Posted by in omnibus libertas on 01/23/10
Last updated 01/23/10

On Thursday, the United States Supreme Court issued its ruling on the Citizens United v. Federal Election Commission case. In essence, the Court struck down the sections of the Bipartisan Campaign Reform Act that banned election-related advertisements by corporations or unions immediately preceding an election.

As a defender of liberty, I welcomed and cheered the decision.

But to my surprise, many people who also claim to be defenders of liberty denounced the decision. For example, in one of the comments on the C4L blog post about the decision, RonPaul-aholic wrote:

We’re coming to the point where civil liberties won’t exist for the individual, but will exist for corporations. Wonderful.

But RonPaul-aholic is wrong, and I’ll explain why.

An incumbent politician has an advantage over his challenger, because people have a natural tendency to choose the devil they know than the devil they don’t know. Additionally, while the incumbent is well-known to the voters, the challenger might be completely unknown to most voters.

Because of this, a candidate challenging an incumbent must campaign significantly harder than the incumbent: he must make more appearances, run more advertisements, and work harder to raise his awareness with the voters. To do this effectively requires money (as Campaign for Liberty members who are currently donating to various campaigns can attest).

And this is why incumbent politicians—in the guise of fighting corruption, mind you—inevitably seek to restrict campaign spending. Simply speaking, the stricter the limits on campaign spending, the more the playing field is tilted in favor of incumbents.

(For a deeper examination of how “campaign finance reform” benefits incumbents over challengers, see the discussion in John Lott's Freedomnomics.)

Of all the various forms of speech, the form the Founding Fathers were most concerned with protecting was political speech. They understood that politicians would inevitably seek to muzzle political speech to protect themselves from criticism.

The average person can’t afford to purchase a full-page ad in the New York Times, or purchase a 30-second TV commercial, or print thousands of professionally-typeset pamphlets. But when someone pools his time and money with hundreds or thousands of other like-minded individuals, the resulting organization can speak with a voice that can be heard loud and clear in the political arena.

(Campaign for Liberty members: does this remind you of an organization you’re familiar with?)

Our Founding Fathers understood that the ability to pool resources is a tremendously powerful defense of liberty. This is why the First Amendment specifically affirms the freedom of speech in totality, instead of the freedom of the people to speak.

This is why the speech restrictions in the BCRA were a travesty. Not only did the BCRA ban political speech—the most important kind of speech—but it did so during the exact time window during which political speech has its maximum power: directly before an election.

Just as the PATRIOT Act attacked our liberties in the guise of fighting terrorism by playing on our fear, the Bipartisan Campaign Reform Act attacked our liberties in the guise of fighting corruption by playing on the reflexive dislike many people have towards corporations.

After Bush signed the BCRA into law, many speculated that the Supreme Court would strike down the free speech restrictions it contained. In April 2007, the Supreme Court heard Federal Election Commission v. Wisconsin Right to Life, Inc., which was a direct challenge to the constitutionality of the free speech restrictions of the BCRA. An incredibly disparate set of groups—including such strange bedfellows as the American Civil Liberties Union, the National Rifle Association, NARAL Pro-Choice America, Focus on the Family, the AFL-CIO, and the Cato Institute—filed amici curiae briefs urging the Court to strike down the BCRA’s free speech restrictions as unconstitutional, to no avail: in June 2007, the Supreme Court upheld virtually all of the speech restrictions contained in the BCRA.

But on Thursday, the Supreme Court finally broke the BCRA’s shackles on free speech. All defenders of liberty should rejoice.

Some people aren’t rejoicing, of course. From an LA Times article:

President Obama called the ruling “a major victory for Big Oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans.” He promised to seek “a forceful response to this decision” from Congress.

The New York Times was, predictably, frothing:

Congress must act immediately to limit the damage of this radical decision, which strikes at the heart of democracy.

Of course, keep in mind that Obama is an incumbent (and potentially a worried one, after Republican Scott Brown stunned Democrats by winning the Senate seat formerly held by Ted Kennedy). And that the New York Times, as a “media outlet,” was specifically exempted from the free speech restrictions in the BCRA. (And that the United States is a republic, not a democracy.)

In contrast, here’s an excerpt from Justice Scalia’s concurring opinion:

But to return to, and summarize, my principal point, which is the conformity of today’s opinion with the original meaning of the First Amendment. The Amendment is written in terms of “speech,” not speakers. Its text offers no foothold for excluding any category of speaker, from single individuals to partnerships of individuals, to unincorporated associations of individuals, to incorporated associations of individuals—and the dissent offers no evidence about the original meaning of the text to support any such exclusion. We are therefore simply left with the question whether the speech at issue in this case is “speech” covered by the First Amendment. No one says otherwise. A documentary film critical of a potential Presidential candidate is core political speech, and its nature as such does not change simply because it was funded by a corporation. Nor does the character of that funding produce any reduction whatever in the “inherent worth of the speech” and “its capacity for informing the public.” Indeed, to exclude or impede corporate speech is to muzzle the principal agents of the modern free economy. We should celebrate rather than condemn the addition of this speech to the public debate.

Justice Roberts’ concurring opinion is also stirring:

The Government urges us in this case to uphold a direct prohibition on political speech. It asks us to embrace a theory of the First Amendment that would allow censorship not only of television and radio broadcasts, but of pamphlets, posters, the Internet, and virtually any other medium that corporations and unions might find useful in expressing their views on matters of public concern. Its theory, if accepted, would empower the Government to prohibit newspapers from running editorials or opinion pieces supporting or opposing candidates for office, so long as the newspapers were owned by corporations—as the major ones are. First Amendment rights could be confined to individuals, subverting the vibrant public discourse that is at the foundation of our democracy.

The Court properly rejects that theory, and I join its opinion in full. The First Amendment protects more than just the individual on a soapbox and the lonely pamphleteer...

We have had two rounds of briefing in this case, two oral arguments, and 54 amicus briefs to help us carry out our obligation to decide the necessary constitutional questions according to law. We have also had the benefit of a comprehensive dissent that has helped ensure that the Court has considered all the relevant issues. This careful consideration convinces me that Congress violates the First Amendment when it decrees that some speakers may not engage in political speech at election time, when it matters most.

This is not a victory for evil corporations; this is a victory for liberty, plain and simple.

Yes, with this Supreme Court ruling, corporations like Lockheed-Martin and Goldman Sachs can now take out political ads before elections. But so can The World Wildlife Fund, the NRA, the Brady Campaign, and the ACLU, just to name a few. I am once again free to empower any of these organizations, and countless more, to speak politically on my behalf—and so are you. The ability of incumbents to use disingenuous tactics to hamstring challengers has been greatly nullified.

The only thing that distresses me about the Court’s decision is the knee-jerk reaction against it from people who should know better. This tells me that in terms of educating people as to what freedom and liberty truly are, the Campaign for Liberty has a long way to go.

Posted 01/25/10 icehcky8 Fenton, MO

Thanks for the insight. I had been looking around the internet as well as this site in an attempt to figure out the positives and negatives of the situation. Your commentary is the best I've come across so far.

Posted by in omnibus libertas on 01/06/10
Last updated 01/06/10

In this blog post, Matt Holdridge quotes an article by Robert Kneisley that ponders whether an asset bubble might be forming in the gold market.

Matt then asks:

So my question is, if Austrian Economics holds true, wouldn’t the Fed have the ability to not only create a “bubble” in housing but also in any market, even precious metals?

If this is the case, are we caught up in what Alan Greenspan memorably referred to as “irrational exuberance,” but instead of housing, it’s gold this time?

For whatever my opinion’s worth, I'll attempt to answer Matt’s questions.

First, though, I think that Mr. Kneisley is confusing investing with saving.

Saving is when you set aside some of your money instead of using all of it for consumption.

Investing is when you loan some of the money you have saved to someone who uses it to produce something of value, thereby making a profit. With the profit, he repays the money he borrowed from you, plus a fee (an interest rate) that you charge him for the loan.

(The fee exists because with investing, there is a risk that the person who takes your loan will fail to make a profit and therefore be unable to repay you. The fee entices a lender to make the loan despite the risk. The riskier the loan, the higher the fee that a lender will demand.)

In these terms, you cannot “invest” in gold, because gold doesn’t produce anything. People who think they’re “investing” in gold are simply engaging in commodity speculating: they’re buying a commodity (gold) and gambling that in the future, the demand for that commodity will be higher, which will permit them to sell the commodity at the higher price and make a profit. But since commodity prices are notoriously difficult to predict, unless you’re an expert at it, you’re far more likely to loose money instead of make money. (And even experts seem to get burned on a regular basis.)

However, gold (and silver) have several important properties that most commodities do not: they are durable, they are divisible, and they are rare enough that they have high value-to-weight ratios (gold more than silver). These qualities are why gold and silver have been used as a medium of exchange—that is, money—throughout human history.

United States dollars are lousy vehicles for saving: when the government creates new money out of thin air (as the Federal Reserve continually does for United States dollars), it devalues all of the money already in circulation. This devaluation robs savers of the value of their savings, even though the amount of money the saver has in his possession doesn’t change.

This is the real reason to purchase gold and silver: not to invest in them, but to save in them. The government cannot inflate away the value of your savings if you save in gold and silver.

So, finally, to answer the questions Matt raised...

No, I don’t think the Federal Reserve can create a gold bubble—at least not easily. The reason why the bubble from all the new money the Fed was creating from 2002 to 2007 or so formed in the housing market was because that market was grossly distorted by government intervention: the government was giving people tax-exempt loans to go purchase a commodity (a house) at an artificially low interest rate, and then guaranteeing to repay the loan if the loanees defaulted!

And no, I don’t think we’re caught up in “irrational exuberance.” There are some speculators along for the ride, of course, but speculators tend to run for the exits when a big correction happens. I doubt that the savers—the people who are buying a little gold and silver every month—will be deterred, because savers are long, long on gold.

Could a gold bubble happen? Yes, it could. But it if does, it will be obvious. To illustrate, I now present the Top Ten Ways To Spot a Gold Bubble:

1. Rappers switch to purchasing ostentatious jewelry out of platinum instead of gold, complaining that all the people who are buying gold are “dilutin’ our flava.”
2. Congress laments that more people can’t realize the “American dream” of owning their own gold bar.
3. Hosts of gold parties start selling gold instead of buying gold.
4. Congress changes the tax code to make interest paid on loans used to purchase a gold bar deductible.
5. Cities and towns across the nation pass zoning laws limiting gold dealers to no more than 30 per square block.
6. Cash4gold changes its name to Gold4Cash.
7. Jim Cramer devotes half of every “Mad Money” show to discussing the best ways to buy gold.
8. Congress creates an agency to underwrite loans to people who otherwise couldn’t afford to purchase a gold bar.
9. The average Joe on the street thinks that only kooks don’t buy gold.
10. Gold prices double every few months or weeks relative to the prices of other commodities.

(The “relative to other commodities” part of #10 is important, because if we see massive inflation or hyperinflation, the price of gold will rise rapidly. But so will other commodities, because the last thing anyone will want to be stuck holding is dollars.)

The bottom line: when everyone “knows” that buying gold is a sure way to make a fast buck, that’s when we’ll see a gold bubble.

Posted by in omnibus libertas on 08/31/09

I received this email yesterday from Senator Casey (D; PA):

On Tuesday, September 1st, I will be hosting a public forum to discuss the Affordable Health Choices Act, the Senate's Health Care Bill.  Details for the forum are below.  Please plan to come early.  Doors will open an hour before the event and seating will be on a first-come, first-served basis.

Tuesday, September 1 at 10:00 am
Community College of Allegheny County
Allegheny Campus
Foerster Student Service Center
Ridge Avenue
Pittsburgh, Pennsylvania

Doors open to the public at 9:00 am.
Seating is first-come, first-served.

I called Senator Casey's office to get more details. Here's what I was told by his staffer:

The entire forum will be recorded. Signs, banners, et. al. will be permitted outside, but not inside the auditorium. Recording devices (cell phones, camcorders, et. al.) will be permitted, as long as they are reasonably compact and don't block others or others' view. (I.e., you can't set up a tripod.)

Here is the agenda (times approximate):

10:00 - Senator Casey opening remarks & PowerPoint presentation
10:10 - panel discussion
10:20 - additional remarks by Senator Casey
10:25 - question and answer session (~60 minutes)

(The staffer didn't know exactly who would be on the “panel discussion,” but it's safe to assume it will involve nothing but government sycophants cheerleading for the legislation.)

Here is the way the question and answer session is going to work: upon entering, everyone will be handed a comment card. The comment will request your contact information and your question. There will be a drop box for completed comment cards.

When the Q&A session starts, a moderator from CCAC (not Senator Casey or any of his staff) will collect the comment card box, and in full view of the audience, randomly draw a comment card from it. The person whose card was picked will then approach the microphone (or the closest microphone, if multiple microphones are present), and ask their question to Senator Casey directly. Senator Casey will answer the question, and the moderator will pick another comment card. This process will repeat until the Q&A time is exhausted.

While the person I was speaking with resisted calling it as such, this process essentially means that Senator Casey is using a lottery system to determine who will be permitted to ask questions.

This is very important, because while the lottery system is a fair way to determine who gets to ask questions (assuming no dirty tricks, like pre-stuffing the comment box with pro-government people's names), it means that the proportion of pro-liberty versus pro-government questions Senator Casey is asked will depend directly upon the proportion of pro-liberty versus pro-government people in the audience.

We can rest assured that unions and other pro-government groups will attempt to pack this forum. Therefore, pro-liberty people must pack this event as well. The Foerster Student Service Center auditorium only seats 300 people-that's just 20 rows of 15 people! Get there early. Bring a friend, if you can. The more pro-liberty people we can get into the forum, the more critical questions Senator Casey will be peppered with.

(I called the CCAC Allegheny campus, and according to them, for tomorrow, visitors can park in any student parking spot; you don't need to obtain a parking tag first. Student parking lots are listed on the CCAC virtual tour map.)

Some tips for attendees:

• We can't trust Senator Casey not to heavily edit the recording his staff will make. Bring recording devices, and record everything you can.
• Pro-government groups have characterized pro-liberty people as mindless rabble-rousers who wish only to disrupt these types of public forums; it is important that we don't lend any credence to these false characterizations.
• No matter what outrageous claims Senator Casey attempts to make, don't try to shout him down from the audience. If you do, expect to be ejected. Similarly, if you attempt to shout down people selected to ask questions, expect to be ejected.
• Write down your best question on the comment card, but have a mental list of multiple questions prepared, in case someone asks your intended question first.
• If you are selected to ask your question, be short, polite, and to the point. You should be able to ask your question in under 15 seconds. 10 seconds would be even better; 5 would be better still. Practice your questions in advance.
• Again: be polite. It wouldn't hurt to preface your question with, "Senator, I know you have the best of intentions, but..." Don't ask "so when did you stop beating your wife?" -style unfair questions, like "When is government going to stop driving up health cares costs?" Asking unfair questions will only make you (and pro-liberty people) look bad.

Let's make sure Senator Casey gets some tough questions, folks!

Posted by in omnibus libertas on 08/19/09
Last updated 08/19/09

There were a few interesting posts on the Daily Reckoning today.

First, Doug Casey posted a scathing review of the George W. Bush administration.

Now, attacks against Bush are nothing new, and goodness knows, he deserves most of them. But attacks against Bush that come from a Left-leaning perspective frequently ignore what I think will be Bush’s most harmful legacy: passing off his insufferable corporatism and cronyism as the free market. Doug writes:

“The worst shame of Bush—worse than the spending, the new agencies, the torture, or the wars—is that he used so much pro-liberty and pro-free-market rhetoric in the very process of destroying those institutions. That makes his actions ten times worse than if an avowed socialist had done the same thing. People will blame the full suite of disasters Bush caused on the free market simply because Bush constantly said he believed in it.”

I couldn’t have said it better myself.

Bill Bonner also posted an article in which he advises us to learn to love the Depression. A choice excerpt (emphasis is original):

“[The Feds] are borrowing and spending trillions—$8 trillion is to be added to US debt over the next 8 years. So far, this money has done nothing to relieve the underlying problem: the consumer has too much debt and too little income. The government can give him a tax rebate... or give him a check for a clunker. These giveaways will produce a temporary boost. But when the giveaways give way there is nothing left. Does the guy who bought a car with government cash in 2009 buy another one in 2010? Does the fellow who brought his mortgage up-to-date with a tax rebate in 2008 go out and buy a new house in 2009?

The problems are real... at the heart of the real economy. They are not problems that can be solved by monkeying with the money supply, interest rates, or even fiscal policy. They are problems that need to be solved by the real economy... in the real economy... by consumers, who need to pay off their debts, and by businessmen, who need to adjust to the realities of the real world—adapting their capacity so as to produce things for people who can actually afford to buy them. It’s a long process... with many bankruptcies and disappointments along the way...”

If you don’t currently subscribe to the Daily Reckoning feed, you should. (It’s worth it for no other reason to read the hilarious articles by The Mogambo Guru.)