Greek Economy

According to the Financial Times the Greeks have had rising expectations and lifestyles even though their public sector is inefficient and, I would guess, they do not produce enough to live at the level they do. The FT reports that under its recent agreement with the European Union, Greece will reduce it budget deficit from 13.6% to 3% of GDP, and public debt will "stabilize" at 140-150% of GDP. Eager to stabilize the Euro, the Europeans, especially Germany, are lending Greece 110 billion Euros ($146 billion).  The result of the massive loans and spending cuts will be a contraction of the Greek economy of between 2 and 4 percent.

The German people are unhappy with the large loans.  As nasty as the US bailout was, at least it was mostly paid to US firms, although I am not certain that I would like to remain in the same country as the bailout recipients like Goldman Sachs.  Indeed, I would like to see the Fed shut down, which would curtail if not close most of Wall Street.  But in any case, the Germans must feel like fools for seeing their wealth be squandered not for incompetents of their own tribe, but of a different tribe.

Be that as it may, the big question is whether this frittering of $146 billion will work.  Perhaps in the short run, perhaps not.  In the long run, are you kidding?  They lend $146 billion to profligate clowns, and then expect what?  Isn't this just another version of sub-prime lending?  If the Greeks want to live as though they have economic freedom, might they consider adopting economic freedom as a policy instead of mooching off others?

The quicker the US can disassociate itself from the Fed, the better.  For the political use of the nation's money supply is but a way to divert wealth from productive Americans to thieves of various kinds. Wall Street, the federal government, incompetently run businesses, public contractors, foreign governments, all will benefit at the expense of hard working Americans under the authoritarian yoke of the Federal Reserve Bank.  And how effective has the Fed been at generating long term full employment? 

Raising Arizona: The New Immigration Law

I would have liked to see Arizona pass a different kind of law, a much more aggressive law, such as a law saying that Arizona citizens do not have to pay federal income tax. That really would have caused all hell to break loose.  The anti-immigration law is too tame to pose much of a challenge to the thugs in Washington, although perhaps a case can be made that Arizona has the right to refuse the Supreme Court's illegal power grab in Mapp v. Ohio, when the power freaks on the Supreme Court bench claimed to have the authority to force the states to obey the Fourth Amendment.

I reviewed the text of the Arizona law (part 1 is here and that links to the other parts) and found it a tad authoritarian.  The law prohibits state officials from refusing to enforce federal immigration laws. It says that where law enforcement officials stop or arrest someone, a "reasonable attempt shall be made, when practicable, to determine the immigration status of the person."  In doing this race, color or national origin cannot be considered.  Drivers' license, an id card or other government-issued identification can be used for proof of citizenship in a stop-and-id situation.  State offices are allowed to exchange information about someone's immigration status.  Aliens who illegally fail to register are held guilty of a misdemeanor and if they carry contraband like drugs or weapons they are guilty of a felony.  The law illegalizes blocking traffic to pick up day laborers.  Employers have to verify employment eligibility through something called "e-verify".

There is already a federal law on the books that requires proof of citizenship when someone is hired, which I recall considering an encroachment on liberty when it was passed in the early 1990s.  I do not think this law is any more extreme than that, which I think should be repealed.  I wish Arizona had picked a different area to make a test case of the 10th Amendment because the US government does have the right to regulate immigration. Article I, Section 8 of the Constitution gives Congress the power to naturalize immigrants (too bad President Obama missed out).  Regulation of immigration is not at issue under the 10th Amendment.

I dislike the power that Arizona grants to its law enforcement officials to demand an identity card.  This is not the America that I know.  However, I do think that this is a valid area for state legislation.  The US Supreme Court illegitimately arrogated regulation of search and seizure to the federal government in the 1961 case of Mapp v. Ohio, in which it claimed that the Fourth Amendment applies to the states. That is ridiculous.   The federal government, including the Supreme Court, has no authority to tell the states whether they have the right to search or seize, and any state has the right to tell the federal government to shove that US Supreme Court decision up its derriere.  That decision amounted to violent illegality. F*ck them.

Hence, although I don't like the stop and id  component of the Arizona law, I am glad of two things about it. (1) It really ticked off people in the People's Republic of Frisco, the land of fruit and nuts, and (2) It puts Arizona in the potential position of defying the goosestepping judicial Nazis at One First Street, NE.

Will the US Hyper-Inflate?

Kitco's James Turk  cites a useful report by by Stephen G Cecchetti, M S Mohanty and Fabrizio Zampolli published as a working paper of the Bank of International Settlements. The report is entitled "The Future of Public Debt: Prospects and Implications."  The report concludes:

"Our examination of the future of public debt leads us to several important conclusions. First, fiscal problems confronting industrial economies are bigger than suggested by official debt figures that show the implications of the financial crisis and recession for fiscal balances. As frightening as it is to consider public debt increasing to more than 100% of GDP, an even greater danger arises from a rapidly ageing population. The related unfunded liabilities are large and growing, and should be a central part of today’s long-term fiscal planning.
It is essential that governments not be lulled into complacency by the ease with which they have financed their deficits thus far. In the aftermath of the financial crisis, the path of future output is likely to be permanently below where we thought it would be just several years ago. As a result, government revenues will be lower and expenditures higher, making consolidation even more difficult. But, unless action is taken to place fiscal policy on a sustainable footing, these costs could easily rise sharply and suddenly."

One may wonder whether the Obama administration, the European Union or the New World Order is capable of increasing productivity, innovation and output to cover rapidly increasing old age liabilities (including medical as well as pension benefits).  The only system that would have been capable of doing this was the laissez-faire capitalism of the 19th century.  But the Obama administration is busily placing the final nails in that system's coffin. The European Union is a form of institutionalized econo-sclerosis. And the "new world order" touted by Obama and his greedy socialist billionaire friends is dumber than a Three Stooges act.

So buy gold, my friends.  The horse is out of the stable. America is in a self-inflicted decline, motivated by greedy socialist billionaires and their media marionettes with cabezas de madera.

Origins of the Three Branches of Government in the US Constitution

A friend asked me to review the antecedents of the three branches of government in the US constitution.  This was not a new idea at the time of the founding.  In general, the best book to read to understand what the founders were thinking is the Federalist Papers by Alexander Hamilton, James Madison and John Jay.  It is evident in reviewing the Federalist Papers that the founders were students of the Enlightenment and in particular the ideas of Charles de Secondat, Baron de Montesquieu, who in 1748 finished one of the greatest works of political science, Spirit of Laws.  But Montesquieu was not the only important political scientist who informed the founders.  Aristotle, who wrote in the fourth century BC and whom the Englightenment famously rejected was still read.  It is important to understand that the education of that period and through the 19th century was religious in nature and emphasized the classics in the original Greek and Latin.  In political science and ethics students read Aristotle as part of the curriculum.  The founders were mostly knowledgable in Latin and Greek, and were certainly familiar with Aristotle's Politics.

Aristotle was one of the most important advocates of freedom in the history of ideas.  Unlike some of his Athenian contemporaries, he was not an abolitionist.  However, he responds thoroughly to the communist ideas of his professor, Plato.  He makes clear that it is fundamental to a state to have plurality and openness of exchange, and that excessive unity is deleterious.  He begins Book IV, Chapter 13 of his Politics as follows:

"Having thus gained an appropriate basis of discussion we will proceed to speak of the points which follow next in order...All constitutions have three elements, concerning which the good lawgiver has to regard what is expedient for each constitution.  When they are well-ordered, the constitution is well-ordered, and as they differ from one another, constitutions differ. There is (1) one element which deliberates about public affairs; secondly (2) that concerned with the magistracies--the questions being, what they should be over what they should exercise authority, and what should be the mode of electing to them; and thirdy (3) that which has judicial power."

Aristotle there refers to the three branches of government that correspond to the US Constitution, the deliberative or legislative; the magistracy or executive; and the judicial.  Aristotle was not unkind to democracy, but he saw it as flawed unless it contained elements of aristocracy, by which he meant selection of the most virtuous to rule. This could be done using republican methods. 

Montesquieu relies on Aristotle's framework in writing his monumental Spirit of Laws. The scope and scholarship of Montesquieu's book is still awe inspiring today. In Book XI Section 6 Montesquieu discusses the Constitution of England. England at that time was the freest country, and he admired it greatly.  He writes:

"In every government there are three sorts of power: the legislative; the executive in respect to things dependent on the law of nations; and the executive in regard to matters that depend on the civil law.  By virtue of the first, the prince or magistrate enacts temporary or perpetual laws, and amends or abrogates those that have been already enacted.  By the second, he makes peace or war, sends or receives embassies, establishes the public security, and provides against invasions.  By the third, he punishes criminals or determines the disputes that arise between individuals..."

In the Federalist Papers, which Hamilton and Madison published in several newspapers to drum up public support for the Consitution, Montesquieu is referred to numerous times. In general, the founding fathers were students of the Enlightenment and applied their understanding of Montesquieu, Locke, Hobbes, Smith and other Enlightenment thinkers to their conceptualization of the Constitution. 

The United States had been founded by religious sects fleeing persecution in Europe.  At least several of the original 13 colonies were founded by religious groups.  New York was not (it was founded by a commercial enterprise, the Dutch West India Company), nor was Virginia.  The founders differed considerably as to their religious orientations.  All were trained religiously, for education in those days was a religious enterprise.  However, not all were religious. George Washington was an observant church goer.  Benjamin Franklin was an atheist. Jefferson and Adams were Deists, which is not quite being a full Christian.  Jefferson re-wrote the Bible, taking out all of the miracles.  The Jefferson Bible is available to read.  Jefferson was an enlightenment rationlist. Deism is something like Unitarianism. On his grave Jefferson had three achievements listed:  (1) author of the Declaration of Indepdence; (2) author of the Virginia Statute of Religious freedom and (3) founder of the University of Virginia.  He did not list President or Governor of Virginia.  The Virginia Statute on Religious freedom concludes:

"Be it enacted by General Assembly that no man shall be compelled to frequent or support any religious worship, place, or ministry whatsoever, nor shall be enforced, restrained, molested, or burthened in his body or goods, nor shall otherwise suffer on account of his religious opinions or belief, but that all men shall be free to profess, and by argument to maintain, their opinions in matters of Religion, and that the same shall in no wise diminish, enlarge or affect their civil capacities. And though we well know that this Assembly elected by the people for the ordinary purposes of Legislation only, have no power to restrain the acts of succeeding Assemblies constituted with powers equal to our own, and that therefore to declare this act irrevocable would be of no effect in law; yet we are free to declare, and do declare that the rights hereby asserted, are of the natural rights of mankind, and that if any act shall be hereafter passed to repeal the present or to narrow its operation, such act will be an infringement of natural right."