Archives for Ideology

After three months of deliberation, President Barack Obama (The Decider, v2.0) is surging an additional 30,000 troops into Afghanistan.  This was an understandably difficult decision for the most left-wing anti-war President in recent history to make, so I commend him for having the political courage to do so, and I’ll even compliment his due diligence in deciding, because he’s right:  strategy comes first, and if we don’t have the right objectives, we shouldn’t be there at all.  For all of us, I hope he’s found the right strategy for success.

Shortly after his speech, the President will be whisked away to Copenhagen, Denmark, to champion our global war against global warming, a debate currently embroiled in the controversial deletion of emails.  The findings in said correspondence did not support the money-making conclusion that “climate change is real.”  I’ll leave the science to another post, but I’ll come back to the green scheme later in this post.

You see, everything at this point in our history comes down to the bottom line.  If it did not, then what is Peter Orszag, Director of the Office of Management and Budget, doing in the War Council photo above?  This post will address the multiple facets of our debt problem, and my next post will concentrate on more specific solutions to draw down the debt.

In my last post, where I wrote about the Tea Party movement, I quoted Ludwig von Mises, saying you can’t have both capitalism and socialism.  I used this premise to support the market over business.  Like Ayn Rand, though, I believe America is a mixed economy, and as such, is an ideological battlefield between capitalistic and socialistic policies.  Former Chairman of the DNC, Dr. Howard Dean, believes the debate between capitalism and socialism “is over,” and goes so far as to root for the other side while speaking in Paris, of all places.  Of all places…

Europeanization of America

So, where are we headed?  It seems like we are incrementally shifting towards something unforeseen since our founding.  While incrementalism was not a common term in the early 1800′s, it was certainly understood by President Thomas Jefferson, who said, “Experience hath shewn that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.”

Dr. Dean and his leftist ilk are deliberately accelerating the Europeanization of our nation.  Europeans are quite comfortable with bits (and sometimes chunks) of socialism sprinkled hither and yon.   Their collective apathy is indeed the root cause of their lower levels of productivity and lower standards of living compared to the United States.  Jefferson also warned about this degraded state of existence, saying, “When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe.”

Consuming an elixir of corruption, apathy, and socialism will have long-term consequences.  At best, we are beginning a jobless recovery, due to our lack of Homeland Production.  We are still losing more than 100,000 jobs a month; we would have to create 100,000 jobs a month simply to keep up with new entries into the job market.  At worst, we are entering a double-dip recession caused by our over-spending, as our President recently warned us.  Funny he should bring it up, since he leads the biggest spending Administration in American history.  That’s like having your friendly neighborhood drug dealer warn you about your crippling addiction to crack cocaine.

We aren’t Europe, yet.  In Europe, locals sit at their coffee shop, in a state of beautiful ruin.  The buildings and streets were built centuries ago, and civilization lives on top of ancient achievements.  In the United States, so-called “business professionals” walk on fairly-new streets into fairly-new buildings constructed by the toil of workers who earn a fraction of what they do.  If the businessman errs, he moves to another management position; if the construction worker makes a mistake, he’s out of a job.  I see this disparity and understand how it fuels populist sentiment amongst the left.  Their solutions, like those in Europe, however, are government-based.  I believe only the private sector, through innovation and production, can save us, and they can only do that if government gets out of the way.  Therein lies the rub.

Facing Down the Debt

Our enormous debt is a product of our varying degrees of taxing and spending.  Today’s tax-and-spend levels are not equivalent to our new reality.  Accounting systems such as mark-to-market, or its zombie equivalent, mark-to-model, created an illusion of vast wealth for the better part of a decade, with deregulation of the Security and Exchange Commission’s (SEC) Generally Accepted Accounting Principles (GAAP) supported by both parties.  When the financial sector collapsed last year, exposing our frayed economy for what it is, America faced some harsh choices, and decided to launch a $700 billion Bank Bailout. 

This $700-to-800 billion range is a reoccurring dollar amount in current history: The recent Stimulus Package was $787 billion (of additional debt).  The amount of American currency in circulation is roughly $800 billion, and according to the Congressional Budget Office (CBO), the Health Care Bill currently up for debate will cost $829 billion over ten years; we’ll see what happens to the final amount after it’s merged in Committee for final scoring.

Two $800 billion figures scare me more than any, though.  The CBO states that in ten years, the cost of servicing our debt – that is, the interest on our debt – will be $800 billion a year.  Also, as of September 2009, we owe China $798 billion in debt.  These two numbers thrust us into insolvency faster than any others.  There are only two ways to draw our numbers down:  tax more and spend less.  Neither of these options are particulary palatable, but our current solution – printing more money – carries it own consequences.

Interest-on-Debt: Entitlement spending drives our debt, plain and simple, and puts American sovereignty at risk; the Social Security and Medicare Trustee Reports show the combined unfunded liabilities of these entitlements has reached $53 trillion, and account for about 5% of GDP and roughly 40% of the Federal Budget.  Outyear projections for these programs are frightening.

As the federal government spent $3.5 trillion this year, but only collected $2.1 trillion in revenues, our deficit reached an all-time record of $1.4 trillion, at 11.2% of GDP in 2009.  As Niall Ferguson points out, the CBO projects this deficit percentage will decrease to 9.6% in 2010, 6.1% in 2011, 3.7% in 2012, and steady out above 3% for the foreseeable future.  But these are just deficit percentages, pushing the total debt amount to unsustainable levels: in dollar terms, the total debt held by the public (which includes foreigners) rises from $5.8 trillion in 2008 to $14.3 trillion in 2019 – that is, from 41 percent of GDP to 68 percent.

These increases put us in a precarious situation, and threatens our AAA Bond rating, which we’ve held since our first scoring in 1917.  If Moody’s were to degrade our Bond Rating to AA – which it threatened to do last year – it would cause a devastating run on the market.  But some are still buying our debt on the promise we’re good for it…

Our Mandarin Problem: As China holds roughly 6% of our debt (or one-quarter of all foreign owned debt), it’s feared they own us, but there’s an old saying: If you owe the bank $100 thousand, the bank owns you; if you owe the bank $100 million, you own the bank.  Ask yourself: why would China buy up so many of our Treasury bonds during an economic crisis?  One reason is they seek to dominate us in the long term, but the more likely reason is that we are codependent on each other, as they depend on American businesses for Chinese employment.  Also, China accrues roughly $50 billion a year in interest from the United States, according to the Council of Foreign Relations.

Only time will tell what will become of Sino-American relations.  It’s interesting, though, to look at history to see that civilizations approaching insolvency usually cut their military budget first, weakening themselves, and eventually allowing themselves to be conquered.  The Pentagon’s present Budget slashes defense spending from its current 4.8% of GDP to 3.2% in 2015, and 2.6% by 2028, aligning us more with… Europe, of course.  Is America incrementally going the way of the dodo?

Why We Waste

As the Berlin Wall fell in 1989, $22 billion worth of American money for foreign aid flowed freely into Russia, to assist in building the new democracy.  A curious thing happened, though:  it all disappeared.  We knew that a lot of that money went straight into the bank accounts of the oligarchs, and not into its intended institutions, but we turned the other way, assessing it another unforeseen cost of democracy.

How could public officials casually waste so much money?  More broadly, why is the public sector so much more inefficient than private industry?  The answer is simple:  It’s not their money. President Ronald Reagan had a sign on his desk that read:  “There is no limit to what a man can do if he doesn’t mind who gets the credit.”  Similarly, there is no limit to how much we can collectively waste if we don’t mind which individuals get the bill.

This is how our financial sector bailouts were handled.  This is how the Stimulus Bill has been managed, and how the aforementioned global warming scheme was operated.  If there is a perceived crisis, our government is willing and able to leverage taxpayer funds in its general direction.  Humans, being what they are, see free flowing cash and stand ready to siphon some off the top.

Government interaction will not save us, but their inaction – that is, getting out of the way – could assist recovery by giving the private sector a shot at their goals.  As legendary UCLA basketball coach John Wooden once said, ”Never mistake activity for achievement.”  Doing more in terms of taxation, legislation, and regulation is not worth the time or the money if it doesn’t actually achieve anything.  I’ll offer some real solutions in my next post.

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“I have no fear that the result of our experiment will be that men may be trusted to govern themselves without a master.”
~ Thomas Jefferson, 1787

A tide is turning as populist sentiment returns to the Republican base. This renaissance is loosely based on fiscal conservatism and individual liberty, which I discussed about 18 months ago, here, here, and here. This comes in response to the leftists who hold the reins and control the levers of all facets of federal government. The independent, right-of-center base is undergoing a reckoning in the wake of the 2008 Election, a process based on foundations I discussed here, here, and here. As Democrats choose to ignore what’s going on outside their congressional office echo chamber, they seal their own fate.

Some Republicans seem to be getting it, though (while some are still oblivious). One of the strongest Republican supporters of comprehensive health care reform is Senator Orrin Hatch from Utah, who is now (rightly) questioning the very Constitutionality of the impending Health Care legislation. He says the Supreme Court has ruled that government can regulate goods produced by an industry, but can’t require certain goods to be bought. If Democrats can’t convince him… his analysis is worth reading.

Sadly, I understand that many “Independent voters” out there are nothing more than turncoats, driving to rallies with adhesive still on their bumper from a recently-scraped Obama ’08 sticker, and joining the ranks with their Gadsden Flags and picket signs, bemoaning death panels and bailouts, simply because it’s hip now. Many of these people were “crying out for change” in 2008. Now that winds have shifted, they’ve switched sides. These folks are ideologically unreliable. So, as a self-described independent, and not an Independent voter, I want to be clear: my sentiment since last year’s election hasn’t changed. I didn’t cry on Inauguration Day like all those leftists on the Mall; I cried on two months earlier, on Election Day, flying back from Texas, sensing my country was turning into something unrecognizable.

Markets Über Alles

Tea Party rallies typically argue for capitalism over socialism, or liberty over tyranny. Prominent Austrian economists contend economies can only function one way or the other, resulting in one governing system or another. Von Mises specifically said, “There is simply no other choice than this: abstain from interference in the free play of the market, or to delegate the entire management of production and distribution to the government. Either capitalism or socialism: there exists no middle way.”

I am not so sure, and tend to agree with Ayn Rand’s assessment that American capitalism is a “mixed economy,” where some things are socialized, and some things are privatized. While this has questionable long-term sustainability, I would contend current public-private partnerships are more problematic in the long run. Although not immediately evident, there is a broad distinction between pro-business and pro-market policies. Businesses embed themselves with government to gain favor at the cost of the market; this is referred to as a “non-market interaction,” as it takes place outside the free market.

As an advocate of laissez-faire free market and supply-side economics, I consider market intervention regrettable, but must occur when regulating certain industries to prevent danger to the public (you wouldn’t want just anybody building their own nuclear reactor, now would you?), and in anti-trust matters, to prevent monopolies. In this instance, market intervention is executed to save the free market from domination. Likewise, to save American business, the link between certain businesses and public policy decisions must be broken. This may seem counterintuitive, but so do 2000+ page health care legislation designed to “help” us. What’s really in these bills? Depends on who’s buying.

Disagree? Do you not see the difference between American business and the free market? This may seem controversial to some, to indict certain businesses of foul play, but ask yourself: Why is the Internal Revenue Service tax code 16,000 pages long? A copy of the law costs almost a thousand dollars! It takes a lot of pages to insert all those clever company-funded loopholes and discreet bribes in the form of subsidies and tax credits. Senate legislation these days is even less subtle.

Who’s to Blame?

You have to be careful with this realization, or you’ll find yourself siding with the likes of filmmaker Michael Moore or Senator Bernie Sanders, the Independent Socialist from Vermont. In the end, preserving the market protects individuals from this runaway beer truck we call our federal government. Whether that keeps jobs inside the United States, however, is up to trade policy, which I’ll leave for another day.

Ultimately, Tea Party Patriots need to understand and embrace the market over business; separating the two does not mean you are anti-business. Saving business requires simplifying our system, and insomuch, businesses cozy with government may suffer, but business largesse will thrive. I’m not even saying cut taxes (yet), or cut regulation (yet); just simplify the system first. Above all, remember capitalism is not the problem. Do not confuse the American economic system with Adam Smith’s notion of capitalism, because the two are not the same.

The Tea Party movement has been particularly vocal in slowing our downward march, but their effectiveness has yet to be determined, because, while vibrant, they are unfocused. Tea Parties need a singular mission, and it is this: to sever the link between government and business. With an average 40% tax rate, this is not business’ fault. To compete in the market, businesses must lobby for amendments with tax breaks, or worse, lobby for tax hikes with well-crafted exemptions for themselves.

Contrary to beliefs, imbedded corruption is not “just business.” The high water mark for fraudulent activity in government is this Health Care legislation, which forces citizens to buy a product for the first time in American history. What are we, Venezuela? Insomuch, we are losing our soul. Sure, laws can be rolled back by the Supreme Court, but the nation’s trajectory will be harder to correct if the bill passes. The public-private partnerships have disoriented our nation, and “what happens next” will define our new direction.

We have experienced the beginning of this frightening economic crisis – yes, I said the beginning – and instead of confronting our endemic problems, we pile on. If we do not work on drawing down our national debt, in ten years the interest on that debt alone will cost “more than the combined federal budgets for education, energy, homeland security, and the wars in Iraq and Afghanistan.” Since China, whom we owe $800 billion, is funding our debt, what percentage of domestic and foreign policy do they own? What kind of leverage do they have in our daily affairs?

I would contend it’s not curtains for us yet, and the world’s richest man, Mr. Warren Buffett, agrees, and is substantially investing in American companies. He recently stated, “It’s an all-in wager on the economic future of the United States… I love these bets.” This isn’t just patriotism; he believes there is money to be made. In the long run, however, we are all left with some hard political choices: How do we draw down our crippling debt? Specifically, how do we raise taxes at this point without stifling growth? And most importantly, how do we cut spending without abandoning fellow citizens? I will explore these issues in the following post.

“It is difficult to free fools from the chains they revere.”

~ Voltaire

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“If this be treason… make the most of it.”

But it wasn’t treason, for obedience is not true patriotism; Patrick Henry’s opposition displays a pure devotion to mankind, with a willingness to sacrifice person and peace in order to build a country up from the ground, founded in liberty, with long-lasting freedoms we enjoy today.

Big, Bold Steps

It’s only fitting this Fourth of July to honor one of this nation’s founders.  Before Patrick Henry gave the speech that made him famous, before he was served as Virginia’s first Governor, before he was offered the position of Secretary of State in George Washington’s cabinet, which he subsequently declined due to Washington’s federalist policies, he was a prominent Virginian who took big, bold steps to throw off the soft tyranny imposed on the colonies from an overseas hegemony.  In 1765, only nine days after being elected to the Virginia delegacy, Henry introduced the Virginia Stamp Act Resolutions, “In language so extreme that some Virginians said it smacked of treason.”

Patrick Henry went on to fight in the Revolutionary War, and in August 1775, Henry became colonel of the 1st Virginia Regiment, leading a militia that fought in the Gunpowder Incident at the outset of the War.  It’s worthwhile noting that while Patrick Henry forged ahead with big, bold steps, he was not a proponent of progressive federalism, but rather, the leading voice of opposition to policies he saw as “tending toward monarchy.”  He threw a proverbial monkey wrench into the Constitutional Convention by essentially filibustering the first three words of the document, “We the People,” as he saw this as too collectivist.  And to think that today’s opposition to government proliferation is considered “extreme.”

I am only left to imagine what the founders would think of today’s new American experiment.  What would Patrick Henry say of today’s swollen federal government?  “When the American spirit was in its youth, the language of America was different: Liberty, sir, was the primary object.”

The Speech

So, on March 23, 1775, at St. John’s Church in Richmond, Patrick Henry gave his now famous “Give Me Liberty of Give Me Death speech; it was apparently so powerful that those in attendance began yelling, “To arms!” while taking to the streets.

“It is in vain, sir, to extenuate the matter.  Gentlemen may cry, Peace, Peace – but there is no peace.  The war is actually begun!  The next gale that sweeps from the north will bring to our ears the clash of resounding arms!  Our brethren are already in the field!  Why stand we here idle? What is it that gentlemen wish? What would they have?  Is life so dear or peace so sweet as to be purchased at the price of chains and slavery?  Forbid it, Almighty God!  I know not what course others may take, but as for me, give me liberty, or give me death!”

Our nation was conceived from such a spirit.  For his combination of ideology and oratory, Patrick Henry gained contemporary comparisons to the Roman statesman Cato, from which my D.C. think tank of choice takes its name.  Cato believed that such sacrifice, a willingness to die for a cause, was the ultimate guarantor of personal freedom, in accordance with the “radical ethical” view of Stoic philosophy for which he was known.  The tragedy entitled “Cato” was a favorite among the colonists, and contained the line of inspiration:  “It is not now time to talk of aught/But chains or conquest, liberty or death.”

The Contrast

Today, the United States is led by a man of equally great oratory skills.  Indeed, while trying to “sell his public option” and move towards nationalized health care, President Obama stated the following in a town hall meeting with screened questions just a couple of days ago in Annandale, Virginia, on July 1, 2009:

“America — one of the great things about this country is we’ve got a system that’s sometimes kind of hard to change.  Congress gets kind of bogged down, and part of that is because of the way the Constitution is designed — it’s served us well because it keeps us very stable.  We don’t have coups and all kinds of governments collapsing all the time.  But the disadvantage sometimes is, is that it’s hard for us to make big, bold steps.  But the great thing about the system is that, every once in a while, when we finally hit a point where things just aren’t working at all, we are able to generate the political will to finally get things done.”

Strange; our current President considers the statutory founding of the Constitution to be an impediment to his political ambition, whereas Patrick Henry saw it as an establishment of a government with too much power.  Placing these diametrically opposed ideologies on a scale with our founding document as a measuring point puts things into context and serves as a wake-up call of sorts.  Those who founded this country realized that the strength of this nation is not built on the powers of the federal government, but by the degree of freedom afforded to its people; our greatness is not derived from our rules and regulations, but by the vast spectrum of American individuality.

It is said that necessity is the mother of invention.  In a free society, invention is the mother of success.  With freedom, people are incentivized to invent all sorts of things.  It was here that the Wright Brothers took flight in their airplane, Henry Ford developed an automobile for everyone on his modernized assembly lines, and Al Gore invented the Internet (I suppose while clandestinely working at the Pentagon?).  My point is this:  the entrepreneurial spirit is the American spirit.  We have produced more since we declared our independence 233 years ago than any other country in the world ever has.  This is due to capitalist incentives and the deregulation of business initiatives; while it takes an average of three months to start a small business in Germany due to regulatory guidelines, it takes about three minutes to register as a business here in the United States.

Capitalist countries generate things, while socialist countries try to reverse-engineer them.  After all, it’s hard to be productive, much less inventive, under the barrel of a gun.  What would Patrick Henry say?  “Perfect freedom is as necessary to the health and vigor of commerce as it is to the health and vigor of citizenship.”

After watching the descending “health and vigor of commerce” in the past year, I realize ultimately this is not the fault of our imperfect business models, developed by imperfect people, but due to the lack of perfect freedom amongst imperfect people.  When taxes are raised on corporations, or levied against companies that supply the lifeblood of our commerce infrastructure, all businesses and firms that rely on these transactions will suffer.  Some, due to the lack of perfect freedom, will go out of business.

The Sleep

Where is America?  Where is that Patrick Henry spirit of opposition?  Even I would contest it means more than a well-placed bumper sticker on the back of your American-made, carbon-emitting, Virginia state licensed, (awesome) Japanese pick-up…

It appears America is relaxed, comfortable, and slowly going to sleep.  On the morning before the passage of the Waxman-Markey (Climate Change) Bill on the 26 of June, at 3:09 am, 300 pages of amendments were already added to a 1000+ page bill, for which, discussion was not allowed.  Under the shroud of media coverage over the death of Michael Jackson, an entertainer, our single-party government was able to push a bill through the House of Representatives that nobody read.  As it will punish all business, this bill is opposed by such radicals as the U.S. Chamber of Commerce, who said in a recent statement, “Congress should stop, take a breath, and consider sensible policy alternatives that increase our energy security, promotes a strong economy, and contributes to a global reduction in emissions.”

Blinded by comfort, Americans are oblivious to these policy moves, these big, bold steps that will inevitably cripple their very way of life.  What would Patrick Henry say?  “The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them.”

The special interests that are driving our country into a ditch with bills like this will never be exposed if the American people do not demand so.  At the end of the 18th Century, when this country was going through a rebirth of its own, freedom was paramount.  Back then, everyone cared.  To reach a tipping point of that magnitude could require sacrifices unseen in this nation in many, many years.  If the citizens of this land had to reassert itself and declare its independence from a hegemony once again… would you be ready?

“The Constitution is not an instrument for the government to restrain the people; it is an instrument for the people to restrain the government – lest it come to dominate our lives and interests.” – Patrick Henry

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As we approach Independence Day, I find it prudent to reflect on our nation’s historical founding and its relevance today, given the rocky economic times in which we live.  This issue is buttressed with the upcoming appointment of Judge Sonia Sotomayor to the Supreme Court and the debate over federalism, which was very much alive this past Tax Day, April 15, 2009.

 

What were the Tax Day Tea Parties about?  According to their somewhat official website, the Tea Parties “were a true grassroots protest of irresponsible fiscal policies and intrusive government.”  I would contend that government is never more intrusive than when it takes your private property.  Such actions have slowly become more permissible since our nation’s founding.  Let me tell you a story…

  

 

Our Founding as Background

 

It is important to note that before Thomas Jefferson penned the now-famous words of the Declaration of Independence on July 4, 1776, “We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain inalienable Rights, that among these are Life, Liberty and the pursuit of Happiness,” he was well-versed in 17th Century British scholar John Locke, who Jefferson called, “one of the three greatest men who ever lived.”  In 1689, Locke wrote in his book Two Treatises of Government, “The state of nature has a Law of Nature to govern it, which obliges everyone, and reason, which is that law, teaches all mankind who will but consult it, that being all equal and independent, no one ought to harm another in his life, health, liberty or possessions.”

 

These ideals were echoed in America’s founding before Jefferson wrote his piece; The Declaration of Colonial Rights, on October 14, 1774, identified “Life, Liberty, and Property” as inalienable rights in response to Britain’s Intolerable Acts.  Furthermore, founder George Mason wrote the Virginia Declaration of Rights in the weeks before American Independence was declared, which were ratified June 12, 1776, and stated, “That all men are by nature equally free and independent, and have certain inherent rights, of which, when they enter into a state of society, they cannot, by any compact, deprive or divest their posterity; namely, the enjoyment of life and liberty, with the means of acquiring and possessing property, and pursuing and obtaining happiness and safety.”

 

Property’s Effect on Markets

 

Though different, there is no apparent conflict between Property Rights and the Pursuit of Happiness.  Adam Smith, at the dawn of the Industrial Revolution, wrote his magnum opus, The Wealth of Nations, illustrating the benefits of free market capitalism.  In it, he said, “By pursuing his own self interest he frequently promotes that of society more effectually than when he really intends to promote it.  I have never known much good done by those who affected to trade for the public good.”  It is worth noting that the world’s most successful political and economic systems were both founded here, in our country, in the year 1776.

 

Dr. David Baron, author of the textbook Business and it Environment (of which I am now too familiar), links property to the free market, stating in the first sentence of the Tenth Chapter, “Markets and property rights are the centerpieces of the free enterprise system.  Markets allow people to exchange goods and services, and property rights allow them to gain from trade.  Markets also provide information by establishing prices that reflect the cost of society’s resources used to produce goods and services.”  He goes on from there to defend regulation during “market imperfections,” a fight I’ll perhaps save for another day.

 

Happiness was linked to both a right to privacy and private property in the 1883 Supreme Court case Butchers’ Union Co. v. Crescent City County, in which Justice Samuel Freeman Miller concurred, “Among these inalienable rights, as proclaimed in that great document, is the right of men to pursue their happiness, by which is meant the right to pursue any lawful business or vocation, in any manner not inconsistent with the equal rights of others, which may increase their prosperity or develop their faculties, so as to give to them their highest enjoyment.”

 

James Madison, author of the Fifth Amendment, believed these are not only natural rights, but legal rights guaranteed in the basic kind of social contract outlined by the Magna Carta; coincidentally, the “what’s-in-it-for-me” self interest rendered a natural order that is inherently good, as members of our society were free to embark on endeavors benefiting them and their family as they accumulated the property necessary to enjoy life, liberty, and the pursuit of happiness.

 

Assault on the Fifth Amendment

 

Although I intend to focus on the last two phrases of the Amendment, I will include the entire text, with emphasis added, to show what is at stake here:

“No person shall be held to answer for a capital, or otherwise infamous crime, unless on presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

There it is again, that pesky Right to Property, in what is now known as “The Takings Clause.”  As the federal government continues to narrowly define private property and broadly define public use, the claim for “eminent domain” undermines the entire Amendment.

 

Others may argue whether “taking” is equivalent to “devaluing,” as the Supreme Court surprisingly did in its 1996 case Lucas v. South Carolina Coastal Council, in which wetlands regulation would not allow construction on private property.  The Court stated that “Deprivation of all economically beneficial use is, from the perspective of a property owner, deprivation of the property itself.”  I instead want to address eminent domain, what private property actually is, and where we go from here.

 

Eminent Domain

 

What is eminent domain?  Dutch jurist Hugo Grotius in 1625 defined dominium eminens, Latin for “supreme lordship,” stating, “The property of subjects is under the eminent domain of the state, so that the state or he who acts for it may use and even alienate and destroy such property, not only in the case of extreme necessity, in which even private persons have a right over the property of others, but for ends of public utility, to which ends those who founded civil society must be supposed to have intended that private ends should give way.  But it is to be added that when this is done the state is bound to make good the loss to those who lose their property.”

 

Such feudalist reckoning, upheld in British common law, was supposedly abolished at this nation’s founding, but has slowly reemerged through eminent domain, again threatening private property and our fundamentally American way of life.  This reckoning has even infected the High Courts.

 

For instance, today, if a private company is successful enough to produce goods used by the public largesse, it no longer is found to be private, as stated in the 1877 Supreme Court case Munn v. Illinois, in which the state of Illinois was regulating the prices charged by grain elevators, with the state declaring them “public warehouses.”  The court actually cited the British common law theory, stating that when “affected with a public interest, private property ceases to become juris privati only.”  The Court goes on to say, “Property does become clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large.  When therefore, one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for common good.”  Strike One.

 

In 1934, in the Nebbia v. New York case, the Supreme Court broadened government’s authority to regulate industry to those enterprises not affecting the public largesse when they upheld the minimum price of milk sold in grocery stores for the benefit of farmers who were disproportionately affected by the Great Depression.  As it turned out, grocery store owner Leo Nebbia was found in violation of the price floor for selling two quarts of milk and loaf of bread for 18 cents, when the regulatory price of a quart of milk was 9 cents.  Justice McReynolds, one of the infamous Four Horsemen of the Supreme Court, dissented, saying, “This is not regulation, but management, control, dictation.”  It’s more than that, now; it’s law.  Strike Two.

 

Then in 2005, in the Kelo v. City of New London, the Supreme Court defended the outright taking of private land for public use, eminent domain on its face, by upholding the City of New London, Connecticut’s decision to condemn a blighted urban neighborhood in order to construct business buildings as part of the city’s comprehensive redevelopment plan.  The controversial 5-4 decision upheld similar rulings Berman v. Parker ( 1954) (taking for public purpose is ok) and Hawaii Housing Authority v. Midkiff (1984), (taking with just compensation is ok), both of which were determined 8-0.

 

Dissenting the Kelo decision, Justice Sandra Day O’Connor stated, “Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random.  The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms,” arguing that the decision eliminated ”any distinction between private and public use of property — and thereby effectively deletes the words ‘for public use’ from the Takings Clause of the Fifth Amendment.” 
 

Strike Three?  Almost.  On the first anniversary of the now historic Kelo case, President George W. Bush signed an executive order stating that the federal government must limit its use of taking private property for “public use” with “just compensation”, which is also stated in the Constitution, for the “purpose of benefiting the general public.” He limited this use by stating that it may not be used “for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken.”  This order only applies to the federal government, however, and although the Kelo case sent state and local governments scrambling to prohibit eminent domain to protect its citizens, states and municipalities still govern themselves in this regard, and some are still able to seize private property for public use, with blatant disregard for the Fifth Amendment, however vaguely defined.

 

What, for that matter, is personal property?  Is it just land?  Well, no.  Buildings?  Houses?  What about apartments?  Supplies?  Bank accounts?  Out of control, this idea can extend into the pockets of both management and labor.  Capping executive salaries has been implemented for enterprises accepting public funds, but a bill has recently been introduced to link performance to pay for entirely private businesses, and another was proposed by Representative Barney Frank to cap salaries of all employees of publicly-funded businesses.  This is the Brave New World in which we now live.

 

Where do we go now?

 

First and foremost, let me say that it honestly appears our current President is a good person.  He cares for his family, and I respect that.  I believe he has struck an even initial posture in foreign policy strategy, even though he has had some Chavez-induced hiccups along the way.  He has more political capital internationally than perhaps any President ever, and that has to stand for something.  Although I am ideologically juxtaposed with the guy, he doesn’t scare me as much as he used to.

 

I would be fibbing, though, if I said I wasn’t concerned about our public policy, namely, the federal government’s intrusion into the private sector.  I believe such intrusion has dangerous consequences.  Government’s intervention in the free market should be somewhat like curling, the Winter Olympics sport.  (Summarized here.  Need a more energetic reminder? here you go).  Government should direct the flow of the free market, but can’t put a hand on it to stop it, or push it if it stops.  That’s what we do, though, with endless taxes and incentives.  In the shifting of our mixed economy away from capitalism, President Obama is quickly becoming the Chief Executive of American Business, with taxpayers, as of this week, owning more than 70% of General Motors.

That’s not my point here, though.  I’ve questioned Obama constitutionally on this site before (see Audacity of Expansion and What’s Been Up), but I admit I did expect a former Constitutional law professor to seek a nominee to the Supreme Court with proper jurisprudence and the utmost respect for the U.S. Constitution.  Not so.  Sardonically, it appears Judge Sotomayor will have her ruling in the Ricci v. City of New Haven case, the decision to scrap “Equal Justice Under the Law” (see Fourteenth Amendment) for 18 apt, non-African American firefighters who passed the test (out of the 118 that took the test, 27 were black) overruled while being confirmed to be a Supreme Court Justice, possibly within the same month.  I guess that’s “Equal Empathy Under the Law.”

But where does she stand on property rights?  Judge Sotomayor, in her ruling on the Didden v. Village of Port Chester ruling (2006), allowed the Kelo-style condemnation of Didden’s property, on which he planned to build a CVS, so that the Village of Port Chester could sell it to a developer, who built a Walgreen’s in its place.  The 3-judge panel, in which Sotomayor concurred, cited judicial precedence in the Kelo case, stating, “We agree with the district court that the voluntary attempt to resolve appellants’ demands was neither an unconstitutional exaction in the form of extortion nor an equal protection violation.” 

On Tuesday, Radley Balko of Reason magazine called this “state-sanctioned extortion.”  Richard Epstein of Forbes magazine wrote, “American business should shudder in its boots if Judge Sotomayor takes this attitude to the Supreme Court. “  As a self-appointed member of this perfunctory 3-judge panel, I concur.  On behalf of founders’ intent, the free market, more than 300 million Americans, and everything they own, I oppose Judge Sotomayor’s appointment to the Supreme Court.  Perhaps I set my criteria too narrowly, but due to the negative effects of proliferating broad definitions discussed herein, I stand by my opposition.

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