About the Rich Getting Richer

Last week the stock market crashed after the Fed said that it will eventually scale back on its efforts to keep interest rates low. The correlation between the two explains why the rich are doing so much better than the rest of the country.

For years the Fed has been pumping money into the economy. Normally this would be inflationary but only a few places in the economy had indicated any sort of bubble. The stock market is the biggest.

What is going on is simple - investors are borrowing money at record-low rates and using it to buy stocks. There are other investments going on at the same time. What is not happening is the money going for traditional investments. Businesses are not using the money to expand.

That keeps the money bottled up at the top. Only a limited number of people are in a position to benefit from this, mainly financial institutions. People involved with those institutions are making a LOT of money but they aren't spending it.

There are contributing factors. The new financial regulations institutionalize Too Big to Fail which encourages risky behavior. The financial institutions know that the tax payers will bail them out if their investments go bad.

But all of this depends on cheap money so any hint that the Fed might allow rates to climb in the future is bad news.

Note that none of this involves tax law or unions. Progressives worry about the concentration of money at the top but their remedies will be ineffective.

An Armed Idiot

Writing in Ms Magazine, Heidi Yewman tells of her month carrying a gun. She claims that she was inspired by the NRA's Wayne LaPierre who said "The only thing that stops a bad guy with a gun is a good guy with a gun."

Her rules for carrying the gun are:
Carry it with me at all times, follow the laws of my state, only do what is minimally required for permits, licensing, purchasing and carrying, and finally be prepared to use it for protecting myself at home or in public.

To understand where Heidi is coming from you have to know that she has been an anti-gun activist. She led a shareholder's revolt against Starbuck's open carry policy and has boycotted the chain for two years.

At first this sounds like an honest attempt by an anti-gun activist to understand gun culture. It is not. It is a stunt designed to prove her original point that guns should be banned in public.

The key is her third point - only doing the minimal requirements. While most normal people who buy a gun for self-defense take a gun safety course and become familiar with gun handling, she didn't even ask the dealer how to load it. Instead she brought the gun home, opened the box, and panicked because she convinced herself that it was loaded with the safety off.

After finding a policeman who showed her some basics, she strapped it on and went to a Starbucks. Her conclusion?

In some way, I feel a certain vindication. I was right to protest Starbucks policy. Today, they have a woman with absolutely no firearms training and a Glock on her hip sitting within arm's reach of small children, her hands shaking and adrenaline surging.

This whole is contrived. She faults Tony, the gun dealer, for selling a gun to someone as ignorant as she is. She faults the cop for not confiscating the gun when she told him what an idiot she is. Why didn't she ask Tony for some basic instruction? Probably because he would have spent more time with her than the cop could. He might have even tried to sign her up for a gun safety course which would invalidate her entire premise. Also, some basic gun handling would alleviate her jitters about carrying a gun.

That is the last thing she wants. Her whole article is based on the idea that guns are dangerous instruments that are likely to go off at any second. Her ultimate aim is to establish a guilt-by-association for gun owners. If someone who is willfully ignorant is allowed to carry a gun then all gun owners should be treated as willfully ignorant.

A careful reading of her goals shows that they are contradictory. She says that she will be prepared to use the gun to defend herself but that involves knowing how to aim and fire the thing. She can't remain willfully ignorant and still be prepared to use it.

She is not above stretching the truth a bit, also. She apparently lives in Washington state whch requires two background checks and a waiting period for getting a gun. She fails to mention this. Instead she says that getting a dog license is easier (do they really fingerprint dog-owners in Washington?).

The irony is that she will probably hurt her cause. The article is making the conservative rounds where she is being held as an object of ridicule.

About that Amnesty Bill

I keep getting urgent email alerts warning that the Amnesty Bill is advancing through Congress. I hate them because there is no such bill. True, there is a bill which would overhaul how illegal immigrants are handled but this is no amnesty bill.

Let's talk a little bit about reality. There are something like 11 million people who came to this country illegally. The biggest group came from Mexico but a large number came from China. They came here because our labor market was able to absorb them and portions of our economy need them. There is no way to send them all back, even if our economy could absorb the impact. Attempting it would require turning our country into a total police state where your citizenship was constantly being verified and your home was subject to search in case you were sheltering illegals.

They aren't going away so what do we do with them? Current policy amounts to amnesty. We look the other way and let them stay. Some cities have even adopted a sanctuary policy where the police are barred from turning illegals over to immigration authorities.

They are here and they aren't going to leave so we need to find some way to legally accommodate them. This is a good time to do it. The collapse of housing construction in the US and a rebounding Mexican economy has slowed the illegal immigration rate to a trickle. This would be a great time to close the border.

The objections to immigration reform don't stand up to scrutiny. One objection is that they are being rewarded for breaking the law. Actually the path to citizenship includes fines and a long residency requirement. Also, keep in mind that federal laws are so complex that nearly everyone breaks them regularly.

There is a fear on the right that this will assure a permanent Democrat majority. The thinking is that the Democrats will ram immigration reform through then claim credit for it for decades to come. This is a real possibility which is why Republicans need to be leaders in the fight to pass reform. Being seen as the anti-Hispanic party will hurt the Republicans for decades but stealing this as an issue from the Democrats will help Republicans make inroads with Hispanic voters.

Defending Libertarianism

Michael Lind on Salon thinks that he has the ultimate question that Libertarians can't answer: If your approach is so great, why hasn't any country anywhere in the world ever tried it?

E. J. Dionne picks up that question and tries to use it to discredit Libertairans.

First things first. There are no true, modern libertarian countries just as there are no pure communist or socialist countries. These policies have been implemented in various degrees in many different countries so we can judge their relative merit.

Before I go further I need to define Libertarianism. It means different things to different people but its heart is a government that protects property rights and the rule of law while allowing trade and innovation to happen with minimal regulatory oversight.

Historically there have been many countries that have implemented this. All of the great trade empires have strong libertarian elements. This includes Victorian England, 17th century Holland and Renaissance Venice. These were not democracies but the governments still promoted trade.

The classic example of Libertarian values is pre-20th century United States.

In the modern world we have seen countries like China move from communist poverty to capitalist prosperity by adopting libertarian trade policies.

In the US we can compare Texas with California to see the effect of loose and strict government policies.

Internationally we can see that the US which just significantly expanded the regulatory state is lagging behind most of the developed world in economic expansion.

Dionne brings up the Great Depression as an example of how expanding government power saved the country from the Great Depression. The truth is that it was a world-wide depression and the recovery happened world-wide regardless of local policies.

So, if Libertarian policies are so great then what happened to them? The short answer is Progressives like Dionne. around the beginning of the 20th century they became upset with income inequality and other causes and started lobbying for increased government power to set things right. This was an emotional appeal, not an economic one. Libertarianism didn't exist at the time. It was created by the backlash when socialist and communist policies failed.

Now the Progressives are back. They see income inequality as a major problem that must be addressed by government intervention. It doesn't matter to them that everyone is living a more prosperous life than 50 years ago. They want the expansion of government to proceed and feel threatened by anyone who points out the flaws in this.

The Phone Records Scandal

The fact that the government is collecting records on every call made within the United States is a bit troubling but not as bad as it seems at first. In order to access the data, agents have to first get clearance from a judge.

What is not clear is easily these requests are granted or how wide reaching they are. Given the current administration's overreach on surveillance, we need to know more about the program before we can properly judge it.

One thing that is clear though is that the man in the White House is not the man who people thought they elected. Candidate Obama was against surveillance programs such as this. President Obama has extended them.

It should not go unremarked that many of the people who are defending this program condemned it under President Bush. That implies that the program is needed and that the objections were purely political.