Mandatory Voting: One More Misguided, Coercive State Policy

Dambisa Moyo appeared on Kitco to discuss her recent book and advocate mandatory voting.  She claims that the current American system permits voters' apathetic shirking, with the result that politicians think short-term and pander to the extremes in the two parties.

The question of long-term versus short-term thinking by politicians is related to issues that Madison and Hamilton discuss in The Federalist.  They feared mass democracy because the general public tends to think short-term, so they believed that mob rule would likely result from mass democracy.

Long-term thinking favors free markets; short-term thinking favors coercion and government management. Since America was made more democratic during the Progressive era,  short-term rather than long-term thinking has tended to prevail. When the US was more in the nature of a republic than a democracy, laissez-faire policies that, in the long-term, generated 0.5% to 2.0% annual real wage increases resulted. When the country adopted Progressivism in the late 19th century and adopted the 17th Amendment in 1913, real wages were growing.  Sixty years after the passage of the 17th Amendment, which made election of Senators more democratic by ending their election by the state legislatures, real wages stopped growing.

The reason real wages stopped growing in 1973 was the passage of popular, but ham-handed, regulation in the 1960s.  President Nixon's termination of the gold standard in 1971 did not meet public disapproval, and it led to the ability of sophisticated financial elites to divert wealth to themselves. As well, government beneficiaries, defense  contractors, and other privileged interests have benefited, but the public is mostly unaware that the gains it was earning under free market capitalism ground to a halt after the Great Society regulatory expansion of the 1960s.

More democracy meant shorter-term thinking, just as Madison feared. Republics work better than democracies.

If we look at the 22  countries that have mandatory voting, they are mostly low-GDP or very small countries.  The high-GDP countries that have mandatory voting are small,so the effects of complex lobbying and media manipulation processes, as occurred during the 2008-9 bailout and routinely occur vis-a-vis monetary policy, are also small.  In a small country it is hard to favor policies that favor yourself at others' expense; the country is so small that harm will come to everyone.

As you can see in the chart below, which I copped off PBS,  there is mandatory voting in countries with insane and corrupt legal and monetary policies like Argentina, the Congo, Greece, and Mexico.  The relatively well-run countries with mandatory voting are small.  These include Singapore, Australia,and Luxembourg.

Increasing the number of voters will not change much. It may reduce the time horizon of elected officials.  The cost of voting may reduce marginal voters' time investment in learning about issues.  In small countries costs of voting for misguided policies are quickly borne by everyone, but in large countries  some groups can impose costs onto others.   Thus, voters can be convinced to vote for policies like the minimum wage that harm a small number of people but make themselves feel good. Policies that squash innovation are among these.

Even in a small country like Greece, which only has a population of 11 million, the public wasn't able to foresee that pension underfunding and excessive government wages would soon result in bankruptcy.

Most of the other countries on the list of countries with mandatory voting have not been able to develop because of the sclerotic, big-government bloat that most people believe benefits them. They believe so because they are unable to think long-term.   If anything, forcing more widespread voter participation, which will make the voter base more manipulable because it will force those with the least interest in voting to vote, will appeal  to elite interests that stand to benefit from loose monetary policy and government favoritism.

Country	Age of Eligibility for Mandatory Voting
Argentina	18
Australia	18
Belgium	18
Bolivia	18
Brazil	18
Congo, Democratic Republic of the	18
Costa Rica	18
Dominican Republic	18
Ecuador	18
Egypt	18
Greece	18
Honduras	18
Lebanon	21
Luxembourg	18
Mexico	18
Nauru	20
Panama	18
Paraguay	18
Peru	18
Singapore	21
Thailand	18
Uruguay	18

Source: CIA World Factbook via PBS

Howard S. Katz, RIP

My old friend and former business associate, Howard S. Katz, has died according to Kitco.com and Zionist Gold Report (h/t Glenda McGee).  Zionist Gold Report cites an obituary in the Nashua Telegraph.

>According to an obituary in New Hampshire’s daily newspaper, Nashua Telegraph, Howard S. Katz, a long-time commentator on Kitco.com passed away on Dec. 23, 2010 at the age of 72. Howard was a financial analyst and editor-in-chief of The One-Handed Economist and the former Gold Bug Newsletters. He was born in Providence, and had lived in New Hampshire for 10 years.

>His biography on Kitco.com states that he was one of the early gold bugs of the late ‘60s and ‘70s, turning bullish on gold in 1965. He turned increasingly skeptical about gold as it mounted its final rise in 1979, and he called the top after the close on Jan. 21, 1980 (with gold at $825.50/oz.). Howard was also the head of the Committee to Establish the Gold Standard and worked with Congressman Ron Paul for the passage of the American eagle gold coin bill of 1986.

>He published several newsletters; The Speculator (1964- 1972), The Gold Bug (1973-1986) and The One- handed Economist (1996-present). He is also the author of three published books on money: The Paper Aristocracy (1976), The Warmongers (1979) and Honest Money – Now! (1979).

 

In the late 1970s, before I moved to California to attend the UCLA Graduate School of Management, I was the treasurer of Katz's Committee to Establish the Gold Standard.  At the time Howard lived in a small apartment on Fourth Avenue in lower Manhattan.  I worked with him on his congressional campaign bid in Manhattan (I may have been  his only staff member).  I was learning to drive at the time, and Howard gave me a few tips.  Although he came in near last in the race he spread the pro-gold message.  Ronald Reagan was elected a year or two later.  The end of the late 1970s' high inflation, as Howard liked  to emphasize, was the product of the Carter administration, not the Reagan administration. President Carter had appointed Paul Volcker, who adopted monetarist Fed policies.  Volcker's policies popped the Keynesian stagflation of the 1970s that followed upon Richard M. NIxon's pronouncement that “we are all Keynesians now”; the out-of-control public sector unionism in New York and elsewhere; and the monetary policy-induced inflation of the late 1960s and 1970s. But, as Howard also frequently emphasized, Reagan renewed the inflationary pattern through the Keynesian supply sider argument.

Howard had been a member of the Free Libertarian Party in Manhattan prior to my joining it in 1977.   A few years ago Howard gave me his unpublished manuscript Wolf in Sheep's Clothing that I have yet to review. I had reviewed a draft of his revised "Paper Aristocracy" which I do not believe was re-published.  Paper Aristocracy is out of print but sometimes used copies are available at Amazon.com.

I recall clearly his visiting Congressman Ron Paul in the late 1970s  to discuss gold issues with him.  Hence,  Katz has influenced Paul's pro-hard money ideas today.  Katz unquestionably has influenced national debate on monetary policy and renewed public concern about the Federal Reserve Bank. 

Before any one else in post World War II America, Katz emphasized the Jacksonian insight that the central bank is a redistribution mechanism from poor to rich.  Hence, the Keynesian claim that the Fed helps labor and small business is pap.  He claimed that economists and advocates of progressivism fall into two categories: the smart dissemblers who are manipulating the system to their and Wall Street's advantage, such as Alan Greenspan, and the vast majority of useful idiots, economists who actually believe the Keynesian theory.

Howard made similar points about the Fabian socialism of people like Sidney and Beatrice Webb, namely, that their socialist ideologies were a "wolf in sheep's clothing."  He argued that there are two categories of advocates of destructive socialist policies: those who actually believe them, the majority of useful idiots, and those who understand their vicious implications and use them to gain power.

I lost contact with Howard when I attended UCLA in 1979.  In 2004 or so in the face of impending gold price increases I spent several weeks attempting to renew contact and tracked him down in Nashua.  At the time, he published his newsletter, the One Handed Economist, via Xeroxing.  I suggested that he start a small website, which we did after a year or two of deliberation.  He asked a different friend to run his website about two years ago. Also, he changed the name to "the Gold Speculator."

Howard had a tremendous effect on many libertarians' and gold advocates’ thinking.  He will be sorely missed.

$980 or $1200 Gold?

Jon Nadler of Kitco argues the bear case:

"On the technical side of things, as was expected, the break below the $1,015 (he means $1,115) price marker elicited a fairly heavy subsequent decline in values. At this time, near-term support has held up at the $1,073-1,075 levels, despite such support being fairly moderate in terms of bargain hunting. Thus, a deeper decline towards the $1,055 and ultimately the $980 level now appears more plausible, even if we can expect a bounce from current levels in upcoming sessions. Overhead resistance appears to be in the $1,095-1,097 area, and the metal needs to rise to above the $1,117 mark to get the bulls excited again."

Also of Kitco, Frank Holmes argues:

We believe that the secular bull market for commodities and natural resources stocks that began in 2000 is far from over. The International Monetary Fund believes that commodity prices will rise further in 2010 as a result of global economic recovery and escalating demand from fast-growing emerging markets.

"The expanding middle class in China, Brazil and the other biggest emerging economies want more of the material goods taken for granted in the developed world. They are laying claim to a bigger share of the world’s commodities, many of which could face future supply constraints.

"History shows that commodity supercycles typically last 20 to 25 years, though not without periods of volatility. If the current cycle follows the historic pattern, we could be just starting the second half of a prolonged upward trend."

"To favor the bear case long term you need to believe in the competence of the Fed and the US Congress. Also, you need to overlook the long term trend of dollar depreciation over the past century. To favor the bull case short term you need to overlook the power of the central banks and Wall Street and the dollar mythology.

GOD BLESS KITCO: KITCO RECANTS HETEROSEXUAL BAN

Howard S. Katz showed me a confidential e-mail from Bart Kitner, president of Kitco, who has invited Katz back to the site as a contributor. Kitco's Daniela Carbone, likely a product of politically correct educational systems, banned Katz from writing for Kitco's gold commentaries for saying on his personal blog that he opposes gay marriage. Katz is a longtime gold investor (dating back to the '60s--I first met him in 1978) and he has a lot to offer in the way of advice about gold and commodity investing. He has beaten the S&P indexes since '99 when he started keeping track. Kitco is a fine gold site and has corrected its inadvertent misstep.

The public outcry in response to my blog and Katz's articles on some of the other gold sites was gratifying. Several of my friends, associates and readers called Kitco, as did several of Katz's readers.

This illustrates the growing power of the Net to confront the gay-dominated easy money community. Homosexual investment bankers will no longer silence gold investors.

As well, this illustrates the potential public power that can be awakened by the "tea parties" that have recently sprung up. I believe that true Americans have lain dormant for too long, seeing their country stolen by rapacious government, special interest looters, big business crooks and homosexual investment bankers who have manipulated the state so that hard working Americans have to pay 50% of their incomes to incompetent government tyrannies.

Kitco Bans Gay Marriage Opponents

What does gold investment advisor Howard S. Katz have to do with Miss California? Recently, Perez Hilton, a gay judge in the Miss USA contest, asked Miss California, Carrie Prejean, whether she believes in gay marriage. Prejean suggested that marriage ought to be between a man and a woman. There has been speculation that Prejean lost Miss USA as a result. Suppressive intolerance against all who disagree with extremist dogma is reminiscent of the the Fascist trial of Antonio Gramsci. The left has whined about McCarthyism for more than fifty years, yet it does not hestitate to apply McCarthyite tactics, ruining careers with ideological litmus tests, when an individual's views do not conform to left wing or homosexual dogma.

Howard S. Katz has been working on gold investing since the 1960s. He has successfully navigated gold, lumber and other commodities markets for 40 years, and frequently publishes on Gold Eagle, Goldseek, and other gold websites. Recently, on his personal blog that he had linked to a Kitco article, Katz mentioned that he opposes gay marriage. He did not write this in the Kitco article. He simply voiced the view that he opposed gay marriage in his blog, which was linked to the article.

Because Katz failed the Code of Gay Fascism, Ms. Cambone wrote Katz the e-mail below. It saddens me that the gay community and Kitco have taken to witch-hunting and McCarthyite tactics, such as attacking people's livelihoods because they merely store and do not lubricate their gold bars.

Does this mean that all current writers on Kitco support gay marriage? I will inquire. Please stay tuned.

--------------------------------------------------------------------------------
Subject: commentary
Date: Thu, 16 Apr 2009 12:35:50 -0400
From: dcambone@kitco.com
To: howardkatz@hotmail.com

Dear Mr. Katz,

We have run into quite a few complaints with your latest article. It seems that when our readers clicked the link to your website, they found a blog against homosexual marriages. This has insulted many people. We at Kitco realize that your commentary did not make reference to this fact but we cannot be associated with individuals who share these viewpoints.

You are a longtime contributor to Kitco and we appreciate your commentaries. Unfortunately, we cannot publish commentator’s who have points-of-views that are offensive to readers.

If you would like to discuss this matter in further detail, please feel free to call me.

Sincerely,

Daniela Cambone
Content Specialist
Marketing Department

Kitco Metals Inc.
Direct Line: (514) 670-1317
Cell: (514) 928-5820
Fax: (514) 875-2579
dcambone@Kitco.com
www.kitco.com

Kitco Bounces Katz Over Gay Marriage

I just sent the following e-mail to Kitco. One of the several alternative gold sites where Howard publishes his articles is Goldseek.


Dear Friends: I am a blogger with an interest in gold and I occasionally submit op ed pieces to newspapers. Howard S. Katz told me that you have told him that he cannot publish in your website because he said that he opposes gay marriage in his blog. I find this interesting and would be interested in learning about your position on this topic and why you felt it was appropriate to ban him (assuming that is the case). I would be interested in setting up a telephone interview in the near future.

Best wishes,

Mitchell Langbert, Ph.D.