Tidbits Quotations on September 23, 2010
To Accompany the September 23, 2010 edition of Tidbits
Bob Jensen at Trinity University


This is not a forwarded politically-biased message since David Walker is leading a very bipartisan effort to save the United States from economic disaster. Former Andersen Partner David Walker was appointed U.S. Comptroller General by President Bill Clinton and retained in the same position under President Bush ---

In his government position David Walker became staggered by the pending economic doom of the United States.

At the American Accounting Association 2010 annual meetings in San Francisco in August, David Walker will be the only person inducted this year into the Accounting Hall of Fame. Since leaving government service, David became the CEO of the Peterson Foundation that is trying to aid our government in saving the United States from entitlements bankruptcy. (By the way, as I read it, the Peterson Foundation supported the latest health care legislation that, in theory, will reduce deficit spending, although I personally think it should’ve been a full-fledged national health plan).

President Obama has appointed a joint task force to find ways of preventing total economic disaster of the United States that exists not so much because of current trillion dollar deficits as the threat of unfunded future entitlements obligations, with Medicare being the biggest unfunded entitlement as baby boomers retire.

Before viewing the Town Hall video, you might want to view the following earlier video:

You can watch a 30-minute version at
http://www.pgpf.org/newsroom/press/IOUSA-Solutions-Premiers-on-CNN/   (Scroll Down a bit)
Note that great efforts were made to keep this a bipartisan panel along with the occasional video clips of President Obama discussing the debt crisis. The problem is a build up over spending for most of our nation’s history, It landed at the feet of President Obama, but he’s certainly not the cause nor is his the recent expansion of health care coverage the real cause.

One take home from the CNN show was that over 60% of the booked National Debt increases are funded off shore (largely in Asia and the Middle East).  

 This going to greatly constrain the global influence and economic choices of the United States.

By 2016 the interest payments on the National Debt will be the biggest single item in the Federal Budget, more than national defense or social security. And an enormous portion of this interest cash flow will be flowing to foreign nations that may begin to put all sorts of strings on their decisions  to roll over funding our National Debt.

The unbooked entitlement obligations that are not part of the National Debt are over $60 trillion and exploding exponentially. The Medicare D entitlements to retirees like me added over $8 trillion of entitlements under the Bush Presidency.

Most of the problems are solvable except for the Number 1 entitlements problem --- Medicare.
Drastic measures must be taken to keep Medicare sustainable.



Watch National Town Meetings


Video on IOUSA Bipartisan Solutions to Saving the USA

If you missed Sunday afternoon CNN’s two-hour IOUSA Solutions broadcast, you can watch a 30-minute version at
http://www.pgpf.org/newsroom/press/IOUSA-Solutions-Premiers-on-CNN/   (Scroll Down a bit)
Note that great efforts were made to keep this a bipartisan panel along with the occasional video clips of President Obama discussing the debt crisis. The problem is a build up over spending for most of our nation’s history, It landed at the feet of President Obama, but he’s certainly not the cause nor is his the recent expansion of health care coverage the real cause.

One take home from the CNN show was that over 60% of the booked National Debt increases are funded off shore (largely in Asia and the Middle East).
This going to greatly constrain the global influence and economic choices of the United States.

By 2016 the interest payments on the National Debt will be the biggest single item in the Federal Budget, more than national defense or social security. And an enormous portion of this interest cash flow will be flowing to foreign nations that may begin to put all sorts of strings on their decisions  to roll over funding our National Debt.

The unbooked entitlement obligations that are not part of the National Debt are over $60 trillion and exploding exponentially. The Medicare D entitlements to retirees like me added over $8 trillion of entitlements under the Bush Presidency.

Most of the problems are solvable except for the Number 1 entitlements problem --- Medicare.
Drastic measures must be taken to keep Medicare sustainable.


I thought the show was pretty balanced from a bipartisan standpoint and from the standpoint of possible solutions.

Many of the possible “solutions” are really too small to really make a dent in the problem. For example, medical costs can be reduced by one of my favorite solutions of limiting (like they do in Texas) punitive damage recoveries in malpractice lawsuits. However, the cost savings are a mere drop in the bucket. Another drop in the bucket will be the achievable increased savings from decreasing medical and disability-claim frauds. These are important solutions, but they are not solutions that will save the USA.

The big possible solutions to save the USA are as follows (you and I won’t particularly like these solutions):



Watch for the other possible solutions in the 30-minute summary video ---
(Scroll Down a bit)


Here is the original (and somewhat dated video that does not delve into solutions very much)
IOUSA (the most frightening movie in American history) ---
(see a 30-minute version of the documentary at www.iousathemovie.com )

If you missed Sunday afternoon CNN’s two-hour IOUSA Solutions broadcast, you can watch a 30-minute version at
http://www.pgpf.org/newsroom/press/IOUSA-Solutions-Premiers-on-CNN/   (Scroll Down a bit)
Note that great efforts were made to keep this a bipartisan panel along with the occasional video clips of President Obama discussing the debt crisis. The problem is a build up over spending for most of our nation’s history, It landed at the feet of President Obama, but he’s certainly not the cause nor is his the recent expansion of health care coverage the real cause.

Watch the World Premiere of I.O.U.S.A.: Solutions on CNN
Saturday, April 10, 1:00-3:00 p.m. EST or Sunday, April 11, 3:00-5:00 p.m. EST

Featured Panelists Include:

  • Peter G. Peterson, Founder and Chairman, Peter G. Peterson Foundation
  • David Walker, President & CEO, Peter G. Peterson Foundation
  • Sen. Bill Bradley
  • Maya MacGuineas, President of the Committee for a Responsible Federal Budget
  • Amy Holmes, political contributor for CNN
  • Joe Johns, CNN Congressional Correspondent
  • Diane Lim Rodgers, Chief Economist, Concord Coalition
  • Jeanne Sahadi, senior writer and columnist for CNNMoney.com

Watch for the other possible solutions in the 30-minute summary video ---
(Scroll Down a bit)


CBS Sixty minutes has a great video on the enormous cost of keeping dying people artificially alive:
High Cost of Dying --- http://www.cbsnews.com/video/watch/?id=5737437n&tag=mncol;lst;3
(wait for the commercials to play out)

U.S. Debt/Deficit Clock --- http://www.usdebtclock.org/

"The Looming Entitlement Fiscal Burden," by Gary Becker, The Becker-Posner Blog, April 11, 2010 ---

"The Entitlement Quandary," by Richard Posner, The Becker-Posner Blog, April 11, 2010 ---

David Walker --- http://en.wikipedia.org/wiki/David_M._Walker_(U.S._Comptroller_General)

Harvard Professor Niall Ferguson --- http://en.wikipedia.org/wiki/Niall_Ferguson

Harvard Profession Video:   Niall Ferguson: Empires on the Edge of Chaos ---

Call it the fatal arithmetic of imperial decline. Without radical fiscal reform, it could apply to America next.
Niall Ferguson, "An Empire at Risk:  How Great Powers Fail," Newsweek Magazine Cover Story, November 26, 2009 --- http://www.newsweek.com/id/224694/page/1
Please note that this is NBC’s liberal Newsweek Magazine and not Fox News or The Wall Street Journal.

. . .

In other words, there is no end in sight to the borrowing binge. Unless entitlements are cut or taxes are raised, there will never be another balanced budget. Let's assume I live another 30 years and follow my grandfathers to the grave at about 75. By 2039, when I shuffle off this mortal coil, the federal debt held by the public will have reached 91 percent of GDP, according to the CBO's extended baseline projections. Nothing to worry about, retort -deficit-loving economists like Paul Krugman.

. . .

Another way of doing this kind of exercise is to calculate the net present value of the unfunded liabilities of the Social Security and Medicare systems. One recent estimate puts them at about $104 trillion, 10 times the stated federal debt.

Continued in article --- http://www.newsweek.com/id/224694/page/1


Niall Ferguson is the Laurence A. Tisch professor of history at Harvard University and the author of The Ascent of Money. In late 2009 he puts forth an unbooked discounted present value liability of $104 trillion for Social Security plus Medicare. In late 2008, the former Chief Accountant of the United States Government, placed this estimate at$43 trillion. We can hardly attribute the $104-$43=$61 trillion difference to President Obama's first year in office. We must accordingly attribute the $61 trillion to margin of error and most economists would probably put a present value of unbooked (off-balance-sheet) present value of Social Security and Medicare debt to be somewhere between $43 trillion and $107 trillion To this we must add other unbooked present value of entitlement debt estimates which range from $13 trillion to $40 trillion. If Obamacare passes it will add untold trillions to trillions more because our legislators are not looking at entitlements beyond 2019.


The Meaning of "Unbooked" versus "Booked" National Debt
By "unbooked" we mean that the debt is not included in the current "booked" National Debt of $12 trillion. The booked debt is debt of the United States for which interest is now being paid daily at slightly under a million dollars a minute. Cash must be raised daily for interest payments. Cash is raised from taxes, borrowing, and/or (shudder) the current Fed approach to simply printing money. Interest is not yet being paid on the unbooked debt for which retirement and medical bills have not yet arrived in Washington DC for payment. The unbooked debt is by far the most frightening because our leaders keep adding to this debt without realizing how it may bring down the entire American Dream to say nothing of reducing the U.S. Military to almost nothing.

Niall Ferguson,
"An Empire at Risk:  How Great Powers Fail," Newsweek Magazine Cover Story, November 26, 2009 --- http://www.newsweek.com/id/224694/page/1

This matters more for a superpower than for a small Atlantic island for one very simple reason. As interest payments eat into the budget, something has to give—and that something is nearly always defense expenditure. According to the CBO, a significant decline in the relative share of national security in the federal budget is already baked into the cake. On the Pentagon's present plan, defense spending is set to fall from above 4 percent now to 3.2 percent of GDP in 2015 and to 2.6 percent of GDP by 2028.

Over the longer run, to my own estimated departure date of 2039, spending on health care rises from 16 percent to 33 percent of GDP (some of the money presumably is going to keep me from expiring even sooner). But spending on everything other than health, Social Security, and interest payments drops from 12 percent to 8.4 percent.

This is how empires decline. It begins with a debt explosion. It ends with an inexorable reduction in the resources available for the Army, Navy, and Air Force. Which is why voters are right to worry about America's debt crisis. According to a recent Rasmussen report, 42 percent of Americans now say that cutting the deficit in half by the end of the president's first term should be the administration's most important task—significantly more than the 24 percent who see health-care reform as the No. 1 priority. But cutting the deficit in half is simply not enough. If the United States doesn't come up soon with a credible plan to restore the federal budget to balance over the next five to 10 years, the danger is very real that a debt crisis could lead to a major weakening of American power.


Entitlements Warnings --- http://www.cs.trinity.edu/~rjensen/temp/Entitlements7-21-10%20-%20EOTM%20-%20Twilight.pdf
Thank you for giving me permission to post this Michael Cembalest [michael.cembalest@jpmorgan.com]
Michael Cembalest, Chief Investment Officer, J.P. Morgan Private Banking

"Peter G. Peterson: Tax Aversion Syndrome and Our Deficit Future:  We've run out of painless options. Higher taxes and reduced entitlement benefits for the well-off are the only solutions," The Wall Street Journal, July 24, 2010 ---

People fret about the current public debt rising to 60% of GDP, which many economists believe should be the maximum debt level. But they ignore Congressional Budget Office (CBO) projections that, under current policies, the public debt will reach a staggering 233% of GDP in 30 years and nearly 500% in 50 years.

This is an unthinkable and unsustainable path. In less than 50 years, for example, the CBO projects that interest payments on the national debt alone will represent nearly 20% of the entire U.S. economy and consume 100% of government revenues. This leaves not a penny for any government programs, including critically needed education, R&D and infrastructure. With plummeting savings rates, already 47% of the public debt is held by foreign nations. Borrowing trillions more from China, the Middle East and elsewhere will leave us more beholden to lenders whose interests may not align with our own. Given the growing concerns about the global debt crisis, we need to build confidence we are getting our fiscal house in order. This added confidence will help our recovery.

Continued in article

Federal Government warns against travel in some parts of the United States ---

Blessed are the young, for they shall inherit the national debt.
Herbert Hoover --- http://www.brainyquote.com/quotes/quotes/h/herberthoo110353.html


"Principles for Economic Revival:  Our prosperity has faded because policies have moved away from those that have proven to work. Here are the priorities that should guide policy makers as they seek to restore more rapid growth,"
The Wall Street Journal, September 16, 2010 ---

America's financial crisis, deep recession and anemic recovery have largely been driven by economic policies that have deviated from proven fact-based principles. To return to prosperity we must get back to these principles.

The most fundamental starting point is that people respond to incentives and disincentives. Tax rates are a great example because the data are so clear and the results so powerful. A wealth of evidence shows that high tax rates reduce work effort, retard investment and lower productivity growth. Raise taxes, and living standards stagnate.

Nobel Prize-winning economist Edward Prescott examined international labor market data and showed that changes in tax rates on labor are associated with changes in employment and hours worked. From the 1970s to the 1990s, the effective tax rate on work increased by an average of 28% in Germany, France and Italy. Over that same period, work hours fell by an average of 22% in those three countries. When higher taxes reduce the reward for work, you get

Long-lasting economic policies based on a long-term strategy work; temporary policies don't. The difference between the effect of permanent tax rate cuts and one-time temporary tax rebates is also well-documented. The former creates a sustainable increase in economic output, the latter at best only a transitory blip. Temporary policies create uncertainty that dampen economic output as market participants, unsure about whether and how policies might change, delay their decisions.

Having "skin in the game," unsurprisingly, leads to superior outcomes. As Milton Friedman famously observed: "Nobody spends somebody else's money as wisely as they spend their own." When legislators put other people's money at risk—as when Fannie Mae and Freddie Mac bought risky mortgages—crisis and economic hardship inevitably result. When minimal co-payments and low deductibles are mandated in the insurance market, wasteful health-care spending balloons.

Rule-based policies provide the foundation of a high-growth market economy. Abiding by such policies minimizes capricious discretionary actions, such as the recent ad hoc bailouts, which too often had deleterious consequences. For most of the 1980s and '90s monetary policy was conducted in a predictable rule-like manner. As a result, the economy was far more stable. We avoided lengthy economic contractions like the Great Depression of the 1930s and the rapid inflation of the 1970s.

The history of recent economic policy is one of massive deviations from these basic tenets. The result has been a crippling recession and now a weak, nearly nonexistent recovery. The deviations began with policies—like the Federal Reserve holding interest rates too low for too long—that fueled the unsustainable housing boom. Federal housing policies allowed down payments on home loans as low as zero. Banks were encouraged to make risky loans, and securitization separated lenders from their loans. Neither borrower nor lender had sufficient skin in the game. Lax enforcement of existing regulations allowed both investment and commercial banks to circumvent long-established banking rules to take on far too much leverage. Regulators, not regulations, failed.

The departures from sound principles continued when the Fed and the Treasury responded with arbitrary and unpredictable bailouts of banks, auto companies and financial institutions. They financed their actions with unprecedented money creation and massive issuance of debt. These frantic moves spooked already turbulent markets and led to the financial panic.

More deviations occurred when the government responded with ineffective temporary stimulus packages. The 2008 tax rebate and the 2009 spending stimulus bills failed to improve the economy. Cash for clunkers and the first-time home buyers tax credit merely moved purchases forward by a few months.

Then there's the recent health-care legislation, which imposes taxes on savings and investment and gives the government control over health-care decisions. Fannie Mae and Freddie Mac now sit with an estimated $400 billion cost to taxpayers and no path to resolution. Hundreds of new complex regulations lurk in the 2010 financial reform bill with most of the critical details left to regulators. So uncertainty reigns and nearly $2 trillion in cash sits in corporate coffers.

Since the onset of the financial crisis, annual federal spending has increased by an extraordinary $800 billion—more than $10,000 for every American family. This has driven the budget deficit to 10% of GDP, far above the previous peacetime record. The Obama administration has proposed to lock a sizable portion of that additional spending into government programs and to finance it with higher taxes and debt. The Fed recently announced it would continue buying long-term Treasury debt, adding to the risk of future inflation.

There is perhaps no better indicator of the destructive path that these policy deviations have put us on than the federal budget. The nearby chart puts the fiscal problem in perspective. It shows federal spending as a percent of GDP, which is now at 24%, up sharply from 18.2% in 2000.

Future federal spending, driven mainly by retirement and health-care promises, is likely to increase beyond 30% of GDP in 20 years and then keep rising, according to the Congressional Budget Office. The reckless expansions of both entitlements and discretionary programs in recent years have only added to our long-term fiscal problem.

As the chart shows, in all of U.S. history, there has been only one period of sustained decline in federal spending relative to GDP. From 1983 to 2001, federal spending relative to GDP declined by five percentage points. Two factors dominated this remarkable period. First was strong economic growth. Second was modest spending restraint—on domestic spending in the 1980s and on defense in the 1990s.

The good news is that we can change these destructive policies by adopting a strategy based on proven economic principles:

• First, take tax increases off the table. Higher tax rates are destructive to growth and would ratify the recent spending excesses. Our complex tax code is badly in need of overhaul to make America more competitive. For example, the U.S. corporate tax is one of the highest in the world. That's why many tax reform proposals integrate personal and corporate income taxes with fewer special tax breaks and lower tax rates.

But in the current climate, with the very credit-worthiness of the United States at stake, our program keeps the present tax regime in place while avoiding the severe economic drag of higher tax rates.

• Second, balance the federal budget by reducing spending. The publicly held debt must be brought down to the pre-crisis safety zone. To do this, the excessive spending of recent years must be removed before it becomes a permanent budget fixture. The government should begin by rescinding unspent "stimulus" and TARP funds, ratcheting down domestic appropriations to their pre-binge levels, and repealing entitlement expansions, most notably the subsidies in the health-care bill.

The next step is restructuring public activities between federal and state governments. The federal government has taken on more responsibilities than it can properly manage and efficiently finance. The 1996 welfare reform, which transferred authority and financing for welfare from the federal to the state level, should serve as the model. This reform reduced welfare dependency and lowered costs, benefiting taxpayers and welfare recipients.

• Third, modify Social Security and health-care entitlements to reduce their explosive future growth. Social Security now promises much higher benefits to future retirees than to today's retirees. The typical 30-year-old today is scheduled to get an inflation-adjusted retirement benefit that is 50% higher than the benefit for a typical current retiree.

Benefits paid to future retirees should remain at the same level, in terms of purchasing power, that today's retirees receive. A combination of indexing initial benefits to prices rather than to wages and increasing the program's retirement age would achieve this goal. They should be phased-in gradually so that current retirees and those nearing retirement are not affected.

Health care is far too important to the American economy to be left in its current state. In markets other than health care, the legendary American shopper, armed with money and information, has kept quality high and costs low. In health care, service providers, unaided by consumers with sufficient skin in the game, make the purchasing decisions. Third-party payers—employers, governments and insurance companies—have resorted to regulatory schemes and price controls to stem the resulting cost growth.

The key to making Medicare affordable while maintaining the quality of health care is more patient involvement, more choices among Medicare health plans, and more competition. Co-payments should be raised to make patients and their physicians more cost-conscious. Monthly premiums should be lowered to provide seniors with more disposable income to make these choices. A menu of additional Medicare plans, some with lower premiums, higher co-payments and improved catastrophic coverage, should be added to the current one-size-fits-all program to encourage competition.

Similarly for Medicaid, modest co-payments should be introduced except for preventive services. The program should be turned over entirely to the states with federal financing supplied by a "no strings attached" block grant. States should then allow Medicaid recipients to purchase a health plan of their choosing with a risk-adjusted Medicaid grant that phases out as income rises.

The 2010 health-care law undermined positive reforms underway since the late 1990s, including higher co-payments and health savings accounts. The law should be repealed before its regulations and price controls further damage availability and quality of care. It should be replaced with policies that target specific health market concerns: quality, affordability and access. Making out-of-pocket expenditures and individual purchases of health insurance tax deductible, enhancing health savings accounts, and improving access to medical information are keys to more consumer involvement. Allowing consumers to buy insurance across state lines will lower the cost of insurance.

• Fourth, enact a moratorium on all new regulations for the next three years, with an exception for national security and public safety. Going forward, regulations should be transparent and simple, pass rigorous cost-benefit tests, and rely to a maximum extent on market-based incentives instead of command and control. Direct and indirect cost estimates of regulations and subsidies should be published before new regulations are put into law.

Off-budget financing should end by closing Fannie Mae and Freddie Mac. The Bureau of Consumer Finance Protection and all other government agencies should be on the budget that Congress annually approves. An enhanced bankruptcy process for failing financial firms should be enacted in order to end the need for bailouts. Higher bank capital requirements that rise with the size of the bank should be phased in.

• Fifth, monetary policy should be less discretionary and more rule-like. The Federal Reserve should announce and follow a monetary policy rule, such as the Taylor rule, in which the short-term interest rate is determined by the supply and demand for money and is adjusted through changes in the money supply when inflation rises above or falls below the target, or when the economy goes into a recession. When monetary policy decisions follow such a rule, economic stability and growth increase.

In order to reduce the size of the Fed's bloated balance sheet without causing more market disruption, the Fed should announce and follow a clear and predictable exit rule, which describes a contingency path for bringing bank reserves back to normal levels. It should also announce and follow a lender-of-last-resort rule designed to protect the payment system and the economy—not failing banks. Such a rule would end the erratic bailout policy that leads to crises.

The United States should, along with other countries, agree to a target for inflation in order to increase expected price stability and exchange rate stability. A new accord between the Federal Reserve and Treasury should re-establish the Fed's independence and accountability so that it is not called on to monetize the debt or engage in credit allocation. A monetary rule is a requisite for restoring the Fed's independence.

These pro-growth policies provide the surest path back to prosperity.

Mr. Shultz, a former secretary of labor, secretary of Treasury and secretary of state, is a fellow at Stanford University's Hoover Institution. Mr. Boskin, a professor of economics at Stanford University and a senior fellow at the Hoover Institution, chaired the Council of Economic Advisers under President George H.W. Bush. Mr. Cogan, a senior fellow at the Hoover Institution, was deputy director of the Office of Management and Budget under President Ronald Reagan. Mr. Meltzer is professor of political economy at Carnegie Mellon University. Mr. Taylor, an economics professor at Stanford and a senior fellow at the Hoover Institution, was undersecretary of Treasury under President George W. Bush.

Bob Jensen's threads on the bailout are at

"Even Hillary Agrees!" by Chuck Norris, Townhall, September 14, 2010 ---

If Secretary of State Hillary Clinton warned last week that our rising national debt "poses a national security threat," should President Barack Obama or anyone in his administration be suggesting any economic plan that would increase it in any way?

At last week's Council on Foreign Relations meeting, Clinton was supposed to be espousing "a new American moment" and boosting U.S. global leadership, but she ended up dropping the country further in the tank (the debt tank, that is) during an off-script Q-and-A session after her 45-minute speech.

In response to a question from the president of the CFR, Richard Haass, on the impact of a monstrous and crippling national debt, Clinton veered from the Obama administration's typical economic path and plan.

Here's a portion of Hillary's actual reply to Haass: "I think that our rising debt (level) poses a national security threat, and it poses a national security threat in two ways. It undermines our capacity to act in our own interests, and it does constrain us where constraint may be undesirable. And it also sends a message of weakness internationally. I mean, it is very troubling to me that we are losing the ability ... to chart our own destiny."

I can't say often that I agree with Hillary, but on this point, we're in complete harmony. That is why I address it in the expanded paperback version of my latest New York Times best-seller, "Black Belt Patriotism," in the chapter titled "Stop America's Nightmare of Debt."

But then Clinton backpedaled by jumping on the old Obama administration blame-game bandwagon: "We don't need to go back and sort of re-litigate how we got to where we are, but it is fair to say that, you know, we fought two wars without paying for them, and we had tax cuts that were not paid for, either. And that has been a very deadly combination to fiscal sanity and responsibility."

That's too bad. Hillary was doing so well owning up to the administration's role in the mammoth national debt, but then she got caught up in that blame-Bush merry-go-round that is so contagious in this administration.

At this point, nearly two years into Obama's presidency, isn't that a lot like the pot calling the kettle black?

It's time, once and for all, for this administration to stop and get off that economic fault ferryboat. You can do that through the presidential campaign, but when the present White House has plummeted the U.S. into more debt than the cumulative totals of all administrations from George Washington to Ronald Reagan, it's time to put up or shut up. Let me explain.

Continued in article

"Head Of NJ Teachers' Union Makes $550,000 A Year--2X As Much As The Governor And 10X The Average American," by Gus Lubin, Business Insider, September 14, 2010 ---

"The Money of Fools," by Thomas Sowell, Townhall, September 14, 2010 ---

Seventeenth century philosopher Thomas Hobbes said that words are wise men's counters, but they are the money of fools.

That is as painfully true today as it was four centuries ago. Using words as vehicles to try to convey your meaning is very different from taking words so literally that the words use you and confuse you.

Take the simple phrase "rent control." If you take these words literally-- as if they were money in the bank-- you get a complete distortion of reality.

New York is the city with the oldest and strongest rent control laws in the nation. San Francisco is second. But if you look at cities with the highest average rents, New York is first and San Francisco is second. Obviously, "rent control" laws do not control rent.

If you check out the facts, instead of relying on words, you will discover that "gun control" laws do not control guns, the government's "stimulus" spending does not stimulate the economy and that many "compassionate" policies inflict cruel results, such as the destruction of the black family.

Do you know how many millions of people died in the war "to make the world safe for democracy"-- a war that led to autocratic dynasties being replaced by totalitarian dictatorships that slaughtered far more of their own people than the dynasties had?

Warm, fuzzy words and phrases have an enormous advantage in politics. None has had such a long run of political success as "social justice."

The idea cannot be refuted because it has no specific meaning. Fighting it would be like trying to punch the fog. No wonder "social justice" has been such a political success for more than a century-- and counting.

While the term has no defined meaning, it has emotionally powerful connotations. There is a strong sense that it is simply not right-- that it is unjust-- that some people are so much better off than others.

Justification, even as the term is used in printing and carpentry, means aligning one thing with another. But what is the standard to which we think incomes or other benefits should be aligned?

Is the person who has spent years in school goofing off, acting up or fighting-- squandering the tens of thousands of dollars that the taxpayers have spent on his education-- supposed to end up with his income aligned with that of the person who spent those same years studying to acquire knowledge and skills that would later be valuable to himself and to society at large?

Some advocates of "social justice" would argue that what is fundamentally unjust is that one person is born into circumstances that make that person's chances in life radically different from the chances that others have-- through no fault of one and through no merit of the others.

Maybe the person who wasted educational opportunities and developed self-destructive behavior would have turned out differently if born into a different home or a different community.

That would of course be more just. But now we are no longer talking about "social" justice, unless we believe that it is all society's fault that different families and communities have different values and priorities-- and that society can "solve" that "problem."

Nor can poverty or poor education explain such differences. There are individuals who were raised by parents who were both poor and poorly educated, but who pushed their children to get the education that the parents themselves never had. Many individuals and groups would not be where they are today without that.

All kinds of chance encounters-- with particular people, information or circumstances-- have marked turning points in many individual's lives, whether toward fulfillment or ruin.

None of these things is equal or can be made equal. If this is an injustice, it is not a "social" injustice because it is beyond the power of society.

You can talk or act as if society is both omniscient and omnipotent. But, to do so would be to let words become what Thomas Hobbes called them, "the money of fools."


"Glenn Beck, Progressives and Me:  The TV host has a point when he says a limitless view of state power is un-American," by Ronald J. Pestritto, The Wall Street Journal, September 15, 2010 ---

On television, on radio, in books, and in a widely viewed speech to the Conservative Political Action Conference earlier this year, Glenn Beck has pronounced "progressivism" as the "disease" that afflicts America. His progressive opponents, meanwhile, seem obsessed with attacking him for this obsession—the Center for American Progress has even launched a series of papers to "set the record straight."

This battle reveals a deeper dispute about American history. Mr. Beck and others—such as Jonah Goldberg in his 2008 book, "Liberal Fascism"—tie today's progressives (the new word for liberals) to the progressive movement at the turn of the 20th century. They contend that the original progressives—including leaders such as Woodrow Wilson and Theodore Roosevelt—rejected America's founding principles. Mr. Beck also claims that today's leftist policies are the culmination of a journey begun by progressives over a century ago.

I think it's fair to say that I'm one of those indirectly responsible for the fuss. Messrs. Beck and Goldberg have drawn from my academic work on Woodrow Wilson, and I've been interviewed about this work by Mr. Beck as an occasional guest on his program.

Whatever I or anyone else thinks about Mr. Beck's programming or political views, on one central historical issue he is correct: The progressive movement did indeed repudiate the principles of individual liberty and limited government that were the basis of the American republic. America's original progressives were convinced that the country faced a set of social and economic problems demanding a sharp increase in federal power. They also said that there was too much emphasis placed on protecting the liberty of individuals at the expense of broader social justice. So did this make them socialists—a charge frequently leveled by Mr. Beck?

Woodrow Wilson did oppose the actual socialist movement of his day, and he didn't believe that the government at the time was capable of accomplishing everything socialists then had in mind. Nevertheless, in his 1887 essay, "Socialism and Democracy," Wilson considered the socialist principle—"that all idea of limitation of public authority by individual rights be put out of view"—to be entirely consistent with democratic principles: "In fundamental theory socialism and democracy are almost if not quite one and the same. They both rest at bottom upon the absolute right of the community to determine its own destiny and that of its members. . . . Limits of wisdom and convenience to the public control there may be: limits of principle there are, upon strict analysis, none."

Theodore Roosevelt also recoiled from the socialist movement. But in his famous "New Nationalism" speech of 1910, he said it was necessary that there be "a far more active governmental interference" with the economy. "It is not enough," he said, that a fortune was "gained without doing damage to the community. We should permit it to be gained only so long as the gaining represents benefit to the community."

To achieve their ends, progressives understood that the original constitutional limits on the scope of the federal government had to be breached. This is why Roosevelt railed against court decisions, like the famous Supreme Court case of Lochner v. New York (1905), that upheld individual property rights against progressive legislation (in this case a law limiting the number of hours a baker could work). It is also why Wilson consistently advocated the adoption of a more English-style government, where there is no written fundamental law to serve as a check on the authority of the national legislature.

All this makes puzzling recent calls from some conservative quarters to lay off the original progressives. Matthew Continetti in the Weekly Standard, for instance, claims that "progressivism is a distinctly American tradition."

In fact, it was anything but. Wilson sought, in his 1886 essay on "The Study of Administration," to model America's national administration on Bismarck's Prussia. He wrote that this model of centralized government "is not of our making; it is a foreign science, speaking very little of the language of English or American principle. It . . . utters none but what are to our minds alien ideas. . . . It has been developed by French and German professors."

Other leading progressives such as Frank J. Goodnow, the president of Johns Hopkins University, noted approvingly (in a 1916 lecture) that in Europe, unlike in America, the rights an individual possesses "are, it is believed, conferred upon him, not by his Creator, but rather by the society to which he belongs. What they are is to be determined by the legislative authority in view of the needs of that society. Social expediency, rather than natural right, is thus to determine the sphere of individual freedom of action."

In thinking about alternatives to such a limitless vision of state power, we need not turn to some kind of minimalist anarchy. The Federalists of America's founding era were hardly shrinking violets about centralized government power; and police power lodged in the states was used vigorously prior to the progressive era of the early 20th century. But at a time when there is a serious debate about first principles—and when significant elements of the public appear receptive to criticisms of our march toward European-style social democracy—the meaning of progressivism, past and present, is surely relevant.

Today, a congressman such as Pete Stark can simply boast that the federal government "can do most anything in this country." And Speaker of the House Nancy Pelosi won't even consider the constitutionality of a government takeover of health care a "serious question." Given this state of affairs, it does not seem unreasonable to reflect on the origins of the disdain for the Constitution in the Progressive Era.

Mr. Pestritto is a professor of politics at Hillsdale College and the author of "Woodrow Wilson and the Roots of Modern Liberalism" (Rowman and Littlefield, 2005).


Every student should learn about the "Tragedy of the Commons"

Tragedy of the Commons --- http://en.wikipedia.org/wiki/Tragedy_of_the_commons

"Garrett James Hardin (Dallas 1915—Santa Barbara 2003)," by Vaclav Smil, American Scientist ---

In the world fond of simple associations, Garrett Hardin will be remembered above all as the man who made millions familiar with a concept known as "the tragedy of the commons." He wrote an article with that title for Science in 1968, when the first wave of environmental consciousness was swelling. That short essay became one of the most famous (and among the most cited and reprinted) pieces of ecological or, as Hardin would have preferred, "bioethical" writing.

Contrary to the usual perception, this concept was not Hardin's invention. Such grand generalizations almost always have important precedents. Hence it is doubtful that even Aristotle, who pointed out long ago that "what is common to the greatest number has the least care bestowed upon it," was the first to reach this conclusion. Hardin does, however, deserve credit for recognizing the magnitude and the inevitability of this tragedy: It's not a deviancy or madness but rather perfectly rational behavior that leads to the long-term ruin of the commons, a word that evokes communal agricultural lands but also applies to ecosystems, rivers, oceans, organisms or mineral resources. That is, actions that benefit the individual (meaning single persons, households, villages, companies or nations) in the short term often end up hurting the collective.

Hardin's greatest service was presenting this notion in the form of a captivating parable about an overgrazed pasture and expressing it in precise, resonant language that left no room for appealing the initial verdict. He wrote: "Ruin is the destination toward which all men rush, each pursuing his own interest in a society that believes in the freedom of the commons." (Today's editors would, of course, have tried to force Hardin to change "men" to "people" or some other politically correct choice—probably to no avail.) He realized that this ruinous dynamic operates in any number of cases involving environmental pollution and the degradation of ecosystems. These instances include three of the leading concerns of our generation: extensive and drastic commercial overfishing of the oceans, continuing deforestation of the humid tropics and rising emissions of greenhouse gases, which may cause serious global warming during the latter half of this century.

Hardin was a man of many causes, yet several of his major writings were variations on the theme of the ruined commons. This is true about another of his widely read and reprinted essays, "Living on a Lifeboat," published in BioScience in 1974. There he used another parable to argue that immigration of the poor to affluent countries hurts those already living there, just as taking too many drowning people into a lifeboat risks sinking everybody. If the connection between these two essays wasn't apparent enough, it became so in 1995, when he published a book with the title The Immigration Dilemma: Avoiding the Tragedy of the Commons.

Clearly, Hardin was concerned about the number of people the United States could support. So it should not come as a complete surprise to learn that he was a founding member of Planned Parenthood and one of the nation's most influential advocates of population control and abortion on demand—the issue he said occupied most of his time between 1963 and 1973, the year that the Supreme Court made its landmark decision in Roe v. Wade. (It might come as a surprise, however, to learn that Hardin and his wife had four children.)

Continued in article

Forwarded by Paula

The Manitoba Herald, Canada, as Reported by Clive Runnels, August 26, 2010

The flood of American liberals sneaking across the border into Canada has intensified in the past week, sparking calls for increased patrols to stop the illegal immigration. The recent actions of the Tea Party are prompting an exodus among left-leaning citizens who fear they'll soon be required to hunt, pray, and to agree with Bill O'Reilly and Glenn Beck.

Canadian border farmers say it's not uncommon to see dozens of sociology professors, animal-rights activists and Unitarians crossing their fields at night. "I went out to milk the cows the other day, and there was a Hollywood producer huddled in the barn," said Manitoba farmer Red Greenfield, whose acreage borders North Dakota. The producer was cold, exhausted and hungry. He asked me if I could spare a latte and some free-range chicken. When I said I didn't have any, he left before I even got a chance to show him my screenplay, eh?"

In an effort to stop the illegal aliens, Greenfield erected higher fences, but the liberals scaled them. He then installed loudspeakers that blared Rush Limbaugh across the fields. "Not real effective," he said. "The liberals still got through and Rush annoyed the cows so much that they wouldn't give any milk."

Officials are particularly concerned about smugglers who meet liberals near the Canadian border, pack them into Volvo station wagons and drive them across the border where they are simply left to fend for themselves." A lot of these people are not prepared for our rugged conditions," an Ontario border patrolman said. "I found one carload without a single bottle of imported drinking water. They did have a nice little Napa Valley Cabernet, though." When liberals are caught, they're sent back across the border, often wailing loudly that they fear retribution from conservatives. Rumors have been circulating about plans being made to build re-education camps where liberals will be forced to drink domestic beer and watch NASCAR races.

In recent days, liberals have turned to ingenious ways of crossing the border. Some have been disguised as senior citizens taking a bus trip to buy cheap Canadian prescription drugs. After catching a half-dozen young vegans in powdered wig disguises, Canadian immigration authorities began stopping buses and quizzing the supposed seniors by asking questions about Perry Como and Rosemary Clooney to prove that they were alive in the '50s. "If they can't identify the accordion player on The Lawrence Welk Show, we become very suspicious about their age." an official said. Canadian citizens have complained that the illegal immigrants are creating an organic-broccoli shortage and are renting all the Michael Moore movies. "I really feel sorry for American liberals, but the Canadian economy just can't support them." an Ottawa resident said. How many art-history majors does one country need?"

In an effort to ease tensions between the United States and Canada, Vice President Biden met with the Canadian ambassador and pledged that the administration would take steps to reassure liberals. A source close to President Obama said, "We're going to have some Paul McCartney and Peter, Paul & Mary concerts. And we might even put some endangered species on postage stamps. The President is determined to reach out." he said. The Herald will be interested to see if Obama can actually raise Mary from the dead in time for the concert.






    Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

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    Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
    By Bob Jensen

    What went wrong in accounting/accountics research?  ---

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    Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

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