Eric’s Blog

At the Portland Saturday Market somebody came in my booth today and asked me if I would consider putting the weight of the catnip jerked chicken in grams as well as ounces. I come to the market to sell product. It’s part of how I do this thing called paying my bills, so the intensity of his request was rubbing me the wrong way. It didn’t help that he was wearing an Obama Jacket, which has fallen to almost nobody lately willing to advertise their support even in the market. Having spent the last 9 months agonizing on whether I could proceed with my planned expansion and finally deciding the economic uncertainty caused by the political upheaval makes it too risky, this was really rubbing salt in my wounds. Then he proceeded to tell me that there were only three other countries in the world who hadn’t gone metric. This caused me to come unglued as he listed them.

At the moment I couldn’t put my finger on it, but I remember being told that we were the only western nation without nationalized health care, etc… and I was thinking how much I really don’t want to be like anybody else. I never wanted to be like anybody else. I always liked being me. I always liked being American. And so I told him I didn’t care. I told him I didn’t want to be like Europe. I have friends in Europe. I love Europe, but my friends think I’m a crazy American. What was it I didn’t want to do he asked. I told him it was the soft socialism, the governments going bankrupt like Greece, all of it. I told him I like the way we do things here.

That’s when it got interesting, because I realized it was not like me to unload and I was trying to soften it, but then we both talked about our travel around the world and how America was by far the best place to live. I did mention Belgian beer. Anyway it was funny because now instead of talking how America was in the same league as some backwater nations we were agreeing that it was the best place to live. I told him next time I worked on the packaging I would probably dual label. He bought a toy for his cat. He had a nice family.

At the end of the day I was thinking about it and wondering why it set me off. Then it hit me. This was a message from childhood. I remember telling my parents that I wanted such and such a toy and my justification was everybody else is getting it to which my parents said if everybody else was jumping off a bridge would you follow them? Yeah, did your parents ever say that to you? I remember reading about an oil company spending $10M on nuclear research and when asked why the board of directors said because a competitor spent $5M. It turned out to all be wasted money. I actually became so individualistic and have seen so much stupidity that for me the idea that everybody is doing it is my reason to do a double take. Seemed like everybody was buying iPods and then spending lots of money on music. I bought an Archos and people always said wow, bigger screen, expandable, etc…

So this is the thing now. Mob sucker peer pressure. It doesn’t matter if an idea is good or bad, or if you managed to sucker enough Germans to vote for Hitler, it’s all about how many people are doing it and if everybody else is doing it we don’t want to be left out. We’re insecure unoriginal followers needing direction. We’re America. I remember my European friends having a hard time doing a bank transfer to reimburse travel expenses because I didn’t have the “universal” bank transfer number. I had to look it up and finally replied back that the reason my bank didn’t have a number is that American banks started the transfer number system over 50 years before Eurpoean banks and while many other banks around the world had adopted the European bank number system it was silly for the US to scrap theirs.

When has America ever followed? We beat the British not just in our revolution but again in the war of 1812 where we would have been put under British ownership had we lost. We should have lost both by all rights, but we didn’t. Every country in the world has emulated our system of economics to some degree… well except for Cuba but as Castro is now one of the richest men in the world while his people suffer I suspect he doesn’t care that everyone else has a more humane more capitalist government.

There are two disturbing things I heard today. A vendor near us has a small flag in his booth and someone asked him if that meant he was a conservative. He replied that he has the flag there because he is American. This is troubling. Did the questioner think only conservatives would have a flag or did they think it was strange to have one so he must be one of them? Maybe he thought it was like the Christian fish symbol, a secret sign for an underground belief system. The other thing was in a speech today by representative Mike Pence who said that he had heard confidentially that within the administration that they saw themselves as managing the decline of America. This is distressing because I believe that many believe America is largely over, that Obama is the first post-American president. Pence followed with saying that if we get government out of the way America will come roaring back.

This really completes my thought on America being a nation needing the consensus of the rest of the world. Horse crap! We are the richest most powerful nation on earth and that is because in the modern world we are the first nation founded on an idea… the idea of liberty. The American idea is that you can pursue happiness, that you can endeavor to follow your dreams and realize wealth previously only possible through being born into the right family. Being so much bigger than life to the rest of the world is certain to provoke jealousy. If you have led the world why should you start following it? If you have been the innovator why should you start adopting other ideas? If everybody else is less successful, less secure and less happy should we be like them instead?

At least when I was a child it was only some toy company looking for my money. Toys come and go, but governments stick around sucking money out of the economy until they die a bloated failure like Rome or get overthrown. Thankfully we can have a revolution by voting. Most importantly… It doesn’t matter who is doing what. You do what you know is right and what you believe in. Let everybody else jump off a bridge.

Yesterday at a family get together my brother in law said to me we needed to have term limits and a balanced budget amendment for the federal government. My response was that doesn’t go nearly far enough. I listed three things, but now that I think about it I think there are several key problem areas with our federal government. The first one is that they have no regard for the constitution. This is compounded by the fact that we have been willing to codify the misinterpretation of the commerce clause when it suits our needs and the absurd idea that the constitution is a living document. It is clear the founding fathers had a healthy distrust of big government and the tyranny of the majority. Term limits may be useful but it overlooks the root cause of corruption and special interest, tax revenue and regulation.

At the heart of the present debate I believe are a minority of the country who actually believe in what many refer to as the nanny state. I believe for most this is a sincere conviction that a civilized society must protect the less fortunate and the defacto agent of this protection is government. It is an easy emotional position, and I believe it is utterly deluded. I believe a very tiny core of this group has been infected with the worst ideas of Marx, Malthus and others and I believe the curse of intention has blinded them. There is an old saying the road to hell is paved with good intentions. It is the adage of unintended consequences. Human nature is to self test our intentions rather than to review our results. For instance if I intend to make more money and decide raising prices is the way, then as sales drop I keep raising prices I can confirm I am okay because I have good intentions and I’m even acting on them. When disaster ensues I may be forced to re-examine my actions, but in many cases people don’t learn. Case in point, taxes. Economies go up and down and governments tend to plan on them staying up. When they go down the answer is to raise taxes. Followed to the logical end eventually this would lead to taxes absorbing all income. Consequences must always be considered.

Let’s look at the problems. The modern idea of the constitution is that it’s an evolving document. That somehow advances in technology have changed our world or made us smarter and now we can find new ways to interpret it. Let’s test that. The constitution is the basis of all law in this country and all law must conform to constitutional directives. Would we consider a law regarding homocide to be evolving and consider that perhaps it meant something different if it was inconvenient when we wanted to kill someone? Of course not. Try talking on officer of the law out of giving you a traffic ticket because you believe you have a new interpretation of the law giving you special dispensation. There are 14 enumerated powers given to congress and a guarantee of states rights in the 10th amendment. Our constitution was the second attempt at forming a government. The first, a lose confederation of states, failed. The commerce clause was written in response to states charging tarriffs for goods crossing state lines making things much more expensive. It was intended that the federal government would have control here to protect the people. Here is the commerce clause which is listed under congressional powers.

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes

This has been expanded by inference to the point that the supreme court ruled that a pig farmer growing wheat in his back yard to feed his pigs affected interstate commerce. It was also used to say it was illegal to grow marijuana for personal use. Did you think this constitutes regulating black markets or merely relegating them. I’m not arguing for legalizing marijuana, I’m saying from a strict constitutional perspective this ruling is as absurd as Dredd Scott and if you are not selling what you grow in your back yard across state lines than it’s the purview of your state, not the federal government.

In 1916 Woodrow Wilson was re-elected president with the slogan “He’ll keep us out of war” and promptly put us into WW I. Wilson has many distinctions including segregating the military, instituting the Federal Reserve Bank, canceling free speech with the Sedition Act, paved the way for Hitler with the Treaty of Versailles and gave us the income tax which initially was only supposed to be no more than 7% and quickly jumped to a top marginal rate of 90%. Over the years it has grown to over 5.5 million words and in 2006 was estimated to be 44,000 pages. Even members of the treasury and IRS use accountants and attorneys from the $4,000,000,000 a year tax preparation industry. A study of the constitutional design of government is a study in balance of power and constraint. Where might any example of this thinking be found in US tax code?

Along with taxes is regulation and the Knowledge Problem. In a nut shell economies are far to complex for any central authority to understand in real time. If there is anything the free market has taught us it is that the organic interaction of the marketplace and supply and demand is inherently self directing and smarter than any central authority. The problem is that many people are frightened by free markets. Paradoxically though we are also confused by them. For instance a recent review from a conservative think tank demonstrated that the recent health care bill was actually only a marginal increase in government control of health care because it is so heavily regulated already. Again, economist Friedrich Hayek explained the problems with command economies. Unfortunately our government responds to a problem with the idea that we need more intent when in fact it was the result of acting on that intent that was creating problems.

One other point is that congress and the president are not required to live under the laws that they pass. I believe not only should they be required to be subject to law but that any practice that is illegal in the private sector needs to be likewise illegal in the public sector and anyone perpetrating criminal acts ought to be criminally liable. I believe that if it were possible to be prosecuted criminally for voting to enact law that was expressly illegal we would go a long way to Jefferson’s vision.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty

A final point my brother in law made was that some regulation was required in the stock market. Specifically short selling and derivatives. I agree. George Soros has become rich producing misery. In the case of the British Pound, the Euro and our housing market he has been betting on them getting worse and also working to effect devaluation. It’s like going to a horse race, picking a loser and drugging them and getting a big payoff. Likewise derivatives are insane as almost nobody understands them. Just look at the debt clock and you will see we owe over $600 trillion. Our GDP is maybe $14 trillion and our total wealth in money land and property as a nation is just over $50 trillion. Derivatives are gambling on currency variations. When money is no longer chiefly made or lost in the production of goods and services or the financial support of said production but in the manipulation and speculation of markets then free markets have been poisoned.

So what are the solutions? I believe what is required is very difficult. Like our founding fathers I believe in institutional distrust. I believe this means constitutional amendments. I know these are not easy, but I also know there is no other way to insure our freedom. These are my proposed amendments.

Clarify Commerce Congressional powers regarding commerce within the states shall be interpreted to be explicit to interstate commerce and without inference. Simply put this would most likely cause a flood of lawsuits to repeal excessive regulation. My thinking, a little chaos can be a good thing. We have 50 states. If one of them wants to become the new workers paradise, by which I mean a socialist nightmare, then we can vote with our feet.

Tax Reform There are several tax reforms proposed worth looking at. A flat tax is good and repealing income tax for a consumption tax, also known as the fair tax, is good. The point should be simple. By eliminating complexity and instituting a tax code that treats everyone equally we eliminate much of the incentive for special interests and the harm they do to the rest of us. Aside from a simple and constrained tax code anyone can understand and read in a few minutes it needs to have built in restrictions capping the tax rate so that raising taxes would require a constitutional amendment.

Government Accountability Act All members of congress and the president as well as any legislative staff shall be subject to all laws governing the public without exception. Any action by congress regarding public monies for public welfare shall be constrained by the same laws and accountability of the same actions by those in the private sector. This may need some work to prevent too much chaos but the intent is to make congress liable for fraud and theft, such has been done with social security and to make them live under the same laws such as they tried to get out of for health care reform. Of course these specifics would become non sequiturs in full reform.

Entitlement Reform The federal government shall devise a plan to insure that those people dependent on entitlement monies from the government are not unduly harmed while setting a firm date to move any such entitlements to private sector solutions. This may not be needed Representative Paul Ryan has a brilliant roadmap for America to make entitlements solvent and pay off the public debt that the CBO says will work. However we do need to be clear about something. The government cannot be trusted. Technically the commerce clause clarification would make entitlements go away but protection must be assured for the elderly who have counted on it. The irony is that if we were all investing in our retirement in the private sector there would be so much investment capital and so much lower taxes and less debt our economy would be the envy of the world.

Public Sector Employment Accountability Act Public sector employees shall not be allowed collective bargaining Take a look at what is bankrupting cities, states and to a degree the federal government. Teachers can’t be fired and public employees can retire after 30 years with 90% pay and great benefits. In many cases these six figure salaries are being paid by people making a lot less. End it!

Prohibition of Unfunded Mandates The federal government shall not mandate state governments take any action that requires any state funds to participate in a federal program. Simple. Get rid of that lever.

Regulatory Protection Act Any federal safety regulation which can be shown to unduly favor one business over another or increases the barrier of entry to competition shall be deemed unlawful, especially in such case as influence in the legislation was exerted by a particular business. Exception to be granted only in the case where incontrovertible and extreme public safety can be proven to be at stake. This gets rid of laws like the toy testing law. You can be arrested for selling a used crib or childrens clothing at a garage sale because it has not passed tests. This enables large manufacturers to put smaller companies out of business without any demonstrable issue of safety. This would also keep the FDA from making vitamins a prescription item and other insanity.

The Patent Reform Act No patent shall be granted unless applicant can demonstrate that the product is not worth developing without patent protection. Any patent demonstrated to be in use freely with the knowledge of the patent holder may be invalidated if it is proved the willfully allowed this. Patents may only be awarded for tangible products and will not be recognized for software or business practices. This is my pet peeve. Companies hold patent portfolios in a cold war as everybody is in violation. Other companies wait until their idea is in wide use to begin collecting. People have become billionaires not making anything except filing patents based on ideas they got from magazines and suing inventors decades later. The entire pharmaceutical industry is based on acquiring patents, however I’d add that the FDA just makes things worse by making it nearly impossible to get anything through. My point is that most products that have a patent would be developed anyway in today’s market and no inventor can afford to engage in a legal patent war so the entire thing has turned into a big legal expense nightmare that hurts innovation and markets instead of advancing them.

Of course term limits and outlawing derivatives and short selling are worth considering. However the ideas I put forward here would effectively deconstruct 100 years of failed policies holding back our freedom and economy. You may or may not agree but there are several incontrovertible facts. First off even the president’s own budget people say our budget path is unsustainable. Second, we have the largest economy in the world because of the freedom we have had. Granted it is a lot less free than it used to be and it’s also not as healthy as it was, but when we look to Europe for a model we are looking at people who adopted some of what made us great and a lot of what didn’t and there is a reason our economy is still greater. The result of the ideas I have put forward here would be tumultuous and perhaps frightening. It would result in our courts overturning a lot of law. I saw fine. It is walking away from the beautiful simplicity of freedom for the delusion of collectivism that has taken away more greatness than we can know. Let’s fix it!