Tag: John McCain

Open Letter to The Kansas City Star

The editorial board of the newspaper The Kansas City Star recently shoehorned the Libertarian Party in with their story about how Joe the Plumber lost a lot of respect for John McCain after he came out in favor of the Wall Street Bailout. Here’s what was said:

… the nation’s largest third party also opposed appropriating $14 billion of taxpayer money to bail out the American automotive industry.
“It’s insanity,” said Libertarian Party spokesman Andrew Davis. Instead, the Libertarians favored letting the auto companies file for Chapter 11 bankruptcy, taking down the U.S. economy with them.
Now, that’s sane.
The Libertarian Party — founded in 1971 as an alternative to the two main political parties — proudly stands for smaller government, lower taxes and more freedom.
The Buzz says the party also stands to lose just about every election its candidates run in.

As a self-respecting Libertarian, I can’t let these kinds of snide comments slide. Hence, I have written the following letter to the editorial board of the Kansas City Star.

To whom it may concern:

I read your “Buzz” commentary with concern regarding how you treated the idea of an auto industry bailout. Specifically, you dismissed it out of hand as somehow less than sane without explaining your reasoning. You then instead engage in an ad hominem attack of the Libertarian Party as being a party that is only capable of losing “just about every election its candidates run in.”

You have done a great disservice to your readership. First and foremost, you have not provided any information for your readers to consider regarding the auto industry bailout except that it will, somehow, ensure that the auto industry will “take down the US economy with them.”  Not so. An economy depends on industries that are able to profitably render goods and services that are needed by its people. If an industry cannot do this, as the US auto industry has been unable to for years, then losing the industry will not “take down the US economy.” Instead, it will free up the labor and resources used in an unprofitable industry and make them available to be put to work in a more profitable one. A process which economic Joseph Schumpeter labeled “creative destruction.”

The alternative is to hinder our economy by taking resources from other areas of the economy and use them to subsidize a failing industry. This has never worked. In order for the free market to allow for societies to most efficiently allocate its resources towards what consumers most want, businesses have to be allowed to fail. It is a painful but necessary process. Japan avoided this process to their detriment in the 1990s; the resulting “zombie companies” functioned as a drag, not a boon, on the overall Japanese economy and greatly contributed to what’s now known as their “lost decade.”

Now that I have provided a logical argument as to why the Libertarian Party was actually correct in its assessment, I would like to continue on and discuss how you treated it. As the Libertarian candidate for State Representative in 2008, I feel I know something both about the party as well as the function of the American political process.

The US Constitution set up a ‘winner takes all’ political process: the candidate with the most votes wins. This engenders a compromise-based, collation-building strategy towards gaining the necessary votes to win. Consequentially, many people see little difference between the two leading parties, Republicans and Democrats. Indeed, the last two Presidential Republican National Conventions showcased speakers Zell Miller (in 2004) and Joe Lieberman (in 2008) who were formerly prominent Democrats. The general flavor of the two parties is that the Republicans believe in free markets whereas the Democrats trust in the guiding hand of government, but this financial crisis has shown that, when the chips are down, there seems to be precious little difference between their approach to economic crisis. For most voters in the last two Presidential elections, Iraq seemed to be the only issue that divided them, and even that seemed a rather ephemeral difference.

Given that both parties provide very little real difference between them, third parties remain the only choice for people such as myself who refuse to compromise their principles in the name of victory. As such, you are correct in saying that we Libertarians are not in danger of overtaking American politics by storm anytime soon. However, this is not to say that our ideas are not worthwhile or shared by many Americans. In fact, political quizzes have shown that many Americans hold Libertarian views despite the fact that they vote for other political parties in an effort to chose the lesser of two evils.

That the numerous discussions I have had with ordinary Americans showcases their desire to vote for their traditional party, not because they actually believed in it, but out of fear of the other party winning the election, represents a failing of our political system. That both parties favored a Wall Street bail out that everyday Americans overwhelmingly opposed, has shown how unresponsive our political system (where 98% of all incumbents are reelected) can be to the true wishes of the people.

Such is the world that we all live in, and one would think that a newspaper would use the influence of its editorial board to rail against such injustices. I see that sadly, this is not so. What I have provided in this letter is a logical argument for my ideas that your infotainment-minded editorial board appears to lack. I feel this is yet another failure of the system our forefathers set in motion. Jefferson believed that a free press was the “fourth estate” that would keep the branches of government responsive to the needs of the people.

Were he alive today and in possession of your newspaper, I believe he would see that this was a naive belief.

Sincerely,

Preston Poulter (www.prestonpoulter.com)

Everything I Need to Know I Learned from a Shock Jock

For those of you who don’t know, I listen to some pretty salty radio. Specifically, I listen to both Howard Stern and Bubba the Love Sponge on Sirius Satellite radio and, while I can’t specifically recommend shock radio for everyone, I can say that both shows have, in addition to a lot of material many would find objectionable, a healthy amount of intelligent dialogue. Both shock jocks have gotten increasingly more political over the last handful of years as both were targeted by George Bush’s FCC chairman Michael Powell with the largest fines in radio history. Having both found their home on sensor free satellite radio, they now both routinely comment on the absurdity of the “War on Terror” as well as favoring Barrack Obama in the Presidential race.

Having been so financially touched by the latest administration, politics has become personal issue for them. I find the politics of the Bubba show particularly interesting as he is not a traditional Democrat but rather someone like myself who has developed a Democratic sympathy out of utter dislike for the policies of the Republican party. Yesterday on the Bubba show, the topic of the housing crisis came up. Specifically they were discussing John McCain’s recent proposal that the government simply buy up all of the troubled mortgage’s and have the government renegotiate better terms with the home owners so as to keep everyone in their homes. Brent, the producer, pointed out that he had reread Ron Paul’s A Foreign Policy of Freedom and that the book had predicted both the housing crisis as well as the government’s bailout of it. Bubba then went on to say words to the effect that:

If they want to stabilize housing prices here’s what they need to do. Stop all this bailout <stuff> and just lower the price. Eventually, the price will get lower to those of us that have some spare change will go out and buy the house as an investment property and fix it up. Crisis solved.

This reinforced in my mind the utter simplicity of classical economic theory because Bubba, who did not even go to college, was doing a wonderful job as describing the effects of Say’s Law. Jean-Baptist Say (1767-1832) was a French economist who attacked the Mercantilist notion that recessions were caused by a shortage of money. Instead, Say argues that money is merely a medium of exchange and one can not actually buy anything without first supplying something else (i.e. a worker must first supply his labor in order to get its money’s worth to then buy goods) that it is not money that is in short supply but other goods. According to Say, a generalized over-production was simply not possible, while a specific overproduction of one given good certainly was. Thus Say’s solution was to allow the markets of goods and services to find their own clearing price and that that would quickly bring an economy back to stability and further help orient the markets production of goods and services towards what the society actually valued. 

Say’s law was attacked by Keynes who theorized that a generalized over-production was not only possible, but that it would tend to be persistent unless the government took action. It is Keynesian theory that lies behind John McCain’s plan, but Keynesians will quickly admit that if Say’s law is correct, that all of Keynes’s theories will fall apart. William Hutt’s A Rehabilitation of Say’s Law points out the how Keynes seemingly intentionally misstated Say’s Law in order that he might then attack it and how Keynes’s misstatement still seems to be accepted by most modern economists as the law itself when it, in fact, is not. 

Say’s law is obvious. So much so that it was unintentionally state by Bubba when describing the John McCain’s housing plan. To allow the economy to quickly realign itself with the actual wants and needs of society, we need to allow the value of housing, bank stocks, and collateralized debt obligations (CDOs) to find their own price rather than have the government move in to buy these products. Do not believe the argument that the “credit markets are frozen” and that no one will buy CDOs at any price. That is simple nonsense. I guarantee that if CDOs are allowed to fall enough in price, eventually they will find a market clearly price and the market will unfreeze itself. The problem is that this market clearing price is probably far below where the banks have it marked on their balance sheets. So you see, the problem is a political one, not a defect of the market itself. 

All in all, I think we would do well to follow the simple logic of Bubba and his crew. Allow the market to find it’s own market clearing price, and let the chips fall where they may.

On Patriotism

My good friend Taylor recently posted this comment:

Not sure I would use predictions from Mahmoud Ahmadinejad to bolster my opinions. Actually that last graph was pretty unpatriotic. Why not put your efforts more into the “here is what I think we can do to see that this country remains/becomes great” instead of “I will enjoy watching you burn.” There are enough nay-sayers on the net already, I think people would rather read and contemplate ideas of salvation (for the economy and country) rather then have reiterated the doom and gloom they already are getting from the media (not to mention from their investment statements).

I see a trend on your blogs to gloat at the circumstances we are in. You do offer alternatives but few seem viable (i.e. returning to the gold standard). I guess what I am trying to convey here is that I want to read your opinion on what can actually be done to better the situations you comment on.

– How can we practically reduce entitlement program spending?
– How can we practically buy out our debt?
– How can we practically curb inflation, raise home value, bolster jobs and growth?

Anybody can tell me the situation is bad…put your efforts into educating us instead? If there is something to be learned from you I want to know it.

It’s not that I respect the words of Mahmoud Ahmadinejad that caused me to quote him. After all, how accurate can someone be when the claim that there are no homosexuals in their entire country? But when he is one of a chorus of voices saying that this is the end of the American Empire, it’s worth noting. 

In regards to your charges of my lack of patriotism, that would depend entirely on how you define it. If you define patriotism as the willingness to make sacrifices for your country, then I am clearly not a patriot. As far as I’m concerned, I think I’m getting a raw deal on the taxes I pay and I’ll be damned if I sacrifice anything more. But if you define patriotism more broadly to be acting in support of the ideals of liberty on which this nation was founded, then I feel I am being very patriotic. 

Our founding fathers, whom we consider paragons of patriotism, were clearly not patriotic to the causes of the British, the ruling government of the time. As Jefferson wrote: 

“The spirit of resistance to government is so valuable on certain occasions, that I wish it to be always kept alive. It will often be exercised when wrong, but better so than not to be exercised at all. I like a little rebellion now and then. It is like a storm in the atmosphere.” 

I feel Jefferson would be proud of the people speaking out against our government today. I feel he would call us patriots. This, of course, just reinforces the saying that “One man’s patriot is another man’s terrorist.” 

In regards to what can practically be done to improve our current situation, my answer is this: nothing. The American political system has rotted to its core. The realities of fiat money have combined with powerful corporations to ensure that what is in the best interests of the people will be hardly given any consideration at all. If that we’re enough, mass media and polling have enabled politicians to shift the political dialogue away from anything meaningful and towards such chestnuts as abortion, gay marriage, and the “War on Terror.” I watch in abject horror as every year our politicians seem to get dumber and more empty. Just when I though George Bush was as low as we could go, McCain dug up Sarah Palin. 

That’s not to say that there weren’t meaningful candidates running this year. One person was running for President who say this crisis coming a long time ago, and he was running as a Republican. But the Republican establishment was not ready for someone like Ron Paul. They distanced themselves from him and even went so far as to form a collation to deny him the delegates from the State of Louisiana. 

Since you work in the corporate world, here’s a corporate analogy for you. Pretend you were brought in as a consultant to clean up a failing company. The problems with the company were obvious, but when you proposed the obvious solutions, you were told none of them could be undertaken because management wouldn’t allow it. Would you not then call for the ousting of management?

You are asking for new insight into this problem. It seems to me almost as if you were asking for a magic bullet. “Please don’t talk to me about the gold standard and the dangers of fiat money.” you seem to say, “I just want to know what policies we can adopt that will fix this situation (and allow us to go on just as we have been).” Were there is no magic bullet. Nothing will fix what is so clearly broken. You can add all the fertilizer you want. the tree of our nation’s governance died long ago. 

The solutions to this problem are as simply as they are unpalatable. Take all powers to control money away from the government entirely and outlaw fractional reserve banking. The resulting monetary system will be run by private institutions who are closely audited by their depositors, and precious metals (or whatever the free market decides) will be the unit of accounting of commerce. Suddenly the government will have to raise in tax revenue all that it spends. When such a day comes, you will notice a sudden and drastic curtailing of government spending, including entitlement programs. Meaningless wars will suddenly shift from convenient exercises to gain public support to the truly horrible actions that should only be taken as a dire last resort that they really are. 

None of these ideas are new. Jefferson wrote about them in the late 1700s, as did Murray Rothbard in Man, Economy, and State in the late 1900s. If you’re looking for a sample of Dr. Rothbard’s work, check out his essay on “Taking Money Back.” Times may change, but our situation is not new. But then again I think you knew this. I suspect you’re now saying to yourself how impractical all of these hard money ideas are in our current environment. “There must be some other way to fix the system,” you might ask. 

Let me assure you, there is not. Attempts at fixing our current system is as meaningless as rearranging deck chairs on the Titanic. The system is broken, but few seem to realize it. Until the system is allowed to collapse, we are powerless to improve the situation. You yourself once ridiculed me for being a Libertarian as “wasting my vote.” So you now claim to think that there is some meaningful action that I can take? 

The system must be shown to be what it is: a failure; a sham; a tragic disaster. It is only from its ashes that we can meaningfully move forward. Only once people clearly understand the folly of the life that they have been leading can we make the hard decisions to take back our liberties from the all powerful nanny state we have built to take care of us all. That is why I am contently and excitedly watching the decay and collapse of the system. I believe I am going to outlive our current system, and it is what lies on the other side of it that excites me.