The Audacity of Reason

Verizon Proves That Markets Still Work

2011-12-30T13:30:00.000-08:00

Yeah, you'd better hear me now!

Verizon Wireless recently agitated hordes of customers by announcing plans to impose a $2.00 fee for single online or telephone payments.

Well, the thousands of customer complaints Verizon likely received has compelled the company to disconnect this fee plan.

This is an example of free-market capitalism at its finest. A company made a decision its customers didn't like; its customers expressed their outrage; and the company backed off. After all, Verizon bases its business on a series of voluntary transactions with its customers, and since those customers can switch providers with relative ease, Verizon needed to listen to them.

No government strong man was necessary to coerce Verizon's actions; it acted in its own interest, which happens to be satisfying its customers.

The article reporting on this story also reminds us that Bank of America customers pressured it into dropping plans to impose a $5.00 monthly debit card fee.

Long live the markets.

Ryan T. Darby practices law in San Diego. He happens to be an AT&T customer, but he's happy for all his Verizon friends, including his mom.

Ayres & Edlin Tax Plan Would Drown Everyone on Board

2011-12-22T11:40:00.000-08:00

Tax law professors Ian Ayres and Aaron Edlin recently wrote a New York Times op-ed outlining the most disturbing proposal that I've read in a long time: they advocate a 100 percent tax rate on all income that exceeds 36 times the median household income.

In 2006, the median American household income was $50,233. This proposal would therefore cap income for that year at $1,808,388–certainly no small chunk of change. However, the Ayres-Edlin proposal is an absolutely terrible idea that would cost us economic growth, tax revenue, and economic liberty.

First, history teaches us that excessive taxation actually lowers tax revenue. A cursory glance at income tax statistics shows that federal tax revenue was higher in the 1980s than the 1970s. This is interesting because (1) the 1970s was a highly inflationary era, and (2) the Reagan tax cuts slashed the top marginal rate from 70 percent to as low as 28 percent.

Of course, this shouldn't be surprising. Punitive taxation disincentivizes economic productivity; indeed, common sense dictates that people will not work for nothing, as the Ayres-Edlin proposal requires after an individual (or business) earns more than their income limit. Additionally, punitive tax rates incentivize various forms of evasion (some legal, some not). Even if you're a statist, shouldn't you want the rich to earn a whole lot of money that the government can tax? Incentivizing productivity yields higher economic growth and larger tax returns, so everyone wins by allowing "the one percent" to do their damn jobs.

The other problem with the proposal is the arrogance that Ayres and Edlin–or anyone else–has either the clairvoyance or the moral imperative to dictate how much money is too much for one person to earn. Wealth accrues in a market economy through a multitude of individual, voluntary transactions. To chide someone for being too successful strikes me as jealousy wrapped in an egalitarian facade.

I can't conclude without pointing out the absurdity of their statement that "The sky is the limit for the rich as long as the 'rising tide lifts all boats.'" Ayres and Edlin, of course, are borrowing President Kennedy's justification for slashing the top marginal rates. President Kennedy knew that everyone would benefit by allowing the rich to keep–and invest–more of their income. Perhaps, then, a more appropriate metaphor for Ayres and Edlin is that a sinking ship drowns everyone on board.

Occupy Wall Street: Rebels without a Case

2011-11-15T16:57:00.001-08:00

A New York judge upheld the constitutionality of Mayor Bloomberg's decision to prevent Occupy Wall Street protestors from sleeping in the Zuccotti Park.

And frankly, it wasn't even a close call.

The Supreme Court has made it quite clear that laws prohibiting sleeping in public spaces apply just as equally to protestors as they do to everyone else. In Clark v. Community for Creative Non-Violence, the Court held that the National Park Service could enforce such a law against homeless advocates who wished to sleep on the Washington Mall.

Specifically: "Damage to the parks, as well as their partial inaccessibility to other members of the public, can as easily result from camping by demonstrators as by nondemonstrators. In neither case must the government tolerate it." The Court resolved that this ruling is "a reaffirmation that reasonable time, place, or manner restrictions on expression are constitutionally acceptable."

The Court's rationale is very simple: protestors have to follow the same rules as everybody else. In this case, Occupy protestors have no more of a right to create a public health hazard than those who are legitimately homeless. Furthermore, Occupy Wall Street's argument is even weaker because Zuccotti Park is not public property; it is privately owned, and its owners wanted the protestors off their property.

The Occupy protests are a terrific distraction from the drudgeries of actually working for a living, but they don't have a legal leg to stand on.

Dear "Rich Kid for Redistribution": Just shut up & give it away.

2011-10-11T11:15:00.000-07:00

This girl epitomizes the problem with so many wealthy statists (and those who pretend to be, as I'm guessing is the case here).

She purportedly deplores the fact that she has money, and she chooses to do...well, nothing about it. If she really wants her money to go to the less fortunate, then why doesn't she just give it away? There are plenty of worthy charities out there that are far more efficient than the government.

Alas, I suspect she prefers to use her money as a status symbol, just like the people she's protesting. "Look at me! I have money that I don't need, so I want to help the less fortunate! Look at what a wonderful person I am!"

Oh, just shut up and give it away, already.

...and she wants to control MORE of our tax dollars?

2011-09-15T15:44:00.000-07:00

Oops.

Sen. Dianne Feinstein (D-CA) announced that her campaign war chest was "wiped out" by treasurer Kinde Durkee. Ms. Durkee faces federal charges for allegedly plundering hundreds of thousands—if not millions—of dollars from Democratic candidates throughout California.

Oddly enough, Sen. Feinstein does not know how much money Ms. Durkee stole from her. Why not? Because, according to Politico.com:

Feinstein said she and her campaign staff have been unable to access all their bank records at this point because Durkee alone controlled access to the account, which has made it difficult for them to assess how much money is gone.

Seriously? What kind of fool provides a third party with sole, unchecked access to a financial account?

Oh, wait—the same fools responsible for America's $14.7 trillion national debt.

And if Sen. Feinstein is this irresponsible with her own campaign's money, then what makes us think she is responsible with ours?

Ryan T. Darby practices law in San Diego. He has yet to find himself locked out of any of his bank accounts.

Law School Blame Game Heads East

2011-08-18T12:46:00.000-07:00

I previously blogged about an unemployed lawyer's regrettable lawsuit against Thomas Jefferson School of Law. The angry alumnus alleged that the law school misled her into believing her odds of post-graduate employment were stronger than they actually were, even though a simple glance at the school's bar passage rates should have easily dispelled her purported misconception.

Well, it looks like the Law School Blame Game is hitting the road, as alumni from New York Law School and Cooley Law School have filed similar complaints against their respective alma maters. Cooley, meanwhile, appears to be striking back by filing a defamation action against Kurzon Strauss, the law firm representing the unemployed alums.

The story is pretty simple at the end of the day: the plaintiffs applied to law school without performing their due diligence, graduated in the middle of a bad economy, want to blame someone, and decided their law schools are easy (and wealthy) enough targets. Bad times often popularize bad ideas, so I really hope for the sake of the legal profession that this one doesn't catch on.

Ryan T. Darby practices law in San Diego, California. He received an outstanding legal education and has no plans of suing his alma mater.

Casey Anthony: Deranged enough to create Reasonable Doubt?

2011-07-15T13:10:00.000-07:00

I didn't monitor the Casey Anthony trial because, well, I have my own cases to worry about. However, the surprise acquittal has provoked numerous friends to solicit my lawyerly opinion on the matter, so I decided to weigh the evidence in an effort to autopsy the prosecution's failed case. Maybe conducting some independent research free from the TV talking heads could give me a fresh, untainted perspective.

But, before I provide my opinion, two caveats:

1. I am a civil attorney, not a criminal attorney; and

2. Not observing the trial largely precludes me from critiquing the attorneys' performances.

That being said, I think the evidence establishes beyond a reasonable doubt that Casey Anthony killed her daughter. Why? Because there is just no reasonable explanation why Ms. Anthony would place duct tape over her daughter's mouth, either pre- or post-mortem.

For the sake of discussion, let's remove the duct tape from the fact pattern. Do children accidentally drown? Yes. Is it plausible that a demonstrably deranged mother may attempt to cover up an accidental drowning out of fear? I suppose. But deranged must a person be in order to duct tape the child's mouth either before or after the drowning? Implausibly deranged, in my opinion. So implausibly, in fact, to dispel reasonable doubt.

The jurors, however, seem to have misunderstood the concept of reasonable doubt. Juror Jennifer Ford stated that the jurors were "sick to [their] stomachs" and "crying, and not just the women." Such a visceral reaction tells me they knew with a strong degree of certainty that Ms. Anthony was guilty, but they didn't think that certainty amounted to reasonable doubt.

Ms. Ford continued: "If you're going to charge someone with murder, don't you have to know how they killed someone or why they might have killed someone, or have something where, when, why, how?" Well, no, you don't. The jury instructions do not require jurors to answer those questions because it's possible to find guilt beyond a reasonable doubt without them.

This misunderstanding most likely originated with the best of intentions. I can just imagine (and this is pure speculation, mind you) some juror stoically declaring to his or her colleagues that this case is too important to screw up, so they had to make damn sure that no reasonable doubt existed in their minds. Unfortunately, this problem psyched them out: they were so scared of screwing up that they confused "reasonable doubt" with "any reason to doubt." The latter standard is completely unmanageable, because it is almost always possible to find some reason to doubt a case. Applying it would make it virtually impossible to ever secure a conviction.

And so, back to the doubt that must have crept into the jurors minds: that Casey Anthony is such a bad person that she might not have killed her daughter. Now, there is a paradox that will haunt criminal law students and prospective prosecutors for generations to come.

Ryan T. Darby practices civil litigation in San Diego, CA.

Bush's "Decision Points": in Defense of a Presidency

2011-06-22T16:57:00.000-07:00

Love him or hate him, President George W. Bush's memoirs have an important place in the historical record and are a must-read for those who wish to understand the tumultuous past decade of American history.

Decision Points is best understood as President Bush's defense of his presidency. Bush obviously writes it from a biased, self-interested viewpoint. This is not an objective narrative, but that hardly renders it immaterial. Critics have made strong arguments against his presidency; this is President Bush's rebuttal.

I am pleased to say that I walked away with a superior understanding of some of the decisions he made. For example, I was surprised to learn that Bush attempted to convince Louisiana Gov. Kathleen Blanco to concede control of the Hurricane Katrina response in the aftermath of Hurricane Katrina, but Blanco adamantly refused to do so. Similarly, I had never really considered that Bush's decision not to immediately visit the Katrina disaster zone was due to the fact that emergency responders did not want him there, since his presence would divert resources from the response.

I was also fascinated by the behind-the-scenes look at his time in office. His narrative of the hours following the Sept. 11 attacks was insightful and dramatic, and his account of the various Iraq deliberations was also interesting. The details of his secret Thanksgiving trip to Baghdad following the invasion are quite riveting.

Of course, the book does not lack flaws. I looked forward to his thoughts on the Valerie Plame incident, but no mention was made. He also tried to defend his credentials as a fiscal conservative which is, well, an argument that he just can't win. Similarly, his defense of his Medicare expansion made me want to bang my head into the wall.

Despite these flaws, I really do classify the book as a must-read for anyone seeking a better understanding of the Bush presidency. You don't need to take his word as Gospel truth, but it certainly is worth more than a grain of salt.

In Defense of Thomas Jefferson School of Law

2011-06-02T11:23:00.000-07:00

Recent graduates from Thomas Jefferson School of Law ("TJSL") filed a class action lawsuit against their alma mater, alleging that it intentionally misrepresents its employment figures. This—the plaintiffs allege—caused them to attend TJSL, which they now regret because their career prospects are dim (also TJSL's fault, they allege).

Note to the plaintiffs: dragging your alma mater's name through the mud is no way to advance your career prospects; it actually harms the value of your degree. I'm just sayin'.

Now, looking at the merits, it seems to me that the plaintiffs face an uphill climb. Specifically, they may find it difficult to prove the following elements necessary for a successful intentional misrepresentation claim:

that TJSL represented to the plaintiffs that an important fact was true, when it was actually false; and
that the plaintiffs reasonably relied on TJSL's representation.

(1) It is unclear that TJSL falsely represented anything to the plaintiffs. Their primary contention appears to be that TJSL included non-lawyers in the employment data it submitted to U.S. News & World Report. This creates the illusion that 80 percent of its graduates become employed as lawyers within a few months of graduation, when in reality many found jobs in other fields.

This legerdemain may be misleading, but it is a common practice among law schools. The primary question is why it has taken U.S. News & World Report so long to close this gaping loophole.

Frankly, I do not see how a misrepresentation was made so long as TJSL provided data that conformed with U.S. News & World Report's loose standards, and so long as TJSL accurately reported this data to prospective students. Evidence that TJSL told prospective students that 80 percent of recent graduates become attorneys would, however, satisfy that element. We will see what comes out during discovery.

(2) It was not reasonable for the plaintiffs to rely upon TJSL's employment figures. Yes, the prospect of getting a job after graduation is important. However, it is bizarre to claim that this single data point controlled their decision to attend TJSL. Other factors, such as ranking, bar pass rate, location, professor quality, tuition/scholarships, and personal comfort seem to play larger roles.

However, one flagrant logical flaw probably defeats the whole claim. The complaint specifically alleges that more than 50 percent of TJSL graduates routinely fail the bar. Well, if that is the case, then why did the plaintiffs believe that 80 percent of TJSL alumni become attorneys within a few months of graduating?

Math may not be most attorneys' strong suit, but it does not take a rocket scientist to conclude that this is impossible. Maybe poor logical reasoning explains why the plaintiffs have not found attorney positions.

In conclusion, I don't think the plaintiffs have a very good case. It is unclear that TJSL misrepresented any facts to the plaintiffs, and even if it did, other factors made it unreasonable for plaintiffs to base their decision to attend TJSL upon that representation.

There is no doubt that TJSL—among other law schools—exposed a flaw in the U.S. News & World Report rankings. Fortunately, U.S. News has closed that loophole. There is no doubt that the job market out there is difficult, but TJSL is not to blame for that. As an East Village resident, I think the new TJSL campus adds a lot to my community. I just hope its reputation—which I can tell it is working hard to improve—is not harmed by what appears to be a meritless lawsuit.

Leland Yee & the Hypocrisy of Campaign Finance Reform

2011-04-07T13:44:00.000-07:00

A number of San Francisco mayoral candidates have side-stepped local campaign finance regulations by spending enormous sums of money in earlier, less regulated races. For example, the Chronicle reports that Sen. Leland Yee spent $1.1 million in a non-competitive re-election campaign, including $471,000 to his campaign strategist—15 times that strategist's going rate.

The logical explanation, of course, is that Sen. Yee took advantage of less stringent state fundraising regulations to create name identification and pre-pay his consultant.

Curiously, Sen. Yee supports regulating campaign finance, according to votesmart.org. I wonder what he had to say when he spoke at a campaign finance reform rally a couple of years ago.

Now, I am not accusing Sen. Yee of breaking the law. However, this provides a couple of lessons:

Lesson #1: Candidates who support campaign finance regulations often find ways to dodge them; and

Lesson #2: Money will always find a way into politics so long as the government picks economic winners and losers.

Keep Central Committee Elections on the Primary Ballot

2011-03-30T15:41:00.000-07:00

Originally posted at San Diego Rostra.

San Diego County Registrar Deborah Seiler’s well intentioned proposal to remove central committee elections from primary ballots would centralize political power in the hands of party insiders, and ultimately undermine the power of the average voter to select candidates for the general election.

I have interacted with Ms. Seiler in the past while monitoring the ballot counting process, so I can attest that she operates the Registrar in a professional and transparent manner. I am certain she is acting in good faith, and she raises a valid point that the current system subsidizes internal party elections.

However, the passage of Proposition 14—the open primary initiative—has already thrown the nominating process into disarray. Prop 14 provides that the top two vote recipients in the primary—regardless of their party affiliations—will appear in the general election. In other words, voters in the general election may have to “choose” between two candidates from the same party. Predictably, the parties are scrambling to devise internal means of selecting their candidates.

The California Republican Party, for example, voted at its recent convention to conduct an internal mail-in primary. This pie-in-the-sky idea will likely prove that political parties lack the expertise, manpower, and funding to conduct large-scale elections. It is far more likely that Republicans will scrap this unrealistic plan, and instead consolidate the endorsement power among a relatively small number of party insiders.

When push comes to shove, county central committee members will likely play a strong—if not dominating—role in selecting the party’s official nominees prior to the primary. This vests central committees with a tremendous new power, so voters have a strong interest in (finally) paying attention to their central committee elections.

Unfortunately, Ms. Seiler’s proposal would largely remove voters’ ability to elect their central committee representatives. The same concerns plaguing the party endorsement of primary nominees also apply here: do we choose an impractical mail-in process, or vest party insiders with even greater power? Neither option sounds very good, but the mail-in election is too impractical.

Therefore, under Prop 14 and the Seiler proposal, party insiders would most likely select central committee members, and those central committee members would then select their parties’ official primary nominees. This would afford voters no direct control over which candidate receives their party’s endorsement (and monetary support) heading into the primary.

Furthermore, political parties are not like the Kiwanis Club (as Ms. Seiler asserted), at least according to the Supreme Court. It has held that a party privately conducting a primary election may not discriminate against voters based upon race. See Terry v. Adams, 345 U.S. 461 (1953). The Court found that the political party performs a public function, so the 15th Amendment (and presumably other restrictions upon government) apply to private political parties.

I commend Ms. Seiler’s commitment to efficiency, and I invite her to propose a cost sharing plan that keeps party elections on the primary ballot. But ultimately, political parties play an integral role in our political system. They will adapt to any attempt to marginalize them, most likely at the expense of the average voter’s power and influence. Our electoral system thrives on transparency, so removing party elections from the public eye would be a step in the wrong direction.

Kehoe's Bill Infringes Upon Landlord Rights

2011-03-10T12:39:00.000-08:00

Coming soon to an apartment building near you!

Sen. Christine Kehoe (D-San Diego) proposed a bill prohibiting California landlords from preventing their tenants from posting political signs on their windows. The Legislature should reject this proposal because it improperly infringes landlords' rights to regulate the outward appearance of their properties.

Sen. Kehoe's bill—SB 337—would add the following provision to the California Civil Code:

1940.4. (a) A landlord shall not prohibit a tenant from posting
or displaying noncommercial signs, posters, flags, or banners on or
within any portion of a dwelling unit leased by the tenant, unless
the posting or display would violate a local, state, or federal law.
(b) The Legislature finds and declares that this section is
declaratory of existing law.

(emphasis added).

First of all, the italicized language makes it clear that this bill applies to far more than simple political signs. This would allow tenants to post eyesores that have absolutely nothing to do with politics, and could be as obscene as existing law permits. It is fine, of course, for homeowners to post whatever they wish on their windows; they enjoy dominion over their property, and should be allowed to make whatever use of their homes they deem fit.

Renters, however, do not own the homes in which they reside—their landlords obviously do. Property ownership comes at great cost: down payments, mortgages, property taxes, property insurance, maintenance, and (for rental property) tenant relations. The end result of this cost is the owner's right to look at his property and say, "That's mine."

SB 337 infringes upon this notion by stripping the owner's dominion of the appearance of his property. We lawyers are taught to view property not as a lump sum, but as a "bundle of sticks." For example, landlords initially possess all of their properties' "sticks," but then they transfer some of those sticks to their tenants. The landlord may own the tenant's rental unit, but the landlord has also granted the tenant specific interests in the unit, particularly involving control over the unit. That is why landlords do not object to tenants using their units however they deem fit, generally so long as they do not cause damage or disturb their neighbors.

However, tenants' property interests are generally limited to the confines of their units; existing law allows landlords to retain control over the appearance of their buildings. SB 337, however, will deprive landlords of this control. It will essentially transfer part of landlords' property interests to their tenants, without compensation. This creates a catch-22 for landlords: they may attempt to recoup this loss by charging additional rent, but tenant-created eyesores makes the property less appealing and depresses rent levels.

Furthermore, I am not really going into the notion of free speech because the First Amendment applies to the government, not landlords. Tenants have the right to express themselves however they wish, but the First Amendment does not entitle them to use their landlords' property to do so.

Ultimately, this is a question of property rights. Tenants who wish the right to express themselves by posting on their windows ought to purchase their own homes. Until then, they should keep in mind that someone else owns the windows they are using.

Ryan T. Darby is a renter, but he doesn't cause too much trouble for his landlord. He's also a staunch defender of property rights and a landlord-tenant attorney.

"One company should not have the power to" . . . defend itself?

2011-02-09T15:30:00.000-08:00

The San Diego City Council recently demonstrated good sense in repealing its prior ordinance that by many accounts would have essentially banned the construction of new Walmarts within city limits.

Walmart responded to the initial ordinance by funding a massive signature-gathering campaign to place the issue before the voters in a special election. The 7-1 majority favoring the repeal largely cited the hefty $3.4 million the cash-strapped City would need to provide in order to fund the election.

Price tag aside, the repeal is good news because government has no business picking economic winners and losers.

Well, Sen. Juan Vargas (D-San Diego) doesn't see it this way. He intends to introduce a bill before the state legislature imposing the same regulations as the repealed San Diego ordinance. Vargas was motivated in large part by Walmart's decision to defend itself:

What I did not like was that one company and one company alone had the power to scare the City Council into changing its mind and that is what happened. That's not right. That's not the way government should work. One company should not have the power to do that.

Excuse me? The City deliberately targets Walmart, and Vargas is stunned when Walmart defends itself?

This extends well beyond the Walmart debate, and questions the proper role of government in economic affairs. Free marketeers like me believe the government should act as an impartial referee by upholding contracts and protecting private property rights. Unfortunately, others believe the government should prefer "the little guy" over "the rich and powerful," and then take from or otherwise hinder "the rich and powerful" for the benefit of "the little guy." And government routinely does so.

And then, folks like Vargas are appalled that "the rich and powerful" defend themselves.

It's also utterly naive to believe "the little guy" is impoverished, since in this situation he is actually the labor unions who inject millions of dollars into the political process. No surprise that Vargas neglects to criticize them, however.

Look—if you don't like the proliferation of private capital in electoral politics, then examine the underlying motive: a government mindset that prefers some economic actors over others. Remove this element from governance, and there will be no motive to inject money into the political process. Until then, don't be surprised to see these economic actors—"the rich and powerful" (i.e., Walmart) and "the little guy" (i.e., the labor unions)—spend fortunes trying to influence politics.

Hat tip to San Diego News Room contributor Michael M. Rosen.

Judge Prohibits Disbarred Lawyer from Using "J.D." Suffix

2011-01-24T16:50:00.000-08:00

U.S. District Court Judge Patricia Gaughan has upheld an Ohio Supreme Court decision prohibiting a disbarred attorney from attaching the "J.D." suffix to his name. The former attorney, Bruce Andrew Brown, argues—and I tend to agree—that this violates his First Amendment and due process rights.

Yes, the state bar associations play an important role in protecting the general public from incompetent and/or unethical lawyers, but the fact of the matter is that Brown is, in fact, a J.D. The Ohio Bar may legally determine whether Brown can practice law, but neither it nor the judiciary can take away the Juris Doctor he earned from Columbia Law School in 1984—no more than a court can revoke a legitimately earned Bachelor of Arts.

Brown's alleged use of the "J.D." to mislead others into believing he is a lawyer may be grounds for some legal action, whether punitive or prospective, but broadly banning an individual from claiming title to a degree he legitimately earned is entirely inappropriate. How we describe ourselves to the rest of the world is a matter of free speech, and the courts generally employ strict scrutiny when analyzing a restriction on free speech. The Supreme Court has also found that commercial speech that is false or misleading is not protected by the First Amendment, but (1) Brown is, in fact, a J.D.; and (2) a blanket restriction prohibiting Brown from using suffixing "J.D." to his name is not narrowly tailored to serve the government's interest, as is required by this test.

I really hope this decision is reversed on appeal.

9th Circuit Rules Against the Mt. Soledad Cross

2011-01-05T17:21:00.000-08:00

The Mount Soledad War Memorial

The 9th Circuit has ruled that the cross-adorned World War II memorial atop Mt. Soledad violates the Establishment Clause because it may be construed as a government endorsement of religion.

This ruling demonstrates how far our judiciary has wandered from how the framing generation's understanding of the Establishment Clause. As I recently explained following the 10th Circuit's similar treatment of a Utah memorial honoring fallen state troopers, the Establishment Clause's text plainly prohibits the federal establishment of a government religion. Renowned Establishment Clause scholar Dr. John Eastman's "We are a Religious People, Whose Institutions Presuppose a Supreme Being" documents the Framers' attitudes toward the role of religion in public life, and reaches the following conclusion:

The Establishment Clause barred the federal government from providing tax support to one religious sect to the exclusion of all others, or from mandating adherence to such a nationally 'established' religion, but id did not prohibit the federal government from providing aid to religion generally, or even from issuing public non-sectarian religious proclamations.

The judiciary has, unfortunately, manipulated the Establishment Clause far beyond these limits. One critical prong of the courts' convoluted Establishment Clause inquiry is whether "it would be objectively reasonable for the government action to be construed as sending primarily a message of either endorsement or disapproval of religion." Vernon v. City of Los Angeles, 27 F. 3d 1385, 1398 (9th Cir. 1994).

The 9th Circuit used this Endorsement Test to conclude:

The use of such a distinctively Christian symbol to honor all veterans sends a strong message of endorsement and exclusion. It suggests that the government is so connected to a particular religion that it treats that religion’s symbolism as its own, as universal . . . . By claiming to honor all service members with a symbol that is intrinsically connected to a particular religion, the government sends an implicit message “to nonadherents that they are outsiders, not full members of the political community . . . ."

Cases such as these use terms like suggest and implicit quite a bit in order to make groundless assertions that have no bearing on reality. For the record: the federal government does not treat Christian symbolism as its own, and non-Christians are, in fact, full members of the political community. I would like to think that further clarifications would prevent our judiciary from confusing potential perceptions of discrimination with the sort of concrete religious establishments the Establishment Clause is crafted to prevent.

Regardless, this and the earlier 10th Circuit holding should give the Supreme Court ample opportunity to restore its Establishment Clause jurisprudence to one that interprets it as it was written, and manages not to order the closure of benevolent World War II memorials.

Tax Increases = Employment Cost Increases

2010-10-12T10:47:00.000-07:00

Campaign rhetoric about Republicans supporting "tax cuts for the rich" demonstrates economic ignorance and/or intentional incitement of class warfare. Either way, it's bad for our country.

Let's get one thing straight: increasing taxes on the top bracket kills job creation. Why? Because—surprise, surprise—the highest earning Americans tend to be the job creators, and increasing taxes deprives them of business capital and effectively increases the cost of employment.

Free market economist and investment adviser Donald Luskin clearly illustrates this point by describing how a tax increase would affect his company, TrendMacro:

Little companies like mine don't pay corporate taxes like big companies. They are organized as sole proprietorships, S-corporations, or limited liability corporations (like TrendMacro), so the profits are passed on to the people who own them (me, in the case of TrendMacro), who in turn pay taxes on them as personal income. . . . Under the Bush tax policy, that means paying 35%. If those cuts expire at year-end, next year the top rate will rise to 39.6%.

Now, suppose I want to hire a new employee at TrendMacro. I'd only do it if I thought I could make enough money on it to justify the trouble of recruiting, training, supervising -- and taking the risk that it might not work out. So, just for example, let's say I'd have to think I could make an extra $65,000 a year with my new employee.

At the current tax rate of 35%, my new employee would have to generate profits of $100,000 to leave me with $65,000. If that rate climbed to 39.6%, I would keep only $60,400. So to hit my $65,000 target for hiring, I would have to expect my new employee to generate profits of $107,616.

So what do you know? Raise my taxes, and all of a sudden it's not as easy for me to hire someone. The guy or gal who could make me only $100,000 wouldn't get the job. And unless I met someone who could make me $107,616, no one would get the job.

Asking Congress to stick it to your boss may feel good, but ultimately our workforce will feel the pain.

Judge Steeh: participation in the "health care market" through abstention

2010-10-07T16:26:00.000-07:00

Federal Judge George Steeh dismissed a legal challenge to Obamacare's individual mandate in Michigan. Specifically, Judge Steeh held that choosing not to purchase a medical plan constitutes "Commerce . . . among the several States" under the Commerce Clause.

Oddly, Judge Steeh does not characterize not purchasing insurance as "inaction," but rather as a delayed action. Which may or may not occur. But probably will. He supposes. Right? Bueller? Bueller?

Specifically:

The health care market is unlike other markets. No one can guarantee his or her health or ensure that he or she will never participate in the health care market. Indeed, the opposite is nearly always true. The question is how participants in the health care market pay for their expenses—through insurance, or an attempt to pay out of pocket with a backstop of uncompensated care funded by third parties.

This phenomenon of cost-shifting is what makes the health care market unique. Far from "inactivity," by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later . . . .

The Pacific Legal Foundation argues that this reasoning is flawed because "we are not active participants in the market for medical care until we seek medical attention."

Or, think about it like this: the fact that I will inevitably become hungry does not immediately make me a participant in the food market. After all, I have no idea what time I will want to eat, where I will eat, what I will want to eat, how much I want to spend on food, or any number of other decisions that affect the supply-demand mechanism inherent in the food market.

PLF also argues that the individual decision of whether to purchase insurance "is simply a decision against one possible way of financing health care, which one may or may not ever need."

Yes, that's right: it is entirely possible (and hopefully the case) that an individual who chooses not to purchase insurance will either not get sick, or will incur minor medical costs. Moreover, as PLF notes, "Congress could regulate" individuals who choose not to purchase insurance but attempt to shift their costs onto the public. This is a critical point because many people who do not have health insurance can afford it, but calculate that they can better spend their money elsewhere. And what right do we have to question such a decision?

Oh, of course, proponents of socialized medicine argue that we wind up paying for the health care of the uninsured anyway. This reveals its circular absurdity: they claim they want socialized medicine because they want everyone to receive medical care, but respond to criticism by alleging that it's better for society to provide everyone with insurance because the uninsured will receive medical care anyway. Pretty soon, they're going to need to make up their minds on this.

Regardless, the statists reason that engaging in an activity that may impose a future cost upon society (in this case, life) merits federal regulation. Doesn't this place us on a slippery slope? Since so many of our decisions can affect our health, providing us with medical care will give the government ample pretext to regulate . . . well, just about any decisions we make.

Let me count my medical sins for today: I started off with an inadequate breakfast; stressed out over a trial (that I eventually won); inundated my system with caffeine; ate a high-cholesterol steak salad for lunch; consumed more caffeine; and I've been typing this blog with my hot laptop resting on my legs (which probably isn't good for me). Oh yeah, and I'm skipping the gym for the second day in a row.

Those are my decisions, right? Well, using Judge Steeh's logic, perhaps my (and your) personal habits are quickly becoming society's business. If society pays for our health care, then society gets to regulate behaviors that affect our health.

I'm pretty sure this is not what the Founding Fathers had in mind.

It's the Business Capital, Stupid!

2010-10-06T14:50:00.000-07:00

Check out this video showing a fantastic Kudlow Report debate over the ramifications of allowing the Bush tax cuts to expire. It features conservative pundit Herman Cain, liberal pundit Mark Walsh, and free market economist Donald Luskin.

Cain and Luskin make an extraordinarily strong case for extending the tax cuts in their entirety, including the top-end earners. Cain in particular argues (starting at 4:02) that raising taxes on the top bracket will cost Americans jobs: "Small business people—two thirds of them—file their taxes as sub-S corporations."

Cain hits the nail on the head!

Increasing taxes increases the cost of business, thereby leaving less capital for business owners to use to hire (or maintain) their employees. And by what voodoo economics will

Walsh responds by making the terribly false assertion that this will tax business owners' incomes, not their working capital. Absolutely untrue. Sub-S corporations do not file tax returns; instead, their shareholders report the corporation's profits and losses as personal income. If you don't believe me, look up Section 1363 of the Internal Revenue Code.

It's pretty simple: taking money away from job creators kills job growth.

My medical premium just increased—thanks, Obamacare!

2010-09-23T14:17:00.000-07:00


Image found on PekoeJoe.com.

A Washington Examiner editorial vindicates many of our warnings that Obamacare would increase the cost of American medical care and limit a number of our coverage options. And, regrettably, a letter I recently received from my insurer supports this contention.

Here are three excerpts from the Examiner, the first dealing with our freedom to choose the plan we like best:

» Obamacare won't allow employees or most small businesses to keep the coverage they have and like. By Obama's estimates, as many as 69 percent of employees, 80 percent of small businesses, and 64 percent of large businesses will be forced to change coverage, probably to more expensive plans.

Now, check out this letter I received from my insurer:

In other words, I should be able to keep my existing coverage options so long as I do not materially alter . . . well, just about anything about my plan. Because if I decide to make any changes or, God forbid, shop around for a better deal elsewhere, then the new Obamacare mandates may butt into my medical choices. Awesome.

Second, the Examiner addresses increases in premiums:

» Obamacare will increase insurance premiums -- in some places, it already has. Insurers, suddenly forced to cover clients' children until age 26, have little choice but to raise premiums, and they attribute to Obamacare's mandates a 1 to 9 percent increase. Obama's only method of preventing massive rate increases so far has been to threaten insurers.

My insurer also confirms this (you'll have to excuse me for redacting my personal information):

So basically, my insurance premiums are increasing in part due to a new set of federal mandates that neither I nor most of the people in this country even wanted. Fantastic. I'm not going to divulge the size of this increase, but I will say that it's substantial enough for me to lackadaisically ponder other ways I'd rather spend that money.

Some Obamacare proponents (are you guys still out there?) may be saying, "Wait a minute. That letter lists a few other reasons your premium is increasing, so don't just blame it on Obama!" Well, wasn't Obamacare supposed to mitigate the outside factors that increase medical costs? But then again, we really shouldn't be surprised that levying extensive new mandates upon insurers—including forcing them to lose money by insuring individuals who are already ill—increases their costs.

Last, but not least, the Examiner reports on a job-killing behemoth of red tape:

» Obamacare imposes a huge nonmedical tax compliance burden on small business. It will require them to mail IRS 1099 tax forms to every vendor from whom they make purchases of more than $600 in a year, with duplicate forms going to the Internal Revenue Service. Like so much else in the 2,500-page bill, our senators and representatives were apparently unaware of this when they passed the measure.

Wow. Imagine all the financial resources that businesses will be forced to divert from making money to hiring accountants to prepare tax documents. Maybe I should have gone into tax law after all.

In sum: thanks, Obamacare!

News Flash: Communism still an abject failure

2010-09-08T15:45:00.000-07:00

Fidel Castro admitted to reporter Jeffrey Goldberg that communism has failed in Cuba.

Castro's exact words in response to Goldberg's question of whether the Cuban model is worth exporting: "The Cuban model doesn't even work for us anymore."

Gee, surprise us some more.

Obama the "Man of the Year"—for Free Marketeers

2010-08-23T14:55:00.000-07:00

The Cato Institute's Dan Mitchell points to the Libertarian Party's tongue-in-cheek designation of President Obama as its "Man of the Year" to support his contention that the free-market movement needed to take one step back in 2008 in order to take two steps forward.

Mitchell first notes that Senator McCain would not have implemented a free-market agenda:

McCain’s healthcare plan also was bad, and surely would have become even worse as it meandered through a legislative process controlled by Harry Reid and Nancy Pelosi. Moreover, cap-n-trade and a value-added tax would have been much more likely under a McCain Administration. . . . In short, a McCain victory would have meant continued growth of government with no prospect of a conservative/libertarian renewal. Obama’s victory has been giving us bad policy, of course, but at least there’s now a backlash for freedom.

Mitchell then proceeds to argue that President Obama's statist policies have spurred a "renaissance" in the free-market movement. He also points out that the 1976 Carter and 1992 Clinton victories resulted in the 1980 Reagan and 1994 Republican Congressional victories.

Hopefully the 2008 Obama victory will result in similar Republican revolutions—and the Republicans will implement a solid free-market agenda.

Reversal Likely in 10th Circuit Cross Case

2010-08-19T17:23:00.000-07:00

Image found on foxnews.com

A Tenth Circuit panel just ordered the removal of 14 crosses memorializing fallen Highway Patrol officers from a Utah roadside. The court held that these crosses violate the Establishment Clause because they "have the impermissible effect of conveying to the reasonable observer the State endorses a certain religion."

Ah, the endorsement test: Justice O'Connor's proposed means of further convoluting the Supreme Court's hopelessly tangled web of Establishment Clause jurisprudence known as the Lemon test.

The Court adopted the Lemon test almost forty years ago for adjudicating Establishment Clause issues. Lemon v. Kurtzman provides that government action satisfies the Establishment Clause only if it (1) involves a secular purpose; (2) does not have the primary effect of advancing or inhibiting religion; and (3) does not result in "excessive government entanglement" with religion.

Justice O'Connor opined about 25 years ago in a concurring (read: non-binding) opinion that a government endorsement of religion helps determine whether the government has violated Lemon's "secular purpose" prong.

And so, the Tenth Circuit concluded that "the cross memorials would convey to a reasonable observer that the state of Utah is endorsing Christianity."

My first response is . . . how does that violate the Establishment Clause? Let's set Supreme Court precedent aside for a second and examine the First Amendment's text. It states that "Congress shall make no law respecting an establishment of religion. . . ." Its underlying principle is that government may not establish religion. Is the State of Utah establishing Christianity by simply allowing the Utah Highway Patrol Association to use its own money to place crosses on public property? I can't imagine how—this does not coerce or intimidate anyone into adopting Christianity, nor does it prevent anyone from practicing another religion (or the lack thereof). In fact, private money pays for the crosses and there is no other demand for usage of the barren roadside space, so it costs the taxpayers nothing.

The inevitable rebuttal is that people of other faiths may feel uncomfortable with the potentiality that the government endorses Christianity (regardless of whether that is the actual case). I'm not unsympathetic to that argument on public policy grounds. However, public policy is the realm of the legislature, not the judiciary. If you have a problem with it, then write a letter to your local legislator. Don't use the judiciary as a tool to effectuate an agenda unsupported by our constitutional text.

However, even if you support the endorsement test, the crosses are still constitutional because a reasonable observer is unlikely to conclude that they constitute a state endorsement of Christianity. When I see a series of white crosses placed alongside a roadside, the image of Christ's crucifixion is not the first thing that enters my mind—the crosses bring to my attention that someone died there. In fact, unless opponents of the memorial advocate the morbid placement of skulls or coffins along the roadside, I cannot think of a more conspicuous symbol of death.

Fortunately, the Supreme Court is likely to clean up this mess. First Amendment expert Eugene Volokh points out that the majority of the Court opposes the endorsement test. Moreover, perennial swing voter Justice Kennedy recently wrote in the Salazar v. Buono opinion that a "cross by the side of a public highway marking, for instance, the place where a state trooper perished need not be taken as a statement of governmental support for sectarian beliefs."

This strange coincidence seems to make it clear that the endorsement test will soon be thrown to the wayside, and the crosses may ultimately remain in place.

New iOS Update to Fix iPhone 3G Problems

2010-08-12T14:52:00.000-07:00

Here is a pretty fantastic video parodying the damage the new iPhone OS (4.0) has done to the iPhone 3G:

Sad, but true.

Fortunately, it looks like iOS 4.1 will fix these problems. Hopefully Apple will release it sooner than later.

Fed Monetizes 10% of National Debt

2010-08-10T16:37:00.000-07:00

"Helicopter Ben," as depicted on investletters.com.

...and almost no one noticed.

The Federal Reserve announced today that it would reinvest the proceeds of its $1.3 trillion in mortgage-backed security (MBS) purchases into long-term Treasuries. Here is the official announcement, as reported by CNBC:

To help support the economic recovery in a context of price stability, the committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.

Translation: we fear deflation, so we're going to combat it with inflation.

Here are the facts: the Fed purchased $1.2 trillion in mortgage-backed securities over the past two years to drive down mortgage interest rates. The idea was to increase home sales by making mortgages more affordable. Today, the Fed announced what it will do with the proceeds of those investments: use them to finance our national debt.

In other words, the Fed is printing money out of thin air to pay our national debt.

This really shouldn't be a surprise, either. Ben Bernanke infamously stated in 2002 that he would fight potential deflation at all costs, including a "'helicopter drop' of money" into our economy. Again: fighting deflation with inflation.

Moreover, our politicians have no plan for paying off the $13.3 trillion debt they have created. Their only solution is to print more money.

Enter "Helicopter Ben." By purchasing $1.3 trillion of our $13.3 trillion debt, the Fed is wiping out 10 percent of our national debt simply by printing more money.

This "easy out" may sound attractive, but it devalues—or inflates—our currency. The more you have of something, the less valuable it becomes. After all, there is a reason why a nickel no longer buys you a cup of coffee. Unfortunately, wages—especially blue collar wages—rise much slower than prices. Savers especially suffer because the purchasing power of their cash drops like a rock, and the Fed is always late in raising interest rates.

But, politicians are OK with this because this allows them to pay back our debt with less valuable dollars.

The takeaway: inflation is coming. Bernanke stated this is his plan, and our political spendthrifts agree. Don't sit on large piles of cash, because you'll get slaughtered. Invest in gold and other hard assets, including real estate.

[Disclosure: I am long DGP, a gold ETN. Dammit Jim, I'm a lawyer, not a financial planner, so do your homework and consider consulting with an investment professional before you take my advice. Whatever you do, please don't sue me. Thanks.]

AP's Report of Miranda Rights' Death Greatly Exaggerated

2010-08-02T18:39:00.000-07:00

STOP WHINING! Part I.

STOP WHINING! is a new segment dedicated to the refutation (and occasional mockery) of needless whining. Just ask Arnold.

Most reporters do a poor job of covering court decisions. They tend to regard the courts as a public policy creator on par with the executive and legislature, rather than as an interpreter of the other branches' laws. This leads them to focus on political ramifications, rather than the substance of the interpretation itself.

Case in point: AP writer Jesse J. Holland's opinionated lamentation—thinly disguised as a news article—of the Supreme Court's recent Miranda-related holdings.

For context, the "Miranda rights" (to remain silent and request an attorney) are mandated by the Supreme Court's holding in Miranda v. Arizona, based upon an expansive reading of the Fifth Amendment's right for an individual to not "be compelled in any criminal case to be a witness against himself."

The headline itself declares Holland's personal bias: "High court trims Miranda warning rights bit by bit." This incendiary language is entirely inappropriate. First, the Supreme Court may only interpret—rather than create—our rights under the law, so these holdings do not "trim" our rights; they just signify that the Court previously erred in deciding that certain rights existed in the first place.

Second, regardless of Holland's opinion, it is poor form for a journalist to conspicuously inject his own bias into a news piece; that's why our newspapers are divided between "news" and "opinion" sections. I learned that basic lesson during high school journalism.

Substantively, the author's sarcastic, indignant tone demonstrates his ignorance of opposing viewpoints just as strong as his contempt for those who hold them.

The lead sentence previews one of his critical themes: "You have the right to remain silent, but only if you tell the police that you're remaining silent."

Clever.

He later elaborates that "the court's conservatives used their 5-4 advantage to rule that suspects must break their silence and tell police they are going to remain quiet if they want to invoke their 'right to remain silent' and stop an interrogation, just as they must tell police that they want a lawyer."

In other words, the police must cease an interrogation once a suspect signals a desire to speak to an attorney. Until then, the police may continue asking questions. Holland's indignation is odd, since this "new" rule just spells out a premise that any law student studying Miranda assumes to be true.

After all, it's pretty humorous to imagine a police interrogation under the author's apparently preferred rule that police must stop interrogating a suspect who does not request an attorney, but simply doesn't speak:

Detective: So, we caught you covered in the victim's blood, while clutching a bloody knife in a stabbing posture, and hovering over the victim's corpse. What do you have to say for yourself?

Suspect: ...

Detective: OH! You didn't respond to my question, so the Fifth Amendment obviously compels me to stop asking you questions! Forget that there are a thousand reasons you may not have answered me completely independent of your right to remain silent. The last thing society wants is for me to offend your delicate sensibilities by repeatedly talking until you admit that you just killed someone. After all, I just might bore you into uttering a false confession!

Me: This is preposterous! I as a libertarian believe that the primary purpose of law is to protect us from other persons, and from the state. This means the state certainly cannot compel us to confess against our will; this is the United States, not the Spanish Inquisition. But the law certainly does not prevent law enforcement officers from using reasonable means of securing honest, willful confessions from criminal suspects.

More importantly, why do we want the law to protect a suspect who honestly confesses to a crime absent illegitimate coercion? Justice Antonin Scalia once quipped in a dissenting opinion:

Nonthreatening attempts to persuade the suspect to reconsider that initial decision are not, without more, enough to render a change of heart the product of anything other than the suspect’s free will. Thus, what is most remarkable about the Miranda decision ... is its palpable hostility toward the act of confession per se, rather than toward what the Constitution abhors, compelled confession. The Constitution is not, unlike the Miranda majority, offended by a criminal’s commendable qualm of conscience or fortunate fit of stupidity. Dickerson v. United States, 530 U.S. 428 (2000) (Scalia, J., dissenting).

Indeed.

I'm sure Holland's heart is in the right place—preserving our civil liberties. Hopefully, Holland can see that the battle for the individual right against coerced confessions was won years ago—seeing as how we're squabbling over whether a suspect must burden himself by vocalizing his desire to remain silent, rather than sit in the interrogation room like a bump on a log.

Perhaps, then, Holland and other reporters will re-channel their energy and champion individuals whose property is seized in large quantities and redistributed to other individuals by the government.

OK, a blogger can dream, can't he?

Sinking Floatopia Is Not the Solution

2010-07-29T17:28:00.000-07:00

Photo courtesy of San Diego Entertainer Magazine

Funny things happen when the government tries to curtail liberty—people find ways to get around those restrictions.

San Diego's wrong-headed ban on alcohol at city beaches provides a classic example. Party goers keep discovering creative new means of skirting the ban, each more troubling to the City than the last.

It all started with a beach brawl involving about 70 drunken idiots during Labor Day 2007. This sparked major outrage, and San Diego voters in 2008 chose to permanently ban alcohol consumption along city beaches.

Of course, the City and the voters had the option of increasing punishments for being drunk in public or beach fighting, or even banning alcohol only on holiday weekends when the large crowds—consisting largely of non-San Diegans—reach critical mass.

But, no. The knee-jerk reaction is to ban the substance, rather than its abuser. Forget all the people out there (about 99.9 percent of us) who manage to consume alcohol without starting a riot. And forget that the trouble makers will inevitably find ways to drink on the beach anyway, while the rest of us sip Capri Sun.

In the meantime, many of the ban's supporters are happily sipping Kool-Aid in the comfort of their homes, assuring themselves that they've done right by the attendees they don't know of a beach they never visit.

Well, San Diegans predictably rebelled by starting Floatopia parties, where literally hundreds of revelers float along Mission Bay and drink all the alcohol they want. After all, the ban only extended to the beach itself—it mentioned nothing about the water!

Of course, boozing on a small float surrounded by hundreds of revelers really isn't the brightest idea—it's a good way to drown. Lifeguards were forced to rescue dozens of drunk idiots. So, the City Council recently reacted by sinking Floatopia:

The council voted unanimously Monday to extend the beach alcohol ban off the shoreline for bathers — almost everyone who is not in a kayak or boat — effectively ending the floating parties where mostly college-aged revelers drink in inner tubes or on other inflatable devices.

Well, that will show them! Why, the only way those darn kids can party on the beach is by renting kayaks! Wait...

Kayaks, that can easily capsize. That are propelled by long, heavy plastic paddles. Operated by people who are heavily drinking. Potentially in very close proximity to one another.

So, in other words, we've gone from allowing people to drink on the beach, to moving the drinking onto inner tubes, and now restricting drinking to kayaks. Is it just me, or does each "solution" cause more danger than the original problem? People are still finding ways to drink at the beach, and will continue to do so no matter what the City throws their way.

They will have their booze; the law only punishes those who want cold a beer or two on a hot day at the beach.

And me? Heck, I'm not even a beach goer; I just want to have the right to responsibly drink on the beach if I so choose, just as I want other adults to have that right.

Can't we just live our lives, and punish legitimate offenders?

New Masthead

2010-07-26T18:53:00.000-07:00

The Audacity of Reason is sporting a sleek new masthead, courtesy of my prodigious friend Magie Brennan. Please take some time to view her portfolio at http://playwithmyheart.deviantart.com/. She does very good work, and is always accepting new clients!

Here is a really cool sample from her site:

iOS 4 Slows Down the iPhone 3G

2010-07-22T17:57:00.000-07:00

iOS 4 — the new iPhone operating system — is wreaking havoc upon the iPhone 3G by all accounts (including my personal experience).

It immediately became clear to me after upgrading to the new OS that it was really slowing down my iPhone 3G. I've taken good care of my second-generation iPhone, and it performed very well until I installed the free iOS 4 upgrade.

Everything from my Maps app to text messaging functioned far more slowly. This lag is underscored by the sudden delay of several seconds between pressing the "Sleep" button and hearing that reliable clicking noise. iOS 4 is apparently so bad that my iPhone 3G can't even sleep well!

Unsurprisingly, other 3G owners share my dissatisfaction. This has been reported by a score of sources, such as Product Reviews. Fortunately, AppleToolbox has posted the following methods for improving performance:

Perform a “hard reset.” Hold down the sleep/wake and home buttons simultaneously for roughly 15-20 seconds, until the screen powers off then an Apple logo appears, which signifies a reboot. Some users have (oddly enough) reported that performing two hard resets resolves the slowness issue.

Restore, but not from backup. It appears that bad holdover data from iPhone backups can cause performance problems. Restoring as a new phone will delete contacts and other data, but may resolve this issue.

To do so, connect your iPhone or iPod touch to your computer, click “Restore” in iTunes, then choose “setup as new phone.”

Free up space. Make sure that your iPhone has at least 10% of its available memory free. OS X-based systems, such as iOS 4.0, may require some free space to operate properly.

Close open Safari windows. One iOS application that consumes memory in the background is Safari. Close all unused windows in the application by pressing the page switch button in the lower right portion of the screen then clicking the X at the top left of each page. See this page for screenshots.

These methods do improve performance, but they are simply quick fixes that do not restore the iPhone to its pre-upgrade performance level, nor do they change the bad taste left in loyal Apple customers' mouths.

If customer satisfaction is as crucial as Apple CEO Steve Jobs trumpeted during his iPhone 4 press conference, then I certainly hope Apple is working on fixing this most regrettable problem.

No "Change" Toward Dissenting Voices

2010-07-21T16:31:00.000-07:00

President Obama's deliberate exclusion of the CEOs of JP Morgan Chase and Goldman Sachs from the Dodd-Frank Act signing ceremony further proves that Obama was about as serious about "change" as Bush was about being "a uniter, not a divider."

"Change" was President Obama's campaign centerpiece. Changing the political culture by eliminating Washington's cynical business practices. Adding transparency to government. Getting rid of the dirty tricks, pay-offs, and pay-backs.

Well, the administration invited to the ceremony the bank CEOs who have been the "most sycophantic" while "rebuking" those who "don’t instantly agree that every policy coming out of the Democratic caucus on Capitol Hill is the most brilliant idea ever," according to anonymous Wall Street executives.

How fitting, then, that Citi and Bank of America, essentially wards of the state, served as the perfect yes-men, and were then invited to the signing ceremony. Sort of like tossing a treat to an obedient lap dog, isn't it?

Forget that Morgan and Goldman are two of the largest firms on Wall Street. Forget, even, that Goldman's recent SEC flogging provides a colorable excuse for the administration to deny its invitation.

The bottom line, as CNBC reports, is that the administration is retaliating against Morgan and Goldman:

JP Morgan Chase was very active in the efforts to shape the legislation. Its chief, Dimon, publicly critiqued aspects of the bill. Goldman Sachs was less active and prominent but still played a role in lobbying lawmakers to have some aspects of the bill changed.

Bear in mind that Obama was not striking against Republican ideologues. Morgan CEO Jamie Dimon is a long-standing Democratic donor and was once referred to as "Obama's favorite banker." Goldman was Obama's second-largest donor.

But, cross the administration, and you will feel its wrath.

This "change" sure sounds like business as usual.

Phonebook Waste

2010-07-16T16:52:00.000-07:00

I'm no environmentalist, but the printing and distribution of all these phone books seems like a tremendous waste of resources.

I'd guess that we're looking at about 350 phone books (split between white and yellow pages) placed alongside the mailboxes in my building.

A building consisting of about 200 apartments' worth of predominantly young, professional residents. I can probably count the number of residents over 40 on one hand.

When was the last time anyone under 40 used a phone book? The Internet is a far more useful database for finding business phone numbers.

And what of residential phone numbers? Well, if I didn't give you my phone number, and if you don't know how to reach me via e-mail, Facebook, LinkedIn, Twitter, foursquare, or MySpace, then you probably don't have much business calling me!

You really don't have to be an environmentalist to object to this waste. Paper may figuratively grow on trees, but trees don't grow back overnight. I would much rather leave all that timber intact for use in other products, to drive down the cost of timber, or just for the sake of having a few extra trees lying around.

Similarly, the resources used to pay people to print and distribute these phone books—among any number of collateral tasks—could be used to pay people for things we would rather have.

This also doesn't mean we need the government to force the telephone company to stop printing all these phone books. Instead, we need to shout to the phone companies, "HEY, DUMMIES! We don't use your crummy phone books, so stop printing so many of them!"

Partisan Hackery at the NAACP

2010-07-14T17:07:00.000-07:00

The NAACP's recent denouncement of alleged racism within the tea party movement reeks of dirty tricks and shallow race baiting.

The resolution's premises are absurd because the tea party movement already opposes racism, and tea party leaders have already denounced the isolated incidents that purportedly prompted the resolution.

First, there is no need for the tea party movement to denounce something it already opposes. It draws much of its ideological inspiration from the principles of natural law enshrined in our Declaration of Independence, including that all men are created equal—the very antithesis of racism.

The NAACP, on the other hand, bases its case on isolated, anecdotal evidence. But, as it turns out, tea party leaders have already denounced such misbehavior within their ranks!

So, what's the NAACP's real goal? Simple: a political cheap shot during an election year.

The resolution has drummed up slanted headlines like "NAACP Says Tea Party Tolerates Racism" (CBS) and "NAACP accuses tea party of tolerating bigotry" (AP). A misleading frontpage headline is worth a thousand backpage retractions.

Fortunately, this cheap trick is backfiring on the NAACP. Haphazardly decreeing opposing voices as racist is one of the oldest tricks in the book, and the American people have rejected this kind of race baiting for years.

That's probably why Jesse Jackson and Al Sharpton are trying to downplay the resolution.

This is a pretty revolting development, since the NAACP was so instrumental during the civil rights movement. Hopefully the backlash will convince its leadership to focus on its mission of strengthening the black community, and shy away from partisan adventurism.

Obama: Government's "Unconscionable Ineptitude"

2010-06-16T21:48:00.000-07:00

"If there's any bright light that's come out of this disaster, it's the degree to which ordinary Americans have responded with speed and determination . . . even as their government has responded with what I consider to be unconscionable ineptitude."

Who unleashed that excoriating criticism?

Why, none other than Sen. Barack Obama, back in 2006. When someone else was mishandling a disaster along the Gulf Coast.

So, does waiting nearly two months before meeting BP's CEO constitute "unconscionable ineptitude"? Or does making it abundantly clear he has no clue how to solve this mess?

Probably.

But, hearing the President of the United States talking about kicking people's asses makes for great primetime television.

And hilarious YouTube remixes, apparently.

Rep. Etheridge Assaults Private Citizen

2010-06-14T15:38:00.000-07:00

Rep. Bob Etheridge (D-N.C.) was recently filmed assaulting a college student who had the audacity to question his voting record.

The video clearly shows Rep. Etheridge forcefully grabbing the student first by the arm and then by his neck and shoulders, effectively demobilizing him for 30 seconds while demanding the student to divulge his identity. Another video captured from the student's perspective is available here.

Rep. Etheridge clearly committed a battery against the student because being confronted with non-violent questioning on a public sidewalk does not grant him the privilege of forcefully detaining the questioner.

It would be an open-and-shut case even if Etheridge were a private citizen, but his status as a Congressman is even more appalling. Is Bob Etheridge really so arrogant that he believes his actions are immune to his constituents' scrutiny? Why, for that matter, does he believe he has the right to use physical force to intimidate his critics? The government is answerable to the governed, not the other way around.

Or, does Bob Etheridge believe he belongs to a ruling class?

He apologizes profusely because he got caught, and probably only because he got caught.

We deserve better than this.

John Eastman for Attorney General

2010-06-04T16:07:00.000-07:00

I strongly encourage you to support John Eastman for California Attorney General.

I have enjoyed the privilege of studying under John as one of his law school pupils, and then working for him on a number of his constitutional law cases. My experience with him leaves no doubt in my mind that John Eastman is the real deal.

John truly is a Renaissance man. He is a fantastic lawyer, a skillful administrator, a brilliant scholar, and a talented educator. His litigation of over 50 cases before the Supreme Court and other appellate courts uniquely qualifies him to defend the constitutionality of California law. Chapman Law's leap from Tier 4 to Top 100 during his deanship proves his leadership and administrative talents. And, let's face it --- we need more intelligent politicians.

It is important to note that John Eastman is an unabashed conservative. Social conservatives will appreciate his vow to defend Prop 8 and stringently enforce 3 Strikes, while libertarians should enjoy his legal advocacy of economic liberty and limited government.

His primary opponent, Steve Cooley, is far less conservative. The Eastman campaign recently enumerated the stark differences between Eastman and Cooley. My personal favorite is that Cooley is poised to collect approximately $5 million in state pension payments while excessive pensions are driving California bankrupt.

My experience with John Eastman convinces me that he possesses the skills, experience, intelligence, ideas, and character necessary to brilliantly serve as California's next Attorney General. You can learn more information about him at eastmanforag.com.

U.S. May Soon Lose AAA Credit Rating

2010-05-07T15:01:00.000-07:00

The United States is precariously close to losing its AAA credit rating, according to Congressional Budget Office projections. Jed Graham of Investor's Business Daily reported:

In the wake of the financial crisis and recession, Moody's Investors Service has brought new transparency to its sovereign ratings analysis — so much so that 2018 lights up as the year the U.S. could be in line for a downgrade if Congressional Budget Office projections hold.

The key data point in Moody's view is the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18%-20% of federal revenue is the outer limit of AAA-territory, Moody's managing director Pierre Cailleteau confirmed in an e-mail.

Under the Obama budget, interest would top 18% of revenue in 2018 and 20% in 2020, CBO projects.

But under more adverse scenarios than the CBO considered, including higher interest rates, Moody's projects that debt service could hit 22.4% of revenue by 2013.

So, what is the Obama administration doing about it? Piling on more debt, of course! Sure seems like a great time to create an expensive new medical entitlement program, doesn't it?

Hat tip to James Pethokoukis.

Obamacare Already Harming Coverage

2010-03-26T14:20:00.000-07:00

The Wall Street Journal reported that Verizon notified its employees that Congress' recently enacted health care litigation will likely result in diminished coverage:

[T]he telecom giant warned that "we expect that Verizon's costs will increase in the short term." While executive vice president for human resources Marc Reed wrote that "it is difficult at this point to gauge the precise impact of this legislation," and that ObamaCare does reflect some of the company's policy priorities, the message to workers was clear: Expect changes for the worse to your health benefits as the direct result of this bill, and maybe as soon as this year.

Most provisions will not come online for another few years, but some tax consequences are immediate:

Mr. Reed specifically cited a change in the tax treatment of retiree health benefits. When Congress created the Medicare prescription drug benefit in 2003, it included a modest tax subsidy to encourage employers to keep drug plans for retirees, rather than dumping them on the government....

In a $5.4 billion revenue grab, Democrats decided that this $665 fillip should be subject to the ordinary corporate income tax of 35%. Most consulting firms and independent analysts say the higher costs will induce some companies to drop drug coverage, which could affect about five million retirees and 3,500 businesses. Verizon and other large corporations warned about this outcome.

So, the legislation will cause a lot of employers to either dump retirement drug benefits onto Medicare, or slash coverage. Fantastic. But wait, there's more!

In its employee note, Verizon also warned about the 40% tax on high-end health plans, though that won't take effect until 2018. "Many of the plans that Verizon offers to employees and retirees are projected to have costs above the threshold in the legislation and will be subject to the 40 percent excise tax." These costs will start to show up soon, and, as we repeatedly argued, the tax is unlikely to drive down costs. The tax burden will simply be spread to all workers—the result of the White House's too-clever decision to tax insurers, rather than individuals.

This deal keeps getting worse all the time.

Prop Them Up, and Knock 'Em Back Down

2010-01-15T15:56:00.000-08:00

"[G]overnment's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." -Ronald Reagan

In 2008, the government convinced the American people that our financial system was on the verge of collapse.

In 2009, it assured us that it averted such a disaster.

In 2010, President Obama wants to tax the banks into the stone age.

Talk about smoke and mirrors! I have no doubt that policy makers legitimately believed that swift actions were necessary to maintain the flow of credit and prevent another Great Depression. Unfortunately, that apparent necessity gave way to politics as usual. The government is now transforming the TARP from a shield used to block financial Armageddon, and into a spear used to attack the banks—odd, since TARP's premise was that the banks are vital economic components.

The bottom line is that the Democratic leadership is fighting for political survival, and the banks are as good a bogeyman to target as any. Their primary policy objectives of economic stimulus, health care reform, and cap-and-trade have fallen flat, so they're resorting to economic populism—find someone that most people hate, and punish him.

Well, this new tax will punish the banks—along with their customers. Loans are terribly difficult to procure as it is because banks—still in survival mode—want to preserve their capital. So, if the government forcibly extracts more capital from the banks, does that mean the banks will increase or decrease their lending? The answer must even be obvious to those who support this terrible idea, but apparently they prefer populist theatrics over good policy. Hopefully this intensifies the drubbing they will incur during this year's midterm elections.

Avatar: a Film about Property Rights?

2010-01-15T01:14:00.001-08:00

People are raving about the new film Avatar, and I can attest that it's living up to the hype—frankly, I've never seen anything like it. I won't give away anything vital, but most Americans perceive an underlying theme of racial and ethnic tension. The Chinese, however, appear to view it as a defense of private property rights. The Wall Street Journal reports:

Hollywood blockbusters aren't usually notable for their artistic or political subtlety. And James Cameron's latest sci-fi hit, "Avatar," would seem to be no exception, going by the lament of some critics that the film's impressive special effects are undercut by a skimpy story line and flat dialogue.
That, however, is not how many Chinese see the film, which tells the story of rapacious humans trying to evict the blue-skinned natives of the planet Pandora in order to extract some exceedingly valuable mineral. This is standard politically correct fare for a Western audience, conveying a message of racial sensitivity and environmental awareness. In China, however, it has more rebellious undertones.

That's because Chinese local governments in cahoots with developers have become infamous for forcibly seeking to evict residents from their homes with little compensation and often without their consent. The holdouts are known as "nail households," since their homes are sometimes left stranded in the middle of busy construction sites. More often, however, they are driven away by paid thugs. Private property is one of the most sensitive issues in the country today, and "Avatar" has given the resisters a shot in the arm.

Even in Hong Kong, the "Avatar" banner has been taken up by antigovernment activists trying to defeat a plan to demolish a village to make way for a new high-speed railway line. One mysterious benefactor reportedly donated movie tickets to the villagers to stoke their enthusiasm for protests.

Fascinating. I need to watch that movie again with that perspective in mind.

Hat tip to Prof. Donald Boudreaux at Cafe Hayek.

Could Sotomayor Pass a Constitutional Law Exam?

2009-07-15T22:47:00.000-07:00

Judge Sotomayor has botched enough elementary questions about constitutional law to give me serious pause about her judicial competence. She has taken multiple opportunities to demonstrate not only that she does not understand the infamous Kelo holding, but she doesn't even know what a fundamental right is!

Let's pretend that we're all law students, and our professor just said, "Ms. Sotomayor, please tell us about Kelo v. New London." Let's look at her statement before the Senate Judiciary Committee:

I understand the concern that many citizens have expressed about whether Kelo did or did not honor the importance of property rights, but the question in Kelo was a complicated one about what constituted public use. And there, the court held that a taking to develop an economically blighted area was appropriate.

Well, no, as Prof. Ilya Somin points out. First of all, the Kelo opinion acknowledged that the property at issue was not blighted. Second, the Supreme Court held 50 years ago in Berman v. Parker that the state may use the takings clause to develop an economically blighted area.

In fact, she doesn't even mention Kelo's major issue, which was whether the government transfer of property ownership from one individual to a private developer in order to foster economic growth constitutes a "public use" under the takings clause.

Now, let's say the professor gave her another crack at it. Here was another statement she made before the committee:

[T]he issue in Kelo, as I understand it, is whether or not a state who had determined that there was a public purpose to the takings under the—the takings clause of the Constitution that requires the payment of just compensation when something is—is condemned for use by the government, where the takings clause permitted the state, once it's made a proper determination of public purpose and use, according to the law, whether the state could then have a private developer do that public act, in essence. Could they contract with a private developer to effect the public purpose? And so the holding it in Kelo was a question addressed to that issue.

Not even close, chides Prof. Somin. Whether the state may "contract" a private individual to effectuate a public use (such as a public school or highway) has nothing to do with Kelo. The government utilizes private contractors all the time. The actual issue, stated differently, was whether the state may transfer your grandmother's house to a private developer so he can tear it down and build a parking lot for Pfizer Pharmaceuticals.

This is big deal because Kelo v. New London is an extremely important case—so important that law schools typically teach it twice: first in property law, and again in constitutional law. Virtually any law student can apparently tell you more about Kelo than Judge Sotomayor.

This is especially unfortunate because Judge Sotomayor used Kelo to further deteriorate private property rights. Her Second Circuit panel held in Didden v. Village of Port Chester that, as stated by Prof. Somin, "it was constitutionally permissible for a state to condemn property because the owners had refused [a developer's] demand to pay him $800,000 or give him a 50% stake in their business, threatening to have the property condemned if they did not comply." So, Judge Sotomayor's poor interpretation of Kelo apparently condones state-sponsored extortion. Wonderful.

To make matters worse, Judge Sotomayor doesn't even know what a fundamental right is. Here is her legal definition of a fundamental right: "The term has a very specific legal meaning, which means that [an] amendment of the Constitution [is] incorporated against the states."

No, Your Honor, you have it backwards, reminds Prof. Randy Barnett. Constitutional amendments are incorporated against the states because they protect fundamental rights. We could attribute this to a tongue slip if she didn't keep repeating it.

These are not simple mistakes because eminent domain and the fundamental rights doctrine represent critical areas of constitutional jurisprudence. A Supreme Court nominee should possess a strong command of these topics, yet Judge Sotomayor doesn't even seem to grasp their basic principles. This is very disturbing.

On the bright side, this sends an uplifting message to all the struggling law students out there who couldn't describe a case in class if their legal careers depended on it—you too could be nominated to the Supreme Court!

$300,000 per Job Purportedly Saved by Stimulus

2009-06-09T15:27:00.000-07:00

President Obama recently boasted that his stimulus plan has "saved or created nearly 150,000 jobs."

This is a flagrantly unverifiable claim. Concrete data compiled by the Department of Labor tells us how many jobs have been lost or created, but there is no apparatus we can use to report that a job was almost lost—much less who receives the credit for saving it.

Nobody seemed to notice until former Bush deputy press secretary Tony Fratto began screaming bloody murder to the Wall Street Journal: "We would never have used a formula like 'save or create.' To begin with, the number is pure fiction—the administration has no way to measure how many jobs are actually being 'saved.' And if we had tried to use something this flimsy, the press would never have let us get away with it."

But the media has let the Obama administration get away with it, with a few exceptions.

The Associated Press reported that Obama's figure "is so murky it can never be verified." The L.A. Times reported Obama advisor David Axelrod's claim that the stimulus "has produced hundreds of thousands of jobs." The administration clearly needs to get its imaginary numbers straight.

However, let's give President Obama the benefit of the doubt, and assume that the stimulus has saved 150,000 jobs. The government reports that it has spent $43.7 billion in stimulus funds as of May 29. That means that the administration has spent nearly $300,000 for ever job purportedly saved. ($291,333, to be precise. It's easy—just divide 43.7 billion by 150,000.)

I don't know what those 150,000 men and women are doing, but unless they're curing cancer, building a better iPhone, or doing something else to drastically improve the quality of American life, I'm going to posit that their jobs are not worth $300,000 a piece of our money.

Think that's a waste of money? Just wait until the government spends the remaining $740 billion!

American Capitalism Gone with a Whimper

2009-06-03T14:51:00.000-07:00

There can be little doubt that socialism is replacing capitalism at an alarming rate in the United States. Just look at the facts:

De facto government ownership of large segments of the economy;
Direct government intervention in private business models and compensation plans;
Increased transfer payments from "the rich" to "the poor;"
Arbitrarily favoring labor unions over the legal rights of bond holders during bankruptcy proceedings;
Imminent regulation of every activity in the country involving CO2 emissions; and
Probable government rationing of health care (nothing is "free").

The seduction of socialism has grown so strong that even the Russians (you know, the former Soviet Union?) are chastising us for abandoning our free market system.

This shouldn't be too surprising since the Russians (alongside the still-Communist Chinese) are in large part better capitalists than we are. They adopted a very low flat tax that led to explosive economic growth following its enactment.

Russian Prime Minister Vladimir Putin—a former KGB operative—recently warned the United States that "excessive intervention in economic activity" would be a costly mistake:

In the 20th century, the Soviet Union made the state's [economic] role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.

Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.

And one more point: anti-crisis measures should not escalate into financial populism and a refusal to implement responsible macroeconomic policies. The unjustified swelling of the budgetary deficit and the accumulation of public debts are just as destructive as adventurous stock-jobbing.

Unfortunately, the United States seems intent on disregarding the lessons learned from Russia, favoring a command-and-control economy over free markets.

Well, Russian newspaper Pravda recently published a pre-mortem obituary of American capitalism. The author criticized the United States for berating the lack of rule of law in Russia while repeating the mistakes of Russian socialism. The most chilling prediction: "The proud American will go down into his slavery with out a fight, beating his chest and proclaiming to the world, how free he really is."

A Communist takeover of the United States is not imminent, but the fact that we are even progressing toward that side of the spectrum is frightening. Just how far we travel down the path of prioritizing the state ahead of the individual depends upon how soon the American people snap out of their trance and end this insanity.

Cap and Trade: The $9.6 Trillion Growth Killer

2009-05-21T14:55:00.000-07:00

The Obama administration and its congressional allies seem prepared to sacrifice the American economy on the altar of global warming. Specifically, the Waxman-Markey cap-and-trade proposal represents a crusade to drastically diminish carbon emissions in the United States.

I'm not going to debate the scientific arguments; instead, I want to make it abundantly clear that the purported benefits of this plan do not justify its excessive costs.

The purpose of cap and trade is simple: to reduce CO2 emissions by issuing permits that ration the amount of emissions a producer may generate. This gives each company an incentive to implement new technologies to reduce their emissions so it can sell its leftover permits to less efficient companies.

These permits are worth money, so their use diminishes their value (just as depleting a Starbucks gift card of its credits diminishes its value). The logical implication is that using a permit levies a cost upon its user. In order to achieve compliance with permit restrictions, the user must reduce production (and lose revenue), increase efficiency (an extra cost), or purchase another user's remaining credits (an extra cost). No matter how you look at it, this plan is expensive.

The Cost
The Heritage Foundation just released a study estimating the cost of the Waxman-Markey cap-and-trade proposal to be $9.6 trillion in lost GDP over the next twenty-five years. I repeat—$9.6 trillion in economic loss.

The Heritage report reasoned that the economy would respond to cap and trade as it would respond to an energy crisis: "The price on carbon emissions forces energy cuts across the economy, since non-carbon energy sources cannot replace fossil fuels quickly enough. Energy prices rise; income and employment drop."

How bad would this be? According to the report: a 55-90 percent increase in energy prices; an annual $1,500 increase in family electric bills; a $596 annual increase in gasoline prices; an average annual loss of 1,105,000 American jobs; and national debt increase of $29,150 per person. All within the next twenty-five years.

This program will also invite the government to further direct the American economy. The cap-and-trade program will empower the bureaucrats who administer it, and this will open the door to new forms of corruption.

As Thomas Sowell notes in Basic Economics, "bureaucrats' ability to create delay often means an opportunity for them to collect bribes to speed things up . . . . This in turn means higher prices to consumers, and correspondingly lower standards of living for the country as a whole." If you think it's hard regulating the money received by public officials, imagine trying to keep tabs on the bribes received by anonymous bureaucrats!

Arthur Laffer and Stephen Moore pointed out in The End of Prosperity that "bureaucrats will be regulating all sectors of the industrial economy and all activities of every business in America." Intrusive government entanglement is not far fetched, since the White House is now effectively telling General Motors how to run a car company.

The mere administrative compliance costs may also be staggering. As Laffer and Moore quipped, "[i]f you think the IRS is heavy-handed and intrusive, wait till companies have to comply with the new Green Police."

Of course, it's unclear how much of this accounts for American companies that will duck these insane requirements by moving their operations overseas, and taking their economic contributions and tax revenues with them.

The Benefit
The costs are tremendous, so what is the benefit? Apparently, not very much.

Climatologist Chip Knappenberger recently concluded that if Waxman-Markey yields an 83 percent emissions reduction by 2050, "the temperature reduction is nine hundredths of one degree Fahrenheit, or two years of avoided global warming."

In other words, the government is sacrificing trillions of dollars to reduce the temperature by less than one degree? Seriously?

Maybe each of us should purchase a T-shirt that reads, "We lost $9.6 trillion, and all I got was this lousy T-shirt."

But Think of the Children! (No on Prop. 1A)

2009-05-19T15:37:00.000-07:00

California voters are voting today on whether to "fix" the budget by extending the "temporary" tax increases imposed in the latest budget—of course, tax increases are rarely temporary and hardly ever fix anything.

But the tax issue always incites from the usual suspects the same indignant response that we are letting our children down by failing to increase taxes, which is the purported panacea for our poor education system.

The first problem with this theory is that raising taxes does not necessarily increase revenues.

Dr. Arthur Laffer and Stephen Moore recently wrote in the Wall Street Journal that punitive state income tax schemes fail because Americans are inherently mobile creatures---we know how to move. They pointed out that between 1998 and 2007, "more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states . . . and relocated to the nine tax-haven states with no income tax . . . ."

These individuals tend to be job creators. Over that same period, the no-income tax states "created 89% more jobs and had 32% faster personal income growth" than the high tax states. 'Taxing the rich' may seem like a good idea, but you can't tax them once they move to another state. To the contrary, this scheme deprives California of vital economic productivity, including tax revenue and job creation.

Second, even if raising taxes would solve the situation, are the taxpayers really at fault?

Education spending within the budget increased by over a third between 2003 and 2008, keeping pace with the overall budgetary increase. Are our schools 35 percent better off today than they were in 2003? Why should we believe that throwing more money at the problem will work any better than in the past?

Perhaps the problem isn't a lack of resources, but misallocation of those resources. California is already one of the highest taxing states in the country; rather than blame the greedy taxpayer, perhaps we should ask why we're receiving so little for the money we already spend.

So, where does the problem lie? Maybe with the bureaucrats who misallocate the money budgeted by the legislature, or perhaps with the legislature for sacrificing education spending in favor of their own legislative agendas. Most likely, it is all of the above, plus any number of rules and regulations that diminish the level of service our students receive.

Let's make the money we already spend work more efficiently; until then, don't ask me for another dime, because I don't feel the least bit bad about saying no.

Obama "to get the economy off the of bubble-and-bust cyle" (???)

2009-05-07T15:48:00.000-07:00

I have some exciting news to report: the Obama administration plans to abolish the boom-and-bust economic cycle! Austan Goolsbee—member of the Council of Economic Advisors—matter of factly declared so much during an interview with CNBC's Erin Burnett:

In [President Obama's] budget, he is trying to design a framework to get the economy off of the bubble-and-bust cycle.

Perpetual economic growth—how exciting! Now, we need only address the minor point that we attempted this in the 1960s, and failed miserably.

President Johnson declared, "I do not believe recessions are inevitable." Why should he have? Arthur Okun—the chairman of his Council of Economic Advisors—wrote that "[r]ecessions are now considered to be fundamentally preventable, like airplane crashes and unlike hurricanes."

Keynesian economists believed they could sidestep the classic boom-and-bust business cycle by using brand new computer-driven economic models to outsmart natural market forces. Robert J. Samuelson explained their folly in The Great Inflation and Its Aftermath:

They could determine how far the economy was straying from "potential output." They could also predict recessions and inflation, it was believed. Thus, corrective policies could be adopted. If the economy was below full employment, it could be nudged up. If it were in an inflationary zone, it could be nudged down. With better information and theories, economics seemed a reliable form of social engineering.

Unfortunately, the Great Depression—a deflationary crisis—conditioned economists not to worry very much about inflation. This mental blindspot was politically fortuitous, because politicians preferred rising prices over declining employment. President Nixon acutely summarized the political sentiment: "When you start talking about inflation in the abstract, it is hard for people to understand. But when unemployment goes up on half of one percent, that's dynamite."

Combine (1) economists initially apathetic about inflation with (2) a population that doesn't understand inflation and (3) elects politicians who are willing to induce inflation in order to prevent a recession, and the result was the stagflationary quagmire of the 1970s.

Mr. Samuelson describes this through the perspective of Arthur Burns, the Fed chairman from 1970-1978:

Burns conceded [in 1979] that the Fed "had the power to abort inflation at its incipient stage fifteen years ago or at any later point." If inflation is too much money chasing too few goods, the Fed could have fought it by supplying less money. Indeed, the Fed had stepped "hard on the monetary brake" in 1966, 1969 and 1974, Burns said. Unfortunately, the initial effects were a slower economy and higher unemployment---cardinal sins in the new political climate. So each time the Fed had relented too quickly before inflation was broken, bowing to criticism from Congress and the administration.

Fed Chairman Paul Volcker and President Ronald Reagan eventually slayed the inflationary beast, but the price was the severe 1982-83 recession. This required a courageous Fed chairman determined to suffocate inflation by contracting the monetary supply, and an American president willing to provide the political support necessary for the Fed chairman to do his job.

That was what happened last time the political elites assured us they could end the boom-and-bust cycle. I can only imagine how it will work out this time around . . . .

Bailing Out Responsible Homeowners (who treated their homes like ATMs)

2009-03-04T15:40:00.000-08:00

CNBC's Diana Olick reported today that President Obama's plan to bail out "responsible homeowners" will provide incentives for lenders to forgive secondary liens---including home equity loans.

The proposal posted on the Treasury web site provides that "the program will include additional incentives to extinguish second liens on loans modified under the program in order to reduce the overall indebtedness of the borrower and improve loan performance." Page 5, paragraph vi.

So, in other words, the Obama administration has crafted a plan to assist responsible homeowners---who just happened to suck money out of their properties like ATMs. Since they are unable to pay that money back, it looks like the American taxpayers will foot the bill. Does that mean we also get to use the stuff they purchased with our money?

Deficit Spending: the New Voodoo Economics?

2009-03-03T19:05:00.000-08:00

Rep. Linda Sanchez (D-CA) summarized Congress' apparent attitude toward deficit spending in this question/statement directed toward Treasury Secretary Tim Geithner:

Do we really need to balance the budget in order to reduce our future [] debt burden, or can we reduce our debt burden while still running deficits? Because some people would have you believe that the two must go hand in hand.

I'm of the personal opinion that deficit spending tends to increase the national debt, but what do I know?

Geithner Calls the Kettle Black

2009-02-27T16:12:00.000-08:00

There's an old saying about the pot calling the kettle black, which is used to attribute hypocrisy to an individual who alleges another of behavior which he too is guilty of. Treasury Secretary Tim Geithner epitomized this idiom during an interview with Jim Lehrer:

I am deeply offended by the quality of judgments we've seen in the leadership of our nation's financial institutions. They've caused a very damaging loss of confidence. Financial systems require confidence; they're built on confidence. They've created a deep hole of public distrust and anger, which is enormously damaging.

Mr. Geithner, please meet the kettle. There is no doubt that the banks' horrible decisions over the past few years are key to our economic problems. However, Mr. Geithner is in no position to claim moral indignation at the banks' lack of leadership when he has provided zero leadership ever since he crashed and burned before Congress two weeks ago.

In case you missed it, Wall Street thumbed its nose at Mr. Geithner's purported plan to stabilize the financial sector through a 421-point crash of the Dow Jones Industrial Average---about a 5-percent decline. The reason? The administration led us to believe that Mr. Geithner would deliver a comprehensive plan; in fact, President Obama announced the night before that Mr. Geithner would announce "very clear and specific plans for how we are going to start loosening up credit once again."

Instead, Mr. Geithner only delivered a broad outline which did not sound much different than the Bush/Paulson plan, but for a "stress test" which---left undefined---seemed like a doorway to nationalization. Mr. Geithner highlighted his plan's ambiguity when he stated, "We're not going to put out details until we are confident that we've got the right structure that's going to achieve these objectives to try and bring private capital in, alongside government financing to help these markets get working again."

As market pundit Larry Kudlow quipped, "President Obama, please meet Treasury man Tim Geithner; Mr. Geithner, this is Mr. Obama; we'll all shake hands and have a cup of coffee together."

Alan Greenspan liked to say that the maxim First, do no harm applies just as much to the Federal Reserve chairman (and, by extension, Treasury secretaries) as it does to doctors. Well, Mr. Geithner did tremendous harm to the financial sector. His purported goal is to ensure the survival of our major financial institutions to maintain a viable credit market, but Mr. Geithner has only hastened their demise by scaring private capital away from those institutions---thereby increasing their need of government assistance.

How, then, did Mr. Geithner attempt to make amends? Well, he really didn't. Instead, he seemingly went into hiding and refused to provide any clarification. Mr. Geithner could have said any number of things; in his Lehrer interview, he stated that "these banks now have very substantial amounts of capital relative to what you would have seen in the U.S. economy going into previous recessions," and "I think [nationalization] is the wrong strategy for the country, and I don't think it's a necessary strategy." Mr. Geithner could have dramatically improved the situation by saying that two weeks ago, but he simply chose to say nothing.

The result, therefore, was what Wall Street considers a four-letter word: uncertainty. Private investors were left speculating without clear guidance about whether the White House would nationalize our banking system, and wipe out the shareholders in the process. The speculation increased as Mr. Geithner remained silent.

Mr. Obama did not help matters because, as blogger Paul Kedrosky noted, Mr. Obama talked himself into---and out of---nationalization within the course of the same speech: Mr. Obama first stated that Japan prolonged its decline by initially refusing to nationalize, whereas Sweden quickly nationalized and recovered much more quickly. This sounds like a clear endorsement of nationalization. However, he then reversed himself by pointing out that our banking system is far more complicated than Sweden's, so nationalization may not work here. His so-called conclusion:

And so what we have to do is we have to pull the Band-Aid off so we don't duplicate what happened in Japan. But we've also got to make sure that in pulling the Band-Aid off we don't just start doing so much damage that things end up getting much, much worse.

Someone needs to gently remind Mr. Obama that while deliberating out loud works well for Senators, the President of the United States is in no position to appear so wishy-washy. He is the leader of the free world, and everyone looks to him for leadership. Statements like these imply that the administration has no idea what to do.

Therefore, it is clear that the administration failed to lead the way to financial recovery following Mr. Geithner's failed speech. Who, then, was in charge? Simple: the rumor mill ran Wall Street, and the financial sector led a broad market sell-off. There was little change in fundamentals; the dominant factor was increasing fear that the White House would nationalize our banking system. This affected not only the "bad banks," but the entire sector, as fear of a domino effect caused investors to flee from the more stable banks---thereby diminishing their stability. This fear spread to all other sectors, largely because no one wants to say the government running our banks. The major stock indices have crashed about 15 percent since Mr. Geithner's testimony. Only one investment did well: gold, which is viewed as the ultimate hedge against uncertainty.

This does not mean that Mr. Geithner should have rushed into a poorly deliberated plan just for the sake of acting. The problem is that Mr. Geithner appeared to have ample time to conjure up a more detailed plan. After all, he was the President of the New York Fed and Vice Chairman of the Fed's Open Market Committee prior to his Treasury Secretary nomination; this means that he worked very closely with Ben Bernanke and Hank Paulson in their initial attempts to stabilize the financial markets. Moreover, one would think that he would have taken full advantage of the "Office of the President-Elect" to get off to a running start. Instead, it appears that he did little or no footwork prior to his confirmation. At the very least, if he had so little to say, he should have done more to control our expectations.

We saw a brief stock market respite this week when Mr. Bernanke quelled fears of nationalization, even though Mr. Bernanke is not even part of the administration: frankly, it reached the point where any guidance whatsoever was better than no guidance. Unfortunately, this respite appears to have been short lived as we now creep back to 12-year lows. Mr. Geithner claimed during the Lehrer interview that the initial sell-off following his testimony two weeks ago was really not his fault:

Well, I think it's important to see this happened against the backdrop of a deepening recession here and around the world, and that is the fundamental cause of the uncertainty you're seeing in markets everywhere and the fragile confidence we see generally.

Well, Mr. Geithner, there is no doubt that we're facing a terrible economic climate. However, inherent in the Obama administration's claim that it can make things better is the reality that it can also make things much worse. You, sir, did make things worse. Even if you refuse any responsibility for the current uncertainty, I would implore you to at least show some leadership and remember that every dollar of private capital you scare away from the banks is a dollar that the taxpayers will wind up replacing.

President Obama, please meet President Karzai

2009-02-18T01:37:00.000-08:00

The Associated Press reports that President Obama apparently just spoke to Afghan President Hamid Karzai for the first time. Ever.

Ronald Neuman, former U.S. ambassador to Afghanistan under President Bush, speculates: "Holding off on a presidential call may be no more than a sensible decision to wait until the president really knows what he wants to say on crucial issues."

No hurry, Mr. President; it's not like the United States has deployed tens of thousands of American G.I.s to fight a war within President Karzai's borders or anything.

(Note: I know I promised I would shy away from matters of foreign policy. But this is just too ridiculous to ignore.)

Mortgaging Our Economic Future

2009-02-17T18:53:00.000-08:00

And so, with the stroke of a pen (ten pens, actually), President Obama today signed into law a $787 billion dollar bill he assured us will help get the American economy back on its feet. At best, it will provide a shot-term economic jolt; at worst, it could massively devalue the dollar, contribute to a future inflationary crisis, and help transform America’s economic juggernaut into a Western European sloth.

The best thing that can be said is that it will create a placebo effect that will boost the economy. As I argued in my previous post, the fundamentals of the bill will not be helpful, but if enough people believe it will boost our economy, then perhaps it may become a self fulfilling prophecy. If John Q. Public believes (rightly or wrongly) that this will help solve our economic woes, we can expect consumer and investor confidence to rise, which will allow America to get back to business. Of course, I suppose it’s beside the point that Congress could have just as easily caused this placebo effect by leaving the first page of the bill blank and spending zero dollars.

The alternative theory is that this bill will grow the economy by spending money that would not have otherwise been spent. The problem is that the government cannot spend money out of thin air—it can only spend a dollar by taking that dollar away from the private sector, either now or in the future. Proponents of the bill would assert—correctly—that this spending bill supplements (rather than replaces) current spending because it is 100 percent deficit spending, which means the private sector does not yet have to pay for it. Unfortunately, the irrefutable implication is that the government must gradually remove this money from the private sector for a long time to come. In short, we are mortgaging our economic future for the sake of the present.

The Congressional Budget Office—a non-partisan federal agency tasked with assisting congressional decisions by providing economic analysis—predicts that this bill will hurt our economy in the long run. It estimates that the legislation in the short run will “raise GDP and increase employment by adding to the aggregate demand” over the next few years. However, the legislation will “reduce output slightly in the long run.” This is because the resulting debt will “‘crowd out’ private investment” in the long run. Therefore, the CBO predicts reduction in future GDP by as much as .2 percent, reflected largely in lower wages because “workers will be less productive because the capital stock is smaller.”

The bill’s economic effects are even more serious when you account for its potential to devalue our currency, which the CBO report does not seem to consider. Our national debt stood at $8.95 trillion at the end of 2007, and equaled 65.5 percent of our GDP. The national debt presently amounts to $10.7 trillion and our GDP totals $14.3 trillion, so our national debt is now approximately 75 percent of our GDP. To put these figures in perspective, our national debt has not occupied such a huge percentage of GDP since the early 1950s—while we were paying for World War II!

This would be bad enough, except we’re just now getting started. The Congressional Budget Office already predicted a $1.2 trillion deficit for the coming fiscal year. President Obama stated that “unless we take decisive action, even after our economy pulls out of its slide, trillion-dollar deficits will be a reality for years to come.” The Treasury is reportedly considering spending as much as $2 trillion to stabilize the financial system. Anyone care to predict what percentage of GDP our debt will consume after all is said and done?

There is no doubt that President Bush and his Republican congressional majorities committed fiscal malfeasance by overspending during the boom years; as a result, our nation’s overbearing debt makes it very difficult to justify spending increases during the bust years. Justified or not, however, the United States is spending it. I can’t help but wonder whether our trading partners who largely finance our debt—with China as our number one creditor—will continue doing so. Yes, our creditors would harm their own economic interests by inciting dollar depreciation, but it would also be masochistic of them to continue buying debt they doubt we can repay without printing more money out of thin air.

This, of course, would result in inflation. The M2 indicator of our money supply has already increased at an annual rate of about 20 percent since August, so the Federal Reserve will already have a difficult time removing all of this excess liquidity from our system once our economy recovers. Imagine how much worse this situation would become if we're forced to essentially "inflate" our way out of debt.

Combine potential devaluation with classic monetarist inflation, and Americans will watch the price of their goods skyrocket—and our standard of living plummet. Of course, I could always be wrong. I’m still saving up the money to purchase a crystal ball and I don’t have a PhD in economics, but it seems clear that the economic stimulus plan is a recipe for disaster. How can we obtain long-term prosperity by mortgaging our economic future for the sake of temporary “stimulus” that so many people doubt will really work? Make no mistake—I do believe the economy will naturally rebound over the next year or two, due to its cyclical nature. But this “stimulus” plan will have little (if anything) to do with it, and it will simply open the door to future economic pain.

A Stimulus Plan to Nowhere

2009-02-12T16:01:00.000-08:00

I posted the following thoughts on a Facebook note on February 4, and it generated considerable debate. It is particularly timely since Congress is expected to pass the final version of the stimulus bill over the next few days.
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The riddle constantly implied through the 2008 election cycle was, “Who could possibly screw up our economy worse than the Republicans?” The answer has become fairly obvious: the Democrats!

I normally abhor the partisan Republican-Democrat finger pointing as the lowest form of political hackery. Unfortunately, the Democratic leadership has spent the past few weeks living up to the odious caricatures of bleeding heart big spenders who place their social agendas ahead of economic reality. Specifically, their introduction of a welfare expansion bill disingenuously labeled economic stimulus has forced me to question their intentions and their competence.

President Obama spent the past few months pledging an economic stimulus bill that will boost our economy through infrastructure spending and tax cuts. I am not a fan of Keynesian-style government spending stimulus because, frankly, I don’t think it works. To make a long story short, government can only spend by preventing private sector spending (now or in the future), and it typically takes years for infrastructure spending to enter the economy due to the enormous planning required before ground can be broken. However, I at least acknowledged that such a bill would cause a “placebo effect”: even if it does not in fact stimulate growth, its enactment will inadvertently stimulate growth by boosting consumer and investor confidence.

Unfortunately, the so-called American Recovery and Reinvestment Act does not live up to President Obama’s description. He promised infrastructure, but Congress instead delivered a wish list of liberal policy objectives aimed at expanding the welfare state rather than growing the economy. The $816 billion House version entails $604 billion in new spending.

This includes $20.0 billion for food stamps, $20.4 billion allocated to the Department of Health & Human Services, $17.6 billion for student financial aid, $29.1 billion for public school programs, $20.0 billion to renovate those same schools, $11.2 billion for housing assistance programs, $19.5 billion for education grants, $27.1 billion for unemployment benefits, $13.3 billion for health insurance for the unemployed, $11.1 billion for “Other Unemployment Compensation,” and $20.2 billion for Medicaid and Medicare.

By contrast, only $30.0 billion is allocated to highway construction.

Feeling a bit swindled, now, aren’t we? Check out an article by Jim Manzi discussing this in further detail.

This plan does not stimulate economic growth; it simply recycles money. What do I mean? Well, understanding the economic impact of this proposal requires comprehension of the basic economic principle that the government cannot “create” spending; it can only spend money that it takes from the private sector, either through taxes or borrowing. The proponents of this proposal claim that it will redistribute wealth from “the rich” to “the needy,” who will stimulate the economy by using their government payments to purchase of goods and services.

In other words, the plan is for the government to take money away from “the rich,” and give it to “the needy,” who will in turn give it back to “the rich” when they purchase goods and services. This clearly does not grow anything, except for the size of government and the size of our national debt. All this does is transfer the same dollars back and forth between the same people, minus the dollars retained by the bureaucratic middlemen within the federal government. This is simply welfare expansion window dressed as economic stimulus.

Republican Senators actually responded—much to my surprise—with a decent alternative. This bill, priced at $445 billion is about half as large as that passed by the House, and is laced with supply-side tax cuts. It slashes payroll taxes for all workers and income tax rates for lower income earners, as well as substantial tax credits for home buyers. The hallmark of the bill, however, is its reduction of the corporate tax rate from 35 to 25 percent, and small business filing as individuals by the same margin.

Talk about incentivizing growth! The United States levies some of the highest corporate tax rates in the developed world, and most people do not realize that most “individuals” taxed at the 35 percent rate are actually small businesses. This will provide them with a much needed shot in the arm to weather the storm and incentivize growth. More money in their pockets translates into fewer layoffs and pay cuts, and—as experience has consistently shown—higher tax revenues. If you don’t believe me, just check the official Treasury data for yourself. Cross reference the supply side tax cuts of the 1920s, 1960s, 1980s, and 2000s with those figures, and you’ll see that the subsequent economic growth resulted in higher revenues despite the lower rates.

Of course, the Republican counterproposal was not perfect. It still contained $48.15 billion in welfare expansion, but at least its remaining expenditures contain a far higher proportion of infrastructure than its competitor. I also like the fact that its expenditures cease following either three years or two consecutive quarters of 2 percent GDP growth, whichever comes first. Additionally, it called for a subsequent 2 percent across-the-board spending cut to help balance the budget and a commission to examine the long-term viability of Social Security, Medicare, and Medicaid. Too bad the Democratic majority never took it seriously.

Sen. McCain introduced this counterproposal, and you know what? It really makes me think I underestimated him during the election! Maybe he has a chip on his shoulder to prove that he received an unfair shake in November. If so, I really hope it motivates him to remain a vocal proponent of such beneficial measures—perhaps recreate himself as a Supply-Side Maverick rather than a Campaign Finance/Amnesty/Global Warming Maverick.

Meanwhile, President Obama is doing a pretty amazing job of talking down the economy. He recently stated that failing to pass this bill “will turn a crisis into a catastrophe.” Perhaps President Obama and his Democratic colleagues should turn their attention to finding that Hope they used to get elected in November and leave economic stimulus to the Republicans.

The Audacity of Reason

2009-02-08T16:47:00.000-08:00

Welcome to the inaugural posting of The Audacity of Reason. Its primary purpose is to advocate the reasonable application of economics and law within the public policy arena. As the title implies, I believe that reasonableness is sorely lacking in modern politics. “Reasonable” is, of course, a dangerously ambiguous term, so the integrity of this blog demands that I provide at least a brief ideological synopsis so you understand what I believe “reasonable” is. Although I cannot encapsulate my ideology within a few paragraphs, this should at least give you an idea of where I’m coming from:

Politically, I’m a libertarian-leaning Republican based upon the core notion that the primary role of a just government is to protect the people from one another and foreign invaders while restraining itself from meddling in the people’s private affairs. Conversely, I reject the paternalistic view that the government should protect the people from themselves.

Economically, I believe supply-side economics is the best path to prosperity and individual liberty. This includes advocacy of low taxes, minimal government, balanced budgets, free trade, and price stability. I believe each of these basic tenets has greater potential to alleviate poverty and promote prosperity than any government program ever could.

Legally, I advocate a strict textualist interpretation of the Constitution based upon the original understanding of its provisions, to the degree we can divine such an understanding from the historical record. Consequently, I generally reject the idea of a “living constitution” because a constitution that means whatever we want it to mean really doesn’t mean very much at all. I do, however, keep an open mind for interpreting provisions whose original meaning is unclear.

I hope this elucidates my core political, economic, and legal values. You may be wondering why I don’t have much to say about foreign policy, and that is because I simply don’t know enough about it to discuss it in great detail. My law school education qualifies me to discuss law, and my interest in reading about economics qualifies me to discuss economics. I do have certain ideological predilections when it comes to foreign policy, but I don’t keep up with it as much as I should, so I won’t waste your time by blogging about topics in where I lack a very sophisticated understanding.

With that being said, I’m really looking forward to this opportunity not just to post my views, but to read your comments. I have utmost confidence in the propriety of my opinions, but I recognize that intelligent people can view the same facts very differently, and therefore reach very different conclusions. These topics may lead to heated discussions, but as long as we do our best to maintain a respectful atmosphere, I believe we will all benefit from an ongoing dialogue.