John Pistole, head of the Transportation Security Administration (TSA), thinks flying is a privilege, and therefore, apparently, those of us “privileged” to be doing it ought to be subjected to whatever humiliations his agents can dish out.

Sen. Rand Paul, during his questioning of Pistole in Senate hearings this week, quoted the Supreme Court’s contrary view:

The right to travel is so important that it is assertable against private interference as well as governmental action. A virtually unconditional personal right, guaranteed by the Constitution to us all.

Sen. Paul continued in saying:

I feel less safe because you’re doing these invasive exams on a six year old. It makes me think you’re clueless, that you think she’s going to attack our country and that you’re not doing your research on the people who would attack our country.

Here are the proceedings:

Senator Paul was clearly raised right—parents, follow that lead!

Anti-capitalist protesters inflated a provocative balloon at a U2 concert in Ireland, accusing the band of evading their taxes, leading security to wrestle to them to the ground, which was met with more violence. Around 30 people got in the thick of the struggle.

I’ve never been a big fan of U2, or their globalist politics, but this much is certain: These band members, to the extent they are depriving the Irish government—or any government—of tax dollars, are doing a public service. And this puts aside the fact that these people do seem genuinely interested in fighting global poverty and disease, and have dedicated their time and resources to such generally legitimate causes as disaster relief, AIDS activism, and charity work for the third world. They have been criticized, including by the radical left, for the paternalism of their approach, which does often seem to coincide with the activities of interventionist politicians. But they cannot be worse than the state itself, and so every dollar they save from the Irish government by living in the Netherlands is a wonderful thing.

Perhaps the band’s security overreacted, as some suggest. But it was on private property, and the protesters ought not to detract from the show with their misguided complaints about U2’s tax evasion. Indeed, this might be among the most admirable things I’ve heard about U2. If it demonstrates something hypocritical in the leftist ethos, all the more reason to abandon that philosophy. So I say: Become full-blown capitalists, U2. Speak out in favor of the market. Oppose the politicization of all issues. Condemn war, police statism and socialism across the board. Embrace the philosophy of liberty. Turn your back on the anti-capitalist left, as they’ve turned their back on you. I still won’t like anything you’ve done since Joshua Tree, but will be forced to praise your heroic humanitarianism adamantly.

Rick Scott, who was elected as Florida’s governor last November, campaigned on a platform of fiscal conservatism.  He wanted to cut taxes, cut government spending, and cut regulation to make Florida more business-friendly.  He said his platform would create 700,000 jobs in seven years, and his campaign slogan was, “Let’s Get To Work!”

Scott has followed through on his campaign promises.  I mentioned here how he cut taxes and government spending, and here about how he reduced land use regulation, making it easier for businesses to site facilities, and easier for development in general.  Scott himself explains more here, and after presiding over a legislative session that cut spending, taxes, and regulation, has adopted the slogan, “Promises Made, Promises Kept.”  Unlike many political slogans, this one is true.

So, in these times, when Tea Party ideas seem so popular, when Rick Scott got elected on a fiscally conservative platform, and delivered to Floridians what he promised in his campaign, how has he been received?  According to polls, he’s one of the nation’s least popular governors.

Why isn’t Rick Scott more popular?

As the Presidential Campaign heats up, I can’t help but think of Albert Jay Nock’s childhood reminiscence:

One incident of election night, however, stuck in my memory. Some devoted patriot, very far gone in whiskey, wandered up in our direction and fell by the wayside in a vacant lot where he lay all night, mostly in a comatose state. At intervals of half an hour or so he roused himself up, apparently conscious that he was not doing his duty by the occasion, and tried to sing the chorus of “Marching Through Georgia,” but he could never get quite through the first three measures without relapsing into somnolence. It was very amusing; he always began so bravely and earnestly, and always faded out so lamentably.

Having devoted a great part of my latter years to a close observation of public affairs in many lands, I have often had occasion to remember that man. His sense of patriotism and patriotic duty still seems as intelligent and competent as that of any one I have met since then, and his mode of expressing it still seems as effective as any I could suggest. (Memoirs, p. 58).

In the continuing revolving door between industry and its government regulators, the Wall Street Journal yesterday reported on the $13 million Congressional staffers earned from their former private employers, companies they run or other side jobs in 2009.

Further, ethics rules “permit the vast majority of [Congressional] aides to have financial ties to companies that could be affected by their Congressional work, so long as those interests are disclosed on an annual basis.” Such disclosures are not available for public view, other than through filing under the Freedom of Information Act, which the Journal exercised to research its piece.

Rep. Barney Frank, told that one of his Senior Aides had earned $300,000 selling J.P. Morgan stock grants during the same period Frank headed the House Financial Services Committee as it drafted new regulations on financial-services firms including J.P. Morgan, admitted to being “‘troubled’ he didn’t know one of his senior aides had such financial ties to a Wall Street firm…,” but continued:

It was very important to me to have people who know how the industry works, and she used that knowledge to help us regulate them more effectively.

Alert Beacon readers will recall some of our earlier posts on Rep. Frank’s role in creating the very financial meltdown his new regulations seek to redress, including Bob Higgs here, here, and here, and David Theroux here.

And, let’s not forget Saturday Night Live’s original, surprisingly insightful look at the mortgage meltdown and the role Rep. Frank’s earlier regulations played in it. The skit was removed by NBC due to a lawsuit threatened by some of those portrayed, but the unedited version can be seen here.

Meanwhile, Congressional and Senate leaders continue to grow richer as their constituents remain victims of their recession, with Rep. Pelosi’s wealth growing 62% last year, and Senators including Reid showing less-spectacular but still respectable double-digit increases. And when you have perks such as a fleet of all-expenses-paid government jets at your disposal, such wealth goes even further!

Since late December 2008, the bank prime lending rate — the interest rate banks charge their best corporate customers — has remained steady at 3.25 percent.

Meanwhile, during the same period, the excess reserves that commercial banks hold at the Fed have increased from $2 billion in August 2008 to $1,513 billion in May 2011.

Ordinarily, one would have expected this development to produce hyperinflation of the general price level. However, the price level has increased quite moderately, and for a while many analysts warned that deflation was the greater risk. Despite a slight increase in the price level’s rate of growth in recent months, the index of prices paid by all urban consumers has increased by only about 6 percent in the three and a half years since the beginning of 2008. Not only has hyperinflation failed to appear; even garden-variety inflation of prices in general has been extremely low by the standard of recent decades.

The preceding combination of events poses a great challenge to economic analysts. How can we explain that the fantastically enormous explosion of bank reserves has not given rise to bank lending that would greatly expand the money stock and thereby drive up prices in general?

The most obvious answer, of course, is that the banks are simply sitting on the reserves, rather than lending them to customers. And why are they doing so? The usual answer is that since late 2008, the Fed has paid the banks a rate of interest on their reserves at the Fed. This interest rate has recently been in the range 0-0.25 percent. Although this is not nothing, it verges very closely on nothing. And if one notes that the purchasing power of money has fallen at least a bit, it is clear that the banks are realizing a negative real rate of return on their holdings of excess reserves at the Fed.

Moreover, they are doing so notwithstanding that they appear to have the option of lending at 3.25 percent to their best corporate customers and at higher rates to their less creditworthy customers. Why are they forgoing the opportunity to earn huge sums by switching out of excess reserves at the Fed into commercial loans and investments? The answer would seem to be that that are so frightened of the risk associated even with loans to their best customers that they are loath to lend. After some volatility up and down and then up again between the summer of 2008 and early 2010, total loans and investments of all commercial banks have settled for more than a year at a level only about 2 percent greater than their level at the beginning of 2008. This increase of about $200 billion amounts to only a small fraction, about 13 percent, of the increase in their excess-reserve balance at the Fed during the same period.

In these circumstances, some economists have taken to arguing that excess reserves no long constitute “high-powered money,”  that they no longer belong to the monetary base, and therefore they have not proved to be the fuel for hyperinflation that nearly all economists would have expected them to be prior to the past four years of anomalous experience.

I am not convinced. First, I am not convinced that these gigantic sums will not, sooner or later, still become the fuel for hyperinflation, or at least for a greatly accelerating rate of general price inflation, which economists expected they would be before the recent recession and all of the government’s and the Fed’s extraordinary responses to it occurred. Second, I am not convinced that the banks will remain content forever with earning a negative real rate of return on their holdings of $1.5 trillion in excess reserves now languishing at the Fed. If they were to realize only the difference between the rate the Fed is paying them and the rate they would earn by lending these funds exclusively to prime customers — an increase of 3 percent on their return — they would gain an additional $45 billion in income. That’s a great deal of potential income to leave lying on the table, and it might be even greater if we factored in the additional income they might earn by lending to less-than-prime customers at greater rates. I understand, of course, that banks are seeking to repair their damaged balance sheets, in light of their recent debacle in real-estate-related investments of various sorts and in conformity with the new Basel requirements for increased bank capitalization. Still, I am not convinced that these consideration can account fully for the very curious conditions now existing in the banking industry.

Of course, my lack of conviction in the new wisdom may be groundless. This time, everything really may be different. But as an economic historian, as well as an economist well behind the cutting edge of his profession, I am not ready to latch onto this latest “this time it’s different” explanation, at least not until a long time has passed and my skepticism has been proved baseless by long-sustained counter experience. At the moment, the conjunction of recent macroeconomic events still seems to me to pose a great puzzle.

Perhaps a part of the answer relates to the regime uncertainty about which I have written from time to time during the past three years, harkening back to my earlier writing about its significance during the second half of the 1930s, during the so-called Second New Deal. It would hardly be astonishing if such worries were now contributing to the extreme risk aversion banks are manifesting. Moreover, perhaps for the same reason, potential borrowers are not exactly clamoring for loans, and indeed many corporations are sitting on huge cash hoards of their own. Interesting times, indeed.

The Bureau of Labor Statistics has released the Consumer Price Index data for May, and the CPI is up about half a percent (actually, 0.47%) since April.

The annual inflation rate (year over year increase since May 2010) is now 3.6%.  Most of this increase has come in the last six months, because the CPI was almost flat from May to November 2010.  The inflation rate for the past six months (CPI percent increase at an annual rate since November) is 6.5%.

It wasn’t that long ago that the financial press was concerned about deflation, but as long as the Fed continues its low interest rate policy, inflation is the real threat.  Two years ago I thought we’d see “Inflation Ahead” as a result of the Fed’s policies, and here it is.

It’s not a question of “If,” but “Which” union TSA employees will soon use as their armed representative against taxpayers and as protection against travelers who haven’t yet fully resigned themselves to treatment worthy of the Gestapo or KGB.

From the National Treasury Employees Union (NTEU) “Welcome TSA Employees” web page urging TSA employees to vote it their representative:

Do not let others choose your workplace representation for you. Make your voice heard and vote for the largest, most respected, independent union in the federal sector. Cast your vote for NTEU (#2 on the phone selections) by 11:59 p.m. (EDT) on Tuesday, June 21.

For those of you who are still waiting to speak up for your workplace rights and vote NTEU, here are just a few reasons why NTEU is the best choice at TSA:

NTEU is the exclusive representative of your airport colleagues at CBP. [U.S. Customs and Border Protection]

NTEU is an honest and professional union, one that you can be proud to be a part of;

NTEU has a long track record of success in Congress;

NTEU bargains the best contracts in the federal sector; and

NTEU has trained attorneys and labor relations experts on the ground nationwide.

And don’t overlook the sidebar:

Raise Your Voice !

Join NTEU’s efforts to keep anti-TSA amendments out of a final DHS funding bill.

Which links to this email-ready prepared message for TSA employees to send to “Your U.S. Senators:”

As a federal employee and your constituent, I urge you to oppose the provisions included in the House-passed Department of Homeland Security Appropriations bill that would cut funds to TSA by nearly $300 million, resulting in job losses of up to 8,000 at the agency, and would prohibit funding for collective bargaining rights at TSA.

Prohibiting collective bargaining rights at TSA is ill-advised on many fronts. After an extensive review of how collective bargaining could be implemented at TSA while keeping the security of our traveling public the top priority, TSA Administrator Pistole issued a determination that limited collective bargaining, with a flexible standard to allow the agency to act without bargaining in emergency or exigent circumstances, could begin at TSA. Its employees are choosing an exclusive representative in an election already underway. A large majority of the TSA workforce has expressed support for union representation as evidenced by the close to 85% of votes cast for a union in the first stage of the election. Cutting funding for collective bargaining would prevent TSA employees from even the limited collective bargaining just approved and it would deal a significant blow to morale at the agency.

Many federal employees involved in securing our nation already have collective bargaining rights – Customs and Border Protection Officers, Border Patrol Officers, Bureau of Prison Guards. Like these federal employees, TSA employees must follow civil service rules that prohibit the right to strike and allow managers to move employees to different areas in the event of an emergency. Additionally, airports that have had private screeners since 2002 have never been prevented from collectively bargaining and two of those airports have had collective bargaining for years with no impact on the traveling public.

The majority of the TSA workforce has expressed an interest in representation. Poor morale at TSA contributes to inefficiencies at the agency. Poor workforce management has led to one of the highest attrition rates in the government, and high on-the-job injuries. Collective bargaining will strengthen TSA by providing its workers both with a system that is fair, credible and transparent, and with a voice in the development of workplace quality standards that will make all the traveling public even safer.

I ask you to oppose efforts to cut jobs at TSA and prohibit funding for collective bargaining rights.

Notice the smooth segue from “prohibit funding for collective bargaining rights at TSA” to “Prohibiting collective bargaining rights” [emphasis added].

I say: fire ’em all and abolish the TSA.

President Obama’s Jobs and Competitiveness Council released five “fast-action” recommendations for things the government can do that will result in 1 million jobs on a near-term basis.

Among the ideas was:

Boost jobs in travel and tourism. This industry is one of America’s largest employers, but the United States has lost significant market share. By making it easier to visit the United States through improved visa processes, we can win back market share in travel and tourism and create hundreds of thousands of jobs.

The visa process, of course, was tightened up in the aftermath of 9/11—in another classic case of penalizing the innocent for gross government failure. Under the new visa directives, the wait time to receive a tourist visa can regularly exceed 100 days, including extended wait times for the now required in-person interview, at which applicants are additionally treated as suspects rather than the valued tourist and business visitors the vast majority are.

As just one example of the fall-out from the change in policy, 500 out of 1,460 international registrants for last year’s Association of Equipment Manufacturers convention in Orlando were unable to actually attend because they couldn’t obtain a U.S. entry visa in time. As the Association’s president noted:

The visa process is very slow and very arbitrary. … We’re in a bad economy, and there’s a lot of places worldwide where you can buy equipment.

Meanwhile, those who are successful in obtaining a visa are subjected to further humiliations and interrogation immediately upon arriving in the U.S., with biometric data captured from each entrant, and passport control lines stretching for up to hours.

And as any of us who has had an encounter with these agents can testify, they are not ambassadors of welcome. Upon my most recent return from abroad, there were six agents lining the final hallway leading into the passport control hall, eying everyone who walked by and generally giving the impression of one’s arrival into a totalitarian state.

As, by even a modest definition, the U.S. now is.

Read this account and decide for yourself: 2,000 elderly British cruise ship passengers recently docked at Los Angeles for a short stop-off during a five-star cruise around America. In the words of one of them, it was “more like arriving at Guantanamo Bay.”

The passengers had paid more than $16,000 apiece for the luxury cruise, which had already docked at 9 U.S. ports—at each of which they had cleared immigration. Subjected to yet more unnecessary and petty bureaucracy, as one passenger explained:

A couple of passengers got a bit stroppy about having to go through all the rigmarole again and these petulant officials decided to take revenge.

The revenge was enacted over a 7-hour period, during which the passengers were

“herded like animals” and made to stand for hours in temperatures up to 80F with no food or water or access to lavatories.

Some are said to have passed out in the heat while others were left confused and bewildered.

When one lady asked in desperation whether she could use a bathroom, one immigration official is said to have replied: “Do it over the side, we won’t mind.”

By contrast, visit almost any other country—including those attacked by the U.S. not so long ago (e.g., Cambodia)—and the entry process is swift, clear, and friendly.

If this is how immigration officials treat wealthy, elderly, British (and thus presumably white) passengers on a luxury cruise, why should anyone any longer want to visit the U.S.?

There is lots to be concerned about regarding the way the TSA is trampling on our constitutional rights.  So, my complaint here may seem minor within the context of all of the TSA’s activities.  But…

Last night I was on my way home to Tallahassee, flying through Atlanta, as I often do.  Prior to boarding the flight to Tallahassee, the TSA set up a table at the gate, and four TSA employees screened all passengers on the flight to check their IDs against their boarding passes.  And, they selected some passengers to have their carry-on items further screened.  (I was not one of the people selected for further screening.)  The gate agent announced that anyone refusing to be screened would not be allowed on the flight.

The flight from Atlanta to Tallahassee is a short one — 34 minutes of air time, according to the pilot’s announcement — and it would be rare indeed for someone to be just going from Atlanta to Tallahassee.  In all likelihood, all of the flight’s passengers were connecting from somewhere else, and the Atlanta-Tallahassee flight was the last leg of their trip.

This TSA screening irritated me for two reasons.

First, it is a waste of resources.  The flight was delayed half an hour or so for mechanical reasons, and four TSA agents hung around our gate for more than an hour waiting for boarding to begin, and then screening passengers who were boarding.  As I sat there watching them chat with each other while on the government’s payroll, I was wondering whether my tax dollars were paying for this, or whether it was just adding to the deficit, which would hasten the nation’s rush toward a Greek-style financial collapse.  We’re spending way too much money on things that don’t make us safer.

Everyone on my flight had already gone through screening to get into the airport to begin with, and almost certainly had already been on another flight.  If there was really a terrorist on that flight, would that terrorist have waited until the second leg of a multi-leg flight to engage in terrorism?  Would a terrorist really target a small regional jet on a 34 minute flight?  It makes no sense to screen passengers on that particular flight when other flights are departing from Atlanta to Los Angeles, New York, and Chicago, for example.

It is completely implausible that a terrorist could be on that flight, and a complete waste of resources to screen those passengers.

My second reason for irritation is more significant.  Our Constitution says, “The right of people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated… but upon probable cause…”  The TSA had already searched everyone on that flight once, so how could the TSA have probable cause that someone on that flight was a threat to security?  It’s harassment for the TSA to do this, but worse, it’s a violation of our constitutional rights.