DID LEGENDARY REPORTER CARL BERNSTEIN CREATE FAKE NEWS?

DID LEGENDARY REPORTER CARL BERNSTEIN CREATE FAKE NEWS?
by Jim Greenfield

Carl Bernstein became famous as an investigative reporter in the 1970’s as part of the Washington Post team of Woodward and Bernstein, whose investigation into the Watergate Scandal brought down the presidency of Richard Nixon. But look at this recent CNN report and consider whether Carl Bernstein still has any credibility:

Bernstein: Trump’s lawyers tell him what he wants to hear on Russia
By Daniella Diaz, CNN
December 31, 2017

Washington (CNN). Veteran journalist Carl Bernstein said Sunday that President Donald Trump’s lawyers are telling him what he wants to hear about the probe ending soon to prevent Trump from firing Mueller.
“There are many times he has expressed, I’m told by people in the White House, the desire to fire Mueller, the desire to pardon people under investigation including his family,” Bernstein, a CNN contributor, told CNN’s Dana Bash on “State of the Union.” “His lawyers are telling him what he wants to hear — that’s what I’m told — by lawyers in the White House, they’re telling him what he wants to hear to keep him from acting precipitously and to go off and fire Mueller in a rage, or fire (Deputy Attorney General) Rod Rosenstein in a rage. They have an out-of-control client.”

Bernstein added: “The President of the United States, in their view, is out of control most of the time, in their view, when it comes to this investigation.”
(See report at: http://www.cnn.com/2017/12/31/politics/bob-woodward-carl-bernstein-donald-trump-white-house-russia/index.html)

In making these claims, Carl Bernstein is unwittingly accusing President Trump’s attorneys of serious professional misconduct. Moreover, Bernstein is implicitly claiming that Trump’s lawyers are so stupid that they intentionally disclosed their own misconduct to the media, i.e. to him.

If Bernstein’s report is true, Donald Trump’s lawyers violated at least three sections of the Washington D.C. Lawyers’ Code of Professional Conduct.

Rules of Professional Conduct Rule 1.6–Confidentiality of Information says:

“… [A] lawyer shall not knowingly:
(1) reveal a confidence or secret of the lawyer’s client;
(2) use a confidence or secret of the lawyer’s client to the disadvantage of the client;
…..
(b) “Confidence” refers to information protected by the attorney-client privilege… and “secret” refers to other information gained in the professional relationship … the disclosure of which would be embarrassing, or … detrimental, to the client.”
(See https://www.dcbar.org/bar-resources/legal-ethics/amended-rules/rule1-06.cfm )

If Bernstein is telling the truth that Trump’s lawyers disclosed to him confidential information about their communications with their client, the lawyers clearly violated this section of the Code.

Rules of Professional Conduct: Rule 1.4—Communication says:
“(a) A lawyer shall keep a client reasonably informed about the status of a matter….
(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions ….”
(See https://www.dcbar.org/bar-resources/legal-ethics/amended-rules/rule1-04.cfm)

If Bernstein is telling the truth that Trump’s lawyers intentionally misled him about the status of the Mueller investigation in an attempt to manipulate him so as to alter his behavior (i.e. not fire Mueller), such deceptive conduct by Trump’s lawyers clearly violated this provision of the Code.

Rule 1.3–Diligence and Zeal says:
“ ….
(b) A lawyer shall not intentionally: …. prejudice or damage a client during the course of the professional relationship.…..
[6] … a lawyer should always act in a manner consistent with the best interests of the client.”
(See https://www.dcbar.org/bar-resources/legal-ethics/amended-rules/rule1-03.cfm)

If Bernstein’s report is true, Trump’s lawyers violated this section of the Code of Professional Responsibility by disclosing to an investigative reporter who is an adversary of their client, information that was damaging and prejudicial to their client, with near certitude that the damaging disclosure would be released to the public in a manner that would harm their client.

If Bernstein’s report is true, Trump’s lawyers disclosed to Bernstein that they were deceiving their client. The lawyers, Bernstein says, lied to Trump by telling him that the Mueller probe will soon be over when in fact they knew it would not soon be over. According to Bernstein, Trump’s lawyers then disclosed this lie to a prominent critic of the President (Bernstein) so that he could report it to the whole world.

Let’s break this down:

1. If Trump’s lawyers were indeed lying to him, why would they tell Bernstein? Wouldn’t they know that the first thing Bernstein would do with such a disclosure is go on CNN with it? Wouldn’t they also know that after appearing on the news, word would immediately get back to Trump who would then know that his lawyers had lied to him? Upon learning from the news report the truth that the probe was not soon coming to an end, Trump would promptly fire Mueller, the exact opposite result of that sought by the lawyers, according to Bernstein. Before firing Mueller, however, Trump would no doubt fire his crooked lawyers who had thus betrayed him.

2. Such flagrant violations of the Code of Professional Conduct by Trump’s lawyers would likely result in their disbarment. Trump’s lawyers would certainly know this. In fact, I haven’t practiced law for 35 years, but as soon as I saw this story, I immediately recognized, as would any lawyer, that the conduct by the lawyers Bernstein alleges would have violated provisions of the Code of Professional Conduct barring a lawyer from betraying his client’s confidence, deceiving his client, and acting in a manner contrary to his client’s interest. What incentive could Trump’s lawyers possibly have to betray their client in this manner knowing that they would thus destroy their own careers?

3. Lawyers would also be guilty of violating the Code of Professional Conduct if they knowingly lied to their client as claimed by Bernstein, in telling Trump that the Mueller probe would soon be over, when they knew that in fact it will not soon be over.

4. Not only would these ethical violations by Trump’s lawyers likely lead to disciplinary action by the Bar Association, but such professional misconduct could result in a major civil malpractice claim against them by Donald Trump.

5. In addition to the financial liability, the damage to these lawyers’ reputations would be irreparable. What other client would hire such lawyers after such a major public scandal? And why would they disclose their own misconduct to a prominent investigative reporter, knowing that he would report their violations to the public?

How likely is it that lawyers of a stature to be serving the President of the United States, would do anything so palpably stupid as what is claimed here by Carl Bernstein?

This story is a glaring example of fabricated fake news. Unfortunately Bob Woodward allowed himself to be drawn into this debacle by appearing alongside Bernstein on this CNN program. However Woodward never endorsed the phony claims by Bernstein.

There’s a big difference between Bob Woodward and Carl Bernstein. Woodward is an honest, smart, investigative reporter. Bernstein is an agenda-driven political hack with no credibility. This “report” by Carl Bernstein is so manifestly false and fraudulent that it could mark the end of Bernstein’s career.

Senator Elizabeth Warren Hasn’t Got A Clue

Senator Elizabeth Warren Hasn’t Got A Clue

Senator Elizabeth Warren (D. Massachusetts) is frequently mentioned as a possible Democratic candidate for President.  But it’s astonishing that Warren, formerly a tenured law professor at Penn and Harvard, is apparently unaware that the United States has a “government of laws not of men.”  On NPR this morning interviewer Steve Inskeep asked Warren about an audio tape that emerged about bank regulators who decided not to criminally prosecute giant investment bank, Goldman Sachs.  Inskeep repeatedly pointed out to Warren that the regulators had found that the bank’s actions, although “shady” (whatever that means) were not illegal.  Warren repeatedly brushed aside this distinction, as if it were insignificant.  She said that “the fact that Goldman could mount a legal defense here is not really the point….”  Really, Senator?  Not really the point?  In other words, Warren believes that criminal prosecutors should go after people who have broken no law, if the prosecutor has some personal moral or ethical objection to the defendant’s conduct.  Sorry, Senator Warren, that’s not the way the American  criminal justice system  works.  Prosecutors aren’t supposed to go on vendettas, based on their personal beliefs, against people who haven’t broken the law.   It’s shocking that ivy league law schools like Penn (my alma mater)  and Harvard would have hired a professor who fails to grasp such a fundamental principle of the American justice system.

Pothead Nation USA

From the Nothing Can Stop A Bad Idea Whose Time Has Come Dept.

 

POTHEAD NATION

by Jim Greenfield © August 25, 2014

Isn’t it ironic that the movement to legalize marijuana across the nation appears to have gained irresistible momentum just as new studies come out showing that marijuana causes chronic brain damage and long term reduction in iq among young people whose brains are still developing?  A recent Duke University study  shows a long term eight percent drop in i.q. among teenagers who use pot regularly.  Apparently this reduction in intelligence is not reversed even when young users stop abusing the drug.  A Northwestern University School of Medicine study published in the “Journal Of Neuroscience” found that marijuana use causes structural brain damage, corroborating an earlier study at Harvard Medical School.

Colorado and Washington states have already legalized marijuana and it is defacto legal in many other states where law enforcement against possession is virtually non-existent.  There is growing pressure to decriminalize pot at the federal level as well from advocates who apparently don’t believe the scientific evidence and claim  pot is harmless.  As a fallback position  they sometimes argue unconvincingly that  at least it’s not as bad as alcohol, a claim not supported by any evidence.  Evidence of the linkage between marijuana use and mental health problems such as depression, low self-esteem, loss of motivation, poor memory, and schizophrenia are ignored by the pro-pot crowd.  The rising popularity of legalization among the uninformed public has cowed politicians into either silence, or open support of legalization.

Proponents of pot legalization compare the so called “war on drugs” with prohibition in the 1920’s.  To which I say, “What war on drugs?”  Pot legalization heads claim prohibition doesn’t work.  Actually, prohibition does work.  When there were stiff prison terms for possession of all classes of drugs, such as in the 1950’s, drug abuse was almost non-existent, except limited use in a few big city slums .  It is illogical and naïve to believe that legalizing a dangerous substance will not result in a substantial increase in its use.

The clearest example of the effect of legalizing a behavior that was previously illegal is pornography.  Back in the days when pornography was illegal it was extremely rare and hard to come by – found only in secret sleazy back alley stores in sleazy back alley neighborhoods.  After the Supreme Court struck down anti-pornography laws in the 1970’s in the name of free speech, pornography proliferated at an exponential rate.  Today pornography is found everywhere, in stores that advertise openly throughout the country in otherwise respectable neighborhoods, on the internet, and on cable tv.  Could anyone argue that this proliferation would have occurred if pornography hadn’t been legalized?

This is not to take a position about whether pornography should be legal.  Clearly that genie ain’t going back in the bottle.  The point is rather that demand for any product that is illegal and illicit is depressed.  Legalizing any previously illegal product not only de-stigmatizes its use, but makes it commonplace and easy to obtain.  It also results in widespread marketing and advertising, and a huge expansion of the market for that product.    Pot stores are coming soon to a neighborhood near you.  And if you think legalizing pot won’t make it easier for your kids to get it and get addicted, dream on.

So what will be the impact on our nation of multiplying the use of a drug that has now been scientifically proven to make people stupid?  Duh.  There will be more stupid people.  In my opinion we already have an ample supply of stupid people and don’t need more.

And for my libertarian friends, think about this.  The unfortunate thing about potheads is that, like other stupid people, some of them vote.   And who do you think they vote for?  Libertarians?  I don’t think so.  They vote for Democrats.  They vote for demagogue politicians who promise to give them free handouts to support their addictions, debilitated life style of dysfunction, degradation, inability to hold a job, and chronic dependence on the welfare state, common bi-products of chronic drub abuse.  So, libertarians, put that in your pipe and smoke it.

The libertarian argument for legalization goes something like this.  We believe in freedom.  (So do I).  Every adult should be free to engage in any conduct he chooses so long as it causes no harm to anyone else (the libertarian prime directive).  Ingesting marijuana, or any other drug, may harm you, but it causes no harm to anyone else.  Therefore, according to libertarian dogma, you should be free to use it.

The problem with the libertarian argument is that it’s simplistic, just as the libertarian formula which purports to provide the solution to all public policy questions is simplistic.  The problem, which is ignored by the libertarian creed, is figuring out where to draw the line between where self-destructive conduct harms only yourself and where it harms those around you.  Would anyone argue, for example, that the children of a drug addict aren’t harmed by their parent’s drug abuse?

The truth is that, like libertarians, I have no desire to interfere with people who want to harm themselves unless, and here’s the problem, their self-destructive behavior harms me as well, which in fact, it does.  If you want to go out in the Mohave dessert and shoot up on meth or heroin, go ahead.  Have at it.  But if you’re living next door to me, or working in my company, or your kids play with my kids, sorry pal, don’t tell me your drug abuse does me no harm.

And another thing.  Libertarians believe in freedom, right?  So do I.  But would you argue that widespread drug abuse increases freedom?  What a superficial conception of freedom!  Do you define freedom mechanistically to mean soley the physical ability to move your body around and do what you like with it, like for example the “right” to put brain destroying chemicals in your body?  How about a subtler and more profound notion of freedom?  In vedic philosophy the Sanskrit word “moksha” means liberation, not physical freedom to do what you choose with your body, or even political liberation, but liberation of the mind from ignorance and suffering, i.e. “enlightenment.”  As the Beatles said, “You better free your mind instead.”  Does allowing drug abusers the “freedom” to become enslaved to their addiction truly promote the cause of liberty in any meaningful sense?  Maybe there are some things we don’t need to be free to do because we know how it ends.

It makes perfect sense for Democrats to support marijuana legalization because most stupid people vote Democrat.  But for Republicans it is stupid to be pro-pot, and would make more sense to advocate re-criminalization rather than de-criminalization.  Let’s not throw in the towel, but get our young people off the drugs, and into the work place where they can start paying taxes, and hopefully figure out that the government is not their friend, so they wake up and start voting Republican or Libertarian.

The more philosophical point is this.  Freedom is rather a rare and delicate commodity.  Most men throughout history have lived under one form or another of despotism.  To remain free, a people must be capable of clear, intelligent thought.  If we permit our population to be further dumbed down and degraded, dysfunctional, dependent, and addicted to brain-addling substances, the demands to expand the welfare state even more will be irresistible.  If you want to understand the connection between a compliant, brain dead population and mass subservience to centralized authority, go back and re-read Aldous Huxley’s classic, “Brave New World.”   If  the trend of expanding drug abuse accelerates,  the citizens of this pothead nation, even those of us who don’t use drugs, will lose what’s left of our freedom.

Serving all humanity, but mainly serving myself, this is Jim Greenfield.

 

2012 study from Duke University. Researchers studied nearly every child born in a small town in New Zealand since the 1970s. They gave them I.Q. tests as teenagers then another later in life. They asked about their marijuana, alcohol and other drug use. The study concluded that those who regularly smoked marijuana did lose, on average, eight I.Q. points.

OBAMACARE: HEALTH PLAN FOR THE SICK & STUPID

OBAMACARE: THE HEALTH PLAN FOR THE SICK AND STUPID

                                                by Jim Greenfield     4/3/14   

 According to polls, Americans are rejecting Obmacare en masse.   Frustrated by its disastrous roll-out, the Obama Administration has desperately sought to salvage this bureaucratic fiasco by getting endorsements from athletes and celebrities, who are ignorant about the product they’re endorsing.  Their sales pitch to buy Obamacare is a con and their marks are young people. 

 Obamacare is beyond the pale even for liberals.  It’s Robin Hood in reverse as it redistributes wealth from poorer young people, to wealthier  middle-aged people.  If too few healthy people sign up, Obamacare will collapse from inadequate funding.  To survive financially, Obamacare requires high premium payments from healthy people to subsidize the high costs of care for older sicker people. 

According to the Cato Institute  (“Obamacare: A Bad Deal for Young Adults. www.cato.org/publications/briefing-paper/obamacare-bad–deal-young-adults ): “Those provisions [of Obamacare] would drive premiums down for 55-year-olds but would drive them up for 25-year-olds—who are then implicitly subsidizing older adults. ….Those provisions …and individual mandates essentially redistribute income from young to old.”

These findings are corroborated by a Heritage Foundation study,  “How Will You Fare in the Obamacare Exchanges?” (http://www.heritage.org/research/reports/2013/10/enrollment-in-obamacare-exchanges-how-will-your-health-insurance-fare).

The study finds that in 45 states premiums increase under Obamacare, particularly for young adults.  In eleven  states they go up more than 100% for 27 year olds.  In another sixteen  states premiums go up from 51% to 100% for 27 year olds.

 In Oregon, premiums for 27 year olds have risen 55% under Obamacare.  Monthly premiums for 50 year olds have increased only 7.4%.

 The Heritage study states:  “The Obama Administration is desperate for younger people to enroll to prevent an adverse selection death spiral. As pointed out by Sam Cappellanti, ‘The enrollment of these low cost young adults…is essential … to subsidize the costs of insuring the elderly and chronically ill.’”

 From these studies it’s clear Obamacare will disintegrate without a massive transfer of wealth from healthy young people to sick older people.  To get young people to buy into this bad deal they must be conned or coerced. 

 The middle-aged beneficiaries of this wealth transfer are far wealthier than the young people from whom the money is extracted.  Young people have far lower earning power than the older, higher skilled recipients of these subsidies.  Earnings peak when workers hit middle age.  In 2009, peak income occurred in the 40-55 years old age group where people earn more than three times as much as younger workers. ^ (“A Peak Earning Years Portfolio”  . Bloomberg Business week. March 17, 2009. Quoted at  http://en.wikipedia.org/wiki/Peak_earning_years).  Obamacare takes money from financially struggling young people and hands it out to wealthier older people. 

 If you’re a healthy young adult buying Obamacare insurance is a sucker’s deal.  The most popular provision of Obamacare is the rule prohibiting insurance companies from turning down people with pre-existing medical conditions.  But the pre-existing condition requirement creates a paradox that violates the most basic principle of insurance.

 For example, why do you purchase fire insurance for your home?   You do so, because if the house  burns down the enormous cost of rebuilding would be unaffordable.  But suppose the law changed to require insurance companies to pay to rebuild homes even if the homeowner  didn’t purchase the insurance until after the fire?  You would then have no incentive to pay for insurance until after the home burned down.

 Obviously such a perverse law would put the insurance companies out of business and we’d all have to live with catastrophic risk.  Yet this is exactly how Obamacare works.   Why would a healthy person pay for insurance he doesn’t need when the law allows him  to buy it after he gets sick?   Obamacare attempts to counteract this oxymoron by creating a phony, negative  incentive to buy health insurance; it’s called “the individual mandate.”  The individual mandate seeks to frighten  healthy people into buying insurance at inflated prices,  contrary to their own financial interest, by siccing the IRS on those who disobey the mandate

 But in this rare instance, the IRS is a paper tiger.   The law only permits the IRS to impose penalties for refusing the mandate by deducting the fine from your tax refund. (http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/01/everything-you-need-to-know-about-life-under-obamacare-2/)  So if you don’t get a tax refund, i.e if you arrange not to have excess taxes taken from your paycheck, guess what!  The IRS can’t collect the fine and you can tell them to go jump off a cliff. 

 So if you’re young and healthy, it’s stupid to pay these inflated prices for Obamacare.  It’s smarter not to  purchase insurance unless you get seriously ill..   One caveat: if you get sick suddenly you may have to wait for the next open enrollment period to sign up for insurance.  But even with that wrinkle, a rational cost/benefit analysis suggests you’re better off not buying what Obama and his pitch men are selling. 

  

Jim Greenfield is the author of THE TAXMAN COMETH, a brilliant satire about tax evasion. www.taxmancometh.net.  Jim hosts a highly entertaining and provocative weekly radio show every Sunday afternoon from 1:00 to 3:00 on KPAM 860 A.M.  www.jimgreenfieldshow.com

 

 

WEALTH INEQUALITY: THE HOBGOBLIN OF THE LIBERAL MIND

Wealth Inequality: The Hobgoblin Of The Liberal Mind

by Jim Greenfield

 “A foolish consistency is the hobgoblin of little minds.”  Ralph Waldo Emerson

 President Obama has sought to distract attention from the Obamacare train wreck, and the consequent election disaster looming for Democrats, by harking back to the favorite perennial shibboleth of governmentalists everywhere: wealth inequality.  (The term “governmentalist”  includes all statist ideologies: liberal, progressive, social democrat, socialist, or communist because frankly I can’t tell much difference between ‘em.)  The specter of “wealth inequality” is ever lurking in the background whenever governmentalists of every ilk discuss domestic policy.  Wealth inequality is what all liberal/progressive policies are about.  They always want to raise taxes on the rich, i.e. anybody who makes more money than whoever happens to be speaking, and always want to give more government handouts to the “needy.”  The wealth levelers’ solution to the inequality problem is always the same: expand the power of politicians and government bureaucrats by redistributing wealth. 

 The irony is that the most prominent governmentalist in the world, Barrack Obama, has done more to increase wealth inequality than anyone in history.  Under the policies of the Obama administration, median household income, i.e. the wages of middle and working class families, have significantly declined.  Median wages are down 4.4% or $2400 per year per family since Obama took office.  (see Robert Pear, New York Times online 8/21/13). 

 As working class wages have gone down, the stock market has soared.  The Dow closed on 2/28/14 at 16,321, two and a half times higher than its bottom of 6,547 in March of 2009, shortly after Obama took office.  During the same period, the S &P 500 has risen 2.75 fold.  In other words, the investor class has seen their portfolios go up by more than 250% during the same period that middle class working folks have seen a substantial decline in their wages.  Paradoxically, this huge increase in wealth inequality has taken place under a President who loudly proclaims that wealth inequality is the most important problem of our time.

Why has wealth become so unequal under Obama?  Because  the Obama Administration has an array of  anti-business policies including higher taxes, an exploding national debt, expanding government regulation, higher welfare state spending, and, of course Obamacare.  These anti-business policies have not hurt crony capitalists and the super-rich, but they’ve hit the middle class hard, damaged small main street businesses, discouraged hiring, and depressed wages.  At the same time the Federal Reserve has pumped literally trillions of dollars of digitally created currency (not to be confused with bitcoin) into large banks and wall street firms, driving up stock and bond prices.  The Fed stimulus of these asset classes have made the rich richer, insulating them from Obama’s depressive policies that have so afflicted middle class working folks.   

But my purpose isn’t to criticize Obama policies that exacerbate wealth inequality, or to highlight the ironic hypocrisy of Obama’s de facto war on the middle class.  Because the truth is that “frankly, my dear, I don’t give a damn” about wealth inequality.  See I don’t share the governmentalist view that wealth inequality is a huge problem.  For governmentalists wealth inequality is just another excuse to expand government power even further, in the name of leveling the playing field, fairness, equality, or some other lovely sounding egalitarian principle. 

 But the inconvenient truth is that egalitarian governmentalist policies don’t actually reduce inequality.  All they do, in the name of equality, is change the rules about who gets to decide who gets rich and who stays poor.  Those at the top of the most egalitarian systems, communist paradises like North Korea, Cuba, or the former Soviet Union, are fabulously wealthy compared to the rest of the population, just like the titans of industry in capitalist countries.  The difference is that in socialist and communist countries the super rich acquire their wealth through the exercise of political power, whereas in America guys like, say, George Soros, Warren Buffett, Al Gore, the Clintons, the Bushes, or the guys who started Solyndra, acquire great wealth without political influence.  Just kidding.

 Actually, the unfortunate truth that political influence is a path to great wealth even in a capitalist country like America is an outgrowth of two factors.  First, America isn’t really a capitalist country.  Not any more.  Forty percent of our gdp is now appropriated by the public sector and is therefore essentially socialistic.  And the other sixty percent is heavily regulated and otherwise intertwined with government.   What we have isn’t capitalism; it’s a mixture of socialism and crony capitalism, with a few vestiges of real capitalism.  Crony capitalism is easily confused with true capitalism, thereby giving capitalism a bad name.  Second, the truism that political influence begets wealth is just the way it is, and always has been.  This kind of corruption can’t be entirely eliminated but the best way to keep it in check is to limit the power of government and the politicians who control it.  Unfortunately the concept of limited Constitutional government is now regarded by the ruling classes as an antiquated and out of vogue notion, which also happens to be an assault on their power.  Those of us who advocate Constitutional limits on government power are called extremists and told we lack “compassion.” 

 The argument against wealth inequality, and by implication in favor of using government power to redistribute wealth, exploits intrinsic human sensibilities about fairness.  Most of us intuitively feel that it’s unfair for Bill Gates to have $69 billion, while children starve in the streets.   Liberal radio talk host Mark Levine recently confronted me with a stark example.  Is it fair, he asked, that the old miser Scrooge from Dickens’ “Christmas Carol,” should have millions, while the poor crippled boy, Tiny Tim, can’t afford surgery to correct his congenital condition?  As the “right wing” guest on Mark’s show, it was my unpleasant job to take Scrooge’s side of the argument.   

 It’s hard to make Scrooge’s unsympathetic case in a 30 second soundbyte.   I concede that it isn’t “fair” that Scrooge hoards his fortune while poor Tiny Tim is left to die.  But here’s the problem.  Who decides what is fair?  Is it fair to have the government take Scrooge’s money and use it to create Medicaid, or, for that matter Obamacare?  Before you answer keep in mind that if the government takes Scrooge’s money, it won’t be long before they’re taking your money also.  And they won’t just give it to Tiny Tim; they’ll give it to all kinds of unsavory people for all kinds of unsavory reasons.   

 If you compare the fairness of laissez faire capitalism, where the Scrooges, Rockefellers, and Gates’s accumulate vast fortunes, while the Tiny Tims die from lack of care, with some Platonically ideal and idyllic world where everyone cares for his brother, and all men are really equal, capitalism comes up morally short.  But in the real world those aren’t the real choices.  In a free market system wealth is allocated according to a combination of the vicissitudes of market place skills and good luck.  You may well feel that such an economic system is unfair, but what do you replace it with?   In the real world the only alternative to free markets is a political economic system where government bureaucracy re-distributes wealth in accord with the dictates of self-interested politicians.  Do you think the results are any fairer? 

 In the real world government is the worst possible institution to place in charge of administering charity to Tiny Tim and other misfortunates.  I’d rather work on old Scrooge and persuade him to part with some of his money voluntarily, which, by the way, is exactly how the “Christmas Carol” story turns out.  And in the real world, the fabulously wealthy from Andrew Carnegie, Henry Ford, and Rockefeller to Bill Gates and Warren Bufftett have been generous philanthropists.  So my question for redistributionists and wealth levelers is this: Do you think the government does a better job of administering charity than philanthropists, private churches, and charities?

 The welfare state began in America in the 1930’s and has been steadily expanding ever since.  We have 80 years of data, and the results are in.  Massive government hand-outs of benefits and cash has been an unmitigated disaster.  What governmentalist ideologues and welfare state advocates fail to take into account is that the politicians who take upon themselves the unbounded field of power to decide who gets what and who has to pay what, have motives that aren’t entirely altruistic.  Doesn’t this minor detail occur to those who advocate the massive government hand-outs of the welfare state?  Do you think the men to whom you grant this awesome power are angels with pure motives?  Is it not more likely that they will use this expansive power over the allocation of money to reward their friends, punish their enemies, hand out cash to those who give some of it back to them, and buy the votes of the masses with benefits and promises of benefits?  If power corrupts why are we surprised that a government that has accumulated so much power has also become so corrupt?  After decades of observing the failures of the welfare state, how can anyone still believe that such a corrosive system can produce positive social benefits?

 To illustrate the problem consider an example.  Imagine you’re part of a group of 100 people who move to a desert island.  Your group decides to democratically elect a government of three people to be in charge of everything, including the power to decide taxes and who will pay them, and to whom wealth will be allocated.  How do you think those three officials will fare?  Everyone will treat them with great deference, and ply them with gifts and favors.  Their decisions about who pays what and who gets what will be largely determined by what is in the self-interest of the three politicians who have been granted all this power.  The public good will be subordinated to naked self interest.  And the level of corruption will grow steadily worse over time.  The model I am describing is exactly what’s gone wrong with the political system in the United States today. 

 Wealth inequality is a bogus issue, a red herring that takes the public policy discourse out of focus.    If you think inequality is a problem let me ask a question that brings the issue into focus.  Suppose we adopted a pro-growth pro-business public policy that over a period of time, say ten years, grew the economic pie including a doubling of the income of people in the bottom 10 percent.  At the same time, however, the income of people in the top 10 percent quadrupled.   In other words, the policy makes everyone wealthier, but overall inequality  increases because the poorest 10 percent have only doubled their income, while the richest 10 percent have quadrupled theirs.  Would you support such a policy? 

 If you answer yes, you are recognizing that wealth inequality in and of itself is not really the problem.  You would like to see the poor become better off, even if the rich become better off at a faster rate.  If you answer no, it means you are truly obsessed with inequality and would favor a society where everyone is equally poor because you believe that inequality is a worse problem than poverty.  If that’s what you believe, you are a communist.  (Not that there’s anything wrong with that.)

 If  you’re now persuaded that wealth inequality is not a problem that government should try to correct, but you are still concerned about poverty, I have a solution.  It’s called free enterprise.  Over the past two hundred years the free enterprise system has liberated billions of people around the world from the grinding poverty bare subsistence struggle for survival that characterized the lives of most people since men first emerged from the trees.  Free enterprise doesn’t create equality; far from it.  But it does create vast amounts of wealth.  And that wealth is distributed  unevenly.  But even those in the bottom tier, and even more so the vast majority of people in the middle class in capitalist societies, have a material standard of living today higher than the kings and emperors of the ancient world.  The vast amount of wealth and material comfort, from indoor plumbing to electric appliances that we all take for granted today, were created by free market capitalism.  Let’s not kill the capitalist goose that laid the golden egg in the futile pursuit of an unattainable goal like equality.

FEAR AND LOATHING IN AMERICA

FEAR AND LOATHING IN AMERICA

The Bogus Shutdown/Debt Crisis

by Jim Greenfield 10/24/13

The crisis isn’t failing to raise the debt ceiling; the crisis is the debt.”   Peter Schiff

The majority is almost always wrong.”    Henrik Ibsen

I’ve been studying public policy and politics for 50 years. Never have I seen such an onslaught of misinformation, disinformation, confusion, and sheer ignorance as the coverage of the recent government shutdown/debt ceiling debacle. If the public is confused, which, according to opinion polls, the public surely is, it is because a cabal of journalists, pundits, and politicians have done everything possible to make them confused. I’m not shocked by demagoguery by politicians, nor by bias in the media. What was unusual was the extraordinary amplification by the media of manipulative messages of particular politicians to create public hysteria, that was so beneficial to one political faction while so damaging to the other.

It’s human nature to panic over imaginary threats, while remaining oblivious to real threats. Remember the existential danger believed to be posed to civilization in 1999 by Y2K? Remember Y2K? Imaginary threat. Or, on the other hand, the real threat posed by Hitler in the 1930’s as he was building the greatest war machine in history and, other than Winston Churchill, nobody noticed.

Myth #1. Who was to “blame” for the government “shutdown?”

Throughout the shutdown fiasco, the media obsessed on the question who was to “blame,” and conveniently provided a simple answer: the Republicans. But the question contains two false premises. First, the assumption that shutting the government is a negative for which someone ought to be blamed. Second, the factually incorrect premise that the government was shut down. The government was not shut down; it continued to function throughout this manufactured crisis. Soldiers continued fighting. The IRS continued collecting taxes. The NSA continued spying and gathering data on us all. The government continued giving out money with abandon to everyone to whom the government routinely gives out money with abandon.

A few functions of government were shut down, functions handpicked by the Obama administration to inflict the maximum pain on the maximum number of people, a slight perversion of the old utilitarian maxim about pursuing the greatest good for the greatest number. Obama’s shut-down targets were optically selected to get the most bang for the shut-down buck – the Washington Monument, Yellowstone National Park, and the Grand Canyon, to name a few. Shutting down the Grand Canyon required a really big canopy.

“Essential” government personnel continued to work. “Non-essential” personnel were given paid holidays. Astonishingly, some furloughed government workers managed to “double-dip” by wangling unemployment benefits on top of the pay they received retroactively for not working. Not a bad deal.

The Obama administration coldly decided that the people in charge of keeping parks and monuments open were non-essential, but the people in charge of closing them were essential. Threatening the citizenry with arrest to keep the parks closed is rotten work, but somebody has to do it. This strategy was manifestly chosen in order, with the complicity of the mainstream media, to convey the compelling message that Republicans are dirty, rotten, scoundrels. Never mind that the House Republicans had passed several bills to fund not only the parks and monuments, but all other government functions except Obamacare. It was the Senate Democrats, led by Majority Leader Harry Reid, who blocked this legislation. These inconvenient facts were not permitted to interfere with the Democratic party/media narrative that it was right wing Republican extremists (i.e those who, like the majority of Americans, oppose Obamacare) who had shut down the government.

This false reporting exacerbated ambivalence and confusion in public attitudes toward government. According to a recent Gallup Poll, 64% of Americans say big government is the biggest threat to the country. If the public is worried about big government, why were they also worried by a reduction in peripheral government functions? These conflicting attitudes are self-contradictory. If the public doesn’t like big government, why wasn’t the debate about who gets the credit for shutting down the government instead of who gets the blame? Why did the public see the modest shutdown in non-essential functions as a crisis? Answer: because the media told them it was a crisis. And if it was the Democrats who refused to vote on measures to keep the government open, why did the public think it was Republicans? Answer: because the media told them it was Republicans.

Myth #2. The government shutdown harmed Americans and caused severe damage to the economy.

President Obama said that the shutdown and threat of national default had inflicted “completely unnecessary damage on our economy.” It’s an article of faith among liberal governmentalists that reducing government spending damages the economy. In one sense, they are correct, but only because of the peculiar way gross domestic product (gdp) is measured. In accord with the dictates of Keynesian ideology, the official definition is: GDP = private consumption + gross investment + government spending + (exports −imports). In other words, the definition of gdp includes government spending. Hence, any reduction in government spending, by definition, reduces gdp. This is putting the rabbit in the hat. Any government can create the illusion of economic growth by simply printing money and spending it, and many, including Barack Obama, have done just that. In the short run, such “stimulative” policies appear to increase gdp. In the long run they are disastrous because they conflate growing government bureaucracy with real economic expansion. Real wealth is created by the private sector making stuff, not by government bureaucrats handing out cash to favored constituents. The historical record shows that reduced government activity is a long term economic boon.

Remember also that just last year the Obamanistas made the same scare-tactic argument that the sequester budget cuts would cause untold damage to the economy. But the horrors Obama and his supporters gloomily prophesied would result from the sequester never materialized. The same arguments and scare-tactic forecasts were also made when the government was shut down in 1995, during a similar confrontation between the Republican-controlled House, and the Clinton Administration. In fact, the 1995 shutdown, and budget trimming measures that followed, produced four straight years of balanced budgets and an economic boom that lasted five years.

Myth #3. By refusing to raise the debt ceiling the Republicans would cause the U.S. government to default on its debt and create a world-wide financial crisis.

Let me break this down. The word “default” has been even more misused and abused than the word “literally,” which, in recent years, “educated” people in the media have been using to mean the exact opposite of what the word actually means. Recent example from Fox Business channel: “These policies will cause the economy to literally flush down the toilet!” For those who don’t know what the word “literally” means, let me put your mind at ease. It’s not possible for the economy to literally flush down the toilet because the toilet isn’t big enough for that to happen.

Innumerable Democratic party politicians, reporters, and media commentators repeated over and over and over again that if the Republicans didn’t vote to increase the debt ceiling, the United States government, for the first time in history, would “default” on its debt. This assertion is a prevarication and a lie! It’s the biggest and most frequently repeated lie since many of the same people were telling us in the last decade that George Bush’s tax cuts were only for the rich. Like the lie about the Bush tax cuts, the “default” lie was repeated so often that most Americans came to believe it.

This “crisis” was manufactured to create fear and dread in the populace for the purpose of driving a particular agenda. Even the President of the United States himself did his best to talk down the economy and spook financial markets. I’ve never before seen a President engage in such tactics, laying the foundation to blame Republicans for the ongoing failure of his economic policies.

So what are the facts that refute the “default” lie? The Democrats and the media conflated not raising the debt ceiling with defaulting on the debt. These are two completely different things. If Republicans had followed through on the threat to not raise the debt ceiling, would that have meant that the government would default, i.e. not pay interest on its debt? No. All it would have meant is that the government could not go even deeper into debt.

By way of analogy, suppose you are $200,000 in debt, and you want to get a loan to go even deeper into debt. The bank says your wife has to co-sign, but your wife, wisely, refuses to “raise your debt limit.” Does that mean you default on your existing debt? No. You can continue to make payments on your existing debt out of your income. In fact, by refusing to co-sign, your wife actually reduces the risk that you’ll default by restraining you from going deeper into debt.

Similarly, if the Republicans in Congress had stuck to their guns and refused to raise the debt ceiling, it would not have caused a default on U.S. government debt. To the contrary, it would have produced an instant balanced budget that would have prevented the President from leading the United States even deeper into debt.

But Democratic politicians, including the President, and many in the media, either through ignorance or malfeasance, told the public that if the Republicans didn’t vote to raise the debt ceiling the U.S. government would default on its debt. As shown by opinion polls, the public believed this patent nonsense. Those who made this argument are ignorant of the simple arithmetic. Here are the numbers. The United States government takes in approximately $3 trillion a year in tax revenues. It spends approximately $235 billion a year on interest on the national debt. In other words, only 1/12th of government revenue is spent paying interest on the debt. So even without raising the debt ceiling, there is virtually zero chance that the government would default on its debt.

Now it’s true that the government would have had to cut spending if the Republicans had refused to raise the debt ceiling. They would have had to cut about $700 billion from the $3.7 trillion budget, i.e. a reduction of about 19 percent.

Who would have decided which spending to cut? President Obama. Would President Obama have chosen to cut spending by defaulting on the debt of the United States? Unlikely. If he had made such a choice, it truly would have created a world-wide economic crisis. But not even Barack Obama would have done anything so reckless and destructive. And if he had, Alexander Hamilton would surely have risen from his grave, and demanded that the President pay the debts of the United States.

To extend the above analogy, suppose, after your wife refuses to increase your debt limit, you have to choose how to spend your limited income. If you choose going to fancy restaurants over paying your mortgage, you’ll default. If you choose to pay the mortgage, you have less money for restaurants, but this isn’t a default. Similarly, if Congress refuses to raise the debt ceiling, the president has to choose what expenditures to cut. Only if he’s a total douche bag would he choose to default on the nation’s debt.

The real risk that the government might have defaulted can be handicapped by looking at prices on short term government bonds during the crisis. According to a report on NPR, the price of $1,000 treasury bonds that came due just after October 17, the deadline for raising the debt ceiling was discounted by only a few cents. This tiny discount demonstrates that bond investors, the most savvy financial experts, were not spooked by the political turmoil; they knew the government would never default on its debt.

Despite the best efforts of Obama and his loyal followers in the press, bond and stock investors never panicked during this fabricated crisis. Now on to the next crisis. Let’s see how the Democrats and media figure out a way to blame the looming Obamacare catastrophe on the Republicans. As long as it’s called “Obamacare” this could prove difficult. Maybe they should rename it “Cruzcare.”