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How Regulation & the Fed Killed the Competitive Spirit in the Banking Community

in Business and Economy, Economic Liberty, Economics, Liberator Online, News You Can Use by Alice Salles Comments are off

How Regulation & the Fed Killed the Competitive Spirit in the Banking Community

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

During a recent House Committee on Oversight and Government Reform hearing, a group of lawmakers wanted to know why there have been so few new banks opening their doors in America in recent years.

MoneyWhile it’s hard to admit that, for once, a group of Washington insiders are actually asking the right question, it’s also important to go beyond their concern by looking at why the sluggish economy is, in fact, to blame, but not because of economic factors alone. The problem, Mercatus Center’s Stephen Matteo Miller wrote, is regulation.

As the country announced the end of the economic crisis of 2008, the Federal Deposit Insurance Corporation’s application process was prolonged, hoping to cap the number of failed banks over time.

While this explains part of the problem, another issue also brought up by the Mercatus scholar may explain the other reason why there’s so little competition in the banking business.

According to a study carried out by the Federal Reserve Bank of Richmond, the implementation of low interest rates defended by the Federal Reserve leadership may have had been directly to blame for low competition as well.

The conclusion both economists and the Mercatus scholar agreed on despite the findings by the Richmond Fed is that, laws like the Dodd-Frank Act, which adds to the regulatory burden, as well as the FDCI’s rule change had the most negative effect on the competitive aspect of the banking market, effectively protecting established banks and keeping smaller, more consumer-oriented banks out of the market. The artificial modifications made by the Fed have also contributed.

Over time, restrictions developed as regulations embodied in the Code of Federal Regulations have also had a negative effect on the overall health of the American economy. According to the Cumulative Cost of Regulations study carried out by the Mercatus Center, the regulatory burden may have helped to reduce gross domestic product (GDP) by $4 trillion. This aggressive and dramatic reduction may have also prompted entrepreneurs in the banking community to think twice before launching a new business.

So when reviewed carefully, the phenomena now under consideration by Congress has little to do with what many believe to be slow economic growth, or what many progressives like to call “record profits.” After all, it’s easy to measure how successful the established, too-big-to-fail banks have become over the past 6 or 7 years. What’s hard to assess is how much wealthier we would have been if government had gotten out of the financial system altogether.

Minimum Wage Laws Push Young Blacks Out of the Workforce

in Business and Economy, Economic Liberty, Liberator Online, News You Can Use by Advocates HQ Comments are off

Minimum Wage Laws Push Young Blacks Out of the Workforce

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Unemployment is in the news again. But the media’s focus on the presidential elections seems to keep Americans from discussing the ongoing economic disaster we haven’t had the time to deal with since 2008. But as the Federal Reserve chairwoman shows signs of mild nervousness, more news outlets begin to pay attention. Still, few choose to dig deeper, and the great majority of the American electorate remains oblivious to the root causes of the problems they are dealing with now.

Walter E WilliamsIn order to help his fellow Americans understand the realities of government-management of economic policies, economist and professor Walter E. Williams wrote an article discussing the shift in unemployment rates and demographics over the past decades, helping us understand how bad the consequences of government interference are.

According to Williams, the unemployment rate of African American teenagers in 1948 was 9.4 percent while in 2016, the black teenage unemployment rate is about 30 percent. Still in 1948, the unemployment rate of white teens was higher, at 10.2 percent, while in 2016, it’s at 14 percent.

To the libertarian economist, what has caused this problem we have at hand is the elitist mentality.

In his article, Williams points out to comments made by another economist, David Howell, to illustrate the shifting mentality.

When talking about minimum wage laws and the reasons why we should embrace a higher minimum wage policy, Howell, who Williams calls a New School economist, says that we should not be worried about one of the most devastating consequences of raising the minimum wage: job losses. “Why shouldn’t we in fact accept job loss?” Asked Howell. But it was another scholar, Economic Policy Institute economist David Cooper, whose comments appeared to have truly triggered Williams.

“What’s so bad about getting rid of crappy jobs,” Cooper says, “forcing employers to upgrade, and having a serious program to compensate anyone who is in the slightest way harmed by that?” To Cooper, working fewer hours but making more money is all that matters, even if millions end up struggling to have access to entry level jobs due to the tough wage requirements.

To Williams, a “crappy job,” economically speaking, is a job. And being unemployed means being out of a job.

Whether Americans do not look fondly back to the 1940s and 1950s, Williams explains that, back when wage policies weren’t as interventionist, teens took jobs that would seem undesirable to the New School economists of today.

When Williams was a teen, he explained, he and his buddies would rise early during summers to board farm trucks headed to New Jersey. His jobs then varied a great deal. At times, Williams would pick blueberries, but sometimes he washed dishes and mopped floors, but he also worked unloading trucks at Campbell Soup.

Unfortunately for many teens living in poverty nowadays, the same jobs are either unavailable or not “good enough” for big city kids. Instead of allowing people to choose what job they are willing to take in order to make some kind of money, those who support interventionism in the economy prefer to see the poor unemployed and unskilled to see them fend for themselves.

If Williams is correct and current black leadership is all in favor of this view, things are only going to get worse.

More Fit Than Fat

in Liberator Online, Walk the Walk by Brett Bittner Comments are off

More Fit Than Fat

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

It is a new year, and like every January that I remember, many of us make resolutions to improve an aspect or two of our lives. Some of us want to spend more of our time and attention with loved ones. Others want to improve our health by kicking a bad habit, watching what we eat, or increasing the frequency with which we exercise.

I love seeing people make positive changes in their lives. It’s exciting. Lately though, I have noticed something of a trend among the more fitness-focused in my network. I do not mean the folks who joined a gym the last week of December or were “waiting until after the holidays” to start working on attaining a six-pack before swimsuit season. I mean the guys and gals who are pumping iron, taking a spin class, or running treadmill marathons every day (or so it seems).

fitThe trend I see is a tendency to begrudge having all these new bodies at the gym. I see tweets complaining about full parking lots that will be “back to normal by February,” Instagram photos of a rookie misusing equipment, and Facebook posts poking fun at someone who just began their quest to be more fit than fat.

This trend is recent, but feels very familiar. The familiarity I feel comes from some within the libertarian movement, who challenge, ridicule, and belittle new and prospective libertarians. My hope is that this is not being done intentionally.

I am sure you have seen a “seasoned” libertarian speaking to someone whose interest in freedom is relatively young. They are pontificating about the fundamentals of natural rights and natural law, quoting long passages from Mises’ Human Action, or challenging a new libertarian’s view on a principle or issue of which they have yet to consider or examine the “proper” libertarian position. Perhaps you have seen another longtime libertarian list all of the “essential” books on their bookshelf, intimating that until they have been read, no ounce of libertarianism resides within this n00b. Possibly, you have borne witness to a game I like to call “The Biggest Libertarian in the Room,” where the “winner” is a jerk who made everyone else feel like they are not libertarian enough to even remain there. Noted libertarian communicator Michael Cloud would probably classify each of these as examples of the “Libertarian Macho Flash.”

If you identify as having done any of the above or variants thereof, I ask that you think back to the time when you first found that thirst for liberty. You may not have protested the Federal Reserve on the first day after you realized your newfound political lifestyle. You may not have committed the entire e-book collection of the Mises Institute to memory during your first month as a new libertarian. You may not have begun to look for the unintended consequences in every new governmental proposal or program.

I admit that I am probably guilty of some variation of those dastardly deeds outlined above in the past, and, for that, I ask forgiveness. Today, however, is a new day where I know better than to run off the newly-interested while flexing my libertarian muscles and showing off my libertarian bonafides. I hope this opened your eyes to some of these behaviors, and you will join me in welcoming these new eyes, ears, hearts, and minds to the beauty of our philosophy.

Audit the Fed Could Come Up for a Vote in the Senate

in Audit the Fed, Economic Liberty, Liberator Online, Monetary Policy, News You Can Use by Jackson Jones Comments are off

Audit the Fed Could Come Up for a Vote in the Senate

This article was featured in our weekly newsletter, the Liberator Online. To receive it in your inbox, sign up here.

Sen. Rand Paul, R-Ky., announced on Tuesday several amendments that he plans to offer to the Cybersecurity Information Sharing Act (CISA), a controversial bill that could come up for a final vote in the upper chamber later this week. While most of the amendments are privacy-focused, one of them would require an audit of the Federal Reserve.

audit the fedPaul picked up the “audit the Fed” cause from his father, former Rep. Ron Paul, R-Texas, after his exit from Congress in January 2013. The amendment appears to be the exact same language of Paul’s Federal Reserve Transparency Act, S. 264, which was introduced in January. To date, the bill has 32 cosponsors. Rep. Thomas Massie, R-Ky., has introduced companion legislation in the House, H.R. 24, which is co-sponsored by 184 of his colleagues.

The amendment Paul plans to offer – that is, if Senate Majority Leader Mitch McConnell, R-Ky., doesn’t use procedural tactics to block them – would require the Federal Reserve to give information – such as discussion between the central bank the Treasury Department and transactions with foreign banks – currently excluded from audits conducted by Government Accountability Office under 31 U.S. Code § 714(b).

“A complete and thorough audit of the Fed will finally allow the American people to know exactly how their money is being spent by Washington. The Fed currently operates under a cloak of secrecy and it has gone on for too long,” Paul said in a release on Tuesday. “The American people have a right to know what the Federal Reserve is doing with our nation’s money supply, and the time to act is now.”

The House, in July 2012 and September 2014, passed iterations of the Federal Reserve Transparency Act by strong, bipartisan margins. The Senate, then controlled by Democrats, never took the bills up for a vote.

Federal Reserve Chair Janet Yellen has firmly stated her opposition to transparency at the central bank, claiming that it would threaten its independence. “Back in 1978 Congress explicitly passed legislation to ensure that there would be no GAO audits of monetary policy decision-making, namely policy audits,” Yellen said in December. “I certainly hope that will continue, and I will try to forcefully make the case for why that’s important.”

Any attempt at an real audit of the Federal Reserve would face challenges should Congress actually pass it. The White House, in February, announced its opposition to the bill, calling the measure “dangerous.”

Created by an act of Congress in 1913, perhaps one of the worst years for liberty, the Federal Reserve holds a tremendous amount of influence over the economy. Despite the arguments against stronger audits, the power the central bank holds means more transparency is necessary. The American people have a right to know what the Fed is up to.

They Said It… With Ron Paul, Seth Meyers, and More

in Liberator Online by James W. Harris Comments are off

(From the They Said It section in Volume 20, No. 10 of the Liberator Online. Subscribe here!)

DRUG PROSECUTORS RUIN LIVES:
Ethan Simon“Every time I opened a file [as a drug case prosecutor], I ruined a life. You can get over an addiction, but not a conviction. … The War on Drugs has failed in every respect and exacerbated every problem it was called on to fix.” — Ethan Simon, Bernalillo County, New Mexico assistant district attorney 2008-2011, now a member of Law Enforcement Against Prohibition (LEAP), speaking at the University of New Mexico School of Law, February 26, 2015.

AUDIT THE FED: “Perhaps the real reason the Federal Reserve fears a full audit can be revealed by examining the one-time audit of the Federal Reserve’s response to the financial crisis authorized by the Dodd-Frank law. This audit found that between 2007 and 2010 the Federal Reserve committed over $16 trillion — more than four times the annual budget of the United States — to foreign central banks and politically influential private companies. Can anyone doubt a full audit would show similar instances of the Fed acting to benefit the political and economic elites?” — Ron Paul, “Don’t Be Fooled by the Federal Reserve’s Anti-Audit Propaganda,” March 8, 2015.

NET NEUTRALITY: A “SOLUTION” LOOKING FOR A PROBLEM: “At the most fundamental level, net neutrality is a solution looking for a problem. There currently aren’t any companies paying ISPs for favoritism, and no clear indication that any will. Plus, even if they did, Internet speeds are increasing at an exponential rate, making the argument irrelevant. To illustrate this point, the University of Surrey in the UK is testing 5G Internet that will give mobile phones terabit speeds, faster than even the best fiber optic Internet connections today. At that speed, full-length movies in high quality would download in a split second. Spinning wheels in front of videos will be a thing of the past, no matter how much any company pays another. Yet, the FCC will still be able to regulate the Internet as it pleases, even if there is no longer a need for the regulation (if a need for the regulation ever existed in the first place).” — Jack Enright, “Net Neutrality: A solution looking for a problem,” Students For Liberty blog, March 4, 2015.

Seth MeyersNOBODY LIKES CONGRESS: “Today during his speech in Washington, Israeli Prime Minister Benjamin Netanyahu repeatedly referred to Congress as ‘my friends.’ It was a move that had many in Congress Googling the word ‘friend.’” — Seth Meyers, March 3, 2015.

DO WHATEVER YOU WANT, AS LONG AS… “A modern liberal is someone who doesn’t care what you do, as long as it’s compulsory.” — conservative author and icon M. Stanton Evans [as quoted by George Will], who died March 3, 2015.

Ron Paul: My New Year’s Resolutions for Congress

in Liberator Online by Advocates HQ Comments are off

(From the Libertarian’s New Year’s Resolutions section in Volume 19, No. 27 of the Liberator Online. Subscribe here!)

In late December 2012, as he approached retirement from Congress, Ron Paul presented some New Year’s resolutions for his fellow members of Congress to ponder. 

If anything, they’re more relevant today than ever, and we’re pleased to share them with you. 

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Ron PaulAs I prepare to retire from Congress, I’d like to suggest a few New Year’s resolutions for my colleagues to consider. For the sake of liberty, peace, and prosperity I certainly hope more members of Congress consider the strict libertarian constitutional approach to government…

In just a few days, Congress will solemnly swear to support and defend the Constitution of the United States against ALL enemies, foreign and domestic.  They should reread Article 1 Section 8 and the Bill of Rights before taking such a serious oath. Most legislation violates key provisions of the Constitution in very basic ways, and if members can’t bring themselves to say no in the face of pressure from special interests, they have broken trust with their constituents and violated their oaths. Congress does not exist to serve special interests, it exists to protect the rule of law.

I also urge my colleagues to end unconstitutional wars overseas. Stop the drone strikes; stop the covert activities and meddling in the internal affairs of other nations. Strive to observe “good faith and justice towards all Nations” as George Washington admonished. We are only making more enemies, wasting lives, and bankrupting ourselves with the neoconservative, interventionist mindset that endorses pre-emptive war that now dominates both parties.

All foreign aid should end because it is blatantly unconstitutional. While it may be a relatively small part of our federal budget, for many countries it is a large part of theirs — and it creates perverse incentives for both our friends and enemies. There is no way members of Congress can know or understand the political, economic, legal, and social realities in the many nations to which they send taxpayer dollars.

Congress needs to stop accumulating more debt. U.S. debt, monetized by the Federal Reserve, is the true threat to our national security. Revisiting the parameters of Article 1 Section 8 would be a good start.

Congress should resolve to respect personal liberty and free markets. Learn more about the free market and how it regulates commerce and produces greater prosperity better than any legislation or regulation. Understand that economic freedom IS freedom. Resolve not to get in the way of voluntary contracts between consenting adults. Stop bailing out failed yet politically connected companies and industries. Stop forcing people to engage in commerce when they don’t want to, and stop prohibiting them from buying and selling when they do want to. Stop trying to legislate your ideas of fairness. Protect property rights. Protect the individual. That is enough.

There are many more resolutions I would like to see my colleagues in Congress adopt, but respect for the Constitution and the oath of office should be at the core of everything members of Congress do in 2013.

America’s Real Welfare Queens: Fortune 100 Companies

in Liberator Online, Welfare by James W. Harris Comments are off

(From the Intellectual Ammunition section in Volume 19, No. 14 of the Liberator Online. Subscribe here!)

Welfare QueensEarlier this year Open the Books, a non-partisan watchdog group advocating transparency in public spending, issued a genuinely shocking report that added up all federal grants, loans, direct payments, and insurance subsidies going to private companies.

Among its findings: corporate-welfare payments from the federal government to the Fortune 100 companies, from 2000 to 2012, amounted to more than $1.2 trillion.

The bulk of this was in the form of contracts between government agencies and private firms, with the largest going to the military-industrial complex. While these provide some services to taxpayers, such spending is difficult to control because the huge sums also fund a massive lobbying industry busily working for more such spending.

But contracts aside, staggering amounts of money were just given away as outright subsidies — taxpayer-funded handouts to the biggest businesses in America.

Writing in National Review Online, economist Stephen Moore summarizes: “$21.3 billion… was doled out in the form of outright income-transfer subsidies to corporate America. On average, each Fortune 100 company received about $200 million in such [taxpayer-funded] handouts.

“So who are the major corporate-welfare queens? The biggest grant recipients were General Electric ($380 million), followed by General Motors ($370 million), Boeing ($264 million), Archer Daniels Midland ($174 million), and United Technologies ($160 million).

“About $8.5 billion of this largesse came in the form of taxpayer-subsidized loans. The big winners here were Chevron, Exxon Mobil, Ford Motor Company, and other multibillion-dollar corporations whose franchisees received Small Business Administration loans.

“Archer Daniels Midland got just under $1 billion for USDA farm-program loans, and this doesn’t include ethanol subsidies. Another $10 billion was doled out through federal insurance…”

And the problem goes beyond even these staggering sums. Says Moore:

“That $1.2 trillion number does not include the hundreds of billions of dollars in housing, bank, and auto-company bailouts in 2008 and 2009, because those payments are kept mostly invisible in the federal-agency books. It also doesn’t include the asset purchases of the Federal Reserve, indirect subsidies such as the ethanol mandate that enriches large agribusinesses like Archer Daniels Midland…

“Amazingly, all but one of the Fortune 100 stood in the federal soup line to take at least some form of corporate-welfare benefit.”

Sums up Moore: “Imagine for a moment that you are sitting on your couch watching TV and there is a knock on the door. There in a corporate suit is an employee of General Dynamics with a tin cup and he asks if you would contribute a dollar for a research project. You would slam the door in his face. But somehow when the government collects a dollar from each of us and gives the money to General Dynamics, this is considered in Washington a wise ‘investment.’”

Read the next article from this issue here.

Go back to the full issue here.

What 10 Federal Laws, Agencies or Rulings Would You Abolish?

in Ask Dr. Ruwart, Liberator Online, Libertarian Answers on Issues, Libertarian Stances on Issues, Libertarianism by Mary Ruwart Comments are off

(From the Ask Dr. Ruwart section in Volume 19, No. 14 of the Liberator Online. Subscribe here!)

QUESTION: If you could repeal 10 federal laws, reverse 10 Supreme Court rulings or dismantle 10 federal agencies, which laws, rulings or agencies would you do away with? I guess what I’m looking for is the libertarian “hit list.”

TargetMY SHORT ANSWER: Each libertarian might answer this differently, so I can only give you my personal favorites. If I could magically change our government ten ways, I would end all taxation (1), confiscation (2), and eminent domain (3), effectively cutting off the government’s revenue. The borrowing powers of the government would be rescinded to prevent it from deficit spending in retaliation (4). Any outstanding obligations would be retired (5), as much as possible, from sales of government property (including about 42% of our country’s land mass).

Without the means to compel payment for government services, all government agencies would have to operate like any business by voluntary exchange with its customers. Agencies that failed to provide satisfactory service would have to shut their doors. Since some people would undoubtedly be willing to support a government that regulated in their favor, any initiation of force, by government or individuals, would be outlawed (6).

Sovereign immunity would be eliminated (7), making government officials subject to direct prosecution by their victims. For example, bureaucrats in the FDA, if they managed to survive the above reforms, could be held liable for deaths that they caused by denying the American consumer access to drugs of their choice or information about them.

Gold and silver would likely become legal tender, by simply ending the Federal Reserve’s monopoly on currency issue (8). I’d make a declaration of war by Congress necessary for sending troops overseas (9), taking away the president’s power to wage war by naming it something else.

Finally, I’d save my last “wish”‘ for something critical that I may have missed!

Read the next article from this issue here.

Go back to the full issue here.

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Short Answers to Tough QuestionsGot questions?  Dr. Ruwart has answers! If you’d like answers to YOUR tough questions on libertarian issues, email Dr. Ruwart

Due to volume, Dr. Ruwart can’t personally acknowledge all emails. But we’ll run the best questions and answers in upcoming issues.

Dr. Ruwart’s previous Liberator Online answers are archived in searchable form.

Dr. Ruwart’s latest book Short Answers to the Tough Questions, Expanded Edition is available from the Advocates, as is her acclaimed classic Healing Our World.