The number of suspects barred from flying in the United States has more than doubled in the last year. As with much of the rest of the war on terror, Obama has exceeded all expectations in following his predecessor’s footsteps.

In Ayn Rand’s novel, Atlas Shrugged, published in 1957, businesses push government to pass law after law that aids weaker businesses by penalizing successful ones. There’s the “Anti-Dog-Eat-Dog Rule” to prevent destructive competition among firms in an industry, and the “Equalization of Opportunity Bill” that limits the number of businesses one person can own. Throughout the novel government enacts laws and policies to hold back successful companies for the benefit of their struggling competitors.

The book is fiction, of course, but many people have observed how the fictional events in this novel published more than half a century ago have eerie parallels in real-world government policy. One example is a fine that has been levied on Google by a French court, because Google has been giving away its mapping services, undercutting a French business that was trying to sell the same services. Just as in Atlas Shrugged, firms that give consumers a better deal are held back to protect those firms that don’t offer consumers something equally attractive.

The EU is attacking Google on another front as well, challenging their privacy policy, not because they say there is anything wrong with it, but because they want more time to investigate it. Google gives away most of its services, and nobody is forced to use those services or deal with Google at all. If people don’t like Google’s policies, they don’t have to use their services. Why should any government be involved?

Google appears to be a target just because it is a large successful company that gives people things they want—often at no charge. The threats Ayn Rand foresaw to our freedoms are showing up in the news daily.

To think as a young man I longed to live in southern California. Today, the state is one big caricature of Political Correctness.

News item: The Los Angeles City Council passed an ordinance requiring porn actors to wear condoms. Presumably, they can perform their on-air sex acts outside Los Angeles. What is the point? The “educative purpose of law,” they say. By Nanny State standards, an encased sausage is kosher. The city’s rating has been downgraded from XXX to XX-. And the porn industry is already relatively safe due to self-regulation, not coercive push-the-porn out of town Regulation.

Consider the goofiness of the whole thing: L.A. mandates wrappers on human wieners but has done nothing to shut down gay bathhouses, in contrast to San Francisco which shut them down after a bitter intra-gay political battle over the issue. I also doubt whether LA cops bother those enjoying sex in bathroom stalls. In fact, the state even has a guide “Sexual Orientation Training for Law Enforcement” discussing proper “patrol contact” with gays, lesbians, and bi-sexuals having sex in public. And there are plenty of guides to the stars . . . er, I mean bathroom stalls. Larry Craig (R-ID) would love this place but porn stars stay away.

I still dream of warm places in the sun but no more “California dreaming.” Not because of porn but because of the regulate-anything-that-moves attitude that killed “Hotel California.” As The Eagles sang, the free-spirited years are over and done: “We haven’t had that spirit here since 1969. . . .”

If porn producers have a sense of humor, they will set up shop in the Virgin Islands and give California the proverbial middle finger. So to speak.

Many books and articles have been written about the financial crisis of 2007–2008. Unfortunately, much of this literature is deeply flawed, mistakenly treating, for example, unscrupulous mortgage lenders and securities dealers as the primary cause of the calamity rather than as factors subordinate to more fundamental causes. One book exempt from this criticism is Alchemists of Loss: How Modern Finance and Government Regulation Crashed the Financial System (2010), by Kevin Dowd and Martin Hutchinson.

The book traces the development of modern finance and the institutional setting in which it operates, and explains how they set the stage for the mortgage meltdown and the mess that ensued. Although Dowd, an economist, and Hutchinson, a financial journalist who worked for many years as an investment banker, examine a host of causal factors that contributed to the financial calamity, they place the primary institutional blame on the agency assigned to promote maximum employment, stable prices, and moderate long-term interest rates: the Federal Reserve.

Economist Roger W. Garrison, a leading theorist of the business cycle, agrees with Dowd and Hutchinson’s overall assessment (see Garrison’s outstanding review essay, “Alchemy Leveraged: The Federal Reserve and Modern Finance,” in the Winter 2012 issue of The Independent Review).

In brief, under the leadership of former chairman Alan Greenspan, the Fed, in the years of the housing boom, pursued an expansionary monetary policy that drove down interest rates far below market levels. Along with policies designed to broaden homeownership that were pursued or influenced by other agencies of the federal government, the Fed’s reckless credit expansion precipitated an unsustainable housing bubble whose burst was bound to devastate much of the rest of the economy. Dowd and Hutchinson’s discussion of this aspect of the financial crisis will sound familiar to readers of this blog.

Other parts of Alchemists of Loss illuminate less familiar dimensions of the financial crisis. One fascinating contribution is the authors’ novel theory of how public policies enacted to redistribute income helped set the stage for the crash.

Motivated by income redistribution, changes to the U.S. tax code that were initiated many decades ago, along with the addition of various regulations, contributed to the demise of the partnership as a leading model for business enterprises and to the rise of the corporation. This development profoundly altered the incentives that business managers face, Dowd and Hutchinson argue, partly because the corporate form of organization separates ownership from control. One result is that contemporary business managers often possess shorter time horizons than the owner-managers who preceded them. The underlying concern for long-term profitability that characterized the “old partnerships” has given way to a focus on the exploitation of short-term profit opportunities. The growing importance of traders in securities firms—the practitioners of the “alchemy” of modern finance referenced in the book’s title—is a creature of this transformation.

Dowd and Hutchinson suggest that the opportunities for cumulative short-run gain would not have been available, at least not at any significant level, had the vigilant and long-term-oriented “old partnerships” continued to play a large role in the economy. Thus, by penalizing the partnership, the redistributionist tax code has eroded what had been a stabilizing influence on the macroeconomy.

Although Dowd and Hutchinson argue that these and other developments have weakened the financial system, it bears repeating on whose doorstep they place the blame for the recent crisis. Without the credit expansion initiated by the Federal Reserve’s Open Market Committee, there would have been no artificial boom for the economy in general and no unsustainable bubble in the housing market in particular. Dowd and Hutchinson’s refreshing emphasis on distortions to long-term investment patterns caused by the Fed’s credit expansion, Garrison notes, accords with the business cycle theory of the Austrian School of Economics even though they don’t cite its influence on their thinking.

But if Alchemists of Loss shares the analytical tenets of a tradition that sprouted in Vienna, some of its policy prescriptions hail from the Windy City. For although Dowd and Hutchinson favor the abolition of the Federal Reserve, a goal advocated by many Austrian economists, they offer a set of “second-best” proposals associated with the monetarism of the University of Chicago. Chief among these is a Federal Reserve policy aimed at stabilizing the level of prices.

Unfortunately, monetary policies designed to maintain a stable price level would still leave the economy vulnerable to Fed-induced business cycles, according to Garrison. So although Alchemists of Loss has many virtues, a well-developed and full-proof prescription for avoiding future booms and busts isn’t one of them.

Presidential candidate Mitt Romney, in attempting to highlight an emphasis on the middle class in his platform, said a politically foolish thing. “I’m not concerned about the very poor,” he said. “We have a safety net there. If it needs a repair, I’ll fix it.” In an apparent effort to soften the harshness of his remark, he added: “We have a very ample safety net and we can talk about whether it needs to be strengthened or whether there are holes in it. But we have food stamps, we have Medicaid, we have housing vouchers, we have programs to help the poor.”

The typical liberal spin on this gaffe is that it demonstrates this millionaire Republican’s heartlessness towards the most needy. Yet this is not what interests me so much. What I find far more interesting and telling is that Romney, like practically all conservatives, takes for granted a key premise of the progressives: The very poor are helped most by the welfare state, and the way to help them more is to “strengthen” the government’s safety net.

Conservatives almost always accept this premise with a certain slight variation to the liberal outlook. The right sees the poor as getting all and more than they deserve from big government, from the taxpayers, and so left-liberal complaints about the plight of the poor must be ignoring how much the government has already done to help those on the bottom rung. The left, on the other hand, has a different variation on the theme: The government must do more—much more—to help the poor (and middle class)—through more activity, more handouts, more regulations, more of a “safety net.”

Yet what’s most significant is what both sides have in common, the view that the government safety net does in fact help the very poor, that the poorest Americans have the most to gain from America’s welfare state, such as it is.

This has got to be the saddest misconception in all the talk about government poor programs. It is a mystery that it persists at all. If you consider the very poorest Americans—those without a place to live, for example—it seems odd to think the government has done so much to help them, when, as a matter of fact, they still do not have a place to live. It is a retreat from reality, and an obscene one at that, to speak of the “very poor” as the ones who have most benefited from America’s “social safety net” when, by definition, the very poor are the ones who have the least despite the decades and trillions spent on the war on poverty.

Indeed, the vast bulk of the welfare state—putting aside corporate welfare—is aimed not toward the “very poor” but the middle class. And why shouldn’t it? Those are the majority of Americans, the majority of voters, the ones whose votes Republicans and Democrats really care about buying.

When I think of Medicare, Social Security, public education, unemployment insurance, disability payments, and the rest of the lion’s share of the “safety net,” I don’t think of the “very poor,” I think of the middle class—from the lower middle class to the upper middle class—as the core recipients.

Yet people don’t think of this stuff when they think of the safety net. They think of food stamps—which cost about $80 billion a year at the federal level. This, a little more than 2% of the federal budget, is not a negligible amount of money, but it pales compared to the over $700 billion spent on Social Security every year, much of which ends up in the hands of a well-to-do demographic. Food stamps, moreover, are used by about 14% of Americans, which must therefore include a big chunk of the 95% Romney is referring to as neither very rich nor very poor. What’s more, well over half of the budgets of social welfare bureaus typically go to overhead costs, such as paying the salaries of well-paid upper middle class government workers.

The point here isn’t that the government should spend more to help the poor. The point is that government “safety net” programs are hardly directed toward nor sufficiently help the “very poor.” And this would be consistent with the entire history of the human experience, where the poorest were categorically those with the least access to the spoils of government taxing and spending.

Now, there is plenty the government can do to help the very poor, and it all involves getting out of the way. Government at all levels can and should: (1) stop taxing the poor—they are hit especially by sales taxes, payroll taxes, and sin taxes–and recognize that all taxes destroy wealth and that the poor ultimately suffer from them all, (2) stop regulating the poor out of work with business codes and fees that almost invariably protect established interests by erecting anti-competitve barriers to entry, (3) repeal minimum wage laws that prohibit those at the bottom of the economic ladder from being able to take that first important step, (4) repeal licensing laws on occupations like taxi-driving, construction, hair-dressing, and indeed every other industry that poor Americans are often quite qualified to be entrepreneurial in, but are only prevented from entering by the state’s absurd impositions that often amount to hundreds of thousands of dollars, (5) pursue fundamental criminal justice reform to bring safety and liberty back to the city streets, eliminating gang violence by ending the drug war, repealing all gun laws that disadvantage the poor, vastly reining in the police who are so often a threat to normal poor Americans, and completely revamping a correctional system that robs hundreds of thousands of peaceful poor Americans of their freedom and economic opportunities, (6) deregulate all industry—health care, especially; the poor have better access all the time to the very products whose producers are least regulated (computers, electronics, clothing) and are the most alienated from those with the most government involvement (medicine), (6) eliminate welfare programs that inculcate complacency and dependence rather than encourage independence and responsibility.

The government is by far much more an impediment and enemy of the very poor than it is any sort of friend or guardian to them. Romney’s recent flippant comment only echoes a grave misunderstanding permeating nearly the entire political spectrum on the true relationship between the state and the most vulnerable of Americans.

Those hoping ObamaCare will soon lead to a “Single-payer” plan such as Canada’s might want to look through the most recent annual report on wait times for health care in Canada just released by the Fraser Institute.

Among other findings in “Waiting Your Turn: Wait Times for Health Care in Canada, 2011 Report:”

Specialist physicians surveyed across 12 specialties and 10 Canadian provinces report a total waiting time of 19.0 weeks between referral from a general practitioner and elective treatment in 2011—the longest total wait time recorded since the Fraser Institute began measuring wait times in 1993.

The definition of “elective” goes far beyond plastic surgery, referring to procedures few of us would willingly “elect,” including Medical Oncology, Radiation Oncology, Internal Medicine, Urology, Elective Cardiovascular Surgery, Orthopedic Surgery, Neurosurgery, General Surgery, Otolaryngology, Ophthalmology, and Gynecology. You’ll be relieved to know that patients must wait “only” an average 1.2 weeks for urgent cardiovascular surgery.

There’s also some question of the quality of care available in Canada, even if one can wait, as evidenced by the well-publicized choice of a Canadian Premier to have his heart surgery in the U.S. last year.

Tests we now undergo virtually on demand will likely also become a longed-for dream as we suffer and wait for diagnoses. A friend whose medical condition puzzles her doctors recently underwent a series of three ultrasounds on same-day bases; and an MRI on her choice of several days after calling for an appointment. In British Columbia, the Canadian province most like California, she would have waited 4 weeks for an ultrasound (presumably waiting 4 additional weeks for each of the follow-ups); and 16 weeks for the MRI.

No one denies that the U.S. healthcare system is badly broken, beginning with the introduction of employer-provided (3rd-party payer) health insurance as a work-around to World War II wage and price controls, and ever-higher premiums correlating with ever-expanding government involvement in the sector—evidence that would seem to call for less government involvement, not more.

We “baby boomers,” now entering the age at which we can anticipate needing increasing amounts of health care, yet unfortunately spoiled by lifelong experience with “on demand” access to health care, will likely find it especially trying to accept a Brave New World in which we, unlike our parents, are not immediately booked into life-saving or ameliorative surgery. Will we consequently overthrow the tyranny of healthcare as “Made in D.C.,” or quietly acquiesce to the drumbeat propaganda that increased wait times and death rates are the price for “fairness”?

In their recent article in the Wall Street Journal, “No Need to Panic About Global Warming,” a group of sixteen world-renowned scientists decry the unscientific alarmism over “global warming,” citing numerous inconvenient facts that dispute global warming claims. Here is a video interview with signatory William Happer, Professor of Physics, Princeton University:

Their message to policymakers?

There is no compelling scientific argument for drastic action to “decarbonize” the world’s economy. Even if one accepts the inflated climate forecasts of the IPCC, aggressive greenhouse-gas control policies are not justified economically. . . . Every candidate should support rational measures to protect and improve our environment, but it makes no sense at all to back expensive programs that divert resources from real needs and are based on alarming but untenable claims of “incontrovertible” evidence.

This statement follows up on the public resignation of Nobel Prize-winning physicist Ivar Giaever from the American Physical Society (APS) in which he states:

I did not renew [my membership] because I cannot live with the [APS policy] statement: ‘The evidence is incontrovertible: Global warming is occurring. If no mitigating actions are taken, significant disruptions in the Earth’s physical and ecological systems, social systems, security and human health are likely to occur. We must reduce emissions of greenhouse gases beginning now.’ In the APS it is OK to discuss whether the mass of the proton changes over time and how a multi-universe behaves, but the evidence of global warming is incontrovertible?

The group of scientists note the following facts that refute climate alarmist claims:

1. The lack of global warming for well over 10 years now:

This is known to the warming establishment, as one can see from the 2009 “Climategate” email of climate scientist Kevin Trenberth: “The fact is that we can’t account for the lack of warming at the moment and it is a travesty that we can’t.” But the warming is only missing if one believes computer models where so-called feedbacks involving water vapor and clouds greatly amplify the small effect of CO2.

The lack of warming for more than a decade—indeed, the smaller-than-predicted warming over the 22 years since the U.N.’s Intergovernmental Panel on Climate Change (IPCC) began issuing projections–suggests that computer models have greatly exaggerated how much warming additional CO2 can cause. Faced with this embarrassment, those promoting alarm have shifted their drumbeat from warming to weather extremes, to enable anything unusual that happens in our chaotic climate to be ascribed to CO2.

2. CO2 is not a pollutant:

CO2 is a colorless and odorless gas, exhaled at high concentrations by each of us, and a key component of the biosphere’s life cycle. Plants do so much better with more CO2 that greenhouse operators often increase the CO2 concentrations by factors of three or four to get better growth. This is no surprise since plants and animals evolved when CO2 concentrations were about 10 times larger than they are today. Better plant varieties, chemical fertilizers and agricultural management contributed to the great increase in agricultural yields of the past century, but part of the increase almost certainly came from additional CO2 in the atmosphere.

3. The smear campaigns by the warming establishment are outrageous:

Although the number of publicly dissenting scientists is growing, many young scientists furtively say that while they also have serious doubts about the global-warming message, they are afraid to speak up for fear of not being promoted—or worse. They have good reason to worry. In 2003, Dr. Chris de Freitas, the editor of the Journal Climate Research, dared to publish a peer-reviewed article with the politically incorrect (but factually correct) conclusion that the recent warming is not unusual in the context of climate changes over the past thousand years. The international warming establishment quickly mounted a determined campaign to have Dr. de Freitas removed from his editorial job and fired from his university position. Fortunately, Dr. de Freitas was able to keep his university job.

4. Even if one accepts the inflated climate forecasts of the IPCC, aggressive greenhouse-gas control policies are not justified economically.

A recent study of a wide variety of policy options by Yale economist William Nordhaus showed that nearly the highest benefit-to-cost ratio is achieved for a policy that allows 50 more years of economic growth unimpeded by greenhouse gas controls. This would be especially beneficial to the less-developed parts of the world that would like to share some of the same advantages of material well-being, health and life expectancy that the fully developed parts of the world enjoy now. Many other policy responses would have a negative return on investment. And it is likely that more CO2 and the modest warming that may come with it will be an overall benefit to the planet.

If elected officials feel compelled to “do something” about climate, we recommend supporting the excellent scientists who are increasing our understanding of climate with well-designed instruments on satellites, in the oceans and on land, and in the analysis of observational data. The better we understand climate, the better we can cope with its ever-changing nature, which has complicated human life throughout history. However, much of the huge private and government investment in climate is badly in need of critical review.

This is not the way science is supposed to work, but we have seen it before–for example, in the frightening period when Trofim Lysenko hijacked biology in the Soviet Union. Soviet biologists who revealed that they believed in genes, which Lysenko maintained were a bourgeois fiction, were fired from their jobs. Many were sent to the gulag and some were condemned to death.

The scientists then address the key issue of why there is so much intolerance and corruption among global-warming proponents, and the answer they give is sadly, “Follow the money.”

Alarmism over climate is of great benefit to many, providing government funding for academic research and a reason for government bureaucracies to grow. Alarmism also offers an excuse for governments to raise taxes, taxpayer-funded subsidies for businesses that understand how to work the political system, and a lure for big donations to charitable foundations promising to save the planet. Lysenko and his team lived very well, and they fiercely defended their dogma and the privileges it brought them.

Signatories:

Claude Allegre, former Director, Institute for the Study of the Earth, University of Paris
J. Scott Armstrong, Co-Founder, Journal of Forecasting and International Journal of Forecasting
Jan Breslow, Head, Laboratory of Biochemical Genetics and Metabolism, Rockefeller University
Roger Cohen, Fellow, American Physical Society
Edward David, Member, National Academy of Engineering and National Academy of Sciences
William Happer, Professor of Physics, Princeton University
Michael Kelly, Professor of Technology, University of Cambridge
William Kininmonth, former Head of Climate Research, Australian Bureau of Meteorology
Richard Lindzen, Professor of Atmospheric Sciences, MIT
James McGrath, Professor of Chemistry, Virginia Technical University
Rodney Nichols, former President and CEO, New York Academy of Sciences
Burt Rutan, aerospace engineer, designer of Voyager and SpaceShipOne
Harrison H. Schmitt, Apollo 17 astronaut and former U.S. Senator
Nir Shaviv, Professor of Astrophysics, Hebrew University
Henk Tennekes, former Director, Royal Dutch Meteorological Service
Antonio Zichichi, President, World Federation of Scientists, Geneva

UPDATE: (Sunday, January 29, 2012) In “Forget global warming — it’s Cycle 25 we need to worry about (and if NASA scientists are right the Thames will be freezing over again): Met Office releases new figures which show no warming in 15 years,” The Daily Mail of London now reports that despite massive bias from climate alarmists, the sun may be showing us that the CO2-based climate models are wrong and we may be entering a new period of cooling and perhaps even an ice age:

The supposed ‘consensus’ on man-made global warming is facing an inconvenient challenge after the release of new temperature data showing the planet has not warmed for the past 15 years.

The figures suggest that we could even be heading for a mini ice age to rival the 70-year temperature drop that saw frost fairs held on the Thames in the 17th Century.

Based on readings from more than 30,000 measuring stations, the data was issued last week without fanfare by the Met Office and the University of East Anglia Climatic Research Unit. It confirms that the rising trend in world temperatures ended in 1997.

Meanwhile, leading climate scientists yesterday told The Mail on Sunday that, after emitting unusually high levels of energy throughout the 20th Century, the sun is now heading towards a ‘grand minimum’ in its output, threatening cold summers, bitter winters and a shortening of the season available for growing food.

Solar output goes through 11-year cycles, with high numbers of sunspots seen at their peak.

We are now at what should be the peak of what scientists call ‘Cycle 24’ – which is why last week’s solar storm resulted in sightings of the aurora borealis further south than usual. But sunspot numbers are running at less than half those seen during cycle peaks in the 20th Century.

. . . .

‘We’re now well into the second decade of the pause,’ said Benny Peiser, director of the Global Warming Policy Foundation. ‘If we don’t see convincing evidence of global warming by 2015, it will start to become clear whether the models are bunk. And, if they are, the implications for some scientists could be very serious.’

Unsurprisingly, President Obama’s campaign speech masquerading as the routine address to Congress, spelled out in the Constitution and known as the State of the Union, was saturated with every prevalent form of modern American statism—protectionism, corporate-liberal socialism, nationalism, and militarism. In a couple areas, however, he was particularly bold in his statist proposals.

Obama blamed “jobs and manufacturing . . . leaving our shores” for the poor economy, and promised to penalize companies that outsourced jobs, levy a “basic minimum tax” on “every multinational company,” and “prevent counterfeit or unsafe goods from crossing our borders.” Shockingly, as Carl Close notes, Obama even took credit for having “stopped a surge in Chinese tires.”

Interestingly, given my recent blogging about intellectual property, the president complained about counterfeit American media being distributed abroad: “It’s not right when another country lets our movies, music, and software be pirated.” Now let’s assume this is true. Traditionally, copyright was largely limited by national boundaries. And what does Obama propose to do about poor merchantsn the streets of Shanghai peddling bootleg DVDs of The Hangover 2—the watching of which, I’m told, is itself a punishment disproportionate to the crime? Enlist the Chinese government to expand its power to crack down on it? This is one area where the U.S. government is almost surely more invasive, with ambitions to run policy worldwide, than any other nation that comes to mind. This has been a trend for a decade or so, but Obama scares me by bringing it up in his address.

Not to be outdone by Republicans, Obama oozes with pride in the U.S. warfare state. His is a softer-spoken militarism than we got under Bush, but the substance is the same. “At a time when too many of our institutions have let us down,” Obama said, the troops “exceed all expectations.” This is something few Americans wish to gainsay, and yet it hardly seems accurate in regard to the war in Afghanistan to which Obama was referring. Is it really correct that the fact that “some troops in Afghanistan have begun to come home”—after Obama tripled the U.S. presence that was there when he took office, we must remember—is an example of the troops “exceeding all expectations”? When the war began over ten years ago, was it universally expected that by 2012 the U.S. military would be less far along in whatever it’s doing over there than it is now? Obama brags that “most of Al Qaida’s top lieutenants have been defeated,” yet we must note that there were only about an estimated 100 members of al Qaeda in the whole country—two years ago.

Obama, in complaining that “Warren Buffett pays a lower tax rate than his secretary,” repeats the tired Democratic theme that the rich are undertaxed compared to the poor, to which I always reply: Fine, then, cut taxes on the poor, and keep cutting until you reach a rate of zero. Surely then the rich won’t be paying less than their fair share. In fact, we  could cut taxes on the rich down to one percent at that point, and they’d still be putting in more than their fair share. But the talk of raising taxes on the rich, or anyone, is crazy in today’s economic environment. Yet Obama promises nothing but more soft socialist trickery to address the economy, such as tax increases and a “Financial Crimes Unit,” although I doubt such a unit will be investigating the improprieties of regulators, central bankers, or Democratic politicians.

Perhaps Obama’s most totalitarian proposal concerns the final nationalization of underage Americans:

We also know that when students don’t walk away from their education, more of them walk the stage to get their diploma. When students are not allowed to drop out, they do better. So tonight, I am proposing that every state, every state, requires that all students stay in high school until they graduate or turn 18.

Most people I knew who dropped out at sixteen did so with the consultation of their parents, having decided that those last couple years of cookie-cutter state indoctrination were not necessary for their success, and most of them turned out just fine. In many cultures, adulthood, in some sense at least, begins around thirteen or fifteen. Thanks to government education, in the United States it doesn’t seem to kick in until much later. If the Democrats get their dream of wiping out any semblance of heterogeneity among Americans from the time they are infants to the time they enter college, much of what remains in the American character of independence will be decimated.

The Federal Reserve has announced what appear to be inconsistent policy targets for the upcoming year.  The Fed says they want to keep interest rates low at least through 2013, meaning a continuation of easy money policy, and has also announced that their inflation target is 2%.

The inflation rate for 2011 was 3.2%.  A continuation of easy money policy through low interest rates should increase inflation, especially if the economy continues to recover.  The Fed’s idea that they can both maintain artificially low interest rates and reduce inflation seems inconsistent.  I’m expecting inflation in 2012 to be higher than it was in 2011, even though the Fed’s target is lower.

I often disagree with Matthew Yglesias, but I found myself cheering when I read parts of his Slate column on President Obama’s State of the Union Speech.

The president’s stated wish to protect domestic jobs by hindering trade is, Yglesias writes, “a strikingly retrograde, self-contradictory, and confused agenda of reviving American prosperity through mercantilism.” Moreover, Yglesias supports his harsh verdict with lucid reasoning:

Think of it this way. One idea for putting Americans back to work would be to raise the gasoline tax and use the proceeds to buy manufactured goods that we then dump into the middle of the Atlantic Ocean. This would, I promise you, work perfectly well. The previously unemployed folks with the new factory jobs would thank us for our trouble. But it would be a curiously prosperity-destroying way of bolstering the economy. When Obama brags that “over 1,000 Americans are working today because we stopped a surge in Chinese tires,” he’s implementing a small-scale version of a similar idea. Blocking an influx of cheap Chinese tires does, indeed, preserve jobs for tire-makers. But tire-buyers pay higher prices and presumably curtail their purchases of some other goods or services in exchange. Meanwhile, Chinese tire-makers have lost jobs and are now less likely to buy American soybeans or DVDs of our movies....

[Obama's] line of thinking swiftly stumbles into self-contradiction. After lambasting companies that “ship jobs overseas,” Obama launched into a feel-good anecdote about how “Siemens opened a gas turbine factory in Charlotte and formed a partnership with Central Piedmont Community College.” Is a politician in Germany giving a speech lambasting Siemens for shipping jobs to the U.S. and complaining, as Obama did, that it’s “not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized,” perhaps through partnerships with community colleges[?]

Were they alive today, Frederic Bastiat and Henry Hazlitt would surely be delighted—delighted, that is, to see that their arguments against protectionism are still in use. But surely they would be disheartened to see that it is still necessary to use them.