The mind of an unwitting statist...

I occasionally happen upon a local newsprint publication that calls itself "The Cherokee Ledger-News."

Somehow I ended up with a copy of the August 17th issue in my hands, my eyes drawn to the Opinion page. On that page I saw the following provocative title on an opinion piece by the paper's Managing Editor, an Erika Neldner: "Ethics trump politics."

At least I thought it was provocation that drew my interest, but then I realized it was more confusion than anything else. Was she saying that ethics do trump politics? Or was she saying that ethics should trump politics? Or was she drawing attention to a case in which ethics did trump politics. My curiosity and confusion piqued, I proceeded to read the piece in order to re-settle my previously settled (and relaxingly incurious and unconfused) mind.

It turns out that Ms. Neldner was chastising the local GOP outfit (the Cherokee County Republican Party or CCRP) for its "reprehensible" "recent action" in which she claims the CCRP was trying to unduly influence the Cherokee Board of Education to pressure GOP members of that board into "violat[ing] the Cherokee Board of Education's ethics policy by going against their judgment of what's best for the children."

My interest is not really in the substance of the point that Ms. Neldner was trying to get across. Indeed, for a variety of reasons I won't discuss, she does a poor job of making her case.  What I'm more interested in examining is the underlying thought process (or lack thereof) behind the entire piece.

It begins as follows:

The recent action by the Cherokee County Republican Party (CCRP), as it relates to the Cherokee Board of Education, is reprehensible, and it needs to keep its politicking out of issues where it doesn't belong.

A little more than a year ago, just after the July primary election, I sat at this very same desk and penned a piece about taking politics out of education.

A year later, politics has reared its ugly head in education once again, and my opinion hasn't changed: there is no room for politics in education.

 [Emphasis mine]

With an introduction like that can we expect the remainder to be a manifesto for eliminating the government monopoly on schooling, or at the very least, a plea for increased school choice via vouchers or tax breaks for those who wish to send their children to non-state schools?  Of course not!

The issue at hand was the CCRP's assertion that any Republican board member that did not vote for a new Cherokee county charter school would be stripped of their membership in the local party... well actually, it wasn't even that bad.  Here's Ms. Neldner again:

The CCRP recently met and approved an official resolution urging the four school board members, who dissented in the vote to approve the Cherokee Charter Academy, to either reconsider their decision to locally fund the school or renounce [sic] their membership from the local Republican Party.

 [Emphasis mine]

Now, I know nothing of the CCRP, so I'm predisposed to give them the benefit of the doubt: As far as I can tell, this is just a political organization doing whatever it can to make a statement about, and prevent future execution of, a mistake in its name that in their minds -- contra Ms. Neldner -- did in fact do harm to "the children."

However, in Ms. Neldner's mind, this is what constitutes a "reprehensible" "action" that seeks to pressure the Cherokee Board of Education to "violate the Cherokee Board of Education's ethics policy by going against their judgment of what's best for the children."  Apparently it's impossible for the CCRP to simply disagree with what is in fact "best for the children."  No -- they must be evil bastards who can't help but get their dirty politicking mitts into education for ... what reason?  Oh, well never mind -- we don't want to pull back that curtain.

But let's put that aside and, for the sake of argument, presume that Ms. Neldner is right -- the CCRP are a bunch of meddling know-nothings and malcontents bent on harming "the children."  What is the cause of this intrusion of politics into the classroom, and what is the solution?  Here is Ms. Neldner's logic:

She cites an SB 84, passed by the Georgia General Assembly, "last year," which she asserts "basically says local board of education members should be treated differently than other elected officials."  She then quotes the bill:

"... this elected office should be characterized and treated differently from other elected offices where the primary duty is independently to represent constituent views.... Local board of education members should abide by a code of conduct and conflict of interest policy modeled for their unique roles and responsibilities."

 Notwithstanding the fact that the incident which Ms. Neldner describes in fact seems to contradict that any such ethical lapse occurred (the board did NOT vote to approve the charter school), the thrust of the article seems to propose that this bill failed to do its job.  Finally we get to Ms. Neldner's solution:

... it's time for lawmakers to remove that eight-letter dirty word [politics] from our local school boards and make them non-partisan.

Call me skeptical -- or even cynical -- but doesn't this seem like a dubious proposition?  If passing a law failed to remove politics from education, does it seem likely that passing another law would work a second time around?  Can one magically erase political considerations simply by hiding the political affiliation of the office-seekers?

More to the point, what do you expect to happen when your schools are themselves the result of a political process?  What can you expect when nearly every aspect of education is essentially controlled by the state?    Furthermore, HOW DARE YOU use the political process to take a monopoly control over education, and then assert that the resultant schools cannot and should not be influenced by politics?  If I am of the opinion that politics already influences education too much, then you're damn right I'm going to use the political process to undo that influence, or failing that, do whatever I can to bend the end product toward what I think I and my children need.

Rather than being too hard on Ms. Neldner, though, I should give her some credit -- the desire to get politics out of education is a good one.  But this gets to the crux of my comments: her solution isn't to remove politics from education, but quite the opposite -- to double-down on legislative 'fixes'.

Statist tendencies almost invariably come down to one overall contradiction: that in order to solve issues that were at worst caused by the state, or at best not helped by the state, the solution is to expand the size and scope of the state.

How's this for revising the tax code?

The other day I was contemplating the federal government's various sources of revenue, marveling at the wisdom of the framers in constructing a government that has such a hard time approving new revenues (i.e. tax increases), and lamenting that the political class can simply borrow the money instead -- or even print it if needed, as the Federal Reserve Bank has done to astonishing levels recently.

I then free-associated to the nature of the fed's money-printing privileged.  It's essentially a free license to counterfeit.  The reason counterfeiting is considered 'bad' is because it effectively reduces the value of the currency being counterfeited, which can cause a lack of confidence in the currency, and all of the attendant issues arising from that lack of confidence.  But many economists seem to believe that not only is it acceptable for the federal government to issue counterfeit* paper, but that it is in fact the only way to get out of a business cycle recession in which the core issue is perceived to be a 'liquidity trap' (i.e. we're in a recession because of a lack of spending, but people are spooked so they won't spend).  As I understand it the theory is that you pump the economy so full of liquidity that people 'feel' rich, and therefore spending resumes, thus pulling the economy out of the 'liquidity trap'.  In this case, the fed is putting the cash directly into bank reserves in order to 'pump up' their books so they look less risky.  This is supposed to encourage short-term lending, which is supposed to allow businesses to borrow-and-spend at pre-recession levels.

My purpose with this post is not to get into whether or not that theory is valid, or whether or not its implementation has worked (although I think evidence shows that it hasn't -- thus Obama's new $400b+ jobs bill stimulus package).  My purpose is rather to highlight a solution to the revenue problems of the federal government, based upon the fed's ability to counterfeit.  The solution is this:

Instead of bothering with trying to get taxes and spending cuts passed; instead of implementing and maintaining a tax code that is thousands of pages long and impossible to comply with in an absolute sense; instead of periodic political squabbling over revenue vs. tax increases; instead of maintaining the charade that we're ever going to cut spending and increase revenue such that the budget can be balanced, why not simply do four things:

1. Eliminate all taxes
2. Authorize the federal government to borrow all the money it needs for spending
3. Use the federal reserve to print all the money necessary to pay for that borrowing
4. Require a balanced budget

The result would be an inflation rate that would most likely be in the double-digits, but it would also be the effective tax rate -- the amount of money each person loses due to inflation each year would be their yearly federal tax rate.  It would also mean that any time new spending was approved a corresponding change in the inflation rate would also have to be approved.

Now, this is somewhat tongue-in-cheek.  I certainly don't believe it is a viable (to say nothing of moral or ethical) solution.  But that's the point.  The only difference between what the federal government does now, and this plan, is a matter of quantity.  Are we to print money to pay for all spending, or just some portion?  If just some portion, what makes that more sustainable than the alternative?  At what point does the portion that we are paying for through counterfeit become large enough that the plan fails?  Is that failure point some absolute value?  A specific rate of inflation?  A percent of GDP?


Now, I know there are very obvious arguments against this: Keynesian economists would probably argue that massive expansion of the monetary base is not warranted except in dire circumstances -- using it as a matter of course is not recommended.  Progressives would probably argue that the result is a flat tax that doesn't allow them to practice class warfare effectively target revenues according to financial status.

Really, the point is simply to highlight the questionable nature of the fed printing machine.  However, I actually prefer this plan in some ways to what we have currently:

• It would inflict real, immediate pain on the people each time new spending is approved -- the associated increase in inflation rate would force politicians to convince the current electorate of the need, rather than simply off-loading it to future generations.
• It's effectively a flat tax -- there is no way for the federal government to divide the people into groups by their finances, and then pit them against each other... unless they issue separate currency for poor people versus rich people and set the inflation rate for each at different levels.
• It would make it clear to everyone exactly how much of their wealth was being confiscated each year by the federal government. With a tax code that fools even Warren Buffet into believing his effective tax rate is only 17%, this would be an improvement.
• It would make it transparent whether or not the federal government's tax rate was helping or hindering the economy: If interest rates settled under this regime to a value less than the inflation rate, then it would become quite clear the the federal government was destroying wealth rather than creating it!  (of course, that would only work if the fed wasn't manipulating interest rates)
• It would make it more difficult for the fed to pick economic winners and losers (i.e. crony capitalism) -- if there were no tax breaks to hand out then there would be no way, other than explicit handouts in the form of direct subsidies and/or guaranteed loans, for the fed to create preferential conditions for specific industries and companies.
• It would make it more difficult for the fed to interfere with free trade since it would no longer be able to implement punitive and/or preferential tariffs (remember point 1 -- all taxes have been eliminated).  
• It's potentially more stable and predictable than the current regime... though I suppose there's no reason to think the fed wouldn't make quantitatively large adjustments to the spending (inflation) rate over short-term periods.

At this point I think I've taken it far enough...

What Ever Happened to the Constitution? | Andrew Napolitano

Judge Andrew Napolitano always struck me as somewhat of a goober on Fox, but in other venues he turns out to be quite thoughtful and intriguing.

Here's a fantastic talk he gave before an audience at the Mises Institute, in which he discusses the total lack of fealty the federal government shows to the Constitution, how it came to be that way, and the insidious ways in which it results in the gradual degradation of individual liberty in this country, in a way that was the exact opposite of what the framers intended. He explains that in essence the Constitution describes the way in which the federal government is to go about its primary function -- the preservation of individual liberty -- and that all other functions are illegitimate... and I would add, contrary to the former.