Monday, May 5, 2014
Did the Jews in the Dachau Gas Chambers Thank Government for Protection from Power Companies?
In my business class yesterday I mentioned my distaste for government regulation. A recent concern is the National Security Agency's use of personal information to retaliate against American dissidents. The NSA's actions are like the Soviet Union's 20th century economic retaliation against its dissidents. In a recent Reason Magazine article and the video above, William Binney, a former NSA official turned whistle blower, describes retaliation for his revealing the NSA's misuse of personal information about US citizens.
A student raised this point: "It is difficult to choose between regulation that suppresses competition and the absence of regulation that allows large firms to take advantage of individual citizens." The trouble is that there is little evidence that large firms took advantage of citizens when there was no regulation. There is little evidence that the benefits of regulation, if any, exceed the costs. The growth of large firms coincided with the growth of regulation; regulation is a prerequisite to large scale, so advocates of regulation claim to solve a problem that they have caused. Before federal intervention, cartelization of industry repeatedly failed. It did not succeed until the Sherman Antitrust Act and Theodore Roosevelt encouraged it. The Sherman Antitrust Act encouraged the growth of large-scale firms by illegalizing collusion or cooperation among small firms.
Moreover, the threat that large government poses to private citizens' welfare is worse than large firms' extraction of monopoly rents. Is a United States government that has expanded through imperialism, murdered Native Americans, enabled the enslavement of Blacks through the US Constitution and the Fugitive Slave Act, murdered a million-and-a-half Vietnamese, exiled immigrants who disagreed with the capitalist system, and funded political correctness in universities to be trusted to make us safe from power companies?
Did the Jews gassed in Dachau feel grateful to the Nazi government for regulating power companies?
Saturday, May 3, 2014
Visualizing a Response to the 2070 American Collapse
Misallocation of resources, inefficiency, and absence of innovation cause all civilizations to collapse. China has gone through 20 or 30 dynasties over its 4,000 years, a new one every 200 years or so. The American case is tragic because the Lockean liberalism on which America was founded held out a possibility of permanent stability and development. Of course, permanence would have depended on restraint, both moral and economic, yet restraint did not obtain.
First, there was a tendency to misallocate and overexploit resources. Second, there was a failure to live up to the standards required of Lockean liberalism, especially the requirement to avoid the use of force to extract wealth or to capriciously allocate wealth through the state. Third, the moral foundation on which America rested was the best the world has seen, yet it was not good enough. The Calvinism of the nation's founders gave way to materialism. Fourth, the envy and greed that attended wealth inequality was exacerbated by legitimate grievances about the state's use of resources to benefit the few.
The result was an intensified system of state allocation of resources to American elites at the expense of producers, who under Lockean liberalism and the economic law of wages are entitled to the marginal value of their productivity. America's is not a fair system.
The redistribution of wealth has recently accelerated, and there is little reason to think that it can be reversed. Moreover, the American standard of living today depends on global subsidization through a propped up dollar. The need to prop up the dollar will extend as Americans grapple with the need to fund retirement, health care, housing, welfare, and the stock market.
Claims of homeowners, whose houses have inflated values, and house buyers, who are entitled to affordable housing, conflict. So do the claims of baby boomers, to whom government has promised Social Security benefits, and the millennial generation, who are entitled to their wages.
Entrepreneurship and innovation enable societies to overcome the misallocation of wealth, but the increasingly shrill claims of crackpot environmentalism, corporations, cronies of elected officials, and financial markets lead to ever-greater regulatory rigidity. Such rigidity stalls entrepreneurship, limiting it to already-known domains such as technology. The importance of entrepreneurship is greatest in areas in which its benefits are least known and least anticipated. This bounded rationality problem leads to diminishing returns to entrepreneurship.
America's universities have contributed to economic decline. Their claim that social problems can be analyzed and cured through scientific positivism leads to focus on the known as opposed to the yet-to-be-learned. Universities substitute correlation for morality, yet their greatest contribution has been the recognition that correlation is not causation. They are centers of ignorance and opportunism.
The confluence of declining innovation, increasing indebtedness, and decreasing entrepreneurship transforms America, once the land of achievement, into the land of entitlement. The end result is stagnation, then decline. The differences among the nations will likely diminish because other nations lack the confluence of characteristics--need for achievement, a laissez faire economy, and a foundation of morality--that are necessary for a nation to excel as America has. In the past, military organization, military valor, and luck led to ascendancy. Such will be the characteristics of great nations in the coming two centuries.
In the long term, decentralization, the breakup of the federal republic into the separate republics of the states, may help. The reason is that elimination of central control stimulates competition, innovation, variety, and alternative approaches. That is precisely how Western Europe was transformed from an economic laggard in the Middle Ages to the dominant culture of the modern era.
First, there was a tendency to misallocate and overexploit resources. Second, there was a failure to live up to the standards required of Lockean liberalism, especially the requirement to avoid the use of force to extract wealth or to capriciously allocate wealth through the state. Third, the moral foundation on which America rested was the best the world has seen, yet it was not good enough. The Calvinism of the nation's founders gave way to materialism. Fourth, the envy and greed that attended wealth inequality was exacerbated by legitimate grievances about the state's use of resources to benefit the few.
The result was an intensified system of state allocation of resources to American elites at the expense of producers, who under Lockean liberalism and the economic law of wages are entitled to the marginal value of their productivity. America's is not a fair system.
The redistribution of wealth has recently accelerated, and there is little reason to think that it can be reversed. Moreover, the American standard of living today depends on global subsidization through a propped up dollar. The need to prop up the dollar will extend as Americans grapple with the need to fund retirement, health care, housing, welfare, and the stock market.
Claims of homeowners, whose houses have inflated values, and house buyers, who are entitled to affordable housing, conflict. So do the claims of baby boomers, to whom government has promised Social Security benefits, and the millennial generation, who are entitled to their wages.
Entrepreneurship and innovation enable societies to overcome the misallocation of wealth, but the increasingly shrill claims of crackpot environmentalism, corporations, cronies of elected officials, and financial markets lead to ever-greater regulatory rigidity. Such rigidity stalls entrepreneurship, limiting it to already-known domains such as technology. The importance of entrepreneurship is greatest in areas in which its benefits are least known and least anticipated. This bounded rationality problem leads to diminishing returns to entrepreneurship.
America's universities have contributed to economic decline. Their claim that social problems can be analyzed and cured through scientific positivism leads to focus on the known as opposed to the yet-to-be-learned. Universities substitute correlation for morality, yet their greatest contribution has been the recognition that correlation is not causation. They are centers of ignorance and opportunism.
The confluence of declining innovation, increasing indebtedness, and decreasing entrepreneurship transforms America, once the land of achievement, into the land of entitlement. The end result is stagnation, then decline. The differences among the nations will likely diminish because other nations lack the confluence of characteristics--need for achievement, a laissez faire economy, and a foundation of morality--that are necessary for a nation to excel as America has. In the past, military organization, military valor, and luck led to ascendancy. Such will be the characteristics of great nations in the coming two centuries.
In the long term, decentralization, the breakup of the federal republic into the separate republics of the states, may help. The reason is that elimination of central control stimulates competition, innovation, variety, and alternative approaches. That is precisely how Western Europe was transformed from an economic laggard in the Middle Ages to the dominant culture of the modern era.
Friday, April 25, 2014
List of Member Banks--Stockholders and Owners--of the Federal Reserve Bank
The following is a complete list of members of and stockholders in the Federal Reserve Bank. The list includes all regions. I obtained it through a Freedom of Information Act request. The request and the Fed's response are as follows. The Fed did not respond to my second request, which was for information about the law governing the fiduciary status of its stockholders.
My inquiry
Dear FOIA Officer:
Pursuant to the federal Freedom of Information Act, 5 U.S.C. § 552, I request access to and copies of a list of all (a) stockholders of and, if there are any differences, (b) member banks and other financial institutions of the Federal Reserve Bank. The list would include all members and stockholders in all regions and all types of institutions, including but not limited to national banks and state banks. I agree to pay reasonable duplication fees for the processing of this request up to $150. If my request is denied in whole or part, I ask that you justify all deletions by reference to specific exemptions of the act. I will also expect you to release all segregable portions of otherwise exempt material. I, of course, reserve the right to appeal your decision to withhold any information or to deny a waiver of fees. I look forward to your reply within 20 business days, as the statute requires. Thank you for your assistance. Sincerely, Mitchell Langbert, Ph.D. mlangbert@hvc.rr.com
The Fed's response
shall be increased from time to time as member banks increase their capital stock and surplus or as additional banks
become members, and may be decreased as member banks reduce their capital stock or surplus or cease to be members.
Shares of the capital stock of Federal reserve banks owned by member banks shall not be transferred or hypothecated.
When a member bank increases its capital stock or surplus, it shall thereupon subscribe for an additional amount of
capital stock of the Federal reserve bank of its district equal to 6 per centum of the said increase, one-half of said
subscription to be paid in the manner hereinbefore provided for original subscription, and one-half subject to call
of the Board of Governors of the Federal Reserve System. A bank applying for stock in a Federal reserve bank at
any time after the organization thereof must subscribe for an amount of the capital stock of the Federal reserve bank
equal to 6 per centum of the paid-up capital stock and surplus of said applicant bank, paying therefor its par value plus o
ne-half of 1 per centum a month from the period of the last dividend. When a member bank reduces its capital stock or
surplus it shall surrender a proportionate amount of its holdings in the capital stock of said Federal Reserve bank.
Any member bank which holds capital stock of a Federal Reserve bank in excess of the amount required on the
basis of 6 per centum of its paid-up capital stock and surplus shall surrender such excess stock. When a member
bank voluntarily liquidates it shall surrender all of its holdings of the capital stock of said Federal Reserve bank and
be released from its stock subscription not previously called. In any such case the shares surrendered shall be
canceled and the member bank shall receive in payment therefor, under regulations to be prescribed by the Board of
Governors of the Federal Reserve System, a sum equal to its cash-paid subscriptions on the shares surrendered and
one-half of 1 per centum a month from the period of the last dividend, not to exceed the book value thereof, less any
liability of such member bank to the Federal Reserve bank.
I mailed the Fed the following inquiry, to which it did not respond:
This is the list of Fed member banks and stockholders. It should be available on Scribd by clicking on the link.
My inquiry
Dear FOIA Officer:
Pursuant to the federal Freedom of Information Act, 5 U.S.C. § 552, I request access to and copies of a list of all (a) stockholders of and, if there are any differences, (b) member banks and other financial institutions of the Federal Reserve Bank. The list would include all members and stockholders in all regions and all types of institutions, including but not limited to national banks and state banks. I agree to pay reasonable duplication fees for the processing of this request up to $150. If my request is denied in whole or part, I ask that you justify all deletions by reference to specific exemptions of the act. I will also expect you to release all segregable portions of otherwise exempt material. I, of course, reserve the right to appeal your decision to withhold any information or to deny a waiver of fees. I look forward to your reply within 20 business days, as the statute requires. Thank you for your assistance. Sincerely, Mitchell Langbert, Ph.D. mlangbert@hvc.rr.com
The Fed's response
Dear Dr. Langbert,
This is in response to your email message dated April 15, 2014,
and received by the Board’s Freedom of Information Office on April 16, 2014, in
which you request copies of a list of all (a) stockholders of and, if there are
any differences, (b) member banks and other financial institutions of the
Federal Reserve Bank. Attached is a list of institutions regulated by the
Federal Reserve System. We are also providing you with a link to the Board’s
website regarding information about stock issues.
Comment
The link about stock issues says this:Federal Reserve Act
Section 5. Stock Issues; Increase and Decrease of Capital
1. Amount of shares; increase and decrease of capital; surrender and cancellation of stock
The capital stock of each Federal reserve bank shall be divided into shares of $100 each. The outstanding capital stockshall be increased from time to time as member banks increase their capital stock and surplus or as additional banks
become members, and may be decreased as member banks reduce their capital stock or surplus or cease to be members.
Shares of the capital stock of Federal reserve banks owned by member banks shall not be transferred or hypothecated.
When a member bank increases its capital stock or surplus, it shall thereupon subscribe for an additional amount of
capital stock of the Federal reserve bank of its district equal to 6 per centum of the said increase, one-half of said
subscription to be paid in the manner hereinbefore provided for original subscription, and one-half subject to call
of the Board of Governors of the Federal Reserve System. A bank applying for stock in a Federal reserve bank at
any time after the organization thereof must subscribe for an amount of the capital stock of the Federal reserve bank
equal to 6 per centum of the paid-up capital stock and surplus of said applicant bank, paying therefor its par value plus o
ne-half of 1 per centum a month from the period of the last dividend. When a member bank reduces its capital stock or
surplus it shall surrender a proportionate amount of its holdings in the capital stock of said Federal Reserve bank.
Any member bank which holds capital stock of a Federal Reserve bank in excess of the amount required on the
basis of 6 per centum of its paid-up capital stock and surplus shall surrender such excess stock. When a member
bank voluntarily liquidates it shall surrender all of its holdings of the capital stock of said Federal Reserve bank and
be released from its stock subscription not previously called. In any such case the shares surrendered shall be
canceled and the member bank shall receive in payment therefor, under regulations to be prescribed by the Board of
Governors of the Federal Reserve System, a sum equal to its cash-paid subscriptions on the shares surrendered and
one-half of 1 per centum a month from the period of the last dividend, not to exceed the book value thereof, less any
liability of such member bank to the Federal Reserve bank.
I mailed the Fed the following inquiry, to which it did not respond:
I teach business at Brooklyn College and have a question; maybe
you can help me or direct me to the best person to ask. Normally,
corporation law applies to corporations in the state in which the
corporation is domiciled. For instance, the common law of Delaware applies to
the many corporations domiciled in Delaware.
(1) As a corporation owned by its members but authorized by
federal law and governed in part through the political process, what body of
common law or federal statutory interpretation applies to the Fed? Is it the
law of the states where the district Feds are located, federal law, federal
regulation, or some other body of law?
(2) As a corollary of (1), where is the Fed domiciled for
application of law concerning governance, fiduciary versus business judgment
responsibility of its board, and similar kinds of governance issues:
Washington, DC; the states where the branches are located; both; or elsewhere?
(3) Is there a specific statute or section of the Federal Reserve
Act that concerns governance, the governors’ fiduciary duty to members,
and what that fiduciary duty would constitute given the Fed’s broad
social mandates (reduction in unemployment, reducing inflation, and the like)?
Is there someone at the Fed (maybe a legal officer) who knows the
answers to these questions?
Thanks for your help.
Thanks for your help.
Mitchell Langbert, Ph.D.
This is the list of Fed member banks and stockholders. It should be available on Scribd by clicking on the link.
Obama's Dismal Presidency
In 1951 David B. Truman, president of Mount Holyoke College, published The Governmental Process: Political Interests and Public Opinion, a monumental, scholarly work on the political science of special interest groups and the federal government. Truman illustrates his chief points with history, and he offers insightful anecdotes about many of the chief twentieth century interest groups such as the American Federation of Labor, the National Association of Manufacturers, the Grange, and the American Medical Association. Truman integrates his discussion of interest groups with a discussion of the structure of the federal government; he shows how the structure of Congress, the presidency, and the Supreme Court determine how interest groups behave.
In Truman's chapter on the executive branch, which is near the end of the book, he dissects the characteristics of successful and effective American presidents. He writes this (p. 403):
The president's leadership of the legislature depends heavily upon his symbolic supraparty position. Although he cannot completely ignore the pleas of partisanship, he must play upon the multiple memberships of both fellow party-members and nominal opponents in order to effect winning support for the cause he is championing.
Truman also writes this (p. 402):
The president's partisanship and partiality among groups must be kept within limits...despite the need to maintain cohesion among the elements that helped him to power. The process by which he is nominated and elected inevitably gives some groups better access to him than others can command, but as the dominant symbol of the nation, he cannot be completely identified with a segment of it...The measure of detachment imposed on a president by his position as a chief of state is not necessarily a handicap. The obligation to remain minimally accessible to all legitimate interests in the society can supply him with a measure of independence and a persuasive power that effectively supplements his formal authority.
By these measures, President Barack Obama's presidency has been a failure. He has failed to represent all of America. This failure is due to the American media, which no longer offers diversity of viewpoints that reflect the range of legitimate views in America--a problem that Truman discusses at length but which has become more serious since Truman's day, when it was already a matter of concern. Rather, like the media in a totalitarian state, the American media attempts to delegitimize legitimate opinion that deviates from Obama's narrow party line.
Obama represents the interests of one segment of America: the pro-Wall Street left wing of the Democratic Party. He has made no effort to compromise, whether it be in his ideologically motivated health reform, his failed cap-and-trade proposal, his use of the IRS to target conservatives and other dissidents, and his attacks on the states in areas like his No Child Left Behind Act, er, I mean Common Core.
Obama has so divided America that, for the first time since the 1960s, we see pockets of armed resistance to the federal government. The contretemps at the Cliven Bundy ranch is a symptom of failed president who has divided rather than united a nation. The media's ideologues, ever eager to support the federal government's authority, paint the militia who support Bundy as extremists. Their extremism is the fruit of Obama's extremism and the extremism of the American media, which does not tolerate dissent.
In Truman's chapter on the executive branch, which is near the end of the book, he dissects the characteristics of successful and effective American presidents. He writes this (p. 403):
The president's leadership of the legislature depends heavily upon his symbolic supraparty position. Although he cannot completely ignore the pleas of partisanship, he must play upon the multiple memberships of both fellow party-members and nominal opponents in order to effect winning support for the cause he is championing.
Truman also writes this (p. 402):
The president's partisanship and partiality among groups must be kept within limits...despite the need to maintain cohesion among the elements that helped him to power. The process by which he is nominated and elected inevitably gives some groups better access to him than others can command, but as the dominant symbol of the nation, he cannot be completely identified with a segment of it...The measure of detachment imposed on a president by his position as a chief of state is not necessarily a handicap. The obligation to remain minimally accessible to all legitimate interests in the society can supply him with a measure of independence and a persuasive power that effectively supplements his formal authority.
By these measures, President Barack Obama's presidency has been a failure. He has failed to represent all of America. This failure is due to the American media, which no longer offers diversity of viewpoints that reflect the range of legitimate views in America--a problem that Truman discusses at length but which has become more serious since Truman's day, when it was already a matter of concern. Rather, like the media in a totalitarian state, the American media attempts to delegitimize legitimate opinion that deviates from Obama's narrow party line.
Obama represents the interests of one segment of America: the pro-Wall Street left wing of the Democratic Party. He has made no effort to compromise, whether it be in his ideologically motivated health reform, his failed cap-and-trade proposal, his use of the IRS to target conservatives and other dissidents, and his attacks on the states in areas like his No Child Left Behind Act, er, I mean Common Core.
Obama has so divided America that, for the first time since the 1960s, we see pockets of armed resistance to the federal government. The contretemps at the Cliven Bundy ranch is a symptom of failed president who has divided rather than united a nation. The media's ideologues, ever eager to support the federal government's authority, paint the militia who support Bundy as extremists. Their extremism is the fruit of Obama's extremism and the extremism of the American media, which does not tolerate dissent.
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