Free Markets, Free People

Daily Archives: June 11, 2009


Miranda and War

An interesting discussion broke out in the comment section of the Miranda post, which I’m hoping will continue. The primary issue (and I’m simplifying here) centers around just how detainees caught on a battlefield should be handled if they don’t fit the established parameters of soldiers under the Geneva Conventions. Although there appears to be agreement that reading detainees Miranda rights is a step (or three) too far, there is also wide agreement that we should be skeptical about allowing our government so much latitude as to hold anyone indefinitely. I think closing the gap on those parameters is the challenge to be met, but I don’t think it is possible to do so without understanding how war differs from law enforcement.

Clausewitz defined war as “continuation of policy with other means.” The crux of his definition is that “war” is simply a tactic used to further political goals. War is not waged as end in itself, but as a means towards other ends which, for whatever reason, could not be accomplished through non-violent tactics. There are always exceptions, of course, but certainly a rational state will not expend blood and treasure when the same goals can be accomplished without. Even an irrational state, with irrational goals, will not waste such resources if it understands that it does not have to.

The other tools in the box for continuing policy include diplomacy and capitulation. Once those are deemed exhausted or unacceptable (as the case may be) then the tool of war is likely to appear. In other words, if agreement cannot be reached between erstwhile enemies, and surrender by one side or the other is not acceptable, then actual battle will be necessary to decide whose policy will be continued. At that point all manner of understanding between the parties is dead and only victory or a credible threat thereof will allow the discarded tools to once again be used in the construction of policy.

In the absence of war, there is general agreement as to how competing parties will conduct themselves in the pursuit of their policies. Citizens may vote, senators may argue, special interests may agitate, and whole nations may barter. The agreements may deal with how citizens deal with one another, how governments deal with their citizens, or how violations of the agreements are handled (i.e. law enforcement). In the modern world those general agreements are reduced to treaties, constitutions, rules, regulations and the like, all of which may be considered law. The policies themselves may also be enacted into law, but without some understanding as to the mechanisms for peacefully deciding which policy will be followed, then war is the only tool available. A rule of law, which is only useful where there is broad agreement on it, obviates the need to use war to advance policy. All of the foregoing are the hallmarks of a civil society that depends on pursuing policies through peaceful tactics. To turn Clauswitz’s definition around, law is the continuation of war by other means.

To be sure, transgressors of law will be dealt with at times in violent ways, but there is at least a tacit agreement to the law’s authority to do so where the violator is operating from within the society and generally partaking of its benefits. If enough transgressors get together then the agreements have broken down, and civil war or revolution may occur. Therefore, war can be understood as the tactic that is used when the law has ceased to be of use. More simply, war is the absence of law.

Given the above, which is nothing more than a condensed version of my personal views on the subject, it is difficult for me to understand how legal concepts can be introduced into war. Opposing factions may agree with one another to fight under particular rules of engagement, or to treat enemy prisoners a certain way, but when those rules are broken there is no legitimate authority to enforce them. The Geneva Conventions represent a more elaborate attempt to impose limits on warfare, but even those were never intended to apply to non-signatories except in very limited circumstances (pre-Hamdan anyway). More importantly, it seems obviously ludicrous to apply laws outside such limited agreement to any of the parties involved in battle, because there would be no battle if such laws were being adhered to in the first place.

So while any number of parties may agree amongst themselves to fight under self-imposed rules, that does not give any of them authority to impose those rules on others. Furthermore, except where explicitly agreed to otherwise, such rules would not govern war between a party to such an agreement and a non-party. To look at it another way, if Mike Tyson and Evander Holyfield agree to fight under certain sanctioned rules, that does not mean that either fighter must adhere to the same rules if attacked by a third party on the way home from the match.

Accordingly, in a world of asymmetrical warfare, the basic principle that “war is the absence of law” seems to apply. In this context, the very idea of approaching war with terrorists in foreign countries under a rubric of law intended to govern domestic life appears absurdly out of place. Treating detainees captured on the battlefield to the luxury of legal niceties intended to protect the very citizens those terrorists seek to harm defies all logic. And pretending that reading any of them Miranda rights will do anything more than hamper our ability to defeat these cretins is an exercise in serious delusion. In short, law is a manifestation of the agreements underlying a peaceful community, and war is the means of protecting those agreements from those who seek to subvert them.

When considering just where the line should be drawn then, between reading enemies their “rights” and allowing the government to detain them indefinitely, I think it’s useful to understand that we are not really talking about a “rule of law.” Instead, we are talking about how best to utilize the tactic of war in furthering our policy of not allowing crazed radicals to murder our citizens. While I find great merit in placing the government (i.e. our instrument of war) on a firm leash, I don’t think it is at all useful to conflate the means by which we protect ourselves from an overbearing government with the means by which the government protects us from enemies bent on our destruction.


Embracing Paygo

Republicans and some allies are criticizing President Obama’s proposal for “pay as you go” rules that only cover new and expanded entitlement spending. They rightly point out that legislators can get around these new rules with budgetary tricks like relabeling spending so that “PAYGO” rules don’t apply.

But some on the Right have also warned that paygo will just lead Democrats to pass higher taxes. I’m not convinced that that’s a bad thing.

Don’t get me wrong: I don’t like taxes. But deficit spending is taxation — deferred taxation, with interest. If the government is going to spend a bunch of our wealth on things other than emergencies, enlightened fiscal conservatives should want the American people to see the price tag, the sooner the better.

Otherwise we’re going to continue this business of borrowing from our children to pay for our reckless spending today – that’s what a lot of those tea partiers were protesting against, wasn’t it?

So fiscal conservatives should propose even more comprehensive and stringent paygo legislation than the Democrats have. Force the Democrats to put it all on the table – lock in tax hikes or spending cuts, now.

We’re going to have to do pay the piper at some point, so how does it help to wait until a real fiscal emergency is upon us?

The longer we wait to pay for it through direct taxation, the more time we give the spenders to come up with clever ways to conceal the cost – whether through inflation, or carefully targeted taxes designed to create as little political backlash as possible. Paygo creates forced errors.

If the Democrats decide to cover the gap with tax increases, that’s an issue for 2010 and beyond. Every new big spending plan, like the Obama health care plan, comes with a surefire tax increase in the near future. And as Californians recently showed the country, even Lefty voters don’t like the prospect of actually paying for all those neat programs for which they voted.

Sure, it’s self-serving for Republicans who engaged in no small amount of deficit spending themselves to suddenly find religion on the need for a balanced budget.

But there are good reasons to suspect that this level of deficit spending (and the necessary money-printing that has followed) is going to hit us in all kinds of unpleasant ways. If we don’t commit now to eventually paying off these debts, the problems will get even worse.

So let’s do something about it – or turn the heat up on the Democrats until they do something about it. Let’s give them all the paygo and fiscal discipline they can handle, and then some.


Was Von Brunn An Equal Opportunity Hater?

It appears that could be the case. Kathy Shaidle:

The anti-semitism of von Brunn is the first thing one notices when visiting these bizarre websites. However, like those of most “white supremacists”, many of von Brunn’s political views track “Left” rather than “Right.” Clearly, a re-evaluation of these obsolete definitions is long overdue.

For example, he unleashed his hatred of both Presidents Bush and other “neo-conservatives” in online essays. As even some “progressives” such as the influential Adbusters magazine publicly admit, “neoconservative” is often used as a derogatory code word for “Jews”. As well, even a cursory glance at “white supremacist” writings reveals a hatred of, say, big corporations that is virtually indistinguishable from that of anti-globalization activists.

Shaidle’s point is valid (as is her point about the “obsolete definitons”). This guy wasn’t a product of “right-wing” or “left-wing” views, this guy was a hater of all things that even hinted of Jews, right or left. He was an anti-semite to the core and, frankly, a nut.

Trying to score political points with this tragedy seems badly strained at best and truly an example of how low our political discourse has fallen. Instead of talking about the tragedy of the loss of the security guard to a lunatic, the first thing some want to do is play politics, point fingers and stereotype. That says more about them (you know, the tolerant and non-judgmental types?) than those to whom they’re pointing.

~McQ


This Blog Post Saved At Least 10 Jobs Today

Seriously.

At least that’s what the macro model I built says.  It has some very sophisticated algorithms.

According to the model, the associated bandwidth cost for this post was enough to keep the blog hosting gang going and because of that, they kept making payments on all the computer equipment, power and rent/lease obligations they have associated with their hosting site, which in turn kept a computer retailer/power company/real estate firm from laying off folks while also paying those down the line from them today and having the same effect.

Seriously.

Go ahead – prove me wrong.

~McQ


Sometimes A Picture …

Is definitely worth a thousand words.

Or a chart.

Arthur Laffer is not amused:

Here we stand more than a year into a grave economic crisis with a projected budget deficit of 13% of GDP. That’s more than twice the size of the next largest deficit since World War II. And this projected deficit is the culmination of a year when the federal government, at taxpayers’ expense, acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries.

With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs — such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid — are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.

But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.

And what have those “panic-driven monetary policies” brought us? Well, first the picture:ed-aj638a_laffe_ns_20090609175213

The chart is certainly no laffer.

Remember, we’re being told by “experts” (*cough* Krugman *cough*) that we’ll be able to handle this with no problem, really, if we just manage it properly. A tweak here, a tweak there and bingo – no inflation.

Hmmm … let’s get a little context here, shall we?

The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10 (see chart nearby). It is so far outside the realm of our prior experiential base that historical comparisons are rendered difficult if not meaningless. The currency-in-circulation component of the monetary base — which prior to the expansion had comprised 95% of the monetary base — has risen by a little less than 10%, while bank reserves have increased almost 20-fold. Now the currency-in-circulation component of the monetary base is a smidgen less than 50% of the monetary base.

So that means that what? Well Laffer goes into a good explanation of bank reserves and how they function, etc. etc. – bottom line, banks are going to be loaning a bunch of money, thereby injecting liquidity into the marketplace.

But.

With the present size of the monetary base, and …

With an increased trust in the overall banking system, the panic demand for money has begun to and should continue to recede. The dramatic drop in output and employment in the U.S. economy will also reduce the demand for money. Reduced demand for money combined with rapid growth in money is a surefire recipe for inflation and higher interest rates. The higher interest rates themselves will also further reduce the demand for money, thereby exacerbating inflationary pressures. It’s a catch-22.

And what does that mean could happen? Well again, we’re in uncharted territory, but the last time we had anything even similar, eh, not so good:

It’s difficult to estimate the magnitude of the inflationary and interest-rate consequences of the Fed’s actions because, frankly, we haven’t ever seen anything like this in the U.S. To date what’s happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits. Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges. It wasn’t a pretty picture.

Yeah. I remember it well. And here we are again – on steriods. So now what?

Per Laffer, the Fed must contract the money supply back to where it was plus a little increase for economic expansion. And if it can’t do that, it should increase the reserve requirement on banks to soak up the excess.

But Laffer doubts that can or will be done:

Alas, I doubt very much that the Fed will do what is necessary to guard against future inflation and higher interest rates. If the Fed were to reduce the monetary base by $1 trillion, it would need to sell a net $1 trillion in bonds. This would put the Fed in direct competition with Treasury’s planned issuance of about $2 trillion worth of bonds over the coming 12 months. Failed auctions would become the norm and bond prices would tumble, reflecting a massive oversupply of government bonds.

In addition, a rapid contraction of the monetary base as I propose would cause a contraction in bank lending, or at best limited expansion. This is exactly what happened in 2000 and 2001 when the Fed contracted the monetary base the last time. The economy quickly dipped into recession. While the short-term pain of a deepened recession is quite sharp, the long-term consequences of double-digit inflation are devastating. For Fed Chairman Ben Bernanke it’s a Hobson’s choice. For me the issue is how to protect assets for my grandchildren.

Nice.

Yes friends – we’re in the best of hands. I’m just wondering how the present administration is going to attempt the blame shifting when the inevitable happens.

~McQ