We’re Number 12! We’re Number 12!

I believe it’s in the preface of Applied Economics: Thinking Beyond Stage One, where Thomas Sowell recounts his first economics professor confronting young, idealistic, typically left leaning, first year college students with the relentless question, “Okay, then what happens?” It’s an important question, both for the book, and for life in general, which is certainly why he wrote about it. I am no longer in possession of the book, so I can’t quote it, but the method goes something like this:

Student: Poverty is terrible, the government should pay unemployed people.
Professor: Okay, then what happens?
Student: Then people won’t suffer poverty, and have to worry about a job.
Professor: Okay, then what happens?
Student: Then people never feel the needed pressure to find a job
Professor: Okay, then what happens?
Student: People remain unemployed as long as the government pays them…

And on it goes until the student recognizes that their good intentions are fraught with unintended adverse consequences. When I was a young left-wing advocate I was full of good intentions, until one day I started thinking outside my box and asked myself “Okay smart guy, then what?” I learned that as open as I thought my box was, it was actually far too small, closed & sealed. Things weren’t as they appeared to be. From then on, I have continually questioned everything I think I believe to be true. Non-stop, every day, I question myself hard in an effort to seek truth. Each time, I find myself becoming more & more liberty-minded, or “small ’l’” libertarian, as some say.

One of the issues I’ve questioned myself on is same-sex marriage. Tonight, my current home state of Minnesota became the 12th in the nation to legalize same-sex marriage. So hey! Isn’t that great? Homosexuals are free to marry each other… FREEDOM… LIBERTY… GET IT? I should be happy, right? Not really. I don’t see how demanding the government to authorize someone to have a sanctioned relationship is in anyway remotely free. In fact it is the exact opposite. If government approval is what makes your relationship whole, you have a lousy relationship!

Put that aside for now. Personally, as a Christian, I think marriage is a covenant, or a contract between a man, a woman & God. The Bible is pretty clear about the approved participants being one man & one woman, and since God is the sanctioning body, he doesn’t approve applicants for same sex marriages. Be free & live life how you want, but them’s the breaks in the Christian world. Don’t like it? Talk to God, & good luck.

Not everyone is Christian! How can I expect them to live up to the rules of my faith? I don’t! From what I can tell, Jesus himself didn’t either. If you call yourself a follower of The Way, you are expected to follow the rules, but there is nothing saying we are to impose our beliefs of others. Encourage them to come to us, sure, but not impose our laws on them. Besides, we aren’t exactly good at following these laws ourselves, so don’t expect those with no reason to even try to follow these rules to comply with them! About 3% of the US population is homosexual. Just in case you didn’t know, they are as human as you & I, they fall in love, they commit to each other and with determination & hard work they grow old together. We should all respect that committed relationship.

So WHY, Dennis? WHY aren’t you happy about the same-sex marriage decision??? Just one question remains, the one question that makes me side with the traditionalists:

Okay, then what happens?

It’s the unintended consequences. My friend, Walter Hudson, wrote a great open letter to the Minnesota senate that outlines almost all the concerns I have had up to today. Instead of me beating a dead horse, read Walter’s entry for yourself, He’s a more practiced writer than I am, so there’s no sense in my rephrasing it. As of today, I have a new concern. As I was both pondering the issue and studying for my last constitutional law class, I came across something troubling. A 1983 SCOTUS case named Bob Jones University V. United States.
Bob Jones University is a private, religiously affiliated college. Like most colleges in the US, its students are predominantly white. From what I’ve learned, they’ve always accepted minority students, but they did not condone interracial marriage at the time. As such, they did not accept student applicants who were in an interracial marriage, and they based this on their interpretation of The Bible. Well, guess what? I don’t like it, You probably don’t like it, but that’s why there’s a first amendment. They have the right to free exercise of their religion.

So what’s the problem? The IRS of course! In 1970, the IRS changed their definition of what a 501(c)(3) was. In case you are wondering, that’s just the regulation number that defines tax-exempt charitable, religious, & educational organizations. Prior to 1970, there was no restriction on organizations that discriminated based on race. But you know how the IRS works; If they let you keep your own money, then they think they are paying you. After 1970, they decided they were no longer going to “fund” organizations that discriminated based on race. Long story short, The case ended up in front of the Supreme Court & Chief Justice C.J. Burger.

The court sided with the IRS in an 8 to 1 decision, which ended BJU’s tax-exempt status and required them to pay millions of dollars in back taxes. Ok, so where am I going? This is same-sex marriage, not interracial marriage! Besides, the Minnesota law has a religious freedom amendment preventing such an effort, right? Not so fast! In his open letter, Walter does a pretty good job of outlining how religious freedoms have already been trampled in the other 11 states which have approved same-sex marriages, and he illustrates just how thin this religious protection actually is. But to get at my point, we have to examine the majority opinion of SCOTUS as written by Chief Justice Burger.

The district court that heard BJU’s case first found “that the IRS exceeded its powers in revoking the University’s tax-exempt status and violated the University’s rights under the Religion Clauses of the First Amendment…”. So they held that there was a religious protection involved, but was there? Burger didn’t think so:

“The Government’s fundamental, overriding interest in eradicating racial discrimination in education substantially outweighs whatever burden denial of tax benefits places on petitioners’ exercise of their religious beliefs. Petitioners’ asserted interests cannot be accommodated with that compelling governmental interest, and no less restrictive means are available to achieve the governmental interest.”

So what about the First Amendment? That wasn’t the issue to Burger. In fact, he was probably right. Neither SCOTUS nor the IRS was saying BJU couldn’t discriminate. In fact, they continued this policy until 2000. If SCOTUS had stopped the discrimination BJU had based on religious beliefs, then there would have been a First Amendment violation, but that wasn’t the case here. The IRS was simply stating they were ending BJU’s tax-exempt status, because the government didn’t approve their policy of discrimination. In other words, they still enjoyed the religious protection of the first amendment, but were still penalized by the government for their religious beliefs, because BJU wasn’t acting with that compelling governmental interest.

But were are still talking racial discrimination, not being religiously opposed to same-sex marriage! It’s apples & oranges, chalk & cheese! Or is it? If you are on Facebook, you have no doubt seen the photo memes comparing 1950’s era KKK members protesting interracial marriage to the current traditional marriage supporters. As if blatant racism has anything to do with basic biology. Those memes insult me… not as a traditionalist, but as a thinking, sentient human being. They are just so utterly simplistic, I can see the dolt in the corner with a dunce cap on his head making that thing up & thinking he’s clever. But I digress needlessly.
I don’t even have to convince you that same-sex marriage proponents are already thinking in these terms of bigotry, civil rights, & discrimination. If you haven’t caught on to that sentiment yet, you don’t have many leftist friends, because they’re pretty blatant. I also don’t have to spend much space illustrating how basic civil rights laws & court decisions that were originally drafted to protect the African American population has stretched to provide so-called protections for nearly any entity you can think of, from big corporations down to common criminals. It’s a tradition that started with the Slaughterhouse Cases in 1873, but we don’t have to mess with this, because Burger already gave it to us:

“An examination of the IRC’s framework and the background of congressional purposes reveals unmistakable evidence that, underlying all relevant parts of the IRC, is the intent that entitlement to tax exemption depends on meeting certain common law standards of charity — namely, that an institution seeking tax-exempt status must serve a public purpose and not be contrary to established public policy.Thus, to warrant exemption under § 501(c)(3), an institution must fall within a category specified in that section, and must demonstrably serve and be in harmony with the public interest, and the institution’s purpose must not be so at odds with the common community conscience as to undermine any public benefit that might otherwise be conferred.”

I emphasized it in the quotes, but just so we’re clear let’s summarize:
1) For an institution to receive tax exempt status, it must serve a public purpose, AND NOT be contrary to established public policy. UH… a law is policy… it allows the public to do something… Public+policy=Public policy! As of tonight, Minnesota’s “established public policy” is homosexuals are allowed to marry. Most Christian churches do not allow homosexuals to get married.
2)Also to warrant 501(c)(3) status, the institution must not be at odds with the common community conscience as to undermine any public benefit that might be otherwise conferred, or given. UH… a democratically elected legislature & governor is representative of a common community conscience, is it not? And if a church is refusing to marry a same-sex couple, they are undermining any public benefit that might be otherwise given if the church wasn’t so set in its doctrines.
These churches beliefs are protected by the first amendment, but their tax exempt status is at dire risk due to the precedence set by Bob Jones University v. United States.
Okay, now what happens? All out economic warfare on America’s churches is my bet.

Debt Ceiling or Spending Ceiling?

Just a quick post of a thought I had. The national buzz line is we have to increase the debt ceiling so that the US does not default on it’s debts, because that would be bad. I have no doubt that that would be bad, but how is restricting the amount of debt that an entity can accrue effect its ability to pay the bill for the debt? For this to be the case, the country must already be bankrupt. We must be out of money to pay our outstanding debt, so we must go further into debt to pay our current debt… Right?

I’m not saying that this issue doesn’t need to be resolved, & we have dug a hole so deep that the debt ceiling will have to be raised, temporarily for now, so the government can spend any NEW money, but I think these Chicken Little types are just blowing hot air.

They are essentially saying that they spent the paycheck, maxed out the credit cards, they just bought a Rolls Royce (no money down financing, of course) & now they need to up the credit limit on those cards so that they can pay their bills… with the credit cards.

Things are bad, but who believes they are THAT bad?

Protectionism and My Wood Chipper

I bought a used wood chipper about a month ago. It needed a little work & it’s about 25-years-old, so I got it cheap. It works great after I fixed almost everything, but the carburetor leaks gasoline when the engine is off. Today, I stopped by the  local small engine shop, & asked about it. He said the carburetor needed to be totally rebuilt & cleaned, which would cost about $100. About 2 years ago I bought a new carburetor for a lawn mower & it only cost $40, so I asked him what a new one would run? That’s when he told me that Tecumseh Engines went out of business, and parts are very rare; if one could be found, it would probably be $200. As I walked out of the shop, I started thinking that a whole new engine should only about $250. So I drove to Northern Tool in Burnsville to see my options.

After a short time looking, I decided I wanted a 205 cubic centimeter engine, of which there were a lot to choose. Hondas fell out of the running just because they are almost $500, Kohlers also were too high for my needs, so that left Briggs & Stratton. I then started thinking, well at least I’ll have an engine made in the USA. I’m not a huge “Buy American” guy, but I sure like to avoid buying things made in China when I can. Well the Briggs engines in my price range are made in China, not the US. But they have a nice Intek series 205cc engine that would be perfect for $280. However, I really wanted to see if I could get an engine made in the US, In my opinion there is a quality difference, so I looked. I finally found an Intek series 205cc engine that was made in the US, but it was $480. Looks like I’m buying Chinese.

But this got me thinking, what can be done about this? Is a “Made in USA” engine of identical specifications really worth nearly twice the price? I don’t think so. So I came up with three possible solutions:

1) We can raise tariffs on Chinese made motors so that they also cost $480… or more, but that only hurts me as a consumer. I can buy an engine for $280, why would I want to insist that they raise the price to make the American engine more appealing at $480?

2) We can address the structural inequities/inefficencies in our domestic system, so that the manufacturer can sell American made engines closer to the $300 ball park, where I’d be happy to pay a little more for the quality & pride of having an American engine, or

3) We can admit that the Chinese can make small engines more efficiently than we can. So we stop making small engines domestically, & direct our domestic resources to something that we can make better than other countries.

The first is classic protectionism. It is favored by labor unions, but as I said, it only serves to raise all prices to the American consumer, including the union member when he goes shopping for engines. The second is a competitive approach, where we do what we can to compete in the market place. Think of Target & Walmart. They have to constantly figure out how to operate in a way that they can keep their prices at the same level as the other. Or they can give the consumer a reason to want to pay more for an identical item at their store, as opposed to forcing the consumer to pay more like in the first option. The third option is one of efficiency. I have less than an acre of land, & I hate gardening. I love beef, but I really can’t raise livestock in my yard. I can however fly people around  in airplanes, & my wife can sell paper products to graphic designers all day long. So That’s what we do, and we let a farmer take care of our food needs. It’s called division of labor according to Adam Smith.

So, which do you think would be the best option? I’m torn between 2 & 3 myself.

Why I’m Not Hot For a Gold Standard

I got my iPhone a couple weeks ago & downloaded an incredibly delightful app called “Past Money.” It’s an inflation calculator. I know I have strange ideas about what’s fun, but I am who I am.

Anyway, The complaint about fiat money, paper money backed by no intrinsically valuable substance other than the full faith & trust in the issuing entity, is that mismanagement will lead to price inflation. This is because as the government prints more money the money loses its value. In other words, the same product or service become worth more dollars this year than it was last year, but it is of the same value.

In basic economics terms, it’s called price inflation, or just inflation, and it happens because there are too many dollars in the economy and not enough products & services to buy with our dollars. It’s basic supply & demand, and it applies to dollars in the same way it applies to Beanie Babies, or housing. If there is a supply that is more than what the market place demands, then the item is worth less.

The gold standard is where money is either made of gold, or paper money is “backed” by gold. This means if I take a dollar to the bank or treasury I can claim the dollar’s value in gold. & the paper dollar would be destroyed.Under this system, a dollar cannot change in value to gold, because it IS gold. Why gold? It’s rare, it’s durable, it’s easily identifiable, and every culture likes it enough that it will always have value.

The “Gold Bugs” say this would be a superior monetary system, because it cannot be inflated unless we mine more, but there just isn’t much to mine! The total amount of gold mined throughout human existence wouldn’t fill 2 Olympic sized swimming pools. It isn’t much. I don’t remember the exact numbers, but this amount of gold is worth a total of about $17.5 trillon (in 2011 dollars)

What’s the problem with this? The opposite of the problem of fiat money. The economy grows by more goods & services being produced & consumed. If the pool of money stays the same, but the number of goods & services increase, than the value of the goods & services goes down. This is technically called negative price inflation, but commonly known as deflation.

At first glance, it seems great. Our money is still worth it’s price in gold, but prices are dropping… I can buy more, right? Nope. Where do you get your money? Sure, you get a paycheck from your employer, but why? You are selling your labor to your employer, and guess what? Your employer’s money is backed by gold too. and the value of your labor, like all other goods & services in the economy costs less. In other words, your paycheck will decrease along with the prices. The money you saved under your mattress will be worth the same, but nothing else will.

The value of your house will fall too, while you pay a mortgage on a house, it will be losing it’s value. you’ll be upside down in your loan, owing more to the bank than the home is worth. Sound familiar? How’s that working for us now? Today we are only experiencing a market correction, but with a gold standard, it will become an institutional fact of life.

The US had a true gold standard prior to 1913, with the exception of a few years during & after the Civil War. In 1914 the Federal Reserve became a reality, & while we were technically on a gold standard, it was being managed by a new central bank. Many Economists believe that the true cause of the Great Depression was a complete mismanagement of the gold standard by The Fed. The evidence does show that there is validity to this claim. There were other manipulations beyond the scope of this post, but the gold standard officially died in 1965, though functionally it had been dead for decades before that.

Back to my app… It proves my thoughts above. Let’s say you were 250 years old, and you had a job in 1801. You earned $100, with which you could buy $100 worth of goods & services in 1801, but you decided to save it. In 1901 you decide to spend that $100. Good news is that your $100 is now worth $200 of goods & services in 1901. The bad news is you are now out of money, so you go back & get the same job you had in 1801, but this year they are only paying you $50. So you have to get a second job & work twice as hard to get a total of $100 in 1901 dollars… and it is worth half as much as your $100 in 1801 dollars were.That’s the gold standard!

So you squirrel away your $100 in 1901 dollars until 2001. Your $100 in 1901 dollars is still worth $100 in 2001 dollars, however, what cost $100 in 2001 only ran you $4.70 in 1901.  So you blew it all, very fast, because in 1901, $100 would have bought  what now costs $2,128, and you need another job FAST! The good news is your old job from 1801 is still available, and it’s now paying $1,064 dollars a year for the same amount of work you did in 1801, & if you want that second job from 1901 back, it’s also paying $1,064… because that’s the way it works. Told you it was fun!

I believe that fiat money is the way to go, but the central banking authority, The Fed in our case has to be highly regulated. The number of dollars printed should be strictly tied to the observed growth in Gross Domestic Product, which is essentially how many goods & services are available. There will still be booms & recessions inherent in the business cycle, but our monetary policy will be stable. Stability is what the market needs to properly self regulate.

Time Magazine’s Worst Senator of 2005 is now Minnesota’s Worst Governor…

… And we had Jesse Ventura for crying out loud!
At 1:14 in this video from KSTP, you will re-witness Gov. Mark Dayton promising that he would NOT allow a government shutdown if he could not get his agenda of a tax hike through the legislature. And yet, here we are. Who is responsible for Dayton breaking his promise?

This isn’t a reason for more gun control laws

This is a shocking story of a 5-year-old finding a gun, & accidentally shooting his 4-year-old friend in a park. The typical people will jump on this as another reason to demand more strict gun control laws. They use these tragedies to manipulate the fear instinct in people to react emotionally rather than logically; to get people to demand things they wouldn’t normally accept.

The catch in the story is that the boys live in a Maryland suburb of Washington, DC. The gun control laws in this area are already among the most strict in the country. Sadly, this still happened. If anything, we should look at this pragmatically, & realize that strict gun control laws are clearly not the issue here, and start looking for real solutions.

Begin the Begin

Turns out that many of your Facebook friends don’t really want to hear all the voices running through your head! Even some people who agree with the voices you transcribe don’t want to hear it. After about 2.5 years, I’m catching on!

This blog is to serve as my surrogate Facebook page for all voices political in my head. This way I can rant about these issues I feel quite passionate about. Those who want to read & participate can do so, while those who just want to read about my cats or my warped sense of humor can do so on their Facebook news feed. With that said, if you found this page in another way, Welcome! Your readership & input is appreciated.

I want this to be an open forum, with respectful comments whether you agree or disagree. I’m a very libertarian-leaning-Republican-voting person, but I wasn’t always this way. I got here through a lifetime of learning, a learning that I refuse to let end. I may come across as an ideologue, but rest assured, I question my own beliefs every day. The answers I get usually strengthen my position. If anyone could shake my foundations, I might move in another direction… I haven’t seen a serious contender yet, but I’m always listening. I wish others were as open in their views.

As I said, I’m passionate about these issues, & I will write passionately. Some of my best friends are quite the opposite of me politically, but I still respect them as intelligent, good people. We don’t have to agree to be friends, so lets try to be respectful, but not get too sensitive!