Today, a U.S. District Court in Florida held that the individual mandate found in the Obamacare law is an unconstitutional use of the Commerce power.  Judge Roger Vinson emphasized that this was not a decision on the wisdom of the law, but solely whether Congress has the power to pass it.  If we accept the expansive interpretation offered by the Government (that Congress can regulate any activity or inactivity that could possibly impact the national economy), then, as Judge Vinson observed:

Congress could require that people buy and consume broccoli at regular intervals, not only because the required purchases will positively impact interstate commerce, but also because people who eat healthier tend to be healthier, and are thus more productive and put less of a strain on the health care system.

Rather than rewrite history, Judge Vinson turned to the background of our Revolution:

It is difficult to imagine that a nation which began, at least in part, as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force people to buy tea in the first place. If Congress can penalize a passive individual for failing to engage in commerce, the enumeration of powers in the Constitution would have been in vain for it would be “difficult to perceive any limitation on federal power,” and we would have a Constitution in name only.

This is the second decision against the individual mandate and is well done. Hats off to Judge Vinson for having the courage to strike down this clearly unconstitutional act.

Texas A&M University, which is a more or less legitimate institution of higher education, harbors something called The Bush School of Government and Public Service. Don’t laugh; it’s true. Today, one of my Facebook friends posted a publicity photo, which I take to be part of the school’s efforts either to attract students or to entice donors. Whatever the photo’s specific purpose may be, it had a profound effect on me. In fact, ever since I saw it, I have had a feeling of absolute emptiness at the very core of my being.

I confess that all such pictures disturb me. The carefully calibrated assortment of bright-eyed, sweetly smiling youngsters, selected to exhibit the officially sanctioned distribution according to race, sex, and ethnicity – you know, the distribution you’d not expect to find spontaneously on display if you simply walked into a campus cafeteria or dormitory unannounced – always stops me in my tracks, as if a well-intentioned left-liberal had just poked me in both eyes.

But let us not indict these naïve young models. Being young, they know not what they do. (Back in 1961, at age 17, I was similarly clueless when I was sworn into service in the U.S. Coast Guard.) Let us instead indict the message that appears in the forefront of the photo in large, bold, black capital letters: “Public Service Is a Noble Calling.” A photo and caption on the “About” page of the school’s website suggests that these words were uttered by the selfsame former president of the United States for whom the school under discussion is named, George Herbert Walker Bush. Remember him?

A stalwart fellow he was. At one time the Director of Central Intelligence (that is to say, the head of the Central Intelligence Agency) in the Ford administration, his finest public moment found him declaring to the world in no uncertain terms, “This will not stand, this aggression against Kuwait.” And what decent U.S. leader would have let stand the Iraqis’ attempt to lay hands on the oil that Kuwait’s billionaire sheiks had been stealing from underneath Iraqi territory by means of diagonal drilling?

Among the Bush School’s degree programs is a Masters Program in International Affairs. What training the students in this program must receive, all in the butt-kicking tradition of George H. W. Bush himself, a man celebrated for not letting a two-bit dispute between despicable Arab tyrants pass by, when he could exploit the occasion to launch a senseless war in which thousands of Iraqi draftees were blown to smithereens by B-52 bombardments or buried alive in their trenches by U.S. military bulldozers. It was the most splendid little war since the Spanish-American War, without a doubt.

Except, perhaps, for the fact that the U.S. military undertook as part of the fun and games to destroy the water supply and sewerage systems (and the electrical supply system needed to operate them) in Iraq, then to restrict or block for more than a decade the importation of essential materials for restoring these critical public-health facilities, with the ultimate result that hundreds of thousands of Iraqis, the great majority of them infants and little kids, died from diseases transmitted by contaminated water. Oh, well, as Ambassador Halfbright famously intoned, the U.S. government considered these children’s deaths “worth it.” So no one should be surprised if the well-scrubbed graduates of the Bush School emerge from their training prepared to slaughter millions of innocents, in the event that some future president’s pleasure or caprice requires such service on their part.

It’s difficult to say “Bush School of Government and Public Service” aloud without gagging. When I first espied that publicity photo earlier today, my immediate reaction was to post a comment: “These people will be serving the public only in the sense that the bull will be serving the cow.” That quick comment, however, like most instant reactions, failed to express the true enormity of what the Bush School’s graduates may end up doing.  Yes, of course, most of them, if they remain in government “service” at all, will be mere flunkies for a fifth-level time-server or a third-rate political appointee. Yet it is not beyond imagination that some of them ultimately will rise to occupy positions in which they will have at their disposal the means of wreaking substantial death and destruction. Having been trained to accept the workaday character of doing evil deeds, in the reputational shadow of a man renowned for doing evil deeds at the highest level, they may be expected to do their “duty.”

In a poll of business executives following Tuesday’s State of the Union speech, the Wall Street Journal finds most remain skeptical of President Obama’s new, business-friendly rhetoric, and confirmed that his policies to date account for the continued economic malaise.

As encapsulated by Anthony Guzzi, CEO of Emcor Group Inc., a construction and facilities-services provider:

For two-and-a-half years now, capital has been afraid to invest in the U.S. in any substantial way.

As Robert Higgs’s extensive work on Regime Uncertainty has made clear, it will take more than sound bites to make American businesses invest again. And contrary to Obama’s Newspeak, “invest” means private money subject to private risks and rewards—not redistributing other people’s money.

President Obama did not offer much in the way of specifics in his State of the Union address this week, so one thing that did stand out was his specific recommendation that we lower the tax rate on corporate income.  A Republican response to the president’s speech was given by Wisconsin Representative Paul Ryan, and while Ryan didn’t mention it in his response, he has recommended replacing the corporate income tax with a “Business Consumption Tax” at an 8.5% rate.

Ryan’s Business Consumption Tax is a Value Added Tax (VAT).  I have argued against creating a VAT in the United States, but Ryan’s Business Consumption Tax avoids many of the negative factors that would make a VAT undesirable here.

The compliance costs on taxpayers would be less the way Ryan’s Business Consumption Tax computes value added for tax purposes than the system used for tax computation in the European Union, and while there is always a threat that this tax could open the door for a wider application of a VAT, the tax is limited in both a political and economic sense, and is designed as a replacement for the corporate income tax.

The Business Consumption Tax would have a broader tax base than the current corporate income tax (fewer loopholes), and that produces the tax’s biggest advantage: it allows the marginal tax rate to drop from the current 35% to 8.5%.

Perhaps the biggest change from the current tax system is that a firm’s labor costs are part of its value added, so firms that are labor intensive (for example, software companies) would find their tax bills rising relative to manufacturing firms that are capital intensive.  This could create a political hurdle too high to clear, should Ryan’s plan ever be seriously considered.

Having listened to the State of the Union address, the intriguing thing is that President Obama says he wants to lower the corporate tax rate, and Representative Ryan has a plan to do it — big time.  A drop from 35% to 8.5% would make tax considerations a minor issue in new investment compared to the penalty of over a third of corporate income that now is levied on corporate profits that firms are unable to drop through the loopholes.  Obviously, businesses will be more productive when they make their resource allocation decisions on how profitable they will be rather than on whether they can avoid taxes.

I’ve heard Obama critics say that he has no intention of following through on his rhetoric on limiting government.  But the president did say he wants to cut the corporate tax rate, and the Ryan plan is an interesting starting point for answering the president’s rhetoric, if for no other reason than that it would reduce the corporate tax rate to a quarter of its present level.

In yesterday’s New York Times appears an op-ed article by Edward L. Glaeser, a professor of economics at Harvard. Glaeser’s article is remarkable because arguments in favor of freedom, insisting that economic analysis implicitly rests on a moral presumption that individual freedom has fundamental value, do not appear every day—or every month—in “the newspaper of record.” So, I am glad to give two cheers to Glaeser, one for his theme and another for his courage in placing the argument in such a hostile outlet.

I cannot give Glaeser a third cheer, however, because toward the end of the article he inserts a concession that I find wholly inconsistent with the rest of the argument. He writes:

Economists’ fondness for freedom rarely implies any particular policy program. A fondness for freedom is perfectly compatible with favoring redistribution, which can be seen as increasing one person’s choices at the expense of the choices of another, or with Keynesianism and its emphasis on anticyclical public spending.

Many regulations can even be seen as force for freedom, like financial rules that help give all investors the freedom to invest in stocks by trying to level the playing field.

To be sure, many mainstream economists do think about policy just as Glaeser says they do. But in doing so, they are mistaken. I find it difficult to believe that a man of Glaeser’s intelligence has really given much thought to what he is saying in these passages.

In fact, a presumption in favor of freedom rules out virtually everything that modern governments do, certainly nearly everything they do in interfering in economic affairs. Redistribution of income, for example, requires that the government rob Peter in order to benefit Paul (and its own functionaries, who serve as middlemen in this transfer). This action is not freedom; it is a crime against Peter, a raw violation of his right to his own legitimate property. Keynesian countercyclical spending requires the government to spend borrowed money whose acquisition is premised on future taxation (that is, robbery) of taxpayers in order to service the debt and repay the principal. Again, innocent persons have their rights violated. How can anyone fail to see that robbery is incompatible with freedom? Finally, the financial rules that Glaeser finds compatible with freedom entail threats of violence against financial transactors who do not follow arbitrary government rules—often extremely foolish and even destructive rules—in making their transactions, notwithstanding the fact that the parties to the transaction may be perfectly willing to proceed without such regulatory compliance. Such regulation is the very opposite of freedom; it is instead the sheer imposition of outside force, intruding on willing transactors, and thereby discouraging them to some extent, if not entirely, with consequent loss of the wealth that such transactions would have created, in addition to the loss of liberty.

Perhaps it is unseemly for someone such as I to make a recommendation to a Harvard professor, yet I cannot resist the urge to suggest that Glaeser read, say, Murray Rothbard’s Power and Market. Expositions of that sort would help him to gain a clearer vision of the distinction between individual freedom and state domination in economic affairs. Glaeser quotes Milton Friedman to good effect in his article, but Friedman’s writings ought to be the beginning, rather than the end of wisdom in this area. In regard to freedom, Friedman’s arguments were good as far as they went, but they did not go nearly far enough. Like Glaser, Friedman was prepared to make many concessions to state power, and his focus on utilitarian arguments, as opposed to moral principles, diminished the intellectual force of his laudable efforts to enlarge the scope of liberty in economic affairs.

In the run-up to President Obama’s “State of the Union” address this evening, the nation’s monetary and fiscal policymakers seem, as often is true, to be working at cross-purposes.

According to reports published in The Wall Street Journal yesterday (January 24, 2011), Chairman Ben Bernanke at long last has concluded that the Fed should adopt an “official” inflation target of two percent per year. The same issue says, in a related article, that “several [unnamed] Republican lawmakers” will soon introduce bills to repeal the Humphrey-Hawkins Act’s mandate requiring the Fed, in exercising its monetary policy discretion, to pursue the twin—and ultimately incompatible—goals of promoting price stability and “maximum” full employment.

At the same time, however, President Obama is poised to take advantage of tonight’s national broadcast to promote new federal spending initiatives (as of yet-unknown amounts) intended to reduce America’s unemployment rate, which has been running at 10 percent of the labor force for the past two years. Taxpayer-financed “investments” in public education, infrastructure (roads and bridges), science and technology head the president’s list of so-called job-creating programs.

The federal government cannot “create” jobs in one sector of the economy without destroying them in another. That is because it is spending the taxpayers’ money rather than its own. Washington has, at least since the 1960s, been profligate and has little or no incentive to exercise either monetary policy or fiscal policy discipline. It can keep the rate of inflation low or it can print money to reduce the nation’s unemployment rate to tolerable levels, but it cannot do both.

Public policy predictability is the key to private economic prosperity. Chairman Bernanke cannot credibly pursue his recent conversion to a low-inflation regime unless the executive branch cooperates by reducing spending, cutting taxes, eliminating regulatory red tape and, in general, allowing wealth-creating entrepreneurship to flourish

President Obama’s 2001 perspective on the “State of the Union” is apt to be (mis-)interpreted as a Clintonian move to the center, launching his 2012 reelection campaign. Caveat emptor.

The Great Depression has been a deeply contested subject from the very beginning. After John Maynard Keynes’s General Theory became sacred writ for most mainstream economists, Keynesian interpretations generally prevailed, notwithstanding pockets of resistance among older economists, in general, and Austrian school economists, in particular. Milton Friedman and Anna Schwartz’s monumental Monetary History of the United States eventually helped to displace Keynesian interpretations with a monetarist interpretation, especially after the stagflation of the 1970s worked to discredit Keynesian macroeconomics.

Nevertheless, in part because mainstream macroeconomics never settled into a fixed orthodoxy for very long, competing interpretations of the Great Depression continued to attract adherents and to incorporate new elements of analysis during the past thirty years. The Austrians, once again attracting young economists to their ranks from the 1970s onward, persisted in waging guerrilla warfare against Keynesian, monetarist, New Classical, and other varieties of interpretation of the Depression.

With the onset of the current economic troubles—what some call the Great Recession—the debate about the Great Depression flared up anew, because many commentators began to compare these two episodes of exceptionally subpar overall economic performance. In 2008, an article by Gauti Eggertsson, “Great Expectations and the End of the Depression,” was published in the leading mainstream journal, the American Economic Review. This article advances a variation on one of the leading themes among mainstream economists, attributing the U.S. recovery after 1933 to a regime change associated with the New Deal’s abandonment of the gold standard and its commitment to active intervention in the private economy, allegedly in sharp contrast to the Hoover administration’s hands-off policy stance.

Steven Horwitz has taken issue with Eggertsson’s article in an important critique published in 2009 in the online journal Econ Journal Watch, edited by Daniel B. Klein. Eggertsson replied to Horwitz’s critique in 2010. Now, Horwitz has rejoined this back-and-forth in a new contribution to Econ Journal Watch titled “Unfortunately Unfamiliar with Robert Higgs and Others: A Rejoinder to Gauti Eggertsson on the 1930s.” No one will be surprised if I recommend Horwitz’s original critique and his follow-up piece as important contributions to this highly significant debate.

Misunderstanding the Great Depression has caused much mischief in modern macroeconomics and, more important, in government fiscal and monetary policies based on or influenced by this faulty understanding. If we are ever to arrive at a sound understanding of the Depression, we will have to persuade the economics profession to take Austrian economics seriously, as most economists did before the publication of Keynes’s magnum opus in 1936. Keynesianism in particular has proven itself to be a fundamentally flawed mode of analysis, yet one that has survived, evolved, and—like the zombies in the film “Night of the Living Dead”—keeps coming back, no matter how many times anti-Keynesians credit themselves with having dealt it a fatal blow. Monetarist, New Classical, and other recent critiques have themselves been inadequate or indefensible in various ways, as well.

Horwitz’s recent contributions have valuable things to say, not only about our understanding of the Great Depression, but also about the most productive way to do economic analysis and about the importance of working with correct historical facts, as opposed to the “stylized facts” that mainstream economists all too often are content to accept as an adequate foundation for the development and testing of their models.

As Congress and the President consider yet another set of “reforms” for the federal income tax code, taxpayers should encourage them to heed the words of one of the first and greatest economists. In Book V, Chapter II, Part II of The Wealth of Nations (Modern Library, Cannan ed., p. 778), Adam Smith wrote that:

The tax which each individual is bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisite to himself. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay is, in taxation, a matter of so great importance, that a very considerable degree of inequality [in tax burdens], it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty.

That lesson was by and large ignored last fall when lame-duckers in the House and Senate dithered about extending the so-called Bush tax cuts. Let us hope that more attention will be paid to it this year while new tax law provisions are on the table as well as two years hence, when reductions in tax rates enacted under President Bush are set to expire once again.

After the shooting that killed six and wounded at least a dozen people, including Arizona Representative Gabrielle Giffords, I blogged about the accusations that extreme political rhetoric was to blame for the shooting.

In passing I also remarked “…that news accounts are calling Loughner a ‘suspect’ in the shooting, when after the shooting people took the gun away from him and held him for the police.  What kind of Orwellian use of language calls him the suspect, rather than the gunman?”

Several commentators were critical of my remark, saying that our legal system presumes people to be innocent until proven guilty, and at this point Loughner is, in fact, just a suspect.  That’s a valid point.  Still, I will stand by my point.  Does anyone who has followed this case not think that Jared Loughner was the gunman?

The Loughner case is not an isolated incident.  Often, where there is overwhelming evidence available to the public that a person committed the crime, the person is referred to as a suspect, not the perpetrator.  As a result of cases like this, whereas at one time suspect used to refer to someone who might have committed a crime, now it carries the connotation that there is convincing evidence that the suspect is, in fact, the perpetrator.  By using the word this way, suspect has come to mean the person who committed the crime, not someone who there is some reason to think might have.

Because “suspect” no longer means what it used to, we have invented a new term, “person of interest,” to replace what suspect used to mean.  Now, if we suspect somebody may have committed a crime, we call that person a person of interest, and if the evidence plainly shows the person did commit the crime, then the person becomes the suspect.  The way the term suspect is commonly used is not the same as the old dictionary definition.

The problem is that in cases where there is not solid evidence regarding who is the perpetrator of a crime, we might still call a person of interest a suspect, and today that implies, as in the Loughner case, that we have solid evidence that the suspect is, in fact, the perpetrator.  The misuse of language works against the innocent, not in their favor.

As the term is used today, to call someone a suspect means we believe the person is the perpetrator.  But, referring back to the dictionary definition, it is easier to call someone a suspect because it gives the accuser an out.  We have created ambiguity in the language, so suspect (like many other words) no longer has a precise meaning.

If I say Loughner was the gunman and it turns out not to be true, I was wrong.  So, I’d better be careful when I call Loughner the gunman.  But if I call someone a suspect, it carries the same connotation, but because the term no longer has a precise meaning, my dictionary-based out is that I just said I suspected the person was the perpetrator.  I didn’t say I actually knew it was true.

Innocent until proven guilty?  Sure.  But the way the term is used today, calling someone a suspect implies the same thing as accusing that person of committing the crime.  When someone is referred to as a suspect, the connotation is that the suspect is the perpetrator, not that we are presuming the suspect is innocent.

Fact: The USA is in the midst of a obesity epidemic.

Fact: Fat people are more likely to need health services, work fewer years, and pay less in taxes. They “free ride” by consuming scarce health care resources paid for by those who are healthy and thin.

PROPOSAL:

For their own good, and for the Public Good, the Departments of Health (state and federal) will calculate the “fat footprint” of every product that enters the stream of interstate commerce (by definition, everything in the universe). A new value added tax (VAT) will be added to all food items to cover health care costs and encourage healthy behavior on the part of those “irresponsible” fat people.

The government will also require all state and federal workers to work out at their local gym, eat food from an approved list, and reduce their weight to a level deemed adequate by F.A.T.S. (Federal Agency for Trimming and Slimming America).

This regulation will also extend to employees of businesses that contract with the federal government. Currently, F.A.T.S. is working to devise universal coverage beyond those groups. After all, one reason why children are “left behind” is that they are too fat to catch up with their peers. This must change.

Civil rights laws will be revised to add thin-to-normal weight people to the list of protected classes for affirmative action purposes. Employers must seek out thin-to-normal weight employees by casting a wide net in their recruitment. These workers will boost the bottom line of companies and make for a more socially just distribution of resources. The EEOC will supervise the formulation of goals and timetables to achieve real progress.

The tax code will extend credits to those who can document weight loss. Other candidates for tax subsidies: those with reduced cholesterol levels, lower blood pressure, and other markers of good health.

A half century ago, normal-weight president John F. Kennedy said, “Ask not what your country can do for you, ask what you can do for your country.” His promise lays unfulfilled next to the potato chips on millions of American couches.

Fifty years is too long, we know what you can, should, and must do for your country: lose weight. Let us move ahead and get the job done!