Monday, March 26, 2012

Reflections on the Media Hysteria over the Trayvon Martin Case

Trayvon Martin was a 6'3" 17 year old
First off I hate writing about “racial” stories where someone black is involved. If you are not in lockstep with the New York City media elite you are labeled a racist. One bad word about black people and you are a racist, 100% proof positive, when you disagree. This has been going on since I was a child in the 1960s and it seems to have gotten worse as time passes. The media never sensationalized black on white crime, only white on black, or in this case Hispanic on black crime. Black on white crime is censored, covered up, and concealed whenever possible.
In the United States people are instantly ostracize by the media, government, universities, military, anything connected with government at the federal, state, or local level to utter one word of truth, like there might be differences in races, differences in crime statistics between races, differences in IQs of races. We live in the equivalent of fascist Germany or communist USSR in America when it comes to truthfully talking about race.
Since I am at the end of my life cycle I just do not care that much anymore. I am not in the “hip” crowd, never was, and I do not have a $150,000 government job to lose. I will try to be “sensitive,” barf, as I can. I understand people are individuals, not everyone is a creep, murder, rapist, druggie, just because of their skin color or propensity to wear “gang” clothing.
Briefly what happened in the Trayvon Martin case:

Hispanic George Zimmerman allegedly used lethal force to successfully defend himself from a potentially deadly encounter

1. When police officers arrived, George Zimmerman had a bloody nose and was bleeding from a wound on the back on his head.
2. The eyewitness who called 911 said Zimmerman who screamed for help.
3. The eyewitness also reports that Zimmerman was on the ground and Martin was on top of him beating on him.
This information was made public by a local Orlando television station on February 27th.
Of course no one but Zimmerman knows exactly what happened but speculation is that Zimmerman was following Martin and Martin did not like it, confronted Zimmerman, and started kicking his ass. Zimmerman pulled a gun and killed Martin.
The story flashed me back to Pontiac, Michigan in the early to mid 70s. Pontiac was suffering race riots with court ordered bussing in 1971, the GM Pontiac plant was in decline, and white flight was in its infancy.

Judge Damon A. Keith thought he had the answers to race problems in 1969 and ordered desegregation in 1971, which resulted in white flight by 1975. Photo 1973.

It was not uncommon for young men to form into groups, “gangs,” and roam the streets looking to commit petty theft, fights, and girls. I was no different and roamed the streets all summer long looking for adventure and excitement. I hung around two other boys most of the time and we did juvenile petty crime, stealing change out of cars, gas, vandalism, bikes, alcohol, and other substances. When it came to females it must have been a different time because we invariably struck out time after time.
Two of us were white and one Hispanic. I am here to testify that you do not have to be “walking while black” to be suspicious. We were confronted several times, followed, reported, and chased. Most people were non-confrontational but occasionally they were not. Most of the time we simply walked away and that was the end of the confrontation. But sometimes the sparks flew.
One night the three of us were walking around looking for change in cars way past bedtime and three girls parked directly in front of us. Too good to be true? You bet ya.
While we were talking to them their three boyfriends, all about three years older than us, snuck up on us from behind. I ran, got away, one of my friends could not run and stood his ground with heavy duty 4’ industrial chain and his pursuer wisely did not attack.
The other friend was caught from behind, and had to fight it out in a vicious battle with a larger opponent. He was able to poke his pursuer in the rips with a piece of rebar he always carried and got away. I doubled backed and went to assist my friends who were buzzing with excitement. Not much damage and plenty of excitement. It made being alive SOOOO exciting.

Science class, Pontiac, Michigan, 1973

Another time I was in the EXACT situation Martin was in. It was in the morning, daylight, and a older man probably in his late 20s was following me. I was on my way home after a night of ghetto behavior. I had nothing on me, simply walking home. And I was white. It made no difference; the man hurriedly ran towards me and yelled at me to stop. There we were no more than 20 feet apart.
In this situation Martin choose to attack his pursuer. Martin is 6’3” and no kid. I was 6’ and about the same weight as Martin. I was not scared of the rotund man physically. An out of shape late 20s or 30s man is no match for teenager use to confrontation and physical battle. It would be an ass kicking if I choose to go that rout. Out of shape fat men can last a minute, at best in a physical fight. I was in shape, excellent shape.

So what did I do?
I took one looked at the man saw he was a blubbery out of shape moron, and ran through the closest back yard available.
Why the back yards and not the street?
The man had a car. Why would I give him the advantage of getting in his car and following me? For Gods sake was I that stupid?
By going into back yards I was simply using my superior conditioning to;
1. Get out of visual sight as fast as possible.
2. Move a few streets over and eventually out of the neighborhood. This tactic works well with cops also, back in the days when helicopters were not as prevalent as they are today. I feel bad for kids today.
But what about dogs and fences?
The fences were no problem, 4’, 6’, and even 10’ fences could be easily climbed in about two seconds, maybe five in the case of a 10’ fence. They were not an obstacle for me, but they were an obstacle for my pursuer.
Dogs would bark and you simply put distance as fast as you could. No big problem the overwhelmingly majority of time.
Why avoid confrontation?
1. Usually I was guilty as charged and the guy was simply doing his job.
2. What good would come out of a fight with a fat assed 20 something?
Really, seriously, what good will come out of it?
Cops, jail, women screaming, dogs barking, death?
I had much more desirable things to do than fight some fat cop wanna bee. Sleep, eat, marijuana, you name it, many other activities more enjoyable than getting medieval with a fat ass.
I think Martin saw his superior physical advantage combined with his rage over the “injustice” and decided to kick Zimmerman’s ass. That simple. Unfortunately for Martin Zimmerman had a gun and he used it. When you are on the streets there is no mercy and there are no rules. Martin was 17; I was 14 when my incident happened.

Which brings up the media coverage, why?
The real reason the media is covering this “outrage” is a man defended himself with a concealed weapon successfully. Initially he was identified as white and white men are not allowed to defend themselves in America. When Bernhard Goetz successfully defended himself in NYC against four thugs with a gun he was charged with attempted murder, assault, reckless endangerment, and several firearms offenses. Fortunately he was convicted only on the illegal firearms possession and served eight months in prison.
Zimmerman is the Bernhard Goetz of 2012. He reported to the Sanford Police that he successfully defended himself from a physical attack from Martin, and the evidence backed him up. To be fair to both Zimmerman and the family of Martin the case should have been presented to a grand jury, if for no other reason than to clear Zimmerman. There was a death; this was not a local fight with minor injuries. If the authorities mess up on anything it was they not understanding the difference between a local brawl and a death case.
What could have happened if Zimmerman did not have the gun?
He could be the guy with the funeral and there would be no national media coverage. Everyday blacks commit hate crimes against whites. While blacks make up 13% of the population they commit 85% of the crimes between blacks and whites. Crime statistics have been around for a century. This is nothing new.
Here are a few horrific black on white hate crimes that receive no national media coverage:
O’Fallon teen attacked near her home
Update: Judge denies bail for man arrested in Ashleigh Jacobs death
Boy, 14, charged in rape of woman, 90
KC police investigate assault said to be racially motivated
A mother killed in cold blood, a 90 year old raped, beatings, stabbings, and no national media coverage and outrage. A man in Sanford, Florida allegedly successfully defends himself against an alleged physical attack and it’s a national story.
Media bias?
Yes and we are sick of it. The propaganda days are over. The one world government is not happening. If anything happens it will be politicians who lied to the people about the debt ending up like Mussolini, reporters who lied as a daily practice being unemployed, and bankers who ripped of the people reliving the 1930s and 40s.
People can take crap only so long…and then they explode.

The Seven Rules of Bureaucracy

University of South Florida Professor Loyd S. Pettegrew
The following appeared in Ludwig von Mises on 3-23-2012.
One of Wolfman Jack’s favorite tongue-in-cheek commercials, delivered in his raspy voice, went like this: “You say ya kids ain’t got no clothes, ya ain’t got no food in the frigerator — THEN BUY YOURSELF A COLOR TV BABY!”
This facetious admonition, spending way beyond ones means, is exactly how government at the federal, state, and local levels have been behaving over the past 50 years. Even worse, government at all levels has been enabling Americans to do the same.
Gone are the days when both the people and their government lived within their means. With 44 percent of households receiving some form of federal subsidy and the majority of Americans not paying any taxes, our country is now more the land of entitlements than the land of opportunity (Boskin, 2011; Heritage Foundation Report, 2011).

University of South Florida Professor Carol A. Vance

With the current challenge of reducing the run-away government spending and an entitlement mentality by citizens, it is quite possible to trim $4 trillion dollars by reining in just our federal bureaucracy. Thomas Sowell suggested that to do so, we must further examine and challenge the giant economic leviathan of our government bureaucracy. The Office of Management and Budget revealed that the executive branch of our federal government grew by 23 percent since President Obama took office. The Wall Street Journal (2012) opined that the president has “presided over the largest expansion of government since LBJ — health care, financial regulation,” and in so doing has spent 24 percent of our nation’s GDP.
Unfortunately, both taxpayers and the media get social amnesia, seldom holding bureaucrats’ feet to the fire when programs they created fail or simply don’t do what they were designed to do. Sowell (1995, p. 257) reveals part of this problem in The Vision of the Anointed:
When the government creates some new program, nothing is easier than to show whatever benefits that program produces.… But it is virtually impossible to trace the taxes that paid for the program back to their sources and to show the alternative uses of that same money that could have been far more beneficial.
Even worse, bureaucrats and their supporters are loath to admit when their programs have harmful consequences and are inclined to double-down on a failing policy once it has proven its worthlessness. The classic example is Representative Barney Frank who as recently as 2009 announced that he was planning to introduce legislation that would increase the FHA loan ceiling by an additional $100,000 to $839,750 (New York Times, 2009).

In order to understand the foundation of America’s morass, we must examine bureaucracy. At the root of this growing evil is the very nature of bureaucracy, especially political bureaucracy. French economist Frédéric Bastiat offered an early warning in 1854 that laws, institutions, and acts — the stuff of political bureaucracy — produce economic effects that can be seen immediately, but that other, unforeseen effects happen much later. He claimed that bad economists look only at the immediate, seeable effects and ignore effects that come later, while good economists are able to look at the immediate effects and foresee effects, both good and bad, that come later.
Both the seen and the unseen have become a necessary condition of modern bureaucracy. Max Weber, considered the father of modern bureaucracy largely in response to the Industrial Revolution, is credited with formalizing the elements of bureaucracy as a fundamental principle of organization. He was also painfully aware of the arbitrariness of bureaucratic decision processes. In a speech he gave to the German Association for Social Policy in 1909, he trumped his abiding commitment to bureaucracy with a decided uneasiness of its adoption by government and universities (Mayer, 1944).
That the world should know not me but these: it is in such an evolution that we are already caught up, and the great question is therefore not how we can promote and hasten it, but what we can oppose to this machinery in order to keep a portion of mankind free from the parceling-out of the soul, from this supreme mastery of the bureaucratic way of life.

Free-market economists have challenged government bureaucracies since the 1920s. Ludwig von Mises, in the preface to his 1944 edition of Bureaucracy, asked if Americans should give away their individual freedom and private initiative for the guardianship of the bureaucratic state. He warned,
America is an old democracy and the talk about the dangers of bureaucracy is a new phenomenon in this country. Only in recent years have people become aware of the menace of bureaucracy, and they consider bureaucracy not an instrument of democratic government but, on the contrary, the worst enemy of freedom and democracy. (Mises, 1944, p. 44)
Harry Teasley warns us that US history is full of examples of government bureaucracy arbitrarily passing out benefits and, in so doing, overriding and sometimes punishing the free market. The perfect example of this is the recent housing bubble, the grounds for which started with the Fair Housing Act and government underwriting of Fannie Mae and Freddie Mac. Yet amid the chaos of the ensuing financial meltdown, Congress decided to punish banks and further regulate them to make risky mortgage loans in the name of social justice (see Sowell’s The Housing Boom and Bust, 2009). Teasley concludes that the free market has historically done a better job of distributing benefits justly and adjusting to any unintended consequences efficiently and effectively.

Department of the Navy, 1918

One of the truisms of bureaucracies, be they government or private sector, is that if left to their own devices, they will grow bigger, bolder, and less manageable over time. Teasley has seen this happen over and over again and put his considerable intellect to how its apparatus works. John Baden has offered us one of the most promising, yet ignored, solutions to the bureaucratic leviathan. Baden (1993) puts the problem at the feet of politicians concentrating benefits and dispersing costs and believes “predatory bureaucracies” would allow bureaucracies to feed on themselves with the most effective and efficient bureaucracy taking money and responsibility away from those that are less efficient and effective. While a provocative theory, the problem lies in the very rules that underpin bureaucracies. Despite the concept being nearly 20 years old, it has not been attempted, let alone enacted in any meaningful or widespread way.
Harry Teasley has spent his life confronting bureaucracy. This has given him superb insight into the dynamics that give rise and cover to bureaucracies. He has also fought governmental bureaucracies successfully. We argue that knowing these rules can help Americans set a course away from statism and political service as a profession and career, and lead our country back to fiscal solvency and exceptionalism through dismantling bureaucracy.
Rules of Bureaucracy
Rule #1: Maintain the problem at all costs! The problem is the basis of power, perks, privileges, and security.
Teasley correctly points out that problems, not solutions, are the basis of bureaucratic power, perks, privilege, and political security. In politics, the tougher the problem appears, the more resources must be devoted to it. Political careers have been made by bureaucrats promising to fix problems. Bureaucrats feign trying to fix problems while usually making them worse. This is because maintaining the problem creates constituent dependency and allows the bureaucrat to show tangible evidence that he or she is working hard for constituents and their cause. It also allows bureaucrats to spend lavishly and, seemingly endlessly, on new government programs and employees. Examining the three “wars against” created by politicians in the last 50 years provides ample illustration of rule #1.

The biggest drop in the poverty rate was BEFORE the "War on Poverty" was declared. From a poverty rate of 15% when the war on poverty was declared and billions latter to 15.1% today. Another war lost to government stupidity.

The War on Poverty
In 1964 President Lyndon Johnson declared the war on poverty. This led to an explosion of poverty programs including the Economic Opportunity Act, the Office of Economic Opportunity (OEO), the Job Corps, Volunteers in Service to America (VISTA), Upward Bound, Head Start, Legal Services, the Neighborhood Youth Corps, the Community Action Program (CAP), the College Work Study Program (CWSP), and recently the new White House Office of Urban Affairs. Texas A&M economics professor Edgar K. Browning estimates that 80 targeted federal, state, and local government programs comprise the legions in this war. US Census figures show that in 1964, the year this “war” began, the poverty rate was 15 percent and in 2010 it was 15.1 percent. Any fifth-grader can see that there hasn’t been much progress on the poverty front, especially given the trillions of dollars spent since then. Not surprisingly, once started, most of these programs have never gone away and demand an ever-increasing amount of taxpayer dollars.
The War on Drugs

Richard Nixon and Elvis Presley declare war on drugs

President Richard Nixon declared the war on drugs in 1971 to support the Comprehensive Drug Abuse Prevention and Control Act of 1970. With this war came the creation of the Drug Enforcement Administration (DEA), the Office of National Drug Control Policy (ONDCP) and its head bureaucrat the Drug Czar, the National Youth Anti-Drug Media Campaign, and nearly three decades later, the Treasury and General Government Appropriations Act of 1998 and the Drug Free Media Campaign Act the same year. In 1982 Vice President George H. Bush began pushing for the involvement of the US military and CIA in drug interdiction. As recently as 2009 the National Southwest Border Counternarcotics Strategy was announced by Homeland Security Chief Janet Napolitano. This was a coordination of counterterrorism and drug interdiction forces. This war has also spawned drug-enforcement divisions in most police departments across the United States. The apparatus grows larger while the problem grows worse.
Like many wars the nation fights, the war on drugs has been long term, costly, and ineffective. Articles in the Economist (April 16, 2011) and the Wall Street Journal (January 14, 2012) conclude that the US war on drugs has thrown all of Latin America into the cartel drug-production and smuggling enterprise, increasing drug production and smuggling into this country and elsewhere around the world. Despite the expanding price tag, the National Institute for Drug Abuse concluded, “The decline in illicit drug use by the Nation’s adolescents since the mid to late-1990s has leveled off.” The unintended consequences of the war on drugs have been far worse. Through US drug-interdiction efforts, the cost of naturally growing weeds (marijuana and opium poppies for example) has risen spectacularly, creating market wealth for the producers and smugglers that has attracted international terrorists and compromised the US war on terror.
On the home front, America today is no less ravaged by drug trafficking and drug use despite more than a trillion dollars our government has spent waging this war. The National Institute of Drug Abuse reports that among 8th-, 10th-, and 12th-graders, lifetime, past-year, and current illicit drug use remained unchanged during the last decade.
The results of the 2001 National Household Survey on Drug Abuse and Addiction revealed that, while millions of Americans habitually smoke pot, drink alcohol, snort cocaine and swallow prescription drugs, most who need treatment fail to recognize they have a drug abuse problem. The figure of those “in denial” of their drug abuse is estimated at more than 4.6 million — a significantly higher number of individuals in need of professional help than had been previously thought. (US No Drugs, 2009)
The growing cost of fighting the US war on drugs amid mounting evidence of its ineffectiveness can be seen by tracking the recent annual budget increases. Between 2008 and 2012, the president’s war-on-drugs budget increased by $1.7 billion (Office of National Drug Policy, 2012). For this extraordinary increase in local, state and federal bureaucracy and the attendant king’s ransom of taxpayer dollars that feed it, Americans should expect a reasonable return on their tax dollar. But yet another federal drug agency says otherwise:
In 2007, 114 million Americans — 46 percent of the US population over the age of 12 — reported having used illegal drugs at least once in their lifetime and about one-third of these individuals (36 million Americans) reported having used illegal drugs during the previous year, according to government estimates. (Substance Abuse and Mental Health Administration, 2008)
Rule #2: Use crisis and perceived crisis to increase your power and control.

The 2001 World Trade Center attack is the quintessential, but only the latest, in a series of crises that have been used to increase government power and control. Numerous terrorist attacks had been executed on US sovereign interests before September 11, 2001. These include but are not limited to the 2000 USS Cole attack, the 1998 US embassy bombing in Kenya, the 1996 Kobar Towers bombing, housing the 4404th wing of the US Air Force in Saudi Arabia, the 1995 Oklahoma City bombing of a federal building, the 1993 World Trade Center bombing in New York City, and Pan Am flight 103 over Lockerbie, Scotland.
On the heels of the first World Trade Center bombing, the Antiterrorism and Effective Death Penalty Act of 1996, Pub. L. No. 104–132, 110 Stat. 1214 (a.k.a. AEDPA) was passed by a substantial majority of Congress and signed into law by President Bill Clinton. On October 26, 2001, having only minor opposition by Congress, the Patriot Act was quickly signed into law by President George W. Bush and abridges US citizens’ constitutional rights with little judicial review if you are suspected of terrorist activities or even of providing “material support” to terrorist groups. Muslims point to the fact that the Patriot Act diminishes one’s Fourth Amendment rights against unlawful search and seizure and also directly abridges amendments 5, 6, and 8 (Ghazali, 2004).
The Department of Homeland Security is a new and expensive federal bureaucracy that increases the government’s right to search airline passengers and their luggage, physically pat them down and confiscate items they believe may be hazardous, whether or not they have any links to terrorism. Travelers have no right to protest or to have a higher level of authority review a TSA decision. As a personal note, we were once traveling from my home in Tampa, Florida, to California. A TSA agent spotted the insulin pump I was wearing on my belt and called for a complete screening including swabbing my pump and my hands for traces of explosive, hand searched everything in my carryon bag, and frisked me. When he was finished, another TSA agent quietly apologized and told me that no other agent has authority to stop a TSA agent if he or she wants to execute a detailed and time-consuming search of a passenger. Even with the influence from a new president who criticized the Patriot Act during his election campaign, the law of the land remains securely in place, as does the prison in Guantanamo Bay.
Rule 2a. Force 11th-hour decisions, threaten the loss of options and opportunities, and limit the opposition’s opportunity to review and critique.
In the first year of the Obama presidency, the fact that approximately 12 to 32 million Americans, depending on whose numbers were believed, were without healthcare coverage was turned into a crisis that the US Congress rushed in to fix. Little if any attention was given to the fact that millions of Americans didn’t have health insurance when they could afford it simply because they chose not to purchase it (Wall Street Journal, 2011). It turns out that emergency rooms across the United States treat a great many of these people when sick.
By all accounts of the legislative process, few if any members of Congress had fully read the bill before being forced to vote it into law. Congress and President Obama chose to ignore the pending collapse of Social Security and Medicare, both well-studied and acknowledged crises, to spend a trillion dollars on universal health coverage that the majority of Americans didn’t want or need. The unintended consequences of this action are a flawed piece of legislation that several federal courts have struck down as unconstitutional. Its effects on the economic recovery were harshly negative, driving up the cost of healthcare and creating enough ambiguity among small-business owners to ensure any job creation is stifled.
Rule #3: If there are not enough crises, manufacture them, even from nature, where none exist.
Bureaucracies are always on the lookout for a new crisis. In his “Guiding Principles of Politicians, Bureaucrats, and Bureaucracies,” Harry Teasley points to three examples:

Secretary of Defense Robert S. McNamara in a post-midnight press briefing at the Pentagon points out action in Gulf of Tonkin, Aug. 4, 1964.

The Gulf of Tonkin incident, where an alleged attack took place on two US naval destroyers by a North Vietnamese torpedo boat, allowing President Johnson to deploy conventional military forces to Vietnam without congressional approval.
The attribution of weapons of mass destruction (WMDs) to Saddam Hussein permitted President George Bush to invade Iraq (again, without the need of congressional approval), after which no WMDs were found.
Man-made global warming. The first two resulted in loss of life and a terrible toll of people maimed and injured. We are still in the throes of discovering the effects of the third crisis.
We do know that under President Obama the power of the EPA is at a zenith, growing in size and power as a regulatory agency with all the prosecutorial powers to fine and even imprison violators (and the latitude to ignore violations as fits their interest). Alternative and renewable fuels have become a lightning rod for the EPA. Bill Gates was quoted recently in the Wall Street Journal as saying this about EPA solar-energy subsidies:
I think people deeply underestimate what a huge problem this day-night issue is if you’re trying to design an energy system involving solar technology that’s more than just a hobby. You know the sun shines during the day, and people turn their air conditioners on during the day, so you can catch some of that peaking load, particularly if you get enough subsidies. It’s cute you know, it’s nice. But the economics are so, so far from making sense.… And so unfortunately you get technologies that, no matter how much of them you buy, there’s no path to being economical.
The EPA has also teamed up with the Justice Department and Fish & Wildlife in prosecuting musical-instrument manufacturers and musicians deemed to have endangered hardwoods in their instruments. Musicians who play older instruments that used such hardwoods before it was illegal can no longer safely take their instruments across US borders without “adequate” documentation and hope to return with the instruments back in to the United States without Customs agents seizing their instruments and fining or even imprisoning them. Gibson Guitars, makers of classic instruments, has been singled out in federal raids, and there is now a criminal case, “United States of America v. Ebony Wood in Various Forms” (Felten, 2011). The EPA has enlisted US Customs to enforce problematic environmental policy.
Diversity is another example of creating a social crisis where none had existed. The ongoing need for diversity, never explicitly defined, haunts government bureaucracies particularly. James Taranto (2011) points to a “Diversity bureaucracy” that state universities continue to populate when teachers are laid off. No matter how much progress is made, there are new groups that emerge representing the nation’s continued failure to embrace the crisis of diversity. On campuses these days we must spend scarce resources on glorifying the transgendered; international students (particularly graduate students, because they bring greater monetary reward); gays, lesbians, and bisexuals; Muslims, etc. Like political correctness, diversity has become a primary orthodoxy and a perpetual goal of government that simply cannot be achieved. Once crises are created, they become self-sustaining.
Despite monumental gains in the status of women and minorities in what has always been a diverse nation, the diversity crisis is perpetuated. A series of New York Times articles documents that on college campuses, where women outnumber men by 57 percent to 43 percent, female gender issues remain an imbedded hallmark of diversity worthy of sizable resource expenditure. The American Association of Medical Colleges reported that more than 20 years ago, the number of women equaled the number of men in America’s 40 medical schools (AAMC, 1999). According to a story in the Boston Globe (2007), by 2007 women represented 79 percent of the students in American schools of veterinary medicine and the Journal of Accountancy (2011) reported that half of both undergraduate and masters students in accountancy were women. Despite the rise of women to now be the dominant gender in most professional schools, the government has allowed diversity to be whatever bureaucrats want it to be, no matter what the costs. Heather Mac Donald reported in the City Journal how an entrenched gender bureaucracy in the University of California system has grown despite the majority of students being female:
California’s budget crisis has reduced the University of California to near-penury, claimed its spokesmen. “Our campuses and the UC Office of the President have cut to the bone.…” Well, not exactly to the bone.… The University of California at San Diego, for example is creating a new full-time “vice chancellor for equity, diversity, and inclusion.” This position would augment UC San Diego’s already massive diversity apparatus, which includes the Chancellor’s Diversity Office, the associate vice chancellor for faculty equity, the assistant vice chancellor for diversity, the faculty equity advisors, the graduate diversity coordinators, the staff diversity liaison, the undergraduate student diversity liaison, the graduate student diversity liaison, the chief diversity officer, the director of development for diversity initiatives, the Office of Academic Diversity and Equal Opportunity, the Committee on Gender Identity and Sexual Orientation Issues, the Committee on the Status of Women, the Campus Council on Climate, Culture and Inclusion, the Diversity Council, and the directors of the Cross-Cultural Center, the Lesbian Gay Bisexual Transgender Resource Center, and the Women’s Center.
Race and gender not only continue to flourish at public universities, but often escape accountability. During the height of the 2000 recession, the president and provost of our university created a committee to look for ways to pare their academic budget. Every academic department and school had to produce a report from which cuts would be made that would allegedly save the university and state money. The lowest-scoring academic departments by these performance data, across a wide array of metrics, provided by their own faculty, were Women’s Studies and Africana Studies. The president and provost quickly ignored the need to cut academic programs based on their performance and the two programs were retained.
Rule #4: Control the flow and release of information while feigning openness.

It is telling that the term public relations is not used in government bureaucracies. This is not to say that governmental bureaucracies don’t engage in public influence; it’s just that they don’t want to be seen as doing so. Ironically, they spend huge sums of money at all levels trying to persuade the public and media that they aren’t persuading them. Instead you have “public affairs,” “public information,” “public communication & liaison,” and “public engagement” to duck public criticism of their information-control efforts. The bottom line is that government bureaucracies don’t want people to think that they are controlling the spin and flow of information, so the appearance is all about giving the public the information they want and need and making it sound benign, instead of persuasive.
During the Vietnam War, war correspondents brought death and destruction to television screens every night and kindled immense negative public opposition (see Meyrowitz, 1985). Since then, the government has been strategically engaged in efforts to co-opt the media by organizing carefully controlled combat sorties, led by the US military and their public-relations staff. It is a testament to information control that Operation Desert Storm received rave media reviews and that Operation Iraqi Freedom, despite its questionable validity, had mostly positive news until the war began to drag on and warriors from other Middle Eastern countries began using terrorist tactics.
One of the best examples of controlling information surrounds the information on Iraq’s alleged weapons of mass destruction (WMD) that was strategically released just before the United States and its allies invaded Iraq. Feeling the need to create widespread support for the invasion, the government strategically leaked a CIA report from 2002 that strongly presented the idea that Iraq did have WMDs (see CIA). While this was going on, Secretary of Defense Donald Rumsfeld held multiple press conferences about the invasion and reported WMDs where he would routinely begin by stating the question and then answering it before the press had a chance to probe further.
Another example of government information control comes from the economic recession that began in 2007. While President Obama certainly inherited the recession from President Bush, his administration’s efforts to control the information about it and our progress through it are instructive. As employment continued to decline, the government’s Bureau of Labor Statistics continued to release optimistic monthly reports that would subsequently prove to be wrong. What many people don’t know is that government methods of data gathering are skewed to be much more positive that they ever are. For example, employed persons are anybody 16 years of age or older who did any work for pay or profit during the survey week and all persons who did at least 15 hours of work in a family-owned enterprise operate by someone in their household. Unemployment data from the Bureau of Labor Statistics (2012) do not include retirees reentering the workforce, new college graduates looking for a job, nondeployed military personnel, or people who have been out of work for five months or more. It is instructive that the Department of Labor’s little-known measure of unemployment, U-6, is ignored by the president, Congress, and the media in favor of the rate presented monthly. The U-6 unemployment rate is currently 16 percent.
Rule 4a: Deny, delay, obfuscate, spin, and lie.

"I am not a crook"

There are two classic examples of this rule. The first was from the Nixon administration during the Watergate scandal. When the press called for the president’s ouster after the Republican break-in to the Democratic Party’s offices at the Watergate Hotel was confirmed by W. Mark Felt (“Deep Throat”), President Nixon came on national television and uttered the now famous, “I am not a crook.” In all, six top-level administration officials were indicted and sent to prison. Bill Clinton, whose administration had honed the fine art of spin doctoring into a science, also spoke to the American people as well as Congress and his cabinet and said, “I did not have sexual relations with that woman, Miss Lewinsky.” Hillary Clinton stood by him and attributed the commotion to the “vast right-wing conspiracy.” After DNA evidence was presented by Miss Lewinsky to the federal prosecutor, most of Clinton’s cabinet resigned (presumably for having been lied to by the president). Lying, cheating, obfuscating, and spinning are all tools of the accomplished bureaucrat who is caught doing something wrong.
Rule #5: Maximize public-relations exposure by creating a cover story that appeals to the universal need to help people.
Government bureaucracy is honed on populist rhetoric. Bureaucrats have become skilled at using the “helping the people” angle when making speeches, and especially when dealing with the press. It is a variation of the “people angle” taught in media relations training programs as the best method to attract media attention and promotion. Almost any government program, no matter what its cost in money or personal liberties, can be sold through the media by claiming it is for (1) the children, (2) the environment, (3) the elderly, (4) the poor, (5) the homeless, (6) the national defense, (7) homeland security, or (8) the sick.
For example, CNN (2003) reported that George W. Bush claimed the Medicare Part D pharmaceutical supplement he signed into law was
the greatest advance in health care coverage for America’s seniors since the founding of Medicare. With this law, we’re giving older Americans better choices and more control over their health care, so they can receive the modern medical care they deserve. These reforms are the act of a vibrant and compassionate government.
He forgot to mention the actuarial fiscal liabilities of this law. From the 2009 Financial Report of the United States Government, the long-range unfunded cost projections of the Medicare Part D mandate is $7.2 trillion dollars.
When bureaucrats of any ilk promote their new law or program as being “for the people,” it is important to first look behind the curtain. “Social justice” is the veneer used by bureaucrats to gain positive media exposure while pursuing the building of more bureaucracy. It is so pervasive that your child can even pursue a major in social justice at institutions of higher learning like the University of California, Santa Barbara. Sowell points out in his book The Quest for Cosmic Justice that all justice is, by definition, social, and “social” is most often used in the populist sense of everyone but the wealthy. A cover story that seeks social justice or to right the wrongs of an unjust society is guaranteed media attention, yet very few in the media or the public are inclined to look beneath the veneer of social justice to examine the costs and the unintended consequences.
Rule #6: Create vested support groups by distributing concentrated benefits and/or entitlements to these special interests, while distributing the costs broadly to one’s political opponents.

Jimmy Carter signed the 1977 Community Reinvestment Act that will go down in infamy

The Community Reinvestment Act of 1977, signed into law by President Carter, established the federal government’s role in providing affordable housing to the needy. Over the 33 years it has been in existence, its force has grown the size and reach of the Federal Housing Administration, the Federal Deposit Insurance Corporation, the Federal Reserve, and the Departments of Justice and Housing & Urban Development. It has also given rise to the Federal National Mortgage Association (“Fannie Mae” and “Freddie Mac”). While the initial goal was to provide the less economically advantaged with an opportunity to purchase a home, no one bothered to look at the possible unintended consequences of helping people whose personal credit wouldn’t qualify them to buy a home.
As Sowell (2009, pp. 31–56) points out, “affordable” became the ability for people to buy the home they wanted in the area they wanted and the government’s role was to make it financially possible to purchase it. The Community Reinvestment Act ultimately led to the biggest financial crisis since the Great Depression, yet many of its proponents and even the media failed to see or understand the real problem or the long-term costs and market dislocation that would result.
Even more insidious are government laws that benefit for-profit corporations. These are the recipients of corporate welfare. The poster child of corporate welfare is Archer Daniels Midland (ADM), having received billions of tax dollars from more than 15 federal agencies over the past 50 years. As James Bovard (1995) and Chip Krakoff (2011) point out, to return the favor to the federal bureaucracy, ADM has also been funding reelection campaigns on both sides of the congressional aisle and for both Democratic and Republican presidential candidates. As a testament to ADM’s political ecumenicalism, it has been a long-time sponsor/advertiser of National Public Radio, which attracts a large portion of the left-liberal minded. The EPA is planning to issue an edict to allow 15 percent ethanol to be blended into gasoline, which will result in a 50 percent market gain for ADM’s ethanol-production facilities and a similar market grain in the sale of their dominant field-corn holdings used to make ethanol.
Chip Krakoff (2011) quotes ADM’s Dwayne Andreas as justifying his corporate welfare history:
There isn’t one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians. People who are not in the Midwest do not understand that this is a socialist country.
Our last example of Teasley’s sixth rule of bureaucracy is Solyndra, one of three green-energy companies that received nearly $700 million in federal-government money and filed bankruptcy in the past two years. Solyndra is a photovoltaic-solar-energy-systems manufacturer in California. It has received huge loan guarantees ($535 million) through the American Recovery and Reinvestment Act (itself a huge and expensive federal program to fix the mistakes of the Community Reinvestment Act) and the Federal Financing Bank, as well as being the beneficiary of federal and state policies mandating the use of renewable energy sources (US Department of Energy’s ENERGY STAR Program and by the requirements of the California Title 24 Energy Standard, which prescribes cool roofs to be employed whenever low-slope commercial roofs are constructed or replaced).
The Wall Street Journal (2011) indicated that the company was also backed by the George Kaiser Family Foundation and, along with its founder, were big financial supporters of the Obama presidential campaign as a bona fide for his “green” stand. An additional $75 million loan was made to Solyndra, but the agreement with private investors, including Kaiser, placed them ahead of American taxpayers in case of default. Until the company announced its bankruptcy in August 2011, President Obama had hailed the company as “leading the way toward a brighter and more prosperous future” (Ibid). More than 20 trips were made by company officials, investors, and George Kaiser to the White House between March 2009 and April 2010, and despite reports from industry insiders about Solyndra’s financial health, administration officials dismissed these reports as “B.S.”
Rule #7: Demonize the truth tellers who have the temerity to say, “The emperor has no clothes.”

Telling the truth in America often leads to unemployment and being ostracized. A step up from the firing squad.

There were plenty of people sounding alarms as early as 2003 about the housing bubble and growing deficits that led directly to the devastating economic downturn that lingers today, not only in America but around the world. Most in Washington, including Fannie Mae, Freddie Mac, HUD, the Federal Reserve, Congressman Barney Frank (head of the House Financial Services Committee) and Senator Dodd (head of the Senate Banking Committee), all refused to pay attention to the growing signs of the housing-market collapse and its risk to the US economy, railing against any warnings that Fannie and Freddie were in financial trouble.
Stephen Labaton (2003) of the New York Times quoted Mr. Frank as saying, “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis.”
In the House of Representatives on June 25, 2007, Congressman Frank stated,
We have, I think, an excessive degree of concern right now about home ownership and its role in the economy. Obviously speculation is never a good thing. But those who argue that housing prices are now at the point of a bubble seem to me to be missing a very important point. Unlike previous examples we have had where substantial excessive inflation of prices later caused some problems, we are talking here about an entity, home ownership, homes, where there is not the degree of leverage that we have seen elsewhere. This is not the dot com situation.… Homes that are occupied may see an ebb and flow in the price at a certain percentage level but you’re not going to see a collapse that you see when people talk about a bubble. So those of us on our committee in particular will continue to push toward home ownership.
In 2010 Mr. Frank implicated foreign central banks, particularly China, when attacking a letter written by Republican economists to the Federal Reserve for
joining a broad attack by the foreign central banks who insist that America somehow must subordinate our own legitimate economic needs to their currency requirements. What did disappoint me was to see conservative economists, high-ranking officials of previous Republican administrations, and Republican congressional leaders share the attack by these foreign banks not simply on the Federal Reserve’s proposal, but on the very notion that America has a right to give a primary focus to our own economic need for growth at this time. (McDonald, 2010)
Of course, both political parties demonize the truth tellers who speak out against costly and wasteful policies and their unintended consequences. During the invasion of Iraq, Vice President Dick Cheney, Donald Rumsfeld, and even President Bush frequently took critics to task, asserting that there was “incontrovertible” evidence that Saddam Hussein had weapons of mass destruction. CNN (2005) reported that President Bush said during a Veteran’s Day speech in Pennsylvania,
Some Democrats and anti-war critics are now claiming we manipulated the intelligence and misled the American people about why we went to war. They also know that intelligence agencies from around the world agreed with our assessment of Saddam Hussein. While it’s perfectly legitimate to criticize my decision or the conduct of the war, it is deeply irresponsible to rewrite the history of how that war began.
Rule 7a: Accuse the truth teller of one’s own defects, deficiencies, crimes, and misdemeanors.
One wag said, “Gall was divided into three parts and politicians have all three of them.” We habitually find government bureaucrats, particularly politicians, trying to turn the tables of their accusers in misdeeds. Glen Johnson (2008), Associate Press writer, quoted Congressman Barney Frank, who attended a foreclosure symposium in Boston and challenged the critics of Fannie Mae, implying racism as the motive for the criticism:
They get to take things out on poor people. Let’s be honest: The fact that some of the poor people are black doesn’t hurt them either, from their standpoint. This is an effort, I believe, to appeal to a kind of anger in people.
Former representative Charles Rangel was ultimately accused of 13 ethics infractions by the House of Representatives. Washington Post reporters Leoning & Kane (2010) reported that, after a news conference Mr. Rangel held about the ethics violations, he responded about the possibility of being removed as chairman of the House Ways and Means Committee:

“I don’t see what purpose that would serve, I don’t think reporters should be in the position to remove chairmen, not even temporarily, especially when the reporting is false.” When asked specifically about nearly $80,000 his son had received from his campaign to design a website, he replied, “The reporter should really crawl from under his rock and apologize to my son, a veteran, my friend, my son and a great American,” Mr. Rangel said. “It’s one of the crummiest deviations from the truth that I’ve seen in these recent stories.”
The Road Less Traveled from Here
After presenting Teasley’s rules of bureaucracy, asking where Americans can go from here is not a rhetorical question. Given an economy that is not responding to Keynesian stimulus, proffered by an authoritarian administration and a market-corrupting federal bureaucracy, there are several solutions that we believe will make a difference and take the wind out of the sails of bureaucracy. We offer a series of antidotes to the scourge of bureaucracy.
“Bureaucrat” should not be thought of as a career path. History has proven that “career bureaucrats” do much more harm than good and we must characterize such people as pariahs and scallywags, not saviors of this country. The Democratic and Republican parties will push back from this antidote in their faux political fight for power.[1] Knowing how to get things done in state capitols and in Washington is only an asset to law-making junkies and directly reflects the dark underbelly of the bureaucratic beast.
If Congress comes up with a new “war against,” we should fight it, no matter what the war is against. The federal government’s track record is abysmal and the equivalent of a taxpayer boat — a hole in the water that you sink your money in.
Send all newly elected officials to the state capitol or Washington with the specific goal to reduce legislation. America’s bureaucracies have forgotten that resources are scarce, and most legislation builds bigger government and demands more tax dollars. Federal bureaucracy has grown at an alarming rate under Republican president George Bush and as much in just three years under Democratic president Barack Obama. While legislators keep an informal scorecard with how many pieces of legislation bear their names, does America need Sarbanes-Oxley or Dodd-Frank legislation? While it may inflate bureaucrats’ self-worth and hubris, America must reduce the number of existing laws and agencies significantly.
Sowell (1999) has long advocated that we use an economic analysis to examine our legislative initiatives before they become law. To stem the tide of fiscal irresponsibility leading to unsustainable government size and debt, no bill should pass from committee to a full chamber vote without first being carefully analyzed by the Government Accountability Office using a four-step rubric, the results of which must be presented to the American people before the vote. First, an analysis of what we can do about a problem, including its importance to the economic competitiveness of our country, and how much it will cost. Second, an analysis of what we should do collectively as a nation and what should be left up to individual initiative. Personal health and education are splendid examples. Third, a careful analysis must be undertaken of who will be helped and who will be hurt by any new legislation. As Bastiat warned us more that 150 years ago, political bureaucrats ignore who will be hurt by a new law. Fourth, a careful, econometric analysis must be made of the possible long-term unintended consequences of proposed legislation. Had our legislators done this, instead of trying to seize the political moment and the headlines, much of the federal legislation of the last two decades would never have been passed.
Addressing real problems while reducing government bureaucracies and entitlements will give the United States a new resourcefulness that can go a long way toward making the United States a decidedly freer market, and it will reestablish our exceptionalism in a way that other first-world countries have been unable to do with their stifling bureaucracies and statist programs.
Loyd S. Pettegrew is a tenured full professor of communication at the University of South Florida, where he teaches and studies public influence and also runs his consulting firm, Decision Strategies Group, Inc., which performs research and training for corporations. Send him mail. See Loyd S. Pettegrew’s article archives.
Carol A. Vance is an instructor of accounting at the University of South Florida-St. Petersburg School of Accountancy. She is a principal of Vance & Likens, LLC, an accounting firm, and of Carol A. Vance, ESQ CPA PLC, a tax-law firm specializing in high-net-worth clients. Send her mail. See Carol A. Vance’s article archives.
This essay was developed from a bullet point presentation originated by Harry E. Teasley Jr.
Teasley has spent his life confronting and triumphing over bureaucracy. His business career was spent at The Coca-Cola Company as head of various lines of business. His nickname was “Thor” for his willingness to confront the evils of bureaucracy and its mindless agents. Teasley’s experience with bureaucracy included federal, state, and local government, labor unions, nongovernmental organizations (NGOs), environmental protectionists, Coca-Cola itself and other corporations. Since retiring, Teasley has served as the chairman of the Reason Foundation and has successfully defeated numerous government attempts to infringe on the free market and usurp private-property rights in Tampa, Florida.

Matt Falconer versus Steve Precourt Florida House District 44

When word Matthew Falconer was about to announce his candidacy for State Representatives it sent shockwaves throughout the establishment in Tallahassee.
It has been reported Falconer’s likely opponent, Steve Precourt, leaked the news to Florida Speaker Dean Cannon who abruptly terminated Matthew Falconer’s appointment on the State’s Government Efficiency Task Force.
Cannon’s office released a statement saying he “did not want the appointment to be used for political purposes.” Matthew Falconer was placed on the task force because of his passion for reform and his ideas.
A day later Falconer received a call from the incoming Florida House Speaker Will Weatherford which is amazing given how busy the Speaker is during the last weeks of session. The Speaker politely let Falconer know he and leadership will be “supporting” Precourt.
The Speaker “controls” the “Florida Leadership Fund” which will have an estimated $15 million to spend supporting candidates of their choice. Precourt will have basically unlimited funds raised from special interests. And the average person can only donate $500 to any statewide campaign.
Another State Representative e-mailed Falconer suggesting he not run and reminded him Precourt will have access to “vast sums of money.”

Florida House Representative Steve Precourt supports billion dollar projects the Florida tax payers do not need, cannot afford, and do not want

The question is why are the most powerful people in Florida worried about a single candidate for a state house seat?
The answer is power. The “establishment” does not want to lose their grip on power in Florida.
Falconer has a rock solid conservative record and strong support amongst conservatives in central Florida. His plan is to restore faith in government through ethics reforms, a plan that calls to eliminate leadership funds.
These funds collects millions of dollars from special interests who benefit from government spending. In Falconer’s announcement speech he stated; “the reason we build bridges to nowhere and government rail systems no one will use is because an army of special interests profit from them; lawyers, lobbyists, engineers, and government contractors.”
And he is right.
The establishment in Tallassee does not want things to change. They do not want a reformer even if the public desperately wants reform.
Steve Precourt may be a terrific gentleman but he is part of the problem. He gets almost all of his campaign money from special interests. And he made/makes his living as an engineer designing government rail systems.
How dependent on construction industry contributions is Precourt?

The Florida's constriction industry earnings are down 47%, five plus years of decline

Precourt was a principal in the civil engineering firm DRMP, Inc. or Dryer, Riddle, Mills, & Precourt, a firm with a well establish record of service and value for the dollar. Capitalism build America and Precourt should be proud of his contributions to DRMP.
Looking back on a partial list of the 2006 contributions, at the height of the housing boom, Precourt received an astonishing 34% of his contributions from the industry and individuals working in the industry. This is more significant than the 34% number because any serious candidate will receive contributions from major industries just because they are a serious candidate.
It would be safe to say the civil engineering, construction, land development industry strongly supports Precourt. In normal economic times this would be perfectly acceptable. Today with massive inflation beginning, corruption, and economic desperation in the construction industry we do not need politicians trying to score one huge contract, usually billions of dollars for rail projects, for their special interest group of friends.
Frantic and worried politicians do not make good policy decisions. In 2011 Precourt has raised approximately $105,000.00 with much more expected.
The 2006 contributors to Precourt reads like a who’s who in the civil engineering and construction industry. Metha, AAGAARD, Ardaman, Boyer-Singleton, C. T. Hsu, Capri, Castle & Cooke, CH2M, Dewitt, and prominent individuals in the industry such as Ernie Cox of Ardaman & Associates. Since 2006 Precourt’s contribution list has expanded considerably to other special interest but the strong ties to the construction industry are plain to see in public records.
This is very important for voters to understand and see the potential catastrophe that can happen if a politician beholden to an industry decimated and desperate for any and all public works projects. Some construction projects may be needed and desired but others, such as the billion dollar rail projects, may be so expensive they saddle taxpayers with unneeded and unnecessary higher taxes for decades.
Desperation does not make good public policy.
Simply put we do not want distracted people in the legislature. We do not want a legislature representative whose overwhelming support comes from an industry that is frantically trying to influence, by any means necessary, projects that may or may not be needed by the public.
How desperate is the Florida construction industry?

The Florida Gross Domestic Product is still down 1.6% from 2007

In April 2006 the Florida construction industry made $42,029 (millions) and today $22,335, a drop of 47%. Earnings have dropped for five plus years with not one single quarter of increased revenues. That is an industry that is desperate and that is the industry Steve Precourt represents.
Everyone in the industry has been hurt. Everyone in Florida is affected by the industry and sympathizes with the industry, but we do not need huge government works projects that will waste resources in these desperate times just because we feel sympathy towards an industry.
The federal government can print money through the Federal Reserve to fund whatever they desire. Florida cannot.
The time has come to end the culture of corruption and put real citizen candidates in office. The days of the special interest candidates need to end and the days of citizen candidates are just beginning. The voters are waking up and in this race the choice is clear.
Full disclosure, I have worked as an unpaid volunteer for Matt Falconer’s 2010 Orange County Mayor’s contest. I have never received any financial compensation from any political candidate.

CBO Whistle Blower Lan T. Pham Exposes Mortgage Fraud

Portions of this appeared in Zero Hedge on 3-15-2012.
Lan T. Pham, who, as the WSJ described in early February, “alleges she was terminated [by the CBO] after 2½ months for sharing pessimistic outlooks for the banking and housing sectors in 2010″ and who “alleges supervisors stifled opinions that contradicted economic fixes endorsed by some on Wall Street, including research from a Morgan Stanley economist who served as a CBO adviser. As part of the review, Sen. Grassley’s staff is examining whether Wall Street firms or others exert influence that compromises the office’s independence.” As we observed in February, “what is most troubling is if indeed the CBO is nothing but merely another front for Wall Street to work its propaganda magic on the administration. Because at the core of every policy are numbers, usually with dollar signs in front of them, numbers which have to make sense and have to be projected into the future, no matter how grossly laughable the resultant hockeystick.”
“I realized that the true nature of the issues would not come out. Therefore, I am making public the letter that I wrote to Senator Grassley (Feb. 23, 2011) regarding circumstances that led to my firing after 2.5 months by the Congressional Budget Office (CBO), particularly my writing about mortgage fraud and its roots in mortgage securitization that CBO sought to deny was a problem.

For clarification, the WSJ did not give proper recognition to some individuals. My “supervisors” was Dr. Deborah Lucas, who was CBO chief economist and assistant director, and is currently tenured professor of finance and economics at the Massachusetts Institute of Technology (MIT). MIT Professor Lucas was called by the President to serve in a leadership role at CBO. Morgan Stanley economist and CBO advisor, is the Vice President of Economics Research at Morgan Stanley, Richard “Dick” Berner, whose policy framework for refinancing stimulus was to be incorporated into my writing. Dr. Lucas also shared with me analyses from Goldman Sachs, also on the CBO’s distinguish panel of economic advisors, on the housing market such as the banks’ limited risks on mortgage buy-backs.
As a Congressional senior staffer, financial economist, my initial responsibilities were to write a brief (paper) to Congress on the state of the foreclosure crisis and the alternative policy options, as well as cover banking and housing. Almost to the exclusion of other policy options, CBO Assistant Director Lucas and senior management worked around Morgan Stanley’s policy framework and related ideas to present to Congress as the policy choice (One would be correct to point out that CBO does not make policy). Below are excerpts from my letter to Senator Grassley:

I was repeatedly pressured by the CBO Assistant Director, Deborah Lucas… to not write nor discuss issues in the banking sector and mortgage markets that might suggest weakness in these sectors and their consequences on the economy and households…”
When I wrote about the emerging foreclosure problems in September 2010, CBO Chief Economist Lucas maintained that robo-signing was media “sensationalism,” “the kind of event of the moment where we should be adding skepticism, not just repeating the hype in the press”; CBO wrote that my writing about it “lacks judgment about what is important.” Exploring this further in the letter,
…Issues at the heart of the foreclosure problems pertain to securitization….and the Mortgage Electronic Registration System (MERS), which purports to have legal standing on electronic records of ownership on about 65 million…mortgages… MERS…facilitated Wall Street’s ability to expedite the pooling of subprime mortgages into MBSs by bypassing standard ownership transfer procedures as the housing bubble escalated…
The implications have profound financial and economic consequences that would be of compelling interest to Congress and the public, but the CBO sought to silence a discussion of such risks, that in reality have been materializing. These risks put into question the ability of investors or bondholders to make claims on the collateral (the homes) that underlies trillions of dollars in MBSs, the bulk of which are now guaranteed by …Fannie Mae and Freddie Mac. This affects $10 trillion in residential mortgage debt outstanding, of which $7 trillion in mortgage-backed securities (MBSs)…

The CBO dismissing such issues prevents an analysis of the risks, so that the public may be forced again to shoulder the consequences for which they have not been a given a voice or a choice.
A month later after being told by CBO Chief Economist Lucas to not repeat this media hype, Georgetown University Law Professor Adam Levitin, Special Counsel to the Congressional Oversight Panel and scholar at the American Bankruptcy Institute, raised essentially the same issues in his testimony before the House Financial Services Committee:
“The chain of title problems are highly technical issues, but they pose a potential systemic risk to the US economy. If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever….
These problems are very serious. At best they present problems of fraud on the court, clouded title to properties coming out of foreclosure, and delay in foreclosures that will increase the shadow housing inventory and drive down home prices. At worst, they represent a systemic risk that would bring the US financial system back to the dark days of the fall of 2008.”
In response to the WSJ story, Director Elmendorf issued a public statement maintaining the integrity of CBO’s work, an excerpt which reads:
“…We have the utmost confidence in the objectivity of our work and devote considerable time and energy to explaining the basis of our findings as clearly as we can to help Members of Congress understand the work that we do.” (Bolded emphasis is CBO Director Elmendorf’s)
In early November 2010, a stunning example was CBO Director Elmendorf’s, a Harvard Ph.D. economist, view that employment growth in housing construction would spur economic growth, in his discussion of inputs into CBO’s macroeconomic forecast model. A question about the assumption was met with Director Elmendorf asking why they were “pessimistic” about such assumptions.
After my termination, Director Elmendorf stated that I should have followed directions from the more knowledgeable and experienced Chief Economist Lucas, taken the opportunity to learn from her. Director Elmendorf saw no ethical issues in her direction, but shifted to perhaps we had a difference of professional opinion. As I understand, Director Elmendorf and MIT Professor Lucas first claimed to Senator Grassley’s office that they could not speak about my termination due to personnel privacy protections, when none exists for Congressional employees. When given full immunity to speak freely to Senator Grassley’s office regarding my termination, they refused to speak.
It has been suggested to not mention these things in polite conversation, but I admit there were oddities following CBO’s termination. After CBO fired me at the end of the day saying “we do not know whether or what you know about economics, economic theory or finance,” I returned to my office to make a phone call. Everyone had left, but there was a silhouette of a man standing in the dark in an office across the courtyard watching me during the 15-20 minute phone call. Later, I came home to find some papers had been moved and could no longer find some important documents pertaining to this case. I attempted to retrieve these documents from my office at CBO, but the power to my office was shut down precisely as the documents from my computer were about to be e-mailed to me; the entire floor and building were unaffected. At about 3 a.m. during a week day, there was sudden a loud crash into my front door followed by complete silence. Perhaps it was just a complimentary early wake-up call.
The truth is still what it is.
As I have come to learn, the issue of foreclosure fraud ‘robo-signing’ seems to be spoken in hushed tones near the powers of Washington D.C. CBO has the ear of Congress and can make or break policies that affect the nation with its analyses.
Who is the CBO serving?
Lan T. Pham, Ph.D.

Town Hall Meeting with Florida District 24 Congresswoman Sandy Adams

Florida Congressional District 24 Congresswoman Sandy Adams
Another year and another Congressional Town Hall meeting. My current congressperson is first termer Sandy Adams from Seminole County, Florida. Her claim to fame is giving US Attorney General Eric Holder the toughest questions in the infamous fast and furious scandal. As a ex -cop she is excellent at interrogations.
Her degree and background is in criminal justice so I do not hold it against her when during town hall meetings she draws a blank when the inevitable economic questions arise. She no doubt has economists on her staff but most likely if they are Keynesians or monetarist they are useless on anything but the micro level. Economics taught in college textbooks is mostly useless go big government, go Federal Reserve bull crap feed to the public to ensure future leaders think the answer to every economic problem involves printing more money.
I like Congresswomen Adams more than “Choo Choo” train, 10 term Congressman Mica.
Because of redistricting the two will face each other in the Republican Primary this August.
Adams is the “Tea Party” candidate even though she voted for the $2.4 trillion debt ceiling increase August 5, 2011. Mica by contrast is, in my humble opinion, corrupt as they come supporting his special interest colossal waste of money billion dollar train Central Florida does not need. Adams is a strait talker and would turn someone who attempted to bribe her into the authorities in a New York minute. Give me the ex-cop over Mr. Corruption, thank you.

Florida District 7 Congressman John Mica will face Adams in the Republican Primary in 2012 due to redistricting. Mica is a big special interest congressman.

Anyway back to the Town Hall meeting…
Congressmen and women, Adams is no exception, field the countless bulk of questions about economics, and inevitably they end up looking clumsy, because for most of them this is a strange subjects full of half truths, fairy tales, and propaganda.
So if I may be so bold here are some economic truths that cut through the fairy tales, propaganda, and myths.
For example one gentleman asked her about the GINI coefficient. Of course she was stumped.
The GINI coefficient is something taught in Development Economics in junior or senior level economics. It was an unfair question for her, she should have let me answer the gentleman, or one of her staff members.
So what is a GINI coefficient?
This index measures the degree of inequality in the distribution of family income in a country. The index is calculated from the Lorenz curve, in which cumulative family income is plotted against the number of families arranged from the poorest to the richest.
The index is the ratio of
(a) the area between a country’s Lorenz curve and the 45 degree helping line to
(b) the entire triangular area under the 45 degree line. The more nearly equal a country’s income distribution, the closer its Lorenz curve to the 45 degree line and the lower its Gini index, e.g., a Scandinavian country with an index of 25. The more unequal a country’s income distribution, the farther its Lorenz curve from the 45 degree line and the higher its Gini index, e.g., a Sub-Saharan country with an index of 50. If income were distributed with perfect equality, the Lorenz curve would coincide with the 45 degree line and the index would be zero; if income were distributed with perfect inequality, the Lorenz curve would coincide with the horizontal axis and the right vertical axis and the index would be 100.

This is the economic graph both Republicans and Democrats need to understand, it should be called "monetizing the debt" but the official name is "U.S. Treasury securities held by the Federal Reserve: All Maturities (TREAST)."

Got it?
Well neither did Adams.
Who would with the exception of an economist?
The gentleman indicated that the United States ranks 41 (40th according to the CIA World Fact Book) and that this was somewhat bad because the USA was ranked around countries like Mozambique, Jamaica, Bulgaria, Cameroon, Iran, Cambodia, and ekes Uganda. The implication being that civilized countries like Sweden and Norway have “low” GINI coefficient numbers of 0.23 and 0.25.
What the gentleman fails to mention is that the median purchasing power parity in “social justice” high tax countries of the European Union, Italy, Spain, England, France, and Germany, countries similar to the United States in population and ethnic diversity, is $33,900 compared to $48,100. The United States citizens make a whooping 35% more! Give me more inequality please, thank you.
The poverty rate is 15.1% in the USA, which in 2008 was 13.2%, compared to the 15.1% average in the five EU countries listed above.
So what is gained by having a “good” GINI coefficient if poverty is not reduced?
Your guess is as good as mine.

Florida will have new congressional districts for 2012

The GINI coefficient number is also describing a symptom, not the problem. Wealth inequality is created by several factors but the three biggest are:
1. The Federal Reserve. Simply put by creating inflation as a policy goal those that control the means of production can instantaneously increase their prices while working class people get a raise once a year. The reason JP Morgan (Republican) and John D. Rockefeller (Democrat) wanted a central bank was to pay workers in “soft” money, pay back loans in “soft” money that was worth less over time, and not suffer the continuous deflationary competitive market forces that hard money (gold) forces upon the marketplace. Companies constantly have to strive to cut cost, or lose market-share in a deflationary economic environment.
The answer would be to eliminate the Federal Reserve and go back to private money and 100% fractional reserve banking, but I am not holding my breath Congresswoman Adams will adopt that position anytime soon.
2. Taxes and specifically transfer payments, which hurt the poor disproportionately. In 1960 Social Security as a percent of the GDP was 2.8%, in 2010 it was 6%. In 1960 the federal, state, and local government consumed 26.2% of the GDP, today 45%. Simply put we have a larger government burden to pay for and the poor pay for this through lower wages, less benefits, and finally loss of employment.
3. Unregulated immigration. In 1970 only 4.7% of the population was foreign born, today 12.4%. Most of the immigrants compete for blue-collar jobs, lowering wage cost for the capital users, contributing to the spread between white-collar wages and blue-collar wages since 1970.
Politically incorrect subject matter not likely to be discussed during the campaign.

Representative Adams, Geneva, Florida 3-12-2012

So can Representative Adams be excused for not quite up on the intricacies of economic theory?
I give her a pass.
Another economic puzzler, is lowering the tax rate on the “rich” good for the economy?
Absolutely yes!
Democrats and Keynesians falsely believe that if you take money from a rich man and give it to the poor man the economy will be better off because the poor man has a greater marginal propensity to consume. In other words he will spend most, if not all, of the money.
What this fails to take into account is that the rich man does not put his money under the mattress. The rich man will;
1. Save the money in the bank and generate interest. In this case the money is being used by bankers to make loans, creating jobs for America.
2. Investing the money in stocks, bonds, mutual funds, or other financial vehicles. All these options create capital for economic growth whereas giving the money to government, then giving it to the poor man increases consumption, but will not improve the economy in the long run. Only savings and investment creates improved economic performance in the foreseeable future.
3. If the rich man decides to spend his money the money will enter the economy, and he will pay taxes on the money, just like the poor man with the exception that the government does not get a percent of the money as a redistribution tax.
The final economic puzzler, does increasing taxes increase revenue?
No absolutely not above 30%.
Fewer taxes are collected with a tax rate over 30%. The proof is right there in the Historical White House Budget Tables from the Office of Management and Budget combined with the Historical Top Tax Rates. Next time someone ask if increasing taxes will raise revenue the answer should be a resounding NO! And use the White House tax collection data since WWII to prove the point.
The Reagan economist Arthur Laffer looked at the historic top tax rate and actual taxes collected and came up with his famous Laffer Curve.
Simply put the top tax rate should be 25% or less. From 25% to 30% more taxes are collected, but with the result being slower economic growth. Over 30% corporations and individuals avoid the tax by engaging in tax avoidance behavior such as practiced by Warren Buffett or Mitt Romney getting paid with capital gains and not the higher taxable income. Simply put when you own the store you can pay yourself $1 a year and $1,000,000 in capital gains.

The best solution is a Fair Tax or Flat Tax.
Both are the same. Both eliminate double taxation, corporate taxes, dividend taxes, capital gains taxes; they simply come from different collection points.
Corporate taxes are counterproductive because they come from consumers, dividends, profits, wages, benefits, research and development.
Dividend taxes are double taxation. The IRS should get one chance to tax income, not two, three, or four times like today’s tax code.
Capital gains taxes are the most economically backward tax on the books. Why on earth would you want to tax someone for taking a risk and investing into the economy? As long as the activity is promoting job creation and growth it should be encouraged, not punished.
Taxes should not punish behavior we want as a society.
Finally every congressperson should know that inflation comes from the Federal Reserve printing money.
Since Obama was inaugurated the federal debt held by the Federal Reserve has increased 238%. The Federal Reserve now owns 11% of the national debt, or $1.6635 trillion. You do not have to be an economist to understand creating money out of thin air and buying your own debt is extremely inflationary.
In a way I feel bad for Congressmen and women giving town hall meetings, fielding questions which they have no background whatsoever. It would be as if I had to teach a law class, I would fake it, read a large amount of power points, and pray there were no law scholars in the audience who could cut me up into pieces if they so desired. So for my beloved congresswoman I certainly do understand why she does not know what a GINI coefficient is.

The Implications of the Greek Bail Out Explained in Simple Terms

Greek Finance Minister Evangelos Venizelos
Portions of the following appeared in The Future Tense on 3-10-2012.
It seems like months and months and months have gone by with headlines proclaiming a new Greek bailout and the world is saved. Month after month all is good, unemployment down, economy growing, hope, change, green shoots.
But what is the real story that they are hiding?
Greece is a tiny spec in terms of the global economy. It is even a minute spec in terms of the European economy. The issue at hand here in these endless hours of Greece bailout negotiations is not regarding the quantity of money needed to keep Greece alive;
It is the terms of the deal that will then be used as a precedent for every domino down the line in the coming European bailouts.
That is why policy makers are walking on eggshells. A mistake with this Greece/”Bear Stearns” bailout may set the stage for the Portugal/”Lehman” moment that is right around corner.
Right now Greece is bankrupt. On March 20, they have bonds that will need to be rolled over, which they cannot finance. Without the bailout that took place on March 9, 2012, that roll over would not have happened and a Greek default would begin on March 21.
The financial leaders around the world desperately do not want a formal default to occur. They have been in negotiations for weeks trying to come up with a way to keep Greece alive for just a little longer. Why are they so concerned about insignificant Greece? This story has a very interesting twist.

To the elites its all numbers, to the people it is very real

Think of saving Greece as trying to disarm a bomb. If you make the wrong move the bomb will explode, possibly setting off other bombs that cannot currently be seen. These “off balance sheet” bombs are called Credit Default Swaps. CDS in simple terms are an insurance contract that is triggered if Greece is considered in formal “default.”
The key word here is “formal” default. If the European Union can avert a “formal” default they can prolong the inevitable collapse.
So, not only do the financial leaders have to come up with a way to give Greece money and write down a large portion of their debt, but they must do it without triggering the bomb. It is like an episode of “24″ with Jack Bauer only the story at times is even more unrealistic.
To keep the bomb from going off, Greece bond holders must “agree” unanimously to take a write down. The bailout March 9 said that private debt holders should agree to write down 107 billion Euros. The easy part was to put a number on the page. The more difficult part will now be getting every private Greek debt holder to agree to take a loss.

Generations of people all over the world have been indoctrinated by government schools that capitalism is evil, but government produces nothing and central bankers produce worthless paper. Facts that will never be taught to children.

Here is the first problem.
Many of the investors who bought Greek bonds also simultaneously purchased insurance (CDS) on the debt to hedge their position. If Greek debt went up in value then they keep the profits. If Greek debt defaults then they have the insurance payment to help cover losses. Greece’s plan is to show up at their office and ask them to “accept” a 50% haircut on their investment, which would then cause their insurance payment not to come in the mail.
What do you think their answer will be?
It will obviously be no. The hedge funds and investment bankers purchasing Greece debt are killers backed by financial algorithms. They care very little about the man starving on the streets of Greece.
There is a way Greece can avert this issue. They can issue a “collective action clause” which means that an agreement by a majority of bondholders would create a write down for all bond holders.
The problem?
As of this moment triggering the CAC would trigger the “formal default” bomb.
How this will be handled over the coming weeks is the crucial portion of the debt negotiations. If the bomb is triggered for Greece then it sets the precedent that it will be triggered for
and Italy.
While Greece can easily be contained, Spain and Italy are impossible. The size of both the bailout funds needed and their bomb explosion are like Lehman x 1,000.

This is what all communist want, economic illiteracy, hunger, and violence

The second problem;
No one can see where the losses will be taking place in the banking system, which means no one will trust anyone. Money stops moving and freezes.
Its like a scene out of the 1981 movie “Body Heat” where the ex convict Teddy Lewis (Mickey O’Rourke) is asking Attorney Ned Racine (William Hurt), who is contemplating committing murder;
“You got fifty ways you’re gonna f… up. If you think of twenty-five of them, then you’re a genius… and you ain’t no genius. You remember who told me that?”
And that is where Federal Reserve Chairman Ben Bernanke and European Central Bank President Mario Draghi are today, desperately trying to keep the illusion of normal for Main Street after the murder has been committed.
Where we go from here is impossible to know. We are so far over the edge of the cliff and into the abyss that it is truly staggering. The average person has no idea how thin the thread is that our entire financial system hangs on today.
The stock market, just as in the fall of 2007, is completely oblivious to the danger ahead.
The global debt crisis will not be contained.
We have one more deflationary downdraft ahead of us before the next major re-inflation upward.
The process could take years to unfold, or it could begin tomorrow.
Capital will flee Europe to America and it will take weeks, months, before investors realize America is just as bad off or worse than Europe. Federal, state, and local debt is 120% of GDP, the same as Italy. All debt, public and private is debt is $54 trillion; the GDP is $15.3 trillion. Can Americans afford to pay $180,000 per man, woman, child, elderly person?
The best option is to arrest the politicians and bankers who ran up the impossible debt, declare bankruptcy, and get on with life.

Smashing Myths and Restoring Sound Money by Thomas E. Woods, Jr.

Thomas E. “Tom” Woods, Jr. is an American historian, economist, political analyst, and New York Times-bestselling author. He has written extensively on the subjects of American history, contemporary politics, and economic theory. Woods is considered a libertarian and is a proponent of the Austrian school of economics.
Woods graduated high school in 1990 and intended to major in math entering Harvard University. However, in a desire to strengthen his ability to argue against students supporting communism switched to majoring in history. A key turning point for the development of Woods’ views was his attendance of the 1992 Mises University conference, held by the Ludwig von Mises Institute, and meeting Austro-libertarian economist Murray Rothbard while there. He then headed to Columbia University in 1994 to obtain a Ph.D. in history.
He served as a history department faculty member at Suffolk County Community College in New York until 2006, and is now a scholar and senior faculty member of the Ludwig von Mises Institute (LvMI) in Auburn, Alabama, as well as a member of the editorial board for the institute’s Journal of Libertarian Studies and Libertarian Papers. He is also an associate scholar of the Abbeville Institute.
Woods was present at the founding of the League of the South, and has contributed to its newsletter. His past membership in the group has generated criticism, but Woods asserts his involvement was limited.
He was an ISI Richard M. Weaver Fellow in 1995–96. Woods was also the recipient of the 2004 O.P. Alford III Prize for Libertarian Scholarship and of an Olive W. Garvey Fellowship from the Independent Institute in 2003. He has additionally been awarded two Humane Studies Fellowships and a Claude R. Lambe Fellowship from the Institute for Humane Studies at George Mason University.
Woods is co-editor of Exploring American History: From Colonial Times to 1877, an eleven-volume encyclopedia.