New Slate Article and Miscellaneous

Making Political Sense: The Pros and Cons of the Internet

By: James E. Miller

 Published 02/15/2011

“Congress shall make no law...abridging the freedom of speech.” As everyone should know, this is the direct language from the first, and arguably most important, amendment of the U.S. Constitution.

What contains just 10 simple words lays the foundation that is absolutely necessary for a prosperous and content society.

Without the ability to dissent one’s own government without fear of retaliation, social and economic progress becomes stifled. Once the brakes are put on economic progress, they are also put on improving our lives for the better.

Nowhere is this more evident right now than Egypt. What began as a man in Tunisia setting himself on fire in protest of the police seizing his vegetable cart has snowballed into a movement to topple a 30-year tyrant propped up by our foreign policy and tax dollars.

The protests against Egyptian President Hosni Mubarak are threatening the stability of the countries that surround Egypt.

The Egyptian protestors are defying the curfew implemented and many members of the military that were supposed to be maintaining order have been reported to be displaying their support for the anti-Mubarak movement.

Faced with losing the powerful position he has occupied for the past three decades, Mubarak did what any tyrant does when they are desperate to maintain their control: shut down the people’s means of communication.

In this case, it was the Internet and the social media giants Facebook and Twitter. By being able to communicate and organize instantaneously at little cost, the mass mobilization of people is just a mouse click away.

Fifteen years ago, this would be inconceivable. From the brain of a Harvard University student came a new tool in fighting oppression. And from the idea of providing a service for anyone to communicate instantly rose a network that is able to relay messages to the almost 7 billion people worldwide.

Any government that strives for ultimate control of information must now deal with these two juggernauts. Mubarak attempted to, and though successful initially, has ultimately failed due to a number of groups outside Egypt who have provided Internet access outside the government’s control.

Mubarak may still have a large degree of control of what happens inside of Egypt, but outside the country is another story.

With the whole world watching how the Internet revolution can bring a long established tyrant to its knees, how does a country founded on a limited role of government react?

By introducing legislation to allow the president to essentially “kill” the Internet in a time of emergency of course. There is a bill before Congress that was introduced by Sens. Joe Lieberman and Susan Collins, which grants the executive branch the power to shut down the Internet in a time of emergency or cyber attack.

Sens. Jay Rockefeller and Olympia Snow have also introduced bills that would have the same effect. While President Barack Obama has come out and condemned Mubarak for shutting down the Inter- net, those in Congress are attempting to give him the same exact power.

So much for showing support for the oppressed.

With the rise of the Internet, has come a standard of living that no one with access to would ever dream of giving up. The rapid flow of news has brought what was once considered a rather large world even closer together.

With more information comes a more educated population. Relatives can now speak to each other halfway across the globe. Exotic goods can now be ordered and shipped to the most unlikely of places. And a 23-year-old can now organize with people his age and older to protest what he or she sees as an illegitimate government.

It should not be surprising that those in control fear the freedom of information and expression. It leads to the rise of decentralization to a structure built on accumulating power.

Lord Acton famously proclaimed “power tends to corrupt, and absolute power corrupts absolutely.” The people of Egypt have realized this and are demanding a change. Let us hope that the American people continue to realize this and put a stop to our federal government’s never ending appetite for control.

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In other news, there was a great article on Reagan's initial embrace of a return to the gold standard when he became president on Forbes today but for some reason the link is broken now.  At least it is on my computer.  Anyway, most great things like free trade, tax cutting, and curtailing government spending were only part of Reagan's overblown rhetoric.  He never actually practiced them.  Jeff Riggenback chronicles Reagan's pathetic anti-government record, which still tickles the erogenous zones of conservatives today, here.

Now for what is becoming a daily tradition here at Miller's Genuine Draft, awesome quotes! Either I keep striking gold with these or I am just getting lazy.

Speaking of hypocritical conservatives, Mark Brandly does a good job showing the similarities between George W. Bush and Obama in his Mises Daily today:

Even though they represent different political parties, many of the foreign-policy and financial advisors of the Bush administration would be comfortable in the Obama administration and in some cases the same individuals are in both administrations. Bush and Obama both support the welfare state and the military empire. They both have proposed budgets greatly expanding the budgetary size and legal reach of our federal government.

Federal debt nearly doubled during Bush's reign and it appears that it may double again under Obama. Both presidents supported massive healthcare bills that increased federal spending and federal control over the healthcare industry. And, importantly, both presidents support loose monetary policies and the Federal Reserve system, the primary cause of the current economic crisis.

Sounds good except that Brandly missed financial regulation.  Both Sarbanes-Oxley (Bush) and Frank-Dodd (Obama) increased the authority of the federal government to oversee the financial sector.  We all witnessed how effective Sarbanes-Oxley was with the 2008 financial crisis.  Chances are, Frank-Dodd will be just as useless.  Here is just one recent example of Goldman Sachs skirting the new regulation.  Like Ron Paul always said, the best regulation is no regulation.  And by no regulation, he means letting banks fail obviously.

Brandly also does a great job explaining why the Social Security tax is not 6.2% but 12.4% in reality:

In addition to dispersing the costs of government programs, it's also sometimes possible to hide the costs from the taxpayers. For example, few workers understand the tax burden of the Social Security system. On their paychecks, workers see that 6.2 percent of their gross pay is taken from them to pay for Social Security. What they don't see is that employers match this tax payment with an equal additional payment. It seems that employers are paying half of the Social Security taxes. That's not the case. Even though the employers are legally liable for the tax, they shift the tax on to workers in the form of lower wages. The Social Security tax burden, 12.4 percent of each worker's gross pay, falls on workers. This is just one of the many ways that politicos hide the costs of government policies.

In his first interview while being in prison for publication by the New York Times today,  Bernie Madoff asserts that banks and hedge funds knew about his ponzi scheme all along

“They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’"

Silly Madoff, he should of known that Wall Street acts just like the Fed.  When the good times are rocking, why go a knockin?  You know, why raise the interest rate if so many people are getting cheap housing, maxing out their credit card, and spending like crazy?  It's not like we are suffering from a bubble right now because of it or anything.

Gary North is out today with a refutation of the mainstream media's and conservative's view that Ron Paul supporters can only win straw polls and don't represent the mainstream:

The mainstream media recognizes Paul for what he is: the nation's major voice for libertarianism. This understanding is shared by the conservative mainstream media. Fox News recognizes this, and therefore steadfastly opposes Paul. It was Fox News in 2008 that kept Ron Paul off the podium during its broadcasting of the Republican Party's debates. He was not invited.

The mainstream conservative media want someone who is in favor of the expansion of American Empire. They want someone who will not rock the boat, which would mean sinking the Establishment's ship of state. They are big government conservatives.

The fact that Ron Paul, for the second year in a row, is the favored candidate of the people at CPAC is an insult to the conservative Establishment. It indicates that large numbers of conservatives are not willing to go along with the basic agenda of the conservative movement, namely, the expansion of Federal power in the realm of foreign policy, and an unwillingness to roll back the New Deal, Fair Deal, New Frontier, Great Society, and all the rest of the bipartisan expansion of the Federal welfare state.

This is why, in the reports on the results of the straw poll, the writers spent almost no time on Ron Paul's agenda. There was no discussion of why Ron Paul got votes, except to say that somehow he was able to get more of his people to manipulate the straw poll. The question then is this: Why did the also-rans not get their people in to manipulate the straw poll? If Ron Paul was able to get out all those people, it indicates that the others failed to get support. This, I guarantee you, is never discussed by the journalistic hacks who spin the results of the straw poll. They spend time on the other candidates, as if the winner of the straw poll were somehow a secondary figure.

 I agree with North in that Paul is not a messianic political figure, but damn is it ever inspiring to see a politician who actually understands economics, is true in his convictions, and gets a load of support.  My next blog post will have Paul's CPAC speech.

It wouldn't be a good post without a Mish quote.  On big banks taking money invested in CD's and using it to make money in Treasuries:

Here are some rates courtesy of Bankrate.Com as of 2011-02-15.



According to Bankrate, national average for 5 year CDs is 1.61% and the rock bottom low is .95%. The site average is 1.98% and the top yielding 5-year CD yields 2.75%. Thus Citigroup's claim of competitive rates is absurd.

Although Bank of America makes no such claims, its CD rate is priced so preposterously low, that Bank of America must not even want to deal with them. Alternatively, B of A has an incredibly large pool of moronic depositors begging to be ripped off.

Guaranteed Free Money

Anyone buying 5-year CDs from Citigroup, Bank of America, Northern Trust, or JPMorgan Chase is giving those banks a shot at guaranteed free money.

All those banks have to do is take that money and invest in 5-year US treasuries to have a guaranteed profit. Here are the reasons for that statement.

1. There is no duration mismatch. The banks secure funding for 5 years and invest that money for 5 years.
2. The US government is not going to default no matter what nonsense you may hear elsewhere.

Purists may point out the play is not entirely risk-free because people can pay a penalty, cash out the CD, then take the money elsewhere. However, from a practical standpoint, fools dumb enough to accept 1.5% or lower are probably not bright enough to pay a penalty and take the money elsewhere even if rates dramatically shoot up.

To end, how about a check on rising cotton prices?  From Zerohedge:

In a month and a half, cotton has risen 44%: since there have been about 44 days in 2011, that means about a 1% a day.

Refute that Krugman.