money, virtually unaccounted for, and unaudited, is a source of potential trouble for our republic. We have the right to know who is funding any candidate, and the candidates ought to have the obligation to be completely transparent in who giving them money. It is also illegal to accept money from foreign governments.

It now appears that several of your own staff members have expressed enough alarm to go outside of the normal channels. This story has legs, and you need to get in front of this before people begin to ask questions of your own competency.

Here's a guideline when it comes to ethics: if you even have to ask the question, then you are in a poor position. We have now arrived at that point.

Kindly do your jobs.

Jim Crum

Urgent Business Offer From Minister of the Treasury, Henry Paulson

You know those e-mails from supposed third-world treasury officers offering to deposit $26 million into your bank account if only you'd send them your bank account number. Doug Ross has just received one from Henry Paulson, Treasury Secretary of the United States (h/t Larwyn)! A true classic!









Nancy Razik Calls for Petition to Oust Barney Frank


Please send out a petition we can all sign to oust Barney Frank, and the other
offenders who put our country at risk.

These people will get away with murder unless the American people stop them.
Please help!!!

Maybe you can work out something with Bill O'Reilly and Glenn Beck. They
are ready as we all are to see some heads roll!!!

If you don't rally the American people to action, who will?

Thank you very much!

Nancy Razik

Witness Says Congressman Hinchey Punched Citizen

George Phillips, candidate for Congress in New York's 22nd Congressional district, forwarded a Kingston (NY) Freeman article about his opponent, Congressman Maurice Hinchey. Congressman Hinchey achieved national attention last spring when he proposed price controls on gasoline, a strategy that inevitably leads to shortages and misallocation of resources. Besides Hinchey's economic illiteracy, upstate New York's 22nd district appears to have a Congressman with a violence problem.

The Freeman article reads:

Ex-candidate says he saw Hinchey strike NRA member
By Paul Kirby , Freeman staff

KINGSTON - A former candidate for Ulster County executive says he saw U.S. Rep. Maurice Hinchey smack a man in the head at the Rosendale Street Festival this past summer - an incident that resulted in a harassment charge against the congressman.
Allan Wikman said this week he was "dumbstruck" and "shocked" when he saw Hinchey, D-Hurley, whack Paul Lendvay, chairman of the Catskill Re-gional Friends of the National Rifle Association, on the top of Lendvay's head...

Read the rest of the article here.

Friday, October 3, 2008

Paying For Your Burger With A Wheelbarrow of Cash

I just received the following e-mail from Howard S. Katz, the "Goldbug".

Dear Mitchell,

Sorry to ruin your day, but I just checked out the Federal Reserve Report. They have been increasing Reserve Bank Credit (their portion of the money supply) at a massive rate. It is up 56% in the past 3 weeks. Since the Fed's portion of the money supply is 57%, this computes to a 32% increase in the nation's money supply in 3 weeks (with more to come later when the nation's banks start lending out all those reserves).

Thursday, October 2, 2008

Lots of Change You Can Believe In-$250 Million Worth

Bob Robbins has forwarded a Newsmax article which states that:

"A Newsmax analysis of the 1.4 million individual contributions in the latest master file for the Obama campaign discovered 1,000 separate entries for Mr. Good Will, most of them for $25...Mr. Good Will listed his employer as “Loving” and his profession as “You.” In total, Mr. Good Will gave $17,375...Similarly, a donor identified as “Pro, Doodad,” from “Nando, NY,” gave $19,500 in 786 separate donations, most of them for $25. For most of these donations, Mr. Doodad Pro listed his employer as “Loving” and his profession as “You,” just as Good Will had done."

"With such lax vetting of foreign contributions, the Obama campaign may have indirectly contributed to questionable fundraising by foreigners. In July and August, the head of the Nigeria’s stock market held a series of pro-Obama fundraisers in Lagos, Nigeria’s largest city. The events attracted local Nigerian business owners. At one event, a table for eight at one fundraising dinner went for $16,800. Nigerian press reports claimed sponsors raked in an estimated $900,000...In June, Libyan leader Moammar Gadhafi gave a public speech praising Obama, claiming foreign nationals were donating to his campaign... A pair of Palestinian brothers named Hosam and Monir Edwan contributed more than $31,300 to the Obama campaign in October and November 2007, FEC records show."

"More than half of the whopping $426.9 million Barack Obama has raised has come from small donors whose names the Obama campaign won't disclose."

In a different e-mail, Andy Martin writes:

"I was smacked in the face by recent reports that Obama has raised almost a quarter of a billion dollars, almost $250 million, of clandestine campaign cash whose origins Obama has never disclosed. This amount is unbelievable and appears to reflect clear criminal intent to evade federal campaign contribution limitations.

"How does Obama think he can hide a quarter of a billion dollars by labeling the origins as 'petty cash?' Where are the mainstream media? Bothering Sarah Palin?

"I have asked General Mukasey, the Chicago U. S. Attorney and the FBI to open an investigation into the identities and sources of this secret cash. If the cash hoard is legal, we have a right to know. If the cash is tainted or even criminal, we also have a right to know, before the election, not afterwards. The American People should not have a 'pig in a poke' to vote for on November 4th."

19th Century Innovation in David Ames Wells's Recent Economic Changes

David Ames Wells, a 19th century engineer and economist, was chairman of the national revenue commission under President Abraham Lincoln and special commissioner of the revenue under President Andrew Johnson. Wells became an advocate of reduced tariffs and hard money. He opposed free silver. He opposed income taxes. In 1871 he argued in Local Taxation that New York State was losing business to other states because of excessive taxation. His view of the late 19th century deflation was that depression was due to "overproduction". In his book Recent Economic Changes, published in 1889, he argues that unemployment is due to improvement in technology. This was true short term but not long because labor rotated into services. On page 64 he mentions that "fifty years ago the railroad and the locomotive were practically unknown". "The ocean steam marine dates from 1838." "Electricity had then hardly got beyond the stage of an elegant amusement." He adds:

"The following is a further partial list of the inventions, discoveries and applications whose initial point of 'being' is not only more recent than the half-century, but whose fuller or larger development in a majority of instances is also referable to a much more recent date:

The mechanical reapers, mowing and seeding machines
The steam plow and other labor-saving agricultural devices
The Bessemer process and steel rail (1857)
The submarine and trans-oceanic telegraph cables
Photography and all its adjuncts
The steam hammer, repeating and breech loading fire arms and rifled and steel cannon
gun-cotton and dynamite
the industrial use of India-rubber
The steam excavator
The sewing machine
The practical use of the electric light
The application of dynamic electricity as a motor for industry
The steam fire-engine
The telephone, microphone, spectroscope and the process of spectral analysis
The polariscope
The compound steam-engine
The centrifugal process of refining sugar
The rotary printing press
Hydraulic lifts, cranes and elevators
The regenerative furnace
Iron and steel ships
Pressed glass
Wire rope
Petroleum and its derivatives, and analine dyes
The industrial use of metal nickel
Cotton-seed oil
Artificial butter
Stearine candles
Natural Gas
Cheap postage
The postage stamp

How have we doing in the past hundred years? Keep in mind that television and radio were conceptualized by Nikola Tesla, a 19th century inventor who decided not to focus on them. Had he, they could have both been operational by 1910.

How does the 20th century, the century of "Progressivism" compare to the 19th, the century of laissez-faire in terms of real progress? Of course, the twentieth century invented the atom bomb, nuclear power, nuclear submarines, the analog and digital computer, the Internet, "buy and hold" strategy of mutual fund investment and Warren Buffett's stock investment strategy tips (yes, we have made major progress under Progressivism). But overall, it would seem that the age of Progressivism has been one of slow progress.

John McCain's Political Suicide--First Step to a New Jacksonian Revolution?

By identifying with the Bush/Paulson bailout John McCain has effectively handed the election to Barack Obama. McCain's task in this election was to distance himself from the Bush administration, but instead he has chosen to embrace it.

The Constitution established the House as the more responsive of the two legislative bodies, and the two-year cycle was important for Monday's vote on the bailout. Congressmen feared public retribution. However, that does not mean that the public's will will be done.

In the past week, the Federal Reserve Bank increased the number of treasury bonds it is holding by 18%. That is a supernatural jump, and it means that it has injected a tremendous quantity of money into the banking system. Monetary reserves have increased by 6%, which is also huge. There is no reason for a Congressional bailout if the Fed increases the money supply dramatically. Moreover, there is still a good chance of the bail out bill's passage in the Senate and then in the House, with the House using the Senate as cover.

In the nineteenth century the public understood that its interests DID NOT COINCIDE with those of commercial and investment banking. As a result, the central bank, the Bank of the United States, was abolished in the 1830s. Today, the public is unwilling to learn a few simple facts about the relationships among money supply, inflation, real wages and real economic growth. Real economic growth is impeded by monetary inflation because, in a form of reverse rationing, less optimal projects receive funding because those with political connections (e.g., Wall Street) get the first dibs on capital instead of those who can produce the highest returns, for instance, creative but risky inventors.

I have seen quite a few blogs and spoken to several Ivy-League-trained Ph.D. economists in the past few weeks, and I can say with assurance that the widespread support for the bailout among academics, the media and the establishment is based on junk ideas, quack theory and opportunism. The public is smarter than the "experts", and if problems with the economy continue to escalate, and the bailout will perpetuate and enhance them, then perhaps we will see the beginnings of a new Jacksonian revolution.

Wednesday, October 1, 2008

Springtime for Barack in Chicago

This is the best spoof since Mel Brooks' Producers. Pamela Hall of "Silent Majority", links to this video by"People's Cube" to which Barack Obama's goose stepping followers object (also, h/t Larwyn). The Obama campaign doesn't object to law enforcement in St. Louis arresting people who criticize Obama. They just object to those who protest about it. Link to Youtube here.

Nancy Razik has forwarded a related video linked here:

Phil Berg Files Motion Re Obama Birth Certificate (h/t Bob Robbins) notes that Phil Berg has been hard at work, filing a response to the Obama campaign's and DNC's motion to dismiss on his case demanding that Obama show him his birth certificate. Would you go to court in order to stop someone from seeing your birth certificate, or would you take it out of your file cabinet and show it to whomever? writes

"Mr. Berg provides precedents which he argues establish his standing and petitions the Court to deny dismissal and order the defendants to produce the documents in the previously requested discovery.

"The conclusion of Mr. Berg's brief reads:

Plaintiff served discovery in way of Admissions and Request for Production of Documents, on Defendants on September 15, 2008 and has attempted to obtain verification of Obama’s eligibility through Subpoenas to the Government entities and the Hospital’s in Hawaii. To date, Plaintiff has not received the requested discovery from the Defendants and two (2) of the locations, which subpoenas were served upon, refused to honor the subpoena.

"or the above aforementioned reasons, Plaintiff respectfully request Defendants Barack Hussein Obama and the Democratic National Committee’s Motion to Dismiss pursuant to F.R.C.P. 12(b)(1) and 12(b)(6) be denied and order immediate discovery, including but not limited to: 1) a certified copy of Obama’s “vault” (original long version) Birth Certificate; and (2) a certified copy of Obama’s Certificate of Citizenship; and (3) a certified copy of the Oath of Allegiance taken by Obama taken at the age of majority. If the Court is inclined to grant Defendants motion, Plaintiff respectfully requests the opportunity to amend his Complaint pursuant to the findings of this Honorable Court.

Obamacrimes links to Phil Berg's motion, which is here.

Bob Robbins Writes to Senator John McCain

Senator McCain -

Please push for a Common Sense fix of our country's financial mess.

Please DO NOT support a "Bailout" !!!

BTW, - ... supporting a Bailout might easily doom your bid for POTUS.

Please make sure to NOT allow Golden Parachutes for existing CEOs.

Please try to effect insurance for the bad loans and credit problems.

Thank you in advance, Robert Robbins,

Daniel J. Elazar's American Federalism: A View from the States, Third Edition

Daniel J. Elazar, American Federalism: A View from the States, Third Edition. New York: Harper and Row, 1984. 270 pages. Available used and new from for $45.

This is an excellent source book about the basic ideas of American federalism as expressed in Hamilton, Madison and Jay's Federalist Papers and as it has evolved over the ensuing centuries. Elazar is a noted historian and political scientist who died in 1999 at age 65.

This book reads almost like a textbook. If you are interested in a the best overview of federalism, this is it. Moreover, Elazar includes much intriguing information that adds interest to this important subject.

The states are important, argues Elazar, because "they retain their political position in the overall framework of the nation's political system, a position that requires constitutional support but that transcends constitutional formulations". But as well as being part of national civil society, the states are separate civil societies that cooperate with the federal government.

In chapter one, Elazar points out that "federal democracy is the authentic American contribution to democratic thought and republican government". Federalism contrasts with Jacobinism (p. 5), which is an organic theory of the state aiming to democratize feudalism. Under Jacobinism, power resides at the center of a unified, organic state. In America, the first important Jacobin was Francis Lieber, who came to America in 1848. Of course, the founding fathers were well aware of authors such as Rousseau who were founders of this ideology. As Elazar points out, there is a close link between Jacobinism and Progressivism.

The argument for bureaucracy leads to a third ideology, managerialism, which is the political application of Weberian bureaucracy and scientific management.

Importantly, Elazar points out that federalism or the "matrix model" (p. 6):

"Is best understood as a cybernetic one, a network whose loadings can be shifted from arena to arena as different power currents and messages are transmitted through the multitude of channels interlacing the system. Thus power does not move in a unidirectional way, but shifts in response to changing circumstances."

Thus, Elazar points out that modern developments are most consistent with the Founding Fathers' federalism and not with the managerialism of Progressivism (p. 6):

"The theory and experience of the new technology stand in direct contradiction to earlier notions of duplication. Put differently, technology has begun to imitate the Constitution...That system was not a pyramid, with channels for carrying orders from the top to the bottom, but a matrix of authoritative governmental units located within the framework"

Moreover, the elements of the matrix generally cooperate with each other:

"Since the beginning of the republic, the elements in the matrix have worked together to develop common policies and programs. Most important actors are involved in most important details of most steps in problem definition, planning, programming, budgeting, implementation and evaluation (such as it has been) of most policies of mutual interest to them through the political process."

States have local customs and civil societies (p. 14) but states vary as to how far they deviate from national "patterns and norms" and "policies and interests" and the degree of intra- and inter-state sharing (p.16). Elazar actually ranks the states as to cohesiveness. He also compares the internal consistency of Congressional delegations on roll call votes. However, roll call votes reflect the "results of intrastate conflict" whereas the ranking measures internal unity.

In chapter 2 Elazar asks how federalism creates order out of uncertainty and a "system of systems". If people can't obtain governmentally-related goals through the federal government they go through the states, or vice-versa. Issues often become important at the state and federal level at the same time.

Elazar does not believe that the states can afford to act on their own with respect to many programs (p. 38):

"Given the existence of a national economy in which people, goods and services flow across boundaries easily on the basis of essentially private decisions, the state governments, no matter how willing, are simply unable to cope with some problems without federal assistance. Unemployment insurance, workers' compensation, water pollution control, major highway construction and a whole host of other programs cannot be undertaken alone, even by those states that can afford them. The nation's great industrial corporations have facilities in too many different states..."

Thus, early twentieth century welfare reform efforts began in the states, but reformers found that:

"After some initial successes in the regulatory field, the reformers were unable to secure positive welfare measures except in a few states which pioneered such programs for the country as a whole. This happened partly because their proposed programs were expensive.

Elazar points out that theories of the Federalists was fundamental to the structure of the US government (p.47):

"By accepting the notion of a non centralized government based on system of systems and writing that notion into the fundamental structure of American government, the founders of the United States created the need for the development of a new politics to make their constitution operational."

The states have the primary role for the protection of property rights, although the Federal government has made increasing incursions on these in the form of regulation and federal taxation. Foreign policy, defense and the like, as well as patents, monetary policy and tariffs, are primarily federal. But most governmental responsibilities are shared at least to a degree. Issues such as bankruptcy, discrimination, sanitary inspection, banking regulation and subsidizing business are joint. Responsibilities for insurance regulation, workers' compensation and licensing businesses are state level responsibilities (p. 52).

The trend has been to supercession (see chart on p. 55). Supercession means that the federal government is encroaching on the states.

Big business has preferred federal over state regulation (p. 56):

"As the more progressive or more industrialized states began to strengthen enforcement of their own standards, however, big business shifted to support federal standards as likely to be more uniform across the country. Uniform standards would ease the burden on large state enterprises, and was also likely to be weaker than those of the largest states, where the labor lobby was strong and the business lobby politically weak.

"The legislation that emerged was a compromise. The federal government was to establish nationwide occupational safety and health standards...(OSHA)...A state could continue to maintain its jurisdiction if its plan was substantially as effective as the federal plan, as approved by the Secretary of Labor...States could choose to abandon their own efforts...OSHA could intervene in state efforts through federal monitoring power...Only 28 states were interested in developing alternatives to OSHA (with only 22 following through)...OSHA, by its actions and inactions came to be a symbol of all that was wrong with overbureaucratization...Congress reacted by limiting the scope of its (OSHA's) powers" (p. 57).

States devised consultation plans to remedy OSHA's weaknesses. States have widely varying levels of welfare (statistic cited on p. 60 from ACIR Significant Facts of Federalism). In fiscal year 1980 the federal government collected 61% of all tax revenue.

On p. 68 Elazar has a graph that shows that total public sector spending increased from 10.0% of GNP in 1929 to 33.5% of GNP in 1982. Of that state and local government grew from 7.3% of GDP in 1929 (2.0 for state and 5.3% for local) to 10.5%. Thus, the federal share grew from 2.5% to 23.0%, or tenfold. However, if you subtract defense (which grew from 1.1% to 8.5%) the federal share grew from 1.4% to 14.5%, which is still tenfold. I don't think intergovernmental transfers should be subtracted, as Elazar suggests, because they reflect federal rather than pure state policy.

It seems to me that we were better off in 1929.

Between 1961 and 1979 federal spending on education increased fifteen fold (640 to 9,979 million). Public welfare spending at the federal level increased from 59 million to $18,722 million, or over nearly 3,200 percent.

On p. 85 Elazar gives an account of the tilting of federalism toward the federal government in the 20th century:

"The patterns of sharing described above were crystallized in the 1930s and underwent some significant changes in the 1960s. The crisis-oriented centralism of the New Deal period was normalized after 1946 and the modes of cooperation developed during the 1930s were continued virtually unchanged, though in a more non centralized manner. Beginning in 1961 with the New Frontier, but even more significantly after 1963 and the inauguration of the Great Society, the recognition of the existence of cooperative federalism was accompanied by an expansion of the federal government's role, not only as an initiator of programs but as a policy innovator willing to apply various forms of pressure on the states and localities to get them to conform to its demands...

"Much of the pressure toward conformity was of the kind common in other periods of extensive governmental innovation, and was subsequently relaxed. However, particularly after Richard M. Nixon became president there were also some structural changes in the forms of sharing...The proliferation of grant programs was one of these and the expanding use of project grants was another...Other changes included the diversification of eligible grant recipients, the radical expansion of grants for inner city improvements, and the introduction of planning requirements..."

On p. 94 Elazar discusses the nature of federal expenditures:

"The greatest impact of federal spending within the United States comes not from transfers of payments to state or local governments, but form 1) defense-related expenditures; 2) direct payments to private individuals; 3)government grants to institutions for civilian research...By far the greatest share of direct federal spending is in the form of payments to individuals what have come to be known as income maintenance fiscal year 1980, $314 billion of the $634 billion federal budget, or nearly half, was committed to payments for individuals"

As of 1984, four years into the Reagan administration, "1984 budget estimates, based on a $900 budget authority with outlays of $848.5 billion, show that 42 cents of every dollar, with 29 cents to defense, involve direct benefit payments to individuals." Much of this was attributable to social security, 25% of the total revenue.

Elazar astutely notes on p. 95 (they don't make academics like Elazar much anymore):

"All modern governments provide income security or maintenance benefits in some form. Federal systems are likely to provide such programs through some kind of sharing arrangement. It does not follow automatically from the acceptance of the idea of income maintenance as a government function that it must be primarily a federal one. In a federal system, the choice is open. Canadians, for example have given primary responsibility in this field to the provinces."

Federalization leads to competitive lobbying (p. 98):

"...the key to the acquisition of federal benefits is intensive state and local activity to secure those benefits. The better a state is able to function as a coordinated civil society, the more likely it is to obtain a large share of federal expenditures to stimulate its economy. California and Texas--both virtually self-governing commonwealths in many ways, with strong traditions of intrastate cohesiveness vis-a-vis the outside world--stand as the most successful examples of the truth of this rule."

States have separate characteristics as political systems and so adapt national programs to their own needs. The three factors that shape states' political behavior are:
-political culture (the pattern of orientation to political action)
-sectionalism (the ties that link together groups of contiguous states)
-the frontier--the constant effort of Americans to extend their control over their environment and the consequent periodic reorganization of American social and settlement patterns (p. 109)

The two cultural patterns of American politics are marketplace and commonwealth.

Four consideration (what Elazar somewhat airily calls "the matrix of value concepts) are efficiency, commerce, legitimacy, and agrarianism. Elazar points out that the definition of efficiency has changed from hierarchical ordering to the "decentralized conglomeration of synergistic organizations controlled on the basis of measures of their output. In sum, both efficiency and commerce are primarily related to the concerns of power and its management."

There are three political cultures (pp. 114-16) in America, the individualistic, the moralistic and the traditionalist.

Under individualism, the democratic order is a marketplace. It emphasizes private concerns and limits community intervention. Politics is a business. "Where the norms are high, such people are expected to provide high quality government services in the best possible manner. "political based on a system of mutual obligations rooted in personal relationships." Office holding is a way to obtain rewards. Politics is a specialized profession. Individualist political cultures often view politics as dirty. Bureaucracy interferes with the favor system, but it is efficient, so individualist cultures are ambivalent about it.

The moralistic political culture emphasizes the "commonwealth conception" (p. 117). "Both the general public and the politicians conceive of politics as a public activity centered on some notion of the public good and properly devoted to the advancement of the public interest...Communal power intervenes into the sphere of private activities...issues have an important place...Government service is public service...By virtue of its fundamental outlook, the moralistic political culture creates a greater commitment to active government intervention in the economic and social life of the community. At the same time, the strong commitment to communitarian characteristics of that political culture tends to channel the interest in government intervention."

The traditionalistic culture "is rooted in an ambivalent attitude toward the marketplace coupled with a paternalistic and elitist conception of the commonwealth." Government actively tries to maintain the existing social order...Political parties are of minimal importance...because they encourage a degree of openness...Political competition is usually conducted through factional alignments". Initiation of new programs occurs only if it benefits the governing elite.

The three political subcultures arose because of sociocultural differences among the people who came to America. "Because the various ethnic and religious groups that came to these shores tended to congregate in their own settlements and because, as they or their descendants moved westward, they continued to settle together, the political patterns they bore with them are today distributed geographically.

There have been three stages of the frontier (p. 123): the rural-land frontier; the urban industrial frontier, "which began in the Northeast and spread westward, transforming the society into an industrial society. "By the mid-twentieth century, it had given birth, in turn, to the metropolitan-technological frontier, which is characterized by the radical reordering of an industrial society through rapidly changing technologies and a settlement pattern that encourages the diffusion of an urbanized population within large metropolitan regions. These radically new technologies, ranging from ato9mic energy and automation to synthetics and cybernetics, and the accompanying suburbanization of the population, influenced further changes in the nation's landscape."

"By 1980, however, there were signs that a new frontier stage was emerging based on the cybernetic technologies--minicomputers, satellite-transmitted communications, cable television and new data processing devices--fostered a settlement pattern of large belts of relatively small cities."

Elazar traces the flow of different ethnic groups across the US beginning with settlement in New England in the 1600s and has an amazing map on pp. 128-9 that illustrates immigration flow across the nation of the moralistic, individualistic and traditionalistic cultures. The moralistic is from New England, the traditionalistic from the South and the individualistic from the Atlantic State including lower New York but not eastern Long Island.

He writes (p. 134):

"The amalgam of the political subcultures in the several states is varied, because representatives of each are found within every state to varying degrees. In fact, unique aggregations of cultural patterns are clearly discernible in every state. These cultural patterns give each state its particular character..."

(p. 138) Sectionalism involves arrangement of much greater permanence, which as essentially political phenomena, link whole states and persist despite the emergence of immediate conflicts or divergences...

"...for our purposes, certain common sectional bonds give the states of each section a special relationship to national politics...The nation's sectional alignments are rooted in the three great historical cultural and economic spheres into which the country is divided: the greater Northeast, the greater South, and the greater West."

"The sections reflect the thrust of the frontier. But "each has sufficient diversity to reflect the social and economic complexity of the nation as a whole" (p. 140)

"Roughly speaking the individualist political culture proceeds westward along the northern edge of the center of population line..."

p. 140: "From the New Deal years through the 1960s, Americans' understanding of sectionalism was submerged by their concern with urban-oriented socioeconomic categories, such as the struggle between labor and management or between the haves and have-nots in the big cities...The widespread but erroneous notion that sectionalism had all but disappeared was based, in part, on the myth that sections in the nineteenth-century heyday of sectionalism were separated by different public concerns. In truth, they shared the same universal concerns then, and their differences then as now, stemmed from differing attitudes toward those concerns and differing notions of how to deal with them. Beginning in the 1970s, however, there was a resurgence of sectional feeling as economic social cleavages increasingly came to follow sectional lines. The sun belt-frost belt contribution is the prime example of this new sectionalism..." (p. 141)

"The moralistic political culture is the primary source of the continuing American quest for the good society...The individualistic culture is the most tolerant of out-and-out political corruption, yet it has also provided the framework for the integration of diverse groups into the mainstream of American life.

(p. 150): "The juxtaposition of groups with different political cultures within the same political system, a product of the geology of cultural diffusion in the United States, has invariably led to some form of cultural conflict with many of the states."

(p. 152) "...political culture and conflicts between political cultures influence political behavior in the states" and so "become important in determining state responses to national politics.

"Citizen participation in politics as measured by voter turnout clearly reflects the different predispositions in the 50 states and their particular political cultures. It is reasonably clear that people who believe that they can accomplish something positive through the political process are more likely to vote and otherwise become active in politics. Thus, it would be natural for moralistic types to be most active...In presidential elections, states of the moralistic political culture consistently lead in percentage of voters turning out."

(p. 157) "Political culture also influences voting behavior itself, though usually in less clear-cut ways than it influences electoral competition. The reaon for this is that the two-party system, by reducing voter alternatives, tends to bring together voters who support particular parties or candidates for many different reasons. Nevertheless, there are moments in the electoral process when political cultural differences stand out in bold relief."

Progressivism involved more heavily emphasizing the moralistic political culture than had been true in the 19th century (p. 160):

"in the late nineteenth and early twentietch centuries, before the New Deal, there was often a great deal of conflict betweeen the policies their representatives advcoated and those adopted by the federal government. These states were in the forefront of the third-party movements appearing and reappearing at all levels of government in the two generations following the Civil War. A roster of the nation's Progressive leaders is heavily weighted with the names of their representatives. Under the right circumstances, the old Populist-Progressive bloc periodically reappears. thus, the first outspoken senatorial opponents of American involvement in Vietnam came, with a few exceptions, from the tier of states stretching from Wisconsin to Orgeon that produced the "sons of the wild jackass" two and three generations ago. William Proxmire (Wisconsin), Eugene McCarthy (Minnesota), George McGovern (South Dakota) and Wayne Morse (Oregon) exemplified this bloc throughout the 1960s."

(p. 161) "The states least unified internally are those that have strong competing cultural currents within their limits. In general, they are also least differentiated from national patterns in policy matters and tend to be dominated by the individualistic political culture. The individualistic-dominated states are almost invariably two-party states...The apparent liberalism of the dominant political forces in these states today is often a reflection of perceived economic self-interest rather than a commitment to any abstract principles or social welfare or reform."

The Supreme Court has tended to give "those interested in expanding federal power a green light."

For example, since 1962 the United States Supreme Court has taken it upon itself to act as the ultimate arbiter of the very basis of legislative representation--the drawing of electoral districts...One of the major blows at state integrity has been the Supreme Court's limitation of state responsibility for the organization and regulation of the party system. In the past, that responsibility strengthened the role of party politics as a guarantor of state integrity. Given formal status through state law in the first instance, the party system has been legitimized only tangentially through judicial interpretation or even federal legislation.

Meanwhile, p. 178, "The discretionary rule-making power of federal administrative agencies has been substantially increased, to the pont where their rule-making activities have as much or greater effect on state-federal relations than formal legislation and judicial interpretation. The sheer mass of federal business has made this necessary. Congress can, at best, set forth the general guidelines for implementing federal-state programs

Two kinds of interference: "Best known is the formal system of legislative oversight...This has given the states an important line of access to national policy." (p. 178).

"The congressional committees have become focal points for the combination of interests and actors that has come to be known as the iron triangle or the unholy trinity, depending on one's perspective. That is to say, the complex of interest groups, congressional forces and federal offices concerned with a particular game or set of programs directed to some common end. The elements in this complex reenforce one another in pursuit of their common goals. The multiplication of these iron trinagles and the power each has by virtue of its ability to link constituents, legislators and administrators in a common enterprise are major reasons why federal programs have proliferated."

(p. 192) "The one major addition to the written Constitution that has had profound effects on the position of the states in the federal union is the package of Civil War amendments, the Thirteenth, Fourteenth and Fifteenth. That package formally ratified the supremacy of the national government along the lines set forth in federalist political theory as embraced by the Yankee North.

From 1948 to 1981, a period of 33 years, state revenues grew from $10.1 billion to $189.6 billion.

p. 239: "Three generations ago and more, Americans would probably have thought it strange to think of interests aligning themselves with specific planes of government. During the nineteenth century, when cooperative federalism revolved around land grants and joint stock companies, all planes of government were involved in the same programs. Sharing then, like sharing now, prevented a serious alignment of interests on government planes. Despite all myths to the contrary, both northern abolitionists and southern slave owners appealed to all three planes of government at various times to support their respective positions.

"It was only with the rise of labor-management antagonism that the notion of separate appeals came to the fore. Even then, at the beginning both inerests found similar kinds of support or antagonism on both the federal and state planes No continuing differences developed until the 1930s, when the federal government under Democratic control adopted an open prolabor position. The industrialists then fell back on the states, since they were able to retain influence in at least some of them. Since the labor-management question loomed so large among the public concerns of the 1930s, the consequences that flowed from it were raised by political analysts from the level of the specific issue that spawned them to the basis for sweeping generalizations about the political system. Hence the notion of separate appeals, valid in this issue, was raised to the level of generalization.

"Labor and management have made their appeals on the basis of an immediate multiplicity of specific interests rather than in reference to one overriding concern at least since the mid 1950s. This meant the end of division by plane Management found a sympathetic administration in Washington under President Eisenhower, and organized labor, though still strongly in favor of active federal intervention in the nation's domestic affairs, discovered that it neglected the states at its own peril...

"The 1960s saw the end of the state-oriented ideology of business. As the business community finally came to recognize that active federal involvement in the regulation of commerce in its several forms was here to stay, they began to realize that, from its point of view, if regulation was to come in any case, it was better to have federal rather than state regulation. Federal regulation meant 1 set of rules or standards rather than 50 and, even more importantly, federal rules represent a compromise between stringent regulation and minimal regulation. At least some states--usually the largest and most powerful ones--tend to establish more stringent rules or set higher standards.

"The moment of truth for the business community came with the struggle over federal automobile safety regulation in 1966. The auto industry began their fight against federal action with traditional calls for the protection of the states' rights. Howver, they came to recognize that California and New York (which together constitute some 20 percent of the American automobile market) were exercising their rights to set higher safety standards than those being considered in Congress. The industry then shifted gears and demanded preemptive federal regulation--that is to say, federal regulation shaped to their taste. This would also prohibit the states from regulating at all in the auto safety field, thereby eliminating the higher demands of California and new York and an increasing number of smaller states that were following their lead. The automobile industry pressed for minimal federal standards. When the auto industry won most of what it wanted, other industries adopted the same strategy.

"Those interested in strong regulation, recognizing the changed situation, are turning, ableit hesitantly, away from tehir ideological commitment to federal action and are supporting higher state standards as a way to outflank business pressures. This is particualrly evident among environmentalists. When Congress began to set federal environmental pollution standards, California successfully led the supporters of more stringent controls in a fight to gain exemption

...Minnesota's efforts to establish higher standards of purity for the discharge of waters passing through nuclear power generating plants were rejected by the US Supreme Court on the grounds of federal preemption, in a manner reminiscent of the Fuller Court's restrictions on state efforts to protect workers and consumers in the 1890s.

"On the other hand, the Court sustained Montana's 30 percent severance tax. This tax was levied on coal mines and was designed to give the state fair compensation for the strip mining permitted by the federal government.

"Most recently, the drive for satisfaction on the local plane rather than from Washington has come from among the poor, the black, the young--and most recently, the liberals--groups clearly associated with the profederal alliance in the past. They are now discovering htat community self-governance as well as bureaucratic support is needed to build a stisfying life and that the states can serve as vehicles for expressing their demands even when the federal government is hostile."

p. 242: "To the extent that the federal character of the American system has been damaged, the courts are the principal cources of that damage."

The first shift in federalism "happened in the generation between 1816 and 1848, when joint fiscal management and joint stock companies for internal improvements gave way to land grants. The second took place in the generation between 1877 and 1913, when land grants gave way to cash grants. Now the move seems to be in the direction of new relationships in the field of governmental regulation. The first two periods were clearly oriented toward intergovernmental cooperation in developing an infrastructure for national and regional development. The third shifted focus to include the provision of public services on a cooperative basis. Now the country is moving in the direction of using government to control outcomes and the issue is how the various planes of government can or will cooperate. p. 253

The chief threat to federalism is the US Supreme Court. "Central to these dangers is the apparent abandonment of restraint by the US Supreme Court in matters that affect the integrity of the states and localities. The Court's actions are not designed to be antifederalist. Quite to the contrary, whenever it has addressed the issue of federalism directly, as in the Usery case, it has emphasized the importance of maintaining the integrity of the states...

But its inconsistency and some would say sheer lack of proper understanding of federal principles--or even lack of clearheadedness at times--have had that effect. In decision after decision where the Court has been interested in other issues, usually those of individual rights and sometimes of environmental protection, it has either ignored the institutional needs of the states and localities or the fefderal principle of comity on behalf of abstract principles.

p. 254 A parallel problem is athe new kind of hierarchical thinking that has spread among certain influential circles in American society. It sees the federal system as a pyramid...This image, drawn from teh organizational theories of the first half of the twentieth century embraced then by the business community but now being questioned in those quarters, is radically different from the understanding of the intergovernmental partnership of the past...While sharing was the norm and federal initiatives were vital to the development of new government activities from the earliest days of the federal republic, political leaders and federal administrators alike viewed the role of the federal government as one of assistor to the states, not as their superior. The federal role was designed to be stimulatory, not to supercede state efforts. Federal officials were to be advisers to their state counterparts, albeit advisers who could set standards to follows. Many Republicans who advocate decentralization and greater reliance on the states have shown that they are thinking in terms quite as hierarchical as their Democratic counterparts who desire greater federal activity...Hierarchical thinking is responsible for the worst aspects of concentrated cooperation whereby federal aid is used to supercede the states rather than stimulate them to act...

"There is no better example of this than the history of the voting rights amendments of 1970. These extended the franchise to those 18 years old and over in all elections--federal, state and local--by legislative fiat after it had become apparent that, where the issue had been submitted to voters of the states, it had failed more often than not. The sheer willingness to ignore both public action and constitutional requirements simultaneously can only be explained by the existence of a pervasive feeling that "Washington knows best"--hierarchical thinking in its most extreme form.

Tuesday, September 30, 2008

Newt Gingrich Gets It Half Right

A couple of people have sent me information on Speaker Newt Gingrich's Solutions Day. Because of my teaching schedule I was unable to participate, but I went to his site to get an overview. I clipped the following partial excerpt from the Solutions Day site:

No Economic Growth = No Recovery = No End to the Financial Decay The most important thing to remember is that without economic growth there will be no end to the downward spiral.Without economic growth there will be another bailout next year and another bailout the year after. The number one goal should be to restore economic growth.

I agree with Speaker Gingrich's belief in reducing taxes and in reducing government. However, his growth mantra is misleading.

Growth as measured by economists is a vacuous concept. If there is additional unproductive economic activity, then there is growth. For instance, if banks continue to make subprime mortgage loans, their activities count as "economic growth". Speaker Gingrich fails to differentiate between fake growth and real growth, and so invites a repeat of the current banking problems despite his protestations to the contrary. The nation allowed the banking system to pay itself exhorbitantly and to bankrupt itself because it handed them large sums of money at public expense.

The way to distinguish between real and fake growth is by limiting access to credit. By expanding the money supply Speaker Gingrich would facilitate growth. Supply side economics, i.e., Reaganomics, is a repackaged Keynesian economics that has led to the current bank failures. Banks fail because they lend too much. Increasing the monetary base enables them to lend too much. The only way that fake growth can be limited is by restricting monetary growth. That would cause pain to Wall Street and commercial banking.

You cannot have it both ways. Flooding the nation with more liquidity will simply facilitate obese financial and hedge managers' ever greater obesity. Limiting monetary growth will cause interest rates to rise, some unemployment and prices to stabilize. In turn, authentic entrepreneurs in the Silicon Valley and elsewhere will find ways to make their inventions work because their returns will exceed the interest rate. Wall Street will find it more difficult to sell stocks because only the real firms will grow. Fake growth will be ended.

By ending fake growth, and Speaker Gingrich fails to differentiate between fake growth and real growth, waste in the system will be reduced. Thus, the 35-year-long decline in the real hourly wage that has occurred during the era of supply side economics or Reaganomics will be ended.

In order to make real growth a reality, a gold standard is needed. Continuation of the supply side principles that Speaker Gingrich oversaw in the 1990s will lead to further decline.

New York Sun Au Revoir

Today is the last day of the New York Sun's brief life of seven years. It was the best paper of my adult recollection, and I will miss it greatly.

Contrairimairi Follows Up Dan White of Illinois Election Board....Again

Dear Mr. White,
I have written to you previously, requesting that you investigate charges that Barack H. Obama is not a U.S. citizen.
I now direct you to two websites, the first is an advocate site of Mr. Obama called “”. I direct you to this article published there:

which in part states:

“When Barack Obama Jr. was born on Aug. 4,1961, in Honolulu, Kenya was a British colony, still part of the United Kingdom's dwindling empire. As a Kenyan native, Barack Obama Sr. was a British subject whose citizenship status was governed by The British Nationality Act of 1948. That same act governed the status of Obama Sr.'s children:
British Nationality Act of 1948 (Part II, Section 5): Subject to the provisions of this section, a person born after the commencement of this Act shall be a citizen of the United Kingdom and Colonies by descent if his father is a citizen of the United Kingdom and Colonies at the time of the birth.
In other words, at the time of his birth, Barack Obama Jr. was both a U.S. citizen (by virtue of being born in Hawaii) and a citizen of the United Kingdom and Colonies (or the UKC) by virtue of being born to a father who was a citizen of the UKC. “
Please remember, this site is condoned by the campaign of Mr. Obama. Mr. Obama's recent address regarding his father substantiates the information contained there.
The=0 Asite is clear about the fact that Mr. Obama would have had dual citizenship with Kenya until the age of 21.
The second site I will direct you to is:
Because Mr. Obama was adopted by Lolo Soetoro, and became an Indonesian citizen at that point, technically, his Kenyan citizenship ended with his adoption as Kenya and Indonesia do not recognize dual citizenship. Mr. Obama has never renounced his Indonesian citizenship, nor has he taken an oath of citizenship in the U.S. as a “naturalized” citizen. I believe the article listed at:
should be sufficient for the State of Illinois to remove Mr. Obama as an elected official in this State. I also believe it is sufficient to remove his name from the November ballot, as it DOES prove he has held dual citizenship and is therefore legally ineligible to be President.
Mr. White, clearly the State of Illinois has not done it's job to protect the citizens of this great State from a candidate who is very probably illegally holding an office in this State! This has no bearing on filing legal objections to a candidate's petition to run for an office. It has EVERYTHING to do with whether a sitting official should be removed from an office for breaking the law. You know well, that had he committed any illegal act, he would be removed from office. I believe this is just as serious as any other criminal act requiring removal from office.
I have twice previously demanded that you investigate the charges of ineligibility of Mr. Obama, and I believe twice you have ignored my requests. I am asking now that you fulfill your responsibility to the people of the State of Illinois and act appropriately. Clearly, if the Board of Elections had properly investigated the eligibility of candidate Obama, much of this enormous embarrassment could have been avoided. We are now in a situation, where the failings of officials in Illinois, have likely caused an egregious embarrassment to all Americans, by a llowing our State to be the accepted “vetting process” of a candidate clearly ineligible to run for the Presidency.
I hope that this embarrassment will insure that future candidates for any office in the State of Illinois will be appropriately investigated for eligibility requirements for the office for which that candidate is initiating a campaign.
I hope you will also take any necessary steps to remove Mr. Obama from the office of Senator until such time as he fulfills his legal obligations to the people of the State of Illinois. If in fact, you find that he has obscured or obfuscated, or attempted to obscure or obfuscate, any documentation that would have proven his ineligibility, I will expect that he will be indicted and tried. I would consider any attempt to hide his ineligibility to be malicious.
I am hoping to have a response from you on this, my third attempt to insure that the people of Illinois are protected. Perhaps you do not find any of this serious, but I do. Your apparent refusal to deal effectively with this situation will not benefit anyone. The best resolution to this problem, is to make pub lic any and all documentation obtained in your investigation.
I remain sincerely,

Monday, September 29, 2008

Triumph of the Little Guy

Today's defeat of HR 3997, the bailout, is a triumph of democracy over privilege. I made the mistake of betting that the bill would pass and so lost a bit of money, but it is wonderful to see a slight stirring of Jacksonian freedom in a country that has travelled all to far along the road to serfdom.

Missourian Writes to FEC Chairman McGahan

Someone from Missouri wrote the following letter to Donald F. McGahan to follow up my earlier letter:

Dear Sir: I understand that Mr Langbert has written to your commission in regard to obtaining a copy of Barack O'Bama's birth record. Lots of Americans are questioning this, including me. Most just talk about it, but never have the guts to do anything about it.

I understand you have not responded to him. We Americans have the right to know if O'Bama is qualified to be our President?? I agree with Mr Langbert's inquiry and petition.

Do what is right for our country!


H R 3997 RECORDED VOTE 29-Sep-2008 2:07 PM
QUESTION: On Concurring in Senate Amendment With An Amendment
BILL TITLE: To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes

....................Ayes......Noes.....PRES NV

---- AYES 205 ---

Bishop (GA)
Bishop (NY)
Bono Mack
Boyd (FL)
Brady (PA)
Brady (TX)
Brown (SC)
Brown, Corrine
Camp (MI)
Campbell (CA)
Cole (OK)
Davis (AL)
Davis (CA)
Davis (IL)
Davis, Tom
Edwards (TX)
Frank (MA)
Hall (NY)
Hastings (FL)
Inglis (SC)
Johnson, E. B.
King (NY)
Klein (FL)
Kline (MN)
Larsen (WA)
Larson (CT)
Lewis (CA)
Lewis (KY)
Lofgren, Zoe
Lungren, Daniel E.
Mahoney (FL)
Maloney (NY)
McCarthy (NY)
McCollum (MN)
Meek (FL)
Meeks (NY)
Miller (NC)
Miller, Gary
Miller, George
Moore (KS)
Moore (WI)
Moran (VA)
Murphy (CT)
Murphy, Patrick
Neal (MA)
Peterson (PA)
Price (NC)
Pryce (OH)
Rogers (AL)
Rogers (KY)
Ryan (OH)
Ryan (WI)
Smith (TX)
Smith (WA)
Van Hollen
Walden (OR)
Walsh (NY)
Wasserman Schultz
Weldon (FL)
Wilson (NM)
Wilson (OH)
Wilson (SC)


Barrett (SC)
Bartlett (MD)
Barton (TX)
Bishop (UT)
Boyda (KS)
Braley (IA)
Broun (GA)
Brown-Waite, Ginny
Burton (IN)
Davis (KY)
Davis, David
Davis, Lincoln
Deal (GA)
Diaz-Balart, L.
Diaz-Balart, M.
Edwards (MD)
English (PA)
Franks (AZ)
Garrett (NJ)
Green, Al
Green, Gene
Hall (TX)
Hastings (WA)
Herseth Sandlin
Jackson (IL)
Jackson-Lee (TX)
Johnson (GA)
Johnson (IL)
Johnson, Sam
Jones (NC)
King (IA)
Kuhl (NY)
Lewis (GA)
McCarthy (CA)
McCaul (TX)
McMorris Rodgers
Miller (FL)
Miller (MI)
Moran (KS)
Murphy, Tim
Peterson (MN)
Price (GA)
Rogers (MI)
Sánchez, Linda T.
Sanchez, Loretta
Scott (GA)
Scott (VA)
Smith (NE)
Smith (NJ)
Thompson (CA)
Thompson (MS)
Udall (CO)
Udall (NM)
Walz (MN)
Welch (VT)
Whitfield (KY)
Wittman (VA)
Young (AK)
Young (FL)

Dick Morris Makes Sense

Writing in Newsmax, Dick Morris bemoans John McCain's support for the bailout. That's what I've been saying.

"During Friday's debate, John McCain assiduously and inexplicably avoided using the issue that might have won him the debate and the presidency: opposition to a taxpayer-funded bailout of the financial crisis.

"Congress is about to pass, and the president is about to sign, a bill that the American people detest by 2-to-1 margins. When Americans realize that there is, indeed, an alternative to handing over $700 billion to financial institutions as a reward for their failure, opposition to the idea will swell even further..."

Message From Eagle of Ohio

Eagle from Ohio just e-mailed me the following message

>WONDERFUL, REFRESHING AND ABOUT TIME! I am so pleased to find an American who is not afraid to say the things about Hussein Obama that NEED to be said. I came across your blog quite by accident while perusing I thank you for sticking to your beliefs and the idea that this is STILL the USA and not quite the US of obama just yet.

Many Thanks,

And thank you, sir!

Conservative Chloe on the US and China

Conservative Chloe (aka Jamie) has written me an e-mail. Jamie blogs at

Jamie used to work for the Michigan State Legislature (incidentally I briefly worked for the New York State Assembly Ways and Means Committee). Jamie has posted a good blog concerning progressive education in Michigan that for some strange reason the Chinese government has funded. The program's curriculum sounds familiar--it is the same drivel that "social justice educators" at the Natonal Council for the Accreditation of Teacher Education and the half-literate graduate schools of education have been advocating for a century. A good book on this topic is Diane Ravitch's Left Back: A Century of Battles over School Reform. Progressive education was a failure 50 years ago, but the education schools advocate it.

Jamie notes:

"The new mindset and curriculum these programs want to teach our children are quite frightening. Some of the objectives for preschool and kindergarten are as follows:

* The challenge is to help children appreciate the power they have to cause change and channel that energy towards positive endeavors. By providing opportunities to take action and observe consequences, children learn to appreciate their roles as change agents and become responsible for making wise choices. (In my opinion they are teaching our children to be activists.)

* Energy is the underlying currency that fuels the universe.

* As children extend their understandings to appreciate how human action affects the natural world, they can learn about species preservation. As children observe how plants thrive or die according to heat, rain, and soil conditions (i.e. global warming), they solidify their understandings of the ever important role of environment for all creatures of the earth.

"Throughout this curriculum are quotes from various intellectuals, including Confucius. Of course they can quote Confucius but not Jesus. But the bigger question is, what on earth are we doing in America teaching our children Chinese teachings and a global education curriculum? Is there any Legislator in Michigan willing to address this issue?"

The sad truth is that our own home-grown Bill Ayers and the lunatic fringe known as the education establishment are largely responsible for the ideas that Jamie is describing. I think that the American public needs to think in terms of home schooling and privatization of education. The voucher idea is good but it has run up against too much resistance from the entrenched teachers' unions. I think the best approach would be to fight to de-fund education so that parents are pressured to send their children to private schools or home school. The public education system in America is but one more Progressive disaster.

Howard S. Katz on the Bailout

Howard S. Katz has written a noteworthy blog on the banking bailout. I excerpt from it below. Howard's point is that the claim of a "crisis" is nonsense. Firms fail all the time. Fractional reserve banking causes instability. There is no need for fractional reserve banking. Inflation, which is due to monetary expansion, has caused real wages to decline 18% over the past 36 years. That is a crisis. Monetary expansion has unrealistically caused the stock market to go up, addicting Americans to easy gains through speculation at their fellow Americans' expense. That is a crisis. The failure of AIG, Bear Stearns, Washington Mutual and other financial firms is not a crisis.

>"Our current financial system is quite unstable, and all of this instability results from the commercial banks...

>"The so-called business cycle of the 19th century in America resulted from the fact that all of the commercial banks were expanding their money and making more loans. If a bank started out with a 1:1 ratio against gold and expanded to a 4:1 ratio, it would find itself in a position in which a bank run was a possibility. Therefore it would reduce its lending. When the banks as a whole got too over-expanded, the most exposed bank would be hit with a run. The other banks would see this and reduce their loans. Then there would be a cycle of loan contraction. These cycles of loan expansion and contraction were incorrectly attributed to the nature of a free economic system. This is not true. In a free economy, each person must keep his promises, and the privileges accorded to commercial banks of making promises and then not having to keep them are a violation of a free market.

>"Note that these were cycles of money and credit expansion, but since they were good for the bankers, those economists sympathetic to the bankers called them economic growth. Correspondingly, the cycle of money and credit contraction was called a recession or a depression by the banker-economists. The implication here is that what is good for the banker is good for the whole country, and what is bad for the banker is bad for the country. But this is an outrageous lie. When the banker expands money and credit, there is a rise in prices, and everyone else in society has to pay higher prices for the necessities of life. When the banker is contracting, things are reversed, and the average person benefits.

>"The people of the early 19th century were a lot smarter than the people of today, and there was a political movement to eliminate the privilege of commercial bankers to break their promises. The full expression of this principle was found in a group called the LocoFocos. A compromise version of the LocoFoco movement developed into the Democratic Party and in 1828 won the presidential election with Andrew Jackson as its candidate. In 1832, Jackson vetoed the charter renewal of the second central bank, and this set the stage for the greatest economic growth of any nation in the history of the world.

>"The central bank did not return until J.P. Morgan and Woodrow Wilson teamed up in 1913 to create the Federal Reserve. The original idea was that it would be a banker’s bank and lend to the commercial banks when they had gotten up to the dangerous 4:1 ratio. If the Fed could expand up to 4:1 to the commercial banks and they could expand by 4:1 to the public, then the bankers as a whole could get a credit expansion of 16:1 – more money for the bankers and their big loan customers. The creation of the Fed led to the money/credit expansion of WWI and the 1920s, and this was offset by the money/credit contraction of the 1930s.

>"But this was small potatoes compared with the very first action F.D.R. took after assuming office in March 1933. In one day, he rammed through Congress a bill which gave the Federal Reserve the power to create money out of nothing. Instead of multiplying money by 16 this made it possible to multiply it infinitely. The nation started out on one giant money/credit expansion which continues today.

>"At first, the expansion was slowed down by the conservatives with their old fashioned idea that the budget should be balanced. The Fed is the lender to the Government and requires a Government deficit to do its evil work. But Reagan converted the conservatives to Keynesian economics (using the names “supply side” and “Reaganomics”); and since that time the money/credit expansion has increased its speed.

>"In a free market economy, the stock market moves sideways. The companies whose products gain the public’s favor go up, and the companies which lose favor go down. The stock averages move sideways. Measuring from the first Dow stock index, in 1885 to 1932, one finds that the market moved sideways. The 18-fold stock market gain from 1982-2007 was due to 2 factors: 1) As the Reagan Fed lowered interest rates, the competitive stock yield was also lowered; but the only way to accomplish this is by stock P:E ratios going up. 2) As the interest rate declined, the debt burden of these companies went down; lower costs mean higher profits. The combination of higher earnings and higher P:E ratios made for much higher stock prices.

>"So over the past 26 years a class of very rich has been created. Unlike the traditional American rich these people do nothing to earn their enormous salaries and bonuses. They are pure and simple beneficiaries of the money and credit expansion engineered by the Federal Reserve Bank and the nation’s private banks.

>"Corresponding to the gains of this class of rich there are corresponding losses to the vast majority of Americans. For example, real wages fell by 18% from 1972-2002. That has never happened to any generation in American history, not since 1623.

>"Now the fall in real wages is an economic crisis. And the rise in housing prices of 1997-2007 (which made homes unaffordable to the average person) is another crisis. But both of these real crises are ignored by the nation’s media. Indeed, the media is now bending every effort to convince people that the fall in housing prices which began in 2007 is a crisis.

>"No, the crisis you read about in the newspapers is a crisis for the bankers and their associated vested interests (loan customers, debtors in general, etc.). You see, interest rates started out at 16% (nominal T-bill) and have declined to virtually 0 (T-bill nominal) and badly negative in real terms. Negative real interest rates are a concept so absurd that they perfectly illustrate the insanity of our age. A negative interest rate means that, if you take a loan, there is no interest charge; instead they pay you for the privilege of lending to you. A negative 5% rate of interest means that, if you borrow $1000, then at the end of a year when you repay the loan, they give you $50.

>"Why would anybody lend under such terms? And yet the people who created these conditions are designated as economic experts by the media.

>"But the handwriting is on the wall for the bankers and their friends. Things just went too far, and unthinking conservatism is bringing it to a halt. In 2004, with the T-bill rate at 1%, the New York Times suggested a tightening of credit. Greenspan, always anxious to please the Times, complied. The small tightening of 2004-06 cut the paper aristocracy to the quick. Over the quarter century, they had gotten soft. Profits had come too easy. Just a tiny bit of tightness, and several big Wall Street firms were driven to the wall.

">But these people have never had to work for their money. They expect to be made rich by big daddy government. And so they go running, hat-in-hand to big daddy. And that is the source of the current “crisis.” It is a pack of lies made up by Henry the effect that the whole economic system (whatever that means) will collapse unless the government robs from the American people and bails out Paulson’s Wall Street friends.

>"Here is the challenge for the American people of our day. Faced with a similar challenge in the early 19th century the American people rallied behind Andrew Jackson and fought the bankers. They were largely successful, and America became the greatest economy in the world. What will Americans do today? Will they accept the word of Henry Paulson on faith? Will they pay his demanded $17,000? (Actually no one knows the exact figure.) If they do, there will be another demand on them tomorrow, and Americans will sink into a form of economic slavery to their new masters.

Orchestrated Crisis

Contrairimairi has forwarded a Discover the Networks post concerning the "Cloward-Piven strategy", which aims to overthrow capitalism by making impossible demands on the welfare state. Why leftists are intent to overthrow the current system is unclear to me because we are well on the way to achieving their totalitarian socialist goals.

According to the article, Cloward and Piven argued that potential welfare recipients should be encouraged to flood the system. That happened and capitalism did not fall, although my home city of New York became a corporate ghost town as all the industrial headquarters left and moved to Atlanta, presumably where government programs were not so generous. The article does not point out why, if Cloward and Piven were so effective as Mayor Giuliani claims, their success was limited to New York, Chicago and similar rust belt cities, but not the South. Perhaps Cloward and Piven were on the payroll of the Houston Chamber of Commerce?

The article points out that Cloward and Piven's idea led to an explosion of welfare benefits in the city. But this did not harm capitalism, as the article claims. It harmed New York City, which went bankrupt and had to curtail welfare benefits. The large corporations moved to Atlanta and Dallas. The statistic that the article gives of one in two New Yorkers having been on welfare is scary, but it begs the question as to why the city was unable to create jobs in the first place and why the welfare programs were not curtailed. This would seem to be a failure of New York's political choices. It is more convenient for Mayor Giuliani to blame Cloward and Piven than to blame himself for not reducing the city's budget by 35%, but what do you expect?

The welfare recipients could have been given brooms and told to sweep the city and welfare rolls would have fallen, but public sector unions objected and the city's politicians, including Mayor Giuliani, preferred to honor the Sanitation and other unions rather than re-build a great city. That is due to Progressivism, not Cloward and Piven.

Welfare was as much a result as a cause of the bankruptcy of New York City. Urban renewal, a bipartisan scheme, was doing harm to the City for two decades before the city's bankruptcy. You can eliminate welfare by demanding people get a job, but if you have a Progressive Republican like Robert Moses, the guy who ran urban renewal and a host of other city programs for 40 years, driving jobs out, you don't create jobs in the first place. Even in the past couple of years, with all of New York's economic decline, the leaders pass laws to harass Wal-Mart rather than repeal laws that discourage business formation.

Moses condemned many small businesses and destroyed about 20 neighborhoods along with low-rent tenements, replacing them with ugly city projects. The projects in turn engendered crime, further squashing small business.

The most important effect of Moses' road and apartment building was the neighborhood destruction and the eviction of about 3% of the city's population through eminent domain. Many neighborhoods were torn asunder by superhighways that cut through them, demolishing the customer demand base for small businesses.

Another important factor was the prevalence of public sector unions that had appeared in the 1960s. These made considerable demands on New York's budget to which both Republican and Democratic administrations acceded. As well, construction codes and a corrupt New York law known as the Wicks Law encouraged criminality and sub-quality public construction. Construction in New York is an open pit and an important source of economic decline.

As well, the Port of New York, which had been dominated by the mob for decades moved to New Jersey. Most of the port jobs were lost because of containerization. This also contributed to the bankruptcy. Instead of thinking in terms of laissez-faire policies to stimulate economic development, Robert Moses, Nelson Rockefeller and the Democratic administrations saw government-sponsored development and transfers to wealthy developers as the way to progress. But their Progressivism failed.

The dismal subway system, also due to policies of Robert Moses (and the "nationalization" of this once-private system in the 1930s) makes life in the city unbearable, further driving trade away.

The wonder is that people are willing to live in New York City at all. With high rents due to rent control and corrupt construction rules and probably the worst transportation system of any large city in the world, along with high taxes due to welfare, and an economy that is over-regulated and characterized by subsidies to big developers, it is a testimony to the city's cultural strengths that it continues to survive, albeit in a much more limited way than 40 years ago. It is no longer the center of new ideas as it once was.

I spend about half my time in New York City and the subway trips I take to Brooklyn and NYU twice a week are twice-weekly nightmares. I don't have to go to horror films. Just get on the subway, watch the rats and inhale the vomit. Truly a wonderful town.

Obama Campaign Fetes Ahmadinejad

Newsmax reports that:

"Iranian President Mahmoud Ahmadinejad was feted on Thursday night by left-wing U.S. religious leaders and self-styled pacifists at a gala reception at New York’s Hyatt hotel — which is owned by the family of the Obama campaign’s national finance chairperson, Penny Pritzker.

"Several thousand protesters gathered on 42nd street, directly across from the hotel, late Thursday afternoon, including Beth Gilinsky, president of the Jewish Action Alliance; Frank Gaffney, president of the Center for Security Policy; and the Rev. Keith Roderick, the Episcopal canon to persecuted Christians.

"Ahmadinejad arrived at 8:45 p.m., nearly three hours late, and was protected by the Secret Service and Iranian security guards, Newsmax correspondent Kenneth R. Timmerman reported.

"Inside, the Iranian president was given a warm welcome by John Brademas, a former congressman from Indiana who rose to become Democratic whip in the House from 1977-1981.

"Also welcoming him was Nihad Awad, executive director of the Council on American-Islamic Relations (CAIR), which was named as an “unindicted co-conspirator” in an alleged criminal conspiracy to fund the Palestinian terrorist organization Hamas...

"Barack Obama has made negotiations with Ahmadinejad and other dictators a cornerstone of his foreign policy approach, in contrast to John McCain, who believes that the U.S. must spearhead an international coalition to prevent Iran from going nuclear...

"Obama has said that he is ready to sit down with Ahmadinejad “without preconditions” to negotiate a sweeping security agreement with his regime. McCain has dismissed this as 'reckless,'".

Republican Liberty Caucus Opposes Bailout Plan

I'm on the New York State board of the Republican Liberty Caucus. The national RLC chairman, Bill Westmiller, has issued the following press release opposing the bailout. Despite the Bush administration's creation of this plan, there are many Republican Congressmen who oppose it. The trouble is that John McCain chose to identify himself with it. Bill's press release is excellent, but I would go further. There needs to be a de-nationalization of banking regulation and monetary policy. The current system is an abject failure. The problems go far deeper than the current socialization of banking. The banking system has not been creating value for decades. It depends on the money-creation powers of the Fed. Yet, this irresponsible institution has permitted bankers to extract large salaries. The public subsidization of Wall Street and banking occurs through the Federal Reserve. It is time to end this boondoggle and re-establish a gold standard.

Date: 09/28/2008
Release: Immediate
Contact: Westmiller (805) 493-4332

"NO Bailout for Failure, NO Rescue from Risk," says Republican Group"

Thousand Oaks, CA - A national caucus of Republican activists has urged GOP legislators to stand firm against the "Paulson Bailout" of a corrupt financial regulatory system. "This proposal is a government takeover of the entire U.S. economy," says Republican Liberty Caucus Chairman William Westmiller, "whose only purpose is to rescue those who made risky bets on bad mortgages." The Caucus [] opposes any taxpayer payoff to rescue those who made bad investments in any sector of the economy. "The problem is not a lack of government control," says Westmiller, "but rather the decades of market distortions imposed by Congress through subsidies, mandates, guarantees, and constraints on free-enterprise mortgage offerings."

The Paulson proposal grants the Secretary of the Treasury total control over all mortgage-related financial instruments, nearly a trillion-dollars in discretionary funds, and the power to nationalize or deputize every financial institution in the nation. "This isn't a rescue plan," says Westmiller, "it is an economic police state."

Over the past five years, Congress has refused - on multiple occasions - to impose standard accounting practices on "Government Sponsored Enterprises", maintained an implicit taxpayer guarantee against all of their losses, and expanded the discretion of federal agencies to allocate new national debt to failed investments and insurance brokers. "This is not free enterprise, nor anything even remotely associated with the American Dream," says Westmiller, "it is pure and simply corporatism, designed by oligarchs, suitable for a Weimar Republic or Soviet Union, not the United States of America."

The RLC favors clear legislation protecting individuals against fraud, misrepresentation, and theft. It opposes any law that benefits one class of Americans at the expense of another, including any form of financial guarantee or subsidy that rewards failure or encourages foolish investments.

"The worst aspect of all the proposals now pending in Congress," says Westmiller, "is the destructive craving to save a system of patronage, political favors, and class benefits that has brought us the current crisis. More of the same is no solution.”

"The 'Pelosi Compromise' is a fruitless exercise of battling against the most extreme Democratic proposals," says Westmiller, "adding new layers of bureaucracy, prolonged studies of alernative interventions, and phased-in destruction of the dollar is not progress, it is more, much more, of the same failed policies." The RLC applauds the stamina and fortitude of multiple Republican Senators and Congressmen who have opposed any corporate bailout, expansions of government fiscal power, new burdens on taxpayers, or any further assaults on the value of the dollar through inflation. The RLC is a political membership organization working within the Republican Party in support of individual rights, limited government, and free enterprise. The Caucus has members in all 50 states and 20 chartered state chapters. The RLC has urged all of its members to communicate to their representatives in Congress their total opposition to any bailout.

Welfare Check Day for Wall Street

(H/t Larwyn.) Mark Hemingway of National Review Online blogs that a "deal" has been reach with respect to the bailout scheme and that Henry Paulson has been given a free hand to spend $350 billion, with another $350 billion available in the future. According to the Wall Street Journal:

"The bill leaves many mechanics of the operation up to the Treasury. Among these are the crucial issues of how the U.S. government would decide which assets it will buy and how it would decide what to pay for them. The legislation leaves the Treasury 45 days to issue guidelines on those procedures. The bill awaits votes in Congress starting on Monday.

"From big Wall Street houses to small community banks, executives have expressed an interest in signing up for the bailout. But some have said the extent of their involvement will depend on critical details."

"At the bill's core is Mr. Paulson's concept of buying impaired mortgage-related assets from financial firms -- giving them cash to replace the toxic debts that have put them in danger or dissuaded them from lending. The plan is to help the firms restore their capital bases as well as the trust that enables them to borrow and lend at reasonable terms. Without this, officials worry that the credit markets, the lifeblood of the economy, would grind to a halt.

"Sellers of assets could include a broad range of financial entities -- not just banks but also credit unions and pension funds. The assets offered to the government must have been originated or issued on or before March 14, 2008."

"Support from House Republicans, who staged an 11th-hour revolt on Thursday, is still uncertain. Asked about the outcome of the House vote, Rep. Christopher Shays, a Connecticut Republican, said, "I think it's up in the air. This is what we call a legacy vote."

JustOneMinute links to C-Span's website that carries the draft bill. JustOne Minute notes:

"Section 113 starting on page 33 is the place to look. At a quick glance it appears that the Treasury Secretary is exhorted but not obliged to buy warrants giving the taxpayer some upside participation - the Dodd formulas have disappeared, thank heaven. But at second glance, it appears that *any* purchase by Treasury must be accompanied by warrants of some type; earlier reports suggested that auction purchases would be exempt. The Secretary has broad flexibility in setting terms but I suppose he would be evading the spirit of the bill if he set an absurdly high exercise price with the idea of making the warrants meaningless. Paulson was worried that healthy firms would stay away from the auctions rather than deliver warrants. I guess we'll see if he's right."

I'm a little confused why Paulson would be rescuing healthy firms. I'm even more confused why incompetently managed firms deserve a $700 billion dollar subsidy to keep them afloat in order to continue being incompetent so that they can waste even more money, allowing conservatives to blame the Democrats and Democrats to blame capitalism. Only in the United Socialist States of America.

The majority of Americans did not favor a bail out. But Americans continue to support the two party system despite indifference to the public interest. This is probably because of the mental incapacity of the electorate to grasp problems that progressivism has demanded they resolve. The result is that progressives reach exploitive and incompetently thought through solutions that harm the public. The banking system is one of the biggest examples. It produces no value; it extracts enormous value; and it impoverishes the public. Yet, the public is not able to discern the issue. Progressivism has killed democracy by expanding the required information set because it vastly expanded government. America is no longer much of a democracy. This is accentuated by the bailout's permitting government to take direct ownership of banks. We are moving to a true socialist state accompanied with the economic decline concomitant to one.

Steve From Washington Does Obama Inquiry

Steve wrote:

> Mitchell,
> Thank you for the great work you are doing. I tried to follow the FOI blog and was hoping to see the result of the requests to the Hawaii officials regarding the COLB. What happened? I was going to launch my own when I saw that others had already done so. I have also been in contact with the Washington Secretary of State regarding verification of the Candidates qualifications for Office and am working with an attorney to request proof by original or certified documents.

> Also, beyond the Certificate of Live birth issue, do we know for sure what hospital he was claimed to have been born in? Is the hospital record available but not disclosed?

> Steve Marquis
> http://www

My response:

Thanks for your kind words and thank for your work in Washington. I am sorry to say that none of the government agencies have responded to my inquiries. Only the NY State Bd. of Elections even acknowledged receiving my letter. One more example of government incompetence and indifference to democracy. I do not think even the name of the hospital is known with certainty. I have heard that Obama himself has mentioned two different hospitals, and that people have inquired and the secrecy level in Hawaii is so high that no one is willing to talk.