Saturday, February 12, 2011

How to Fight Back with Their Weapons

How to Fight Back: Using Case Law, Precedent, and Unconstitutionalism to Shape Our Society as We See Fit.

Every system operates under certain basic rules, which are constantly evolving and in flux. Oftentimes, the original set of rules is perverted by the application of users into an applied reality that completely contradicts the original intent of the authors. Libertarians and conservatives alike have decried this where departures from the constitutional model are concerned to no end.

We should instead be looking at the innovations of liberals, leftists, and utilitarian thinkers as a means to our own end. Think of government like an empty storefront every two years or so, given the previous tenants’ uncertainty as to the lease renewal.

For the two years that they hold the lease, we should be plying our time in the trenches, taking empty precinct chairs over, quietly moving into position at the county level and state level, gradually positioning ourselves to engage in seismic shift of the party machinery we appropriate. We can quietly move like-minded candidates into city and county and state government, candidates will in turn appoint like-minded officials to positions within the bureaucracy.

We don’t need to be doctrinaire; we just need to get elected. In point of fact, it would be excellent strategy on our part to speak the meaningless platitudes and generalities so common in politics today. We can come in below radar, seemingly benign in our methods and quite conventional in our beliefs. We can incrementally change city government by simply refusing to enforce those laws we don’t like, even if we can’t repeal them. We can do this by starving inspectors and enforcement offices of funds.

No longer will we be allowing city government to be used as a weapon against a homeowner who built a treehouse in his yard in defiance of the neighbor next door and the zoning code. Small victories will become the foundation for incrementally larger victories. We won’t allow the police officers to arrest for possession, those do can gradually be moved out the back door the station for whatever reason. If you know anything about those who are insistent on enforcing every little rule and regulation, it’s this: they usually break the law and the rules worse than anyone else. It’s just a matter of documenting their wrongdoing and moving them aside.

We can gradually do the unthinkable: refuse federal funds for education, thereby eliminating federal interference in our local matters. In doing so, cuts for unionized teachers will become a matter of fiscal necessity, and we can gradually erode the control of professional unions over our public institutions. We can strengthen the self-determination of parents to home-school their children, or we can simply de-fund any attempt to prosecute a parent who runs afoul of the local education kommissars.

As a practical matter, then, we can begin shaping the society we want by employing the very tools our ideological opponents have employed: intransigence, obfuscation, and outright marginalization. Given a taste of freedom from local government tyranny in the form of idiotic zoning laws and eminent domain, local constituents will likely not object. Those that do can be painted as trying to appropriate government to force their views on everyone else. It’s not fair, but it’s been done before with great success.

As a final matter, we come to the federal level. There are certain built-in advantages to the system that we can appropriate. Liberals built those advantages and they never envisioned that people like us would ever get our hands on the loopholes they authored and use them to go in a completely opposite direction.

Take the presidency, for example. A president has the power to withdraw unilaterally from any treaty. This is the net holding of a 1979 case, Goldwater v. Carter, in which the Supreme Court held that the issue of the case was a non-justiciable political question. That’s been re-affirmed in subsequent cases as well.

This is important to our goal of reducing government back to a constitutionally mandated role and size, because treaties are the means by which Congress has circumvented the enumerated powers of the Constitution, which limit the federal government’s reach. Treaties gave us the DEA, the FDA, the U.S. Fish and Wildlife Management Service, and various other bureaucratic agencies.

Imagine a president being elected who unilaterally went back through various treaties and withdrew from scores of treaties as a president is entitled to do under the current case law. Suddenly, there would be no legal basis whatsoever for various government agencies. You wouldn’t even have to go through Congress and pass a vote. You could accomplish a sharp reduction in government through the Executive Branch itself , merely by eliminating a treaty. Without the treaty, Congress has no power to regulate drugs, food, or wildlife within a state. Congress is reduced back to its enumerated power if you repeal the treaty that gave it vast new powers to regulate areas falling outside of its constitutionally enumerated role as a limited body of government.

Congress would fight such an effort, of course, but the precedent stands and courts are loath to get involved in such matters, especially when the electorate is largely in support of reducing government and spending. The states would and could retain the ability to regulate drugs or wildlife within their borders if they wanted to do so, but the federal government would be cut size, authority, and expenditure.

Moreover, the president has something called an executive agreement, which he can make by himself with another country. Executive agreements have been given the same force and treatment as treaties by the courts. Imagine a president who exploited this to carve out additional liberties and areas of privacy for our citizens by entering into a binding executive agreement with another country whereby wiretapping and surveillance on citizens of both countries would have to be consented to by a court in all cases. Any evidence gleaned from warrantless wiretaps would be inadmissible in any court proceeding, and any official or employee of the government who engaged in such wiretaps or surveillance of any kind on a citizen would be sacrifice his qualified immunity to civil and criminal liability.

And let us envision a president, liberty-minded and ruthless in his commitment to restoring government to constitutionally mandated limits, discovering that he had the power to execute American citizens without due process of law if they were linked to a terrorist group. What is a terrorist group but what the State Department says it is? Entire groups which have traditionally and arguably treasonously agitated for increases in government power at the expense of constitutionally mandated individual liberties to be free from unlawful search and seizure, to have a jury trial and access to legal representation, could easily be defined as terrorist organizations and enemies of America.

Thus defined, they could be stripped of their liberties and even killed at the order of the President. Think of it: neoconservatives, far-left bioethicists who argue for euthanization, various types of freedom-killing ideologies and their followers, all unilaterally classified as terrorists and stripped of equal standing before the law to the point where their lives depended solely on the President’s fiat. The years of tyrannical legislation, regulation, and increased federal power that these types of built would come back to haunt them in ways they never envisioned or imagined.

It’s not only plausible, it’s entirely possible. The neoconservatives and leftists who have built a government of arrogated powers on the abrogation of human freedom would be facing the barrel of the weapon they built, and destruction at the hands of the machinery they engineered would be imminent. You see, the problem with limitless government is that when the other extreme comes to power, you can be subjected to the monstrous consequences of your own creation.

Additionally, as the federal government has the power under the Commerce Clause to regulate broad swathes of the economy, and has done so and been upheld by the courts after the fact, we can seize the federal government and unilaterally make the economy over into a free market by ending subsidies, tariffs, and the like. We can simply use the Commerce Clause to go in the extreme opposite direction that prior government regimes have gone. Barring that, the president can enter into an executive agreement that enables him to abrogate prior economic regulations in order to accomplish such ends.

The president can also obviate any intention of Congress for a law by simply issuing a signing statement offering his own unique spin on the law. If that spin happens to defeat the law’s obvious purpose, so what? Executive orders, national security directives, and various other mechanisms exist to enable our march towards a freer, more liberty-minded society, but first we have to put a man in the White House.

Seventy years of liberal overreach have given us the tools to accomplish our goals in ways we could have never imagined. All we have to do is demonstrate the will, the temerity, and the audacity to seize those powers to remake our society as we see fit. Unconstitutionalism, as it turns out, does have its advantages. It is merely a matter of seizing those advantages and deploying them towards our own ends. This is a long-term war that will be one on the ground, door to door, precinct to precinct, and district to district.

We should not be inflexible, either. Let us recognize that the Democratic Party is stronger in some geographical areas, while the Republican Party is stronger in other geographical areas. The truth is that we should seize the brand which is best suited to enable the achievement of our goals at the local, state, and federal level. If the electorate in your area believes the Republican Party carries a stigma, sign up for precinct chair election as a Democratic. Master their dialect, speak to them on their terms and their level, and once in office, begin doing what you want to do incrementally while throwing them a few crumbs here and there. It’s all about long-term positioning to achieve the unthinkable: a truly liberty-oriented federal government, or at the very least, a President who comes into the Executive with the appearance of a benign, mainstream bipartisan type, but leaves with the record of a scorched earth libertarian saboteur who blew up the government from within.

The lessons of history are obvious: it is extremely difficult to uncross a Rubicon, or to repeal an executive order or override a signing statement. It’s even harder to re-do a treaty on the same terms after the Executive Branch unilaterally withdraws from the existing treaty. We have advantages, if we want to make use of them. We simply have to realize this, and proceed with quiet confidence to covertly make over the country from the ground up as we see fit. The toolbox is full, and we have our enemies to thank for that.

Friday, February 11, 2011

Reflections on 2012 GOP Candidates

In the 2008 presidential campaigns, ground operations were already up and running in the early states of Iowa and New Hampshire at this time. There is little if any evidence of that sort of advance infrastructure building among potential GOP candidates for the 2012 presidential nomination, and this is but one troubling indicator of the GOP's prospects for 2012. CPAC offered the prospective candidates an opportunity to make their case and establish themselves, but after watching footage of the candidates, there were more questions than answers.

Herman Cain was one of the more promising candidates after last year's CPAC appearance, but this year's speech did not live up to expectations. Cain delivered the gristle, and his audience had plenty of fat to chew on, but his speech was markedly short on anything beyond phrases and accusations of a liberal conspiracy to destroy America. Let us be clear: liberals don't want to destroy America, they want to remake America in a way that fundamentally departs from the past. There is a difference. There are those liberals who are nihilistic, but they are largely confined to the academic and theoretical fringe. It would be impossible to elect a Piven to national office, even in the most liberal district. Cain just didn't come off well, or as well as he should have come off as a prospective candidate seeking to build momentum for the 2012 primary season.

Former Senator Rick Santorum had more gristle to throw to the crowd, accusing President Obama of not believing in American exceptionalism. Given how many GOP officials brought into the bailouts, it's hard to imagine anyone making a cogent argument that the GOP believes in American exceptionalism to the point of repudiating such a blatantly socialist effort to make public private sector losses. Santorum has a history of opening his mouth to switch feet, as evidenced by his recent interview when he spoke of Sarah Palin in unflattering and arguably chauvinistic terms.

Donald Trump came out squinting and frothy, full of bombast and short of anything resembling specifics and a commitment to actually run. Trump has flirted with campaigning for the presidency before, and he's never followed through. He's a man who thinks the idea of being President is a nice achievement to have on one's mantle, but he's also cognizant of the fact that getting to the presidency is no easy task. Trump doesn't like being encumbered, and he doesn't like being out of control. The likelihood that he'll actually run is slim to nil, and given his opening joke, it's probably better that he won't run.

Mitt Romney has the problem of his own record to run against, not to mention his time as a hedge fund executive. The nation is not the in the mood to elect a financier, having just footed the bill for some $23.7 trillion in direct and backdoor bailouts to the financial sector via TARP and its sister programs. Mitt Romney will run, but if his performance in 2008 is any indicator, he hasn't a chance of mounting an effective campaign.

Rep. Ron Paul is always a crowd favorite, but that doesn't translate into a winning ground organization in the early states or a campaign with the legs to make it past South Carolina. He's also a representative who votes against omnibus bills and rails against spending, only he waits until after his own earmarks have been inserted to do so. Give the mainstream media a chance to make hay over this obvious inconsistency, and Paul will be pilloried throughout the primaries.

Jon Huntsman, now ambassador to China and former Governor of Utah, has been quietly planning an insurrection against his current employer from Beijing. However, he's in China, not in the United States building a viable campaign organization in the early states or the fundraising apparatus to sustain a campaign long-term. Uncertainty is the word.

Tim Pawlenty delivered the usual platitudes and phrases, but other than sloganeering and popping softballs over a willing audience, it's hard to see where he fits in to a national campaign for the presidential nomination. The problem is that outside of CPAC and political blogs, Pawlenty is not known. Go to Alabama, Mississippi, or Texas, and ask anyone in a coffee shop or a Waffle House who Pawlenty is, and you'll get a blank stare. He just doesn't have the name recognition.

Michelle Bachmann is a polarizing figure, and she's fond of hurling the rhetorical equivalent of napalm in her speeches and off the cuff remarks. It's doubtful she has the discipline to avoid crippling foibles throughout an entire primary season. She's a younger, female Joe Biden, all unbridled Id and instinct. She could poll at 10-20%, but as far as winning the nomination, she has about the same odds as John Ashcroft or Gary Bauer: none at all.

Sarah Palin is in a similar situation. She hasn't shown that she can contain herself and handle Bill O'Reilly when he gets into her; it's doubtful she can handle the national press over an entire primary campaign. Moreover, the press hates her. Their treatment is not going to be fair, and there are ethical questions about the Alaska pipeline and connections between Palin's office and the company that won the bid. If Palin comes out for the nomination, she will be hammered over the pipeline bid process and whatever the media can fabricate. Her daughters are an absolute disaster for her, with Willow and Bristol Palin's forays into Facebook being a prime example. The establishment GOP would leave her out to dry if she did get the nomination, starving her of funding for the general campaign. Barbara Bush's sentiment revealed this perfectly: "I hope she stays in Alaska."


Mike Pence is a social conservative who can't avoid talking about hot-button issues like abortion or gay marriage without being seen as a sell-out by his base supporters. The problem for Pence is that the country at large is in an ugly mood towards any suggestion of increased federal power, even that power which defines marriage as existing between a man and a woman. In essence, the country is perhaps more cognizant of federal overreach into state concerns now than it has been in seventy years. Big government at the federal level just doesn't play in Peoria.

There's Paul Ryan, who is perhaps the intellectual of the bunch, but the reality of the matter is that Ryan has neither the votes nor the constituency to build a national organization between now and 2012. He cannot pass his spending cuts through Congress, and even if he could, a $100 billion spending cut in the face of a $1 trillion deficit is a laughable goal. Americans want spending cut, but they want it to come out of somebody else's programs. It's an untenable situation for Ryan, who has built his brand as a deficit hawk at a time when Americans are looking in the mirror and recognizing some uncomfortable realities: they're addicted to the government's bribery, which comes in the form of entitlement spending and tax breaks for children.

Newt Gingrich has a slight problem in the sense that he has the experience and the wonkish credibility, but he also has a record as a serial philanderer to combat. Additionally, his affiliation with a think tank that advocates fortifying the water supply with lithium and statins could present a nightmare liability for him in the primary news cycle. Gingrich also has to reconcile his membership in the Project for a New American Century-like Foundation for the Defense of Democracies with an American public deeply skeptical of neoconservative interventionism abroad.



Mike Huckabee's pardon of a felon will likely become his Willie Horton if he runs in 2012. Between Huckabee's socially conservative policies, up to and including covenant marriage, and his embrace of socially liberal spending initiatives, the media and the conservatives within the GOP will hand him his head.

Senator John Thune has great bone structure, and little beyond that in the way of a substantive record of legislative achievements.

Haley Barbour has somehow managed to put himself in the position of having to apologize for segregation in 2011. In 2011. Plus, he's a consummate insider at a time when being an insider is akin to having been a member of the Log Cabin Republicans in 2000.

And that brings us to Governor Mitch Daniels, who delivered the best speech of CPAC from a substantive standpoint, yet failed to incorporate anything resembling a thunderous moment into the speech. He was solid, but he didn't wow the crowd or anyone watching a feed from home.

That's the field. What you can safely say in the aftermath of CPAC and after surveying the landscape of candidates who didn't even attend CPAC is that you're likely underwhelmed. What's even more worrisome is that the Obama Administration has to be feeling pretty good about its prospects in 2012, given the natural advantages an incumbent has in an election. Given that former Governor Jeb Bush has postponed his ambitions until 2016, you have to wonder if the GOP establishment is preparing to strategically default in 2012.

Think about it: by doing so, the GOP establishment can hope to wait out the furor and organization of the Tea Party, and simultaneously assure themselves a very disenchanted electorate in 2016 which they can capitalize upon. Moreover, the GOP establishment cannot be thrilled at the idea of tackling the reduction and elimination of entitlements at the moment, especially when defense spending cuts are increasingly being put forward as a possibility. The political climate will likely be more amendable to actual concrete cuts in 2016, if the country is still solvent at that point. Party before country: it's the establishmentarian way where partisans are concerned. This does not bode well for 2012, or for the prospect of meaningful reform before 2016 where spending is concerned.

Nukes Found in San Diego?




Incestuous Blendings of Power

Author's note: Hamdi v. Rumsfeld was a 2003 Supreme Court case involving a U.S. citizen, Yaser Esam Handi, who had been captured by the Northern Alliance in Afghanistan. The North Alliance turned Hamdi over to U.S. forces, who detained him without hearing or legal representation. Hamdi challenged the government's power to do so, and the Supreme Court held that although Congress had authorized the detention in its Authorization for the Use of Military Force, a U.S. citizen classified as an enemy combatant had the right under the Fifth Amendment to challenge his detention. As Hamdi was a U.S. citizen classified as an enemy combatant, he could receive a hearing to challenge his detention before an impartial adjudicator.


The government's position in Hamdi v. Rumsfeld was an extraordinary one,when you consider that the government did not base its arguments on the Congressional resolution authorizing the President to "use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks." The government instead based its argument on Article II of the Constitution, saying that no congressional authorization was required because the Executive Branch possessed plenary authority to detain under Article II.

Plenary authority is unqualified or limitless authority. The Court actually doesn't bother to rule on this issue, because they concluded that it is unnecessary due to the fact that they believed that Congress had authorized the detention of Yaser Esam Hamdi with its resolution authorizing the President to employ "all necessary and appropriate force." This argument is absurd on its face, as Congress does not possess within itself the power to authorize such broad powers of war to the Executive. Congress may declare war under the Constitution; it may not delegate the effective ability to declare war broadly to the Executive.

Such broad powers are not delegable precisely because the Framers recognized the inherent danger of vesting broad and unchecked power in one office or one man. To say that the President may determine who planned, committed, or aided the terrorist attacks and take whatever means he deems necessary to remedy the issue is to invest the President with the power of fiat where war is concerned. It is an invitation to subjective Executive determination and assignment of guilt where 9/11 was concerned. We divide the role of judge and jury for a reason in criminal trials, and we certainly ought to divide the power to make war and declare war precisely to prevent the sorts of abuses that might arise if such powers were to be combined in one office.

The Authorization for Use of Military Force was itself so vague and disconnected from any enumerated mooring of power as to be unconstitutional on its face. In the fever of martial attitudes, Congress may pull off such unconstitutional enlargements of federal power with little if any protest from a grieving public after a national tragedy, but the courts are to inveigh against such efforts as a direct assault on the constitutional separation of powers. They are not to legitimate such absurdity by fostering a pragmatic justification of such nonsensical acts.

It was held in New York v. Printzthat the consent of state legislators to unconstitutional enlargements of federal power was not sufficient to legitimate the expansions of federal authority; one wonders how Congress can consent to unconstitutional enlargements of Executive power by devolving its constitutional responsibility to declare war to the President.

To view Article II, Section 2, Clause 1's language on its face, one can clearly conclude that even the President's role as commander in chief does not come into being until the Army, Navy, or militia of the United States is called into actual service. Who calls the Army, Navy, or militia into service? Congress. Congress is limited under Article I, Section 8, Clause 12 to appropriating money for any army it raises for a maximum term of two years. Implicit in the language is the idea that a standing army is not desired. This is admittedly a narrow interpretation, and one that is at odds with case law, but one that takes the plain language of the Constitution as holding more value than any sophistry put forth by a judge who argues that the concerns of the hour justify the suspension of the law and loosening of fetters on government power.

There is nothing within the Constitution to suggest that Congress may delegate its power to the Executive, nor is there anything in the Constitution that suggests that the Executive may delegate its power to Congress. The incestuous blending of constitutionally divided powers under the auspices of pragmatism is impermissible and deeply troubling to the concept of government established by the Framers. The federal government is limited to those specifically enumerated powers outlined in the Constitution, and to the authoring of those laws which are necessary and proper to carry out such foregoing powers. The Legislatures makes the law, the Executive implements the law, and the Judiciary measures the law against the standard of the Constitution.

In Immigration and Naturalization Service v. Jagdish Rai Chadha, 462 U.S. 919 (1983), we see the full implications of incestuous blendings of legislative, executive power, and judicial power. The INS ruled through its courts that Mr. Chadha could extend his stay in the United States. Congress then introduced a resolution vetoing the decision of the INS immigration judge. Let us consider the real problems that this case illustrates:

1. The INS is an Executive agency, which holds quasi-judicial hearings and promulgates administrative regulations that have the force of law. In effect, it legislates, executes, and adjudicates, all in one executive branch agency.
2. The Congress is the body of the legislative power, asserting for itself the power to veto the rulings of an executive branch quasi-judicial court hearing after the fact, despite the fact that the only veto power given under the Constitution is vested within the office of the President.

Where, among all of these realities, is there any meaningful separation of power to be discerned? It's laughable to look at the aforementioned case and to say that any of the circumstances underlying it can be taken as evidence that the constitutional separation of powers posited by the Framers still stands. The Constitution has been reduced to a mere suggestion. It is advisory in nature, rather than binding on the bodies it defines.

Congress cannot give the Executive plenary authority via a resolution. It can't do so through a statute. Even if Congress were to attempt an amendment the Constitution to push forward such limitless concepts of Executive power, the likely result would be a failure to ratify. It was utterly irresponsible of the Court in Hamdi to fail to reach a ruling on the government's assertion that plenary authority existed for the Executive under Article II, because a failure to rule on an issue is very often taken as a practical legitimizing of one side or another where the issue is concerned.

Moreover, to say as the Court did in Hamdi that Hamdi's status as an enemy combatant is irrelevant and unnecessary to adjudicate is to ignore the supreme law of the land as contained in the Geneva Conventions, a treaty that the United States signed and ratified. The Fourth Geneva Convention, in its commentary, explicitly stipulates that there are no intermediate statuses which exempt one from the reach of international law regarding persons detained by enemies in wartime:

"Every person in enemy hands must have some status under international law: he is either a prisoner of war and, as such, covered by the Third Convention, a civilian covered by the Fourth Convention, or again, a member of the medical personnel of the armed forces who is covered by the First Convention. There is no intermediate status; nobody in enemy hands can be outside the law."[ICRC Commentary, Fourth Geneva Convention, p. 51 (1958)].

The United States can engage in ex-nihilo creations and promulgations of statuses which classify a combatant as an enemy combatant all it wants, but the mere assertion of such statuses is plainly illegal under the supreme law of our land. As a ratified treaty, the Geneva Convention clearly is the supreme law of the land as defined by Article VI, Section 2. Congress may not obviate it, nor may the Department of Justice override supreme law by a mere legal memo offered by mercenary lawyers who suspend their ethics to serve at the pleasure of an out of control Executive which seeks to gobble up as much power as it can.

Of course, there is an argument to made that the President can override such treaties merely by unilaterally withdrawing from them. Under Goldwater v. Carter, 444. U.S. 196 (1979), the Supreme Court ruled that it could not rule on whether or not the President could unilaterally withdraw from a treaty, because the question was nonjusticiable and political. This effectively ensured that the President could withdraw from a treaty. The question of a treaty is not nonjusticiable, of course, because to say that a President can withdraw from a treaty classified by the Constitution as the supreme law of the land is to say something far more troubling: there are two types of supreme law, the Constitution and treaties, and to say that President can withdraw from the one is to imply that he could withdraw from the other. This is obviously an intolerable reading of Executive power.

The only method for withdrawing from a treaty articulated by a Founder or Framer was that of Thomas Jefferson in his Manual for Parliamentary Practice for the Use of the Senate:

"Treaties being declared, equally with the laws of the United States, to be the supreme law of the land, it is understood that an act of legislature alone can declare them infringed and rescinded."

There is absolutely no historical or contextual basis to suggest the President may unilaterally withdraw from a treaty after it is ratified by Congress. Nothing exists to substantiate such a reading of Executive Power, beyond the failure of the Supreme Court to rule on the matter on the grounds that it was a nonjusticiable political question. Let the courts not answer the question, and in doing so, they will answer the question by allowing the unconstitutional enlargement of power to stand. There is no neutral ground to be had here, regardless of what a court may attempt. Either/or is your choice, failing to say one or the other explicitly in a ruling by avoiding the question is a ruling one way or the other in reality.

The logical extensions of such non-readings are historically damaging to individual rights and republicanism. Take the case of Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394 (1886), in which the Court ruled that Southern Pacific Railroad did not have to pay taxes on fences running adjacent to its railroad tracks to the State of California. Southern Pacific had intended to argue that corporations had the same rights and privileges as individuals under the Fourteenth Amendment, an argument which would put a business on the same footing as a person under the United States Constitution. Chief Justice Morrison Waite ruled out hearing any argument on the matter before arguments began, and the Court skirted the issue in its opinion by refusing to rule on the matter of corporate personhood.

Enter court reporter J.C. Bancroft Davis, who had previously served as president of the Newburgh and New York Railway Company. He included Waite's remarks in the headnotes to the case: "The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does."

To make sure that he had heard Waite correctly, Davis sent him a letter asking for clarification, and Waite's response was the following:

"I think your mem. in the California Railroad Tax cases expresses with sufficient accuracy what was said before the argument began. I leave it with you to determine whether anything need be said about it in the report inasmuch as we avoided meeting the constitutional question in the decision."

The actual binding legal opinion contained nothing to substantiate or legitimize corporate personhood under the 14th Amendment, but the non-binding headnote of the court reporter who had previously served as a railroad executive did. Within two years, the Supreme Court was citing the headnote to the case as binding precedent in Minneapolis & St. Louis Ry. Co. V. Beckwith, 129 U. S. 26 (1889):

"It is contended by counsel as the basis of his argument, and we admit the soundness of his position, that corporations are persons within the meaning of the clause in question. It was so held in Santa Clara County v. Southern Pacific Railroad Co., 118 U. S. 394,118 U. S. 396."

Despite the fact that a corporation cannot be born or naturalized in the sense conveyed by the 14th Amendment, the Court held that the newly minted doctrine of corporate personhood could be sustained both logically and as a matter of precedent. All this, from a headnote. A first year law student learns that headnotes are not binding law, but the Supreme Court of the United States in 1889 apparently failed to comprehend the difference between a majority opinion and a headnote. Today, the rationale underlying corporate personhood enables corporations to assert every right reserved to individuals, only with none of the disadvantages of individual status before the law. An individual may declare bankruptcy but one time; a corporation has no such issue. An individual committing fraud is divested of his ill-gotten gain and sent to jail; whereas a corporation may lose an officer or two to jail but stays largely unencumbered even though the fraud enriched its shareholders many times beyond whatever fine it will pay the SEC to settle the matter.

Citing a headnote as binding legal authority enabled the judiciary to legislate corporate personhood into existence under the Fourteenth Amendment. It was yet another incestuous blending of power, and it all stemmed from the Court's failure to properly exercise its power when it avoided the question in Southern Pacific. While Congress has the power to enact appropriate legislation to extend constitutional protections under § 5 of the Fourteenth Amendment, the judiciary has no such ability. Given that the record indicates that Morrison Waite and his fellow jurists were prepared to rule in favor of corporate personhood, the net effect of inaction was the same as any course of action they would have taken: the establishment of an absurd personhood for corporations under the Fourteenth Amendment.

In any event, the effect is one of plenary powers flowing out of the willful disregard of government for the enumerated powers outlined by the Constitution. In theory, the Constitution restrains government. In truth, the Constitution is appealed to when convenient to evoke a mood of patriotic misty-eyed sentimentality among constituents by their representatives, who the proceed to utterly disregard the proscriptions of the Constitution on their offices. The net result is that executive branches legislate and hold court hearings, and the legislature attempts to veto the resulting products that its members disagree with, and the judiciary legislates ex-nihilo in the name of pragmatism and classifies any dispute between Congress and the Executive as political and non-justiciable question in order to maintain the patina of judicial restraint when in reality it fails completely at is job of measuring laws and actions against a constitutional standard. It's chaotic and senseless, but it can't be fixed at the ballot box. These problems are so deeply entrenched in our government that they cannot be fixed through traditional means. Short of an utter revolution at the ballot box which sweeps every incumbent out and a unanimous slate of constitutional stalwarts in, the status quo will persist. Incestuous blendings of constitutionally separated powers are likely to persist into the foreseeable future.

Bulls on PCP

With Treasuries heading upwards, and commodities costs eating into the disposable income of people around the world, the markets aren't headed anywhere good. There's a surplus of production capacity in excess of actual demand that's staggering, and this has led us to a conundrum: while businesses have several trillion dollars in reserve cash sitting around, what are they to do with it? They can't reinvest it, because their capacity is already so high, and demand is so low, that it makes no sense whatsoever to try and bring capacity up.

Inflation here has been artificially lowered by omitting both energy and food costs from the statistics, and while the official number is below 2%, the actual number is around 6-7% by any conservative estimate. With a limited view and data set, all one can do is point to the inconsistency of a 2% inflation number overall versus what one observes out in the field in grocery stores and gas stations.

Simply put, there isn't any deflation in other areas of the economy to offset the obvious price increases in food and energy. Moreover, with what appears to be a brutal winter ahead for the world at large, we're faced with the prospect of even higher energy costs. Coupled with the instability in the Middle East and Northern Africa, conditions are prime for a spike in the cost of a barrel of oil. From what we've seen in Egypt, Yemen, and various other countries throughout the Middle East, we could be looking at a powder keg for oil prices. Pressures are also emerging from natural gas producers, who cannot operate profitably under price ceilings fixed by governments.

Simply put, inflation is becoming a reality around the world, and when coupled with extreme weather events affected sugar and wheat crops in Australia, China, and elsewhere, we're in for a ride. Though most countries need to pull back their stimulus programs, they cannot. Inflating their currency has been their way of masking their mismanagement of the economy and the financial crisis, and the problem is that if they draw back, their people will be in the streets.

Within the first week of March, there is an extremely high likelihood of a major event affecting the stock market. A one day plunge of historic proportions is possible, with 900 to 1200 points being likely. Trading will likely be suspended, but the long term effect is that we are about to see the inflationary gains of the past year recouped through a sell-off. We are likely to see a 35-40% reduction in the market, as the market has been driven by historically low trading volume and any panic among participants will not be offset by the broader temperate attitude of others who are in the market. What we've seen over the past year is not a bull market; it's a bull market on PCP. At some point, the effect wears off, and with bonds no longer a safe bet owing to the extreme likelihood of local and sovereign defaults by year's end, we're looking at a reality check.

Additionally, at some point, investors will realize that the demand for Treasuries and other forms of sovereign debt comes from two places: central banks, and banks that receive liquidity from central banks for the express purpose of purchasing sovereign debt. The banks go along with it for two reasons: one, they're guaranteed their money back plus a premium; and two, when they pay the money back, it's lost 10-20% of its value. If the banks are smart, and they are, they've executed other trades to place themselves in the position of recouping the lost value of whatever currency their working with, or they executed a currency swap with the central bank to begin with for just such a purpose. They get a value premium currency at the beginning to buy an asset with value that will go up in time, only to swap that value currency for another currency that has gone up relative to the original currency.

When investors realize that sovereign debt demand isn't real, or when they realize that they can effectively bet against sovereign debt vìs a vìs Thailand, you're going to see real currency and debt instability throughout the world. In the case of Thailand, the panic wasn't real initially. Traders simply made it real by betting against the bhat in volume, and the Thai government took the bait and emptied their treasury to fortify their currency. The next wave of bets found the Thai government unable to expend anything to fortify its currency against a trading attack.

The governments of the world have already devalued their currencies to the points of uselessness. They have empty treasuries as we speak. One group of traders could exploit this if they wanted to throughout Europe and even North America. China holds much in the way of our reserves and our debt, but let's face it: China has to be realizing that holding the debt of a country when the country is debasing its repayment through inflationary policies is a bad idea. They aren't going to be keen to finance us in the event of an attack on our currency. In point of fact, it makes strategic sense for the Chinese to dump their holdings in our GSEs and in our Treasuries.

The real value, if there is one to be found, will come from the next wave of Treasuries. Prices will go down, rates of return will go up. It's exactly what happened during the Depression, and those who pulled out of the stock market in time and plowed their money into low price high yield bonds came out richer than ever. However, this time is different and more severe. You could actually be looking at entire countries choosing strategic default over the status quo, and what is more, they would be right to do so.

Much of the issue with government debt stems from the derivatives based trade of that debt, and the public financing of private entities that almost went under as a result of their own excess in the $1.4 quadrillion derivatives market. We have tried to dig ourselves out of a hole, and it's time that we realize such a thing cannot be done. The hole will only get deeper. It's like trying to bail water out of the deep end of pool by throwing it into the shallow end. It's Sisyphean in its futility.

So, to recap: we're looking a major event, likely within the first week of March, with a one day trading plunge of historic proportions and the suspension of trading. Medium term we're looking at a sell-off among the historically narrow pool of market participants who drove the asinine growth, and since participation in the market is no longer broad, no one with a temperate attitude exists to check their hysteria. A 35-40% reduction in the market is not only possible, but likely over the course of March. Less likely is a 50% sharp reduction in the market, but over the course of the month we could lose 5,500-6,000 points. At the outlying end of possibility, if the reality check is so comprehensive that it manifests the fact that everyone from banks to governments is broke, we could be looking at 3,000 market. That's the extreme end, and I'd peg its likelihood at less than 1%.

Over time, the possibility of severe pain is likely because so many commodities have been hit hard and severely by the weather and geopolitical instability. The next nine months will likely see us face the unavoidable reckoning. It's bad from a human standpoint, because people will be hurt both here and there. However, it's good because it will force people to some previously unthinkable realizations: their governments do not work, are not competent, and cannot be trusted. The possibility for extreme political change emerges in these sorts of crises, and given the fact that 70 years of Keynesian economics combined with Laffer Curve absurdity is coming to full fruition, it likely won't be the Keynesians who prevail with a solution. This crisis represents the discrediting of governments and economic policies stretching back 70 years.

Should governments attempt to preserve themselves through either more inflation or price controls or a combination of the two, the resulting high prices and/or shortages will put people in the streets to demand change around the world. People revolt only when the abuses and usurpations of their governments interfere with the ability of regular folk to survive. We're about to see just such a situation in developing countries; the only question is whether or not the inflation we exported abroad can be re-imported back here and to other countries throughout the West.

Strap in. It's going to be a helluva ride.

Screed of Momus: Fighting Inflation Through Omission

The latest post on how the government fudges inflation stats by omitting food and energy, tied into events around the world, excess bank reserves, and corporate cash reserves.

Screed of Momus: Fighting Inflation Through Omission

The latest post on how the government fudges inflation stats by omitting food and energy, tied into events around the world, excess bank reserves, and corporate cash reserves.

Posted via email from Screed of Momus

Thursday, February 10, 2011

We Are Going to Hell

A Message from Donald Trump

My fellow Americans,

As you've doubtless heard, I'm considering throwing my hat into the ring for the 2012 presidential election. The reasons are many, but my decision ultimately comes down to some core issues:

1. America is deeply in debt, and our elected officials seem to have no idea that more debt is the answer. It takes money to make money, and this is something that I clearly comprehend as a man who leveraged his fortune to the point of losing two-thirds of it. That's okay, because I borrowed more money and rebuilt my billionaire status. America can be resilient with my expert hand on the steering wheel.

2. I've got solutions. In past years, I proposed a one-time estate tax on estates over ten million dollars, for people who were still alive. Technically, that's not an estate tax, because they're not dead yet, but why quibble over semantics? This estate tax, or as I like to call it, fee simple, will be used to pay down the national debt so that we can borrow more money at lower rates.

3. My track record in business speaks for itself. I've made a fortune building casinos and hotels along with luxury resorts. These are growth industries, because Americans like to gamble and America is a plutonomy where the richest Americans have a disproportionate share of the spending power. We need more luxury resorts.

4. I've got fantastic hair. It's not a combover if you pay the stylist $500.

5. My squint is intimidating as hell. Just ask anyone who's ever been on The Apprentice. I'll put a special edition of The Apprentice together to solve our foreign policy problems. Team Intifada will consist of Hamas and the Palestinian Authority working against Team Jihad, consisting of Hezbollah and The Muslim Brotherhood. Winner gets East Jerusalem and the rights to fight their partner organization to the death over its fate, and I get the television rights.

6. Additionally, I'll fire Congress in order to increase direct democracy. In a world where you can select the next American Idol or the vote for The Apprentice via text message, I fail to see why we need 535 people who don't even read a bill before they vote on it. You can do that from the privacy of your own home, and probably with better results.

7. I know how to deal with Jews. Bankers love me.

8. I believe in the Art of the Deal, and if you give me nuclear bombs for paintbrushes and the Middle East as a tapestry, I can break a few eggs and give you one hell of an omelet in the end. Think about it. It does make sense.

9. If there's a problem with France, I can pull Sarkozy's woman. I'm better looking and richer. It'll break their will and re-establish a level of respect in our relationship.

10. I think big and kick ass. America needs someone who can do that without mangling the English language in the process. Think big, kick ass, and use correct pronunciation. Damn right.

That's my ten point plan to restore America to greatness, fix our foreign policy challenges, and generally restore greatness to America, because America is great and deserves a leader who can deliver greatness. I am that leader. I'll see you all in 2012, unless I don't want to.


God Bless America and Me More,



Donald Trump

America, Leaderless

President Obama has held a wet finger to the wind for two weeks now where Egypt is concerned, only to find a bewildering set of crosswinds that bedevil any attempt to glean which way to go. Take note, America: this is what happens when you have a pure politician in the White House. Obama desperately cares about getting re-elected, far more than he cares about anything or anyone else. In Egypt, the winds of change are blowing, and only a simpleton could conclude that Hosni Mubarak will be in power this time next year. That is, unless the United States and Israel take direct and indirect action to bolster Mubarak.

The ostensible reason for the United States to insert itself into yet another Middle East quagmire is the Muslim Brotherhood, but the Brotherhood's influence is vastly overstated. Egypt is not in the mood to exchange one autocracy for another, and the relatively subdued attitude of the Brotherhood's leadership suggests that they are aware of this. Obama's problem is that he doesn't know which course of action will lead to his re-election: does direct intervention lead to a view of the Obama Administration as tough, or does indirect intervention lead to the a view of the Obama Administration as wise? The fact of the matter is that the current course, one of indecision and vacillation, leads to a view of the Obama Administration as feckless and indecisive.

But that's largely been the case with the Obama Administration throughout its tenure. Obama isn't particularly good at committing to a course of action before it is absolutely certain that the course is safe. When history writes its chronicle of this Administration, intrepid and bold will not be among the superlatives used to describe its accomplishments. The problem with Obama is that rather than being bold, he's downright timid, and it is his timidity that is the salvation of the country.

Franklin Delano Roosevelt, who was perhaps the worst President in our history from a constitutional standpoint, was decisive. He was wrong, but he was decisive. There has never been a president since Roosevelt who was as certain and wrong about everything from taxes to monetary policy to the Supreme Court on down. He was the boldest, dumbest executive we have ever had in the White House.

Obama is giving Roosevelt a race for the dumbest executive, given his assent to $300 billion in profits to the health insurance industry in the recently enacted healthcare reform legislation and his utterly asinine financial deform bill. However, Obama isn't anywhere near the master of soaring rhetoric matched to bold action that Roosevelt was. Can you imagine Roosevelt doing anything besides leveling the presidential palace in Cairo with bombs?

William F. Buckley once yearned for a President bold enough to drop a nuclear bomb on China, saying that history ached for such an act of greatness. Today, history aches for an act of rhetorical greatness, a bomb of a speech that clears the way forward throughout the Middle East. All the President has to do is commit to American neutrality in the interim, telling the protesters throughout North Africa and the Middle East that America will not impede their rush to democracy and self-determination, and America will be there to help them if and when they do establish representative governments. History aches for such an act of greatness, but we have no leaders in our country to quell history's ache.

There is no requirement of bombs or bullets, no troop deployment is necessary. All that is required is for a President to make one magnanimous gesture. We're at a critical juncture in history, one which requires a President with a sense of history strong enough to capitalize on the opportunity that is in reach. "Mr. Mubarak, tear down this regime! King Abdullah, your time is up!"

At a time when the world needs leaders, there are none to be found. There are pale imitations, hollow men and women who speak in wooden cadences and empty platitudes that are but shallow impressions of the giants who went on before. There are no leaders at a time when the world is burdened under $1.4 quadrillion in meaningless paper securities, no one strong enough to step up and call those securities what they are: paper. We have nothing to fear but paper, and if we can revalue and devalue our currency by fiat, we can stare those banks who hold such paper in the face and tell them that their investments are worthless and not worth mortgaging the future of nations with public dollars.

Let them collapse. Collapse is natural and organic when one pursues a failed line of action; to interrupt collapse is to deny consequence a chance to restore and heal the failures of the past. To hurl the public's money after failure, to incentivize the practices that led us to near implosion by piling more money up to cover a bottomless pit is perverse and idiotic.

The same is true of regimes which have stood for two decades as monuments to corruption, inefficiency, and totalitarian human rights abuses. Let them fail. To prop them up or to attempt to prolong their death throes is utterly absurd. It is natural and even right that they should fail. The only thing that has kept Hosni Mubarak fixed in power is the sense of the Egyptian people that the United States will intervene or estop their efforts to remove him. His own army has abandoned him. Only his police fight on his behalf, and their strength is nowhere near that of the Egyptian military.

All that is required to move matters forward and restore magnanimity towards America in Egypt is a leader who will step up and say that Egypt's fate ought to determined by the Egyptian people, and America recognizes the right of peoples to take their own destiny in their own hands. There is no leader in the United States willing to say such a thing, because saying such a thing might be taken literally here. Impeding or manipulating the consent of the governed is necessary to maintain a status quo that denies the right of individuals to informed consent and representative governments whose elected officials truly represent their interest.

You may entertain delusions about America relative to Egypt, but the events of the past two years have manifested a critical problem not only in America, but throughout the Western world: we have no leaders. We are leaderless a juncture in human history where leadership is imperative. Between the financial crisis and rising inflation, and the instability of North Africa and the Middle East, along with the potential for economically motivated uprisings in Eastern Europe, leadership is of the utmost importance.

Tolerating continued fecklessness and self-interested inaction by politicians who only seek to stay in their positions for the future is a course of action we can ill-afford. It's time for Americans to seriously consider where we want to go in 2012 and beyond. We can't afford to prolong the present into the future. A leaderless American does not bode well for the future of the world, for there are indeed opportunities in crisis, but only for those nations who possess leaders. We could fundamentally remake our own society, and allow for renewal and rejuvenation throughout areas of the world that have historically existed under extreme oppression, but we will accomplish nothing by allowing the emergence of other hollow men and women who sacrifice the possibility for greatness to preserve their own mediocrity. History aches for an act of greatness, and if greatness will not come from those we select to lead us, it must come from our actions as we reclaim our government and restore to an intrepid and bold course.

Fighting Inflation Through Omission

There's a common practice in America, one that all states engage in to make it seem as if their programs and policies are successful when they are in fact utterly disastrous. That practice is to omit key indicators from a general reading of employment or inflation. The government then reports the less than comprehensive general reading of employment or inflation to the wider population.

Totalitarian states are built on lies, because lies are essential to maintaining control. The purpose of governments in such societies is to persuade the world at large and their own populations that things are good, or at least better than they appear to be. The general goal of such machinations is to prevent people from recognizing how good things could be if only the government weren't in the way with its incompetence and systemic corruption. Governments in such societies present a deceitful and downright untrue version of reality, and then claim responsibility for the artificially rosy picture they've painted, as though they've really achieved something of merit beyond an outright lie. When you think about it, the only thing a government in our day and age is good at is lying to its own people.

Nowhere is this more apparent than in the inflation rate, which is officially pegged at 1.7% in the United States even though the Federal Reserve has more than doubled the base monetary supply. Additionally, the Federal Reserve pushed over $10 trillion in liquidity to domestic and foreign banks in a backdoor bailout of stunning proportions. You cannot expand the monetary supply by doubling the base monetary supply and pushing liquidity of five times the amount of the base supply into the system via an under the table bailout without devaluing your existing supply of money.

To some degree, the Federal Reserve has stifled inflation by providing an incentive to banks. The Federal Reserve now pays an interest rate on excess reserves that exceeds the rate for short-term Treasuries. As a result, banks have lifted the level of their deposited excess reserves at regional Feds from $2 billion to nearly $1 trillion over the duration of the program. Corporations aren't spending their money, and so they're sitting on well over $2 trillion in cash reserves. The reason is simple and interrelated to the Fed's practices.

The Fed can't afford to let banks pour $1 trillion into the broader economy, because that would affect the inflation rate in a way the Fed can't control. Without that money, consumers have no money to spend. The bottom line is that U.S. economy is a debt-fueled mirage, and without credit, there is no real means to stimulate demand. You want to see how well workers are doing? Take a look: they aren't spending money because they can't get lines of credit to blow through. As a result, corporations have no reason to invest their cash reserves in building production capacity, because they're already 26% below existing capacity.

Without consumers in a consumption-based economy, you have no means of growing your economy. For consumers to drive consumption, they have to have money, either through better wages or through credit. For thirty years, consumers have offset falling wages and higher prices by borrowing.

Today, the Federal Reserve is in the untenable position of cutting of its nose to avoid spiting its face. It can't allow further inflating of a debt bubble, because it has expended itself beyond comprehension in dealing with the last bubble. Therefore, it can't stimulate the economy on a broad without inflating the dollar to the point where the American public would be forced to realize that the government, and the central bankers behind that government, have been an abject failure at managing our economy.

Right now, our government is fighting to avoid a real accounting of its record over the past forty years, because that record has been an unqualified disaster. I'll give you an example: with average inflation at around 2-3% over that time span, a dollar from 1970 is $5.52 cents today. That $5.52 you have in your pocket now would only be a dollar in 1970. That's how devalued the dollar has become in official terms.

However, the official terms are built on a stunning level of perfidy. You see, official inflation statistics don't include the price of food or energy. That's why the official rate can state below 2% while in the real world your dozen eggs has gone from $1.10 or so to $2.00 or more. It's why a gallon of gas costs less than a gallon of milk, even though gas has increased in price by almost 30% in some regions of the country.

By omitting these areas from the published inflation rate, the Federal Reserve is engaging in a massive deceit, but the situation is so bad that the Federal Reserve is having to face up to the possibility that a revolution could very well be a near reality. You see, the Federal Reserve isn't the only one that's been inflating the currency. Every central bank around the world has engaged in the same game, and the Fed sent substantial amounts of money overseas to foreign banks. That money is in circulation, and prices on food abroad are soaring, especially in developing markets.

Combined with severe weather that's affecting commodities like wheat and sugar, this is leading to instability throughout North Africa and the Mideast. People only throw off their governments when they can't gain the basic staples they need to live. You can torture, you can incarcerate, you can suspend liberties, but what you can't do is stand in the way of hungry people who need to eat. If they have to choose between survival by compliance and survival by revolution, they'll choose survival by revolution only when their basic needs are no longer met by compliance.

Fighting inflation through omission is a dangerous game with far-reaching implications, because when populations in oil-producing countries erupt into revolt, energy prices go up as production goes down while demand remains steady. You can't avoid the need for oil. No matter how much is produced, there will always be a buyer, because even people who are out of work need fossil fuels to live. To find work, you use gas. To heat your house or to cool your house, you use fossil fuels in one form or another. There's no avoiding economic reality where food and energy are concerned, and you can only omit so much before the lie becomes apparent in the form of uprisings.

We are on the cusp of something unique and dangerous, and we should not assume that our presence on American soil will insulate us from the costs of government by deceit. American immunity to the deferred legacy of forty years of deficits, inflation, and outright financial fraud is waning. At some point, there will be a reckoning, and the omitted facts of yesteryear will become a substantial portion of the reality check of tomorrow.

Wednesday, February 9, 2011

Nihilism as Government

The simple truth of our government is that it has no idea what to do. Moreover, it cannot do what it must do, because power is divided among two parties, each of whom possesses one house of Congress and one of which possesses a chamber of Congress and the White House. Those initiatives likely to see success represent the unified front of the G.O.P. and the Democratic Party, and their unified front says quite a bit about what is wrong with American government.

Take H.R. 5 out of the House Judiciary Committee, which seeks to strip medical malpractice from states and turn it into an exclusively federal matter. The ostensible goal of H.R. 5 is to end frivolous lawsuits, but the real goal is to end all forms of medical malpractice lawsuits. You see, the end result of any sort of tort reform is to make so expensive to file, with so low of a payoff, that plaintiffs lawyers won't invest the time or the effort to bother seeking redress in the first place.

In essence, even though 1 in 7 American patients suffers an error, and 98,000 Americans die annually due to medical error, Congress wants to close off any avenue at the state level for litigation. It's frivolous because they say it is, and Congress has no concept of tautologies. The types of awards being targeted by Congress for caps are awards you only receive if you prove negligence, like non-economic awards to compensate patients for the loss of their quality of life. Therein lies the rub: H.R. 5 caps awards which are only available to those plaintiffs who prove their case. This should tell you everything you need to know about the intentions of the Republicans and Democrats backing such legislation.

Let's not even begin to examine state's rights, or the fact that the federal government is taking it upon itself to close off anything other than a federal forum for medical malpractice lawsuits. Additionally, let us not consider that medical malpractice caps essentially constitute legislative obviation of the Seventh Amendment at the federal level, which establishes that a jury shall be vested with the power to find damages. It's legislative overreach, and if you acknowledge the power of Congress to regulate these matters, you vest Congress with the ability to cap damages for as little as a penny. Give them the power, and that's what they can do, because there are no limits on any area you cede to the federal government. They can do as they please pretty broadly once they assume the power to regulate a particular area of our lives.

Let's talk about what constitutes a frivolous lawsuit. As a law student, you come to terms with the reality of the law as opposed to the version that makes it onto your television. Less than 1.5% of all civil claims filed in federal court make it to trial. The system is extremely efficient at weeding out frivolous claims. In point of fact, it's efficient at weeding out real claims because the attorney didn't file paperwork in accordance with the local rules of the federal court.

The Harvard School of Public Health found the following in a study it conducted examining malpractice lawsuits: "portraits of a malpractice system that is stricken with frivolous litigation are overblown." The overwhelming majority of malpractice claims that are filed have merit, and attorneys don't file frivolous lawsuits for the hell of it precisely because those lawsuits are extremely expensive to file and pursue. Just to file in federal civil court, you'll pay a filing fee of $350. That's before you pay an attorney a retainer or consent to your counsel keeping up to 40% of any damages you recover as their compensation.

These sorts of laws, whether at the state or the federal level, have nothing to do with weeding out unnecessary lawsuits. They have everything to do with reducing the culpability of doctors for the errors they commit. People who have major medical procedures generally don't have a huge lobby that operates on their behalf. They are of limited means, and their medical issues generally lead to their missing work for extended periods of time. They can ill-afford to have a doctor's error lead to even more time off from work or to future corrective procedures to fix the errors in question. To close off access to a civil remedy by raising the bar for legitimate claims is not only unseemly, it is downright immoral. It seems that a frivolous lawsuit is any lawsuit filed against any doctor by any patient, even those patients who can prove their case.

Are there unnecessary lawsuits against doctors? Yes. Why? The law requires it. As a patient, you deal with multiple doctors, nurses, and institutions. When something goes wrong, you don't know exactly who was responsible for the error until discovery. If you don't sue every possible individual up front who might have had something to do with the negligence which caused the error that resulted in your injury, you lose the ability to sue them at all. It's use or lose.

The problem isn't with the patient or the victim, it's the law authored by asinine and incompetent legislators who don't consider the ramifications of their legislative language. In short, the reason so many doctors get sued is because the law requires it. If the patient doesn't sue every potentially responsible party, and the party or parties he omits from his initial filing turn out to be responsible, he could lose the ability to sue them forever. The statute of limitations begins at the time of filing, and a lawsuit takes a very long time to be resolved.

A solution called "enterprise notification" has already been authored by trial attorneys and it met with approval by doctors. It allows victims of medical malpractice to avoid the statute of limitations by filing against one likely party, advancing to discovery, finding the evidence which pins the blame on the correct party or parties, and then amending their claim to join those parties who were negligent. It's reasonable, perfectly sane, and totally unlikely to ever catch on. The point is to prevent even legitimate malpractice lawsuits from making it to court.

Legislators created the problem with medical malpractice lawsuits, but rather than acknowledging their mistake, they want to mislabel legitimate lawsuits as frivolous. They know that this is the case, because otherwise they wouldn't be attempting to cap damages on awards which are only available to those patients who have proven negligence. It's a perversion of power and a blatant attempt at subverting the division of powers between states and the federal government, and the end result is to deny real victims their day in court and their legitimate compensation for the damages they suffered as the result of medical malpractice.

Thankfully, Representative Ted Poe of Texas recognized this and called it for what it was: a blatant arrogation of power by the federal government at the detriment of states and the Constitution. The GOP and Democratic establishment representatives had no problem whatsoever, but Representative Poe is a Tea Party caucus member who actually seems to care about maintaining distinctions between appropriate areas of federal and state power.

The establishment legislators in both parties are nihilists who believe in nothing beyond their own immediate power and those interests which relate to their biggest campaign contributors. They are unwilling to confront British Petroleum over its misfeasance over the past decade, which resulted in a safety record of unparalleled abuse and negligence, not to mention explosions at its refineries and on the Deepwater Horizon oil well. They are reticent to insist on the enforcement of existing laws against fraud in the financial sector, or to punish regulators who spend more time doing drugs and looking at pornography on the taxpayers dime than they do overseeing the industries they are entrusted to regulate. Laws don't do a damn bit of good if those entrusted to enforce the law won't do their jobs.

We've got a child porn ring that reached into the Pentagon, and little if anything is being done about such outrageous behavior. No, Congress is focusing on the important matters, like whether or not to prevent the BCS Championship from being called a national championship, or ferreting out perjury on the part of Lance Armstrong, Barry Bonds, and Roger Clemens. If it's irrelevant, they want to devote their attention and our tax dollars towards examining it. If it has something to do with $10 trillion in vanished wealth, or a backdoor bailout that exceeds $23 trillion for a mortgage market that is $21.5 trillion in total, they have no interest whatsoever in meaningful investigations.

The reason is simple: those who might be punished or embarrassed for their behavior in matters relating to the financial industry or the oil industry are their biggest contributors. So are doctors and hospitals who might be sued for medical malpractice for their negligence and incompetence. In America, you get the government you buy, not the government you vote for.

We are governed by a deeply corrupt and immoral government, one which has brought about a situation similar to that of Isaiah 59, and in closing I would like to leave you with Isaiah 59:14-15: "And judgment is turned away backward, and justice standeth afar off: for truth is fallen in the street, and equity cannot enter. Yea, truth faileth; and he that departeth from evil maketh himself a prey. And the LORD saw it, and it displeased him that there was no judgment." Our government is comprised of plenty of legislators who can fulminate to no end about abortion or homosexuality, but when it comes to the outright corruption that is so pervasive among their campaign contributors, they fall silent. Remember this in 2012, in 2014, and beyond. The GOP establishment and the Democratic Party establishment represent a pox on our society, a cancer that must be excised fully for America to have a chance of something other than complete nihilism as government.

Tuesday, February 8, 2011

Why We Fail: American Government in Action

For all of the debate and polarization over American healthcare and the recently enacted healthcare reform legislation, one thing is certain: very few people on either side of the debate have any understanding of the historical factors at play. There is a staggering lack of context to the debate on both sides, and an utter unwillingness to consider some basic truths about healthcare.

The first basic truth is that access to healthcare is a fundamental need of every man, woman, and child at some point in their lives. The second basic truth is that any system which fails to address the needs of men and women in their years as children will inevitably lead to exponentially higher costs later in life. The third and final basic truth is that access to healthcare is not the root of the problem; our fundamental flaws are a system that has failed holistically at providing a foundation for the building blocks which are so essential to good health in adulthood: proper nutrition, regular exercise, and education on the risks of failing to instill good eating habits and discipline in physical activity in children.

A Larger Problem

These failures reflect a much larger and systemic issue: the breakdown of American society as a whole. We can’t have a debate in this country because we are intellectually incoherent and bellicose in our ignorance. We can’t even agree one what facts are relative to opinions; in such an environment, it is impossible to have an intelligent discourse on any subject that doesn’t descend into sloganeering and the parroting of key phrases and sound bites over and over again.

The future of America depends on the health and well-being of its people. No society as chronically ill, obese, and indolent as ours can hope to prevail against a hungry adversary from without, because we are being undone from within by our own self-destructive tendencies. We are fat. We are hard-working at our jobs, with productivity that is the envy of many nations around the world, but we do not take care of our bodies with the same effort and attentiveness as we pay to our jobs.

Part of this is a value choice, one which stems from a societal norm which incentivizes hard work in the workplace and renders it nearly impossible to allocate time towards the essentials of good health: Americans eat processed foods and fail to exercise for a reason, and that reason is that our society is geared towards constant work in the private sector and sheer indolence outside of it. Between the responsibilities of work and family, time is an asset that many Americans simply don’t have. We are asked to work harder for less, with some of us holding down multiple jobs. We are expected to maintain a breakneck pace of consumerism and debt driven spending which feeds our financial sector while ripping apart the soul of the American republic.

I posit to you that our value choices are a direct legacy of government policies, which were well-intentioned but ultimately destructive in their outcomes where our health, our families, and our culture are concerned. No matter where you look in American society, the imprint of government is there to be seen. We are regulated beyond all comprehension and all common sense, and the problem is that rather than realizing that regulation has not eliminated human ills and human problems, we instead foist ever more regulation upon ourselves in the hopes that more regulation will remedy what early regulation did not. The answer to what ails us, to what ails our society, is not going to come from government.

In the name of aiding the family, the American government has undone the family. Divorce rates are higher now than they have ever been, rates of chronic illness are higher than they have ever been in the modern era, and rates of indebtedness and bankruptcy are also at historical highs. It is no accident that the proliferation of government regulation and bureaucracy has coincided with the destruction of that most basic human institution: the family.

The American Dream has any number of government bureaucracies, institutions, and laws in place to abet its fulfillment, and yet more and more American families are losing hope that they will ever fulfill that dream. Indebtedness works wonders for shareholders in the financial institutions of the world, but it enslaves American families under a yoke of conspicuous consumerism which inures them to any notion that they should live within the means of a mere salary. The time has come for a reckoning in American society, and the realization of that reckoning is this: as a catalyst for the American dream, government action has failed across the entire spectrum.

Human initiative and action are stifled at all levels of our society by onerous regulatory regimes which ensnare individuals and prevent them from realizing their dreams in the name of some ideal which posits the collective or common good over that of the individual. Well, we have arrived at the destination of such thinking, and neither the common good nor the individual good have been realized.

We are commonly and individually mired in a mess of our own making. We have deferred to government collectively, we have shown apathy in the face of government action so long as our tax refunds were distributed in excess of what we paid in to our government’s coffers, and we have had a largely hands off approach to government for some forty years. We had no choice, according to those of us who defend such inaction. The two party system merged into a uni-party system which presented only the illusion of choice in the form of two candidates who were merely degrees away from homogeneity. We had a choice in the face of such realities, and that choice was and is revolution.

When the ballot no longer works to realize the interests of the people, either collectively or as individuals, then the time has come to cast our vote against the system as a whole with our successful resistance against and overthrow of that system, first by peaceful protest and then by violent means if necessary. Any true government derives its legitimacy from the consent of the governed, and when that government points solely to a rigged ballot and elections process that fails to realize the will of the people, it has no defense whatsoever to the emergence of an alternative method of realizing the majoritarian will. That alternative method is protest and active resistance to such a government.

The winds of revolution are sweeping the globe, and we must ask ourselves one question: “Why not here?” We have chronic high unemployment, widespread fraud in our markets that has gone unpunished, and corporate malfeasance abounds at staggering levels. What is more, our government and the regulatory agencies set up to oversee and prevent such misconduct are very often the very catalyst for the misconduct in question, either by a willful and wanton refusal to enforce the law or by a perversion of the law which enables fraud in accounting. Why not here?

Healthcare in Context

Our government began the process of destroying individual choice in healthcare with the Revenue Act of 1942, a law that provided companies with a tax break for employee healthcare. In enacting such a tax break for companies while denying the same break for individuals, the government cast its lot in favor of employment-based healthcare. Economically speaking, individuals who sought their own policies outside of their employer’s plan were at a disadvantage from a tax standpoint.

At the time this system was implemented, healthcare costs were 5% of the GDP. As the employment based model of healthcare coverage and access spread, the government then struck another blow against individual coverage in 1965 with the enactment of Medicare. Suddenly, individuals over 65 had no incentive whatsoever to buy individual coverage for their healthcare. Their costs were covered by the government on the taxpayer’s dime, and what is more, whatever costs were not covered by Medicare were passed on in the form of an insidious and hidden tax to the insured, who were forced to pay higher prices to make up the difference for Medicare’s below market rates of compensation.

The assault on individual insurance policies continued in 1973, when the HMO Act of 1973 was passed during the Nixon Administration. Individuals were now forced into managed care by government regulations which tilted the playing field in favor of HMOs. Government was in the business of ensuring outcomes with vast new subsidies and tax breaks, which effectively prevented any market -based solution to the needs of individuals seeking healthcare coverage and access. In essence, federal legislators and bureaucrats, rather than individual consumers of healthcare, were picking the winners in the marketplace by shaping the rules in a certain direction.

Today, the results of such government interference are obvious: healthcare has gone from consuming 5% of our GDP to consuming 17.5% of our GDP. 17.5% of everything we generate and produce in this country goes towards our healthcare, and that’s with over 40 million people uninsured. Those 40 million people represent the last bastion of free choice in our healthcare market. They have rejected a system of healthcare coverage which forces them to subsidize the below market reimbursement rates of Medicare and Medicaid, and they have made a simple economic decision to opt out of coverage, by and large. Many among that number are children eligible for S-CHIP whose parents have simply opted to avoid paperwork and bureaucratic wrangling by keeping their children off of the S-CHIP rolls.

Others are people who fall into the ranks of those least likely to require comprehensive medical coverage, young adults who are healthy and have decided against paying for an insurance policy they likely won’t need. Because the government has tilted the market in such a way as to drive out individual policies that would meet the demand of young adults, they don’t have a variety of products to choose from. They can either purchase catastrophic care policies with high deductibles and low premiums with coverage for extremely unlikely events like a car accident, or they can buy a comprehensive care policy with high premiums and still high deductibles that encompass a range of services they won’t use or need. Insurance is about distributing risk among pools of people, and it is perfectly rational for individuals to recognize that by purchasing such policies, they won’t be paying for their own healthcare: they’ll be paying for the healthcare of the minority of patients who drive the overwhelming majority of costs.

Insurers no longer have to compete with each other, exempted as they are by another government creation: the anti-trust exemption. They can pass on the costs of prescription drugs that are sold in countries that implement price controls on such drugs to the American consumer, who has no choice but to pay a higher price for his prescription drugs because the federal government has banned drug re-importation. We are paying higher prices to subsidize lower prescription prices in other countries around the world, and our government’s own regulation is what enables this obscene reality.

However, the problem is much more comprehensive. Americans eat food that is arguably bad for them as a direct result of American government subsidies to corn growers and food processors. In essence, the government we elect and fund with our tax dollars is engaged in regulatory misfeasance, which lines grocery stores with foods containing ingredients known to increase obesity, a condition which leads to chronic illnesses like diabetes and higher rates of cancer.

Additionally, much of what we have been led to believe about modern pharmaceuticals is demonstrably false. Many prescriptions have no greater efficacy than a placebo. You receive as much benefit from taking these prescriptions as you do by ingesting a water or sugar pill. However, because our government has enabled a regulatory regime that enables drug companies to omit unflattering research results from clinical trials of such drugs, we don’t know that this is the case. We are daily bombarded with advertisements that promise results that cannot be borne out by the very drug trials that supposedly legitimate the findings of the pharmaceutical manufacturers. Nevertheless, American consumers pay hundreds of billions of dollars annually to purchase drugs that cannot deliver a result that exceeds the result attainable with a sugar pill.

It goes even further: the difference between generic and brand name drugs is usually infinitesimally small, yet doctors are paid by pharmaceuticals to betray the interests of their patients by recommending more expensive brand name drugs over generic drugs which are arguably a better fit for the budget of their patients.

Your government is involved in a hoax of such staggering proportions that it can only be described as a complete betrayal of the public trust and interest. Government policy has become destructive the very ends governments are instituted among men to ensure: their life, their liberty, and their property.

Medical care is enslavement for most Americans, and expenses related to medical care are the number one reason for bankruptcy among Americans. Access to healthcare should not be a catalyst to debt or insolvency for the critically ill. It is a matter of values to say this, and we are a decent society even if our government does not reflect this reality. It is no surprise to realize that a government which does not reflect our democratic will should be so far afield of our values.

What is more, the flawed assumption of most advocates of healthcare reform rests upon the basis that government action is the answer, when the demonstrable fact of healthcare is that government action is at the root of the problem. Individuals can no longer purchase a policy they can afford on their own that meets their individual need. They can’t afford healthcare apart from insurance, even basic preventative care, because our entire healthcare industry has come to rest upon inflated prices that are a direct legacy of insurance as the backbone of our healthcare system.

When viewed in this context, then, the idea that a government which has misdirected strategic priorities in healthcare for seven decades will magically come up with the right mix of regulatory solutions in the present day is absurd on its face. The answer to what ails our healthcare system is for government to acknowledge once and for all that it has failed and to repeal virtually every regulatory regime it enacted, from tax rebates for health insurance to Medicare and Medicaid to antitrust exemptions and drug re-importation. Short of a mass uprising, this result will not happen.

Every single flaw or characteristic of our failing healthcare system has its genesis in government action. It is as simple as blaming the government, because government action in healthcare doesn’t work. Those who favor such action are fond of pointing to the successes of government-sponsored initiatives like Medicare and Medicaid, as they expanded healthcare access to the poor and seniors. However, when you look at the 40 million uninsured Americans, and the 260 million Americans who are insured, what you see is this: 40 million Americans are uninsured because of those programs and their net effect of driving out individual policies tailored to the types of consumers which make up the 40 million uninsured; and 260 million Americans have insurance that is loaded with loopholes to enable insurers to get out of covering care by classifying prescribed treatments as experimental.

The fact that you have insurance means one thing and one thing only: you will pay increasing premiums for less of a benefit every year; moreover, if you are afflicted with an illness like cancer, there are no guarantees that your insurer will cover your treatments in a timely manner or at all. You are the backbone of subsidized government here and abroad, because your higher premiums and reduced benefits are a direct result of below market Medicare and Medicaid reimbursement. You pay more for drugs to offset what drug companies lose by selling in foreign markets with price controls.

In any event, you are paying more for less on an annual basis as a direct result of government regulation and policy. We used to have an individual market in this country for healthcare, but in the name of avoiding wage competitions in World War II for those workers who didn’t go abroad, President Roosevelt instituted wage caps, hiked corporate taxes, and then allowed deductions for employer provided care plans. Years later, between government choices to obviate the individual policy market further with Medicare, Medicaid, and HMOs, Americans had precious few options outside of a system that no longer had to compete for their business with a variety of policies suited to a range of demand.

And why are you sicker and more prone to diseases like cancer and diabetes than other generations? It might have something to do with the ubiquitous corn subsidies and the sugar tariffs that have driven high fructose corn syrup to the forefront of our nation’s food supply as the preferred sweetener. High fructose corn syrup interferes with the effect of leptin, the hormone that signals to the brain that the body is satiated. As a result, you eat beyond the point of satiation.

Both the subsidies and the tariffs are the direct end result of government action. Americans are more obese now than they have ever been. Combined with government regulations that allow companies to litter our water supply with synthetics and carcinogens, our government-sponsored diet is killing us. And for what? So big Agribusiness can make its profits?

An End to Government as a Solution

The problem with our government, especially that part of it which calls itself the party of small government and less-spending, is that not one elected official is serious about rejecting government as a solution. There's no wholesale repudiation, no mea culpa as to the fact that government has made a wreck of our economy, that regulatory agencies aided and abetted fraud in our financial sector and approved shoddy workmanship on levees, canals, and pump systems which failed during Katrina, and there's certainly no real acknowledgment of the fact that our government failed not once but twice to prevent attacks on the World Trade Center. Time and time again, the government which presents itself as the solution has been revealed as a problem.

The Republican Party isn't rejecting or repudiating government because as long as there is a government with vast power, the Republican Party can deploy that power as its backers see fit. Each party talks about change, and delivers more of the same failure heaped on top of earlier failures. In the meantime, our country's full faith and credit are gambled away to finance these solutions, even though the solutions of today are offered up to fix the solutions of yesterday.

The answer, quite simply, is to reject the notion that government can solve what ails us. We've had seventy years of government expansion, forty consecutive years of deficits, and our government is insolvent from the top to the bottom. Liabilities at the municipal, state, and federal levels are now so tremendous as to be unfathomable.

If you're watching events in the Middle East, you need to be considering that those people are on to something. We need a little of what they've stumbled on to over here. It's time to go to the streets and reject a government which only piles problems up for future generations, all the while labeling its errors as solutions. It's time for our government to go in its entirety, and for the American social experiment to enter a new phase. Given the rampant debt, endemic corruption, and outright gridlock in government, it's time to declare that the current system has failed.

Get in the streets, protest, and don't stop until we get what we want: a fundamental reordering of American government from the top down. It may not be practical, but heaping up $165 trillion and counting in unfunded liabilities isn't practical either, and letting this sort of rampant fiscal abuse multiply further is suicidal. It's time to reject this government once and for all. The ballot doesn't work. We hear lip service every two years, and then it's business as usual. Waiting for the courts to declare an act of Congress unconstitutional isn't going to work: our courts have a view of the Constitution that does not square with that of the population at large. Government exists to secure the rights of men and the interests of the governed: by any reasonable measure of that standard, our government has failed abysmally. It's time to try something else.