Monthly Archives: April 2012

Apr 27 2012

House Passes Online Privacy Invasive CISPA

Originally posted at FreedomWorks.org.

The House of Representatives passed the Cyber Intelligence Sharing and Protection Act (CISPA) last night. This is yet another “cyber security” bill that will infringe on online privacy. The bill would encourage private companies such as Google and Facebook to share vast amounts of our private information with the federal government.

What exactly? An amendment by Rep. Justin Amash (R-Mich.) thankfully passed which protects our tax, library, and gun records from government snooping. But CISPA is still a disaster that contains extremely broad language. Private companies would be encouraged to share everything from our Internet browsing history to the content of our emails with federal agencies.

That information is frankly none of the government’s business. You will not be informed if the government is snooping around in your email inbox with no warrant. It isn’t even clear what the federal agencies will do with our private information. If CISPA becomes law, internet privacy will become a thing of the past.

According to the Campaign for Liberty, “the way this legislation is drafted, it currently overrides privacy presumptions found in the Electronic Communications Privacy Act, the Foreign Intelligence Surveillance Act, and the Communications Act regarding the privacy of an individual’s online communications and related records.

Essentially, CISPA would deem all existing privacy laws null and void for ‘cybersecurity’ purposes.”

CISPA was passed under the guise of national security. But this isn’t about keeping us safe. It’s just another government power grab that violates our fourth amendment rights. The government wants to restrict the free flow of information on the Internet.

The Internet is a prime example of what Austrian economist F.A. Hayek called spontaneous order. No one controls the Internet and that’s precisely what makes it so great. Millions of people from all over the world are able to share unrestricted and uncensored information.

CISPA is yet another “cyber security” bill that will do more harm than good. The defeat of SOPA and PIPA showed the power of grassroots activism. We must remain vigilant and stop all of the government’s efforts to control the Internet.

Apr 24 2012

Legalize Competing Currencies!

Originally posted at FreedomWorks.org.

The value of the U.S. dollar is rapidly declining. The dollar is worth roughly half of as much as it was in the mid-1980s. Since the creation of the Federal Reserve in 1913, the dollar has lost a whopping 97 percent of its purchasing power. The Federal Reserve excessively printing money has devalued our currency which means the dollar can’t buy as much as it used to. 

Many people assume that the increase in prices over time is just a natural occurrence. But that’s not true. The Federal Reserve’s manipulation of the money supply is primarily responsible for the rising prices of goods and services. The more dollars in circulation, the less the money is worth. It now takes more dollars to buy the same amount of goods as it had taken before. It used to take 79 cents to purchase a pound of bacon in 1962, now it cost approximately $4.77. The poor get hurt the most by rising prices since they have less disposable income. 

More Americans are understandably losing trust in the dollar. After all, the paper dollar is backed by absolutely nothing and the Federal Reserve can print as much as it wants with no restrictions. Unfortunately, unconstitutional federal tender laws force Americans to use these Federal Reserve notes issued by the Federal Reserve. Americans are not legally allowed to use other forms of currencies such as gold and silver in transactions.

Why not?

Unlike the paper dollar, gold and silver holds their value over time. That’s exactly why there are laws forcing Americans to use the Federal Reserve issued fiat currency. Without any coercive laws, Americans would likely start using valuable alternative currencies instead of the paper dollar. The Federal Reserve desperately wants to preserve its monopoly on currency. 

Americans should be free to use whatever currency they desire. It’s time that the paper dollar is forced to compete with other forms of currency. The prospect of Americans using alternative currencies would likely encourage the Federal Reserve to stop destroying the value of the dollar through inflating the money supply.

While ending the Federal Reserve is the ultimate goal, repealing unconstitutional federal legal tender laws and legalizing competing currencies is a step in the right direction.

Apr 20 2012

Earth Day Special: Private Property Protects the Environment

Originally posted at FreedomWorks.org.

This Sunday marks the 42nd anniversary of Earth Day. Over the years, the day has become more focused on political activism and less on personal decisions that individuals can make to help the environment. Hundreds of thousands of self-identified environmentally-conscious people travel to Washington, DC to demand that the federal government act to “protect” the environment.

Most of these activists want the government to impose more environmental regulations on businesses. But many of them fail to realize that big businesses are also lobbying for regulations to reduce CO2 emissions. Big businesses often pretend to be environmentally-friendly but their underhanded motives aren’t as pure. They know full well that strict environmental regulations will close down many small businesses which will result in less competition in the market place. Big businesses despise competition from the little guys.

Major corporations are not the worst polluter on the planet. The title goes to the U.S. Federal Government. According to blogger W.E. Messamore,

The federal government is the single largest consumer of energy with 500,000 buildings and 600,000 vehicles. In 2009 alone, the government’s bill for utilities and fuel totaled $24 billion, so it’s no surprise that the government’s carbon footprint is 123.2 million metric tons of carbon dioxide a year.

123.2 million metric tons! How could anyone trust the largest polluter on the face of the Earth to protect the environment?

Please. There is no denying that the environment isn’t in the best shape. Pollution, trash, and air smog are major environmental problems. Regardless of political affiliation, we all want clean air and clear water. But the government is not the solution to achieve these ends.

The key to protecting the environment is private property rights. People tend to take better care of their land when they own it. They have an incentive to conserve and improve their resources over time.

Government owned land is a different story. The same incentives do not exist for “public” land. Most public parks are covered with trash and debris. Nearly all rivers and bays owned by the government are extremely polluted. This is because no one has a vested interest in taking care of the land.

True environmentalists should advocate for private property rights, not more government intervention.

Apr 17 2012

Debunking Myths of the Great Depression

Originally posted at FreedomWorks.org.

The current economic crisis is often compared to the Great Depression which lasted from 1929 until the early 1940s. From the causes to the policy responses, there are striking similarities between the two economic meltdowns. Unfortunately, the typical high school history teacher continues to perpetuate myths about the Great Depression. Learning the real story of the worst economic crisis in U.S. history is important to stop it from happening again. Listed below are rebuttals to five common myths about the Great Depression.

1. Free Market Capitalism Caused the Great Depression.

Most of us probably learned that “unfettered” and “unregulated” capitalism in the 1920s led to the Great Depression. Some have similarly blamed capitalism for the current economic crisis. But just like today, there was not pure free market capitalism in the 1920s.

The Federal Reserve, the central bank of the United States, was created in 1913. Not only did the Federal Reserve fail to prevent the Great Depression but it was primarily responsible for its length and severity. The Federal Reserve controls the money supply and would never exist in a true free market economy.

As Murray Rothbard explains in America’s Great Depression, the Federal Reserve creates boom and bust cycles that destabilize the economy. The Federal Reserve created an unsustainable boom in the 1920s by lowering interest rates. Rothbard estimated that the money supply had increased by 61.8 percent between 1921 and 1929. The inevitable stock market crash was a symptom of the inflationary boom.

Economist Henry Hazlitt once wrote that “worse than the slump itself may be the public delusion that the slump has been caused, not by the previous inflation, but by the inherent defects of ‘capitalism.’” The blame for the Great Depression should be placed on the Federal Reserve, not free market capitalism. 

2. Herbert Hoover Was a Laissez-Faire President.

Many history teachers claim that Herbert Hoover was a “do-nothing” passive president who allowed the Great Depression to happen. Quite the opposite is true. Far from being an advocate of laissez-faire, Hoover was an extremely interventionist president. Hoover actually intervened in the economy more than any prior president.

Herbert Hoover’s interventionist policies prolonged the Great Depression. He doubled federal spending in real terms in just four years. One of Hoover’s first acts as president was to prohibit business leaders from cutting wages. He also launched huge public works projects such as the San Francisco Bay Bridge, Los Angeles Aqueduct, and Hoover Dam. Hoover signed the Smoot-Hawley tariff into law in June 1930 which raised taxes on over 20,000 imported goods to record levels. He raised the top income tax rate from 25 percent to 63 percent and the lowest income tax rate from 1.1 percent to 4 percent in 1932. Despite what most of us have been taught, there was nothing laissez-faire about Hoover.

In the 1932 election, Franklin Delano Roosevelt (FDR) criticized his opponent Hoover of presiding over “the greatest spending administration in peacetime in all of history.”

His statements are seen as a bit hypocritical in hindsight since Roosevelt continued and expanded Hoover’s big government policies. Many of the New Deal programs were based on policies already enacted by the Hoover administration. It could be said that Hoover was the real father of the New Deal.

3. The Federal Reserve’s Tight Monetary Policy Caused the Great Depression.

Federal Reserve Chairman Ben Bernanke and the late Nobel Prize-winning economist Milton Friedman blame the Federal Reserve for the Great Depression. But they do so for the wrong reasons. While Milton Friedman was correct on many economic issues, he was wrong on monetary policy. He was a monetarist who incorrectly believed that the money supply determines the level of economic activity. In his view, an increase in the money supply will lead to more economic activity.

In A Monetary History of the United States, Friedman argued that the economy was strong in the 1920s until the year 1929 when a typical economic downturn occurred. He believed that the economic recession turned into a depression because the Federal Reserve did not print enough money between 1930 and 1933. Friedman and Ben Bernanke essentially blame the Great Depression on the Federal Reserve’s failure to inflate the money supply.

The real problem is that the Federal Reserve inflated the money supply in the 1920’s. Inflationary booms induce widespread malinvestment–bad investment decisions made under the influence of easy money and credit. Malinvestments inevitably lead to wasted capital and economic losses. An economic recession is actually necessary to correct all of the previous malinvestment.

At Milton Friedman’s ninetieth birthday party in 2002, Ben Bernanke even said “I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.” He spoke too soon. The current economic situation may not be as severe as the Great Depression—though economists such as Peter Schiff say it could get as bad. But it’s clear that the central bank was the main culprit in both financial crises. The Federal Reserve’s expansionary monetary policy in the 1920’s caused the Great Depression, not the central bank’s “tight” monetary policy in the early 1930’s.

4. FDR’s New Deal Ended the Great Depression.

The New Deal is widely perceived to have ended the Great Depression but it actually made the economic situation worse. The series of economic packages implemented between in the 1930s hampered economic growth and prolonged the Great Depression. Roosevelt imposed excise taxes, harmful regulations on businesses, increased the top tax rate to 79 percent, doubled government spending between 1932 and 1940, and artificially raised wages and prices.

The New Deal created many public works projects. Contrary to what most of us were taught, public works projects do not boost the economy. It is the classic case of the seen versus the unseen—we can all visibly see the jobs created by New Deal spending, but it is more difficult to see the jobs destroyed by the high taxes needed to pay for the New Deal programs. Of course, taking money away from entrepreneurs in the private sector will only hurt economic growth.

In 1931, a year before FDR was elected president, the unemployment rate was an unprecedented 16.3 percent. By 1939, nearly two terms into the Roosevelt administration, the unemployment rate had risen to 17.2 percent. The New Deal clearly didn’t lower unemployment like most of us were taught.

In May 1939, Treasury Secretary Henry J. Morgenthau Jr. stated that, “we are spending more than we have ever spent before and it does not work… I say after eight years of this Administration we have just as much unemployment as when we started…And an enormous debt to boot.”

The depression would have been much shorter without the New Deal.

5. World War II Ended the Great Depression.

The facts tell a different story. As Ludwig von Mises once wrote, “war prosperity is like the prosperity that an earthquake or a plague brings.” WWII did stimulate certain sectors of the economy. Men and women worked in factories to build tanks, helicopters, ships, and other war supplies. But it is important to look at the overall picture, not just one sector of the economy. We can visibly see the weapon production jobs created by government spending, but it is more difficult to see the jobs destroyed by taxing the private economy.

From a purely economic standpoint, the war made consumers worse off because it was often difficult or impossible to purchase the goods they needed. The weapon factories were not producing goods and services that Americans could enjoy. The federal government had forbidden the production of new cars, houses, and major appliances. Due to government rationing, it was difficult to buy many goods such as chocolate, meat, gasoline, sugar, and tires.

So what did end the Great Depression? Huge government spending cuts after the war did. From 1944 to 1948, the U.S. government cut spending by $72 billion—a 75 percent reduction. In 1945, the deficit was 21.5 percent of Gross Domestic Product (GDP). Two years later, the budget surplus was 1.7 percent of GDP.  The dramatically spending cuts and slight tax reductions boosted economic growth. Between September 1945 and December 1948, the average unemployment rate was only 3.5 percent.

Likewise, the only way to get out of the current economic crisis is to drastically cut government spending and taxes.

Apr 16 2012

The Myth of the Gender Wage Gap

Originally posted at FreedomWorks.org.

President Obama has often criticized the so-called gender wage gap. This is a bit hypocritical since a new study finds that the Obama White House pays women less than men on average. According to the 2011 annual report to Congress on White House staff, the median wage for males was $71,000 while the median wage for females was $60,000—18 percent less. Of course, like many have already pointed out, these statistics do not signal discrimination because it is not comparing men and women who hold the same job and do the same work. It’s not fair to compare the salaries of a female Staff Assistant and the male Deputy Assistant to President Obama.

Unfortunately, the Obama administration continues to spread myths about the gender wage gap. Obama considers signing the Lilly Ledbetter Fair Pay Act of 2009 to be one of the key achievements of his presidency. This pro-trial lawyer legislation makes it easier for women to file lawsuits if they feel they are being discriminated against in the workplace. But the fact is that gender discrimination plays little to no role in pay disparity between men and women. While the law may seem well-intentioned, it imposes recordkeeping burdens on employers and could lead to employers hiring less women due to the fear of frivolous lawsuits.

Barack Obama’s campaign website said “despite decades of progress, women still make only 77 cents for every dollar a man makes.” But he never tell us how they calculate this oft-cited misleading statistic. The U.S. Census Bureau finds the median wage for full-time male and female workers and then calculates the difference. Their research finds that males do earn more than females on average. But they are not comparing apples to apples. The government statistic neglects occupation; it’s not comparing men and women in the same job who have the same educational backgrounds.

Women, on average, earn less than men mostly because of individual choices. Discrimination is not a key factor in the gender pay gap. Men and women tend to be interested in different career choices. Men are more likely to major in engineering, mathematics, and computer science in college. These overwhelmingly male-dominated majors are highly profitable. Conversely, the top college majors for women are education, English, and psychology. Women tend to be interested in the social sciences which normally pay less money. More women than men are enrolled in college and all of them are free to major in whatever they please.

Studies show that women enter and leave the work force at a much higher rate than men. Many women wish to take off some time from work to raise children down the road. Therefore, they choose more flexible jobs. On the other hand, men are more likely to have dangerous jobs, high stress jobs, work longer hours, and travel more for work. Men represent 93 percent of all on-the-job deaths. These types of jobs generally have higher salaries.

When you compare apples to apples, the so-called wage gap disappears. Young, childless, single urban women earn 8 percent more than their male counterparts. Women who have never had a child earn 113 percent of what men earn. Unmarried college-educated males between the ages of 40 and 64 earn nearly 15 percent less than their female counterparts.

The gender wage gap is largely due to individual choices that women make, not discrimination. Obama’s campaign website stated that “Barack Obama believes the government needs to take steps to better enforce the Equal Pay Act.” But any government intervention to “fix” this nonexistent problem will be counterproductive. Women should reject the flawed notion that government is always the answer.