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.

Despite Congress’s decision, in response to a huge backlash on the internet and in Silicon Valley, not to pass SOPA last week, the executive branch shows that it essentially has all the powers in that legislation already—the power to accuse a website of deliberately facilitating “piracy” and shut it down and confiscate its assets all on the basis of unsubstantiated allegations. As with detainee policy, Congress’s legislation, while frightening in that it often codifies dictatorial executive power, is ancillary to that power, seeing as how in this country the president and his minions get away with exercising despotic prerogative in virtually every area of private and commercial life.

As an aside, the government’s crackdown on Megaupload is just the latest indication of where we are headed with federal intellectual property enforcement. What’s next? Youtube? This potentially spells disaster for one of the great blessings of modern civilization—the free-flow of information. Another scary indication is in last week’s Supreme Court decision that “upheld Congress’s right to extend copyright protection to millions of books, films and musical compositions by foreign artists that once were free for public use.” A 1994 law removed art by Picasso, Russian compositions like Peter and the Wolf, and other such works from the public domain. Only Ginsburg and Alito dissented from the rest of the Court and the Obama administration’s position on this law.

But what’s just as unsettling is what this tells us about today’s American government. Glenn Greenwald puts it very well:

The U.S. really is a society that simply no longer believes in due process: once the defining feature of American freedom that is now scorned as some sort of fringe, radical, academic doctrine. That is not hyperbole. Supporters of both political parties endorse, or at least tolerate, all manner of government punishment without so much as the pretense of a trial, based solely on government accusation: imprisonment for life, renditions to other countries, even assassinations of their fellow citizens. Simply uttering the word Terrorist, without proving it, is sufficient. And now here is Megaupload being completely destroyed—its website shuttered, its assets seized, ongoing business rendered impossible—based solely on the unproven accusation of Piracy.

Mitt Romney’s just-released tax return for 2010 shows he paid $3 million in income taxes on an income of $21.6 million. What should we make of that fact?

People tend to view taxes in one of two ways. One way is to think of taxes as the price we pay for government goods and services. The other is that taxes are a penalty that the government levies on people for earning income or having wealth.

If we take the first view, that taxes are the price we pay for government goods and services, then we should ask whether $3 million is a fair price for Mr. Romney to pay for the government goods and services he receives. It seems like a stretch to argue that Mr. Romney received anything close to $3 million in government goods and services, so taking this line of reasoning it would appear that Mr. Romney pays more than his fair share of taxes.

If we take the second view, that taxes are a penalty the government levies on people for earning income or having wealth, then it is reasonable to ask whether $3 million is an appropriately large penalty to levy on Mr. Romney for making $21.6 million in income in 2010. I don’t have a good answer for that, but lots of commentary suggests that $3 million is an unfairly low tax burden for Mr. Romney. (The median prison sentence for aggravated assault is three years, but I don’t have a good answer for whether that is a fair penalty either.)

Are taxes the price we pay for government goods and services, or are taxes a penalty government levies on people for earning income or having wealth? How we answer that question takes us a long way toward how we should evaluate Mitt Romney’s $3 million income tax payment.

This story has been getting some press, and I hope it gets a lot more.  The Senator who was detained was Rand Paul, which may make the story more interesting.  Senator Paul has been a frequent critic of the TSA.

Even though I do a fair amount of airline travel, I still get a thrill out of flying.  Just the idea of traveling six miles above the surface of the Earth at 550 miles per hour is amazing!  But, as much as I enjoy the flight (even with airlines’ cost-cutting and comfort-cutting measures), I despise going through those TSA checkpoints.  They are a violation of my Fourth Amendment Constitutional rights.

However, I’m not completely outraged at this particular story.  If the TSA is going to be treating people this way, the first group of people I would nominate for that treatment would be members of Congress.

Did you know 2012 is the centenary of Charles Dickens’s birth? Dickens is often lumped with Carlyle, Shaw, Ruskin, etc. as a Romantic, Victorian, literary anti-capitalist. (Carlyle indeed disliked capitalism, but not for the usual reasons.) But Dickens, as I originally learned from Paul Cantor, was a wildly successful capitalist and entrepreneur, a driving force behind the great nineteenth-century innovation of the serialized, commercial novel. Consider the following from one Dickens scholar:

Stephen Marcus has called Dickens “the first capitalist of literature” in the sense that he worked within apparently adverse conditions to take advantage of new technologies and markets, creating, in effect, an entirely new role for fiction. In Charles Dickens and His Publishers, Robert Patten quotes Oscar Dystel (president and chief executive of Bantam Paperbacks) on the three “key factors” in his development of a successful paperback line: availability of new material, introduction of the rubber plate rotary press, and development of magazine wholesalers as a distribution arm. As Patten points out, parallel factors operated in the Victorian era: a plethora of writers, new technologies, and expanded distribution. And as methods of papermaking, printing, and platemaking increased in efficiency, so did means of transportation. By 1836, a crucial network of wholesale book outlets in the Strand, peddlers, provincial shops, and the royal mailmade possible by the development of paved roads, fast coaches, and eventually the national railway systemhad been consolidated. The final task facing early publishers was, then, to develop the newly accessible market for their commodity. By lowering prices, emphasizing illustrations and sensational elements, and increasing variety of both form and content, publishers created readers within the largest demographic groups: the rising middle and working classes, where readers had essentially not existed before. . . .

Concurrently with these marketing advances, Dickens transformed the narrative from a standard series of bumbling sportsmen’s sketches into a picaresque based in London but depicting urban infiltration of the country. The fifth number introduced a working-class character, Sam Weller, and his father. Audiences responded well to Dickens’s humorous but sympathetic textual representation of these urban characters. Sales soared after Sam appeared on the scene, and readers apparently wrote Dickens to ”counsel him to develop the character largelyto the utmost.” And Dickens, already showing the true responsiveness to his audience that contrasts so markedly with the simulated responsiveness of Chapman and Hall, answered by making Sam central to the Pickwick adventures.

The author’s and publishers’ narrative, advertising, and distribution techniques, innovative from an entrepreneurial standpoint, proved overwhelmingly successful. By number 5, Pickwick’s circulation had increased to forty thousand per number, where it stayed throughout the run. As Norman N. Feltes is careful to stress in his Modes of Production of Victorian Novels, this success is generally attributed to literary genius, lucky accident, and marketing ability, combining to explode upon the literary world. But, Feltes argues, the historical processes that shaped and determined the material production of Pickwick Papers are as important as “genius, luck, and the shrewdness of Chapman and Hall.” The series’ success certainly depended on a combination of perfect timing, insight into the potential of advertising, Dickens’s great comic skill and ability to reflect his audience, and fine-tuning of the narrative to respond to audience desire. But all these factors could not have arisen simultaneously without the particular nexus of economic, technological, and ideological conditions existent in the 1830s.

The source is Jennifer Hayward’s Consuming Pleasures: Active Audiences and Serial Fictions from Dickens to Soap Opera.

[Cross-posted at Organizations and Markets]

A recent development in Obamacare’s reach raises an important point about religious liberty. The health care law requires hospitals to provide contraceptives to patients. Churches have protested and have won an exemption to this regulation as it concerns their own health services. This is all well and good: Religious institutions shouldn’t be forced to support practices they find morally objectionable. For related reasons, various tax exemptions on religious institutions are also consistent with the principles of a free society.

On the other hand, some will object that these institutions are enjoying special treatment. In the Obamacare regulations, and especially taxes, is it not also something of a tension with the First Amendment for the federal government to recognize some institutions, by virtue of their religious beliefs, as being exempt from certain mandates, while other institutions would not benefit from such exemptions?

Another seemingly very different issue, concerning the drug war, touches on this same theme. About a decade ago, Congress exempted American Indians from federal laws against Peyote, as the drug had been used for centuries in certain tribal rituals, and it appeared to be a threat to their religious liberty to interfere with this peaceful albeit controversial practice. Yet some have pointed out, validly, that it is unfair for the federal government to single out certain religious groups and allow them to commit acts that would be considered illegal if done by anyone else. A similar point could be applied to exceptions to alcohol prohibition made for religious services.

It would seem both alternatives are unfair, from a standpoint of religious freedom—either the state is violating the religious liberty of certain groups that wish to partake in certain activities (or refrain from certain activities) as a matter of conscience, or it is carving loopholes for such groups while denying the rights of others to engage in the same conduct. To take another example, if a conscientious objector is free not to be forced to serve in war on religious grounds—which he should be—why cannot a conscientious objector have secular or other ideological reasons for not going to war?

Meanwhile, David Theroux has pointed out how much of the modern state itself constitutes a theocracy, but of a more secular mold than is seen in some other political cultures. Indeed, is not the bulk of state activity a violation of the freedom of conscience for those who have religious objections to the state’s many practices? If it is a violation of an atheist’s rights to force him to pay taxes to finance a public school that mandates prayer in schools—and it most certainly is—is it not equally a violation of a Christian’s rights to force him to pay taxes to finance a public school that prohibits prayer? I have long thought the answer was obvious: The entire state apparatus, insofar as it forcibly displaces religious life in the name of secular liberty, is itself a standing abomination to the very principles of freedom of religion so loudly vocalized by proponents of a secular but robust state.

True religious liberty is impossible when leviathan involves itself in every intimate avenue of our personal, social, and economic lives. This is because the state itself compels all its subjects to act in ways that may very well violate their consciences and deeply held values. To allow it to do so when religious values would be undermined is a threat to religious freedom. To make exceptions that declare only religion can exempt people from state obligations is also a problem, for then the state is involved in deciding what is and is not a valid religious belief.

The only way to have true religious freedom is to have freedom for all. Individuals and groups, operating according to the restrictions of personal liberty and private property, should be free to engage in any peaceful behavior. All practices would be lawful not on the basis of whether they are motivated by religion but whether they are just. Virgin sacrifices and suicide bombings, whether religiously or secularly motivated, have no place in civil society. But practices that violate no one’s rights—exempting property from taxes, refusing Obamacare’s mandates, using Peyote, refusing to finance public schools that teach alien values, whether religious or secular, and declining to fight in a war—would be permitted for everyone. We may believe some choices to be more moral than others, or more justified than others when there is a religious element, but the only way to truly have religious freedom for all is to have freedom in general for all. Should Obamacare exempt churches from having to provide contraceptives? Of course. And it should also exempt anyone else from being forced to provide them.

After the headline rate of unemployment (U-3) reached 8.5 percent in December 2011 ( the most recent month reported), some commentators began to talk as if the employment situation is now improving rapidly. Some have gone on to suggest that those of us who have emphasized the role of regime uncertainty in retarding the current recovery are now barking up the wrong tree, if indeed we ever had a valid point. To speak of employment woes as old news, however, is highly premature.

The Labor Department has recently made public its preliminary estimate of nonfarm employment for 2011.  I have added the department’s data for previous years, back to 1999, to construct this table.

Employees on nonfarm payrolls, 1999-2011

(annual average, in thousands)

Year        Total           Private

1999...... 128,993         108,686

2000..... 131,785         110,995

2001...... 131,826         110,708

2002...... 130,341         108,828

2003...... 129,999         108,416

2004...... 131,435         109,814

2005...... 133,703         111,899

2006...... 136,086         114,113

2007...... 137,598         115,380

2008...... 136,790         114,281

2009.....  130,807         108,252

2010...... 129,818         107,337

2011(p).. 131,159         109,080

The good news is that private nonfarm employment has grown since its recent trough in 2010: the increase in 2011 amounted to 1.6 percent. This is not much, but it’s better than continued decline.

The bad news, however, is that private nonfarm employment in 2011 was still 5.5 percent, or 6.3 million persons, below its peak number in 2007. Moreover, looking back farther, one sees that private nonfarm employment in 2011 was less than the corresponding number in 2000. For private employment, the past ten years have been, indeed, a lost decade.

In contrast, private nonfarm employment grew by almost 22 percent between 1990 and 2000, and by almost 23 percent between 1980 and 1990.  Americans need to understand that private employment is “where the babies come from.” Make-work jobs on the government payroll are not a good substitute. To keep the flow of genuinely valued goods and services growing at anything like the historical norm, private employment must grow substantially, at least over the medium term, yet in this regard the past decade has been a complete wash. Moreover, at the present rate of increase (1.6 percent per year), it will take almost 4 years just to get back to the private employment level in 2007, before the current recession began.

Stagnation or slow, on-again-off-again growth in the economy’s most important productive input is not the sort of thing of which sustained economic growth is made. Despite the recent, slight employment gains, the U.S. labor market is not even close to being out of the woods, nor is the overall economy, which continues to labor under major threats of government regulation, taxation, and other damaging intervention in the market process.

I posted earlier about the provisions of the New Years Eve-signed National Defense Authorization Act (NDAA) a/k/a the “Homeland Battlefield Bill,” allowing the President of the U.S., at his or her sole discretion, to order the indefinite detention of any U.S. citizen, with no burden of proof whatsoever, and no recourse for the detainee—in fact making the President judge, jury, and jailer.

Congress now proposes to provide U.S. bureaucrats the power to block any internet site or provider, with no due process or recourse available to the blocked sites. A group of distinguished law professors has gone through the proposed legislation, Stop Online Piracy Act (SOPA), also known as House Bill 3261, and advises that it would:

Allow the government to block internet access to any website that ‘facilitated’ copyright or trademark infringement—a term that the Department of Justice interprets to mean nothing more than having a link on a web page to another site that turns out to be infringing.

The professors go on to warn:

By failing to guarantee the challenged web sites notice or an opportunity to be heard in court before their sites are shut down, SOPA represents the most ill-advised and destructive intellectual property legislation in recent memory.

I would go farther and propose that its passage would add another nail in the coffin for the expectation that government always and forever bears the burden of proof prior to being able to deprive anyone of his or her freedom or property.

Further, the legislation provides government the surely nearly irresistible cover for gaining control over a medium that poses the perhaps greatest threat to its exercise of limitless power.

The totalitarian regimes targeted by the “Arab Spring” found themselves unable to withstand the power of the people connected through the internet. Today, those in power everywhere, from petty bureaucrats to despots, must certainly be feeling vulnerable and eagerly seeking the means to disarm dissenters, of which the internet is a hotbed. Whatever else its aims, SOPA fills this bill quite nicely for the U.S. government. Governments everywhere, from China to Venezuela, must be drooling at the prospect of soon being able to pass their very own SOPA.

The call has gone up for massive protests and a campaign of calls and letters to elected representatives to stop SOPA and its Senate-equivalent, the PROTECT IP Act. However, after similar outcries of a vast majority against the TARP legislation of 2009, and the passage of ObamaCare, we must not be surprised if such protests fail to stop this incredibly dangerous power grab.

After all, the concept of “representation” is so 18th century.