Saturday, October 18, 2008

Leftist Conservative-Baiters Attack CUNY Trustees

The Chancellor of the City University of New York, Matt Goldstein, and the Chairman of the Board of Trustees, Benno Schmidt, have done a stellar job of improving standards at this once-great and now reviving university. In the 1930s CUNY challenged Harvard for national eminence. In the 1970s, left wing progressive educationists, in an effort to destroy the career prospects of minority and working class students, aimed to turn CUNY into a laughing stock by ending admissions requirements and introducing elementary school-level "remedial" classes. Schmidt and Goldstein, together with CUNY's stellar board of trustees, have raised standards, improved quality and made CUNY an attractive educational "buy" for many New Yorkers. In response to the improvement of standards, the introduction of a nationally competitive honors college and increasing SAT scores, a leftist bigot, hiding behind the Ku Klux Klan-like cowl, mask and robe of anonymity, wrote a conservative-baiting and anti-Semitic article in an obscure website called "the CUNY Graduate Center Advocate". The article is here. My response on their site is as follows:

This article is an embarrassment. I am concerned that CUNY has admitted students who are so ignorant of history that they confuse JP Morgan with his son, Jack Morgan. The author states that JP Morgan, the "robber baron", made his fortune selling World War I bonds, but, as any schoolchild knows, JP Morgan died in 1913 and World War I started in 1914. This article exemplies the ill-bred conservative-baiting that passes for academic work in education, social science, history and humanities departments around the country, where conservative-baiting and insulting those who disagree with sociopathic, left-wing ideology passes for academic work. For instance, the writer quotes Lenin, a mass killer whose Soviet Union ended up killing between 25 and 60 million human beings, a mass killer of the stature of Adolf Hitler. Quoting Lenin is morally equivalent to quoting Hitler, but apparently much of this goes on. Official Soviet reports admitted that fully 30 million Soviet citizens were in danger of death by starvation by 1921, and Lenin's forces murdered at least several hundred thousand peasants in the Bread War. With a record of murder equivalent to Hitler's, Lenin's appeal to this writer is understandable. It is much worse to work for JP Morgan Bank or Colgate Palmolive than to kill hundreds of thousands of people. The author goes on to make a number of ill-informed, conservative-baiting and anti-Semitic comments. Personally, I am offended by the bigoted equation of Jeff Wiesenfeld's Zionism with racism. This anti-Semitic remark is a disgrace, and this website is racist. The author's conservative baiting begins with his discussion of our excellent and honorable trustee, Peter Pantaleo. There are two sides to labor relations in this country (unlike in the former Soviet Union for which this author pines) and these are labor and management. If Mr. Pantaleo represents management interests, that makes him no more a criminal than Victor Gotbaum's representing labor's interests. I met Mr. Gotbaum, former head of DC 37, in 1988 when he occupied a teaching position at the CUNY Graduate Center to which he had been appointed despite a lack of qualifications. He did not have a Ph.D. and had studied international relations, not labor, at Columbia. Yet, he was given a position in a research capacity teaching doctoral students. Did the author or his or her professor argue against that appointment? If not, why is appointing a pro-management lawyer problematic? The author's incompetence follows through almost every paragraph. The author objects to William E. Macaulay's $30 million donation. Is the writer aware of how universities work in this country, or is he or she so dedicated to the Soviet model that he is completely ignorant of practical reality? Similarly, the insipid complaint about Philip Alfonso Berry's having worked for Colgate Palmolive. Better he should have worked for Gosplan or the KGB, or better yet managed a prison camp in the Gulag Archipelago and murdered 6,000 Jews. That would have been much more pleasing to this conservative-baiting bigot.

Warren Buffett Predicts Inflation, Higher Stock Market

My broker forwarded an article that Warren Buffet wrote in the New York Times today. He is long on stocks and urges buyers to view the current market decline as a buying opportunity. I agree. Yesterday I bought GE, which is selling at less than 10 times earning because of its financial risk, and the S&P 500. Buffett's most interesting statement is toward the end of the Op Ed:

"Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

"Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky's advice: "I skate to where the puck is going to be, not to where it has been."

Given his prognosis of inflation, and the socially unacceptable characteristic of gold and other commodities, they may be at least as good as stocks over the next five years.

Dan Friedman Analyzes Polls

I just received the following message from Dan Friedman, based on an e-mail from the McCain campaign:

Sat Oct 18, 1:03 am ET

WASHINGTON (Reuters) – Democrat Barack Obama holds a 4-point lead over Republican John McCain, according to a Reuters/C-SPAN/Zogby poll released on Saturday.
Obama leads McCain by 48 to 44 percent among likely voters in the four-day tracking poll, which has a margin of error of 2.9 points.

Pollster John Zogby said that while Obama's overall lead had remained relatively stable between 2 and 6 points in the 12 days since the poll started, the latest figures showed a bump for McCain following Wednesday's final presidential debate.

"Today was the first full sample post-debate and there's a clear indication that McCain is moving up," Zogby said.

He added that McCain's support among Republican voters appeared to be consolidating.

McCain was backed by 91 percent of Republicans in the poll, while Obama drew support from just 88 percent of Democrats. But Obama still enjoyed a 16-point advantage among independent voters, which many analysts expect to be a deciding factor in the November 4 election.

"If (McCain) maintains his edge with Republicans, he stays competitive. But he's going to have to increase his share of independents," Zogby said.

Meanwhile, somewhere in the bowels of the city, very near its rectum:

CBS News/NY Times
10/10 - 10/13
699 LV
Obama +14

Obama Citizenship: Steve Marquis Sues Washington State Re Enforcement of Election Law

Steve Marquis is not an attorney but he is a man of courage. He just contacted me regarding his pro se (without counsel) law suit against Washington State regarding the State's refusal to enforce its own laws and the Constitution regarding Barack Obama's candidacy.

Documents concerning his case are here. According to Marquis's summary of key points, "the government agencies that should be assuring the veracity of our electoral process have failed to do so in regards to an outstanding question of Mr. Obama’s Citizenship...The FEC has not responded to petitioners requests for an evaluation and certification of Mr. Obama’s claim to being a 'natural born citizen.'

"The WA State Secretary of States office has not responded to petitioners requests for an evaluation and certification of Mr. Obama’s claim to being a Native born Citizen. FOI requests to Hawaii Department of Health for a certified copy of his birth certificate or hospital birthing records have gone unheeded.

"Demands for access to or certified copies of those salient documents in a Federal court case were rejected in court arguments by Mr. Obama. Rather than diffuse the question by delivering the documents, he instead argued for dismissal based on “standing” or “right to know”. This stalling and obfuscation only adds weight to the speculation that he does not possess the documents that would prove status as a “natural born citizen” as the constitution demands of a presidential candidate.

"The Secretary of State is responsible for executing an election process that lends confidence to the veracity and fairness of the process and the ballot. While there are specific statutory responsibilities, this general responsibility is established by the constitution and is overarching.

"This involves verifying the status of voters through a proper verifiable registration process, certifying the candidates and the tally.
His office is responsible for the ballots themselves. Even though we have some federal candidates listed on the ballot, it is not a federal ballot, but a state ballot executed under the secretary of States prevue and sanction.

"The presidential office is unique in that we do not vote specifically for the president in a nation wide plebiscite, rather we vote to send state representatives called electors pledged for a particular presidential candidate. The WA State Secretary of State is clearly responsible for the state electors and by extension the name on the ballot they are pledged to represent.

"The electors, depending on a particular states constitution, may be “winner take all, proportionally represented or even uncommitted altogether - on the honor system. This underscores the point that we are voting for state electors in a state election so that these state representatives can project the state i.e. regional power to the electoral college.

"If we waited for “after the election” to challenge a candidate’s basic qualifications in court rather than ahead of time in an orderly manner through application which demands minimal documentation by the candidates or at least in the case of particular candidates that have been challenged by citizen complains, such an after the fact challenge would most certainly create a constitutional crisis an likely civil unrest. Which civil unrest would be due to wholesale loss of confidence in the veracity of the electoral process. In particular the FEC and the respective Offices of the States Secretaries of State would be impugned for their dereliction of their constitutional duties, which duties are commonly expected by the people to be carried out transparently.

Mr. Marquis's press release follows:


"Contact: Steve Marquis
Telephone Number: 425-698-7084
Email Address:
Web site address:

"Averting a Crisis in Confidence; Citizen files Lawsuit Against Washington Secretary of State Sam Reed demanding verification of Barack Obama’s citizenship status.

"Seattle WA. 10/9/2008 — Steven Marquis, a resident of Fall City WA today filed suit in Washington State Superior Court against Secretary of State Sam Reed demanding verification of Barack Obama’s citizenship status.

"The complaint seeks specifically that the office of the Washington Secretary of State verify and certify that Mr. Obama is or is not a "natural born" citizen by producing original or certified verifiable official documents. The lawsuit argues that this certification should take place before the election to preclude a constitutional crisis and likely civil unrest should such certification, after the election, prove that Mr. Obama was not qualified for office.

"The Complaint argues that the Secretary of State has the authority and duty to not only certify the voters but also and most importantly the candidates and in so doing prevent the wholesale disenfranchisement of voters who would had had an opportunity to choose from qualified candidates had the certification preceded the election process.

"At this point, Mr. Obama has not allowed independent or official access to his birth records nor supporting hospital records. The Hawaii Health Department has violated Federal law by ignoring formal Freedom of Information requests for the same. Due to the facts and numerous other allegations that would challenge Mr. Obama’s fundamental qualifications for office, a Federal lawsuit was filed and is currently being heard in District Court, Pennsylvania.

"Mr. Obama failed to respond to the District Court’s request to produce or allow access to the official documents (should they exist) and instead filed a motion to dismiss arguing the Plaintiff had no “standing” or right to know. This non-response as of 9/24/2008 in Federal court casts doubt on the veracity of the electoral system and is the principal reason for this lawsuit. The late entry of this suit is due in principal part to Mr. Obama’s delay and subsequent non response to reasonable request for valid certificates. Multiple requests for early certification to the Office of the Secretary of State has been rejected.

"[clarification: The district court process itself demands a response from Mr. Obama. When a complaint is filed, the defendant has an opportunity to respond to the judge regarding the plaintiffs request for a preliminary injunction. Obama did respond, but not with the requested documentation, not even minimally so. He responded with a motion for dismissal based on “standing” rather than the merits of the case]

"The Washington Secretary of State Office is specifically charged with certifying and guaranteeing the veracity of official documents and overseeing the elections to wit the people’s confidence in the fundamental aspect of democracy is maintained. To date, in this regard, Secretary of State Sam Reed has not carried out that fundamental duty.

"This lawsuit demands injunctive relief directing Sam Reed, Secretary of State, carry out the duty of his office in this regard answering the formal complaints for verification of Mr. Obama and any other candidate appearing on the ballots issues through his office for which formal complaints have been received.

"Interested Parties may contact Plaintive as follows:
Contact: Steve Marquis
Telephone Number: 425-698-7084
Email Address:
Web site address:

Andy Martin Sues Hawaii For BOCOLB

BOCOLB: Barack Obama's Certificate of Life Birth. I just received a message from Andy Martin that analyses from my blog are to be exhibits on his legal brief regarding the Obama birth certificate. See:

Andy Martin has just issued this press release:

Honolulu lawsuit filed to open Obama's secret birth records
Obama steadfastly refuses to allow access to official sources
Andy Martin in Hawaii takes legal action to seek the truth and ferret out the facts about Barack Obama's family history

Executive Editor

"Factually Correct, Not
Politically Correct"




(HONOLULU, HI)(October 17, 2008) Obama nemesis and author Andy Martin filed suit in the First Circuit Court in Honolulu today seeking a court order to open Barack Obama's secret birth records.

"One of Obama's most controversial and contentious issues that he has allowed to fester for years is the question of his birth certificate," says Martin. "Obama has posted at least two versions, maybe more, of a 'certificate' on the Internet.

"I want to see a certified copy issued by the State of Hawaii, not one issued by the State of Obama. Why Obama won't allow direct access to his birth records is beyond me. But the closer we get to discovering the truth about Obama the more we understand why he is terrified of that truth.

"What is Obama hiding? Frankly, after being in Hawaii and conducting our first round of interviews, we think we have a clearer picture of what Obama is concealing, and why. We have more research and interviews to conduct before we can announce our opinions.

"In the meantime, I filed a lawsuit against the State of Hawaii to require the state to open Obama's birth records. The Governor and Director of the Department of Health are named as defendants.

"The case has been docketed as number 08-1-2147-10 and assigned to Circuit Judge Bert Ayabe.

"We will distribute copies of the lawsuit at a Saturday morning news conference, as well as making them available on a limited basis Friday evening upon written request. We will hold the Saturday morning news conference in front of the courthouse to provide additional information.

"Friday evening I will be available by cell phone from AlaMoanaBeachPark.

"We will issue a news release later Friday with details of Saturday's news conference.

"The basic question remains: why is Obama trying to hide his life from birth to adulthood from the American people? Interestingly, we think we also know now why he has virtually imprisoned his white grandmother and refuses to allow her to appear in public. Who is the man behind Obama's mask? I think my book 'Obama: The Man Behind The Mask' is aptly titled.

"Next week, we believe we will be in a position to remove Obama's mask and confront him with the truth about who he is and what he is.

"One TV news network has already tentatively scheduled a conference in New York on our return."

Readers of Obama: The Man Behind The Mask, say the book is still the only gold standard and practical handbook on Barack Obama's unfitness for the presidency. Buy it.
Book orders: Immediate shipment from or the publisher now available.
FULL DISCLOSURE: I recently decided to oppose Barack Obama's election and became Executive Director of The Stop Obama Coalition, By default, I became the national leader of the anti-Obama movement. I am not acting as either a Democrat or Republican. I have had no contact whatsoever with the McCain Campaign. I am not a member of any political organization. The views expressed are entirely independent. I am acting as an American citizen who sincerely believes Obama is not the man we need in the Oval Office. We are going to run a very dynamic and aggressive campaign against Obama. I will continue to write my news and opinion columns for /s/ Andy Martin
URGENT APPEAL: The Committee of One Million to Defeat Barack Obama is raising money to fight Barack Obama. Please give generously up to the maximum of $100. Our ability to fight and defeat Barack Obama is directly dependent on the generosity of every American."
The Committee of One Million to Defeat Barack Obama limits itself to $100 maximum contributions; there are no bundlers, fat cats or illegal contributions. Obama is opposed to everything America stands for," says Executive Director Andy Martin. "But while Obama has raised more than a third of a BILLION dollars, his opponents have raised virtually nothing. We can't just sit back and expect John McCain to do the job all alone. Americans can either contribute now, or pay later. If we do not succeed, Obama will."
Andy Martin is a legendary Chicago muckraker, author, Internet columnist, radio talk show host, broadcaster and media critic. He is currently based in New York selling his new book, Obama: The Man Behind The Mask. Andy is the Executive Editor and publisher of © Copyright by Andy Martin 2008. Martin comments on regional, national and world events with over forty years of experience. He holds a Juris Doctor degree from the University of Illinois College of Law.

His columns are also posted at; Andy is the author of Obama: The Man Behind The Mask, published in July 2008, see

MEDIA CONTACT: (866) 706-2639 or cell (917) 664-9329
E-MAIL: [NOTE: We frequently correct typographical errors and additions/subtractions on our blogs, where you can find the latest edition of this release.]

Friday, October 17, 2008

Are Banks' Problems a Mortgage Meltdown? Or a Derivatives Meltdown? Two, Two, Two Excuses in One!

One thing I have learned after nine years in the corporate world, a few years consulting and 18 years teaching business in college is that it is difficult to understand someone else's business. In the recent discussion about a number of banks' financial problems I have heard that this was a "sub-prime crisis". The banks lent exhuberantly and to low income borrowers to whom they were pressured to lend, and the result was widespread defaults.

Today, the Belmont Club writes that the Washington Post now blames the banks' problems on derivatives trading. Which is it? Mortgages? Derivatives trading? I guess the banks, like the old Certs candy commercials, have two, two, two crises in one.

The Washington Post's familiar solution is of course regulation. But would regulators do a competent job? For regulation to work, the regulator must be smarter than the profit-maximizing investment banker. The question is whether reasonable, ethical, and profit maximizing bankers would have lost the money they have lost. If the answer is yes, then I'm not sure that regulators would have done much better. If the answer is no, then the problem is not regulation. Criminal, enforcement rather than better regulation is needed. Moreover, bankers already have a legal fiduciary duty to ensure the ongoing viability of their banks and to maximize profits. They obviously violated that "regulation". Why would a more esoteric form of regulation fare better? And why would government, which cannot even manage an election competently, be good at overseeing the esoteric world of credit swaps?

The pathology of Progressivism is that even where they do not understand the implications of their proposals, Progressives aggressively argue for them. The proposals inevitably involve expanding the state's powers, and the state then becomes the source of more severe problems than it solves. It is likely that the banks' current problems (and they are the banks' problems, not America's problems) are due to pressure from government, e.g., a form of regulation, to extend loans to low income borrowers who could not afford to repay the loans. Alternatively, and probably even more true, the problems are due to bad ethics on the bankers' part.

The article states:

"Derivatives did not trigger what has erupted into the biggest economic crisis since the Great Depression. But their proliferation, and the uncertainty about their real values, accelerated the recent collapses of the nation's venerable investment houses and magnified the panic that has since crippled the global financial system."

The authors note that AIG suffered a loss due to derivatives, but they do not seem to know how much of a loss, just that it was attributable to $440 billion in mortgage swaps. Was three percent in default? Twenty percent? If AIG does not know, then why was AIG in the business? And if the reporters don't know, why do they claim to know what the solution is to a problem that they do not understand? I would not trust a physician who does not know whether I had a stomach virus or a heart attack and prescribes me medication anyway.

Markets are capable of evaluating and punishing banks that engage in excessively risky behavior better than regulators are at assessing what risks banks ought to take. Markets are attempting to do that, but President Bush and Congress have decided not to let the markets work and to let AIG and other financial institutions fail. If banks fail, the government ought to protect depositors, but they ought not to support incompetent investment decisions and bad ethics.

The media is discussing this issue without providing facts, and then offering specific solutions that are not based on evidence. Perhaps the Washington Post should provide their reporters with packs of Certs, and leave it at that.

New Mexican ACORN Voter Fraud

Ace of Spades HQ (h/t Larwyn)quotes a GOP Press Release that alleges that ACORN committed massive voter fraud in New Mexico:

Obama’s ACORN Must Be Shut Down Before Election, All Activities Investigated

(Albuquerque, NM) – Public records released in New Mexico today confirm that fraudulent voter registrations are in fact turning into fraudulent votes. ACORN, currently under investigation by the FBI, is now confirmed to be responsible for producing fraudulent voter registrations and illegal votes in New Mexico. An inspection of public records has revealed that illegal votes were cast in New Mexico’s 2008 primary election.

“This is a bombshell. We now have undeniable proof that a significant number of fraudulent voters were cast in Democrat primary races for the New Mexico state legislature as a result of ACORN’s voter registration fraud,” remarked State Representative Justine Fox Young (R-Albuquerque). “No longer can ACORN argue that their phony voter registration forms don’t translate into fraudulent votes. They do and today we can prove it.”

"It is safe to say that the number of illegal votes being cast dwarfs the 366 votes that decided the 2000 Presidential election in New Mexico,” said Nina Martinez, Secretary for the Republican Party of New Mexico. “Barack Obama contributed $832,000 to ACORN, organized an ACORN subsidiary, represented them as their attorney, trained some of their members and received ACORN’s endorsement. Obama should withdraw his financial support from ACORN and come clean about what he knows of their activities. Every fraudulent vote cancels out an honest vote. We must ensure the integrity of this year’s election.”

Dorothy Maddox-Holland of the FEC Responds to ACORN Inquiry

The FEC has not responded to repeated inquiries about the Obama birth certificate. However, they have just e-mailed me that voter fraud by ACORN--is not their job.

>Good morning Dr. Langbert

Thank you for your letter dated September 29, 2008 regarding allegations of an unusually high level of voter fraud associated with ACORN.

Unfortunately, this type of inquiry is not handled by the Federal Election Commission (FEC), Office of Inspector General (OIG). However, your letter was forwarded to the Election Assistance Commission who in turn informed the FEC/OIG that this type of inquiry is handled by the Department of Justice, Civil Voting Section, 1-800-253-3931. Once again, thank you for your inquiry.


Dorothy Maddox-Holland
Special Assistant to the Inspector General

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Fed Increases Monetary Base by 16% in One Week

Howard S. Katz recently put this week's increase in the monetary base on his blog. The increase of over 16% in one week is historical. The United States increasingly looks like the Weimar Republic. Just one month ago I had a conversation with an economist who previously worked for the Fed. She insisted, correctly, that the money supply had not increased in several years (because foreign governments were monetizing our debt for us, creating an unstable monetary "game"). In just five weeks Ben Bernanke has proven her utterly wrong. The monetary base has gone from $888 billion on 9/11/08 to $1.74 trillion on October 16. In other words, Reserve Bank Credits increased better than 16% this week. This should double the money supply in the coming two years. This will cause inflation and a bull market in stocks, at least temporarily. However, there also may be dollar sales as foreign holders panic at this historic devaluation. A rocky road ahead. The chart and numbers follow.

Ketchup Company Demands Release of Obama Documents

A specialty Ketchup Company has written a press release demanding release of Barack Obama's documents. Irene Alter just sent me the following e-mail:

For media inquiries contact Bill Zachary (917) 733-3038

W Ketchup Calls on Obama to Release his Personal Records

Eagle Bridge, NY — October 16, 2008 — Less than three weeks before the election, lingering questions remain about front-runner Barack Obama's past, including whether he is even constitutionally qualified for office.

Senator Obama says he was born in Hawaii, but he refuses to release a copy of his birth certificate. Prominent Democratic lawyer Philip Berg has sued, claiming that Obama is not a natural born US citizen and therefore not eligible to be President. The campaign has released two digital images of a certificate, one on Obama’s website, and a separate image on The first is widely believed to be a forgery, and the second has not been made available for inspection. Commentators have noted that is supported by the Annenberg Foundation, and Obama was chairman of the Chicago branch of the fund.

Obama spent part of his childhood growing up in Indonesia after his mother married an Indonesian. In his lawsuit, Berg demonstrates that only Indonesian citizens were able to attend school during the years in which Obama was enrolled, and Obama is listed as an Indonesian citizen in his school’s records. Obama would have had to reinstate his American citizenship when he returned to Hawaii; otherwise he would be an undocumented, illegal alien. Obama has not released his Certificate of Citizenship.

Obama is represented in the suit by Joe Sandler, lawyer for the Council of American-Islamic Relations, which has proven links to Islamic terrorists. Instead of releasing the requested documents to the court, Sandler on October 6 asked for delay of discovery until after the election.

Bill Zachary, Chairman of W Ketchup, reacted: “The American people have a right to know the identity of this international man of mystery poised to become our next president. We view conspiracy theories, rightwing and leftwing, with a good deal of skepticism, but it is disturbing that Obama is dragging out a court case that should be simple to resolve – assuming he has nothing to hide.”

Obama’s life grows murkier as it progresses. He has admitted to using cocaine and marijuana in high school, and went on to attend Occidental and Columbia University for his B.A., and then to Harvard Law School. Obama has not released his transcripts, papers or records from any of these academic institutions.

W Ketchup has learned that senior Republicans believe Obama may have indicated his religious status as Muslim at Columbia and Harvard, a possible reason he does not want those records public. Obama has acknowledged benefitting from affirmative action.

Other information that Obama has not released includes his medical records, his law firm clients, and his records as an Illinois State Senator. Last week, however, Judicial Watch announced it had obtained documents under the Freedom of Information Act showing Obama had submitted earmarks for hundreds of thousands of dollars directed to supporters, including his wife’s cousin, while he was a state legislator.

W Ketchup CEO Dan Oliver commented: “Obama has requested $1 million per day in federal earmarks since he became a senator. We wonder, if he becomes president, how many earmarks he will direct toward other family members, such as his first cousin, Kenyan Prime Minister Raila Odinga, and his Kenyan half-brother, George Hussein Onyango Obama.”

Odinga lost the 2007 presidential election in Kenya. His supporters responded by slaughtering 1500 people, including 50 parishioners who were burned to death in a church. Senator Obama had campaigned for Odinga in Kenya, saying in one speech: “Kenyans are now yearning for change.” Obama has not revealed what actions his supporters will take if he loses the US election.

W Ketchup is not sold in Kenya or Indonesia.

Stop the Obama Constitutional Crisis--15,000 Signers of Petition So Far

Jim Crum sent the following emergency message posted on

A lawsuit has been filed with the Pennsylvania Eastern District Court requiring Mr. Obama to produce documents to prove he is constitutionally qualified to run for President. So far Mr. Obama has refused to produce the documents and is trying to fight the court order to produce the documents. Any American should be able to prove citizenship in less than a day. Why can't Mr. Obama?

Here is a link to the actual court documents -
A constitutional crisis will rip our country apart. If this is not cleared up now we will have a crisis. If you care at all about America you must call for Mr. Obama to produce the documents and prove that he is eligible to be President.

Please call on Mr. Obama to produce the documents to prove his constitutional qualifications.

Thank you

To sign go to:

Thursday, October 16, 2008

Christopher Buckley's Transition: a 3 Degree Turn

Several people have blogged, e-mailed and posted about Christopher Buckley's transition from conservative to liberal. Apparently, William F. Buckley's son has decided to ditch the National Review (which his father founded) and conservatism because conservatism has brought nothing but deficits and economic malaise.

This transition is unsurprising and has been made many times in both directions. The reason is that the distinction between left and right, conservative and liberal, in today's political discourse is illusory.

America is a unique country not because of "conservatives" or "liberals", but because of libertarians, who are neither. The notion of "centrist" is also illusory, because it depends on the faux liberal-conservative dichotomy. George W. Bush is as "liberal" as Barack Obama, perhaps more so, and to say that he represents "conservatives" is to admit that there is no difference.

What made America different from Europe is the belief in freedom. Freedom is neither liberal nor conservative. The proponents of conservatism are often diametrically opposed to traditional American ideals. Moreover, their fascination with Edmund Burke is outside the mainstream. At best, Burke represents the Federalist tradition of Alexander Hamilton that was discarded in favor of Jeffersonian Democratic-Republicanism. Jacksonian Democracy is inconsistent with Burke's respect for tradition. Jackson believed in the spoils system, flexibility, elimination of the central bank and change due to laissez-faire. It is from these principles that America developed rapidly in the nineteenth century to become an economic powerhouse, and today we live off the embers of the Jacksonian revolution.

Burke's conservatism is consistent with the left-right split that is characteristic of Europe and which the Progressives brought here from Europe. America's detour into European political ideas began with a mass migration of American students into German graduate schools in the late nineteenth century. This was compounded in the 1930s by European scholars, hoisted by their own petard, fleeing to America. By 1900 Progressivism, a European model that originates in Bismarck's Germany, had come to dominate American political discussion.

The distinctions that Progressivism emphasizes, social democracy versus business interests, had always existed in America, but with a different tenor. First, business interests could equally be represented by more statist (Whig and Republican) views or by Jacksonian laissez-faire. As some firms became bigger in the late 19th century they began to align more closely with the statist Republican tradition. Moreover, the situation is confused by the presence of a laissez-faire intellectual tradition that the Republicans briefly adopted in the post Civil War period and carried forward as a minority view after the New Deal. However, through the Pendleton Act and their fixation on rationalization of government and furthering their professional interests, the late nineteenth century Republicans morphed easily into advocates of Progressivism and government intervention in the 1890s. Throughout the nineteenth century, moreover, in practice the Republicans tended to be the more statist of the two parties because they favored high tariffs and public works.

The Progressives were able to completely staunch the Jacksonian Democrats intellectually. Woodrow Wilson's adoption of Progressive ideas in 1908 and his election to the presidency in 1912 meant that both political parties had dropped the Jacksonian, laissez-faire tradition. However, the American people never really bought into Progressivism.

Thus, American politics became a debate between ideological fraternal twins and a giant, uneducated cousin. Fraternal twins, recall, are not identical but are close. The first twin is a "conservative" who is a pro-business Progressive along the lines of William Howard Taft and Theodore Roosevelt. The second is a "liberal" along the lines of Franklin D. Roosevelt. However, the two twins are very close, about 97%. Theodore Roosevelt had advocated most of the social democratic ideas that Franklin Roosevelt later adopted. George W. Bush has turned out to be as much an interventionist as the socialist Theodore Roosevelt. Both parties favor massive, ill-advised boondoggles. Bush's bailout and nationalization of the banking system is more expensive and more socialistic than Hillary Clinton's proposed nationalization of the health care system.

The uneducated cousin is the mass of Americans who have retained remnants of the Jacksonian Democracy.

The idea that America is a "centrist" country is incorrect. "Centrist" would imply that there is a mean between the pro-business Progressives of Theodore Roosevelt and the social democratic Progressives of Franklin Roosevelt. In fact, there is no such mean. There is no continuum, because the uneducated cousin is off the continuum. He is a hayseed who says unpredictable things, a Sarah Palin-like Babbitt who irritates liberals and conservatives alike, driving William F. Buckley's son to liberalism, which someone like Sarah Palin cannot possibly "understand" because she did not go to Harvard and learn the crackpot theories of John Maynard Keynes.

Progressivism is an extreme, feudalist value system that argues that government should enforce the concentration of business and that an elite should manage and control the economy and the media. The "conservative" Progressives argue that the elite should say that they are an elite openly, while the "liberal" Progressives argue that they favor the poor, but of course are also an elitist movement that favors business and professional interests and decimates the poor.

Thus, Christopher Buckley's transition from National Review "conservative" to "liberal" is a minor move, a three degree turn, for only three degrees separate the fraternal twins. The difference between right wing feudalists who emphasize the power of the rouge (military and secular power) and left wing feudalists who emphasize the power of the noir (religious, benevolent power) is small. Americans emphasize neither, and neither view is rightfully American.

Sherman Anti-Trust Act May Cause Innovation to Decline

The Sherman Anti-Trust Act (SATA) was passed in 1890. It was initially interpreted as a statement of common law concerning reasonable versus unreasonable restraints of trade. In 1896 in United States v. Trans-Missouri Freight Association the Supreme Court held that only competition amounted to reasonable price setting. In 1904, in the Northern Securities Trust case (involving a railroad trust) the Supreme Court held that even trusts or corporations that combined several companies amounted to unreasonable restraints of trade. Hence, corporate mergers were illegal in this period. In 1911, the Supreme Court revised that view, holding that the Standard Oil Company ought to be broken up because it involved unreasonable restraints of trade and was a "bad" trust. However, there are "per se" violations of the Sherman Anti-Trust Act that don't require a test of reason. These include "any...conspiracy in restraint of trade or commerce".

Thus, the Sherman Anti-trust Act after 1896 illegalized any cartel. But capital investment in manufacturing and capital intensive services may require a degree of price predictability. By making conspiracies in restraint of trade illegal, even where they do not result in excessive prices, the Supreme Court forced many businesses to consider two risks: (1) overproduction, which was characteristic of late 19th century industry as described in David Ames Wells's Recent Economic Changes and (2)prosecution under the Sherman Anti-Trust Act if they attempted to collude to limit the risk of over-production.

The remedy to the per se problem was merger that permitted "reasonable" outcomes. Thus, the automobile industry coalesced into three large firms that did not collude but in effect followed a price leader. But this policy may have had side effects that the Supreme Court did not consider.

In encouraging mergers rather than collusion the court limited the number of managements. Creativity often requires a diversity of ideas. By creating small numbers of top heavy firms with a small number of highly compensated executives with much at risk if their firms failed, innovation may have been curtailed. Part of the reason for the post-Progressive slow down in innovation may be the Sherman Anti-Trust Act.

Exactly why the Supreme Court and Congress preferred a few large firms over many smaller ones that might rig prices for a few years in order to avoid excess production is unclear. A few large firms can rig prices without speaking. So the difference, speaking or not speaking, seems to be of minor economic or moral significance. On the other hand, crushing many mid-sized firms into a few really big ones may have killed the most creative managers, who often may have been surpassed in the pyramid due to gamesmanship and corporate politics. Moreover, a few large firms face much greater risk with respect to experimentation than many small ones. This emphasis on large size coincided with the socialist perspective of Theodore Roosevelt and the Progressives. The Progressives loved large size because it seemed efficient to them, but they failed to grasp the underlying dynamic of creativity.

Wednesday, October 15, 2008

McCain Hands Election to Obama

Dick Morris has an article in Newsmax concerning the threat that ACORN poses to the Obama campaign. Well, I mean, if any other candidate had been involved in a corrupt organization engaging in election fraud in 11 states there would be alot of questions, but not so with Obama, and not so with this election. But much of the media's indifference to Obama's various corruption scandals, to include the Tony Rezko house purchase and his lying about his Indonesian upbringing, is due to John McCain's indifference to these character issues.

Matters are worse than that, though. McCain had three ways to beat Obama. First, he needed to distance himself from the Bush administration, especially on the economy. Second, he needed to come up with an alternative strategy to the bailout. Third, he needed to focus attention on Obama's sociopathic character.

Instead, of dumping Bush, McCain took the traditional party course and backed the bailout. Thus, he has allowed the Democrats to paint him as a second Bush administration. The falling stock market (which may turn around beginning next week but remains volatile around three weeks before the election, and may still be declining in early November) is a poison pill, and he has allowed himself to be associated with it. McCain was a fool to participate in the bailout negotiation and he was a fool to back the Bush administration.

McCain's criticism of President Bush would have been warranted, because Bush exercised dinosaur stupidity, stupidity beyond human comprehension, in allowing Paulson and his coterie of quacks to force discussion of the bailout now. Any decision of this kind can wait six weeks. Bush chose to destroy McCain's chances. He deserves a place in Republican hell.

Second, McCain had to devise an alternative solution to the banks' problems that was fair. Increasing the money supply by one third and providing a trillion dollar subsidy to Wall Street and commercial banks is not fair. The public doesn't like it, and McCain simply went along with the absurdly socialist bank-coddling by President Bush. Rather than come down on this folly, which is anathema to any real believer in free markets, McCain chose the uncreative course of supporting Bush in one of the most socialist policies since 1935. What happened to the Republicans as the "party of ideas"? Most of the ideas I've heard from Newt Gingrich and John McCain have sounded like re-baked Keynesian economics from the 1930s.

Third, McCain had to make Obama's character into an issue. As Morris points out in his article, ACORN is being raided by the FBI in 11 states; Obama, as general counsel, was intimately linked to ACORN; and Obama "has lately spent $800,000 of his campaign money to subsidize the group's activities" which have been literally criminal. This opens the door to calls for investigation of Obama's involvement and character issues. Moreover, "as Election Day approaches and early balloting proceeds in many states, ACORN's tactics will get more and more media attention."

Thus, despite a sociopathic character, which we have heard McCain praise, "Obama has lower negatives than McCain, and his unfavorable rating has not risen despite the avalanche of attack advertising to which he has been subjected...Possibly, voters are just inured to the attacks and disregard them. But more likely they are just distracted by the financial meltdown all around them."

The Republicans have decided to lose big. What happened to all those pundits back in August who were saying that their grandmother could beat Obama?

John McCain and the Republicans are giving this election away.

David Ames Wells's Recent Economic Changes

David Ames Wells. Recent Economic Changes: And Their Effect on The Production and Distribution of Wealth and The Well-Being of Society. New York: Appleton and Company, 1891. (Original copyrighted in 1889). 493 pages. Out of print.

I was able to obtain a used copy of this book from for a reasonable price but it appears to have been one of the last available at this time. The copy I obtained had been donated to the Cotton Economic Research Library of the University of Texas at Austin in 1969 by Dr. AB Cox. Dr. Cox was a noted marketing professor and was involved in setting New Deal policy concerning cotton. Unfortunately, the copy is so old that several of the pages disintegrated while I was reading them, which is unfortunate.

David Ames Wells, a graduate of Williams College, was editor of the Annual of Scientific Discovery from 1850 to 1866. He was author of books concerning chemistry, geology and natural science. His 1863 Natural Philosophy went through 15 editions. In 1865 Abraham Lincoln appointed him chairman of revenue and in 1866 President Andrew Johnson appointed him special commissioner of the revenue. He started his economics work by supporting high tariffs, but then revised this view in favor of a general laissez-faire philosophy of low tariffs, low taxes, the gold standard and against inflation and free silver. Wells exemplifies the Mugwump movement of post-Civil War America, Republican advocates of efficiency as well as laissez-faire who opposed Republican James Blaine in the 1884 election in favor of Bourbon Democrat Grover Cleveland.

The book is very dull because it seems that readers of that day were not well acquainted with statistical tables. As a result, Wells verbally describes statistics rather than tabulating them. Large sections of the book are devoted to enumeration of various industry data. However, the key ideas are gems.

I suspect that because the book is dull few historians and economists have read it carefully in recent years. However, a careful reading would disabuse many of illusions about the late nineteenth century American economy. In particular, Wells shows that the word "depression" in use at that time referred primarily to profit declines as opposed to shifts in the physical volume of trade. As a result, the widespread claim that the late nineteenth century was characterized by high unemployment is wrong.

This conclusion should not be surprising to any who care to exercise a modicum of common sense because immigration exploded in the post 1873 period, at the very time that the country was supposedly wracked with "depression". Except for the Jews escaping murderous policies in Russia and Poland it is difficult to conjoin the vast immigration with the claims of many historians that the late nineteenth century was a period of poverty and unemployment. A careful reading of Wells shows that this claim is fallacious.

Wells's argument is germane to today as well as to the late nineteenth century. Wells argues that it is primarily anxiety and psychological factors that created labor unrest and a sense of deprivation in the late 19th century. The word "depression" that was used frequently in that period referred to depression of profit rather than of wages or unemployment.

Indeed, workers fared far better between 1860 and 1889 than they have between 1973 and 2008. Real wages were increasing robustly during the former period, but they have declined by nearly 20% since 1971.

Wells starts out by discussing "the unprecedented disturbance and depression of trade, commerce and industry" which began in 1873 and fluctuated through 1889. The fluctuations occurred throughout the civilized world. Wells points out (pp. 4-5) that antecedent to the 1873 depression in England and the US "were enumerated at the time to be 'a rise of prices, great prosperity, large profits, high wages and strikes for higher; large importations, a railway mania, expanded credit, over-trading, over-building and high living.'"

This sounds suspiciously like a monetary inflation brought on by the Civil War greenbacks. However, there were similar bubbles in England and Germany at that time as well. The 1873 depression ended in 1878 or 9 and recommenced in 1882-3. Wells notes that by 1882 (p. 11) there was

"a plethora of capital seeking investment and a low rate of interest; so that the economic disturbance since 1882 has been mainly in the nature of a depression of industry, with a renewed and remarkable decline of prices; with absolutely no decline but rather an increase in the volume of trade and certainly no falling off in production as compared with the figures of 1880 and 1881, which years in the United States and to some extent in other countries were regarded as prosperous."

This raises another question in my mind. If unemployment were high and production low in that period, why were the "robber barons" so eager for combination? Much of the late nineteenth and early twentieth century political debate concerned trusts and business combinations. The Sherman Anti-trust Act was passed in 1884. If business were slow, demand weak and unemployment high, why were firms eager to restrict production? It would seem that production was high but profits low. In that case, can it be possible that unemployment was high, given that production was excessive? How could it be both ways, over-production coupled with high unemployment? It seems to me that much of the discussion about the late nineteenth century economy has been confused by ideology.

Wells traces the transition of iron prices from 1873 to 1880. He notes of 1877 that although there was a decrease in production of pig-iron from 1873 to 1877 of about 1/3 and prices for iron reached an all time low in 1879, by the end of 1879:

"excitement and speculation took the place of the gloom and discouragement with which the American iron-trade had been so familiar scarce one year before, and the business of buying and selling iron became close neighbor to that of gambling in stocks." (p. 13)

But by 1882 there was another reversal due to expanded capacity. In 1885 there was " a meeting of the Bessemer steel rail manufacturers in August 1885, at which meeting a restriction of production for one year to avoid the evils of over-production and ruinous prices was agreed upon. This action was almost immediately followed by beneficial results to the iron-trade...An incident of our industrial history for 1886 was the large number of strikes among workingmen."

All through the 1870s (from 1873 to 1878 or so) there were public discussions about "depression". In 1886 unemployment may have been around one million (p. 18). There was an 1880 population of about 62 million, but Wells doesn't say the size of the work force and I cannot find it on the web. About half the workforce was in agriculture in 1880, and it is likely that many of the unemployed returned to family farms. According to Charles Hirschman and Liz Mogford:

"In 1880 almost half the gainfully employed workers in the United States were engaged in agriculture, and the American industrial economy was on the periphery of the national and world economy. Employing only about one in seven workers, the manufacturing sector in 1880, with few exceptions, consisted of small enterprises."

Hirschman and Mogford point out that in 1880 immigrants were about one third of all workers, and this proportion increased to 40 percent by 1920. The claim that living standards were declining between 1860 and 1913 would seem to require two fantastic assumptions. First, massive numbers of people were coming to America in order to be impoverished. Second, because real hourly wages were increasing, such people would have had to be coming here in order to be paupers.

Wells reports a study of British conditions on p. 19:

"a. That the trade and industry of the country are in a condition which may fairly be described as depressed
b. That by this depression is meant a diminution and in some cases, an absence of profit, with a corresponding diminution of employment for the laboring classes
c. That neither the volume of trade nor the amount of capital invested therein has fallen off, although the latter has in many cases depreciated in value. That the depression above referred to dates from about the year 1875.

Wells argues that a number of potential causes of the "depression" had been noted, to include over-production, excessive competition and many others (p. 20). Despite all the discussion of unemployment and depression, argues Wells (p. 25):

"statistics not only fail to reveal the existence of any great degree of scarcity anywhere, but, on the contrary, prove that those countries in which depression has been and is most severely felt are the very ones in which he desirable commodities of every description--railroads, ships, houses, live-stock, food, clothing, fuel and luxuries, have year by year been accumulating with the greatest rapidity and offered for use or consumption at rates unprecedented for cheapness."

Wells opens the second chapter with a discussion of how the Suez Canal disrupted prior trade patterns and (p. 34):

"revolutionized one of the greatest departments of the world's commerce and business; absolutely destroying an immense amount of what had previously been wealth, and displacing or changing the employment of millions of capital and thousands of men; or, as the London 'Economist' has expressed it 'so altered and so twisted many of the existing modes and channels of business as to create mischief and confusion to an extent sufficient to constitute one great general cause for a universal commercial and industrial depression and disturbance.'"

In other words, technology causes old modes to become obsolete, and this throws people out of work. It would seem that this is partially true. For the twentieth century excelled in a different kind of depression, one where there was no innovation but rather monetary expansion which, when contracted, caused people to be thrown out of work. This may have been at play in the 1873 depression as well.

Wells gives numerous examples of how technology threw maritime and seal fishery workers out of work (pp. 38-9). Likewise, the railroads threw horse carriers out of work (p. 41). Improved transportation compelled "a uniformity of prices" (p. 46) which ended local shortages. 82.2% more pig-iron was produced in 1883 than in 1870 (p. 49), resulting in "an extreme depression of the business". But the cost of railroads was reduced by the depression in steel. In other words, a wealth of production creates a depression.

Wells gives one example after the next of how technology and innovation replaced human labor, resulting in temporary unemployment. But the new high levels of production resulted in new demands for workers as society became wealthier. There were marked increases in production of textiles, coal, copper, agricultural implements, boots, shoes, flour, metals, bottles, jewelry, bank notes, retail, paper sacks, pharmaceuticals, dyes, oils, natural gas, oil, electricity, electric motors and even the Census Bureau:

"On another grade of goods, the facts collected by the agents of the bureau show that one man can now do the work which twenty years ago required ten men."

However, the rapid change in the economy was coupled with strikes and industrial revolts, which led to ever greater substitution of capital for labor:

"And one significant illustration of the quickness with which employers carry out this suggestion is afforded by the well-authenticated fact that the strike among the boot and shoe factories of one county in the State of Massachusetts in the year 1885 resulted in increasing the capacity for production by the same factories during the succeeding year of a fully equal product, with a reduction of at least fifteen hundred operatives..."

Wells argues (p. 68-9):

"All investigators substantially agree that the depression of industry in recent years has been experienced with the greatest severity in those countries where machinery has been most extensively adopted, and least in those countries and in those occupations where hand-labor and hand-products have not been materially interfered with or supplanted...There have, moreover been no displacements of labor, or reduction in the cost of labor or of product, in all those industries in civilised countries where machinery has not been introduced or increased."

In chapter three Wells discusses over-production as a cause of "depression" (p. 74):

"Industrial over-production--manifesting itself in excessive competition to effect sales and a reduction of prices below the cost of production...and there appears to be no other means of avoiding such results than that the great producers should come to some understanding among themselves as to the prices they will ask...Society has practically abandoned--and from the very necessity of the case has got to abandon unless it proposes to war against progress and civilization--the prohibition of industrial concentrations and combinations. The world demands abundance of commodities, and demands them cheaply; and experience shows that it can have them only by the employment of great capital upon the most extensive scale...To the producer, the question of importance is, How can competition be restricted to an extent sufficient to prevent its injurious excesses? To the consumer, How can combination be restricted so as to secure its advantages and at the same time curb its abuses."

Wells notes that many businesses over expanded in good years, resulting in overproduction that caused reduced profit. He quotes a miller (p. 79):

"...our ambition has overreached our discretion and judgment. We have all participated in the general steeple-chase for pre-eminence...As our glory increased our profits became smaller..."

"Overproduction led to increased competition" (p. 80).

But (p. 82):

"One universally recognized and, to some persons, perplexing peculiarity of the recent long-continued depression in trade is the circumstance, that while profits have been so largely reduced that, as the common expression goes, it has not paid to do business," the volume of trade throughout the world has not contracted but, measured by quantities rather than by values, has in many departments notably increased."

The result of the enhanced competition was (p. 84):

"an increase (but not necessarily proportional or even universal) in consumption...There is, therefore, nothing inconsistent or mysterious in the maintenance or increase in the volume of the world's business contemporaneously with a depression of trade--in the sens of a reduction of profits--occasioned by an intense competition to dispose of commodities, which have been produced under comparatively new conditions in excess of a satisfactory remunerative demand in the world's markets. And, apart from this, it is now well understood that the aggregate movement and exchange of goods is little if any less in times of the so-called 'depression of grade' than in times of admitted prosperity. Again, if depression of business does not signify less business, it can only signify less profits...If there is a progressive fall of prices without a corresponding fall of wages, profits must fall progressively, and interest also...Now this is exactly what has happened in recent years. Profits and prices of commodities have fallen, but wages have not fallen, except in a few special departments. Consequently, the purchasing power of wages has risen, and this has given to the wage-earning class a greater command over the necessaries and comforts of life, and the purchases of all this great class have supplemented any forced economizing of the employing and well-to-do classes. 'The latter are the ones who make the most noise in the newspapers, and whose frequent bankruptcies fill the public eye. But they are not those whose consumption of commodities most swells the tonnage of the railways and steamships. They occupy the first-class cabin, and their names are the only ones printed in the passenger lists, but the steerage carries more consumers of wheat, sugar, and pork than all the cabins together."

The enhancement of production through technology required (pp. 92-3) "great corporations or stock companies, which are only forms of associated capital organized for effective must also be admitted that the whole tendency of recent economic development is in the direction of limiting the area within which the influence of competition is effective."

Wells notes the familiar importance of scale that was widely noticed in the 19th century:

"Thus, the now well-ascertained and accepted fact, based on long experience, that power is most economically applied when applied on the largest possible scale, is rapidly and inevitably leading to the concentration of manufacturing in the largest establishments, and the gradual extinction of those that are small...and another quarter of a century will not unlikely see all of the numerous companies that at present make up the vast railroad system of the United States consolidate, for sound economic reasons, under a comparatively few organizations or companies."

Wells emphasizes the importance of economies of scale (pp. 99-109). Thus, heavy investment in technology led, in the 19th century, to the need for greater scale. Wells also believed that machinery would replace low wage work in poorer countries (p. 105). Wells did not believe in the possibility of accurate price indexes (his arguments are not surmounted by the price indexes in use today). He goes through a number of commodities, some of which he is certain have falling prices due to improved technology and some of which offer less clear evidence (p. 126). Of these, I found his discussion of oil most interesting, in part because that was the product of Standard Oil, and Ames says (p. 131) that it is the most interesting commodity. He writes (p. 131):

"...the annual product of crude petroleum in the United States--the chief source of supply--increased from 9,893,786 barrels in 1873 to 28,249,597 in 187. The price of crude oil during this period declined from 9.42 cents to 1.59 cents per gallon and of refined oil from 23.59 cents to 6 3/4 cents per gallon. Thus, from our vantage point, Standard Oil had performed a tremendous service to the American public, for which Mr. Rockefeller was reviled and the firm attacked legally.

Wells adds (p. 132): "It is claimed, and without doubt correctly, to be largely due to the fact that the whole business of refining petroleum in the United States and the distribution of its resulting products has gradually passed, since 1873, into the ownership and control of a combination or 'trust'--the Standard Oil Company--which commanding millions of capital has used it most skillfully in promoting consumption , and in devising and adopting a great number of ingenious methods whereby the cost of production has been reduced to an extent that, at the outset, would not have seemed possible..."

Standard Oil's use of capital , penetration of foreign markets, use of capital, construction of pipelines, creation of knowledge, improvement of inputs.

To take a more modest example (Wells goes through about fifty pages of discussion about various products whose cost was reduced sharply between 1820 and 1889), Wells discusses paper and rags on p. 155. He writes that the substitution of pulp from wood, straw and various gasses for pulp from fibers of cotton and rags (which had been used until the 1860s) that the prices of "fair qualities of book-paper have declined since the year of 1872 to the extent of fully fifty per cent, while in the case of ordinary 'news' the decline has been even greater." Between 1880 and 1888 the capital invested in the paper industry had increased by almost 75%, wages had increased from $1.13 to $1.50 per day and "the average value of a pound of paper declined from 6.09 cents in 1880 to 3.95 cents in 1888. With declining prices and increasing wages and capital investment, small wonder that investors complained about "depression". Note as well that the rising wages in the paper industry were coupled with deflation in prices, so workers were double off twice, once because of increasing wages and once because of decreasing prices. No wonder the economists who work for Wall Street interests, like Ben Bernanke and Alan Greenspan, worry endlessly about "deflation". Imagine what the stock market would look like in the 19th century's democratic economy.

Unlike the large range of products whose prices were reduced due to technology (p. 191), all the products that were the result of handicrafts did not decline in price. Morevoer, the "scarcity of gold" did not seem to affect prices. Thus, Wells did not believe that "free silver" was a solution to deflation. This contrasts with the subsequent Keynesian view that money is the source of productivity and wealth. It would seem that Wells's ideas were more successful in the 19th century than Keynes's were in the 20th.

Wells goes on to argue against the theory that "depression" and "deflation" were due to an insufficient amount of gold. This directly contradicts the concerns of today's economists, who believe that deflation is harmful because it reduces business activity. Under the theory of "everyone is stupid except the economists who work for banks and the Fed", today's economists argue that business stops if there is insufficient liquidity, and then a dose of state compulsion is needed. In contrast to today's crackpot theories, Wells watched a healthy economy characterized by an unparalleled degree of innovation. Wells argues (p. 208) that:

"profts have fallen..due, in almost every case, to the severe competition engendered by the desire to effect sales in face of a continued supply of commodities in excess of any current market demand; whle in contravention of the assumption that the supply of gold in recent years has been inadequate to meet the increased deamnds of the world for coinage, etc., the following facts are in the highest degree pertinent, if not wholly conclusive: No one doubts that the amount of gold in the civilized countries of the world has largely increased in recent years...and at the end of 1885 was nearly four times what it was in 1850"

Wells argues (p. 254) that a trimetallic system based on copper, silver and gold is the best coinage for world trade based on the volumes of trade in each country (the more developed the country, the greater the need for an expensive currency).

Wells goes on to describe the extensive amount of protectionism that existed in the nineteenth century. For example, with respect to Russia (p. 290):

"Russia having sought to close her doors against the produce of other countries, they in turn have curtailed their purchases of Russian products; and the shrinkage in the foreign trade of Russia in recent years, and during a period of peace, has accordingly been almost withou precedent in commercial history."

Neither tariffs nor bounties on production for export turn out to be beneficial, according to Wells (p. 291). Wells comments on the reactionary nature of protectionism (p. 316):

"...a review of all the circumstances connected with the multiplication of restrictions on international commerce, which the majority of civilized nations have united in creating in recent years, fully justifies the British Commission and other European authorities in regarding it as a most influential agency in occasioning almost universal economic disturbance. It has been progress backward--progress in the direction of that sentiment of the middle ages, which held that, as commerce benefited one country only as it injured some other, it was the duty of every country to impose the most harassing restrictions on its commercial intercourse. The evidence, furthermore, is overwhelming that, as civilization grows more complex, and the use and perfection of machinery increases, all obstacles placed in the way of the freest interchange of commodities have an increasingly disastrous effect in deranging and destroying industry everywhere. Or, in other words, increased knowledge respecting the forces of Nature, and a wonderful subordination and use of the same having greatly increased and cheapened the abundance of all useful and desirable things, the majority of the world's legislators and statesmen have seemed to have considered it incumbent upon them to neutralize and defeat the beneficent results of such abundance."

Wells notes that the improvement in technology had made expanding population possible, refuting Malthus. Thus (p. 334):

"All the resources of the population of the United States, as they exiisted in 1840, would have been wholly inadequate to sow or harvest the present average annual corn or wheat crops of the country; and even if these two results had been accomplished, the greater proportion of such a cereal product would have been of no value to the cultivator, and must have rotted on the ground for lack of any means of adequate distribution...(p. 338, my favorite) The consumption of beer has increased from 6.68 gallons per capita in 1878 to 8.26 gallons in 1880, 10.18 gallons in 1883 and 12.48 in 1888..."

Moreover (p. 342):

"The facts in regard to the general increase in the deposits of savings-banks and the decrease in pauperism, are also entitled to the highest consideration in this discussion. In the United States the aggregate deposits in such banks were probably about ($1.5 billion) in 1888 as compared with ($759 million) in 1873--'74; an increase of nearly one hundred per cent in fourteen years..."

Despite massive increases in real wages and standards of living during the late nineteenth century labor was filled with discontent in the late nineteenth century because the displacement of labor through machinery was psychologically jarring and because "changes in the character or nature of employments consequent upon the introduction of new methods--machinery or processes--which in turn have tended to lower the grade of labor and impair the independence and restrict the mental development of the laborer" and also "the increase in intelligence or general information on teh part of the masses" (p. 364-5).

Wells points out (p. 366):

"That such phases of human suffering are now, always have been and undoubtedly always will be the inevitable concomitants of the progress of civilization or the transitions of the life of society to a higher and better stage...That it is not within the power of statute enactment to arrest such transitions, even when a large and immediate amount of human suffering can certainly be predicated as tehir consequent except so far as it initiates and favors a return of society toward barbarism...the utlimate result is always an almost immeasurable degree of increased good...Society proffers its highest honors and rewards to its inventors and discoverers; but, as a matter of fact, what each inventor or discovereris unconsciously trying to do is to destroy property, and his measure of success and reward is always proportioned to the degree to which he effects such destruction..."

Returns to capital fall with innovation but returns to labor increase with innovation (p. 370) "law" attributed to Bastiat.

This is an interesting claim, because in the last 35 years or so returns to capital have risen while returns to labor have been reduced. Presumably, this is attendant upon a reduction in innovation as firms have found it more convenient to relocate and seek lower labor costs than to innovate.

In the nineteenth century, despite complaints of depression in 1873, 1882 and in the 1890s, notes Wells, depression DID NOT mean unemployment. That is a common error that many historians and economists make. DEPRESSION DID NOT MEAN UNEMPLOYMENT IN THE LATE NINETEENTH CENTURY. IT MEANT DEPRESSION OF PROFITS.

Thus, Wells writes (pp. 373-4):

the number of persons who ahve been displaced during recent years by new and more effective methods of production and distribution and have thereby been deprived of occupation and have suffered, does not appear to have been so great as is popularly supposed; a conclusion that finds support in the fact that, notwithstanding trade generally throughout the world has been notably depressed since 1873, through a continued decline in prices, reduction of profits and depreciation of property, the volume of trade--or the number of things produced, moved, sold and consumed--on which the majority of those who are the recipients of wages and salaries depend for occupation, has all this time continually increased, and in the aggregate has probably been little if any less than it would have been if the times ahd been considered prosperous. In the United States there is little evidence thus far that labor has been disturbed or depressed to any great extent from this cause. But there is undoubtedly a feeling of apprehension among the masses that the opportunities for employment through various causes--continued large immigration, absorption of the public lands, as well as machinery improvements--are less favorable than formerly, and tend to be still further restricted; and this apprehension finds expression in opposition to Chinese immigration, to the importation of foreign labor on contract, to the increase in the number of apprentices, and in the endeavor to restrict the participation of various employments to membership of certain societies...The annual investigation by the managers of 'Bradstreet's Journal' into the condition of the industries of the country for 1887, indicated that in March of that year 400,000 more industrial employes were at work than in 1885..."

and (p. 379):

"Wages, speaking generally, have not fallen but have increased; and, except in Germany, there is little indication of a tendency to increase the hours of labor or encroach upon the reservation of Sunday...The extent and rapidity of the increase in consumption of all useful and desirable commodities and services which follows every increase in the ability of the masses to consume, is one of the most wonderful of modern economic phenonmena; and the one thing which, more than any other, augments their ability to consume, is the reduction in the price of commodities, or rather the reduction in the amount of human effort or toil requisite to obtain them, which the recent improvements in the work of production and distribution have effected. Better living, contingent on a reduction of effort necessary to insure a comfortable subsistence, induces familiarity with better things; constitutes the surest foundation for he elevation of the standard of popular intelligence and culture, and creates an increasing desire for services. "

Wells notes the tendency of labor to transmute from manufacturing to services or what he calls "incorporeal functions--that is, as artists, teachers and others who minister to taste and comfort in a way that can hardly be called material--to increase disporportionately to those engaged in the production of the great staples; and that, therefore, the production of these latter is not likely to increase as rapidly as heretofore."

Wells concludeds his chapter on labor by noting (p. 394):

"All this evidence, therfore, seems to lead to the conclusion that there is little foundation for the belief largely entertained by the amsses and which has been inculcateed by many sincere and humane persons, who have undertaken to counsel and direct them, that the amount of remunerative work to be done in the world is a fixed quantity and that the fewer there are to do it the more each one will get; when the real truth is that work as it were breeds work; that the amount to be done is not limited; that tthe more there is done the more there will be to do; and that the continued increasing material abundance which follows all new methods for effecting greater production and distribution is the true and permanent foundation for increasing general prosperity."

Wells notes (p.396) that "subordination to routine and method is an essential element in all systematized occupations" and that much of worker discontent flowed from restriction of independence attendant upon industrialization. He argues that most occupations are not so routinized as the manufacture of boots and shoes (p. 397-8). He also argues that greater scale leads to greater corporate social responsibility (p. 399):

"Experience also shows that the larger the scale on which he capitalistic production and distribution is carried on, 'the less it can countenance the petty devices for swindling and pilfering,' and the neglect and disregard of the health, safety and comfort of operatives, which so generally characterize industrial enterprises on a small scale; or, in other words, the maintenance of a high standard of industrial and commercial morality is coming to be recognized by the managers of all great enterprises as a means of saving time and avoiding trouble, and therefore as an undoubted and important element of profit. And it is to these facts--the natural and necessary growth of what has been termed the 'capitalistic system'--that a recent English writer on the condition of the working classes largely attributes the suppresssion of the truck (store) system, the enactment of laws limiting the hours of labor, the acquiescence in the existence and power of trade-unions, and the incerasing attention to sanitary regulations; reforms that have reformed away the worst features of the condition of labor as it existed thirty or forty years ago in Great Britain. The larger the concern, the greater usually the steadiness of employment and the more influential the public opinion of the employed."

Wells argues (p. 404):

"There is, therefore, unquestionably in these facts an explanation in no small part of what to many has seemed one of the greatest puzzles of the time--namely, that with undoubtedly greater and increasing abundance and chepanes of most desirable things, popular discontent with the existing economic condition of affairs does not seem to diminish, but rather to greatly increase. And out of such discontent, which is not based on anything akin to actual and unavoidable poverty, has originated a feeling that the new conditions of abundance should be further equalized by some other methods than intelligent individual effort, self-denial and a natural, progressive material and social development (the actuality of which is proved by all experience); and that the state could, if it would, make all men prosperous; and therefore should, in some way not yet clearly defined by anybody, arbitrarily intervene and effect it. And this feeling so far as it assumes definitenss of idea and purpose, consitutes what is called socialism."

From 1860 to 1885 purchasing power increased 26.44% per dollar (i.e., there was 26.44% deflation). In discussing the deflation of the late nineteenth century, Wells observes:

"Why is it that wages of manual labor have been constantly rising in recent yers, while all other prices have been concurrently falling? or, to put it differently, why is it that over-production, while cheapening the product, should not also cheapen the work that produces it? The answer is, that the price of the products of labor is not governed by the price of labor, or wages, but that wages, or earnings, are results of production, and not conditions precedent. Wages, as a rule, are paid out of product. If production is small, no employer can afford to pay high wages; but if, on the contrary it is large, and measured in terms of labor is of low cost--which conditions are eminently characteristic of the modern methods of production--the employer is not only enable to pay high wages but will, in fact be obliged to do so in order to obtain what is really the cheapest (in the sense of the most efficient) labor. The world has not yet come to recognize it, but it is nevertheless an economic axiom that the invariable concomitant of high wages and the skilled use of machinery is a low cost of production and a large consumption."

But (p. 418):

"while the remuneration of labor has enormously increased during recent years, the return to capital has not been in any way proportionate, and is apparently growing smaller and smaller. For this economic phenomenon there can be but one general explanation; and that is, that regarding labor and capital as commodities, or better, as instrumentalities employed in the work of production and distribution, capital has become relatively more abundant than labor, and has accumulated faster than it can be profitably invested...

(p. 420)"Again, as capital increases and competition between its owners for its profitable investment becomes more intense, and as modern methods can bring all the unemployed capital of the world within a few hours of the world's great centers for financial supply, the rate of profit, or interest to be obtained by the investor or lender, from this cause, also necessarily tends to shrink toward a minimum. Such a minimum will be reached when the returns for the use of capital become insufficient to induce individuals to save it"

Thus, through a process of creative destruction, capital continually reduces its own returns.

This process was aborted through institution of the Federal Reserve Bank in 1913.

Catholics Should Vote Their Conscience

Nancy Razik just forwarded this inspiring video from

Senator John Cornyn Demands Criminal Probe of Obama-Related Charity

Ace of Spades HQ Blog reports (h/t Larwyn) that Senator John Cornyn has written the following letter to the Department of Justice demanding a criminal probe of ACORN, a pro-Obama charity with which Senator Obama has been directly involved.

The Honorable Michael B. Mukasey
Attorney General U.S.
Department of Justice
950 Pennsylvania Avenue
NW Washington, DC 20530-0001

Dear General Mukasey:

I am increasingly concerned by reports of widespread election fraud by the Association of Community Organizations for Reform Now (“ACORN”), which seem to emerge on a daily basis.

Specifically, I call your attention to state and local investigations into potentially hundreds of thousands of fraudulent voter registration applications filed by ACORN in North Carolina, Ohio, Nevada, Michigan, Florida, New Mexico, Missouri, Pennsylvania, Washington, Connecticut, Wisconsin, and my home state of Texas. In Harris County, Texas, which includes the City of Houston, election officials either rejected or discovered serious deficiencies with nearly 40 percent of the 27,000 registration cards filed by ACORN from January through July of this year.

Most recently, election officials in Lake County, Indiana, found more than 2,100 fraudulent voter registration applications that were filed at the deadline by ACORN. According to a CNN report, at least one of ACORN’s applications in Lake County attempted to register a dead man. In addition, The St. Petersburg Times (FL) reported today that Mickey Mouse tried to register to vote in Florida this summer. Although Orange County elections officials rejected his application, it is notable that Mickey Mouse’s application had an ACORN stamp on it. In addition, The [Raleigh, NC] News & Observer also reported today that ACORN conducted a voter drive that registered nearly 28,000 people in North Carolina. But according to local election officials some of the forms it filed had information that may have been copied from phone books.

Election fraud imposes a real cost on our system, beyond the obvious consequence of subverting a free and fair election. Fraudulent voter registration on this scale seriously strains state and local elections resources and distracts elections officials from preparing to conduct an orderly election. Of course, ACORN’s nationwide voter registration fraud provides an opportunity for individuals to vote who should not, or for some to vote more than once.

Given these allegations, as well as the well-documented fraud convictions in recent years of ACORN employees, I urge you to launch a nationwide criminal probe into ACORN’s voter registration activities. As you know, federal law prohibits an individual from (1) providing fraudulent voter registration information; (2) conspiring to encourage false registration or illegal voting; and (3) paying or offering to pay another individual for registering or voting. It is also a crime to knowingly procure or submit false, fictitious, or fraudulent voter registration applications. Finally, I must add that, because the violations of federal voting laws by ACORN employees appear to be so widespread, ACORN and its affiliates should be investigated as a criminal enterprise.

Thank you for your prompt attention to this matter.



United States Senator

Revving Up the Helicopter

Howard S. Katz of the has published this revised chart of expansion of Federal Reserve Bank Credit. The reserve bank credits increased by another 50% since the last chart. This variable drives the amount of money in circulation in the United States. It is likely that both Barack Obama and John McCain have favored this step although none of the major media has asked or covered this question. If you are eager to pay 30% higher prices in order to subsidize hedge fund, Wall Street and commercial banking lobbies then vote for either candidate. This has nothing to do with regulation, sub-prime mortgages or bail outs. This is classic monetary inflation brought about by irresponsible political leadership.

A Call to MSM Supporters

Truthhurts is a regular poster here who recently raised the question of the veracity and believability of CNN. When I think of CNN I think of Lou Dobbs screaming illiterate remarks in favor of protectionism and regulation of banking, unaware that banks' current financial problems stem from regulation and government pressure. As well, Dobbs' unawareness of the elementary theory of comparative advantage suggests to me a simple mind, incapable of grasping common sense ideas. Likewise, Jack Cafferty, another simpleton, who is well past the age of normal onset Alzheimers (as is Dobbs, whom I suspect it afflicts) ranting endlessly about John McCain's age. Cafferty's problem is that he starts to think he is talking about Richard M. Nixon midway through his monologue.

In a response to Truthhurts's comment below I have made a suggestion, and I would like to offer it to all who trust in the mainstream media. Do an experiment. When your favorite news station or news source recommends a buy on a stock or bond, then buy it. Keep track of your returns. How much money you lose will be an index of how unreliable your news source is. If you have half of your money left at the end of five years, you can probably safely conclude that you can believe half of what your news source says, etc. For instance, when the stock indexes fell last week, I was in the fitness room where I stay in the city and I heard news announcers saying to sell stocks. I think that was on CNN. Every time you hear a recommendation like that on your favorite news source, act on it. At the end of five years, see how much money you have. If you have 1/3 left, conclude that the stations are about 1/3 truthful, etc.

Louis Farrakhan Calls Barack Obama "Messiah"

Nancy Razik has forwarded a Youtube video of Louis Farrakhan calling Barack Obama "the Messiah".

Geert Wilders at the Four Seasons Hotel

Jim Crum has forwarded a fascinating speech by Geert Wilders, chairman of the Party for Freedom, the Netherlands, that was given at the Four Seasons Hotel in Manhattan. My wife and I celebrated our wedding there, so I can't help but voice my agreement with Mr. Wilders. Read it here.

Pro-Obama Thugs Shut Down Phil Berg Interview--Please Protest

Phil Orenstein just forwarded this e-mail from Vigilant Freedom:

"On the No Compromise Show recently the guest was Attorney Phil Berg, who has filed a lawsuit against B.Hussein Obama asking to see Mr. Obama's birth certificate. After about 10 minutes into the conversation between No Compromise and Mr. Berg the show was shut down.

"There is no proof of what or whom promoted the outrageous lies, excuses and defamation of why the No Compromise show was shut down, but an educated guess would be it was most likely those same people who are suppressing the proof that Barack Hussein Obama does or does not qualify to be President of the USA.

"I understand that the host reported that:

"I was about 13 minutes into my show and BTR decided to remove my show right in the middle of my interview claiming that my show was “racially or ethnically offensive, defamatory, unreasonably violent, threatening, intimidating or harassing; 2. contains falsehoods or misrepresentations that could damage BlogTalkRadio or any other person;” stated BTR assistant Director of Customer Relations, Shannon Dingee-Kramer.

"Of course, Ms. Dingee-Kramer provided no proof of this apparent violation of this vague and arbitrary offense. It’s just pure opinion which seems to be more important than my opinion or Mr. Berg’s opinion.

"Her decision to remove my show was ARBITRARY and unacceptable! There was nothing abusive about my show on ANY level however, the action taken against me was very abusive!

"In fact, I find BTR’s and specifically, Ms. Dingee-Kramer’s opinion and action politically offensive, defamatory, unreasonably violent, threatening, intimidating and harassing; 2. which contains falsehoods and misrepresentations that HAS damaged ME as a person!

"Those who are voting for Obama didn’t like my guest, nor my content, and they demanded my show be removed. Is this acceptable behavior? NO! Is this how BTR handles free speech issues? YES! They shut people down because they disagree with the speech?

"This is disgusting and Orwellian at best! The BTR leadership ought to be ashamed of themselves for their unAmerican actions! Americans should NOT care about offending people MORE than protecting one’s Right to speak! Where do you people live? North Korea?



Vigilant Freedom urges that you please email Blog Talk Radio to express your outrage at the way the No Compromise Show has been treated. Not sure who the appropriate person would be to complain about this free speech issue but there are some people who could perhaps be contacted for an explanation at the following link:

I have written the following message to Mr. Philip Recchia, Director, Programming and Communications, BlogTalkRadio:

Dear Mr. Recchia: I understand that thugs who support Barack Obama have shut down the Phil Berg interview. I have personally experienced harrassment from Obama supporters who triggered a spam mechanism on Blogger that shut down my blog ( Similarly, there are reports of repeated incidents of harrassment, intimidation and attacks by the Obama campaign against all who disagree with it (see who have been reporting on these and similar attacks on an ongoing basis).

I urge you to air Mr. Berg's interview in full. The lying and misrepresentation surrounding Barack Obama's candidacy has not been examined by the mainstream media. For instance, his residence in Indonesia for four years as a child and questions about the place of his birth are cloaked in secrecy. When Mr. Berg attempted to obtain simple documents such as birth certificate through the legal process, rather than simply provide the information Barack Obama and the DNC have preferred to fight revealing birth information in court. Yet, being a natural born citizen is a Constitutional requirement for presidency.

Your station would do a major public service by re-airing the Berg interview and not allowing pro-Obama thugs to inhibit free speech as they have done with respect to the mass media.


Mitchell Langbert