pencils2 Local Coordinator Location: Nevada City, CA Last login: 10/05/11 RSS feed
My name is David Kretzmann. I am 16 years old and have been a supporter of Ron Paul since 2007. I've been interested in stocks and economics for several years now, I started purchasing individual stocks on my own in 2005 when I was 12 years old. After my interest and investments in individual businesses, I started researching economics, upon which I soon realized that most public policies didn't make any sense. Right around this time I heard Ron Paul in the Republican debates, I loved what I heard, and have been hooked ever since.
I have recently launched a new web site, www.DavidKretzmann.com, that I hope you find of interest.
As a lifelong vegetarian, no style of meat production is particularly appealing or justifiable to me. However, despite my herbivore bias, I still see an ethical dilemma present in current industrial meat facilities. Little respect is given to the conditions and treatment of the animals in industrial facilities. Animals rarely see the light of day for any substantial amount of time and they are raised on concrete floors; they are treated as mere products without regard for their status as living, breathing beings. The greatest crime, however, is that industrial facilities survive purely out of price floors, legal code, and other direct government subsidies that hinder competition from natural, local food systems.
A superior product in the marketplace should not require extra help from a government agency, whether it be in the form of a price guarantee for corn (the main substance fed to livestock in industrial facilities), legal code that mandates industrial farming (or heavily restricts other methods of non-industrial farming), or other government subsidies. The fact that industrial livestock facilities rely on government assistance for survival is a testament to their flawed, unnecessary, and undesirable business practices. (If they don't require government assistance for survival, why continue providing subsidies and other competitive advantages to these corporate industrial livestock giants?) If people prefer to purchase industrial livestock meat over locally grown free range meat, there is no need for subsidies or other governmental involvement. Clearly, subsidies are needed only when a corporation or industry (such as industrial livestock producers) offers a lousy product that people won't normally desire.
Government subsidies merely provide the illusion of cheap prices, which goes a long way in distorting the prices and actions of people in the marketplace. The fact that industrial meat is the cheapest does not mean it's a better product or business model, particularly when you account for the government assistance needed to lower the price in the first place. Of course, it is us, the taxpayers, who are providing the subsidies, so the cost we pay for "cheap" food at the grocery store isn't actually very cheap. We pay taxes to provide farm and grain subsidies, fund the bureaucracies who regulate and administer fines to farmers who don't cooperate with the industrial system, among other taxpayer-funded programs.
Society is not bearing the cost of water pollution, of antibiotic resistance, of food-borne illnesses, of crop subsidies, of subsidized oil and water- of all the hidden costs to the environment and the taxpayer that make cheap food seem cheap. No thinking person will tell you they don't care about all that. I tell them the choice is simple: You can buy honestly priced food or you can buy irresponsibly priced food. - Joel Salatin
Clearly the industrial food system has government tilted in its favor; its products are cheap not because of their superior taste or flavor, but because they have managed to successfully crawl into bed with government to dismantle other legitimately competitive businesses. The philosophy of the industrial food system can be summed up in this statement: if people won't buy your lousy, nauseating product, lobby government for subsidies and other protectionist interventions to dismantle competitors who actually offer a product desirable to the public.
In a true free market of limited or no government intervention and subsidies, a product only survives so long as it appeals to the demands of the general public. As soon as a company offers a product that people do not desire or demand, the company is hit with losses and will go bankrupt so long as it doesn't change its practices. This occurs because other competitors can easily take the place of a lackluster company who fails to please its customers. Corporations in the industrial food system face no such market competition and customer input, because they are guaranteed government assistance regardless even if people resist their product. Industrial livestock corporations succeed financially based on how well they please government bureaucrats and follow government regulations, not how effectively they can please customers with a quality product. Are you beginning to see the apparent flaws in this industrial, bureaucratized food system of ours? Our current system has come at the demands of government bureaucrats and corporate lobbyists, rather than the demands of people in their local communities yearning for sustainable, clean, tasty food systems.
The inherent immorality in our current food system is that individuals cannot simply choose to opt out of the system and be done with it. Sure, if a few million of us chose to never again purchase industrial-raised meat, some corporations would face a loss of millions or billions of dollars. However, what would be the corporate reaction? Would they actually change their business practices to match the public's desire for a local, sustainable, earth-friendly food system? Or would these Agribusinesses lobby government for an extra several billion dollars in subsidies and beneficial regulations to stay afloat? Unfortunately, history has shown the latter is the opted path, as it is with all politically-connected corporations and industries, because it demands little change or adaption on the part of the corporation. As a result, today we are stuck with an uncreative, unsustainable, and frankly undesirable industrial setup that very few people would actually choose over a more natural local food system.
In a true free market system with open competition and no government assistance to businesses, I believe industrial livestock and food systems would be run out of the market within a matter of one or two decades. They would be forced to reallocate their resources to fit the demands of a local food system, or suffer the consequences of consistent losses and, eventually, bankruptcy. The free market is a powerful moral force, because it cumulates the demands and desires of the people by giving each individual the power of choice. The fact that we evidently don't have a free market within the industrial agriculture system proves that the system must indeed be immoral, unsustainable, or impractical to at least some degree. If it was a moral, worthwhile system, government subsidies would not be necessary to sustain the practices of industrial livestock and agriculture.
The industrial livestock system in place today is not justifiable for one basic reason: it requires government subsidies to stay afloat. I find the greatest moral dilemma with the fact that the system brings in billions of dollars of government support whether customers demand such a product or not. Government's involvement and propping up of the system has essentially eliminated the power of individual choice, leaving the public susceptible to the whims and desires of corporate lobbyists, government bureaucrats, and our oh-so-wise politicians. The treatment of the animals, the conditions of the factories, the wages of the workers are all secondary. If people are forced to participate in and fund a system they find morally or ethically reprehensible with no option of withdrawal, it is absolutely not justifiable. It is tyrannical.
The Iraq War is undoubtedly one of the largest issues to face the United States within the past decade. In the 2008 presidential elections these differences, opinions, and arguments came out of the woodwork. On August 31, 2010, President Obama officially announced the withdrawal of approximately 100,000 combat troops and declared it to be the "end of our combat mission in Iraq" (MSNBC). Some representatives, such as Congressman Ron Paul, remain skeptical that U.S. policy in Iraq has or will seriously change under President Obama. Despite the assurances and promises from the Obama Administration, I submit that our occupation of Iraq is not finished and has no foreseeable end in sight.
During the 2008 presidential elections, the Iraq War was one of the prime issues discussed in heated debates between both Democrats and Republicans. Some candidates proposed immediate withdrawal, others suggested a time-table of withdrawal, while Senator John McCain stated it'd "be fine with me" if the U.S. occupied Iraq for up to "one hundred years" (crowecole). On November 15, 2007, then-Senator Barack Obama declared "I'm going to bring this war to a close," and asserted he would pursue a policy of withdrawing all combat troops from Iraq within 16 months of his victory (BarackObamadotcom).
In February 2009, six weeks after winning the presidential elections, President Obama announced that all combat troops would be withdrawn from Iraq by August 31, 2010. The remaining 50,000 non-combat troops were slated to leave by December 31, 2011 (MSNBC). On August 31, 2010, President Obama confirmed the Bush-era mission objectives had come to a conclusion, stating, "Operation Iraqi Freedom is over" (MSNBC). As promised, combat troops were indeed out of Iraq by the scheduled date. The next day, September 1, Vice President Joe Biden presided over a ceremony to usher in "Operation New Dawn," the new Iraq mission title of the Obama Administration (Southall).
However, this leaves us the question: what are "non-combat" troops? Do they actually not participate in any combat, or is it a sleek way for the U.S. to continue an occupation of Iraq?
On February 27, 2009, Defense Secretary Robert Gates explained "those [troops] that are left will have a combat capability." Gates continued:
There will be, as the president said, targeted counterterrorism operations. There will be continued embeds with some of the Iraqi forces in a training capacity and so on. (Gates)
Gates' explanation makes it clear that non-combat forces are expected to participate in ongoing violent conflicts within Iraq. He says "the mission has changed" and the method of combat "will be completely different" from the policies pursued prior to Obama's presidency.
It seems to me that "non-combat troops" is a gross misrepresentation of the actual duties of the remaining 50,000 U.S. soldiers in Iraq. Yes, the mission has been altered and the focus of combat has shifted (a debatable point, some might counter), but that doesn't change the fact that remaining troops are realistically engaged in violent and dangerous activities. Changing the name of the mission and the titles of the soldiers doesn't change the reality of the actual war being fought on the ground.
On November 9, 2010, the Associated Press reported the "United States is open to the idea of keeping troops in Iraq past a deadline to leave next year if Iraq asks for it." The article continued on the possibility of U.S. troops staying in Iraq past 2011:
U.S. and Iraqi officials have said for months that they expect Iraqi leaders to eventually ask for an extension of the military agreement with the U.S., but the political impasse has put the idea on hold. (The Associated Press)
This is critical because "Operation New Dawn" may not be as quick and simple of a process as people expected. Defense Secretary Gates does not paint a picture of a secure, reliable Iraqi government, and takes little hesitation to propose keeping U.S. forces there if it's requested by a legitimate Iraqi group. I am not debating if this is a smart strategic military move, but rather using Gates' words to question the dependability of the Obama Administration's withdrawal date for non-combat troops. To put it bluntly, I believe the withdrawal date is not set in stone and it would not be out of the question for the date to extend indefinitely if the security situation in Iraq fails to improve.
One issue that gains relatively small media and political coverage is the role of contractors in the Iraq War. A July 2, 2010 report compiled by Moshe Schwartz, a specialist in defense acquisition, for the Congressional Research Service states as of March 2010 there were "95,461 DOD contractor personnel in Iraq compared to approximately 95,900 uniformed personnel" (Schwartz 7). The most common tasks performed by DOD contractors in Iraq are "Base Support" (facilities management, grounds maintenance, etc.) and "Security" (8).
The Department of State (DS) also hires Private Security Contractors (PSCs) and other contractor positions. On June 21, 2010, Deputy Assistant Security Charlene Lamb explained "the military withdrawal from Iraq will prompt a larger operational role for DS." She continues in more detail, "DS anticipates that we will need between 6,000 and 7,000 security contractors to meet requirements in Baghdad," and estimates show "2,200 PSC movement security personnel and as many as 4,600 PSC static guard personnel could be needed to secure these new facilities and support Department programs" (Lamb).
Contractors are not sitting in the background of the Iraq War performing minute tasks; they participate in dangerous operations and are most definitely a part of the action (as would be expected in a war). This is evidenced by the 468 confirmed contractor deaths in Iraq since the war began in 2003 (iCasualties.org). Contractors are very much involved in combat (both directly and indirectly), and must be part of any discussions of withdrawal from Iraq.
While "combat troops" are being withdrawn from Iraq, Charlene Lamb gives the impression that the State Department is essentially planning to fill the void left by the withdrawing troops with more private contractors. It is a mere shift of duties; more of the load is being placed on private contractors hired by the State and Defense Departments. Typically there have been more contractors than troops in Iraq, so the end of the Iraq War means not only the withdrawal of troops but of contractors as well. Contractors are private citizens paid and hired by the DOD and are an integral part of the Iraq occupation, yet the Obama Administration has not been forthright in discussing when or if contractors will be withdrawn. How can the War possibly be over if thousands of private contractors continue the duties of previous occupying forces?
Representative Ron Paul, a Congressman from Texas, is one of the few Republicans in office who opposed the Iraq War from the beginning under the Bush Administration. On December 21, 2001, Ron Paul vocally opposed the resolution to invade Iraq, explaining that invading Iraq "could serve to further Osama bin Laden's twisted plans for a clash of civilizations between Islam and the West" (Paul). Representative Paul is not convinced that the withdrawal of combat troops means anything significant to ending the War in Iraq. "After eight long draining years," Paul says, "I have to wonder if our government even understands what it is to end a war anymore." Paul argues the drawdown of "combat troops" was nothing more than "political maneuvering and semantics in order to convince an increasingly war-weary public that the Iraq War is at last ending" (Paul).
In response to President Obama's speech announcing the final removal of combat troops and the new era of "Operation New Dawn," Representative Paul issued a press release stating, "The President's announcement that all U.S. combat troops have left Iraq is no more believable than the 'Mission Accomplished' declaration was in 2003." Because the 50,000 remaining troops will continue to carry guns and engage in combat missions, several U.S. military bases remain in Iraq, and the number of contractors in Iraq is expected to increase, Paul concludes the Obama Administration's "new policy is not one of peace but merely a charade" (Business Wire).
Having observed and analyzed this evidence, I have little doubt that there is no foreseeable end in sight with U.S. military involvement in Iraq, particularly when accounting for the looseness of our final withdrawal date in 2011 and the federal government's escalation of private military contractors in Iraq. The 50,000 armed forces that remain in Iraq today are still engaging in combat missions; little has changed except for their job title. I place value in the words of Representative Ron Paul, someone who adamantly opposed the War from the beginning after the events of September 11, when he calls it an "endless war" (Paul). There is no visible exit strategy proposed by the Obama Administration that takes into consideration the increased role of private contractors and the ongoing combat involvement with remaining troops. The U.S. remains militarily active in Iraq both with "non-combat troops" and private contractors and, judging from the Obama Administration's actions thus far, there is no conscientious effort to pull out all U.S. forces and bring the War to a close.
Schwartz, Moshe. "Department of Defense Contractors in Iraq and Afghanistan: Background and Analysis". Congressional Research Service. 2 July 2010.http://www.fas.org/sgp/crs/natsec/R40764.pdf (5 December 2010)
"Iraq Coalition Casualties: Contractors - A Partial List". iCasualties.org. 15 Sept. 2010. Web. 5 December 2010.
Lamb, Charlene. "Deputy Assistant Secretary for International Programs Charlene Lamb's Remarks on Private Contractors in Iraq". U.S. Department of State. 21 June 2010.http://www.state.gov/m/ds/rls/rm/143420.htm (5 December 2010)
When President Franklin Roosevelt signed the National Industrial Relations Act on June 16, 1933, the National Recovery Administration (NRA) was created. The NRA, one of the major components of Roosevelt's "New Deal" legislation, was created in response to accusations of "cutthroat competition" and the need for "fair competition." Economic historian Thomas DiLorenzo explains the "NRA organized each industry into a federally supervised trade association called a Code Authority, which had the authority to regulate production, prices, and distribution methods." The NRA empowered government bureaucrats and industry executives (as well as the U.S. President), officially called the "Code Authority", to determine fair prices, wages, and business practices and punish businesses that did not comply with the code. I will examine the punishment businesspeople faced if they broke the regulations established by the Code Authority.
Journalist and economist Henry Hazlitt wrote in 1933, "It is obvious that under the present N.R.A. programme the American consumer is to become the victim of a series of trades and industries which, in the name of 'fair competition', will be in effect monopolies, consisting of units that agree not to make too serious an effort to undersell each other; restricting production, fixing prices,-doing everything, in fact, that monopolies are formed to do." Hazlitt was one of the few public skeptics of the NRA at the time, and it wasn't long before his predictions proved to be correct.
In less than one year after the formulation of the NRA Jacob Maged, a Jersey City, New Jersey tailor, garnered national interest after failing to comply with the Code Authority. On April 20, 1934 Maged, a Polish immigrant and father of four, was sentenced to a 100 dollar fine and 30 days in the county jail after he pressed a suit for 35 cents, 5 cents below the 40 cent price floor set by the NRA. The New York Times story headline on April 21, 1934 ran, "TAILOR GETS 30 DAYS FOR CUTTING PRICES." The Times reported, "[Maged] believed that the codes were designed to help the 'little fellow' and could not believe that by charging 35 cents instead of 40 cents to press a suit would put him behind bars." Maged spent three days in jail, and was released after agreeing to comply with the NRA code.
Another famous case of punishment under the NRA came with the Schechter family, who founded and owned Schechter Poultry Corp. in New York City. In April 1934 President Roosevelt approved the "Live Poultry Code" for the New York City poultry industry, and in July 1934 the Schechter's were arrested and charged for violating the code. The charges against the Schechter's included failure to operate by the minimum wage and maximum working hours code, as well as selling "unfit chickens" as defined by the Live Poultry Code. (The latter charge is unique because it was an intrastate transaction, which prior to the NRA was outside the regulatory jurisdiction of the federal government.) The Schechter's pleaded not guilty to all charges, and their case climbed to the heights of the Supreme Court. In Schechter Poultry Corp. v. United States (commonly called the Sick Chicken case) the Supreme Court unanimously sided with the Schechter's and declared the NRA unconstitutional on May 27, 1935.
The NRA codes were implemented with noble intentions to lessen "cutthroat competition" and level the competitive playing field, but they tended to do just the opposite. The codes expanded both government and corporate power to define regulations and force innocent businesspeople, like Jacob Maged and the Schechter's, to operate according to the whims of industry executives, government bureaucrats, and the United States President, rather than for the interests of customers. (Obviously it is in the interest of a customer to be charged 35 cents rather than 40 cents to get a suit pressed, but it isn't in the interest of a competing tailor.) As the Supreme Court confirmed, the NRA was an unconstitutional expansion of congressional and presidential power to regulate local intrastate commerce and control business practices. In the words of Associate Justice Louis Brandeis, "This is the end of this business of centralization, and I want you to go back and tell the president that we're not going to let this government centralize everything. It's come to an end."
Sources
DiLorenzo, Thomas. How Capitalism Saved America. New York: Three Rivers Press, 2004.
Hazlitt, Henry. "The Fallacies of the N.R.A." The American Mercury. Dec. 1933, 422.
Harry Hopkins, "Statement to Me by Thomas Corcoran Giving His Recollections of the Genesis of the Supreme Court Fight," April 3, 1939, typescript in Harry Hopkins Papers.
Today it was announced that banks foreclosed on 288,345 houses in the past three months, the highest amount of foreclosures in any three-month period since 2006. It's estimated that 1.2 million homes overall will be foreclosed in 2010. Well, gee, looks like government bailouts of the financial industry have paid off! Despite hundreds of billions of dollars in bailouts, piles of regulatory codes, and vastly expanded government power, the pinch on Main Street is tightening and more people are losing their homes. It makes you wonder, how did all this happen in the first place and why hasn't increased government intervention solved the problem?
Since the early 20th century it has been the initiative and policy of the federal government to lower the price of housing so every single family could own a home. Other arrangements that would commonly arise in a free market (such as renting) just don't fit into the government's version of the "American dream." One of the first to lobby for governmental support of individual home ownership was President Herbert Hoover. On July 22, 1932 Hoover signed the Federal Home Loan Bank Act, and he explained the purpose of the bill "is to establish a series of discount banks for home mortgages." In other words, the federal government would help organize the mortgage loan industry and provide cheaper loans for people to obtain, thus increasing home ownership. Hoover went on to explain:
"In the long view we need at all times to encourage homeownership and for such encouragement it must be possible for homeowners to obtain long-term loans payable in installments. These institutions should provide the method for bringing into continuous and steady action the great home loaning associations which is so greatly restricted due to present pressures." - Herbert Hoover(Emphasis added.)
The "present pressures" of course being the Great Depression, an eensy-weensy economic slump that resulted in banks giving out fewer loans. Still, Hoover thought this was an appropriate time for government to encourage people to buy a house even if the economy was in dire circumstances. So began the history of the federal government's intervention in the mortgage market, often subsidizing or forcing banks to lower their lending standards and give loans to people regardless of their ability to pay them back.
Taking Hoover's actions a step further, President Franklin Roosevelt signed a bill that led to the formulation of Fannie Mae and Freddie Mac in 1938. Interestingly, these government-sponsored enterprises (GSEs) were created to help bail out banks who were faced with (wait for it...) a growing number of mortgage defaults.
Essentially the scenario looks like this: First the government organized banks to lower the price of mortgages in 1932; once people bought the loans, however, many were unable to pay them back and forced to default; upon seeing this flow of events, Roosevelt attempted to bail out the industry by creating Fannie Mae and Freddie Mac in 1938. This was the beginning of the secondary mortgage market, the practice where the GSEs (using taxpayer dollars) purchase mortgages from banks, thereby freeing up money for the banks to provide more mortgages.
"The GSEs are companies created by Congress to bring liquidity, stability, and affordability to the nation's residential mortgage markets. Traditionally, we've fulfilled this role by purchasing mortgages in the secondary market and bundling them into mortgage-related securities that can be sold to investors or held in our portfolio." - Ed Haldeman, Freddie Mac CEO
This new setup encouraged banks to offer loans to riskier clients who in an actual market scenario would not be eligible to purchase a mortgage. Because of government's creation of the secondary mortgage market banks found themselves with extra liquidity, which was used to offer loans to financially-insecure individuals. It's not tough to do the math: riskier customers lead to a higher likelihood of default. These policies have the least desirable impact on the poor people they are intended to help. In reality, it is much more economically feasible and sensible for a poor person/family to rent a house or apartment than to buy a house. However, artificially low mortgage rates lure poor people into an investment they won't possibly be able to pay back. Government's intervention creates a market imbalance that pushes the poor into buying a house when it is almost certainly not in their long-term interest to do so.
The painful effects of foreclosure we see today are the inevitable consequence of ongoing government meddling in the mortgage market. Government either subsidized or forced banks to offer risky loans to risky customers, but when the entire scheme begins to collapse we're told it is a failure of the free market. (As if Fannie Mae, Freddie Mac, the Federal Housing Administration, and other such entities were created through free, voluntary exchange and not by politicians and bureaucrats.)
Before someone blames the current economic mess on "deregulation" and injustices of the free market, consider this action undertaken by the Clinton Administration, as explained by the New York Times:
"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders."
...
"In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980′s." - New York Times; September 30, 1999
Historical evidence clearly shows that government has led the endorsement of subprime mortgages and lower lending standards, with complete disregard for the economic misery that erupts out of such policies and programs. Increasing bailouts will merely delay and worsen the inevitable collapse of the modern mortgage industry that government has played a major role in creating and sustaining.
Even so, you might say, on September 24, 2008, John McCain suspended his presidential campaign with the selfless objective to pass emergency legislation to "protect taxpayers and homeowners," so the government must know what it's doing, right? What America got in September 2008 were the TARP bailouts which, given the situation of the mortgage market today, haven't done squat to "protect homeowners." Given the government's miserable record of attempting to provide affordable housing, who in the world expects more government intervention to save homeowners this time around? You can't save a drowning person by throwing more water on him, nor can you save a government-manipulated economy with more government intervention.
The free market is the best tool to save the housing market and actually provide affordable housing for those who need it. Allowing liquidation of the housing market is necessary and would bring a short-term correction, but it would end the ongoing misery homeowners are experiencing due to government manipulation in the first place. Housing prices would drop to levels most potential homeowners could actually afford, and it wouldn't require one dollar of government intervention.
For a true recovery to take place you don't need increased government spending, intervention, or control; all that's needed is a return to the free market, where individuals will manage their lives and economic decisions far better than any politician or bureaucrat in Washington D.C. The free market is the only option for a sustainable, lasting, and prosperous recovery.
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