New Jersey Survival

Most home foreclosures being processed in New Jersey are illegal, a growing group of attorneys contends, because lending institutions cannot prove they own the debt they are trying to collect.

Judges in at least four New Jersey counties already have halted foreclosures, using a federal court ruling in Ohio as precedent. And with 48,000 foreclosures expected to be filed this year — twice the number filed in 2006 — some attorneys believe challenging foreclosures can become a large and potentially lucrative area of practice.

“This is starting to creep up all over the state and all over the country as people start to realize these banks don’t really know who owns the (promissory) note,” said Peggy Jurow, a senior attorney at Legal Services of New Jersey, which is teaching lawyers how to represent pro bono clients in these cases. “It’s scary to think how many people are losing their homes who shouldn’t be.”

Anyone who is still wondering why the so-called “mainstream media” was so hostile toward Congressman Ron Paul’s campaign for the Republican presidential nomination will find an answer in the June 2 issue of Time magazine. Congressman Paul is a deeply educated student of economics, among other things, and an unabashed advocate of economic freedom and limited constitutional government; Time magazine is staffed by socialist ideologues who display little or no evidence of ever having studied economics at all.The second paragraph of “How the Next President Should Fix the U.S. Economy,” by one Justin Fox, explains the real problem as Time sees it: Americans enjoy too much economic freedom. The natural solution, therefore, is to strip them of their freedom with higher taxes, more regulations, and greater regimentation of their lives. The cause of all of today’s economic problems, says Time, is of course Ronald Reagan, who supposedly cut taxes, went about “slashing regulation,” and preached “the gospel that individual Americans were better suited to make economic decisions than bureaucrats in Washington were.” Where on earth did Americans ever get such a crazy idea?

But there is hope, says Time. “There are signs that … America’s 25-year love affair with tax cuts and deregulation” is ending. One reason for this is that the federal budget is “way out of balance.” According to Time, the fact that the Bush administration has been even more spendthrift (on domestic spending as well as military) than the notorious Johnson administration, and has accumulated huge budget deficits, is evidence that Americans have too much freedom and too much money in their pockets. They need to be taxed more severely in the name of budgetary “balance.” Not one word is devoted to the idea of cutting spending of any kind by a single dollar, let alone abolishing entire government bureaucracies altogether.

Then there are “soaring energy prices,” caused by increased worldwide energy demand coupled with sluggish supply growth that has been blocked by environmental regulation. This would include the regulations that prohibit oil exploration in 85–90 percent of the outer-continental shelf off the Atlantic and Pacific coasts, as well as in most of Alaska. Even though regulation has caused this problem, the “solution,” according to Time, is more regulation of the energy industry.

A third reason for “hope” that Americans will give up their economic freedom is the housing crisis, which again was caused primarily by the Fed-generated boom-and-bust cycle, with a little help from the government’s thirty-year policy of forcing banks to make bad loans to uncreditworthy borrowers under the Community Reinvestment Act. Time wants to blame it all on the free market, however, and makes no mention at all of the role of monetary policy in generating the housing-market crisis.

Health-care costs began spiraling out of control as soon as government became involved in the post–World War II era, especially with the advent of Medicare and Medicaid. Health care and health insurance are arguably the most heavily regulated industries in America; decades of cost-increasing regulations have been the main cause of the “health care crisis” that the socialist ideologues at Time are so worried about. Government control of health-care markets is the problem; therefore, the obvious “solution” is even more government control of health-care markets, says Time.

Time’s Justin Fox presents a tired, old, laundry list of failed socialistic interventions. These include protectionism; more income “redistribution” (a.k.a., legal theft) via the tax system, i.e., “heavy taxes on the rich”; more pork-barrel “infrastructure” spending — and higher taxes to pay for it; an additional round of tax increases “to close the budget gap” (which of course tax increases never do); yet another round of tax increases on oil, gas, and natural gas to “steer” consumers away from these items; more tax increases still in the form of elimination of the mortgage-interest deduction, which “costs the government about $80 billion a year”; and, of course, socialized medicine, the tax increases for which would entirely swamp all of the previously mentioned tax increases. (Time promises to explain how to “make universal health care work” in a separate article. I can’t wait.)

What Time’s “fix” involves is essentially the Sweden-ization of America, where the average working family would be handing over 65–70 percent of its earnings to government bureaucrats, with regulation-induced price increases eating up perhaps another ten percentage points. This all needs to be done at the very beginning of the next administration, moreover, for “putting off change won’t be an option much longer.” It is a perfect recipe for impoverishing America.

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by Bill Bonner

“Cost of living spirals,” begins The Times of London. “Families face 40% rise in energy bills.”

“Inflation outstrips salary rises for first time, and it’ll get worse,” adds the Daily Mail . “While wage increases are running at 3.2%, the Consumer Prices Index has gone up by 3.3% – its highest rise since 1992.”

As if struck by a new strain of social disease, the English are starting to itch and moan. The papers have made a fuss and the doctor has been called in. In the interest of full disclosure, we have no sympathy for either the patient or the doctor. Both delighted in it when they were contracting the malady; that is, they frolicked gaily when prices for their houses and their shares were going up. Nor was any grumble heard from the City (London’s equivalent of Wall Street) when juiced-up bonuses were handed out. But now that prices for beer and petrol swell like beestings, they’re reaching for quack ointments and mountebank remedies.

Naturally, the witch doctors have their potions: Tax the greedy oil companies, stop “excessive speculation,” control prices, nationalize the mortgage industry, raise interest rates…no, lower interest rates!

All of this might have been foreseen by Antonio Rosmini, a 19th century catholic priest. He wrote that humans were not necessarily “angels, confirmed in grace.” Instead, they were “fallible.” And then, he must have had central bankers in mind when he noted that government “is composed of people, who since they are men, are prone to error.”

There are many different kinds of errors. But among central bankers, one is practically universal – they tend to over-do it. There are many things of which more is not necessarily better. Desserts and mistresses, for example. One or two is plenty. But it is inflation we are writing about. The first bit of it hits an economy like a shot of whiskey on an empty stomach. Then, more drinks keep the party atmosphere going for a while. It is not long before you reach the point of where things get out of hand. Pretty soon, you’re doing things you’ll regret.

But let us look at the doctor’s report:

Inflation was not his fault, was the gist of Mervyn King’s letter to the chancellor. Instead, it was the result of “development in the global balance of demand and supply of food and energy”. Then, get used to it, he seemed to say: Inflation “is likely to remain markedly above the target until well into 2009.” Musing on how the inflation rate might be brought down to the 2% target, he went on: “The path of bank rate that will be necessary to meet the 2 percent target is uncertain.”

‘Or impossible,’ he might have added. Britain already has the highest interest rates among the G7 nations….and the lowest inflation rate. In the United States, for example, inflation is running nearly a full percent hotter. And it looks as though prices will all go higher almost everywhere. In America, imports are rising at more than 15% per year, the fastest increase since 1982. In Britain, producers’ input prices are up 27.9% over a year ago. It won’t be long before these wholesale germs turn into a retail epidemic.

Already, much of the world is scratching and grousing as if it had lice. Consumer inflation is rising at 8.5% in the Middle Kingdom…while the costs of its own inputs soar. In Russia, consumer prices are going up 10.5%. In Vietnam, at 25%. And in Zimbabwe? Who’s counting?

Whence all this inflation? You have Mervyn King’s explanation. We will give you our own.

Last week came word that the Gulf States were piling up $1.5 billion net per day in oil revenues. In China, not an oil exporter, the rate of growth of foreign currency reserves has slowed down recently, but the country still nets about $1 billion per day. Overseas central banks accumulate Everests of these dollars, and lend many of them back to the United States – by buying U.S. Treasury bonds. To give you an idea of how fast this mountain of money is growing, foreign central bank holdings of U.S. treasury bonds, held in custody at the Fed, are increasing at a 37% annual rate.

But to buy these dollars, foreign central banks must increase their own currencies to pay for them. And so the global inflation contagion continues to function much as it did for the last five years – except that the flow of funds has shifted away from the finished product exporters in Asia in favor of the exporters of food and energy in the Gulf, Brazil and Russia. The world’s leading central bank is still over-doing it. Result: higher prices.

That is how it works. But for why it works that way, we turn from sinners to a saint. Yes, that same Antonio Rosmini. In 2007, a decree from the Vatican confirmed that he had indeed performed a miracle. Then, in November, he was beatified by Pope Benedict 16th.

Rosmini was a catholic priest, but also an economist. He was our kind of economist, not one who wanted to put his clumsy paws on the knobs and levers of the delicate machinery of capitalism…but one who stood back, admiring it…and trying to figure out how it worked. Back in the middle of the 19th century, free market economics (what we would call ‘libertarianism’ or Austrian school economics) was regarded by the catholic church as only one short step removed from Satanism. Rosmini’s career and his life were cut short when he was put on trial by the Vatican in 1854. He died the following year. Thirty three years later, 40 of his “propositions” were condemned by the Holy Church. But by rehabilitating Rosmini, the Vatican is at least headed in the right direction.

Now, it is the profane authorities who err. Just as he said they would.

Enjoy your weekend,

Bill Bonner
The Daily Reckoning
http://www.dailyreckoning.com/

The President has taken this country to war and the war has not gone well. He has misjudged the spiritual strength of a militarily inconsequential but profoundly committed enemy. War was not even a distant issue when he first became President, and he is increasingly frustrated that this unsuccessful war is defining his presidency. Testy exchanges with journalists have caused him to almost abandon news conferences, he is openly mocked on television and on the street, and his popularity ratings have plummeted. Never one to seek wide counsel, he increasingly surrounds himself only with advisers who give him good news, who tell him what he wants to hear.

No, his name is not George Bush. His name is Lyndon Johnson.

“I am not going to lose Vietnam,” Johnson said. “I am not going to be the President who saw Southeast Asia go the way China went.” It is significant that Johnson thought of the war in the first person—”I am not going to lose.” Johnson had a famously monumental ego and soaring ambition. Friends, fellow politicians, and historians consistently report that what motivated Johnson from his schoolboy days to his presidency was a pure lust for power and control unusual even for a politician. As Johnson’s biographer Robert Caro observes, “Johnson’s ambition was uncommon—in the degree to which it was unencumbered by even the slightest excess weight of ideology, of philosophy, of principles, of beliefs.”

Lyndon Johnson edited reality to suit his needs. Anyone who disagreed with him on Vietnam policy was a “knee-jerk liberal,” “crackpot,” “nervous Nellie,” or “troublemaker.” There was no such thing for him as loyal dissent. Lyndon Johnson was as politically competent as any President in history (and he used that competence for good in getting passed the 1964 Civil Rights Act). He lacked, however, the wisdom and moral courage necessary to keep this country from far deeper entanglement in a disastrous war.

Iraq is not Vietnam. George Bush is not Lyndon Johnson. Taking a country to war is not automatically wrong. But grave decisions of war and peace, life and death, prosperity and privation—on the domestic and international fronts—are made by Presidents during their time in office. At election time, we the people decide who our decision makers will be. And we too often decide poorly, because we ask the wrong questions.

We make the same mistake as one recent grumpy CNN commentator: “What we need from these candidates are details of how they are going to solve our problems. How are they going to stop the slide of the dollar? How are they going to get the troops home from Iraq? How are they going to fix Social Security? That’s what we need to know.” Grumpy and wrong. There’s value in hearing a candidate’s plans and proposals, but it’s of secondary or even lesser importance. Few if any of those plans and proposals will survive the political process intact. Voting for Obama’s health plan or Hillary’s economic scheme or McCain’s immigration policy is virtual-reality voting, positing an intriguing alternate world, but having little to do with this one. When it comes to picking a President, Gandhi had it right: “The obligation of accepting a position of power is to be, above all else, a good human being.”

“You’ve got to be kidding,” one hears our CNN commentator saying. “‘Good human being’? Who’s to say what constitutes a ‘good human being’? I want someone competent to run the country.” Wrong again. Competence without virtue is poisonous. It simply makes one more effective at doing wrong. Furthermore, being virtuous is, in itself, an expression of competence. Since virtue is a requirement for leadership, a lack of virtue in a leader is a sign of incompetence and grounds enough for rejecting that leadership. Virtue is a personal matter, but it is never wholly a private one, certainly not in a President.

Read the article at >>>>>   http://www.christianitytoday.com/ct/2008/june/17.22.html

by Ron Paul

• Introduction
• The Economy
• Potential for War
• Social Discord
• Conclusion

The indictment of the Bush administration for its conduct of the war on terrorism is both familiar and increasingly insistent. In the aftermath of 9/11, it is charged, the White House responded in ways that not only traduced the U.S. legal system but radically transformed it, stripping American citizens of time-honored rights, trampling on the fundamental premises of our Constitution, and bringing shame on our country for extreme and illegal practices in the treatment of suspected adversaries.

Across seven years, a vast journalistic and legal literature has catalogued the depredations allegedly visited on the American constitutional order. Numerous lawsuits challenging the administration’s counterterrorism policies, brought by groups ranging from the American Civil Liberties Union to the Electronic Frontier Foundation, are moving up and down the rungs of the federal court system. The issues have been caught up in the presidential election contest, with both Hillary Clinton and Barack Obama slamming George W. Bush for having breached the proper channels of executive-branch power, and castigating John McCain for carrying the President’s banner.

At stake are legal and policy questions that are exceptionally complex, involving a clash between the exigencies of national security and the most cherished provisions of our civil and political order. Has there indeed been a fundamental shift to our common detriment? If so, how did it happen, and why?

Read the entire article at Commentary>>>>>

www.commentarymagazine.com

Consumers shell-shocked by ever higher records for oil and gasoline prices may have been surprised by the mild Producer Price Index (PPI) update recently issued.

The Labor Department reported that from March to April, wholesale prices rose only 0.2 percent, half of what the markets had been expecting. The primary cause for this tame reading was that energy prices fell 0.2 percent, and in particular gasoline prices fell by 4.6 percent.

What, you think I misunderstood the news?

I’ll reproduce the exact quote from the CNBC article linked above, just so you believe me:

The slower than expected overall inflation was due to falling energy prices and flat food prices, categories that boosted inflation in the previous month.Energy fell 0.2 pct, the largest drop since December, while food was unchanged in the month. Within the energy sector, gasoline fell 4.6 pct, the largest drop since December.

This struck me as odd. It reminds of a line from Chico Marx: “Who are you going to believe, me or your own eyes?”

I do a lot of work in energy economics, and so I follow oil and gas prices fairly closely. Despite the official figures, I was pretty sure gasoline prices went up from March to April; they certainly didn’t fall 4.6 percent! I had to get to the bottom of this mystery.

First Stop, EIA

The first thing I did was check the price history at the Energy Information Administration. Yes, this is a government entity, but I’ve met some of their current analysts, and they are just the sort of retentive geeks you want crunching boring but important numbers. (If any are reading, I hope they realize that is a compliment.) Lo and behold, the EIA table shows that the lowest average weekly gasoline price in April was higher than all of the weekly averages in March. Clearly gasoline was more expensive in April than in March, just as I (and every motorist in the country) would have guessed. Hmm.

To Every Price, There Is a Season

After asking some colleagues and nosing around, I hit upon the answer. No, we weren’t living in 1984, you see, it was that the Bureau of Labor Statistics (which calculates CPI and PPI) had made a seasonal adjustment to the raw gasoline prices that people actually paid and that the EIA recorded. As a different CNBC article explains:

Typically, gasoline prices rise sharply in April as the arrival of warmer weather encourages people to drive more. The government data is adjusted to reflect that pattern so that it can highlight variations from the trend. Because gas prices did not rise as much last month as they typically do in April, the seasonal adjustment showed that prices fell.

Now before we see whether this can explain the anomaly, a brief digression: The paragraph quoted above is a bit too simplistic. To correctly make a seasonal adjustment, one doesn’t simply look at how much prices typically rise from the prior month to the month in question. This rule might make sense if annual prices were constant, but with a backdrop of ever higher prices year after year, the rule isn’t quite right.

For example, suppose that, each and every month, the price of a widget always rises by 0.3 percent, year in and year out. According to the explanation given in the CNBC article, one might think then that if we look at widget prices last month and see that (as usual) they rose exactly 0.3 percent, then we would conclude, “Ah, that’s normal; they always do that from March to April. So really widget prices were flat.”

But to reason in this fashion would be wrong, of course, because we would reach the same conclusion for every month, and end up thinking widgets had stayed the same price throughout the year. (In other words, every month we would say, “Oh, that 0.3 percent rise is just due to the change in month; it did that this time last year, as well.”) Yet in reality, widget prices would be about 3.7 percent higher after a twelve-month cycle, so clearly we wouldn’t want to seasonally adjust all the price hikes away.

The correct way to do seasonal adjustments is actually rather complicated, and different econometricians could use different approaches. (For example, how far back do you go? Do you look at the change in gasoline prices from March to April 1924 to help interpret the monthly rise in 2008?) I’m not faulting the CNBC writer for the explanation given above — notice that I’m not trying to give a better description — but I still thought it worth mentioning that the analysis wasn’t quite right.

So Is the Mystery Solved?

Now at this point, I put down my Guy Fawkes mask and bulletproof vest. My government hadn’t lied to me after all. Phew!

But still something bothered me. That original article said gasoline prices had fallen by 4.6 percent, when in reality they went up by a decent amount. And we know that crude prices are surging up at record-breaking levels. Could seasonal adjustments really explain all that away?

To shed light on this question, I went back to the EIA data sets. Rather than weekly averages, this time I pulled up monthly averages, going back as far as they had them (August 1990).[1] I constructed a new table (shown below), which lists April-over-March gas price increases from 1991 through 2008. I then added a column showing the average April-over-March increase for the entire time span from a given year up through 2007. Finally, I added a back-of-the-envelope “seasonally adjusted” column, which took the 2008 value for April over March — 6.6 percent — and then subtracted the relevant monthly average for the periods of different lengths.

Before proceeding, let’s make sure we understand what the table is saying. In 1996, for example, gasoline prices in April were 8.3 percent higher than in March of that year. In contrast, in the year 2000, gasoline prices in April were actually 3.4 percent lower than the month before. (These numbers are shown in the second column.)

For another factoid, the table’s middle columns show us that over the 17 years from 1991 through 2007, the (arithmetic) average price increase from March to April was 5.2 percent. However, in recent years the April-over-March increases have been much steeper, and that’s why if we look back less distantly into the past, our average will go up. For example, if we only use a three-year average, we would say that from March to April, gasoline prices historically go up 10.7 percent.

Finally, the last column in the table simply takes the 2008 increase of 6.6 percent, and subtracts the period average for every year taken as the starting point of the period. For example, if we look back eleven years, we see that on average gas prices go up 5.8 percent from March to April. Since they went up 6.6 percent this year, we would say that — based on the previous eleven-year history — the crude seasonally adjusted price hike this year should have been +0.8 percent, because gas prices increased more this April than they usually do.

Now that we understand how the table works, we get to the fun part. Recall that the second CNBC article said that prices typically rise in April, and because this year’s rise was below normal, the BLS reported a seasonally adjusted drop. Well, in the middle columns I have colored a year gray if the period average starting at that year is lower than the 2008 value. As you can see, if the BLS used a five-year window, the (crude) seasonally adjusted increase should have been positive, not negative. Indeed, only if the BLS used a window of the previous 1, 2, 3, 4, 6, 7, or 9 years, would the sign of its seasonal adjustment have been correct. For any other period length — including the nice round ones of five years and ten years — the 2008 increase is higher than the historical average.

Yet it gets worse. The BLS didn’t simply report that gas prices fell, once adjusted. No, the BLS said they fell by 4.6 percent. So in the final column, I have colored green the one year for which the (makeshift) seasonally adjusted figure is lower than a 4.6 percent drop. In other words, if I adopt the crude technique suggested by the CNBC article, the only way I can generate a seasonally adjusted drop of at least 4.6 percent for 2008, is if I choose 2006 and 2007 as what happens in “typical” years. If I choose any other period length, then I will get a seasonally adjusted change that is greater than the BLS number.

What If We Don’t Use a Crude Measure?

As I explained earlier, the proper way to perform seasonal adjustments really isn’t what the CNBC article claimed, and yet that’s the crude method I used for the table above. So it’s possible that the BLS came up with its figure of minus 4.6 percent through a perfectly legitimate method. I tried to find a methodological essay on their site, but the best I came up with (due to a tip from a colleague) was a link to their latest model, which was far from edifying. I had an intuition that perhaps the increases earlier in 2008 were very large, so that the model expected 2008 on the whole to have a large increase, making the actual April increase comparatively modest. But that theory didn’t work either, since the March-over-January increase in 2007 was far higher than in 2008. At this point I abandoned my quest to understand the official BLS number.

Conclusion

People have a right to be cynical about the government’s official price inflation numbers. As others have downright mocked, it is crazy to report on “core” inflation, as if the impact of soaring food and energy prices can safely be neglected. In my experience, the government (at least the US government) doesn’t actually lie in its periodic reports, because it doesn’t need to: when it comes to models in the social sciences, there are all sorts of dials one can turn to get just about any result desired.

What really bothers me in this whole episode is that the press is so sloppy. I don’t expect the average business reporter to pontificate on the evils of fiat money — of course not. But the CNBC story I cited originally reported things that were false. It was not true that “gasoline fell 4.6 percent” in April. No, the correct thing to say would have been, “After making a seasonal adjustment, the BLS reported that gasoline prices fell…”

The government wants to shape perceptions in order to minimize dissatisfaction with its irresponsible monetary and fiscal policies. When the financial press goes along and parrots statements that are obviously false, it fails in its duty to its readers.

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Notes

[1] You could get slightly different numbers by changing which grade, etc. of gasoline you tracked, but it wouldn’t change the overall picture very much.

Last fall, our television sets were bursting with ads touting the work our local legislators do for the environment and our open space. Don’t be fooled. For years, town councils have fought bad developments that would gobble up New Jersey’s open space and pollute our drinking water, as legislators have consistently sat by. Now the Legislature, which promoted its green credentials during election season, is trying to undo the good work carried out in our towns and our state to protect our open space and water. With a strong nudge from developers, legislators are rushing to short-circuit environmental progress over the last two years and extend developer permits. And — the worst part — they’re trying to do it before the public finds out. That’s where you come in. Legislature should represent you, not developers. In order to represent you, legislators need to hear from you in person and be reminded that the public will hold them accountable. New Jersey needs you! Take the day off from work. Bring your family. Invite your friends. Whatever you do, come to Trenton to lobby your legislator in person and attend a mass press conference. Take a stand! Show your legislators what matters to you: http://www.environmentnewjersey.org/action/preservation/rsvp?id4=ES What’s at stake? The Permit Extension Act negates past protections adopted after 2006, like no-development buffer zones around state waterways and new protections against flooding. The effort would give up to seven years to extend projects until the eve of 2013 (and even up to 2015 in some cases), without regard to new environmental protections in the years ahead. The bill is speeding through the Legislature right now and scheduled to pass in the next two weeks. Let’s pull the brakes the developers’ dream bill by taking a stand in Trenton to show the Legislature that the public matters and will hold them accountable. Let Legislators know the public matters! For more details on this breaking news, visit our Web site. Sincerely, Dena Mottola Environment New Jersey Executive Director DenaM@EnvironmentNewJersey.org http://www.environmentnewjersey.org P.S. Thanks again for your support. Please feel free to share this e-mail with your family and friends.

by Jim Fedako
My family recently traveled to Texas to relax and camp. I returned with a few observations.

Because They Can

Camping? Alright, we pull a travel trailer, with hot water, A/C, etc. We’re not roughing it, but our SUV is relatively cramped when you consider the empty space being towed behind us. One of my daughters asked, “Why did the state make it illegal to ride in the trailer?” Questions like these always give me pause.

There is the party line: “Well, state officials feel that riding in the trailer can be dangerous. They are only protecting us.” But, wait. Since not all states ban such travel, the party line is not valid — it never is.

The true response is this: “The state officials ban activities because they can. Regardless of the reason, regardless of their belief in an individual’s ability to act in his or her best interest, they ban it because they can. Plain and simple.”

Division of the Consumer

Sure, we give labor its due, but what about the consumer? While traveling and camping, we end up at a different campground every night. Since we were in areas new to us, we had no real action-knowledge of possible campgrounds, their cost, or condition.[1] Sure, there is the occasional KOA, but for the most part, campgrounds are independently owned and locally operated.

All that we had to guide us was our Garmin and campground guide. Yet, every campground we stayed at was just what we desired: clean and cheap.

Even though each owner can be almost certain that we are never going to return to their campground, they were pleasant and helpful. So, why are these campgrounds such joys? Simple: the division of the consumer.

You see, it is the locals and the regulars who demand quality at a reasonable price. In addition, it is these very same folks — and their preferences — that drive the market for local campgrounds. Through this process, my family benefits.

Of course, the same is true for most hotels, stores, restaurants, etc., across the United States; the locals and regulars guide the entrepreneur and his investments.

When these folks visit my slice of Ohio, I will repay them. They will benefit from my buying and abstaining from buying. Each day, my neighbors and I direct local entrepreneurs to produce desired products and services. In the end, everyone benefits from individuals acting in their own best interests, acting without outside — or centralized — influence.

Public Schools

Regardless of the socioeconomics of an area, and in spite of any drought or water shortage, every public school that we encountered was the best-looking building in sight, surrounded by the greenest grass. This is the result of the false belief that government spending drives improvements and leads to positive results, and the belief that tax dollars spent by public schools benefit children and society, both locally and throughout the nation — as if impoverishing the nation for new bricks and green grass will bring about utopia.

In reality, these expensive, well-kept edifices are simply the tokens that government provides for confiscated income and indoctrinated children. Not a fair trade in my eyes.

Route 66: Capital, Value, and Taxation

I-44 through Oklahoma parallels the famed Route 66. For a stretch, we ventured off the highway and back in time.

Route 66 is still strewn with small towns, motels, garages, etc., all suffering from the lack of consumers and dollars. We spent one night camping at an RV park that has seen wealthier days. The campground’s facilities and bathrooms were clean and functional, with the exception of the pool and bathhouse. From all appearances, the owner abandoned the pool years ago, probably not too long after I-44 replaced Route 66 as the road west.

Now, the going rate for campgrounds in that area is $18 per night for water, electricity, and sewer hookup. The owner obviously recognizes that money spent on the pool does not lead to more guests or more profit. Moreover, the guests — all overnighters — have little value for a pool. Therefore, capital reinvestment was reduced from that which sustained a prized Route 66 campground to that which sustains one that now exists off the main road — and the pool is gone.

Likely, the market value of the campground fell the moment I-44 was first proposed. The value of the campground has nothing to do with the amount of labor and resources that went into its production. No, its value is purely driven by the ability of an entrepreneur to obtain profits from his investment.

This is important to note: Since taxation on capital goods reduces the ability of entrepreneurs to obtain a profit, taxation reduces the value of commercial property and the amount of capital reinvestment. Taxation moves the capital good from the main road of consumer preference to the slow, back roads of misallocation — and the pool is gone, so to speak.

Taxation does not create value. Instead, it leads to higher current consumption over capital investments, steadily robbing our future, and our children’s future.

The Border

We spent four nights in Big Bend National Park, alongside the Rio Grande, with Mexico literally a stone-skip away. If it wasn’t for the green swath of vegetation that accompanies the Rio, you likely wouldn’t even notice the river. And yet this is the evil border, and we were about to meet its residents.[2]

Criminalizing Trade

Boquillas is a small village just south of the Big Bend in the Rio. This village used to be the home of 200 people who made a living trading with park visitors. Just a handful of years ago, the border in this area was relatively open, and park visitors and village residents could cross at will. That all changed with 9-11 and the fear subsidized by government and prodded by politicians. Now, it is illegal to cross the border. But the traders to the south still venture across the knee-high waters in order to sell their wares: walking sticks, painted rocks, etc.

The park newsletter notes that items purchased from these Mexicans are considered contraband and will be confiscated by officers. In addition, US citizens who cross the Rio and attempt to reenter the US are liable for a “fine of not more than $5,000 or imprisonment for up to one year or both.”

With a stroke of the pen, the United States criminalized free trade, and Boquillas is now a dying village. Are we safer? Absolutely not. Criminalizing activities does nothing more than create criminals on both sides of the border.

The “illegals” we encountered were very friendly, just business folks looking to put food on the table. Regardless, someone under threat of government will react differently than the storekeeper in some situations. In the end, it is the park visitor who likely ends up the criminal, simply by crossing a river to make an exchange that benefits both parties, and harms neither.

The Function of Government

What is the role of government, if any? One can only justify government as the force that protects property. Of course, the extension of this argument quickly becomes contradictory, but we live in a world where government is reality.

The park newsletter notes that visitors who purchase a walking stick from Mexicans are subject to confiscation, etc., while also noting that visitors need to be on the lookout for drug runners and similar activities. On top of that, most parking spots had warnings noting frequent break-ins of unattended vehicles.

So there you have it: government writ large. The only entity that can legally carry a weapon in the park is not willing or able to protect my property. This very same entity will quickly fine, arrest, etc., anyone caught purchasing an untaxed, $5 painted walking stick. Government security is nothing less than a sham.

In the end, government exists solely to protect itself from my activities. It does not exist to protect my property.

Postscript: Presumed Guilt

On the trip home from the border, with the Rio some 100 miles behind us, we were forced to pull into a border patrol station along with everyone else on the road. Here, the rule is presumed guilt. And, in a scene from a cheap war movie, a man with a sidearm asked me where we were from and where we were going. Milling about were five other holstered agents with a guard dog, deciding whether my story met with their approval.

The officer at my window, with his challenging mannerisms, listened to my story and made his decision, all the while holding my life and liberty in the balance. It was then that I realized that it wasn’t just my family that was on vacation — we have allowed liberty to go on vacation as well.

Thinking back to my response to my daughter’s question, I realized that it was time to extend my words: They do it because they can. We fight for liberty because we must. No one else will do it for us.

Notes

[1] See “Symposium on Information and Knowledge in Economics,” Econ Journal Watch, Volume 2, Number 1, April 2005, pp. 75–81.

[2] In a nation turned upside down, the closer we got to the Rio, the lower the fear of open borders. No one we met in the park had anything good to say about restricted border crossings. Yet, here in the heartland, the fear of the border is still a powerful political weapon.