Red Tape Cutting

There are many things wrong with regulations—almost as an entire category:

·         The definition.

·         The negative economic effects.

·         The beyond the Constitution regulatory tyranny.

As I’ve mentioned before, our founders, when they used the word in the Constitution—i.e., “regulate Commerce,” and “well-regulated Militia”—they meant

to make regular—to make sure something can happen regularly, without blocks or interference. That’s what the founders meant by regulation interstate commerce.

But in today’s government, regulation means something else: governmental power to decide when, how, and whether something can happen. It’s arguable that all government regulation prevents, rather than provides, regularity of something happening.

What we need is for government—especially government regulations—to get out of the way, so that what we want to happen regularly, like commerce, can happen freely.

President Trump cuts red tape
in ceremony in December 2014

A Just the Facts article, “The Effects of Regulations on the Economy,” by James D. Agresti, shows how regulation has actually prevented what it claims to be trying to do:

For example, a 2015 working paper from the Harvard-Kennedy School of Government found that regulations are likely the main reason why community banks’ share of the U.S. banking market fell from more than 40% in 1994 to around 20% in 2015. This is because “larger banks are better suited to handle heightened regulatory burdens than are smaller banks, causing the average costs of community banks to be higher.” Likewise, a 2016 paper in the DePaul Business and Commercial Law Journal found that the 2010 Dodd-Frank “Wall Street Reform and Consumer Protection Act”:

could actually be enhancing the consolidation of the banking industry, in direct opposition to its principal purpose—eliminating “too big to fail” banks. While the industry has intentionally trended towards consolidation in the past, the current dramatic increase of consolidation of banking assets is likely an unintended consequence of increased regulation. This consequence comes from astronomical regulatory costs passed on to community banks, as well as increased capital requirements that diminish these banks’ competitiveness. Dodd-Frank has exacerbated this problem, and it will likely result in further increased consolidation of the banking industry.

What do we keep saying about the unintended consequences of government interference?

If the government wants to implement something beyond the proper role of government, not only will government fail to achieve the stated goals; it will likely do exactly opposite of the stated goal.

Why isn’t that obvious enough that people would stop wanting government to interfere?

It’s hard to get data on the negative effects of regulation on the economy. As Anne C. Steinemann, author of the textbook Microeconomics for Public Decisions, says, it’s pretty easy to create a cost-benefit analysis that will “produce a desired outcome,” and “it is practically impossible to predict all the future impacts” of a government program, “let alone their magnitudes and their probabilities of occurrence.”

An example provided by Agresti compares pro and con arguments. On the pro side, the Obama administration drafted a report in 2014: 

Estimating the costs and benefits of major federal regulations from 2003 to 2013. It concluded that the costs were somewhere between $57 billion and $84 billion, while the benefits were much greater at $217 billion to $863 billion.

Since we were in an elongated recession without the expected recovery through most of those years, that seems like it could be just a wild invention to say, “You think this is bad? Imagine how bad it would be if we hadn’t stepped in.” You can’t exactly “prove” an imaginary alternate universe.

Meanwhile, a 2013 paper in the Journal of Economic Growth found: 

The effects of federal regulations on the U.S. economy have been “negative and substantial.” They estimate that GDP would now be more than three times larger if federal “regulation had remained at its 1949 level.”

Which is right? Probably the one that coincides with the principles that lead to freedom, prosperity, and civilization. In other words, government regulation, which is rule by unelected bureaucratic fiat—or tyranny—is unable to lift an economy out of poverty and into prosperity. So if the pro-tyranny side is claiming their interference is creating all kinds of magical benefits, chances are they’re skewing the data for their purposes or simply outright lying.

Agresti suggests there are plenty of other indicators to lead to the conclusion that regulation is a negative on the economy:

A key driver of economic growth plummeted in the wake of two major regulatory expansions in modern U.S. history. This element is productivity, and as explained by former Federal Reserve Chair Janet Yellen (and various other economists with wide-ranging political views): “The most important factor determining living standards is productivity growth, defined as increases in how much can be produced in an hour of work.”

The Journal of Economic Growth study, mentioned above, uses historical data, of which there is an abundance, and finds

that regulations have “strong and robust negative effects” on economic growth, and these “results are qualitatively consistent with those obtained from studies using the various cross-country and panel data sets on regulation.”

Notably, regulations harm the economy by harming productivity. What we can see is that federal regulations spiked under President Carter (1977-1981) and Obama (2009-2017). “In the wake of both of these regulatory expansions, productivity growth crashed,” as you can see in the chart:

Chart from Just the Facts

So, while we don’t have absolute cause-effect proof, there is plenty of evidence for reasonable people to see the harm government regulation (which is, almost by definition, over-regulation) does to the economy.

What we ought to insist on is adherence to the Constitution; that would give us plenty of evidence that freedom from regulation is good for the economy. But we haven’t tried that experiment in a very long time. The Congress has mostly abdicated its legislative authority to the regulatory arms of the executive branch. And the courts have mostly bowed to the “experts” of those regulatory commissions.

However, there has been some recent progress from this administration: the FCC’s net-neutrality repeal, HHS healthcare reforms, EPA details, some Education Department deregulation. These are actual campaign promises President Trump made that he is keeping.

There are three ways to accomplish regulatory reforms:

·         Executive orders ending the executive orders of the previous administration (easiest to do, but also easiest to reverse by a future administration).

·         Legislation requiring change, and returning responsibility for lawmaking to Congress, and, in many cases, returning the judicial functions to the judiciary, instead of leaving all powers in the hands of regulators to determine law, prosecute, and punish.

·         Reform from within regulatory agencies, which depends on appointees to champion the goal of deregulation.

·

Adam J. White, writing for the Hoover Institution (in “Trumping the Administrative State”), says, ”2018 will mark the beginning of a steady wave of agency decisions that will immediately be appealed to federal courts.” The most high-profile of these

will be filed strategically before courts staffed disproportionately by sympathetic judges in Washington, D.C., or on the West Coast. This litigation may come to resemble the lawsuits challenging President Trump’s immigration and refugee orders: Judges will scrutinize agency actions much more aggressively than before. The traditional deference by judges to regulatory agencies’ decisions is unlikely to prevail, and courts will undoubtedly invoke statements by the president or by his appointees that they see as undermining the credibility that agencies usually are afforded. (This will be quite a turnabout after Democrats less than a year ago criticized President Trump’s appointee to the Supreme Court, Neil Gorsuch, for having questioned the amount of deference” that courts give agencies.)

Of the legislative option, he says this is “an opportunity Republicans may not enjoy again for a long time.” And he adds, if they fail to use it,

It would be disappointing and ironic: Congress’s inaction is itself one of the main causes of our modern administrative state. By failing to legislate on the issues of greatest national interest, Congress creates a policy vacuum that agencies fill unilaterally with regulations. Lawmakers further compound this problem by failing to reform the antiquated appropriations process that no longer ties Congress’s oversight of agencies to its constitutional “power of the purse.”

As for the third option, he makes these suggestions for the regulatory agencies:

They can unilaterally adopt reforms to promote transparency and accountability within their own houses. Perhaps the best example of this so far are the efforts at the Justice Department and Education Department to scale back their reliance on “guidance” documents, a broad category of agency pronouncements that regulate the public but that do not undergo even the minimal procedures for public accountability otherwise required of new regulations. If these two departments succeed in reforming their own practices, they could come to be seen by the public (and by judges and legislators) as the regulatory equivalent of “best practices,” raising the bar for what we expect of other agencies.

So, we’re at a time when we have at least some reason to be hopeful.

In his conclusion, White talks about the most lasting reforms of the Reagan era; they lasted because they became systemic. They became the expected practices over several administrations. Based on that, he says,

Years from now, we may find that some of the Trump administration’s most important regulatory reforms in 2018 were the ones that attracted the least attention. Executive orders and regulatory repeals announced to great fanfare are very important; even more important are reforms changing the culture of modern regulatory agencies, achieved through sustained effort within those agencies, to little fanfare and no ribbon-cutting.

In one of the announcements, President Trump cut a big red ribbon, to mean cutting the “red tape.” I hope his commitment to that is real. And I hope the results will become sustained changes that return us to the freedom that helps us thrive and prosper.

Rage Against the (Washing) Machine

The subject matter today is trivial: my washing machine. But the underlying principles are probably worth considering.

We got our first washing machine a few weeks after our middle son, Economic Sphere, was born, when we moved into our first home, which we rented (for considerably more than we pay for our house payment now, since this was in California). We bought the washing machine and the dryer as a set. Somewhere along the way, maybe after 16 years or so, we needed to replace the dryer, because the heating element gave out. But the washer kept going.

It did a good job. For both boys I did cloth diapers, and all the other grime that goes with growing boys. I don’t mean to minimize the work, but it was doable to put dirty diapers in a pail of water with bleach, and then do wash two days a week. I used a pre-treater, and a detergent with a low amount of allergens. When we didn’t have a water conditioner, I added that, plus a fabric softener.

I had good luck with stains coming out, especially if I caught them before they went through a dryer. Really, I thought I had the laundry task relatively well in hand, all things considered.

Then, a few years ago, the machine gave out. Wouldn’t drain anymore. Wouldn’t agitate. It was pretty much dead. And, after 23 years of service it seemed like time to say farewell.

By this time, the machines on the market were all “high-efficiency.” This word does not mean what you think it means—it does not make doing laundry more efficient for the homemaker. It is supposedly more efficient in use of electricity per load and water per load.

Many of these new washers are front load, but when I listed my essentials for a new machine, I didn’t want a front load. The thing is, almost every week I start a load, turn around and find a sock on the floor or remember a towel or something that needs to get added. If I don’t get it in that load, that item has to sit in the hamper for another week until I get to the next load of that type (whites, light colors, dark colors, reds, and maybe some special load for sheets, blankets, etc.) So I wanted to be able to turn around and add an item in those first few minutes of the cycle—therefore, top load.

We got one. It’s high efficiency, a reliable brand, good ratings in the studies, etc. But while it’s a top load, it still thwarts me. The lid locks. If I find that late sock, I have to press an escape button, hard, hold for several seconds—and hope the machine gets my message. If I’m lucky, it will stop the cycle and unlock. This ends the cycle. I have to start the load over; it doesn’t pick up from where it was.

This is not an improvement.

I used to be able to do a load in the washer in about 40-45 minutes, ahead of the dryer batch, which takes about an hour, maybe 70 minutes for heavy loads. I used to be able to listen for the dryer to end; it signals. Then I would haul the next load upstairs to the laundry. But this new “high-efficiency” machine takes on average 90 minutes for a wash load. So I have to wait, and hope I remember to get upstairs when it’s done. Sometimes I’m still too early, and I’ve made a trip upstairs for nothing.

I don’t know how a machine can function for 90 minutes and use less electricity than the old one did for 45 minutes. I am doubtful that it does. But if there is an electricity savings, I doubt that it’s sufficient to cost me double the time to do laundry for every load the rest of my life. Is my time not worth a few watts of electricity which we pay for?

Then there’s the water problem. Until recently we have been going through what is considered a drought here in Houston—in the range of 42 annual inches of rainfall, rather than 52. We used to live where there was a mere 6 inches of annual precipitation. Under Houston conditions, it’s hard to be overly concerned about using enough water to rinse my clothes. Here’s the thing: the new washer doesn’t believe in using enough water to wash out the detergent.

That white stuff is detergent left after double rinse.

I kid you not, the operation manual says not to be concerned about parts of clothing that seem dry coming out of the machine; they’re still getting clean, it says. Um, no. If no water has soaked into an item of clothing, it is not being “cleaned” just by virtue of being near fabric parts that are getting wet. Not only that, fabric that comes in contact with detergent, conditioner, or fabric softener, but doesn’t get rinsed thoroughly comes out with chemicals on it. See the photo proof.

These particular jeans are a detergent magnet. Maybe because denim is a heavier fabric, I don’t know, but practically every time I wash these pants, they come out with detergent smeared all over, rather than rinsed out. I then have to put them in for another cycle—without adding more detergent. A full cycle, all by themselves, or with a couple of other affected items of similar color.

The machine offers options for smaller size loads. And I can optimize the “high-efficiency” by using less water. But I’ve found that every load must be given the full load treatment, or there is no chance it will get fully wet. Also, there are options for “heavy” load and “extra rinse,” which are essential—every time, without exception. The result on these pants in the photo, smeared with detergent, is after the heavy load, extra rinse option. True also when I find parts of shirts that are still completely dry.

So, not only do I have every load take twice as long as with my old reliable machine, I always use the maximum allowed amount of water. And then I frequently have to double electricity and water yet again by having to re-wash items that didn’t get cleaned. My guess is that, whoever decided I had to buy this kind of machine for the sake of the environment is wrong about both the energy and water usage. My old machine was more efficient. And it was a lot more efficient for me personally.

I complained about this the other night while folding laundry. Mr. Spherical Model kind of rolled his eyes and said I should just always plan on doing a second wash on those pants. Ignore any efforts for efficiency, and just adjust to what is.

That is the practical way. The less practical and more quixotic way, which I am prone to, is to work toward less government interference. Get rid of the regulators. Organize for laundry freedom. And toilet size freedom. And lightbulb freedom. Get government out of my house!

Mr. Spherical Model is sensible in that, if a person is going to make a living, serve in the community, and spend time with family, there’s not a lot of energy left over for raging against the manifold outrages of an overreaching government. Still, to say nothing seems like consent.

I don’t know what the right balance is. For today, I’m giving evidence here, in writing, that government regulators simply do not know as much about the most efficient way for me to do laundry as a woman who has been involved in the ongoing process for several decades. And the Constitution should not be construed to assume I have given my consent.

Let There Be Light Freedom

Regulation is one of those words that have changed through misuse. At the time of the writing of the Constitution, it meant “to allow to be regular, to be expected.” That was what it meant in reference to a well-regulated militia and regulating commerce between the states.

Now it means something more like “rules imposed through government coercion.” I’m against that. I grow more against it with further examination. Even well-meaning regulations (and aren’t they all?) that do not cross my personal choice tend to decay overall freedom (for example, because I don’t smoke, I am not much affected by regulations against smoking).

Here are the facts about today’s regulations:

·         They exceed the proper role of government.

·         Everything that exceeds the proper role of government causes negative, unforeseen consequences.

·         The negative consequences of government regulation almost always result in the exact opposite of the stated purposes of the regulation.

So, whatever your opinion about the utility and value of certain types of light bulbs, government coercion is wrong.

I’m mentioning this now, because January 1, 2014, marked the latest (final?) phase in the imposition of the light bulb control regulation that was signed into law in 2007. You may or may not have already realized you can no longer buy incandescent bulbs 75 watts or larger. The 1-1-2014 phase now includes 60-watt and 40-watt bulbs, the ones you’re most likely to be using around your home.

Soon to be anachronistic incandescent bulb
photo by James Bowe

Technically, you as a consumer are not breaking any laws by buying or using the banned bulbs. So if you Google one of those “myths about light bulbs” articles, you will be told that’s just overreaction by ranting bloggers such as myself. However, they are stopping the manufacture and importation of the banned bulbs. So, you can buy still buy them—as long as the supply lasts, or for about six more months, according to Home Depot, which stockpiled supply more than most. But once the supply runs out, the de facto result is that you as a consumer no longer have the option to buy the cheap, incandescent bulbs you’ve been using all your life.

There are alternatives—expensive ones, but possibly cost-effective, if the bulbs last longer and use less energy. That’s the stated purpose. (To those who accuse me of being a ranting blogger, I would like to calmly point out that the government’s stated purpose includes the insistence that my personal use of incandescent bulbs has a direct effect on the temperature of the planet and the viability of various faraway species like polar bears, whose numbers are climbing. Just saying.)

It doesn’t matter whether alternatives are superior. What matters is—it is not the government’s prerogative to make my consumer choices for me. The light bulb legislation is a classic case study.

Incandescent bulbs are cheap, reliable, and useful. They create a warm glow, and pleasant color. But they are not particularly efficient. The frequently stated percentage is that 90% of the energy is wasted while the useful 10% creates light. Wasted is a relative term, however. The other 90% creates mostly heat. If you had an Easy-Bake Oven as a kid (I did), you can see that was a good thing. Light bulb heat is also useful in incubators for hatching chicks and for some indoor gardening. It’s not a terrible thing in a home otherwise requiring energy for heat.

Are those uses significant enough to override the government mandate? Yes, actually.

Ask the question another way: Is the government’s purpose for controlling purchasing decisions important enough to override valid consumer needs/demands? There shouldn’t have to be a weighing on a scale. As soon as something is placed on the consumer demand side, it outweighs the invalid government purpose—unless the government purpose is rationally recognized as assuring protection of our rights to life, liberty, and property.

I’m trying to connect the dots for government’s role in deciding which current science to honor as sacrosanct enough to require sacrifices from the citizenry. I can’t do it. (Maybe especially when it’s been 23 degrees this week—in subtropical Houston! I know that doesn’t qualify for sympathy from the rest of you suffering from what’s being called the “polar vortex.”)

What I see is that, compared to me, government is really bad at making decisions about what I should purchase. I’m all for innovations, some of which we’re seeing with LED and halogen bulbs. (Here is a good comparison article.) Some of these are still very expensive, but the market, not government coercion, is the best path to innovation and affordability. And way too much of the government coercion has steered us toward compact fluorescent bulbs.

Here’s what I have against fluorescent light bulbs:

·        They’re ugly. The twisty, neon-looking knot is not esthetically pleasing. The light emitted is unpleasant—that’s one of the reasons I hate shopping, because everything looks ugly when the lighting makes your skin look a harsh greenish-purple. I can avoid shopping in fluorescent-lit department stores most of the time, but I can’t avoid my home. I don’t want that unpleasantness surrounding me in my nesting place.

·        They hum. The hum isn’t noticeable to everyone, but it’s enough to be distracting—especially when constant—with some highly sensitive individuals. It’s enough to cause distraction for young kids in schools, interfering with their learning. (Sometimes they get misdiagnosed as ADD and get medicated, when all they really needed was separation from the ugly humming lights.) In adults the hum leads to migraines. The humming is worse if you try to use a dimmer switch. With improved technology, you can now mitigate the dimmer switch hum—if you replace your switch and pay a lot more for the bulbs.

·        They’re expensive. Supposedly they last longer. Unless they’re not upright. Hmm. I have a couple of lamps that use upright bulbs; all the rest of the bulbs in my house are horizontal or slanted downward from ceiling fixtures. Even the porch light, which conceivably could tolerate a squiggly fluorescent bulb, is upside down. So, for me, the costs would not be mitigated by longer lasting bulbs.

But here is the big, main problem: they are dangerous hazardous waste when broken. Sometimes the argument is about how small the effect of mercury would be in the environment in total, compared to the current mercury production from coal-based electricity use. But my concern is about the inevitable breakage in my home. I couldn’t count the number of incandescent bulbs we’ve broken over the years. There was a time, when the boys used to play full-court basketball in our 8-foot-high family room, and the light fixtures were a constant casualty. Cleaning up an incandescent bulb is a relatively small thing: pick up the large glass pieces, vacuum and/or wipe up the rest. Done.

Broken CFL
photo from epa.gov

Compare the clean-up instructions for fluorescents (you can read the actual government instructions here; my abbreviated and only slightly embellished version is below):

1.      Evacuate all living beings, except yourself, whom you have self-appointed as expendable.

2.      Open windows and doors, and then evacuate yourself for 5-10 minutes.

3.      On your way out, shut off central air system. Leave it off for several hours.

4.      While you’re out of the contaminated area, collect the following supplies (which hopefully are not located in the contaminated area):

a.       Cardstock, duck tape, wet wipes, jar with lid or Ziploc bag in which to seal hazardous waste.

b.      Hazmat suit including disposable gloves.

5.      Remove all traces of debris, using your listed supplies, and seal debris and clean-up supplies in container that you will transport to containment facility, so it doesn’t continue to contaminate your home with mercury vapor.

6.      If area is carpeted, follow the clean-up procedure by vacuuming, carefully, with windows still open, and immediately dispose of vacuum cleaner bag as hazardous waste. Follow this procedure (including turning off air system, opening windows, and disposing of hazardous waste vacuum cleaner bag) when vacuuming this area over the next several months.

So, let me explain about Houston. No sane person opens the windows and turns off the air between April and November (pretty much never during the other months either). The humidity is overpowering; a typical day is over 90% humidity. It’s much cheaper to maintain indoor temperature and humidity than to spend hours overtaxing the system to recover non-liquid air. So a single broken bulb is going to wipe out the annual energy savings of the stupid bulbs. (Not to mention that a single presidential vacation easily wipes out the savings of the bulb switchover for a typical small city.)

And apparently the government, so concerned about my safety that it can’t allow me to use incandescent bulbs that might contribute in some incalculable way to the fragility of the planet, is perfectly fine with my being forced to use mercury vapor in my home that I must clean up myself following inevitable breakage—just follow the easy clean-up steps and then simply plan to die early.

We can count on government to make personal consumer choices badly. So, while this law is headache-inducing on that level, what is more difficult to understand is how we—the American people, with liberties guaranteed in our Constitution—have elected officials who pushed this through in the first place and then failed to repeal it before it took effect.

Failing a full repeal, I request (demand) a personal exemption.

Regulatory Tyranny

There’s a book on my to-read list called Individual Rights and Government Wrongs that puts forth the idea that all government regulation should be done away. I’m not new to this concept; son Political Sphere has been honing this argument on me for a while, so I don’t have the automatic response that the very idea is crazy. I’m willing to hear this debate.

The book’s author, Brian Phillips, is local and spoke at our last Tea Party meeting. He points out that, regardless of regulations, it is never in the interest of businesses to sell inferior or dangerous products. And there are plenty of private information sources where we can learn about the safety and quality of products. Think about it; when we want to buy a major appliance, we probably look at Consumer Reports. When we want to buy a used car, we might also use Kelly Blue Book. When we want to hire a contractor, we’ll probably consult the Better Business Bureau or Angie’s List. If reliable information is the commodity consumers demand, private enterprise can provide that commodity. Government simply is not the most reliable source of consumer information.

 Phillips said that most people bring up the Food and Drug Administration and say surely we need that. Again, if we used information sources and made informed decisions, we might be better off than waiting for government imprimatur. The FDA, as a regulatory agency, produces no food, develops no new medicines; it only prevents or allows actions of free citizens.

Phillips included a real example about the FDA, the Abigail Burroughs story. Abigail had a rare form of cancer as a young woman. Her doctor knew of a drug that could help, but it was not yet approved by the FDA. She sought permission from the FDA to use experimentally. They refused. She died eight months later, at the age of 21, in 2001. In 2004 the FDA approved the drug that might have saved her life, too late for her. If Abigail had been allowed to depend on her own doctor that she trusted, and the research she had done before making an informed decision to risk using the experimental drug, she might not have lost her life in her youth. The FDA was not protecting her; it was preventing her from acting on her own behalf.

Phillips said, “According to the FDA, Abigail did not have the right to act, except by permission. That’s the principle underlying all government regulation.”  I think that is the key point. When government acts as the decision maker and permission giver, government has usurped our freedom to act according to our own minds.

He says some people argue that government can regulate, because the majority has voted them that power, so it’s the will of the people. But the US is not a democracy. In a democracy, the majority can do anything it pleases. He gives the example of democratic Athens, where the majority voted to put Socrates to death for his ideas. The US is a representative republic; the Constitution spells out safeguards of our rights, purposely limiting government. It protects us from the tyranny of the majority.

Another way our current regulatory bureaucracy is anti-Constitutional is that, as I mentioned in my last post, law must be knowable by those who are subject to it. Ignorance of the law is not an excuse, so if an entrepreneur/business owner is required to hire someone (or possibly an entire department) whose entire job is to study compliance to bureaucratic regulation, because knowing the law without the intense study (and possibly even with it) is impossible, then do we actually have free enterprise? We have business by permission—and are always at risk of missing a detail for which we can be fined or prosecuted. “Whatever the ruler says” is tyranny.

So, if we agree we’re in a bad place in this regulatory nightmare, what do we do? I don’t know the eventual answer. I am at the information sharing point. Phillips said something I found hopeful: “The real revolution occurred in the fifteen years before a shot was fired—in the hearts and minds of the people.” And I remember my US history enough to know that’s true. People like Samuel Adams were speaking out, loudly, the decade before the Revolutionary War, spreading the message of freedom, helping people understand the principles at stake. I remember one amusing story about Samuel Adams’s very large dog, a Newfoundland I think; the dog had a thing against the bright red coats worn by the British military being quartered in the city to rule over the people. The dog and was known to take the occasional piece off a red tailcoat to carry in his teeth. Samuel Adams was the kind to give the dog a congratulatory pat on the head while insincerely apologizing or apparently failing to notice. Adams was a bit ahead of his time, outspoken—and right. We need some Sam Adamses in our time. Phillips said, “Those of us who want to return America to its purpose need to be sure of the value of our cause.”

Phillips rightly pointed out, “Our founding fathers also lived in gloomy times.” They went from a ragtag army to take on the world’s greatest military power—and they won.” They had to, because they were fighting for our God-given rights. He reminded us that they lost lives, and fortunes, but never lost their sacred honor.

It might seem easier to just give in and try to get along, but we may have already done that too long. We may need to stand up and speak up, more and more. We already have a brilliant Constitution; we just need to abide by it. Changing minds and hearts could be the most peaceful path to return to freedom.

Doing Business

I’m back. Thanks to my son Political Sphere for contributing with a three-part discussion (Part I, Part II, Part III) on the connection between the law and morality, proving you can’t have one without the other.

During our recent travel, when Mr. Spherical Model and I arrived at our destination, a close relative picked us up at the airport to drive us to Mr. Spherical Model’s mother’s home. We had an interesting conversation in the car (that, in hindsight, I wish I’d recorded so I’d have better details for you). Our driver—I’ll call him Bill—is an entrepreneur, working these past several years on a product related to banking and bank cards.  He started this conversation with, “I’ll never do business in America again.” He’s pursuing alternatives: India, France, Great Britain, Japan, Korea….

He started in America. But this administration’s roadblocks are daunting. They just spent two years working with various US banks, with the banks going through the process of figuring out how to use this product while complying with myriad, endless regulations. Some of these come from the Dodd-Frank legislation, which has expanded in size day-by-day with additional rules—about 15 million words worth. (I found an interesting infographic here.) So, it took banks and their legal and compliance staffs two years to study the product. And as they were nearing a positive decision, suddenly the rules changed yet again. And rather than just trust that all would be well, the banks said they’d have to start the process over based on the new rules. In the meantime, overseas banks are very interested and a lot less limited by spools and spools of government red tape.

This reminds me of something I learned in a college government class concerning the rule of law. One of the basic requirements of law is that it is knowable to those who are subject to it. What we have now is tyranny by bureaucracy, with almost no way to comply completely to arbitrary, everchanging hidden details.

Bill had another example of government interference doing the opposite of helping. Someone he knows in the finance world has a business in which he provides an alternative to high-interest payday loans, using reloadable no-carried-balance credit-type cards. He screens those who use it and makes a specific contract with them. The customers temporarily draw a certain amount of unsecured credit on the card, with the promise to pay back that amount by a set short-term date. If the amount is paid according to the contract, there is no interest charge. If the amount hits the deadline, there is a prompt reminder sent to the customer, who is given till the end of the next business day to get the money paid without any penalty or interest charged. If the payment isn’t made, the relatively high interest rate of 18% kicks in, which is not higher than many payday loans, and only applies if the debt isn’t paid as contracted. And unlike payday loans, there’s no 20% (or whatever) transaction fee. So, for someone who needs short-term credit until known income arrives, this is a much better deal. If the customer defaults, he can no longer reload the card, and the business could write off the loss, so it was minimal risk and a much appreciated service that brought return business and connections for other services the business offered.

But the government didn’t like the idea that a “credit card” could charge 18% interest. So they made a rule that shut down the product altogether. So now, if someone has need of short-term credit, they are subject to the high transaction fee as well as the just-as-high-or-higher interest rate of a payday loan (with the risk of doubling the interest rate if you’re late). So, thanks again for government interference that does exactly the opposite of protecting the consumer.

Is government regulation ever helpful? It’s a question worth considering. The idea that government cares enough to protect us from ourselves is downright frightening, considering their pattern of unintended consequences. I have more to say on government regulation, but I think I’ll save it for a whole separate post.

So, back to the conversation with Bill. He went on about the Federal Reserve. Bill was surprised to learn that I actually knew the Federal Reserve Bank was neither a federal organization nor a bank. Bill said 99% of Americans are clueless. They look at the name and assume it's some sort of federal agency, and maybe a supreme top-of-the-hierarchy bank that holds the country's money. Actually it's a consortium of individuals who set themselves up to control the nation’s money supply, and works in conjunction with similar consortia worldwide. Sort of a sophisticated collaboration of mob bosses. 

Have I mentioned that 1913 was a very bad year? Happy Centennial of the worst year in America’s history! Federal income tax started that year. The Constitution was amended to allow for direct election of senators, eliminating representation for state government interests. President Woodrow Wilson was in the process of implementing “progressive” ideology that would undermine constitutional principles. And the Federal Reserve started that year as well. The story is told in a book called The Creature from Jekyll Island, by G. Edward Griffin. It sounds like an old horror B-movie, but it's actually a different kind of nightmare-inducer. Jekyll Island, along the coast of Georgia, is where the founders of the Federal Reserve met and set in motion their plans.

I’ve been aware of the book for a while, and it’s been on my to-read list. But Bill had a copy he let us borrow during the visit. The book is hefty, but it’s set up so you can do a digest version. Every chapter has a chapter heading of what’s coming, and ends with a one-page summary. If you’ve only got a short time, you can get the gist of what happened by reading headings and summaries, which you can probably do in about an hour.

I’m afraid I have to warn that this book will make your heart heavy. Things are not as our Constitution's founders put in place for our eternal benefit. But if you value truth and knowledge, you probably ought to buck up and digest what you can of this information.

Texas or California

Yes. Yes I do think Governor Walker’s victory Tuesday in Wisconsin is indicative of what will happen nationally in November. It was a statement about what works better: doing what’s right to get people working and keeping more of their own money, instead of mounting debt to pay for union and special interest demands.

This special election doesn’t necessarily show who will win the Wisconsin electoral votes in November, but it might. One thing that it wasn’t was close. That is going to be important, because rigging elections only work when they’re within a couple of percentage points. In Wisconsin, I understand, Madison had an incredible turnout: 119% of registered voters. We shouldn’t worry with Eric Holder’s DOJ sending in an army of poll watchers, though. Oh yeah, except it’s his DOJ that has refused to prosecute voter fraud but claims that voter ID laws are intended to cause voter fraud. (Read Injustice, by J. Christian Adams. I wrote about it October 12th, October 18th, and March 14th. )

Anyway, my reasoning for believing the Walker victory is a predictor is that I believe the ideas of truth win out over the lies that are necessary to convince people to submit to tyranny.

A couple of days ago I read a piece by political analyst Michael Barone, wherein he talks about the migration from high-tax states to low-tax states—which happen to be more economically vibrant places to make a living. With the current downturn in the economy nationally, mobility has nearly subsided. But what happens when (if?) the economy improves? Here’s his summary:

Continued domestic out-migration from high-tax states? Certainly from California, where Gov. Jerry Brown wants to raise taxes even higher. With foreign immigration down, California is likely to grow more slowly than the nation, for the first time in history, and could even start losing population.

Fortunately, governors of some other high-tax states are itching to cut taxes. The shale oil and natural gas boom has job-seekers streaming to hitherto unlikely spots like North Dakota and northeast Ohio. Great Plains cities like Omaha and Des Moines are looking pretty healthy, too.

It's not clear whether Atlanta and its smaller kin--Charlotte, Raleigh, Nashville, Jacksonville—will resume their robust growth. They've suffered high unemployment lately.

But Texas has been doing very well. If you draw a triangle whose points are Houston, Dallas and San Antonio, enclosing Austin, you've just drawn a map of the economic and jobs engine of North America.

Texas prospers not just because of oil and gas, but thanks to a diversified and sophisticated economy. It has attracted large numbers of both immigrants and domestic migrants for a quarter century. One in 12 Americans lives there.

America is getting to look a lot more like Texas, and that's one trend that I hope continues. [Emphasis mine.]

I think we could reasonably use California and Texas as the metaphorical picture for what doesn’t work and what does. The snapshot hasn’t always looked like this. California was at one time vibrant and rather conservative. When that changed, outgrowth began (somewhat balanced up until recently by international immigration); since 1990, Californians have been pouring into other states. We left in 1989, only to find ourselves followed to the northwest by Californians who drove up housing prices and tended to institute some of their cultural oddities in their new home. (This was affectionately called “Californication.”)

Texas, on the other hand, was run endlessly by Democrats up until the early ‘90s. In-migration increased in Texas once air conditioning was invented, but oil and computer technologies have been major draws. Since the state became statewide conservative (except for a few odd pockets like Austin and inner cities), it became a great place for business. We came here in 1998, a few years after the conversion.

What we have before us is evidence that high taxes and strangling regulations give you economic calamities of European proportions. But low taxes (Texas has zero income tax; California is about to raise theirs to 13%), and business-friendly laws lead to relative prosperity. From where I sit, inside this triangle of economic engine, unemployment is too high and opportunities that were here before the recession that started in 2008 have not yet returned. But compared to the nation, our distress is much less—and we are likely to recover as soon as the federal government gets out of the way, because we’ve already gotten out of our own way.

Wisconsin has made significant progress since Governor Walker was elected on a promise to do exactly what he did that so upset the unions that they tried to recall him. This week the people strongly voted to keep moving toward being more like Texas. Good direction.