The self-interest of labor unions in this anti-capitalist crusade has always been transparent: Unions cannot exist without somehow prohibiting competition from non-union labor, whether that labor is at home or abroad. Thus, they wage campaigns of propaganda, intimidation, or violence against non-union workers, whether they are in Indiana or Indonesia. They are not in the least concerned about the well-being of the Third World poor. If the labor unions have their way, the poor whose lives are improved by their employment by multinational corporations would all be thrown out of work, many of whom would be forced to resort to crime, prostitution, or starvation. That is the “moral high ground” that has been staked out on college campuses all over America where unions have been successful in instigating “anti-sweatshop” campaigns, seminars, and protests.

That the anti-factory movement has always been motivated by either the socialists’ desire to destroy industrial civilization, or by the inherently non-competitive nature of organized labor, is further evidenced by the fact that there was never an “anti-sweat-farm movement.” Farm labor is still as rigorous as any physical labor, as it was 150 years ago. Indeed, in the early days of the industrial revolution — and in Third World countries today — one reason why families had so many more children than they do in wealthier countries today is that they were viewed as potential farm hands. Abraham Lincoln had less than one year of formal education because his parents, like most others on the early nineteenth-century American frontier, needed him as a farm hand. But since agriculture was not considered to be a form of capitalism, and did not pose any real threat to unionized labor, there was never any significant social protest over it.

In a forthcoming article in the Journal of Labor Research Ben Powell and David Skarbek present the results of a survey of “sweatshops” in eleven Third World countries. In nine of the eleven countries, “sweatshop” wages in foreign factories located there were higher than the average. In Honduras, where almost half the working population lives on $2/day, “sweatshops” pay $13.10/day. “Sweatshop” wages are more than double the national average in Cambodia, Haiti, Nicaragua, and Honduras. The implication of this for all those naïve college students (and faculty) who have been duped into becoming anti-sweatshop protesters is that they should support and encourage more direct foreign investment in the Third World if they are at all concerned about the economic wellbeing of the people there.

It is never the workers in countries like Honduras who protest the existence of a new factory there built by a Nike or a General Motors. The people there benefit as consumers as well as workers, since there are more (and cheaper) consumer goods manufactured and sold in their country (as well as in other parts of the world). Capital investment of this sort is infinitely superior to the alternative — foreign aid — which always empowers the governmental recipients of the “aid,” making things even worse for the private economies of “aid” recipients. Market-based capital investment is always far superior to politicized capital allocation. Moreover, if the foreign investment fails, the economic burden falls on the investors and stockholders, not the poor Third World country.

During the socialist calculation debate of the early twentieth century, one of the responses that Ludwig von Mises made to the “market socialists” was that it could never be sufficient to simply read the Wall Street Journal and use the prices for inputs and other goods as revealed in the capitalist countries in order to make socialism work, as they contended. As important as private property and market-driven prices are to capitalism, another necessary ingredient for capitalist success is a culture of entrepreneurship, management, risk taking, marketing, financial know-how, and other skills that have developed over several hundred years in the capitalist countries. Without this, the market socialists could only play at pretend-capitalism.

Another virtue of foreign investment in the Third World is that it has the potential of transferring such knowledge to countries where it previously did not exist — or at least was not very prevalent. It is not only technology that the poor countries need, but the culture of capitalism. Without it they will never dig their way out of poverty.

The existence of foreign factories in poor countries also creates what economists call “agglomeration economies.” The location of a factory will cause many businesses of all types to sprout all around the factory to serve the factory itself as well as all of the employees. Thus, it is not just the factory jobs that are created. Furthermore, a successful investment in a poor country will send a signal to other potential investors that there is a stable environment for investment there, which can lead to even more investment, job creation and prosperity.

Capital investment in poor countries will cause wages to rise over time by increasing the marginal productivity of labor. This is what has occurred since the dawn of the industrial revolution and it is occurring today all around the world. Discouraging such investment, which is the objective of the anti-sweatshop movement, will do the opposite and cause wages to stagnate.

Finally, perhaps one of the strongest virtues of foreign “sweatshops” is that they weaken the hand of American labor unions. With few exceptions, American unions have long been at the forefront of anti-capitalist ideology and have supported virtually all the destructive tax and regulatory policies that have been so poisonous to American capitalism. Unions believe that they cannot exist unless workers can be convinced that employers are the enemies of the working class, if not society, and that they (the workers) need unions to protect them from these exploiters.

If you want to support the Third World poor, purchase more of the products that they labor to make in the capitalist enterprises that have located there.

Regards,
Thomas DiLorenzo
Whiskey & Gunpowder

May 2, 2011

How So-Called Sweatshops Help the Poor was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

The format is one we’ve seen before in books like Libertarianism A to Z. In Liberty Defined, the introduction lays out the overarching principles of liberty and anti-authoritarianism. The book itself then devotes each chapter to an individual issue, starting with abortion, then moving through things like Austrian economics, capital punishment, evolution and creation, global warming, hate crimes, Keynesianism, taxes, unions and much more. The chapters are fairly short at just a few pages each, written in clear language that seeks to discuss and educate. Each chapter is a delight to read, particularly for lovers of liberty, but even when you don’t fully agree with Dr. Paul, you’ll find his position compelling and his honesty and consistency incredibly refreshing.

“The phrase ‘Austrian School’ or ‘Austrian economics’” Dr. Paul writes, “is not something I ever expected would enter into the vocabulary of politics or media in culture. But since 2008, it has. Reporters use it with some degree of understanding, and with an expectation that readers and viewers will understand it too. This just thrilling to me, for I am a long-time student of the Austrian tradition of thought.”

And no doubt many readers will share Dr. Paul’s joy. They will also note that it is Dr. Paul himself who has been tirelessly campaigning for the free market principles of the Austrian School for the past several years. He tells about the founder of the Austrian School, Carl Menger (1840-1921) “who wrote that economic value extends from the human mind alone and is not something that exists as an inherent part of goods and services; valuation changes according to social needs and circumstances. We need markets to reveal to us the valuations of consumers and producers in the form of the price system that works within a market setting.”

Dr. Paul notes that Keynes’ “entire agenda presumes the existence of a wise activist state that is involved in every level of economic life. Liberty was not an issue that concerned him.”

The Austrian School, however, believes, “We are not cogs in a macroeconomic machine; people will always resist being treated as such.”

Liberty Defined is certain to make people on both sides of the left-right political debate uncomfortable. Dr. Paul decries the welfare state beloved by those on the left, but repeatedly shows that such a state is just the other side of the coin of the interventionist foreign policies of those on the right. Dr. Paul himself is a man of religious and spiritual conviction, but he also doesn’t shy away from analyzing how the neoconservatives of the modern right use adulterate religion and patriotism to garner support for their imperialist adventures.

“Instead of religious beliefs being the cause of war, it is more likely that those who want war co-opt religion and falsely claim the enemy is attacking their religious values. How many times have we heard neoconservatives repeat the mantra that religious fanatics attack us for our freedoms and prosperity? Neoconservatives use religion to stir up hatred toward the enemy.”

Dr. Paul also isn’t given to idealism. He admits, for example, that a truly libertarian position would have porous borders, but he points out that that just isn’t possible right now. He notes that even in a stateless society, all property would be privately owned and those property-owners at the borders would have the right to decide who cross their land. Dr. Paul handles the issue deftly and his proposals of work permits and conditional green cards as opposed to deportation, among other things, struck even this anarcho-capitalist leaning reader as reasonable.

And Dr. Paul is certainly no anarchist, but he is close enough for government work. He is the kind of politician even an anarcho-capitalist could love. Dr. Paul is well versed in the dangers of governments and their tendencies to grow; yet he thinks there is room in the world for a minimal amount of government. It’s a delicate balance. He pulls it off with aplomb. In the chapter on prohibition he says:

“Government should not compel or prohibit any personal activity when that activity poses danger to that individual alone. Drinking and smoking marijuana is one thing, but driving recklessly under the influence is quite another. When an individual threatens the lives of others, there is a role for government to restrain that violence.

“The government today is involved in compulsion or prohibition of just about everything in our daily activities. Many times these efforts are well intentioned. Other times they result from a philosophic belief that average people need smart humanitarian politicians and bureaucrats to take care of them. The people, they claim, are not smart enough to make their own decisions. And unfortunately, many citizens go along, believing the government will provide perfect safety for them in everything they do. Since governments can’t deliver, this assumption provides a grand moral hazard of complacency and will only be reversed with either a dictatorship or a national bankruptcy that awakens people and forces positive change.”

Liberty Defined is layered with a practical view of the political realities, but it never fails to stay true to its moral core. Dr. Paul repeatedly points out that many of his solutions — which ultimately come down to the federal government getting out of the way — simply won’t be applied because the federal government is just too intertwined with the problem.

But Dr. Paul never wavers. With the fearlessness for which he has become famous, Dr. Paul continues to assault all the bad central planning policies and popular misconceptions that allow them to continue even in the face of failure.

On Keynesianism:

“…Something did change with the publication of The General Theory. Keynes gave the governments of the world a seemingly scientific rationale for doing what governments wanted to do anyway.”

On unions and government labor laws:

“Union power, gained by legislation, even without physical violence, is still violence. The laborer gains legal force over the employer. Economically, in the long run, labor loses.

“…If only it were so easy to help the working class. Just dictate wages and everyone will be financially better off. Unfortunately, this leads to disastrous results, whether it’s the prolonging of the economic mess as it did in the 1930s or the tragic results in American industry that we’re witnessing today.

“What good is it to mandate a $75 per hour wage if there are no jobs available at that price? What good is a minimum wage of $7.50 if it significantly contributes to overall unemployment?

“The reaction to the economic argument explaining the shortcoming of labor unions and minimum wage laws is that it’s heartless and unfair not to force ‘fairness’ on the ruthless capitalists. But true compassion should be directed toward the defense of a free market that has provided the greatest abundance and the best distribution of wealth of any economic system known throughout history.”

The chapter on taxes, however, is probably the best (and certainly this reviewer’s favorite). It sums up so many of the important themes: private property, liberty versus coercion, public education, economic misallocation, and the voracious appetite of the state.

“‘Taxes are the price we pay for civilization,’ according to Oliver Wendell Holmes. This claim has cost us dearly…If we as a nation continue to believe that paying for civilization through taxation is a wise purchase and the only way to achieve civilization, we are doomed.”

I am tempted to quote the chapter in its entirety, but at this point I would simply urge you to buy the book so you can read it there, along with the rest of this wonderful work.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder

April 25, 2011

P.S.: Click here to get your copy now.

A Review of Ron Paul’s Liberty Defined was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

When the employees of a grocery store, for example, go on strike and shut down the store, consumers can simply shop elsewhere, and the grocery-store management is perfectly free to hire replacement workers. In contrast, when a city teachers’ or garbage-truck drivers’ union goes on strike, there is no school and no garbage collection as long as the strike goes on. In addition, teachers’ tenure (typically after two or three years in government schools) and civil service regulations make it extremely costly if not virtually impossible to hire replacement workers.

Thus, when government bureaucrats go on strike they have the ability to completely shut down the entire “industry” they “work” in indefinitely. The taxpayers will complain bitterly about the absence of schools and garbage collection, forcing the mayor, governor, or city councilors to quickly cave in to the union’s demands to avoid risking the loss of their own jobs due to voter dissatisfaction. This process is the primary reason why, in general, the expenses of state and local governments have skyrocketed year in and year out, while the “production” of government employees declines.

For decades, researchers have noted that the more money that is spent per pupil in the government schools, the worse is the performance of the students. Similar outcomes are prevalent in all other areas of government “service.” As Milton Friedman once wrote, government bureaucracies — especially unionized ones — are like economic black holes where increased “inputs” lead to declining “outputs.” The more that is spent on government schools, the less educated are the students. The more that is spent on welfare, the more poverty there is, and so on. This of course is the exact opposite of normal economic life in the private sector, where increased inputs lead to more products and services, not fewer.

Thirty years ago, the economist Sharon Smith was publishing research showing that government employees were paid as much as 40 percent more than comparable private-sector employees. If anything, that wage premium has likely increased.

The enormous power of government-employee unions effectively transfers the power to tax from voters to the unions. Because government-employee unions can so easily force elected officials to raise taxes to meet their “demands,” it is they, not the voters, who control the rate of taxation within a political jurisdiction. They are the beneficiaries of a particular form of taxation without representation (not that taxation with representation is much better). This is why some states have laws prohibiting strikes by government-employee unions. (The unions often strike anyway.)

Politicians are caught in a political bind by government-employee unions: if they cave in to their wage demands and raise taxes to finance them, then they increase the chances of being kicked out of office themselves in the next election. The “solution” to this dilemma has been to offer government-employee unions moderate wage increases but spectacular pension promises. This allows politicians to pander to the unions but defer the costs to the future, long after the panderers are retired from politics.

As taxpayers in California, Wisconsin, Indiana, and many other states are realizing, the future has arrived. The Wall Street Journal reports that state and local governments in the United States currently have $3.5 trillion in unfunded pension liabilities. They must either raise taxes dramatically to fund these liabilities, as some have already done, or drastically cut back or eliminate government-employee pensions.

Government-employee unions are primarily interested in maximizing the profits of the union. Consequently, they use civil-service regulations as a tool to protect the job of every last government bureaucrat, no matter how incompetent or irresponsible he or she is. Fewer employed bureaucrats means fewer union dues are being paid. Thus, it is almost guaranteed that government-employee unions will challenge in court the attempted dismissal of all bureaucrats save the occasional ones who are accused of actual criminal behavior. This means that firing an incompetent government school teacher, for example, can take months, or years, of legal wrangling.

Politicians discovered long ago that the most convenient response to this dilemma is to actually reward the incompetent bureaucrat with an administrative job that he or she will gladly accept, along with its higher pay and perks. That solves the problem of parents who complain that their children’s math teacher cannot do math, while eliminating the possibility of a lawsuit by the union. This is why government-school administrative offices are bloated bureaucratic monstrosities filled with teachers who can’t teach and are given the responsibilities of “administering” the entire school system instead. No private-sector school could survive with such a perverse policy.

Government-employee unions are also champions of “featherbedding” — the union practice of forcing employers to hire more than the number of people necessary to do the job. If this occurs in the private sector, the higher wage costs will make the firm less competitive and less profitable. It may even go bankrupt, as the heavily unionized American steel, automobile, and textile industries learned decades ago.

No such thing happens in government, where there are no profit-and-loss statements, in an accounting sense, and most agencies are monopolies anyway. Featherbedding in the government sector is viewed as a benefit to both politicians and unions — but certainly not to taxpayers. The unions collect more union dues with more government employees, while the politicians get to hand out more patronage jobs. Each patronage job is usually worth two or more votes, since the government employee can always be counted on to get at least one family member or close friend to vote for the politician who gave him the job. This is why, in the vast literature showing the superior efficiency of private versus government enterprises, government almost always has higher labor costs for the same functions.

Every government-employee union is a political machine that lobbies relentlessly for higher taxes, increased government spending, more featherbedding, and more pension promises — while demonizing hesitant taxpayers as uncaring enemies of children, the elderly, and the poor (who are purportedly “served” by the government bureaucrats the unions represent).

It is the old socialist trick that Frédéric Bastiat wrote about in his famous essay, The Law: The unions view advocates of school privatization, not as legitimate critics of a failed system, but as haters of children. And the unions treat critics of the welfare state, not as persons concerned with the destruction of the work ethic and of the family that has been caused by the welfare state, but as enemies of the poor.

This charade is over. American taxpayers finally seem to be aware that they are the servants, not the masters, of government at all levels. Government-employee unions have played a key role in causing bankruptcy in most American states, and their pleas for more bailouts financed by endless tax increases are finally ringing hollow.

Regards,
Thomas DiLorenzo
Whiskey & Gunpowder

February 28, 2011

The Political Economy of Government Employee Unions was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

A very dear friend hails from Madison. Both her sister and brother-in-law still live in the Madison suburbs and work for the state. Both belong to the union and both have joined the protests.

One of her brothers also lives in suburban Madison. He was visiting her at her apartment in Brooklyn. “That Scott Walker [Governor of Wisconsin] is a scumbag,” he said to me with an expectation of agreement. Your editor stared blankly.

“He wants these people living at slave wages,” the brother continued. “To show you what kind of jerk he is: He also wants to cut a state insurance program for young mothers. Those people are just going to keep having babies anyway, so you got to help them.”

“I know how you probably feel about those protesters,” my dear friend admitted later. “But these state employees really are people who really ought to be paid well. They do important work.”

They would get paid properly according to their skill level and the market demand for their work, I thought. I began to say it, but then changed the topic.

“February is the worst month,” I said instead. “A few nice days that are like spring, alternated with days of vicious cold or absurd amounts of snow. And just when we’ve all had enough of winter.

“It’s like courting a beautiful but cruel woman…the kind who shows just enough favors to make it hurt when she hides them.”

Your editor had to hush up on the subject of Wisconsin, unions and markets for the sake of peace. He’s under no such restrictions here.

Robert Wenzel over at Economic Policy Journal says this about protest from Cairo to Madison:

When you hear talk that education and healthcare need to be returned to the free markets and that charity should be conducted by private sector charity organizations, you will know that the battle is for liberty. Right now, the battle is for who gets to control the shrinking, because of the recession, plunder.

There’s no way I can cheer for a bunch of government workers protesting against some of their perks being taken away. I’d like to see their jobs ended. But I can’t cheer on a Governor who doesn’t show the slightest clue that he understands that public education makes education a bureaucratic monstrosity that turns curious by nature children into bored stiffs (some of whom end up being treated for something called ADD, when the real disease that they have is GCE — government controlled education).

But, of course, current upheaval in the world is not now limited to Wisconsin.

The world is exploding with protests, riots and in some cases revolutions. Behind this disruption of the status quo is the reaction against government attempts to force people against the natural order. In Egypt, Tunisia, Libya, and the like, it is pure revolt against totalitarian control. In Greece, Ireland and Wisconsin it is protests against the fact that governments can’t do the impossible, i.e. pay out more plunder than they take in (in one form or another). In Greece, Ireland and Wisconsin, the protesters clearly want the impossible. They want the plunder that isn’t there.

But at the core, the fundamental problem with all these upheavals is there is no indication that the people in any of these situations understand what makes for a growing prosperous society. In Greece, Ireland and Wisconsin, the protesters are clearly self-centered, who have no clue that they would live in a much better society if the governments simply ended their positions and stopped taxing the people. This would result in the people hiring the government employees in the private sector, where the incentives would result in a growing society.

Linda Schrock Taylor is a retired special education teacher and outspoken constitutionalist. She pulls no punches when she writes:

Intelligence…I mean a lack of intelligence…plays a very large role in unions and demonstrations. How else can uneducated, ineffective, unread teachers remain employed in a nation of crashing standards? Unions fight accountability. Most individuals choosing “teaching” as a career in this modern era – of non-readers; poorly educated; non-thinking; illogical high school graduates – have SAT scores that rank third (3rd!) from the bottom of the list of professions. Public school administrators score second (2nd) from the bottom. Try to sleep at night with those figures – and the consequences of them – rushing around in your head.

What is to be done? The question is on the mind of every rational, thinking, want-the-best-for-children individual. As far as I am concerned, we need to close all departments of education; withdraw all public financing; and let the public school system collapse. We need not fear such a process anymore than we fear tearing down a dangerous building in order to replace it with a safer and more efficient one. Americans, functioning within their communites are very resourceful and will devise better and more affordable ways to educate the local children. Education only becomes so complex and problematic when it is turned over to bureaucracies and politicians. Cut them out of the picture. Ignore them if they take to the streets to tantrum. There are other choices we can make. Furthermore, we should make them as soon as possible.

Please keep in mind that we’re not making the state government the heroes here. But we can’t help but nod approvingly when Wisconsin’s governor admits that government can’t afford to keep things going the way they have been.

The burden is on the taxpayer. The public carries the cost of government employees. They’ve always been told that it’s worth it. But if it were worth it, then there would be no need for protests. There’d be no need for what Taylor describes as tantrum throwing.

But those controlling the purse strings still don’t want to turn that purse over to the market. They still want their near monopoly on market goods like education.

Meanwhile the taxpayer is held hostage. They’re getting goods of lower quality and paying top dollar for it. And they’re told that there is no other way. The same economic laws that brings computers and cell phones to science fiction heights of wonder for lower and lower prices are suspended when it comes to education…or so we are led to believe.

The governments may be fighting their unionized employees a lot more because subsidizing monopoly and questionable quality is becoming increasingly unaffordable. Only the federal government can monetize their debts and kick the can a little further down the road with inflation. State and local governments can only watch helplessly as expenses climb higher than revenues year after year.

The pay, benefits and promises to public employees are proving unsustainable. Should we be worried? Would it really be so bad to see the guarantees of government employment no longer guaranteed? Can we have the market take a crack at providing more of the things are tax dollars have come to pay for?

“People don’t want choice,” my good friend claimed. “They want certain things simply to be taken care of.” Some people may indeed feel this way, but some people also feel it’s a good idea to turn control of the money supply over to a central governing body. Some people feeling that way doesn’t make it so.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder

February 23, 2011

Madison Protests Show State Monopolies Are Unaffordable was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

In each of the books I’ve written, I’ve taken great care to acknowledge my beautiful and brilliant little girl, Dakota. I often noted that Dakota and her parents were aiming for her acceptance at either Harvard or Stanford and would accept nothing less. The easy part is aiming for gold. The hard part is achieving it. “Homeschool to Harvard” is a story about turning dreams into reality.

Dakota has been home-schooled since birth. While other kids spent their school days being indoctrinated to believe competition and winning are unimportant, and that others are to blame for their shortcomings and failures, Dakota was learning the value of work ethic, discipline, sacrifice and personal responsibility. While other kids were becoming experts at partying, Dakota and her dad debated current events at the dinner table. While other kids shopped and gossiped, Dakota was devouring books on science, math, history, literature, politics and business. I often traveled to business events and political speeches with my home-schooled daughter in tow. While other kids came home to empty homes, Dakota’s mom, dad, or both were there every day to share meals and a bedtime kiss and prayer. Despite a crazy schedule of business and politics, I’m proud to report that I’ve missed very few bedtime kisses with my four home-schooled kids.

While others were out learning to drive so they could attend more parties, or experimenting with alcohol and drugs, Dakota was practicing the sport she loves with dedication, intensity and passion- fencing. The result? She became one of the elite junior fencers in America- winning the Pacific Coast Championship and representing the United States at World Cup events in Germany and Austria.

Was all the discipline and sacrifice worth it? A few days ago, Dakota Root achieved her lifelong dream. She was accepted at both Harvard and Stanford. She was also accepted at Columbia, Penn, Brown, Duke, Chicago, Cal-Berkeley, USC and several more of the elite schools in America, an unheard of record for a home-school kid. She actually had the confidence to turn down an offer from the Yale fencing coach before she had gotten her other acceptances. The kid turned down Yale!

Here is the most amazing part of the story: The first classroom of Dakota’s life will be inside the hallowed halls of Harvard. This fall she will fence for the Harvard team- one of America’s best. Only an elite 1% (30,000) of the best of the best high school seniors dared apply to Harvard. Virtually every one was #1 in their class, or a world-class scholar/athlete, or had perfect S.A.T. scores. Out of 3 million high school seniors headed to college, and those 30,000 applicants, only 1500 or so will attend Harvard. That is the lowest acceptance rate in college history. To be accepted at one or two Ivy League colleges is rare- to all, an almost impossible feat!

At a time of educational free-fall, it is a remarkable story. With America’s public school system ranked at or near the bottom of the industrialized world (and Nevada near the bottom of that), with record dropout rates, grade inflation, violence, gangs, drugs, teen pregnancies, and the scandal of graduating high school seniors requiring remedial math and reading before starting at college, Dakota’s story offers hope. Dakota proves the American Dream is alive, if only we’d stop depending on government to save us.

There is no one answer for education. Our choice of homeschooling melded parental education with tutoring by hand-picked retired teachers and college professors, combined with a personally-chosen curriculum. It’s called parental freedom: the power to decide how to best educate children belongs with the parents, not teachers unions. School choice, encouraging competition for our failing public school system, and offering vouchers on the state level to give parents the power (and money) to choose among charter schools, private schools, parochial schools or home-schooling is the way to force public schools to improve. Competition works. If it’s good enough for Coke and Pepsi, why not public schools?

The sad reality is that teachers unions and government aren’t the solution – they are the problem. Our public schools get worse every year, yet teachers unions demand more and more money. They get their money, it gets worse yet, and they demand even MORE. That is the definition of insanity. This is “Groundhog Day.” It isn’t working- and hasn’t since the day that government took over education in this country.

Dakota Root proves it doesn’t take a state certified teacher, or a teachers union, or a village to raise a child- it only takes two loving parents who give a damn. One home-schooled girl has driven a stake through the heart of the public school education sham. “Homeschool to Harvard” is a powerful story that every parent should be allowed to offer their children.

Regards,
Wayne Allyn Root
Whiskey & Gunpowder

May 5, 2010

Homeschool to Harvard was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

In this specific case, Henry Waxman (D-CA), Chairman of the House Energy Committee, has acknowledged that the largest US insurance company, State Farm, alerted federal safety regulators on “numerous occasions” beginning three (3) years ago that there were reports of unexpected acceleration problems in Toyotas. Now that the “horse has been stolen,’ Mr. Waxman is attempting to lock-the-barn by requesting that the five (5) largest US insurance companies submit any reports the various insurers sent to the safety regulators as well as any e-mails they received from those regulators.

And so now the backpedaling begins. Oh we “pushed Toyota from the beginning” to address US safety concerns said the National Highway Traffic Safety Administration (NHTSA) division of the US Department of Transportation. Why they even sent some top NHTSA officials to Japan to brief 100 Toyota engineers and executives – last December. Let’s see, State Farm notified the NHTSA in 2007 that there was a “problem” so the NHTSA acted “quickly” to send top officials in December, 2009. Wow. Can’t get much quicker response than that, can you? Really holding Toyota’s feet-to-the-fire! I feel safer already, and I don’t even own a Toyota. (Editor’s note: Tex restores classic cars, and it was touch-and-go whether I should leave his dead body and take a black ’57 Thunderbird that would have had the Fonz doing the Snoopy Dinner Dance when visiting his secluded lake house. Suffice it to say the beautiful beast has been on the cover of at least one international magazine.)

Of course this is just an isolated incident, right? Not exactly. Recall the Firestone tire problems of a few years ago? Even though the NHTSA was required by law to begin publishing information on serious vehicle accidents, the agency managed to delay the publication for five (5) years! Excuse? “The NHTSA had to withhold that critical information due to pressure from manufacturers.” So the inmates are still in charge of the asylum?

There are numerous other examples of the failures at the NHTSA but why pick-on just them? There are plenty of other examples. Bernie Madoff comes to mind. It only took our fearless protectors 20 years to “catch” Bernie. The “regulators” in this case had been notified at least 10 years earlier that something was fishy with the Madoff operation. But good ole Bernie was a big dog on Wall Street so he couldn’t be doing something wrong, could he? The same SEC that was responsible for catching Bernie was also responsible for supervising the various investment banks. Yet somehow Bear Stearns and Lehman Brothers must just have fallen through the cracks. We note with appreciation that the insurance regulators were right on top of AIG, keeping them honest and above-board. Our banking regulators certainly didn’t let Countrywide get out of hand. Merrill Lynch found “cover” at Bank of America but now BofA is back in the suspect limelight. Lest you think it’s all financial-related, note the Food “Safety” Act now protects us at the expense of small farmers but offers wondrous support for big Agribusiness. Wonder how that happened? Goldman Sachs pulled the best stunt of all by getting “their man” into top politics in Washington so as to blunt any questions, let alone losses, that might be attributable to them. Hey, if you don’t have friends in high places, you don’t have squat.

I don’t see any pattern here, do you? These are all just “isolated” cases, right? No need for alarm. Pay no attention to the man behind the curtain. Just keep moving along, folks. Nothing to see here.

As Lee Iaccoca would ask “Am I the only guy here that is angry?” Where is the outrage? Have we become so used to government corruption and incompetence that we no-longer even react to these atrocities? Why do we seem to demand perfection from our corporations and not from our government agencies? Why are government-types not held to at least an equal standard to that of business? Why is there no demand for responsible execution of government duties? Why don’t government-types get fired for not doing their jobs?”

We keep coming back to the same answers regardless of the questions or atrocities that occur in our government. Public “ownership” means virtually no ownership. No one is responsible. No one takes or accepts responsibility. Only in the private sector is there a sense of responsibility. Only in private industry does performance count.

We’ve all visited national parks as well as private parks. By that I mean such places as Grand Canyon and, say Disneyland. When I visit a national park, I’m appalled at the trash and filth. When I visit Disneyland, I’m impressed with the cleanliness. That’s a perfect example of public ownership, meaning no one takes responsibility versus private ownership where the very survival of the business depends upon pleasing the customer.

Isn’t hiring a private security guard very similar to hiring someone at the SEC or at the NHTSA or at the FDA or at any government watchdog agency? If the private security guard fails to perform, that person is fired. If someone at the SEC, NHTSA or FDA fails to perform, the Department budget is doubled and many more bureaucrats are hired to “fix” the problem. In government, the problem not only never gets “fixed,” the problem gets worse and the costs skyrocket. So if Mr. Waxman is really serious about getting to the bottom of the latest scandal at the NHTSA, he knows where to look – right behind him.

But of course Waxman really isn’t interested in solving the problem. He’ll go through the motions of making the electorate think he’s on top of things, but the end result will be to simply white-wash the underlying problems. Then it’s on with government business as usual. Toyota will, because in the long run their goal is to survive by making profits, actually fix their current problems. Please note Toyota will do this regardless of what the government “regulators” do or say.

Which begs the question: Why do we need government regulations? If the regulators don’t do their jobs; if they are either unresponsive or slow-to-respond, who needs them? Then who would protect us, you ask? Who is protecting us now?, I ask. Haven’t we just observed that the very folks we rely upon to protect us – don’t?

The government has become the master Pied Piper. While we slept so peacefully, forces at work behind the curtain bamboozled us into believing that they had our backs; that we were being protected even as we slept. Yet once again, we’ve been awakened to facts that they aren’t doing their job. Have they ever really done their jobs? Isn’t what passes for regulation by governments just a myth?

I’ll go a step further. Not only is it a myth, it’s a con-game of the highest order. What do regulators do on a regular basis that is observable? Give up? They formulate rules and regulations, don’t they? And then they impose those rules and regs on the voters under the guise that these requirements will protect the public. But let’s once again look behind the curtain.

In a former life, I had almost every securities and insurance license known to man; at least a man living and working in the United States. Would you suppose I studied for and passed all those exams because I had nothing better to do? Or would you correctly surmise that I submitted to that indignity because that was what was required for me to be able to work in the securities and insurance industries? Who came up with these tests as being a requirement for employment in these industries? Government? You’re temped to respond “How else would your customers know that you were competent to do your job if government didn’t supervise you?” But haven’t we just been discussing that the government regulators really haven’t been doing their jobs? So once again, why did I have to take and pass all those exams?

Ah, now we’re starting to “follow-the-money!” Name a profession: Doctors, Lawyers, Engineers, Stock Brokers, Insurance Agents, Investment Advisors, hair dressers, butchers, the list is almost endless. Question: What do all these assorted professions have in common? Answer: required licenses to practice those professions. You couldn’t let just anybody practice medicine, could you? Doesn’t that person have to have a medical degree from an accredited school, not just any old school but an accredited school, before being allowed to practice medicine? Well, yes, but not for the reason you’d think. The ONLY reason the doctor is required to obtain a degree is because the medical profession (read medical CARTEL) has convinced the government that no one other than a degreed-person is competent to practice medicine. Why?

You’d be tempted to respond that attending an accredited medical school and graduating with an accredited degree is the only way to assure competence, correct? But if that is a true statement, why are there so many successful malpractice law suits against doctors? (Editor’s note: we must always remember that half of all doctors were graduated in the bottom halves of their classes, as well.) If the only qualified doctors are those that completed an approved medical school, how can the lawyers be successful in wining so many malpractice lawsuits? Gee, maybe just having the right degree and license to practice medicine isn’t the solution after all. But remember, we’re trying to follow the money here. So why would the doctors create such a barrier to entry into the medical profession?

Lesson from Economics 101: Law of supply and demand. If there is a large supply of a product or service, the price of that product or service is rather low. The fewer the available products or service providers, the higher the price of each. If you’re a doctor; or lawyer, engineer, stock broker, etc.; you really don’t want any more competition than absolutely necessary in order to maximize your income. You join with others to form a cartel to keep out the riff-raff. You make it difficult to join your fraternity of professionals. You create a high entry cost into your field of endeavor. You limit your competition.

You can safely apply this concept across the board. Think labor unions. You’re a carpenter. You want to earn as high a wage as possible. You join other similarly-minded carpenters and establish rules for membership. Any new kid that wants to join must jump through some rather tough hoops. You are able to effectively keep your membership low. You then petition government to require that all government projects be built only with union carpenters. Government grants your request because you represent a desirable voting bloc for them at the next election. Now equipped with your union and exclusive contract, you can dictate the labor cost for that project. No matter that non-union but highly skilled carpenters are willing to do the job for less. You’ve got a lock on the deal; no outsiders allowed. Now extrapolate this concept to all the other professions. Not so difficult now to follow the money, is it?

There is at least one more step in this progression. We started by questioning the need for government regulation considering the fact that the regulators never seem to act in a pro-active roll and are, at best, re-active. But they do make the “rules.” Enter our unions, whether they be doctors, lawyers or Indian chiefs. Someone has to formulate the rules promulgated by the regulators. Where do those rules come from? What is the source? Let’s continue to follow the money, shall we?

You’ve just formed your professional union to limit entry into your field of endeavor. Now you need to establish a coercive power to enforce your desires. What do you do? You lobby government to establish operating rules and regulations governing your business. But the government doesn’t have the foggiest clue as what you do, let alone what rules are appropriate. So in your most benevolent gesture of good will, you offer to write the rules and regs for the regulators. “How wonderful!” exclaim the regulators, since they haven’t got the slightest idea where to start. This way, they can continue to drink coffee, tell jokes and chase the secretaries around their offices while you prepare the rules and regulations that will give your group a monopoly in your specific industry. Then you continue by contributing heavily to the political party that permitted your establishment of this farce thereby assuring its permanence in our society.

See how the money flows? See why the regulators won’t do their jobs? See why this situation gets repeated a thousand times-over? See why this situation will never change until and unless we, the people, say “enough!”?

Cheers,
Tex Norton

February 16, 2010

Another Waxman Whitewash? was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

The US International Trade Commission ruled that increased imports of Chinese tires hurts American producers, meaning labor unions.  I have a sudden vision of the Chinese hurling tires at us when one can only suppose the things were ordered deliberately by those seeking lower prices. The highly punitive tariffs on all car and light truck tires entering the United States from China are seen correctly by all as a means to pander to Obama’s vital union support and garner votes for his health care aspirations, and who cares if China gets in a snit?  They are also a direct tax on US car owners, because you may be quite certain that China will not bear the costs in the long run.

“The federal trade panel recommended a 55 percent tariff in the first year, 45 percent in the second year and 35 percent in the third year. Obama settled on slightly lower penalties — an extra 35 percent in the first year, 30 percent in the second, and 25 percent in the third,” White House press secretary Robert Gibbs said. What a fascinating view of Obama arithmetic.

“Slightly” lower turns out to be on the order of a third, and the fact that the increase is, oh, call it roughly seven-fold the first year, six-fold the second year, and a mere four-fold the third year won’t have any economic impact will it? Money means nothing to those people; it’s all about making “statements.” We’ll hardly notice when the family phaeton needs new tires.

He of the impeccable logic and ethical skills had only the highest motives. “The president decided to remedy the clear disruption to the U.S. tire industry based on the facts and the law in this case,” Robert Gibbs stated. Hey, this isn’t about money, its about fulfilling the law, a rather novel notion in this day and age.

Our concern here in the far-flung Texas Whiskey Bunker isn’t the continued ineptness of the greatest politician of the age, but how it affects our decisions. Being mean-spirited, callous, and selfish, I plan to hit Sam’s tomorrow and stock up on tires, myself. Then I will consider whether or not to short the ailing tire industry, which has seen imports nearly quadruple in the last five years. One of the great lessons of WWII and depressions is that one cannot have too many tires, too much fuel, or enough butter stashed away. What do you think we were fighting over Burma for? Rubber. They had tin and other strategic materials as well, and we were cooperating with England, which wanted its colony back, of course. As a matter of trifling interest the Burma Road was one of the national lifelines for China. How quickly they forget, the ingrates!

The steelworkers union says more than 5,000 tire workers have lost jobs since 2004 as Chinese increased US market share significantly. “The U.S. trade representative’s office said four tire plants closed in 2006 and 2007 and three more are closing this year and that during that time just one new plant opened.” Uh, could this have something to do with the Kyoto Treaty and other “green” issues? If we thought we couldn’t compete from 2004 until today, just wait until we get the glory of Cap and Trade thrust upon our staggering economy.

Roy Littlefield, the Executive Vice president of the Tire Industry Association said that increasing the tariffs “would not save American jobs but only cause tire manufacturers to move production to another country with less strict environmental and safety controls, less active unions and lower costs than the United States.” The TIA opposes the tariff increase, even though they would like to sell more tires. It is an interesting argument, since the purpose of tariffs is to make foreign goods more expensive. It certainly seems to me that sales of Chinese-manufactured tires will fall because the cost of the tariff will have to be figured into the final price the customer pays, and American Tire Manufacturers would still have their share of the market plus the fall out from higher-priced Chinese imports. I think the point here is that this argument is the last thing US manufacturers have as a weapon. “Raise our taxes, raise the tariffs, and we’ll go elsewhere.”

One of these days we’ll get around to the true cause of the War Between the States, which you may infer — correctly — started over that very issue. We’re still fighting over taxes and tariffs, with the industrialized “north” wanting both high, and the Reds wanting them low.

“U.S. imports of Chinese tires more than tripled from 2004 to 2008 while China’s market share in the U.S. went from 4.7 percent of tires purchased in 2004 to 16.7 percent in 2008, the office said,” an AP report from the White House correspondent stated.

Okay, if we want to split percentages, 18.8% would be quadrupling, while 14.1% would be triple. It is all in perception, I suppose…Here’s one (a perception, that is) from Vic Delorio, another Executive Vice President, this time from the largest manufacturer of tires in China, GITI Tire (U.S.)  He opines that we really shouldn’t do this thing because it would mean Mr. Obama had broken a campaign promise! “…the Obama administration is now at odds with its own public statements about refraining from increasing tariffs above current levels.”

What does Mr. Delorio know?! He actually called it an “unprecedented action,” not true whether we view that as protectionist tariffs, catering to unions, or Mr. Obama breaking campaign promises. Most of the G-20 is against tariffs, quite possibly because they sell us more than they buy from us, but that’s okay, because the tariff won’t go into effect until the day after the meeting of the 20 in the US! Maybe they’ll all forget about it, live and let live.

Beijing says the “duties would be a violation of global free-trade principles” and has complained about U.S. protectionism, but that is understandable because their ox is endangered.

You have to love Democrats for their quick grasp of realities and their total lack of a sense of what should not be said. “Rep.. Louise M. Slaughter, D-N.Y., who chairs the House Rules Committee, said that although the 35 percent levy was less than the 55 percent recommended in July by the ITC, it was still a significant statement of administration support for organized labor,” AP reports. (Emphasis mine.)

What matters to most of us is that viciously punishing tariffs on all car and light truck tires entering the United States from China in order to placate union supporters and garner votes for the disastrous health “care” “reform” Obama wants so desperately doesn’t strike us as worth what it will cost even if we approved of his goals, which we do not.  Even though it is unlikely that there is a voter in the USA who doesn’t know that the Union vote is in Obama’s pocket, is it wise to rub our noses in the fact that our interests will be sacrificed any time it is for the benefit of the steelworkers, autoworkers, teamsters, and so forth? It adds a whole new meaning to “preserving the Union,” doesn’t it? “Car and light truck” covers what ordinary people buy. A reasonable conjecture is that BIG tires were exempted at the bequest of Jimmy Hoffa, Junior. Or do Peterbilt and Mack have that much drag in D.C.?

We’re supposed to pay a third more for Chinese tires which are, it seems reasonable to suppose, of adequate quality and less expensive, because 5,000 US tireworkers lost their jobs and several factories went out of business? Perhaps we might consider, instead, what we all know: union workers are overpaid and under-performing, business is being strangled by taxes and regulations, and it is the way of the world that if you cannot compete you lose.

They can call it “leveling the playing field” all they want, or “fulfilling the law,” but this is just another example of politics as usual. The pigs didn’t leave the trough while there was even a morsel left, and they’re still there, gobbling and flinging giant chunks of flesh to their friends on credit. They’ve run up quite a tab at the taxpayers’ diner and the world doesn’t think their IOUs are good any more.

Unemployment is at a 26-year high and consumer spending is diminishing rapidly, which means tax revenues are falling just as fast, but those tireworkers have to be protected. (Okay, “tirelessly.”) How many of them are there, do you suppose, and why should we pay much more for tires for their benefit?

In general, when the competition is nobbled prices rise. Perhaps the Chinese should seek remedy under US antitrust laws. I only buy Michelins and Perellis, but even sweet little old domestic terrorists know that competition is what keeps people from being rapacious. So rapacious. A reasonable conjecture is that we will see all tire prices increase, but hey, we can’t be selfish. Let’s spread the wealth around for tireworkers; it’s their turn. For the rest of us? “Jam yesterday and jam tomorrow,” but it will always be today for those of us who do not have the right relatives or spouses or belong to the lucrative voter blocks.

As always, there is no point in railing about things we cannot change. The One is going to go tell the Twenty that it isn’t protectionism when we do it and probably that he won, perhaps with a few insults concerning the land of the Obama and the home of the duped.

There are only two things to be done: go buy replacement tires and see if you feel like making a bet on how tire stocks are going to do. There should be a lot of tire sales in the next ten days or so.

See you at Sam’s in the Tire Department.

Regards,
Linda Brady Traynham

September 24, 2009

Aftermath: This article was written last Sunday. Monday we sent the Segundo down to buy tires, and the prices had already leapt dramatically. Tires for a small stock trailer were over $125.00 each. Do we think of it as a little “insider trading” of information amongst unions and big money? Walmart and friends in China, at least? Once again the customer learns that by the time the news is broken the market has already discounted it. Or raised the prices, in this case. — LBT

Tires from China and the Tyranny of Tariffs was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.