New Jersey Survival

Ask yourself this question: was the housing price bubble, which has burst, caused by (a) a Fed policy of too much liquidity, which caused artificially low interest rates, which in turn caused a great deal of malinvestment, or (b) a Fed policy of too little liquidity which caused high interest rates and a credit-starved economy? If you chose answer b, congratulations, you may have a future as a celebrated author, historian, and Wall Street Journal commentator.

Answer b is a theme of a truly ridiculous article by John Steele Gordon in the October 10 issue of the Wall Street Journal online entitled “A Short Banking History of the United States.” The article is an attempt to defend the Fed, its founding father, Alexander Hamilton, and the regime that it finances. (Gordon is the author of a book entitled Hamilton’s Blessing which sings the praises of a large public debt, something that Hamilton himself called a “public blessing.”)

Rather than faulting the Fed for creating yet another boom-and-bust cycle, Gordon blames the current economic debacle on “the baleful influence of Thomas Jefferson.” Jefferson was the foremost opponent of a bank capitalized with tax dollars and operated by politicians and their appointees from the nation’s capital — Hamilton’s Bank of the United States (BUS), a precursor of the Fed. Thus, despite the fact that the real blame for the current economic crisis lies squarely in the lap of the Fed and its ideological underpinnings — particularly the legends and myths surrounding Hamilton — Gordon attempts to convince us that opposition to politicized, centralized banking is the real problem. Anyone who believes this could easily be persuaded that up is down, white is black, and day is night. The purpose of the Fed, according to Gordon, is to serve as a sort of a monetary benevolent despot: “To guard the money supply … regulating the economy thereby.”

Right-wing statists like Gordon, like left-wing statists, have adopted the custom of smearing Jefferson as a slave owner not so much because they are appalled that he owned slaves, but because their objective is to denigrate his laissez-faire/limited-government political philosophy. Gordon includes the Jefferson slavery smear in his article, but fails to mention that his hero Hamilton also owned “house slaves,” which were brought into his marriage by his wife Eliza; he once purchased six slaves at an auction; and he supported the return of runaway slaves to their “owners” under the Fugitive Slave Clause of the original Constitution.

Indeed, nearly all of the “first families” of the New York City of Hamilton’s time — his main social and political circle — were slave owners. As Hamilton biographer Ron Chernow has written, during Hamilton’s time, “New York City, in particular, was identified with slavery … and was linked [economically] through its sugar refineries in the West Indies” (where Hamilton was born and raised). By the late 1790s slaves were “regarded as status symbols” by the wealthiest New York families.

Gordon spreads several other falsehoods about Jefferson in the leading paragraphs of his article. This in itself is telling, for it shows that court historians like John Steele Gordon fully understand the importance of Hamilton’s statist political philosophy in propping up the Fed and the regime that it finances. Gordon claims that Jefferson, a lifelong businessman, “hated commerce,” “hated banks,” and “may not have understood the concept of central banking.” He also argues that Hamilton, by contrast, had a “profound understanding of markets” because he worked as a bookkeeper for British slave-owning sugar-plantation operators and exporters as a teenager on the Caribbean island of St. Croix. This is nonsense on stilts, as the philosopher Jeremy Bentham is supposed to have said with regard to another spurious claim.

What Jefferson opposed was Hamilton’s mercantilist policies of government-controlled banking, corporate welfare, protectionist tariffs, heavy excise taxation, excessive public debt, and other interventions. Unlike Hamilton, Jefferson had read and understood Adam Smith’s Wealth of Nations and his Theory of Moral Sentiments, as well as the work of David Ricardo, Jean-Baptiste Say (who Jefferson tried to get to join the faculty of the University of Virginia), Richard Cantillon, and other economic theorists of that era. Hamilton was ignorant of or ignored all of this. His major intellectual influence was a propagandist for the British mercantilist regime named Sir James Steuart.

As Murray Rothbard wrote in an article entitled “A Future of Peace and Capitalism,”

Jefferson was very precisely in favor of laissez-faire, or free-market, capitalism. And that was the real argument between [Hamilton and Jefferson]. It wasn’t really that Jefferson was against factories or industries per se; what he was against was coerced [economic] development, that is, taxing the farmers through tariffs and subsidies to build up industry artificially, which was essentially the Hamilton program. Jefferson … was a very learned person. He read Adam Smith, he read Ricardo, he was very familiar with laissez-faire classical economics. And so his economic program … was a very sophisticated application of classical economics to the American scene … classicists were also against tariffs, subsidies, and coerced economic development…. The Jeffersonian wing of the founding fathers was essentially free-market, laissez-faire capitalists.

Compared to Jefferson, Hamilton was an economic ignoramus. His reputation as some kind of financial genius has been greatly exaggerated and fabricated, as the great late-nineteenth-century Yale sociologist William Graham Sumner wrote in his 1905 biography of Hamilton. In his Report on Manufacturers, for example, Hamilton presented the cockeyed notion that international competition would cause higher prices and protectionism would cause lower prices by causing domestic producers to compete more vigorously with each other. History had proven this to be an absurd idea long before Hamilton’s time.

Hamilton also condemned transportation costs, calling them “an evil which ought to be minimized” through protectionism. Of course, transportation costs also affect interstate trade, but Hamilton never voiced his opposition to them in that context. Hamilton was such a mercantilist that he even argued in favor of “a monopoly of the domestic market” by banning all imports altogether. It is little wonder that William Graham Sumner referred to Hamilton’s Report on Manufactures as a mass of economic confusion, just the opposite of a “profound and practical understanding of markets.”

Jefferson was not the only prominent opponent of Hamilton’s scheme to establish a bank operated by politicians out of the nation’s capital. James Madison also opposed the First Bank of the United States (BUS). The Virginia Senator John Taylor was as learned on the subject of political economy as Jefferson was, and immediately recognized the danger of imitating the Bank of England as a financier of mercantilist subsidies. “What was it that drove our forefathers to this country?” he asked. “Was it not the ecclesiastical corps and perpetual monopolies of England and Scotland? Shall we suffer the same evils in this country?” Hamilton’s answer would have been “why yes, we shall, for it is the surest route to accumulate power and wealth for myself and my fellow Federalists.” As Gordon wrote, “Hamilton wanted to establish a central bank modeled on the Bank of England.”

John Steele Gordon’s “short history” of banking is completely filled with falsehoods. Throughout his article, he blames Jefferson’s opposition to central banking for economic problems that were in fact created by Hamilton’s Bank of the United States.

As Murray Rothbard wrote in A History of Money and Banking in the United States (p. 69), as soon as Hamilton’s bank was established it

promptly fulfilled its inflationary potential by issuing millions of dollars in paper money and demand deposits, pyramiding on top of $2 million in specie. The Bank … invested heavily in loans to the United States government…. The result of the outpouring of credit and paper money by the new bank of the United States was … in increase [in prices] of 72 percent [from 1791–1796].

The BUS charter was not renewed after its first twenty years. Gordon blames Jefferson for this, but the above-mentioned economic instability that was caused by the BUS surely played a role. (And I’m sure Jefferson would have been proud to accept the credit for the demise of the BUS.) The BUS was revived after the War of 1812 (in 1817) and it immediately “ran into grave difficulties through mismanagement, speculation, and fraud,” wrote James J. Kilpatrick in his book, The Sovereign States. Consequently, “a wave of hostility toward the Bank of the United States swept the country,” which eventually led to President Andrew Jackson’s veto of the bank rechartering bill.

In 1817 the BUS quickly lent $23 million with a specie reserve of only $2.3 million. This flood of cheap credit created a brief economic boom, and then the inevitable bust, or depression, known at the time as the Panic of 1819. As Murray Rothbard wrote in The Panic of 1819, personal bankruptcies abounded, especially among farmers who had overextended themselves thanks to the BUS’s cheap credit; and there was for the first time large-scale unemployment in American cities, with manufacturing employment in Philadelphia falling from 9,700 employed persons in 1815 to only 2,100 in 1819. This was all Jefferson’s fault, says John Steele Gordon.

Another one of Gordon’s false claims is that “The Civil War ended … monetary chaos when Congress passed the National Bank Act,” which would become the state’s monopolistic monetary regime until the creation of the Fed in 1913. In reality, the so-called Independent Treasury System that existed from the early 1840s to 1863 was arguably the most stable monetary system in US history. Modern economic scholars have evaluated the Lincoln regime’s National Currency Acts and have arrived at the opposite conclusion of Gordon’s. In an article entitled “Money versus Credit Rationing: Evidence for the National Banking Era, 1880–1914″ (in Claudia Goldin, ed., Strategic Factors in Nineteenth-Century American Economic Growth) Michael Bordo, Anna Schwartz, and Peter Rappaport concluded that this Hamiltonian system “was characterized by monetary and cyclical instability, four banking panics, frequent stock market crashes, and other financial disturbances.”

Gordon notes that “inflation took off in the 1960s” but does not blame the actual cause of the inflation — the Fed and its legalized counterfeiting operations. He concludes by praising the regime’s current plans to nationalize the financial markets by assuming stock ownership in banks and appointing the US Treasury secretary as the nation’s first financial dictator. He thinks this will finally, at long last, achieve Hamilton’s dream of a “unified and coherent regulatory system free of undue political influence.”

Of course, no government institution in the history of the world has ever been free of political influence, due or undue. This is perhaps Gordon’s most spectacularly stupid remark.

“Unified” or centralized regulation of industry has long been a goal of statists who favor regulatory dictatorship as opposed to a governmental regime that delegates “too much” regulatory power. Gordon himself bemoans the “conflicting” regulations on the banking industry that have been imposed by the Fed, and the FDIC, FSLIC, SEC, and other federal regulators.

The system of financial regulatory dictatorship that Gordon praises, and which is about to be forced down the throats of the American public, has been tried before in other countries. During one of its own periodic financial crises, Italian government officials complained bitterly, as Gordon does, of regulation that has been “disorganic” and “case by case, as the need arises.” The Italian regime altered its regulatory system so that it could pursue “certain fixed objectives,” just as Gordon argues for a “unified and coherent regulatory system.” This highly centralized or even dictatorial regulatory system, the Italians argued, would supposedly “introduce order in the economic field” and achieve the goal of “unity of aim” with regard to government regulation of industry.

All of the words in quotation marks in the preceding paragraph, except for the last ones, are the words of Benito Mussolini. The “unity of aim” phrase was from Mussolini apologist/propagandist Fausto Pitigliani. There is, after all, a very keen similarity between Hamiltonian mercantilism — or an economy directed and controlled by government, supposedly “in the public interest” but in reality for the benefit of a privileged few — and the economic fascism of Italy (and Germany) of the 1920s and ’30s.

[VIEW THIS ARTICLE ONLINE]

_________________________

Thomas DiLorenzo is professor of economics at Loyola College and a member of the senior faculty of the Mises Institute.

Caveat Emptor!     http://www.nakedcapitalism.com/

CARTOON CAPITALISM
by Bill Bonner

Last week, purely in the spirit of mischief, we brought up a sore subject: America’s largest mortgage finance companies, Fannie and Freddie. The two have so much water in their lungs it will take at least $25 billion of the public’s money to save them. Possibly $300 billion. Were it up to us, we’d leave them on the beach.

But, last week, the U.S. Senate bent down and pressed its large mouth onto those gaping traps of the mortgage twins - gurgling into them a corrupt breath of life. Since the two hold one out of every two mortgages in the nation, in effect, Congress is nationalizing the U.S. housing stock itself. Henceforth, citizens will pay not only their taxes to the government, but their mortgage payments too.

In America itself, how this came to be is the subject of little concern. But despite the lack of interest, it is the subject of the next 500 words or so.

At a speech in Vancouver, James Kunstler seemed positively delighted. Finally, gasoline over $4 a gallon was going to do what generations of artistic scorn could not - destroy Fannie and Freddie’s collateral. Kunstler’s critique of American suburban vernacular architecture is that its products are not real houses at all - but “cartoon houses.” They have porches that look like real porches from a distance, but they are too narrow to sit on. They have shutters too - nailed to the wall, making them completely useless. They may have “picture” windows…looking out on nothing…or no windows at all. And they wouldn’t exist at all were it not for cheap credit and cheap gasoline.

Of course, the same may be said of America’s - and Britain’s - entire economies during the last 20 years. The loose credit that built cartoon houses also constructed cartoon economies; they look like real economies, but they are essentially perverse, consuming wealth rather than creating it.

For proof, we return to Fannie and Freddie. Here were two companies that appeared to be helping Americans own houses. But since they were created, homeowners’ equity - that portion of the house actually owned and paid for by the homeowner - fell from 70% to below 50%. Currently, Americans’ total equity is lower than their mortgage debt. As a whole, the nation’s homeowners are “upside down,” in other words. Nearly 9 million Americans have zero or negative equity already - and house prices are still falling.

How comes this to be? The answer is simple: lenders lent more than the houses were worth to people who couldn’t pay it back anyway. This Looney Tune approach to finance radiated to all points of the economy. People pretended that they earned more - spending more and more money to buy more and more goods and services - but wages did not really increase. Then, they bought houses - believing the roofs over their heads were investments, rather than consumer items. With no down payment, no proof of income, and zero interest loans - for most of the new buyers, home ownership was merely a dangerous conceit. Now that the roofs have caved in, it is a staggering burden.

The “consumer economy” was always a mockery. No serious economist ever suggested that you could get richer by consuming wealth. But that didn’t make consumerism unpopular. The more people consumed, the more GDP went up. GDP measures output, not wealth creation; but who could tell the difference? In a cartoon economy - no one. Besides, spending made people feel as though they were getting richer.

Then, whenever the consumer threatened to come to his senses, the feds rushed to “stimulate” him - by giving him more of what he least needed, more credit. More spending kept the cartoon economy running - allowing the consumer, the businessman and the speculator to add to his burden of debt. In 1971, when the United States went off the gold wagon, household debt was less than 50% of GDP. Now, it is more than 100%. And now, the poor consumer’s knees buckle; he will be forced to work the rest of his life just to keep up with his debt burden, let alone pay it off.

Even the rentiers were bamboozled by their own claptrap. Stocks rose from ‘82 to 2000…fell heavily to 2002 and bounced back. For the last 10 years, shareholders have gotten little for their effort. In July of ‘98, the FTSE hit a high of 5,458. This month, it has reached 5,625. And in America, if stock prices were quoted in gallons of gasoline, the Dow would take the driver no further in 2008 than it did 40 years ago.

The cartoon capitalists did it all backwards; they are supposed to exploit the workers, not be exploited by them. But while consumers and investors were going nowhere, corporate managers and Wall Street hustlers were getting rich. The two Bozos running Fannie and Freddie, for example, pocketed about $32 million between them last year - during a period in which the companies lost almost $5.2 billion - not to mention the losses to shareholders. And on Wall Street, managers paid out $250 billion in bonuses in the 4 years leading up to the credit crunch. The firms declared a profit and paid bonuses when the bets were made; they didn’t wait to see how they turned out. Thus did the big banks and big brokers become capitalists without capital, dependent on the gullibility of investors to keep them in business. And when investors began to wise up, they turned to the public for capital support.

What kind of scam is this? It may look like capitalism from a distance. But this is not real capitalism; this is cartoon capitalism - run by clowns, who sell freak investments to chump investors, and encourage the lumpen householder to ruin himself.

Editor’s Note: Bill Bonner is the founder and editor of The Daily Reckoning. He is also the author, with Addison Wiggin, of the national best sellers Financial Reckoning Day: Surviving the Soft Depression of the 21st Century and Empire of Debt: The Rise of an Epic Financial Crisis.

Bill’s latest book, Mobs, Messiahs and Markets: Surviving the Public Spectacle in Finance and Politics, written with co-author Lila Rajiva, is available now by clicking here:

Mobs, Messiahs and Markets

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 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.