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On Thursday, California began the fiscal adventure of issuing its own de facto currency and floating its own deficit by making that currency redeemable in early October...with an option to push back the redemption date, if necessary. That is to say, California has started the process of issuing billions of IOUs instead of using cash to pay 'debts' to contractors, social service providers, local governments, vendors, taxpayers who expect a refund.... (I'll Gladly Pay You Tuesday For A Hamburger Today!)
According to the KPSP Local 2 newsite, Bank of America, Wells Fargo and JPMorgan Chase have agreed to accept "IOU"s from current customers-- but only through July 10. If a bank cashes an "IOU", it will keep the 3.75 interest rate offered by the state when the note matures. If a recipient waits to redeem an "IOU" when it matures, the recipient will receive the interest. (American Riviera Bank, Rabobank, Citibank, Union, and Heritage Oaks Bank have swelled the ranks of 'accepting' banks.) Yep...the banks have given California ONE WEEK to get a viable budget together.
The U.S. Fed took the interesting step of publicly warning people about the pitfalls of using the IOUs (a/k/a warrants) If Gov. Schwarzenegger is playing a game of "chicken" with the Feds-- hoping to embarrass them into coughing up cash, then he is losing. The Feds have already threatened to take back 7 state parks that were originally on federal land if California follows through on closing them to the public.
Meanwhile, Governor Schwarzenegger has ordered 200+ thousand state employees to take a third unpaid furlough day each month, which amounts to a total 14% cut in pay.
You cannot help the poor by destroying the rich. You cannot strengthen the weak by weakening the strong. You cannot bring about prosperity by discouraging thrift. You cannot lift the wage earner up by pulling the wage payer down. You cannot further the brotherhood of man by inciting class hatred. You cannot build character and courage by taking away people's initiative and independence. You cannot help people permanently by doing for them, what they could and should do for themselves.
-- Quoted by Ronald Reagan (from Rev. William J. H. Boetcker, commonly misattributed to Abraham Lincoln)
Libertarian attorney Manny Klausner sends the following commentary from the Washington Post along with the observations:
Many partisans for big government and expanded regulation raise fears of market failure -- but they rarely focus on the reality of governmental failure. No system is perfect, but libertarians understand that the private sector's reliance on competition, choice, and consent generally works far better for consumers and economic growth than command-and-control systems that rely on governmental coercion. For those that claim government under-regulation played a major role in the current financial crisis, it's worth considering some of the inevitable flaws in a regulatory framework.
In his recent interview in Reason, "The Housing Boom and Bust," Tom Sowell discusses his important new book on the financial crisis, and he explains how government policies made the housing crisis possible. A flagrant example of the inherent difficulties of avoiding systematic misuse of government funds involves Obama's recent retaliatory firing of AmeriCorps Inspector General, Gerald Walpin -- after he found wrongdoing involving Obama's basketball-playing buddy, Sacramento Mayor Kevin Johnson. And today's Washington Post's story below, "Staffer at SEC Had Warned Of Madoff -- Lawyer Raised Alarm, Then Was Pointed Elsewhere" provides an informative report on the story behind the story of the SEC's failure to exercise its powerful regulatory powers to competently respond to Bernard Madoff's massive fraudulent scheme.
In celebrating the Fourth of July this weekend, just remember, "IF YOU WANT TO STOP 1984, YOU NEED SOME 1776."
Washington Post article here: Staffer at SEC Had Warned Of Madoff
The contradiction and tragedy of communist-anarchism Part VI, Conclusion
I am delighted to publish an original essay by friend and Voluntaryist Ken Knudson on the intellectual contradiction that is "communist-anarchism" and the tragic debacle of trying to translate the contradiction into reality. Wendymcelroy.com blog should be cited with a link back if the essay is quoted or reprinted. Click on Part I ; click on Part II; click on Part III: Revolution, The Road to Freedom?; click on Part IV Egoism - The Philosophy of Freedom, click on Part V Capitalism - Freedom Perverted.
MUTUALISM: THE ECONOMICS OF FREEDOM
"There is perhaps no business which yields a profit so certain and liberal as the business of banking and exchange, and it is proper that it should be open as far as practicable to the most free competition and its advantages shared by all classes of people." - Chief Justice Roger B. Taney, 1837
When it comes to economics, most anarchists reveal an ignorance verging on the indecent. For example, in the first piece of the first issue of the new "Anarchy" the California Libertarian Alliance talks in all seriousness of "Marx's 'labour theory of value,' which causes communist governments to repress homosexuals." [98] Now, passing over the fact that Adam Smith developed the principles of this theory long before Marx was even born, I can't for the life of me see what the labour theory of value has to do with the repression of homosexuals - be they communist, capitalist, or mercantilist. Kropotkin was no better; in his "Conquest of Bread" he shows a total lack of any economic sense, as he amply demonstrates by his rejection of the very foundation of any rational economic system: the division of labour. "A society that will satisfy the needs of all, and which will know how to organise production, will also have to make a clean sweep of several prejudices concerning industry, and first of all of the theory often preached by economists - The Division of Labour Theory - which we are going to discuss in the next chapter....It is this horrible principle, so noxious to society, so brutalising to the individual, source of so much harm, that we propose to discuss in its divers manifestations." [99] He then fills the next two pages of perhaps the shortest chapter in history with a discussion of this theory "in its diverse manifestations." In these few paragraphs he fancies himself as having overturned the economic thought of centuries and to have struck "a crushing blow at the theory of the division of labour which was supposed to be so sound." [100]
Advocates of "Orphan Works" legislation are taking another run at Congress. A cynic would say that the RIAA, MPAA, et al., want to make your copying them without payment a crime (instead of the civil tort it is now), while making their copying you without payment suddenly legal. For more information, check out the Orphan Works blog.
From Comic Book Resources: Having had similar bills beaten down before, advocates of "Orphan Works" legislation are taking another run at Congress. Meaning, basically, that even as corporate interests are everywhere promoting legislation to criminalize copyright infringement (it's commonly a civil court matter) of properties they lay claim to, they're trying to set the stage for pirating...privately owned copyrighted material – meaning that owned by the creators themselves – on the basis that the pirates... I mean corporate users... "tried" to discover the copyright owner, couldn't, and thus operated in "good faith" that said work was in public domain. As the bill doesn't specify what measures must be taken to qualify as a good faith search and effectively strips the presumption previously in force in copyright law that ownership falls to the creator in the absence of paperwork indicating otherwise, it will force individual creators into the expensive and time-consuming official registration process to protect their output.. For no better reason than corporations don't like to be told no when they want to do something. The lesson, of course, is that corporations don't like pirates unless they're the pirates...
For the record and as a reminder, I do not advocate anything but free-market copyright -- that is, copyright that can be established and maintained as a matter of contract.
In a post entitled "Substandard Chrysler", Karen de Coster relates the problems she has had with her Chrysler PT Cruiser. The comments there relate similar stories. I sympathize, because I also have known the tribulations of owning an American-made vehicle. But I was granted an extra bit of insight that I'd like to share.
Headline in The Sacramento Bee: California to issue IOUs to vendors, local governments. Yep...the world's 5th largest economy is printing its own money in the form of IOUs -- the last time this happened was brief and in 1992 -- leaving people to once again ponder the question, 'Should I take an IOU from someone who is bankrupt?' Of course, most recipients will not have any choice -- those receiving tax refunds, for example.
The Bee article opens, With the state poised to issue billions in IOUs in lieu of cash this week, California's budget crisis could create serious headaches for some private vendors and local governments. The deciding factor could be California's banks. If they're willing to honor the registered warrants, or IOUs, then the problem becomes manageable for the scores of small businesses and local governments that rely on dollars flowing from Sacramento. They'll be able to cash the IOUs.
No bank has committted to accepting the IOUs as yet because the interest rate has not been established; it is expected to be set on Thursday. The IOUs will come due on October 1st whereupon the principal + interest will be paid...at least, in principle. If the banks co-operate by converting the state IOUs to federal ones (aka dollars), then the state government will have bought itself some time and be able to keep functioning; if not...then probably not.
[NOTE: Like almost all the other states, California is constitutionally bound to balance its budget every fiscal year (July-July) and, so, it cannot legally avail itself of the binge-borrowing that allows the fed to stay afloat by accruing a deficit. The IOUs allow California to act like the feds in this regard and accrue its own short-term deficit. If the banks do accept the IOUs as a form of cash, then they are de facto extending a loan to the State of California that becomes due in October.]
Even if the IOUs are accepted by banks, the government Law.com reports, California's judicial branch could receive a $41 million IOU from the state next week if lawmakers don't close a $24 billion budget deficit within days, Controller John Chiang said Wednesday. Without enough cash on hand, the state will start withholding $3.36 billion in payments as soon as next Thursday for student aid, assistance to the poor and disabled, mental health services and trial court operations, Chiang said. The controller's office was quick to add that judges and state employees, including those working in California's courts, will continue to be paid as required by state law. But payments for court operations will be held,
Yep...you read it right; state workers are legally required to be paid in cash and not IOUs. Only local governments/agencies, vendors and others in the private sector will have the double-faux money shoved into their hands where it may remain uncashable until October. Or never?-- at least not for anything but cents-on-the-dollar
Meanwhile, the "local government" of Sacramento County is considering the possibility of issuing its own IOUs. The Sacramento Bee reports, "if the county is still getting IOUs after Oct. 1, the problems would likely turn more severe. The county could be forced to issue its own IOUs to vendors, he said."
What will it do to inflation if states, counties and cities start issuing billions and billions of their own de facto sawbucks in order to stay afloat just one more month, one more week, one more day?
Oh...and if you'd like a peek at some of the institutions/agencies that California is trying to stay afloat, click extended text. (Source: the current proposed budget) Eliminating these agencies would save $15,941,388,000 billion -- almost a full $5 billion more than the California legislature is being asked to cut.
Tax receipts in America are plunging at every level of government: federal, state and local. Even in April, when income taxes were due and money flooded in, there was a federal deficit of $20.9 billion. Otherwise stated, federal tax receipts in April were down 44% compared to 2008 -- the first deficit for that tax-paying month in 26 years.
EverBank’s Daily Pfennig (06/04/09) commented, “In April when taxes are paid, we recorded a deficit?….I also read where the money collected by taxes is only going to cover half of the fiscal 2009 federal budget, requiring the government to borrow and print more than $1.8 Trillion to fund it. And that's not the end of it... There are equal-sized deficits looming for fiscal year 2010 onward. (Read entitlement programs) Tax receipts fell 50% during the Great Depression. Now eight months old, this depression is already rivaling that drop!”
Many states are in even worse shape because, unlike the feds, they are legally required to balance their budgets each year. California, for example, is careening toward what some call a “financial apocalypse”; with President Obama meting out ‘tough love’ by refusing to toss a penny its way, California may be bankrupt in July.
The Daily Pfenning concluded, “Do I have to tell you what's next for Jean and Joan and who knows who? Higher taxes! You won't hear the lawmakers running around screaming that they need to cut government spending! Instead, you'll hear them screaming that they need to increase revenue! HEY! Cut the spending Jack!”
True to prediction, governments are riding a sugar-high of spending.
The Fort Worth, Texas, police celebrated the 40th anniversary of the Stonewall Riot by arresting everybody in a gay bar, even the doorman and those drinking fancy waters or club soda, for "public intoxication" while they themselves used anti-gay epithets. Facebook has already set up a Rainbow Lounge Raid page on which its mission is explained:
Last night [Sunday, June 28] around 1 a.m., on the anniversary of the Stonewall riots, the Fort Worth Police Department raided the Rainbow Lounge and began randomly handcuffing and arresting patrons and shoving anyone who dared to ask why. It was a sobering reminder that on this pinnacle date in the history of gay rights, we still have a very long way to go. I created this group to give folks a chance to discuss it, share stories, pictures, etc.
Dallas Voice -- self-described as "the premier media source for LGBT North Texas -- has been pubishing first-hand accounts of the incident. Click here, and here,. This is the account I find most convincing. One man was handled so roughly that he appears to have internal bleeding in the brain.
Meanwhile, a press release has been quickly issued, presumably the Fort Worth Police Dept. that is trying to cover its ass. Apparently, the incident was a routine "alcohol beverage code inspection."
Yeah. That's why eyewitneses are consistently reporting this story:
I was really confused last night when suddenly, from all directions I see people being led out with zip ties on their hands looking very frightened. It seemed like the officers were provoking their victims as well. One man that had been arrested was standing on the side walk while an officer was being very aggressive and kept pushing the man around and trying to argue with him. The man finally asked him to stop touching him because he was just trying to stand still. It was really bizarre! None of the men that I saw arrested were visibly intoxicated and they all cooperated considering the way they were treated.This will not deter me from going back. I hope all that were arrested are giving them hell now. An injustice was done.
There is a protest at the rainbow lounge at 5 and then another one at the court house at 7 this evening.
The Facebook page also offers first-hand accounts and information on planned protests.
The contradiction and tragedy of communist-anarchism Part V
I am delighted to publish an original essay by friend and Voluntaryist Ken Knudson on the intellectual contradiction that is "communist-anarchism" and the tragic debacle of trying to translate the contradiction into reality. Wendymcelroy.com blog should be cited with a link back if the essay is quoted or reprinted. Click on Part I ; click on Part II; click on Part III: Revolution, The Road to Freedom?; click on Part IV Egoism - The Philosophy of Freedom.
NOTE: some of the discussion in this section is politically dated because the essay was written in 1983. The theoretical points and commentary, however, remain valid (or not)… Again, since I embrace the concept of ‘property rights’, my approach to capitalism varies significantly from Ken’s…even though, like Ken, I vastly prefer the term “free market” and do not see the two terms as interchangeable. It should be noted, however, that Ken’s position is far more consistent with that of the 19th century Tuckerite anarchists; by contrast, I never accepted much of Tucker’s economic theory, largely due to the influence of Ayn Rand and (especially) Murray Rothbard.
The author invites your comments and feedback at menckenfanATgmailDOTcom
CAPITALISM: FREEDOM PERVERTED
"Permit me to issue and control the money of a nation and I care not who makes its laws." - Meyer A. Rothchild
Roosevelt, in blaming the depression of the 'thirties on "heedless self-interest," played a cheap political trick for which the world has been suffering ever since. The great crash of 1929, far from being created by "free enterprise," was created by government interference in the free market. The Federal Reserve Board had been artificially controlling interest rates since 1913. The tax structure of the country was set up in such a way as to encourage ridiculously risky speculation in the stock market. "Protective tariffs" destroyed anything that vaguely resembled a free market. Immigration barriers prevented the free flow of the labour market. Anti-trust laws threatened prosecution for charging less than the competition ("intent to monopolise") and for charging the same as the competition ("price fixing"), but graciously permitted charging more than the competition (commonly called "going out of business.") With all these legislative restraints and controls, Roosevelt still had the gall to blame the depression on the "free" market economy. But what was his answer to the "ruthlessness" of freedom?This is what he had to say on taking office in 1933:
"If we are to go forward, we must move as a trained and loyal army willing to sacrifice to the good of a common discipline, because without such discipline no progress is made, no leadership becomes effective. We are, I know, ready and willing to submit our lives and property to such discipline because it makes possible a leadership which aims at a larger good." [82]
Murder excused and allowed due to a badge. The police are out-of-control and -- along with the rest of the legal system -- they pose the largest signle threat to your life, freedom and well-being. Skip Oliva offers an interesting analysis of how two cases of accidental killing -- one of which was committed by a police officer -- were treated differently.
Free copy of Rothbard's "Economic Depressions: Causes & Cures"
A free download of Murray Rothbard's classic tho' short book Economic Depressions: Causes & Cures has just been made available: click here. Note: the right-hand column also offers Murray's "The Panic of 1819" and "The Ethics of Liberty."
The contradiction and tragedy of communist-anarchism Part IV
I am delighted to publish an original essay by friend and Voluntaryist Ken Knudson on the intellectual contradiction that is "communist-anarchism" and the tragic debacle of trying to translate the contradiction into reality. Wendymcelroy.com blog should be cited with a link back if the essay is quoted or reprinted. Click on Part I ; click on Part II; click on Part III: Revolution, The Road to Freedom? The author invites comments and feedback -email- [Editor: Ken and I have an ongoing and well-trod disagreement about rational egoism. I am among those who subscribe to the “ghost” of natural rights. Ah well…a little pepper in a friendship just seasons it.] Check back to tomorrow for the next segment of Ken’s excellent essay.
EGOISM: THE PHILOSOPHY OF FREEDOM
"Many a year I've used my nose To smell the onion and the rose; Is there any proof which shows That I've a right to that same nose?" - Johann Christoph Friedrich Schiller
The philosophy of individualist-anarchism is "egoism." It is not my purpose here to give a detailed account of this philosophy, but I would like to explode a few of the more common myths about egoism and present to the reader enough of its essence so that he may understand more clearly the section on individualist economics. I am tempted here to quote long extracts from "The Ego and His Own," for it was this book which first presented the egoist philosophy in a systematic way. Unfortunately, I find that Stirner's "unique" style does not readily lend itself to quotation. So what I have done in the following pages is to dress up Stirner's ideas in a language largely my own.
Voltaire once said, "If God did not exist, it would be necessary to invent him." Bakunin wisely retorted, "If God DID exist, it would be necessary to abolish him." Unfortunately, Bakunin would only abolish God. It is the egoist's intention to abolish GODS. It is clear from Bakunin's writings that what he meant by God was what Voltaire meant - namely the religious God. The egoist sees many more gods than that - in fact, as many as there are fixed ideas. Bakunin's gods, for example, include the god of humanity, the god of brotherhood, the god of mankind - all variants on the god of altruism. The egoist, in striking down ALL gods, looks only to his WILL. He recognizes no legitimate power over himself.* The world is there for him to consume - if he CAN. And he can if he has the power. For the egoist, the only right is the right of might. He accepts no "inalienable rights," for such rights - by virtue of the fact that they're inalienable - must come from a higher power, some god. The American Declaration of Independence, for example, in proclaiming these rights found it necessary to invoke the "Laws of Nature and of Nature's God." The same was true of the French Revolutionary "Declaration des droits de l'homme et du citoyen."
--------------------------------------- He does not, of course, claim to be omnipotent. There ARE external powers over him. The difference between the egoist and non-egoist in this regard is therefore one mainly of attitude: the egoist recognizes external power as an enemy and consciously fights against it, while the non-egoist humbles himself before it and often accepts it as a friend. ---------------------------------------
The egoist recognizes no right - or what amounts to the same thing - claims ALL rights for himself. What he can get by force he has a right to; and what he can't, he has no right. He demands no rights, nor does he recognize them in others. "Right - is a wheel in the head, put there by a spook," [73] says Stirner. Right is also the spook which has kept men servile throughout the ages. The believer in rights has always been his own jailer. What sovereign could last the day out without a general belief in the "divine right of kings"? And where would Messrs. Nixon, Heath, et. al. be today without the "right" of the majority?
Yesterday, the Competitive Enterprise Institute made public an internal study on climate science which was suppressed by the Environmental Protection Agency. According to CEI, The report finds that EPA, by adopting the United Nations’ 2007 “Fourth Assessment” report, is relying on outdated research and is ignoring major new developments. Those developments include a continued decline in global temperatures, a new consensus that future hurricanes will not be more frequent or intense, and new findings that water vapor will moderate, rather than exacerbate, temperature.
