“The federal government is supposed to protect us from terrorism.” This may have been a plausible theory at one time, but now, after a decade of goofs and lapses, it sounds more like the opening line of a late-night comedy routine. The latest revelation about government’s anti-terrorism programs makes for rather dark comedy indeed. The Department of Justice has just released a comprehensive, final report on the anthrax attacks that occurred in the United States in the fall of 2001. As the reader may recall, envelopes containing weapons-grade anthrax spores were mailed to media organizations and U. S. senators, resulting in the deaths of five people, and leading to the hospitalization of 17 others, and causing expensive cleanup efforts. Since the poisoned letters contained notes scrawled with “Allah is Great” and “Death to Israel,” these slogans suggested the perpetrator was a radical Muslim.

Well, he wasn’t. After an exhaustive FBI investigation, the Justice department has concluded that the spores came from a U. S. Army medical research facility, and that the person responsible was a scientist, Bruce Ivins, who worked there. So “the worst act of bioterrorism in U. S. history,” (as the Washington Post described it), proved to be the work of a U. S. government employee: a nightmare version of “I’m from government and I’m here to help you.”

The Justice Department concludes that Ivins’s motive was job protection, his way of calling attention to anthrax terrorism in order to save his career. The report explains: “The anthrax vaccine research program that Dr. Ivins had invested essentially his entire career of more than 20 years was in jeopardy of failure. The anthrax vaccine with which he was assisting was failing to meet potency standards and, absent some major breakthrough, may have been eliminated. . . the Next Generation Anthrax Vaccine, on which he was also working, had run its course at USAMRIID, leaving him potentially without anthrax research to do.”

Whatever his motives, it is clear that Ivins was mentally unbalanced. In the years leading up to the crime, Ivins was struggling with “paranoid personality disorder,” seeking professional treatment, and taking anti-psychotic drugs. One therapist working with him reported he had “a history dating to his graduate days of homicidal threats, actions, plans.” His psychiatrist called him “homicidal, [and] sociopathic with clear intentions.” Co-workers knew he was suffering from mental illness, but the government took no action to remove him from his highly sensitive, dangerous position. (Another instance of a government bureaucracy looking the other way with a mentally unbalanced official set the stage for Nidal Hasan’s massacre of 13 soldiers at Fort Hood last November). In July of 2008, as the FBI investigation closed in on him, Ivins committed suicide by taking a drug overdose.

The larger lesson here is that government officials can be very flawed individuals. We often forget this point in devising government programs, because we labor under what I call the “watchful eye illusion.” This is the idea that government is a god-like entity managed by superior people capable of watching over lesser human beings to keep them from harm. When aficionados of government action propose a new XYZ agency, they never add—as they should—“I realize that some of the people, perhaps the majority, staffing XYZ could be foolish, lazy, irresponsible, or corrupt, but I still think it would be a great agency.” In the grip of the watchful eye illusion, they have a childlike faith that every government program will be run by high-caliber individuals who always behave rightly.

Government officials exhibit all the flaws found in the human race. They can be greedy, careless, arrogant, stupid, or intolerant. As the Ivins case reminds us, they can even be homicidal maniacs.

I just found out that my paper “Economic Progress and Entrepreneurial Innovation: Case Studies from Memphis” was accepted by the Southern Journal of Entrepreneurship. The revised version is here. The abstract:

Entrepreneurial innovation encourages economic progress, and an institutional climate that encourages risk taking, rewards success, and weeds out failure is essential to a well-functioning economic system. This essay explores a cluster of path-breaking entrepreneurial innovations with common roots in Memphis, Tennessee: Piggly Wiggly’s popularization of self-serve grocery shopping, Holiday Inn’s innovations in standards and quality, Autozone’s adaption of insights from other industries, and FedEx’s creation of a distribution network that has made overnight shipping a reality.

Also, the editors were kind enough to allow me to post the published version (as it appeared in the journal) of my paper “Can’t Buy Me Growth: On Foreign Aid and Economic Change,” which appeared in the Journal of Private Enterprise at the end of 2009. The published version is here. This paper won third prize in the Independent Institute’s Garvey Fellowship Competition in 2007. The abstract:

Evidence suggests that foreign aid does not promote economic growth. Institutions which promote entrepreneurship do promote growth. Understanding where these institutions come from is paramount to success. This essay analyzes and summarizes theory and evidence regarding the relationship between aid and economic growth.

Cross-posted at Division of Labour and the Mises Blog.

This afternoon, a government employee drove out to our house (12 miles from town on a dirt road, back a long muddy driveway) to hand deliver a census form. I asked him why they didn’t mail it (surely it cost the government more than 44 cents to get him out here in his SUV). He said some addresses are selected for hand delivery. Two bits of good news to report. First, when I told him I only intend to answer the Constitutionally required questions, he cheerfully said, “That’s OK!” Then, when I opened the form later, the one Constitutional question was helpfully backgrounded in blue. This will be easy to complete. On the other hand, at an estimated $25 a visit for hand delivery to 12 million households even before attempts to mail forms to these addresses — the 2010 census is just one more example of the easy and pathetic waste of resources by government.

Relatively speaking, of course. It’s easy to forget that Paul Krugman was once a sensible thinker, at least in some areas. From a lengthy New Yorker profile:

Krugman’s tribe was academic economists, and insofar as he paid any attention to people outside that tribe, his enemy was stupid pseudo-economists who didn’t understand what they were talking about but who, with attention-grabbing titles and simplistic ideas, persuaded lots of powerful people to listen to them. He called these types “policy entrepreneurs” — a term that, by differentiating them from the academic economists he respected, was meant to be horribly biting. He was driven mad by Lester Thurow and Robert Reich in particular, both of whom had written books touting a theory that he believed to be nonsense: that America was competing in a global marketplace with other countries in much the same way that corporations competed with one another. In fact, Krugman argued, in a series of contemptuous articles in Foreign Affairs and elsewhere, countries were not at all like corporations. While another country’s success might injure our pride, it would not likely injure our wallets. Quite the opposite: it would be more likely to provide us with a bigger market for our products and send our consumers cheaper, better-made goods to buy. A trade surplus might be a sign of weakness, a trade deficit a sign of strength. And, anyway, a nation’s standard of living was determined almost entirely by its productivity — trade was just not that important.

Eventually, of course, Krugman became the very thing he despised. As Steve Landsburg famously put it, “Krugman leaves me wide-eyed with wonder at how much economics he has to forget to write those columns.”

The United Nations’ IPCC has just announced that it is appointing an “independent committee” to investigate itself, clearly part of a deliberate campaign of damage control to combat the unraveling of the credibility for its claims of climate alarmism (see here and here). Trust in the IPCC has been disintegrating with the cascade of revelations starting with Climategate that the IPCC’s conclusions were based on error, fraudulent data distortion, gaming and rigging of the peer review process, campaigns to smear critics, and junk science. But as the National Journal suggests, why should anyone expect it and the United Nations itself to be trustworthy to establish any investigation? And let’s be candid, isn’t the U.N. lacking any true credibility, given the fact that it is really an international organization of politicians, bureaucrats, and despots of various sorts? Why should anyone assign such a group the responsibility to discern scientific findings?

Not coincidentally, the New York Times has just featured an article by Al Gore, “We Can’t Wish Away Climate Change,” to reassure “liberal” elites that despite the revelations, the official climate-hysteria, secular religion is secure. But first he reveals what the global warming campaign is really about: “national security” wrapped up in the neo-Malthusian, limits-to-growth canard and a “jobs” program based on corporate welfare and technocracy:

It would be an enormous relief if the recent attacks on the science of global warming actually indicated that we do not face an unimaginable calamity requiring large-scale, preventive measures to protect human civilization as we know it.

Of course, we would still need to deal with the national security risks of our growing dependence on a global oil market dominated by dwindling reserves in the most unstable region of the world, and the economic risks of sending hundreds of billions of dollars a year overseas in return for that oil. And we would still trail China in the race to develop smart grids, fast trains, solar power, wind, geothermal and other renewable sources of energy — the most important sources of new jobs in the 21st century.

Finally, Gore admits, yet in a highly qualified way, that his alleged “consensus” climate panel:

. . . published a flawed overestimate of the melting rate of debris-covered glaciers in the Himalayas, and used information about the Netherlands provided to it by the government, which was later found to be partly inaccurate. In addition, e-mail messages stolen from the University of East Anglia in Britain showed that scientists besieged by an onslaught of hostile, make-work demands from climate skeptics may not have adequately followed the requirements of the British freedom of information law.

But he then reassures those caught up in the Zeitgeist worship of climate catastrophe that:

What is important is that the overwhelming consensus on global warming remains unchanged. It is also worth noting that the panel’s scientists—acting in good faith on the best information then available to them—probably underestimated the range of sea-level rise in this century, the speed with which the Arctic ice cap is disappearing and the speed with which some of the large glacial flows in Antarctica and Greenland are melting and racing to the sea.

He then goes on to make the exact, same, erroneous claims yet again that:

[S]cientists confirmed last month that the last 10 years were the hottest decade since modern records have been kept.

. . . .

Here is what scientists have found is happening to our climate: man-made global-warming pollution traps heat from the sun and increases atmospheric temperatures. These pollutants—especially carbon dioxide—have been increasing rapidly with the growth in the burning of coal, oil, natural gas and forests, and temperatures have increased over the same period. Almost all of the ice-covered regions of the Earth are melting—and seas are rising. Hurricanes are predicted to grow stronger and more destructive, though their number is expected to decrease. Droughts are getting longer and deeper in many mid-continent regions, even as the severity of flooding increases. The seasonal predictability of rainfall and temperatures is being disrupted, posing serious threats to agriculture. The rate of species extinction is accelerating to dangerous levels.

Meanwhile, every one of these claims has been refuted as each major conclusion by the IPCC has been shown to be exaggerated, fraudulent or just plain wrong. In a new article in the London Telegraph, “A perfect storm is brewing for the IPCC,” Christopher Booker notes:

Put the errors together and it can be seen that one after another they tick off all the central, iconic issues of the entire global warming saga. Apart from those non-vanishing polar bears, no fears of climate change have been played on more insistently than these: the destruction of Himalayan glaciers and Amazonian rainforest; famine in Africa; fast-rising sea levels; the threat of hurricanes, droughts, floods and heatwaves all becoming more frequent.

All these alarms were given special prominence in the IPCC’s 2007 report and each of them has now been shown to be based, not on hard evidence, but on scare stories, derived not from proper scientists but from environmental activists. Those glaciers are not vanishing; the damage to the rainforest is not from climate change but logging and agriculture; African crop yields are more likely to increase than diminish; the modest rise in sea levels is slowing not accelerating; hurricane activity is lower than it was 60 years ago; droughts were more frequent in the past; there has been no increase in floods or heatwaves.

Furthermore, it has also emerged in almost every case that the decision to include these scare stories rather than hard scientific evidence was deliberate. As several IPCC scientists have pointed out about the scare over Himalayan glaciers, for instance, those responsible for including it were well aware that proper science said something quite different. But it was inserted nevertheless—because that was the story wanted by those in charge.

In addition, we can now read in shocking detail the truth of the outrageous efforts made to ensure that the same 2007 report was able to keep on board IPCC’s most shameless stunt of all—the notorious “hockey stick” graph purporting to show that in the late 20th century, temperatures had been hurtling up to unprecedented levels. This was deemed necessary because, after the graph was made the centrepiece of the IPCC’s 2001 report, it had been exposed as no more than a statistical illusion.

. . . .

Almost as revealing as the leaked documents themselves, however, was the recent interview given to the BBC by the CRU’s suspended director, Dr. Phil Jones, who has played a central role in the global warming scare for 20 years, not least as custodian of the most prestigious of the four global temperature records relied on by the IPCC. In his interview Jones seemed to be chucking overboard one key prop of warmest faith after another, as he admitted that the world might have been hotter during the Medieval Warm Period 1,000 years ago than it is today, that before any rise in CO2 levels temperatures rose faster between 1860 and 1880 than they have done in the past 30 years, and that in the past decade their trend has been falling rather than rising.

The result? Al Gore continues his whitewashing role to spread alarmist propaganda, all of which has now been shown to be erroneous. But why the persistence in doing so? Booker then provides the answer:

Since 1988, when the greatest scare the world has seen got under way, hundreds of billions of pounds have been poured into academic research projects designed not to test the CO2 warming thesis but to take it as a given fact, and to use computer models to make its impacts seem as scary as possible. The new global “carbon trading” market, already worth $126 billion a year, could soon be worth trillions. Governments, including our own, are calling for hundreds of billions more to be chucked into absurd “carbon-saving” energy schemes, with the cost to be met by all of us in soaring taxes and energy bills.

With all this mighty army of gullible politicians, dutiful officials, busy carbon traders, eager “renewables” developers and compliant, funding-hungry academics standing to benefit from the greatest perversion of the principles of true science the world has ever seen, who are we to protest that their emperor has no clothes? (How apt that that fairy tale should have been written in Copenhagen.) Let all that fluffy white “global warming” continue to fall from the skies, while people shiver in homes that, increasingly, they will find they can no longer afford to heat. We have called into being a true Frankenstein’s monster.

And if this were not enough, the London Daily Mail reports yet another revelation from Jones, who while lying that the data had been available on the Internet, has just admitted in testimony before the Science and Technology Committee in the U.K.’s House of Commons that the withholding of temperature data was done deliberately and was “standard practice”:

Giving evidence to a Science and Technology Committee inquiry, the Institute of Physics said: ‘Unless the disclosed emails are proved to be forgeries or adaptations, worrying implications arise for the integrity of scientific research and for the credibility of the scientific method.

‘The principle that scientists should be willing to expose their results to independent testing and replication by others, which requires the open exchange of data, procedures and materials, is vital.’

Last month, the Information Commissioner ruled the CRU had broken Freedom of Information rules by refusing to hand over raw data.

But yesterday Professor Jones—in his first public appearance since the scandal broke—denied manipulating the figures.

Looking pale and clasping his shaking hands in front of him, he told MPs: ‘I have obviously written some pretty awful emails.’

He admitted withholding data about global temperatures but said the information was publicly available from American websites.

And he claimed it was not ‘standard practice’ to release data and computer models so other scientists could check and challenge research.

I saw a huge new billboard in San Francisco the other day—part of the $350 million ad campaign supporting this year’s $14 billion Census—picturing an American Indian in full regalia against a black background, apparently in the process of worshiping the sky, with the stylized text “Tell your story.”

If he’s wise, he might want to think twice about thereby providing information that can be used against him.

As examples, 1940 Census data was released and used to locate and intern Americans of Japanese, Italian and German descent, as outlined in these stories from Scientific American, “Confirmed: The U.S. Census Bureau Gave Up Names of Japanese-Americans in WW II: Government documents show that the agency handed over names and addresses to the Secret Service,” and USA Today, “Papers show Census role in WWII camps.”

The Census Bureau played a role in the confinement of more than 100,000 Americans of Japanese descent who were rounded up and held in internment camps, many until the war ended in 1945. In 1942, the Census turned over general statistics about where Japanese-Americans lived to the War Department. It was acting legally under the Second War Powers Act, which allowed the sharing of information for national security.

The newly released documents [further] show that in 1943, the Census complied with a request by the Treasury Department to turn over names of individuals of Japanese ancestry in the Washington, D.C., area because of an unspecified threat against President Franklin Roosevelt. The list contained names, addresses and data on the age, sex, citizenship status and occupation of Japanese-Americans in the area. [emphasis added]

And more recently, in 2002,

the Census turned over information it had collected about Arab-Americans … to Homeland Security.

While the Census Bureau assures us that “your confidentiality is protected. Title 13 requires the Census Bureau to keep all information about you and all other respondents strictly confidential,” the exceptions above negate such assurances. And, of course, their release of the “strictly confidential” data was perfectly legal: during World War II, under the terms of the Second War Powers Act, and more recently under the terms of the still-in-effect USA PATRIOT Act.

Meanwhile, the data is also shared a little more broadly than advertised. Stanford University recently joined UC Berkeley, Duke, the University of Michigan, UCLA, and others, in having its very own census data center. As the director of the new center explained, “The Census Bureau is very interested in making the centers more accessible to scholars who can use the data they provide.”

The data available at the centers goes far beyond what’s released publicly by the Census Bureau. While demographic information on such things as age, income and racial background may only be broken down by county or city in the public information, researchers at the center can find that information for areas as small as neighborhoods of a few city blocks.

And, as Henry Brady, dean of the Goldman School of Public Policy at UC Berkeley and principal investigator for the California Census Research Data Centers helpfully added: “We’re trying to make centers where lots of federal agencies will let us use their data …”

Of course, they all swear that the data is held under the strictest security, and will only be used for innocuous projects like “government programs and solutions to our problems.”

I guess the degree to which this is a perceived good depends upon how highly one esteems the “solutions” government programs like internment and renditioning have offered to date.

One might thus consider following the advice of former Senate majority leader Trent Lott, who urged people to skip any Census questions they felt violated their privacy. But fair warning, legislation was recently passed, “changing the fine for anyone over 18 years old who refuses or willfully neglects to complete the questionnaire or answer questions posed by census takers from a fine of not more than $100 to not more than $5,000.”

I was called for jury duty this week and selected as a juror on a battery case.  In my state of Florida, battery is defined as “actually and intentionally touching or striking another person against the will of the other.”  Ever had someone you barely know come up to you and give you a hug, and you’re thinking a simple “hello” would have suited you better?  That’s battery in Florida.

As a juror, I was thinking that lots of people commit battery every day, without any intent to harm anyone.  But any unwanted touching is battery.

Driving in to work today, jury duty behind me, I passed by a police car, mostly hidden, waiting to snare unsuspecting traffic violators.  Part of my commute takes me over a four-lane divided highway with a 45 mph speed limit.  Everybody goes faster, though, and I keep my speed about 55 on that road.  In 22 years making the commute I’ve only picked up two speeding tickets.  But every day I’m violating the law, and I’d be blocking traffic if I actually drove the speed limit.

If the police really wanted people to drive the speed limit, they would park their marked cars in conspicuous places as a signal to slow down or run the risk of a ticket.  Instead they hide, sometimes in unmarked cars, not to deter traffic violations but to stop people who mean no more harm, and are no more of a threat, than those people who give you the unwanted hugs.

Then I ran across this article about government-required stamps that must be placed on illegal drugs.  About 20 states have such laws.  They don’t expect sellers of illegal drugs to buy the stamps; it just means that when they are caught that’s one more law they violated.

These are just three examples of the way that laws are written so that everybody violates laws every day.  They reminded me of a passage in Ayn Rand’s Atlas Shrugged where Dr. Ferris from the State Science Institute is talking to Hank Reardon about his illegal sales of his metal.  Ferris says,

“Did you really think we wanted those laws to be observed?  We want them broken. … We’re after power and we mean it. … There’s no way to rule innocent men.  The only power government has is the power to crack down on criminals.  Well, when there aren’t enough criminals, one makes them.  One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.”

It’s not fiction.

Not everyone has the stomach for perusing the national income and product accounts, but one who does can learn a great deal about what ails the present economy and about its prospects for returning to a healthier condition. (I draw the data I discuss here from Table B-2, “Real gross domestic product, 1960-2009,” in the statistical appendix that accompanies the 2010 report of the president’s council of economic advisers.)

We’ve all been told, of course, that the real gross domestic product has fallen from its peak in the second quarter of 2008. The data show a fall of nearly 4 percent by the second quarter of 2009.  Although this drop bears no serious comparison with the precipitous decline of real GDP during the Great Depression—about 30 percent between 1929 and 1933—it has certainly entailed a great deal of difficulty and frustrated expectations in a situation where many people had made plans based on their anticipation of ongoing economic growth. Between the second quarter and the fourth quarter of 2009, real GDP grew by about 2 percent, making up for roughly half of the preceding decline.

To see why the recession has brought out the doomsayers in such great numbers during the past two years, notwithstanding the rather slight decline in national output, we must examine, among other things, the national product’s components. Doing so, we find, for example, that as usual in an economic slump, private consumption spending has held up much better than private investment spending: the former fell by less than 2 percent, and most of the decline was erased during the third and fourth quarters of 2009, so that by the final quarter of last year, real private consumption spending was less than 1 percent below its previous quarterly peak.

So, judging by what has happened to GDP and to private consumption, one might conclude that the recession has been only a minor dip—how much difference can it make in our style of life if our consumption falls by 2 percent for a short while?—and we might be tempted to conclude that getting out of the present troubles will be a task easily accomplished in the next few quarters.

Reaching such a conclusion, however, would be a mistake, because despite what the news media are always telling us about the preeminent importance of consumption spending in the determination of GDP, consumption does not drive genuine economic growth except in the very short run in a depressed economy. Real economic progress turns on a high rate of investment—primarily business purchases of structures, equipment, software, and additions to inventories—and on this front the news has been much bleaker and the prospects for quick recovery much less encouraging.

Gross private domestic investment peaked in 2006. Between the first quarter of that year and the second quarter of 2009, it fell by almost 34 percent. During the following two quarters, it rose by only 10 percent, so that late last year it was still (when measured at an annual rate) running about 29 percent below its level early in 2006. Such a huge shortfall in investment spending portends an extended period of slow economic growth in the next few years, and perhaps in an even longer run. Worn-out equipment, obsolete software, ill-maintained structures, and depleted inventories are not the stuff of which rapid, sustained economic growth is made.

The current investment drought does not simply reflect the housing bust consequent to the boom that drove residential investment to a peak in 2005. To be sure, real residential investment has fallen tremendously, by almost 53 percent between 2005 and 2009, with especially rapid declines during the past three years. Yet, real nonresidential investment also fell greatly last year, by 18 percent from its peak in 2008. Even real investment in equipment and software—a category only loosely connected to the housing boom and bust—declined last year by 17 percent, after occupying a high plateau during the preceding three years. Business firms have also fled from inventory investment, trimming their holdings by an unprecedented $125 billion in 2009, after lopping off $35 billion in 2008.

If real investment spending has taken a huge hit, however, federal government spending has raced ahead in high gear.  Between 2007 and 2009, federal purchases of newly produced final goods and services—the federal government’s “contribution” to GDP—increased by more than 13 percent in constant dollars. Unfortunately, whereas private investment is the engine of economic growth, government spending (despite what generations of Keynesian economists have asserted) is the brake. Although increased government purchases by definition increase the measured national product, their substantive effect on the process of sustained economic growth is decidedly detrimental.

To understand this negative relationship, we need only to scrutinize how the federal government’s spending is determined, namely, by political processes devoid of economic rationality, and to examine the overwhelmingly adverse effect of government’s growth on the private economy’s functioning. In this light, we can appreciate that enhanced government spending does not actually bulk up the economy—it does not simply compensate for “leakages” from the circular flow of income generation, as the Keynesians imagine. Nor does it merely crowd out worthwhile private activity. Instead, it undercuts, penalizes, and distorts everything that private parties attempt to do to create genuine wealth.  Beefed-up regulations, additional taxes, and government takeovers are the known killers of the economic growth process.

Much of the government’s “contribution” to GDP, of course, is pure waste, even if the recipients of the payments do nothing more to stand in the way of real progress:  the government simply increases the compensation of its legions of drones and wreckers, or it spends money on items for which no private person, if he had any choice in the matter, would pay.

Worst of all, the investors’ famine and the government’s feast are not merely coincidental, but causally connected. The explosion of the federal government’s size, scope, and power since the middle of 2008 has created enormous uncertainties in the minds of investors. New taxes and higher rates of old taxes; potentially large burdens of compliance with new energy regulations and mandatory health-care expenses; new, intrinsically arbitrary government oversight of so-called systemic risks associated with any type of business—all of these unsettling possibilities and others of substantial significance must give pause to anyone considering a long-term investment, because any one of them has the potential to turn what seems to be a profitable investment into a big loser. In short, investors now face regime uncertainty to an extent that few have experienced in this country—to find anything comparable, one must go back to the 1930s and 1940s, when the menacing clouds of the New Deal and World War II darkened the economic horizon.

Unless the government acts soon to resolve the looming uncertainties about the half-dozen greatest threats of policy harm to business, investors will remain for the most part on the sideline, protecting their wealth in cash hoards and low-risk, low-return, short-term investments and consuming wealth that might otherwise have been invested. If this situation continues for several years longer, the U.S. economy may well suffer its second “lost decade” for much the same reason that it suffered its first during the 1930s.

In a front-page article published on February 24, 2010, under the byline of Michael Crittenden and Marshall Eckblad, the Wall Street Journal reports that bank lending, down 7.4 percent since last year, has fallen to its lowest level since 1942.

As I noted in my most recent post, the reluctance of banks to lend cannot plausibly be explained by a lack of liquidity, but instead can be traced to credit risk—lenders’ inability to parse the financial capacities of borrowers to repay loans, especially those of counterparties who have invested in mortgage-backed securities and other ventures promising similarly unsure future returns.

Recovery from the current financial “crisis” cannot begin until such uncertainty is resolved. That resolution depends, as Senior Fellow Robert Higgs has so well documented, on a return to predictable public policies with respect to taxes, spending and regulation.

Free markets are incredibly vibrant, but alert entrepreneurs must be able to plan for the future, even though those plans are subject to being upset by unanticipated changes in the conditions of supply and demand. Adding inconsistencies in public policy on top of that makes the discovery of market equilibrium prices and quantities all the more costly.

The Great Depression lasted until after the Second World War because of the anti-business rhetoric of President Franklin Roosevelt, which became more virulent after he was reelected to a second term in 1936. President Barack Obama should heed the lessons of the New Deal unless he is willing to sacrifice another term in office to the uncertainty fostered by vacillation in his left-leaning principles.

In an interview with Neil Cavuto on Fox News and with global temperatures declining since 1998 and record winter cold and storms not letting up, Senator James Inhofe has called for the U.S. Justice Department to investigate possible fraud by perpetrators of the “global warming hoax,” what he calls the greatest scientific scandal of our generation, and he wants Al Gore to be the first witness regarding possible criminal charges.

Every assertion that he [Gore] made in his science fiction movie has now been disproven, sea level rising, Himalayas melting and all this stuff. The significant thing right now, though, is the hearing that we had this morning, because we have the minority report that we put together which shows that climate-gate, fixing the science, cooking the science, actually took place.

We have it all documented. And people are being investigated right now. The problem for us in America is, you and I have talked before on how destructive, economically, it would be if we were to have cap and trade, any of these bills that were passed in McCain/Lieberman bill or any of these.

It would be the largest tax increase in the history of America, something over $300 billion a year. Now, since they can’t get that passed, in Congress, the Senate won’t pass that, they’re trying to do it through the Clean Air Act, through the EPA, through an endangerment finding.

Here is the key, though. The endangerment finding is based on the science that the IPCC has come forth—that’s the United Nations. And it’s all been debunked. So, we’re destroying the economy of the nation based on science that’s bad.

. . . .

You know, if this has been a warm spell that we have been going through over the last five years, they would all be saying, ah, see that. That’s global warming. But it hasn’t been. We’re in our ninth year of a cooling spell. And everyone understands that that’s the case.

But it’s driving them crazy. You think about the years that people have put into this thing just hoping they would be right. Now we find they’re not. And now we find the big thing is—and we can’t forget it—they cooked the science on which all of this was predicated.

. . . .

What we’re trying to do is get the I.G.s [inspector generals] to investigate it. I asked Lisa [Jackson] this morning, the director of the EPA, if she would get her I.G. to investigate the allegations against the science. I don’t think she’s going to do that. But we need to get the I.G.s involved.

. . . .

The inspector general for the EPA, for NASA, for NOAA, for all these different groups to do their own investigation. That’s what they’re supposed to do for a living.

Then we send that to the Justice Department. That’s happening, by the way, in the U.K. And there, they found that violations that—boy, that’s the Freedom of Information Act—that that was—that is a criminal offense.

Unfortunately, in Great Britain, the statute of limitations has already run. Well, that could be the case here, in which case it would be a criminal violation.