THE GROWING POWER OF GOVERNMENT AND THE THREAT TO LIBERTY: ELECTION 2016

declaration of independence

OF A POST TO COME promised to compare the governing approaches of Donald Trump and Hillary Clinton with respect to two issues.

  • The growth of the power of government.
  • The protection of our rights.

The Growth Of The Power Of Government

Why is it a problem when government is powerful? Government exists to protect our rights. Yet the power we give our government makes government itself a threat to our rights. Therefore, we must choose between giving the government just enough power and giving it too much.

  • To give our government the resources it needs to defend our rights, we must give our leaders the authority to tax us and spend our money. Nevertheless, the more we allow our government to tax and spend, the more we work for government instead of ourselves. At some point, we risk slavery.
  • Some decisions which effect a people must be made jointly. Thus, government must sometimes make decisions we would otherwise make for ourselves. So it is that in a nation of free men and women, we have laws that restrict us from harming each other (traffic laws, for example). In a nation of slaves, however, the laws just list a few trivial decisions that the leaders permit the people to make for themselves.

Here is a table that summarizes where the candidates stand.  Not certain the information is correct? Then check their web sites. I have only provided links where their positions are not available on their own websites.

ISSUE Donald Trump Hillary Clinton
Taxing and Spending Favors tax simplification and reduction Favors increased taxation and spending (inferred from lengthy list of proposals)
Healthcare Private market solution Doubling down on Obamacare
School Choice For School Choice. Will end Common Core Against School Choice. Favors Common Core.
Immigration Favors extreme vetting Open borders/put new immigrants on the dole
Government Regulations Committed to reducing regulations Defends the current regulatory regime
Free Trade Opponent of the big trade bills Helped to craft TPP

To be continued: The Protection Of Our Rights

WHEN ECONOMISTS BECOME THE COURT MAGICIANS — PART 1

The Pharaoh watches as the rods of Aaron and his magicians become snakes. (from here)
The Pharaoh watches as the rods of Aaron and his magicians become snakes. (from here)

Long ago Moses visited Pharaoh and told him God’s command: Let my people go! The Pharaoh disobeyed. So through Moses God brought ten plagues upon Egypt. Even though Pharaoh’s magicians, Jannes and Jambres, could not undo what God had done, they “duplicated” the first plagues God brought upon Egypt, and for some strange reason, Pharaoh took comfort in that.

What is magic, that thing magicians do? More often than not “magic” is just sleight of hand. The magician just fools us into believing he is doing something he is not actually doing. Sometimes, however, even the magician does not know what he doing.

That thing we call the economy is one of the most mysterious things in the world. That is, even though we depend upon it for our food, clothing, and shelter, none of us know exactly how it works. Therefore, when what is going on in the economy concerns us, we consult “experts,” economic magicians, to find out what we should do.

Economic magicians? Does that seem excessively derisive? Then consider these two stories.

Will negative interest rates come to the United States? Probably. Sadly, what economists recommend these days often does not make much sense. Our economy is becoming too contrived, like a house of cards. The problem? Well, let’s begin that discussion by considering a magic trick we call fiat money.

What is ‘Fiat Money’
Fiat money is currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. Fiat is the Latin word for “it shall be”. (from here (www.investopedia.com))

Because it is not backed by anything, fiat money has no intrinsic or innate value. That is not to say financial analysts do not have formulas to calculate the intrinsic value of fiat money. Nevertheless, fiat money has no utility of its own.

The value that we get from goods and services is innately apparent from the simple, most basic acts of living. We need food to survive, so food has value. The value for tradeable goods and services is predicated on utility and relative scarcity.

For financial assets, and money is the world’s first financial derivative, there is no direct utility. It does not satisfy any basic demand of survival or continued existence. Therefore, any value attached to financial products does not come from utility. It comes from faith. (from here)

What does Jeffrey Snider, the author of the above, mean by “faith.”

Value itself is nothing more than the outward expression of individual faith. The traditional value of money is really just an outgrowth of its historical reputation, earned through so many actions and consequences. Money may seem to add a level of objectivity into the discussion of value, but that is only because of a more universal “faith” in the transactional price discovery process it allows. (from here)

So why do we believe our money has value? There is actually a little more to it than merely believing fiat money is “real” money. Remember that our government uses its power to define fiat money as legal tender, that is, the government says we can legally use fiat money to pay off our creditors.  That includes the government itself. Don’t we pay our biggest bill, our taxes, with fiat money?

Thus, using its power, the government prints money and creates a demand for it. So it is that even though fiat money has no actual value of its own, the value of fiat money still follows the law of supply and demand.

  • Supply equates to scarcity. How much labor or how many goods and services are required to obtain a certain amount of money?
  • The demand for fiat money depends upon the bills we must pay. What is the amount of money we need to pay off our creditors?

Therefore, to make its fiat money serve as an appropriate means of exchange, our government must regulate both the supply of and the demand for its fiat money. That’s what we will talk about in the next post.

Note: that I don’t claim to have a huge amount of economic expertise.  I am sharing my observations in the hope of promoting a discussion. Hence corrections and comments are welcome. If you want your comments to include what you think of the economic proposals of the presidential candidates, that is okay with me.

COULD YOU RUN A LAP FOR ME? — PART 2

Ægir and his daughters brew ale in a large pot. (from here)
Ægir and his daughters brew ale in a large pot. (from here)

Here we continue the telling of the story of Petrus and Rona.  For Part 1, see COULD YOU RUN A LAP FOR ME? — PART 1

AS TOLD BY THE KING’S CHIEF GUARD TO HIS GRANDSON

When Adolf the goði arrived with his complaint, King Adalbert sat in his throne room with two ne’er-do-wells much like himself. Even though it was still early in the day, these gentlemen were assisting the king by helping him to sample ale. Adolf the goði stepped into this small party, and he asked permission to speak. 

“My king, may I speak.”

“Yes, Adolf. What is it?”

Adolf then leveled his charge. “I have learned that Petrus worships some other god than your own, Ægir. Not only that, he calls this god the Creator God, the One God above all. If you wish to retain Ægir‘s favor, Petrus must be punished.”

The king took another drink. Then he asked, “How do you know this?”

Adolf replied. “Petrus runs up the crag every morning. At the top he stops to pray. This morning, from behind a bush, I listened to his prayer. He thanked his God for allowing him to give some of his strength to his woman.”

The king rocked back on his heels. Then he gave me my orders. “Aage, bring Petrus to me.”

So I sought five of my men, and I went for Petrus.

Petrus was a widely respected man. Not only had he achieved renown as an athlete, he was honorable and dependable. Yet here I was, ordered to take him to the king for punishment. Unlike his father, King Adalbert had no honor, and he had no respect for those who are honorable. Unfortunately, the old king was dead, and that made Adalbert the king. Spoiled, this lazy good-for-nothing  had never grown up. Even though he was in his 50’s, the king and old enough to know better, he still just took what he wanted, ate like a pig, and drank toasts to his favorite god, Ægir. With his foolish greed and gluttony, he was destroying his own kingdom. Not even Ægir would approve of such an undisciplined beast.

We arrived at the shipyard, where Petrus worked shortly after the noonday sun had reached its zenith. We found Petrus, and I told him that the king wanted to speak to him. He asked why, I said the king would explain. When the shipyard boss asked how long Petrus would be gone, I said I did not know. I was just sent to fetch him. Thereupon, I ordered Petrus and my men to get moving. Petrus’ fellow workers grumbled, but none dared to stop us.

After the sun had marched half-way down from its zenith, we arrived back at the throne room. When Petrus and I walked in, we found the king and his ne’er-do-well friends still nursing flagons of ale.

As Petrus walked in, the king turned to him. “Petrus, what is this I hear about you worshiping another god besides Ægir?”

Surprised, Petrus said nothing. Then the king asked. I understand you gave some of you strength to your lady. Can you do that for me?”

Again, Petrus stood silent. The king waited a moment. Then he howled. “Answer me!”

Finally, Petrus answered. “I don’t know. My God made it possible.”

Then the king spoke in an angry whisper. “You will share your strength with me. Tomorrow you will strengthen me, or I will have your head and your woman’s head sitting up on poles. Now begone!”

I escorted Petrus to the entrance of the castle, and I walked with him across the drawbridge. Then I said: “I am sorry. The king has no right to do this.”

Petrus calmly looked at me. Then he thanked me.

Then I asked. “Petrus, who is this god of yours?”

Petrus said. “He is the Creator, Guard Captain. All that we see He made. He is our Father.”

“How do you know of Him?” I asked.

Petrus paused for moment. Then he said, “I prayed.” After another moment, he added this. “You already know the Creator exists. We have the majesty of the night skies, the glory of a sunrise, the mystery of a child’s birth…. Our legends — even legends of so-called gods — are not enough to explain such things.”

Then I asked him, “what will you do?”

“I will pray,” he said.

To Be Continued

COULD YOU RUN A LAP FOR ME? — PART 1

The Arcadian or Pastoral State. Oil on canvas, 1834, by Thomas Cole
The Arcadian or Pastoral State. Oil on canvas, 1834, by Thomas Cole (from here)

“Grandpa, would you tell me the story about Petrus and Rona?

“It is late Tim. It is time for you to go to bed.”

“Could you tell it to me as a bedtime story, Grandpa? Please!”

AS TOLD BY THE KING’S CHIEF GUARD TO HIS GRANDSON

When I first heard the story Adolf had told, I could not believe it. What possessed my lord to believe such a thing? Yet he was the king. So when he told me to fetch Petrus, I had to obey.

Petrus lived in the town with his lady.  Her name was Rona. Petrus and Rona treasured each other. They had grown in the little town of Teetering Rock playing together, and they married each other.

Petrus was skilled in the construction of longboats, but he was better known for something else.  He was a powerful athlete, a superb runner. From time he was sixteen his fellow villagers counted upon him to represent them at the games, and he always returned victorious.

Petrus had a habit that one of the goðar (that was Adolf), a careful observer, noted with interest. Every morning, he went for a run.  He jogged up to that large boulder that teeters atop the crag overlooking the valley. Once there, he stopped to pray. To what god he would not say, but after awhile, he ran back down to the village.

Over time, Petrus’ habit became well known, and even in the countryside where all the men labor, they admired his stamina and speed. Thus, his fellows would jokingly ask: Could you run a lap for me?”

Like her mother, Rona was a fine weaver. She would patiently weave the most beautiful designs into woolen tapestries. She would spin and carefully dye the wool. Then she would carefully craft her designs. Her most noted creation the king had purchased and hung in his castle, somehow thinking she had created it for him. She had, however, thinking of Petrus, woven a picture of the great rock teetering on that massive crag because he ran there each day. She used her profits as her dowry.

A few years after their marriage, Rona began to slowly waste away. She had never been strong. Quiet and graceful, but never strong. Yet now it seemed she would fade away. She did not complain, and she still tried to work, but Petrus saw she was dying.

Petrus took Rona to the goðar, but her illness left the goðar puzzled. The goðar‘s puzzlement only increased when something suddenly arrested and even partially reversed Rona’s decline. Yet none could help but notice how Petrus and Rona reacted to each other. The hard, toughen competitor thought only of his lady’s desires and comfort. The lady forgot her weakness and gave all her attention to Petrus.

Adolf decided to investigate. To him, Rona’s cure smacked of sorcery, not that Adolf objected to sorcery. His concern was which god was involved.

Several days after Rona’s recovery had become obvious, when Petrus arrived a the top of the crag and stopped to pray, Adolf was hiding behind a bush. Adolf heard Petrus softly speak these words.

Creator God, One God above all, thank you for giving me Rona’s life. Thank you for allowing me to give her some of my strength.

She my soulmate. Just as you intended, she complements me. When I am too hard, she softens my heart. When I am too practical, she holds me back to watch the sun rise. She fill my eyes with the beauty of a new day.

When I hold her, I am filled with peace. When smiles, her joy becomes mine. Thank you, my God, for making her mine to love and protect.

Slowly, Petrus got up, stretched, and then he started his run back down the crag. Adolf watched Petrus head down the hill, now understanding Petrus’ diminished strength. He quietly raged. Creator God! One God above all! This people worships Ægir! How dare he?!!!!!!

Then Adolf took his story to the king, and he demanded the king do something, that he punish Petrus by having him flogged and publicly humiliated.

That’s when I was sent to fetch Petrus.

To Be Continued