Can The Political System Be Fixed?Submitted by the strangerr on Sun, 10/14/2007 - 15:16
Aside from books and the internet, important realtime insights and outlooks are available through specific paid subscriptions. Joel Skousen's World Affairs Brief is one of several I track; it is also one that often contains reporting on Ron Paul and related subjects. Here is another relevant article/excerpt, from the latest weekly report.
The article below is reprinted with permission, from the October 12, 2007 edition Joel Skousen's World Affairs Brief.
CAN THE POLITICAL SYSTEM BE FIXED?
On several occasions during the Michigan GOP debate, we heard various candidates promising to fix chronic problems within the US government--from education and the economy to unemployment--just like politicians have been promising for ages. A close analysis of their remarks indicates that none except Ron Paul have a clue about how to accomplish an honest and effective fix. His answers were clear, concise and enlightening for those who wanted to hear, which did not include the moderators, who gave Paul less than half the time to speak as top tier candidates. While the debate sponsors were not completely effective in suppressing applause for Ron Paul in the audience, they did suppress the post-debate polling, as usual. After a futile 2 hour wait for the rest of the top tier candidates to catch up to Paul's overwhelming 78% lead in their online poll of "who won the debate," MSNBC shut down their poll. CNBC shut down their poll after Paul garnered 86% of the vote. This week we'll take a look at why the establishment candidates' proposals to fix the system never work.
On fixing the economy, former Senator Fred Thompson (the latest media darling to enter the race), was clueless. Incredulously he blurted out, "We're enjoying low inflation. We're enjoying low unemployment. The stock market seems to be doing pretty well. I see no reason to believe we're headed for an economic downturn." What planet is he living on? Low inflation? Everyone is reeling from huge fuel and energy costs. Even basic food stuff have started rising dramatically, not to mention professional and medical fees. Real inflation is now above 10% annually, and going higher as the dollar continues to decline in value. The only reason we aren't experiencing hyper-inflation is because the world is being held hostage to all the dollars they currently own. They can't unload them rapidly without causing a crash in values-so they keep accepting more of our debt in hopes of keeping the world dollar bubble afloat.
Mitt Romney continues to sound more like a wily politician with every answer. Asked about Michigan's economic problems (7% unemployment and auto business shrinking 30%), and whether the answer is to be found in public or private solutions, he said, "It's everybody's job. It's inexcusable that Michigan is undergoing a one-state recession, that the rest of the country is growing...[the] president's going to have to stand up and say -- you know what? -- to the auto industry: The door's always open. We're ongoing to work with you and make sure that you have a listening ear and someone who will participate with labor and with management."
"Listening ear?" What does that say? This is pure political grandstanding and says nothing specific. It's not "inexcusable" that Michigan is in a one-state recession. That's a natural consequence of being dominated by a single unionized industry for more than a century. It happened to Pittsburgh and its steel industry. When federal laws give unions monopoly powers, including forced collective bargaining, wages and benefits will rise far above market rates and lead inexorably to a dead, uncompetitive industry. Protected by law, only an industry wide collapse is capable of undoing the monopoly grip a union has on a bloated company. This is not a tragedy, it is economic justice. "We're going to work with you" is nothing more than Romney promising more taxpayer Chrysler-style bailouts, which didn't last.
Then Romney dropped the universal appeal that all politicians whether federal, state, or local rely on: FIX EDUCATION! This is the political equivalent of "motherhood and apple pie" that voters can seem to resist. It's the universal drug of socialist thought that corrupts even conservatives--who, like other Americans, don't want to pay the full cost of schooling for their kids. Who can say no to "our" public schools? I can, because they are NOT my schools nor your schools even if you use them. They belong to the government, and they can't be fixed as long as government has a monopoly on the power to extract non-participants' taxes to subsidize the public school users--effectively making private school supporters pay twice for education. That's simply not fair.
Romney declared, "We're going to have to fix the schools, as Newt Gingrich pointed out, 22% ...graduate from high school. That's unacceptable." Anyone who holds up Newt Gingrich (the ultimate Republican deceiver) as an example of trust is dangerously ignorant. Yes, a 22% graduation rate is unacceptable, but so is the graduation rate of every other public high school in America, even when higher. How many new "solutions" and how many more billions have to be poured into the public school system before America realizes that none of these people know how to fix the problem? I can say that with confidence because the only thing teachers' unions, school administrators and school boards have to offer is to throw yet more of YOUR money at the mess they have created.
Money isn't the only key issue. If government schools had good text books (which they don't); if they had excellent teachers (they do have some); if they got rid of the load of federal regulations and reduced all of their regulatory load; and even if they got rid of flawed teaching methods and screwed up curriculums, they would still fail. Why? Because public schools as an institution universally don't believe in discipline and don't require discipline. Worse they don't give effective consequences for lack of discipline.
Without discipline no education is possible. Education is work, not play. You can try and make some things fun, but the hard things to learn, the important things to learn, take work--and work takes discipline. The only reason people succeed in public schools, without school discipline, is because they have their own internal discipline, or their parents provide some discipline. In short, they succeed in spite of the system; yet the schools take the credit.
Sadly, modern legal precedents won't allow effective or strong discipline in public schools--and I'm not talking about spanking, though that has its place on occasion. I'm talking about kicking people out when they become predators or fail to abide by the rules, or willfully fail to do their assignments. When education becomes an entitlement, and you can't remove kids from schools there is no ultimate discipline. When the taxpayers are forced to fund schools no matter how bad their performance, there are no ultimate monetary consequences either that can be applied to the teachers, unions or administrators of this incompetence.
It's the same with the economy. There are only two things wrong with the economy, and they are chronic: Over regulation, and fiat money. Rudolph Giuliani had the stock political answers, though he is lying about his intention to follow them. "So the reality is a president has to work on the fundamentals. What are the fundamentals? Keep taxes low. Keep regulations moderate [Rudy thinks the current level of regulation is moderate! In fact, its so bad in the US that it's the number one reason why companies are fleeing to China--lack of regulations]. Keep spending under control [Anyone who believes that either of the two major parties will stop deficit spending is fooling themselves. If deficit spending stopped, Americans wouldn't be able to afford the bill for the Iraq war, let alone all the other entitlement programs,] .
Giuliani had the audacity to decry the legal cost of doing business in the US: "And make sure you do something about legal reform so that our legal system doesn't -- it's 2.2% of our GDP now, is spent on all these frivolous lawsuits. It's double any other industrialized nation." What Giuliani doesn't tell you is that he and his law firm have garnered millions in fees from the same kinds of lawsuits, backing legalized corruption and engaging in lobbying that costs taxpayers millions. Even as a public prosecutor he perpetrated one of the most costly farces on the private investment world--the trumped up prosecution of Michael Millikin. Paul Craig Roberts wrote an expose this week on this legal hypocrisy: http://www.lewrockwell.com/roberts/roberts208.html
When Giuliani was asked about the role of hedge funds and derivatives in our economy, he praised them as true representatives of "the free market." Fortunately, they gave Ron Paul a chance to rebut. "Congressman Paul, I think you have questions and concerns about the bonanza in the hedge fund industry. Do you?
"Mr. Paul: Yes. I think this is not a consequence of free markets... there's transfer of wealth from the poor and the middle class to the wealthy.... This comes about because of the monetary system that we have. When you inflate a currency or destroy a currency, the middle class gets wiped out. So the people who get to use the money first, which is created by the Federal Reserve system, have a benefit. The money gravitates to the banks and to Wall Street [who have first use of the liquidity the Fed injects into the markets to bail out speculators].
"It's because of the monetary system and the excessive spending. As long as we live beyond our means we are destined to live beneath our means. And we have lived beyond our means because we are financing a foreign policy that is so extravagant and beyond what we can control, as well as the spending here at home. And we're depending on the creation of money out of thin air, which is nothing more than debasement of the currency. It's counterfeit. And it is a natural, predictable consequence that you're going to have people benefit from it and other people suffer."
"If they continue what they're doing, it's [dollar value] going to go to zero, we're going to have runaway inflation; all paper currencies eventually self-destruct and are ruined, and we're in uncharted waters right now - this is the first time in the history of man you've had no solid currencies [meaning redeemable in gold or other valuable commodity] around the world and this has been going on for 35 years." Ron Paul understands why the system will never be stable as long as the government persists in creating fiat money. There is no fix without strictly honest money--all paper money must have 100% commodity backing with full redeem ability.
Fiat money only appears to have worked in recent decades because of moderated use (present times excepted) and controlled doses of liquidity promoted by Milton Friedman's "monetarist" school of money and credit (The Chicago School). The idea was that if you keep monetary creation in line with the natural rate of growth of the economy, you can avoid the traditional boom/bust cycles of fiat money. It worked for a while, but now is breaking down as unrestrained credit creation is required to forestall collapse. What Friedman did not count on was the inevitable corruption of the electorate in a semi-socialist society demanding more and more government spending on wars, entitlements and "free" public schooling, busting the budgets of both federal and state governments.
He also failed to take into account that our government is controlled by powers that have a globalist agenda which have a constant need to fund these wars and conflicts throughout the world--which cannot be sustained by taxes lest the citizens revolt. Thus deficit spending, well beyond the "moderate" level of injections of credit that Friedman envisioned, was inevitable as well. Much of this harmful monetary inflation is, in fact, still hidden--created off the books to fund illegal government activities (black projects) by "dark side" elements of our government.
Robert Kuttner, co-founder and co-editor of The American Prospect, testified this week before the House Financial Services Committee. His presentation was a dramatic review of the alarming parallels between 1929 and today, emphasizing the role of improper deregulation in the rise of speculative bubbles. Read it here:
While Kuttner praises New Deal financial regulations, he fails to distinguish between the proper form of financial regulation (that requires commodity backing, transparency and honest evaluations of market and debt instruments) and the type that needlessly restricts free market innovation. Other bloggers added these comments:
"This article is incorrect in several ways; first, the Federal Reserve is not part of the government [but it is part of the government conspiracy to control money and credit on behalf of the insiders], it is a private entity given monopoly rights on the issuance of the legal currency. Second, the revolving door of corporate executives and politicians has nothing to do with the free market and everything to do with classic statist socialism, where an elitist aristocracy determines social policy while most people are cleverly distracted with media diversions. Functionally it is no different than the old Soviet apparatchiki system, only here corporations and government agencies are ostensibly different organizations; the same cliques run both collectives in reality." --A. Magnus
"There was rampant insider trading and stock manipulation during the dot com bubble. Wall St. realized that the average joe did not understand all the new technology and it was a great story to spin to the public. Day-Trading infomercials were all over the tv. The dot com bubble burst and the American public lost trillions... After the dot com bubble all the rogue brokers (with felonies) moved into the mortgage market. Why not? Here is another industry the average joe knew nothing about and the average sales guy could make $20,000 to $30,000 per transaction. Heck, that was better than being a stock broker or day trader. Despite what anyone says, the mortgage industry is not regulated. Sure, there are mandated fees but the joke is any lender or broker can throw on a fee or charge points and if the consumer was dumb enough to pay for it he was out of luck.
"But, it was not [only] the buyer who should beware. The industry eventually got brought down by it's own monopoly. All the lenders, banks and brokers were slamming borrowers over the head with excessive fees. Borrowers did not care [this is a key to suckering in the public] because money was cheap and home prices kept going through the roof. But seriously, why does it cost so much to refinance your home? In short, the industry set the rules (via wealthy lobbyists) and the government was more than happy to play along [Indeed, they created the Fanny Mae and Freddie Mac machinery to finance the reselling of mortgages upline]. The mortgage industry is plagued by corruption and was kept low tech to keep fees high. How is this not a fast and cheap transaction?
"So now the real estate bubble is bursting and government moves in with it's usual 'we will clean up this mess' with new rules and regulations. But in the mean time, the damage is done and average American now has big troubles. Because our homes are really worth about 30% less than what we paid for them. Your home is worth less, [but] your taxes and insurance are soaring and the cost of gas is at record highs. No inflation? This is the first wave of the credit crunch. The US economy must go into recession and clean out the riff-raff before we can resume healthy growth and prosperity." --Chuck W.
Well said. However, the Fed shows every sign of increasing inflation and liquidity to keep the bubble from bursting. We may see a mild recession, but our greatest danger is harder-to-hide inflation.
Senator John McCain was also touting fixes in the Health care and insurance programs. "Every town hall meeting that I have people say, 'I don't know if I'm going to have health insurance or not.' We're going to have to bring costs under control of health care if we're going to assure people that they're going to have retirement and they're going to be able to have the much needed medical care that they need, as they grow older. The fact is that Social Security is going broke. The fact is that Medicare is going broke. That's a little straight talk and we've got to fix it."
Health Care won't be fixed because the current direction also has a fundamental flaw, just like education--lack of price discipline. Health insurance IS a major part of the problem, not the answer--even when it's private. When the government induced businesses to take huge tax write-offs by offering "free" health care as an employee benefit, workers began to overuse the medical system and under use the self-discipline of good nutrition, exercise, and natural remedies. Even with small co-pays, most people pay only a tiny fraction of the cost of their personal health care, and thus there is little resistance to price increases. Nobody asks, "What's it going to cost me" when a doctor orders an MRI or other special test. The insurance pays, so there is no price resistance from the user.
Now that health care prices have risen to extreme levels, no one can afford NOT to be without insurance [so they say-to justify making national health insurance mandatory], and the prices just keep rising because there is still little price resistance from the end users. When price resistance does arise against expensive drugs (for those foolish enough to take modern drugs with all their dangerous side effects), the high cost of drugs is used by politicians to justify more government intervention in the medical systems.
Those of us who have long chosen to stay out of the health care system are at risk to these astronomical prices, if we ever have a problem. I mediate the risk by avoiding the typical American life style and diet which almost always leads to chronic disease. Being out of the health care system and being "at risk" is actually a great motivator to stay healthy and learn how to use natural remedies. This is the real "free market" of health.
A Tax Fix? Duncan Hunter wants a flat tax. But that still doesn't get rid of the IRS mandate to snoop into people's income-a major violation of a citizen's right to privacy. Neither does it eliminate the normal business exemptions for business related expenses. Thus, the majority of business tax complexity would remain with any form of income tax, flat tax or no.
Ex Arkansas Governor Mike Huckabee, waxed enthusiastic about his consumption tax, which in the EU ranges from 15% to 25%. Huckabee ignorantly claimed that such a tax would NOT deter spending: "Nothing's going to discourage them [Americans] from spending money." He obviously hasn't studied Europe. In France, after the introduction of a 21% consumption tax, restaurants declined about almost 30% in two years until they gained a lower rate from the government. Many companies that sold high priced items like yachts saw their business decline 20-40%. Auto sales declined as well.
A 21% tax off the top really does deter purchases, especially above the $1,000 level. A major portion of the EU tax system relies on a VAT tax where tax value is added at every level of commerce, and it's all hidden within the retail price. But even though hidden the higher prices associated with the tax does deter buyers at the margin (of being able to afford something). When a large percentage of the production of the economy is syphoned off in hidden taxes, there is less money (at any given time period) left over for other purchases. We've seen this in the US as a larger and larger portion of everyone's monthly budget goes to fuel, which impacts other potential purchases. There are hidden victims to all forms of taxation. Naturally, the free market always gets the blame for the poor performance that results. In fact, it is the depressive effect of regulation and hidden taxation that causes the markets to falter and lag behind.
Foreign Policy: The most egregious comment of the night came from Mitt Romney as the prospect of an Iran war was raised. Ignorantly taking the "super hawk" position advised by his globalist advisors, Romney was asked if he would need to seek authorization from Congress to attack Iran. He responded:
"You sit down with your attorneys and [they] tell you what you have to do, but obviously the president of the United States has to do what's in the best interest of the United States to protect us against a potential threat. The president did that as he was planning on moving into Iraq and received the authorization of Congress...Mr.
"Matthews: Did he need it [the authorization from Congress]? Mr. Romney: You know, we're going to let the lawyers sort out what he needed to do and what he didn't need to do.
Then the moderator turned to Congressman Paul with the question. His quick response was as dramatic as it was predictable: "Absolutely. This idea of going and talking to attorneys totally baffles me. Why don't we just open up the Constitution and read it? You're not allowed to go to war without a declaration of war. Now, as far as fleeting enemies go, yes. If there's an imminent attack on us. [But] We've never had that happen in 220 years.... The thought that the Iranians could pose an imminent attack on the United States is preposterous. There's no way."
Ron Paul added as an after thought that the American economy is at great risk from a Bush foreign policy: "If Bush is foolish enough to start bombing Iran, that might precipitate such a crisis as oil going to $200 dollars a barrel and really dampening the enthusiasm of the whole dollar." He's absolutely right. We'll see permanently high oil prices in a Middle East regional war.