The Welfare State and the Promise of Protection

by Robert Higgs

Our predecessors dealt with their worries by relying on religious faith. For tangible assistance, they turned to kinfolk, neighbors, friends, coreligionists, and comrades in lodges, mutual-benefit societies, ethnic associations, labor unions, and a vast assortment of other voluntary groups. Those who fell between the cracks of the voluntary societies received assistance from cities and counties, but governmentally supplied assistance was kept meager and its recipients stigmatized.

In the 20th century, especially during the past seventy years, Americans have placed their faith in government — increasingly the federal government. Since Franklin Delano Roosevelt assumed the presidency in 1933, voluntary relief has taken a back seat to government assistance. Eventually, hardly any source of distress remained unattended by a government program. Old age, unemployment, illness, poverty, physical disability, loss of spousal support, childrearing need, workplace injury, consumer misfortune, foolish investment, borrowing blunder, traffic accident, environmental hazard, and loss from flood, fire, or hurricane all became subject to government succor.

. . . .

Our ancestors relied on themselves; we rely on the welfare state. But the “safety net” that governments have stretched beneath us seems more and more to be a spider’s web in which we are entangled and from which we must extricate ourselves if we are to preserve a prosperous and free society.

. . . .

The modern welfare state is often viewed as originating in Imperial Germany in the 1880s, when the Iron Chancellor, Prince Otto von Bismarck, established compulsory accident, sickness, and old-age insurance for workers. Bismarck was no altruist. He intended his social programs to divert workingmen from revolutionary socialism and to purchase their loyalty to the Kaiser’s regime; to a large extent he seems to have achieved his objectives.

. . . .

We can have a free society or a welfare state. We cannot have both. (Read more from mises.org)

Deflation Theory Is Lemon We Have All Been Sold

Aug. 18 (Bloomberg) — For much of the last year, central bankers, industrial leaders and politicians have been warning us about deflation. Falling prices, they tell us, will create another 1930s-style depression. The only answer is to print money furiously.

Now it turns out the theory is a lemon.

Deflation is no threat at all.

It doesn’t prevent an economy from functioning, and it doesn’t stop it from recovering either. The evidence suggests a period of sustained deflation might be what indebted economies need to get them back on the right track.

U.K. Chancellor of the Exchequer Alistair Darling said in a speech earlier this year that the Bank of England must be “prepared to act” to prevent price deflation.

“We are very keen on avoiding deflationary risk,” said European Central Bank President Jean-Claude Trichet in an interview this month. Much the same message has been pumped out around the world by economic leaders.

Nor have they been slow to put their freshly minted money where their mouth is. The Bank of England has embarked on a program of “quantitative easing,” or creating new money, to stave off the threat.

The trouble is, the theory doesn’t stack up.

Deflation, after all, has already arrived.

. . . .

Deflation may be bad for particular interest groups, which happen to be very powerful. It is bad for chief executives. It is easier to keep your profits rising in a mildly inflationary environment. You can just jack up your prices a bit, and you can often cut workers’ wages by stealth by holding wages steady.

The banking industry, which has come to rely on inflation to make highly leveraged loans sustainable, also dislikes deflation. Likewise, it is bad for governments, which use inflation to reduce the value of their debts.

On the other hand, deflation is good news for savers, who get richer just by hanging on to their cash. And it is beneficial for consumers, who get cheaper prices. It is usually good for workers as well, as they can generally hold the value of their wages, even while prices fall.

There are winners and losers, just as there are from most economic developments. The important point is that the people who lose are more powerful than the people who gain. That might explain why we hear about the dangers of deflation, and not about its advantages. It still doesn’t make them right.

There is no threat from deflation. It may even be desirable if it encourages a balance between saving and consumption, and discourages governments and banks from taking on debt. (Read more from bloomberg.com)

Feds failed to clear brush in LA wildfire area

This is interesting to me because it reflects an argument I’m learning that private property is a much better steward of land than government. More on that argument here.

Federal authorities failed to follow through on plans earlier this year to burn away highly flammable brush in a forest on the edge of Los Angeles to avoid the very kind of wildfire now raging there, The Associated Press has learned.

Months before the huge blaze erupted, the U.S. Forest Service obtained permits to burn away the undergrowth and brush on more than 1,700 acres of the Angeles National Forest. But just 193 acres had been cleared by the time the fire broke out, Forest Service resource officer Steve Bear said. (Read more from news.yahoo.com)

Is Ben Bernanke The “Machiavelian Monster” Equivalent Of Nicholas Biddle?


Mises does a great profile of Nicholas Biddle (1786-1844), president of the Second Bank of the United States – the central bank that preceded the Federal Reserve, and provides some useful analogues to not just the current Chairman of the Fed, but to all Fed-friendly crony insitutions that are doing all in the power to perpetuate the hegemony of Wall Street.

Like Ben Bernanke today, Nicholas Biddle cultivated the veneer of a benign civil servant calculating serenely far above the political fray. In reality he, like Bernanke, was up to his neck in the backroom game of power.

When Biddle’s bureaucratic cradle was rocked, he quickly morphed into a Machiavellian monster. Keep that in mind as Ben Bernanke gets progressively cornered by Ron Paul and the bourgeoning anti-Fed movement. (Already the Fed is less popular than the IRS.)

When you hear about the Federal Reserve Transparency Act getting stalled in committee, think of Daniel Webster, bought and paid for with central bank money. When you read Fed apologia in the New York Times, The Economist, and the Wall Street Journal denouncing the “reckless populism” of the Act, think of the newspaper editors in Biddle’s pocket.

The full must read article can be found here. (From zerohedge.com)

Lawless Surveillance, Warrantless Rationales (a critique of Obama continuation of Bush policies)

Over at The American Constitution Society for Law and Policy website, Electronic Frontier Foundation Legal Director Cindy Cohn writes about the so-called Presidential Surveillance Program, the “still-shadowy set of programs that spy on Americans in America without any probable cause or warrant.” The EFF, as regular BB readers know, has fought this program for several years now — in 2006, it filed suit against AT&T for providing the NSA with direct access to its database of communications records. Snip from Cohn’s essay:

While the details are unknown, credible evidence indicates that billions of everyday communications of ordinary Americans are swept up by government computers and run through a process that includes both data-mining and review of content, to try to figure out whether any of us were involved in illegal or terrorist-related activity. That means that even the most personal and private of our electronic communications – between doctors and patients, between husbands and wives, or between children and parents – are subject to review by computer algorithms programmed by government bureaucrats or by the bureaucrats themselves. (Read more from boingboing.net)

See Also:

Why you should NEVER, EVER, under any circumstances speak with the police

  • The federal government has lost count of the number of federal crimes. It is a crime to be in possession of a certain type of lobster.
  • Speaking to the police cannot help you. What you say can, famously, “be used against you,” but IT CANNOT BE USED TO HELP YOU. If something you tell police is demonstrative of your innocence, it is legally hearsay.
  • No rush to plead guilty.
  • 25% of convicts exonerated by DNA evidence had made incriminating statements to police.
  • Even perfectly innocent people can make small missteps when under interrogation.
  • Even if you only tell truthful and innocent information, it can still be used against you.
  • Ohio v. Reiner. “Truthful responses of an innocent witness . . . may provide the government with incriminating evidence.”
  • Police might misremember something you said during a several-hour interrogation.

CIA Releases Its Instructions For Breaking a Detainee’s Will

By Joby Warrick, Peter Finn and Julie Tate
Washington Post Staff Writers

As the session begins, the detainee stands naked, except for a hood covering his head. Guards shackle his arms and legs, then slip a small collar around his neck. The collar will be used later; according to CIA guidelines for interrogations, it will serve as a handle for slamming the detainee’s head against a wall.

After removing the hood, the interrogator opens with a slap across the face — to get the detainee’s attention — followed by other slaps, the guidelines state. Next comes the head-slamming, or “walling,” which can be tried once “to make a point,” or repeated again and again.

“Twenty or thirty times consecutively” is permissible, the guidelines say, “if the interrogator requires a more significant response to a question.” And if that fails, there are far harsher techniques to be tried.

Five years after the CIA’s secret detention program came to light, much is known about the spy agency’s decision to use harsh techniques, including waterboarding, to pry information from alleged al-Qaeda leaders. Now, with the release late Monday of guidelines for interrogating high-value detainees, the agency has provided — in its own words — the first detailed description of the step-by-step procedures used to systematically crush a detainee’s will to resist by eliciting stress, exhaustion and fear.

The guidelines, along with thousands of pages from other newly released documents, also show how the CIA gradually imposed limits on the program and eliminated some of the most controversial practices after the agency’s medical advisers protested.

Still, by Dec. 30, 2004, the date of the CIA memo that outlines the guidelines to the Justice Department’s Office of Legal Counsel, agency interrogators had grown adept at using sleep deprivation, stress positions and sometimes multiple methods to create a “state of learned helplessness and dependence.”

“Certain interrogation techniques place the detainee in more physical and psychological stress and, therefore, are considered more effective tools,” according to the memo, released under a Freedom of Information Act lawsuit filed by Amnesty International USA and the American Civil Liberties Union.

The CIA on Tuesday declined to comment on the memo, which was written by an agency lawyer whose name was redacted from the document. But agency spokesman George Little noted that the interrogation program operated under guidelines approved by top legal officials of the Bush administration’s Justice Department. (Read more from informationclearinghouse.info)

Lew Rockwell — What do the Tea Parties stand for?

***

I will avoid a crowd estimate but a friend of mine who was there today described it as enormous.

Here’s my take on the tea party movement so far. It’s been a successful coalition of conservatives and libertarians so far united by opposition to Obama and all his works. The sentiment in the nation right now is clearly anti-Obama.

The key point is, what is the tea party movement for? On that, there is no agreement and probably won’t be. If conservatives will repudiate eight years of Bushian big government, the coalition might persist. If not, the libertarians should very quickly go their own way lest they unwittingly lend their support to a restoration. (Read more from lewrockwell.com)

1,000 cameras ‘solve one crime’

Only one crime was solved by each 1,000 CCTV cameras in London last year, a report into the city’s surveillance network has claimed.

The internal police report found the million-plus cameras in London rarely help catch criminals.

In one month CCTV helped capture just eight out of 269 suspected robbers.

David Davis MP, the former shadow home secretary, said: “It should provoke a long overdue rethink on where the crime prevention budget is being spent.”

He added: “CCTV leads to massive expense and minimum effectiveness.

“It creates a huge intrusion on privacy, yet provides little or no improvement in security.” (Read more from news.bbc.co.uk)

Government Reaction: Obviously, we need more cameras.

ACLU Lobbyist Larry Frankel Found Dead in Washington

If Larry Frankel, past executive director and longtime lobbyist for the American Civil Liberties Union of Pennsylvania, were to have played a character in a biblical pageant he would have been the burning bush, Andrew Chirls, his former longtime partner once told him. . . . .

On Friday, Frankel, who took a position last year as state legislative counsel for the ACLU’s Washington office, was found dead in the stream that gives Washington’s Rock Creek Park its name.

Police released little about the circumstances of Frankel’s death and as of yesterday had declined to officially identify the man found floating in water shortly before noon on Friday in the federally administered large park that cuts through Northwest Washington. (Read more from philly.com)

ABCNNBBCBS: You will mourn who we tell you to mourn, and forget who we tell you to forget!

Filipinos want US out of Mindanao

Progressive forces in the Philippines have urged Manila to scrap a military deal with the US after former officials testified that US soldiers have been fighting in Mindanao in violation of the country’s constitution.

Under a Visiting Forces Agreement (VFA), hundreds of elite US troops have been deployed in half a dozen locations in the southern Philippines since 2002, ostensibly to train and advise Filipino troops fighting Islamist militants and the Maoist New People’s Army.

On Thursday retired Philippine navy lieutenant Nancy Gadian testified at a congressional hearing that US troops based on Mindanao were embedded with Filipino units in combat situations.

The Philippine constitution bars foreign troops from fighting in the country, which was a US colony until 1946. (Read more from morningstaronline.co.uk)

We cannot afford all this war, neither morally nor economically nor politically.