'76 Blog

(CCU Faculty) We often hear from President Obama that “the rich should give back.”  But what have they taken?  Nothing!What have they given?  ** Jobs: if you have a job, thank an entrepreneur.  ** Goods and services: things we all need to survive are provided by these entrepreneurs.  ** More than their fair share of taxes: the richest 20% of Americans pay over 86% of the taxes, while the poorest half of Americans pay no income taxes at all.(Heritage Foundation) ** Charitable Giving: the richgive the lion’s share to charity, while Liberals have a poor record of giving to charity, believing it is the government’s job.(NicholasKristof, N.Y. Times) Take Steven Jobs, for example. What has he taken from the rest of us?  Nothing.  What has he given? Tens of thousands of jobs, an expanded tax-base, the latest high-tech innovations making all of us more efficient and driving down prices. Yet President Obama said recently that Steven Jobs has not adequately“given back”.What has Steven Jobs taken that he should “give back”?  The jobs Steven Jobs provided are not the unproductive ones Obama claims he will provide in his many speeches.  In fact,these “jobs” have not even been produced, as unemployment continues to rise. Who are those who have taken?  ** Government takes from the paychecks of the productive to fund theirunproductive schemes. ** Politicians take from tax payers to fund their pork projects, which buy them votes for reelection. ** The indolent take “entitlements” from the government. What “entitles” them to take from the rest of us who produce?  “Entitlement” means getting what you deserve. What did they do to deserve the money others earned?  Call it government enforced charity, not “entitlement”. On Thursday night President Obama will tell us his plans to provide more jobs.  Can he really create jobs?  When the government hires someone, where does the money to pay these new government employees come from?  From taxing the rest of us, from government borrowing more and driving us deeper in debt, or from printing up more paper money causing inflation down the road.  Each job saved or created by the Obama administration has cost us $533,000. (Dan Farber, CBS News)  Jobs created by the private sector cost us nothing.  In fact, for each unproductive job the government creates, two productive jobs in the private sector are destroyed. (Rick Santorum) The best jobs program would be for the government to get out of the way of those who really produce jobs, by no longer punishing the productive to reward the unproductive, by lessening the regulatory burden on the productive, by providing the economic stability so that the real job-creators can anticipate future costs, plan the expansion of their companies, and hire more people. If a government continually tries to soak the rich, they lose the very people who made their country productive. Millions in recent centuries came to America for opportunity.  If our government now limits this opportunity, people will leave in droves.  Millions fled the Socialist experiments of the 20th century to seek freedom and opportunity in the West.  Why abandon what has proven successful, only to copy the failed policies of failed regimes which we thought were on the ash heap of history?

('76 Contributor) Authors Gretchen Morgenson and Joshua Rosner have done the country great service with their book, Reckless Endangerment, recently noted at # 1 on the New York Times hardcover business reading list. If you anguish and puzzle as I do about our country’s future, here’s what you need to know about the mortgage meltdown and the unpunished scoundrels behind it. In 1992 unremarkable bureaucrats led by Alicia Munnell, authored a lending report under the aegis of the Boston Federal Reserve.  It was humdrum reading, except a predisposed reader could have concluded that lending discrimination was rampant in the home mortgage sector. And many did. The grievance industry oxygenated the convenient conclusion into a new affordable lending battle cry and Munnell’s document became the fuse that ignited the home mortgage meltdown.  Never mind that more objective thinkers would conclude that banks don’t lavish loans on applicants with erratic and low incomes, negligible cash reserves and poor credit histories. Voices of reason were quickly drowned out as the press and fairness denizens insisted that social justice be done.  Thus was born a new constitutional right: home ownership for all. And the opportunists were legion, just waiting in the wings. Enter Jim Johnson with Fannie Mae and her brother, Freddie Mac. Some of the misdeeds unearthed by the authors about the high flyers in these “public-private partnerships” and their chum-in-the-water enablers would have landed most of us in jail.  The lineup is entertaining not just for the sheer brazenness of their underhandedness, but also for the high profiles these same actors still have today.  Should you have opinions about Barney Frank, Angelo Mozillo, Allen Greenspan, Timothy Geithner, Robert Rubin, Jim Johnson, Franklin Raines, Peter Orszag and others, shelve them until you finish the book.  “A Team” players all in the credit meltdown, you’ll be shocked to learn the most crooked among them never served a day in jail. The Peter Principle of screw-up and move up seems to work exceptionally well in positions of public trust. Let’s not overlook Wall Street. For those of you who believe in fat cats, the evidence behind your gut instinct is here too.  What fair and not so fair-minded people mucked up and was steamrolled over government regulators and greased by well-moneyed lobbyists, was finally metastasized by the Gordon Geckos of New York City.  On this subject Morgenson and Rosner deliver great clarity. They detail how investment banking wonders piled trashy loans into gift boxes, called CDO’s (collateralized debt obligations), and laughed their way to million dollar bonuses while leaving taxpayers on the hook. Should you genuinely wonder how we have reached our current national economic malaise, you owe it to yourself to read this thoroughly researched and documented autopsy.  History may yet judge this calamity the American Waterloo.  

(Denver Post, May 16) Wind velocity abated in Colorado last week when the legislature adjourned for 2010.  Noxious air masses continue moving across the state, however, flattening better judgment.  Hang onto your hat and your wallet. “Cleaner air and cheaper energy” was the slogan when voters mandated wind and other renewable sources for 10 percent of the state’s electric generation with Amendment 37 in 2004.  Democratic legislators liked the idea so much that they upped the mandate to 20 percent in 2007 and boosted it this year to 30 percent. One small problem: neither half of the slogan is true.  You know what’s already happened to your rates from Xcel.  Will costs level off with more reliance on renewables?  Not according to the Energy Information Administration, which says in the coming decade wind will cost about 75 percent more than natural gas, 50 percent more than coal, and 25 percent more than nuclear.  And solar will be twice the cost of wind.  But pollution is a different story, right?  Surely a silently whirring wind turbine (never mind the bird fatalities) is better for air quality than a plant burning fossil fuels and belching carbon.  You’d think so, but you’d be wrong. During the years 2006-2009 here in metro Denver (designated a non-attainment area for special monitoring of our air pollution by the EPA), forcing wind into the electric-generation mix actually resulted in HIGHER emission levels of sulfur dioxide and nitrous oxide, the principal components of ozone and smog – as well as higher emission levels of CO2, widely feared as a greenhouse gas.  Oops. Two obvious questions follow: How so?  And says who?  The “how” is a consequence of wind power’s intermittent reliability (online only about a third of the time), which requires coal-fired plants to cycle on and off more frequently and burn much dirtier as a result.  The “who” is a consultancy called BENTEK [sic, all caps] Energy, based in Evergreen and nationally respected for such research as the wind study I’m citing. “How Less Became More: Wind, Power, and Unintended Consequences in the Colorado Energy Market” is their report, commissioned by Independent Petroleum Association of Mountain States and available at www.ipams.org.  The methodology looks solid to this layman, though potential bias stemming from the study’s natural-gas sponsorship was fairly noted in the industry press after its April 19 release.  To cross-check the research, sponsors are seeking peer review from such institutions as MIT, Stanford, and the Colorado School of Mines.  On the other hand, as a savvy oilman reminded me, “those guys are all on big federal grants for green research,” so their scientific impartiality can’t be taken for granted either.  After East Anglia and Climategate, peer review isn’t what it was. “How Less Became More” takes a sensible tone emphasizing tradeoffs instead of silver bullets or gotcha points.  It recommends that electric utilities can avoid the wind-related emissions spikes by shifting generation from coal plants to natural gas as soon as possible.  And this takes on national significance amid the current discussion of a federal mandate for renewables.  The trouble with mandates is that they beget more mandates, which beget more still. The meddling worsens and liberty weakens.  So this year’s misbegotten generation conversion bill, HB 1365, sweetening the deal for Xcel at the expense of electric consumers for a speedy switch from coal to gas, was far from the clean green winner that some of my Republican friends believed.  More mischief will follow. Conservatives, so-called, who attempt to engineer kilowatts and particulates, forfeit credibility in criticizing liberals who attempt to engineer health care.  Legislators trying to micromanage an industry will never get it right. Never. They’re delusional, like the Indiana House years ago when it decreed the value of Pi.  Markets yes, mandates no.  Amendment 37 was backwards from the start.                                         

(CCU Faculty) 2010 marks the 150th anniversary of the election of Abraham Lincoln to the Presidency.  It is fitting that we recognize this anniversary, as Lincoln’s election marked a huge turning point in our nation’s history.  I will accordingly offer a series of posts drawing our attention to the milestones of 1860.Throughout much of that year, Lincoln traveled to several states to deliver many important speeches.  He focused considerable attention on the issue of slavery and, while doing so, forced his audiences to consider what the United States was about.  In nearly every speech, Lincoln returned to our founding document: the Declaration of Independence. In fact, in his Peoria Speech of 1854, he referred to the Declaration as the “sheet anchor” of America.  Lincoln’s continuous return to the Declaration was due to the fact the he believed that it, more than anything else, defined the nature and purpose of the Union.Just at this point in that fateful year, on February 27, having traveled from his home in Illinois to the northeast, Abraham Lincoln gave the first of his major election year speeches at the Cooper Union in New York City.  In this speech, Lincoln painstakingly describes the thoughts of the authors of our Constitution concerning slavery.  This was significant, as southerners were increasingly manipulating the thoughts and words of the Founders, arguing that they viewed chattel slavery as a good institution and that the founders did not believe that African slaves were fully human, entitled to equal rights.In the Dred Scott Opinion, Chief Justice Taney had wrongly argued that the Founding Fathers never intended for blacks to enjoy equal rights in America.  Likewise, Senator Stephen Douglas had argued in a published article that the Founders had been opposed to the Congress having power to regulate slavery in the territories.  Douglas was a proponent of allowing the voters within each territory to determine whether to be a free state or a slave state.  This position violated the long-standing rules passed by the Congress in 1820, whereby in the territory adopted from the Louisiana Purchase, Congress had limited where slavery could and could not be implemented.In preparation for this speech, Lincoln devoted hours of research time in order to determine what exactly the authors of the Constitution believed concerning slavery, and whether or not it could exist for long in light of the principles laid down in the Declaration of Independence.  Lincoln’s law partner William Herndon noted that Lincoln spent considerable effort studying the founders, writing: "No former effort in the line of speech-making had cost Lincoln so much time and thought as this one."  The Speech is divided into three parts.  In part one, Lincoln systematically goes through the 39 delegates who had signed on to the Constitution at the Convention of 1787.  In this, Lincoln proves decisively that of these delegates, an overwhelming majority were either opposed to the spread of slavery or were silent on the matter.  There was little to no evidence that the signers of the Constitution found it outside of the purview of the Congress to regulate the spread of slavery in the territories.  As an example, Lincoln cites the fact that 76 members of the First Congress (including 16 of the 39) framed the first ten Amendments at the very same time that they were passing the Ordinance that enforced the prohibition of slavery in the Northwest Territory.The second part of his speech deals with the problem of slave rebellions and the south’s claim that such rebellions were caused by the Republican Party.  Lincoln denies this, stating that there was no evidence that any Republicans had supported slave revolts.  Nonetheless, Lincoln continues to stress the moral wrongness of slavery.  Quoting Jefferson, Lincoln states: “It is still in our power to direct emancipation, and deportation, peaceably, and in such slow degrees, as the evil will wear off insensibly; and their places be, pari passu, filled up by free white laborers. If, on the contrary, it is left to force itself on, human nature must shudder at the prospect held up."The final part of the Cooper Union Speech turns to the evolving attitude of the southerners.  Lincoln believed that the south was no longer merely interested in keeping slavery legal in the south.  Rather, with the Kansas Nebraska Act and the Dred Scott Opinion as their support, southerners were increasingly motivated to have slavery spread to states and territories where it had been previously forbidden.  Linked to this expansion was the southern belief that slavery was actually a good institution and the proper place for people of African descent.  For this reason, Lincoln concluded that nothing would satisfy the southerners save finding slavery to be good, and as such, allowing for it to spread.  “So, what will satisfy them? We must stop calling slavery wrong. We must call it right. We cannot be silent. We must be with them. We must support Senator Douglas's sedition act, it must be enacted and enforced. We must suppress all declarations that slavery is wrong. We must pull down the Free State Constitutions. Yes, to outlaw slavery is to say it is wrong, so we must allow slavery. We must remove all taint of opposition to slavery. This, and this alone, will satisfy them.”Lincoln concludes with this challenge and admonition to his fellow Republicans: “So, Republicans, I say: Do not give in! Do not compromise! Do not seek some middle ground between right and wrong. Let us have faith that right makes might, and in that faith, let us, to the end, dare to do our duty as we understand it.”Many modern historians have attempted to frame the election of 1860 into a battle over “states rights”, “property” and “economic differences.”  It cannot be more clear that the victor in 1860 knew full well that while each of these concepts is certainly relevant to the election, slavery was the central issue.  For Lincoln, the future of the Union would be determined by the outcome on this issue.  His clarity of purpose and determination to end what is morally wrong define the election of 1860.

I recently got an email from a university professor in the former Soviet Republic of Moldova.  He was my colleague, when I was a visiting Fulbright professor to his country five years ago, and he visited CCU in 1998, debating me publically on whether Vladimir Putin was responsible for the decline in personal freedom in Russia and a threat to the United States.  So the other day he wrote me to ask, “How is the current US President viewed in Colorado, specifically knowing your state's political view.  You know I was always interested in U.S. politics, elections.”  Since my friend is a leading expert in his country on western politics and often serves as an advisor to his government, I felt compelled to respond: Dear Vitalie: America was born in a tax revolt.  A European king was trying to squeeze as much money as possible from his subjects to fund his global agenda.  Those very settlers had already fled Europe to avoid tyrannical government.  Their dream, what we know call “The American Dream” was to create a better life for themselves and their family, to build their own wealth, which would not be siphoned off by a government claiming to represent their interests. When they finally began to organize their own government, they made sure there were certain safeguards built in their explicit written constitution to insure their freedom. They wanted:1) Free Markets, not manipulated by government bureaucrats, who would claim to speak for the masses but actually look out for their own corrupt special interests.  In a free market everybody gets a voice. Every time one spends a dollar, it is a vote for more of that product to be produced. They spent that dollar because they felt they got the best product at the most reasonable price.  If the government had set that price, it would have been a bureaucrat not the people who affected the economy. As in any command economy, bureaucrats look out for their own interests, which results in a corrupt system where those who know the bureaucrat get the product.  When I lived in your country, I was amazed at the level of corruption within the government.  Free markets empower the people.  Governments subjugate the people.  For that reason America’s founders also wanted: 2) Limited Government.  If governments made decisions for individuals, those decisions would benefit bureaucrats, not the people.  Who knows what is best for you and your family, a government official or you?  Who cares most for you and your family, a government official or you?  Statist political experiments from both right and left have been tried around the world and have failed. They have only brought massive violence, death and poverty.Most Americans I know prefer the ideas of John Locke and Adam Smith, to those of Karl Marx and Mao Tse-tung.  Locke and Smith wanted personal political and economic freedom, and produced untold prosperity.  Marx and Mao wanted to control the masses, and brought untold suffering to hundreds of millions.  Many here in Colorado with whom I have spoken fear that Obama will not bring the hope many expect, but instead bring another failed experiment in social planning and human deprivation.  Respectfully, William Watson

This is truly unbelievable.  House Majority Leader Steny Hoyer and 14 fellow Democrats have introduced the Automobile Dealer Economic Rights Restoration Act of 2009.  Now we not only have the government  competing (through Chrysler and G.M. ) with other automobile companies. With this bill, we also have some congressmen who want the government to compete with itself by passing legislation to restore the dealers' rights, even as it runs the auto companies who terminated those same dealers! I wonder who's  going to pay for that?

The  country is now immersed in a deep debate. President Barack Obama is advocating sweeping “reforms” to the American health care system that will inevitably lead down the dark path to socialized medicine.  But it's not more government we need to reform healthcare—it's more freedom. The thought of nationalizing healthcare is tantalizing for many Americans.  Yet socialized medicine would cost hundreds of billions of dollars, create lengthy, life-threatening wait lines, push out private industry and result in inferior care.  Not to mention that nationalized healthcare is not truly free because somebody is going to pay for it—and that somebody is you, the taxpayer.  In order to compensate for the costs, our taxes would have to go up, violating the President's pledge against raising taxes on the middle class. Consequently, private healthcare operations would be crowded out.  Those who are paying for their own health coverage would also be paying for those who are under the new government program, eventually discouraging them from maintaining private coverage and, inversely, encouraging them to switch to the cheaper government program.  Additionally, the government could initiate regulations and policies to benefit its program over competitors, and many employers will determine that it is more economical to drop their health insurance plans due to the increased financial strain the new program would force upon them. As with the U.S. Postal Service, any entity run by the government has a striking advantage over private industry.  The USPS posted a record-breaking loss in the second quarter of this year of 10.5%, or $1.9 billion—the largest drop in 38 years. Assume for the moment they were to lose more and more money over the course of this year as they lose business, and assume that the very same thing is happening to competitors such as FedEx. USPS, unlike FedEx, has the benefit of taxpayer money to back it up.  This has the potential to stifle competition significantly were this hypothetical to play out. Take Fannie Mae and Freddie Mac.  While it was never written down on paper, everyone understood that should something happen to either financial institution, the government would be there to back it up.  As these examples prove, government programs and government-sponsored enterprises have a unique advantage over their private sector counterparts that, as inefficient as they may be, allows them to continue irrespective of the negative results of their activities.  There is no risk when the government is backing you up. And as the CATO Institute’s Michael Tanner put it, “Government would compel Americans to purchase health insurance, controlling its content, how much we pay, and the relationships between insurers, doctors, and patients. Government bureaucrats would determine whether Americans received certain medical services.” To the President’s argument that the program would serve as a sort-of support system only for those who can’t afford it, look at Social Security.  When FDR began that program in the 1930s, it was intended as a supplement to personal retirement plans, not the primary source of retirement income that it is today. In this case, a program meant as only a support system has grown to be the primary source for retirement funds. But it doesn’t have to be this way.  The United States' healthcare system contains the greatest innovations, the highest-quality care and some of the best doctors in the world.  The problem with our healthcare system is the disparity between those who can afford it and those who cannot. President Obama is right that we need reform.  The status quo is unacceptable.  But his nationalization answer to “cutting costs” does not address the fundamental reasons healthcare outlays are so great. The plan will do little more than inject more government spending and bureaucracy into the industry.  The way to fix this is not with greater government control or a new government program, but through more freedom in the marketplace. The healthcare industry is one of the most heavily regulated industries in the country, with the net cost of regulation estimated by Duke University Professor Chris Conover to be $169 billion a year. As with any industry, in order to pay for the dictates of the government, institutions of health are forced to raise costs, which extends to consumers in the form of higher prices. Government regulations and policies have essentially mandated a third party-based system that forces the consumer to work through health insurance companies, HMO's, employers and other middlemen that pay the supplier.  84% of all personal healthcare spending is made through private health insurance, the government or other private expenditures that are not directly from the patient. Simple human nature tells us that when someone other than the consumer is doing the paying, demand will rise.  Why? Because when an individual is separated from the spending and someone else is paying the costs, consumers are encouraged to use the service more as the incentive for individuals to save for themselves diminishes.  After all, the mentality goes, if someone else is paying for it, why should I care? Likewise, basic economics tells us that as demand rises and supply remains stagnant, prices (premiums) will inevitably go up, which in turn disadvantages those who pay directly, such as the self-employed. Encouraging the third-party system are tax exemptions for employer-provided health insurance that the millions of self-employed and small business owners and workers who pay on their own do not receive. The government incentives, policies and regulations put in place, in large part by the federal tax code, serve to do nothing more than exacerbate the problem. The layman's prescription for health reform is increased competition and market freedom.   Not a day goes by where we don't see commercials for Geico, AllState and other car insurance companies competing over who provides the best service at the lowest price—competition absent from healthcare because of the third-party system.  Insurance companies aren’t competing for individual consumers—they’re contending for large corporations. To fix this, the healthcare tax exemption needs to be equalized across the board so that everyone, not just the middlemen and large corporations, will benefit from it.  That means small businesses as well as individuals.  Tax-free health savings accounts need to be expanded, thereby helping individuals to purchase their own health insurance or pull from a pool of money when they need to. Adjusting the policies and regulations perpetuating the third-party system, like the tax exclusion, would increase competition by allowing consumers to shop around on their own, decreasing costs substantially while maintaining high quality.  Furthermore, due to the high cost of regulation, deregulation is critical to opening up the market. Of course these are just a few starting points that only scratch the surface, but one thing is undeniable: The question is not one of government versus status quo or big business versus government, as the President is trying to frame it.  It goes well beyond that. It's not more government we need to solve healthcare—it's more freedom. Jimmy Sengenberger is a political science student at Regis University in Denver, a 2008 honors graduate of nearby Grandview High School, a national organizer for the Liberty Day movement, online radio host, and a columnist for the Villager suburban weekly.  His website is SengCenter.com. He is also College Liaison for BackboneAmerica.net, working through the Backbone Americans group on Facebook.