Author: Mike

I am a patent attorney in Lexington, Kentucky. My law firm web site is http://www.coblenzlaw.com. I ran for State Representative in 2010 and lost in the primary. Many of these posts are based on writing that I did for that election. Rather than delete it all, I decided to dump it onto the internet.

Bumper Sticker Logic

I saw this on a bumper sticker not long ago:

“The Bigger the Government, the Smaller the Citizen.”

I didn’t get a chance to talk to the driver to find out what he thought it meant, but my presumption is that it in line with the conservative idea of limited government. The more limited the government, the more rights for the citizens; and conversely the larger and more pervasive the government, the fewer rights of the citizens. Hence: the bigger the government, the smaller the citizen.

But let’s think about that in the real world. First, let’s think about those countries with little or no government, places like Somalia or Mali. Where there is no government there is not maximum freedom for the citizens, but chaos.

Second, let’s think about those countries that are rich and have high standards of living.  The United Nations has what they call the Human Development Index, which ranks countries according to a number of factors, including life expectancy, education, and wealth as measured by the gross domestic product per capital. (This is published annually in the UN Human Development Report.) [http://hdr.undp.org/en/reports/]

The list for 2011 is here. 

The top five countries are Norway, Australia, Netherlands, US, and New Zealand. All of the top countries are nations with modern regulatory governments with strong social welfare programs. If you go to the bottom of the report you will notice that all of the counties at the bottom, which the UN says are nations with “Low Human Development”, are countries with minimal or failing governments, like Afghanistan and Sierra Leone.

But overall wealth and a high standard of living doesn’t necessarily equate to “liberty” and “freedom.” Perhaps the people of Mali are more free than the citizens of Norway.

Of course one argument is that the people of Mali live in endemic poverty, and so even if they are less burdened by the heavy hand of government, they don’t have the financial wherewithal to exercise those freedoms.

So let’s look at the other side, and consider Norway. Norway is a near socialistic state, with universal health care, a strong welfare system, and a high degree of government regulation of the economy. So are the citizens of Norway veritable serfs? Actually they seem pretty free to me. They seem able to do almost anything they want. In fact we in the US might consider their society rather licentious.

In fact, if you look at the countries on the top of the list (which includes the US, Canada, Australia, New Zealand, Japan and most of Europe) you see countries with a relatively high degree of government regulation of the economy, and countries with pretty generous welfare programs. And are the citizens of these wealthy nations serfs? In any real sense they are the freest in the world. They have open cultures and successful liberal democracies. They have strong economies (as compared to the rest of the world, even considering the recent world-wide recession) and their citizens are generally fairly wealthy and have a very good standard of living. As a result they have the financial ability to pursue a wide variety of educational and leisure options. They are what is commonly referred to as free.

So if one was to consider the real world, and not the logic of a bumper sticker, one would conclude that the reality is that the smaller the government, the poorer the citizen. And since poverty can stunt your growth: the smaller the government, the smaller the citizen.

Freedom’s Just Another Word

If there’s one thing America is about, its freedom. Many politicians use “freedom” as a mantra, a word repeated so much that it has nearly lost all meaning. Everyone agrees that nothing is more important than freedom, but what does that really mean? When is a person free?

A rough definition is that we are free when there are no external constraints limiting our ability to do as we please. In this regard, and in a very real sense, the freest person is the homeless guy living under a bridge. No job, no family, no home, no responsibilities, no ties that bind, free to do whatever he chooses, free to be whoever he wants.

But when we think of that homeless guy, when we see him pan-handling at an intersection or pushing a shopping cart full of his worldly possessions, do we envy his freedom? Or do we pity him?

No one is more free than a person without a job, without a family, without a home.

The person without a job never has to worry about a boss telling him what to do, doesn’t have to be at work at a certain time, doesn’t have his days and hours predetermined for him. When the man with no job wakes in the morning, the day is his and his alone.

If freedom is the lack of external constraint, then the person without a job is freer—far freer—than the person with a job.

But a job is not merely a burden, a job gives us a sense of accomplishment and a feeling that we are contributing to society. It also provides us with the money—the wherewithal—to do things. The man with no job may, in theory, be able to go anywhere and do anything, but without money his ability to do those things is seriously limited. He is free in theory, but lacks freedom in reality.  

The person without a family is unconstrained by familial responsibilities, his evenings unburdened by family meals, his weekends free of family visits and the drama that often entails. The man without a family is never hectored or henpecked, he has no reason to stay, and no one stopping him from going.

If freedom is the lack of bonds, then the man with no family is the freest man of all. 

But a family is not just a constraint, it is a source of comfort and connection and solace. Most of us gladly trade a bit of our freedom for that connection. And most of us imagine ourselves adrift without those familial connections.

The person without a home does not have to worry about rent or mortgage, he is unconcerned with taxes, upkeep, or maintenance. His weekends are never filled with lawns to mow, leaves to rake, snow to shovel.

But we define ourselves, to some degree, by where we live, by our neighborhood. A home is often more, much more, than a place to live, it is our stake in society.

The reality is that we don’t envy the homeless guy living under a bridge, we pity him. Few people seeing the homeless comment on their freedom. In fact, those who are the most likely to talk about freedom—conservative politicians and pundits—are also the most likely to denigrate the homeless. Words like “bum” or “moocher” flow easily from their lips.

  The reality is that we judge people by their stake in society. We judge people by their willingness to trade their freedom for responsibilities and social connections. We praise people for a job well done, we congratulate them on their successful children, in some neighborhoods we even give them awards for their well-manicured lawns.

Responsibility, not freedom, is the foundation of society. We praise freedom in the abstract, but when push comes to shove, what we value most is a willingness to give up some of that individual freedom for benefit of society.   

Roll Over Mister Burke

Once upon a time conservatism was about social stability, and dead set against making dramatic social or governmental changes based on philosophical theories or the whims of politicians. Edmund Burke, the intellectual father of conservatism, created his ideology after watching the horrors of the French Revolution. He said that social and cultural institutions are the repository of the collected wisdom of humanity, and they shouldn’t be changed lightly. He also said that of all the justifications for change, political theory is among the most dangerous. He saw the disastrous attempts by French revolutionaries to put the political theories of the French philosophers—Rousseau, Diderot, Voltaire, et al—into action. This, he said, was the wrong way to take action that affected the lives of millions of people. Burke didn’t oppose change, but he though it should be gradual, evolutionary, rather than revolutionary. He also didn’t oppose political liberty – he was an early and vociferous advocate of American independence, and a strong supporter of Irish independence—but he didn’t think that the way to achieve political liberty was to overthrowing the existing order and replace it with the untested theories of political philosophers.

In the last few weeks we have had two purely speculative ideas thrust into the political debate. As his presidential campaign was tanking, and as he attempted to dodge questions about how he would balance the budget at the same time as cutting taxes, Mitt Romney said that he would make up the revenue shortfall by limiting deductions for the wealthy. The idea was widely panned by most reputable economists, who laid out mathematically that there was not enough money in those deductions to make up for the other planned cuts. The idea should have died a quick death. But then, as Republicans scrambled for a way to make up the massive revenue shortfalls in their budget proposals to avert the so called fiscal cliff, they grasped Romney’s silly idea, and it became the centerpiece of their plan. Again serious economists said that limiting, or even totally eliminating, deductions for high earners would simply not provide the revenue that Republicans were claiming. But they liked the theory, the untested political idea presented on a political whim, and didn’t want to address the political and economic reality.

And then, in the aftermath of the tragic school shootings in Newtown, Connecticut, the chief spokesman for the NRA suggested that there should be an armed guard at every school in America. Within a few days Republican politicians were parroting this line, and some state politicians were even working on legislation to train teachers or school principles to be able to carry a weapon in school. Never mind that this too was an entirely untested idea splashed into the political debate as a rhetorical point by a partisan hack.

Both are exactly the type of untested theories that Burke warned us against. And both were presented by people who call themselves “conservative.” Burke must be rolling in his grave.

What Cuts?

I’ve spend the last thirty years listening to conservative Republicans talking about the need to cut government spending. That’s been a pretty consistent component of conservative ideology at least since Reagan. But the odd thing is that in all of those thirty years I’ve not heard any specifics. I take that back, I have heard a few specifics. During one of the presidential debates, when questioned about specific government cuts he proposed or supported, Mitt Romney mentioned cutting government funding for the Corporation for Public Broadcasting: i.e. Big Bird. That’s it. Thirty years of talking about it and conservatives generally only specifically mention CPB.

There are a couple of reasons for this. The first is that most government programs have constituencies, and promoting specific cuts ends up creating specific enemies, and specific attack ads during a campaign. So if you suggest that, for example, food stamps should be cut, you risk having those cuts thrown in your face in a political attack ad.

The second reason is that mentioning specific cuts creates identifiable bench marks. If you say, for example, that we should cut subsidies to oil companies, and then those subsidies are never cut, you risk having that thrown in  your face as an example of your failure to live up to your promises.

The third reason, however, is probably the most important. If you describe government as this huge entity that needs to be cut you can always rally against “big government.” But if you break it down into specifics it reminds people that many of those government programs are actually beneficial, and then it becomes difficult to make specific cuts. (See point one.) It also allows opponents of the cuts (also known as supporters of the programs) to the describe the benefits of the programs. So mentioning specific cuts erodes their ability to complain about “big government” and “all that spending.”

But after thirty years it is high time that conservatives provide some specifics. It shouldn’t be too hard to do. Simply go through the various cabinet departments and list what you don’t like. Start at the beginning, The Department of Agriculture, and say what should be cut and should be kept. And work through to Treasury. Any politician who can’t do this probably doesn’t have a clear understanding of what the government does. So their protestations of “all the spending” is little more than a primal scream, and should not be taken very seriously.

Through the Looking Glass

During the debate over the budget deal to avert the so-called fiscal cliff, Republicans suggested changing the calculation for adjusting social security for inflation. (An idea I support, but which is no the subject of this post.) In response, Democratic Senator, and Majority Leader, Harry Reid of Nevada said “we’re not going to talk about cutting social security.”

 This is not an uncommon tactic, to suggest that slowing the rate of growth of a program is actually a “cut.” Now in one way it may be a cut. If, for example, there is a scheduled 10% increase in a program, and a decision is made to reduce the rate of growth to 5%, there is a cut in the rate of growth. But that isn’t the same thing is a cut.

 Here’s an example that most people might be able to understand. Lets say you make $36,0000 a year (or $3000 a month). If your boss comes to you and says that next year your pay will be $35,000, that is a cut. If your boss comes to you and says that your pay will not increase at all, that is not a cut, its just not a raise. If, on the other hand, you are scheduled to get a raise, of, lets say 10% (you had a great year, and darn it, you deserve it), your pay will go up to $39,600. If your boss says that things didn’t work out, and you will only get a raise to $38,000, that is a cut in a promised raise. But if your boss says that business was good, and he might raise your pay 10%, but then it turns out that things did not work out quite as well, and he can only give you a 5% raise, that is a lower raise, but it’s still a raise.

 But what if your  boss says he will raise your pay based on the change in the CPI, the consumer price index, which is one of the government’s indices for calculating inflation. But then he decides that his business did not grow at the rate of inflation as calculate by the CPI, so he will raise your pay based on a different economic calculation of inflation? Is that a pay cut? Not in the real world. It may be a smaller raise than you were expecting, and you may complain bitterly, but it sure isn’t a pay cut.

 Except in Washington. In Washington a lower increase is a cut. And that is one of the problems with Washington. Words have essentially lost all meaning. We have gone through the looking glass into a world where words have lost all meaning. If a slower increase is a cut then what is a real cut?

 If we can’t discuss the problems with face in a fixed language, in a language where words stand for their ordinary meaning, how can we truly understand what the problems are? We can’t. It’s all mush and spin. It’s all a bunch of mealy mouthed nonsense. 

Science and the Foundation of the Economy

In case you need more proof that science is the foundation of the modern economy you can read this story from Forbes:

Beyond The Fiscal Cliff, Pharmaceutical Innovation Is The Key To Long-Term Fiscal Health

Medicine is one of the fastest growing segments of the economy, and one of the key components of that growth is the development of new medicines and new medical technology. And both are based, in large measure, on science at the cutting edge. The United States has long dominated the field of medical research.  And it will continue to dominate only so long as we as a nation take science seriously. That means supporting it in education, and where necessary, funding it through government programs.

The World Keeps Spinning ‘round

I just saw Les Miserables. It was quite the epic. I’m not much for musicals, and there were quite a few scenes where I wondered why they were singing. But all in all an excellent movie.

Oddly enough we watched “The Grapes of Wrath” last night, so it was a weekend of social change and the depravations of poverty. And that got me thinking about our current economic situation. Les Mis occurred against the backdrop of a dramatically changing French society, and that change was a by-product of the Industrial Revolution and the effect that had on the French economy and society.

I think that today we are in the middle of a changing world economy, brought about by computers and information technology, and impacted by globalization and the growth of countries like China and India. We may be in the midst of changes that rival those caused by the Industrial Revolution. It is difficult to tell when you are in the middle of it. It might be as monumental, or it might be of trifling importance. But in any event, changed in the world economy are having a significant impact on this country. Manufacturing is effected by the rise of industrial China and the spread of industrialization and factories around the world. That is reverberating throughout the nation’s economy.

We are in the middle of dramatically changing times. And our politicians are arguing not about how to deal with this new world, but about the tax rate on high wage earners. This disconnect is bizarre.

Boehner’s Plan B

The Republican Speaker of the House of Representatives, John Boehner of Ohio tried to make an end run around the President and his proposal for dealing with the so called “fiscal cliff” by asking the House to vote on what Boehner called his “Plan B.” Plan B was basically a bill that would have allowed taxes to go up for taxpayers making over $1 million, and defer discussion of other maters until later. Boehner’s plan was supposed to embarrass the Democrats, since many of them had proposed such a plan earlier in the year. The problem was that he could not muster enough votes in his own Republican caucus. So Boehner walked away, but before he walked away, he announced in a pique:  

 “Now it is up to the president to work with Senator (Harry) Reid on legislation to avert the fiscal cliff.”

 That’s nice, but there’s only one problem with Boehner’s idea, this little gem:

 “All Bills for raising Revenue shall originate in the House of Representatives.”

That’s from the United States Constitution, Article I, Section 7, Clause 1.

It never ceases to amaze me that conservatives claim deep (deep, deep, deep) deference to the Constitution. Many of them carry around pocket versions that they like to wave around to make a point. But when things don’t go there way, they act like they’ve never heard of the Constitution.

Whether Speaker Boehner wants to deal with it or not is simply irrelevant. Its not the dastardly Democrats, or that slippery Obama, or the liberal press corps that is making him deal with the deficit and the budget. It’s the Constitution.

So Boehner can do one of two things. The first is to do his duty under the Constitution, and work out a revenue bill. Or the second is to walk away, but the coda to that option is that he has to stop lecturing us about his deference to, or supposed knowledge of, the Constitution. He simply can’t have it both ways.  

Princes Among Men

In the last few weeks a number of banks have paid huge fines for various malfeasance. The news today was that UBS will pay $1.5 billion to US regulators for rigging the LIBOR interest rate. The British bank Barclays paid a $450 million fine in June as part of the LIBOR scandal, and both Royal Bank of Scotland and Deutsche Bank are negotiating fines with American and British bank regulators. Just a few weeks ago, HSBC was fined $1.92 billion for laundering Mexican drug cartel money. Standard Chartered Bank was fined $327 million for money laundering in Africa and Asia. And this summer ING Bank agreed to pay $619 million to settle charges that they traded with foreign countries in violations of US trade sanctions.

When conservatives argue against regulating banks and financial institutions they imply, if not outright suggest, that bankers are a particularly noble group of people. They are princes among men. Indeed they are, if he princes we are talking about are from the Italian City states of the Renaissance. They are as greedy and rapacious as the Borgia, as malevolent and malicious as the Medici.   

Andy Barr and Community Banking

Newly elected Representative Any Barr was appointed to sit on the House Financial Services Committee. Barr said that “Serving on the Financial Services Committee will enable me to immediately go to work on solving Kentucky’s jobs crisis. … We must return to the day when a local banker and a small businessperson could meet face-to-face and arrange a loan based on trust and accountability.” [Read more here: http://www.kentucky.com/2012/12/13/2442457/andy-barr-gets-seat-on-house-financial.html#storylink=misearch#storylink=cpy]

There are serious concerns about some of the provisions of the Dodd-Frank Reform Bill, particularly provisions that tighten lending requirements. Some have suggested that the lending requirements are too tight, and this is an issue that must be addressed, and hopefully Representative Barr will work on the issue.

But the problems with community banks goes far beyond Dodd-Frank. There has been a dramatic decline in the number of community banks over the recent decade, and the cause is not Washington regulation. The cause is the free market and the fact that large banks are just more efficient than small banks. According to a report from Celent, which is a research firm that advises financial instates, there has been an “unprecedented concentration” in banking, and much of it has come at the expense of community banks. A link to the Report is here: The Decline of the Community Bank.

 If Representative Barr wants to truly address the problems facing community banks, he needs to look at all of the issues facing community banks. That includes over regulation, but it also includes the effects of consolidation. The problem is that consolidation is a product of the operation of the free market, and that means that there are, on occasion, negative effects from the free market. I wonder how Rep. Barr will address that.