Israel’s Offshore Gas Discoveries are in Jeopardy

On February 3rd, there was a  Conference  in Tel Aviv co-sponsored by the Israeli Ministry of Infrastructure, Energy and Water and Maala – a group concerned with Socially Responsible Business. Globes Israeli Business and Reuters covered it, “Energy minister: Foreign companies aren’t coming to Israel.”

 Silvan Shalom, Israeli Minister of Infrastructure,  the Israel Manager of  Houston –based Noble Energy, Inc. co-developer with Israel’s Delek Group and a representative of Australian  energy company Woodside, Pty.  appeared among other presenters. They were all  bemoaning the arbitrary, some would say capricious draft ruling of Dr. David Gilo, Director General of Israel’s Antitrust Authority (IAA) , basically stopping development of the offshore Leviathan  gas field and  forcing the possible sale of the existing Tamar gas field in Israel’s Exclusive Economic Zone (EEZ).  Gilo,as we have discussed  in prior posts, has confounded Israel’s energy independence and possible export opportunities with his draft consent order based on misguided consumerist  populism.  His understanding of the economics of pricing of gas as a commodity in the international markets is simplistic at best and simply panders to  misguided domestic  populist concerns over maintaining low energy prices.  His proposals to enhance competition  in the domestic  market come amidst the looming March Knesset elections.  Many  suspect that his actions were in support of the Labor-Hanuat coalition objective of unseating Prime Minister Netanyahu.  Not surprising as Israel’s founding generation, save for  Menachem Begin, were Socialist  Marxists. They created the country’s dual economy with Histadrut – the labor union dominated institution – owning  key sectors in the country’s economy that have  only been partially privatized. The exception being Israel’s much vaunted high tech sector.

Gilo’s  misguided logic is reflected in the comments of the Israeli National Infrastructure-Maala conference presenters. It was bolstered by an announcement that the Noble Energy –Delek Group partners  were on the verge of concluding a deal with Egypt to provide much needed gas from the Aphrodite field in the adjacent Republic of Cyprus EEZ.  Neither Noble or Delek accept the separate marketing proposals and sales of  both Tamar and smaller fields, originally part of an IAA deal agreed to by Gilo.

Note these comments from the Globes article:

“We don’t see foreign gas companies coming to Israel,” Minister of National Infrastructure, Energy, and Water Silvan Shalom admitted. “The foreign companies have interests in countries like Saudi Arabia and the Gulf, and bringing them to Israel is no easy task. Israel is small country, with a small gas market. In a utopian and theoretical world, companies would come, but that’s not how it is in the real world.”

“Unfortunately, our business in Israel was unsuccessful, but our connections with Noble Energy have become stronger,” Woodside VP Corporate Affairs Roger Martin said at a conference organized by the Ministry of National Infrastructure, Energy, and Water and the Maala organization.

Woodside, which planned to acquire 25% of the rights in the Leviathan natural gas reservoir for $2.7 billion, backed out at the last minute, and left Israel. “We’re working together with Noble Energy in Africa, and we signed an additional agreement with them in October for oil and gas exploration off the Cameroon coast,” Martin said.

“Our pride in making our contribution to the community was met with cynicism. They tell us cynically, ‘This is very American’,”  [Nobel Energy Israel Manager]  Zomer said angrily. “What do you want from me? What’s very American? I don’t understand this. Since when is doing good considered American? Why should companies in Israel apologize for their success? Of course Noble Energy hoped to make a profit in Israel, but it also meant to do good for Israel.”

Gidon Tomer [CEO Delek Drilling  Partnership] noted , “That state could expect NIS 250 billion  ($65 Billion) in revenues from the first stage of developing Leviathan. He added, “This revenue doesn’t take into account the immediate saving from the consumption of cheap gas. You have to look at the enterprises saved by natural gas. These enterprises are boosting their competitiveness. It’s a reduction in the cost of living.”

Alexander Varshavsky of the National Gas Authority  asserted that Israel could expect to lose NIS 3 billion ($780 million)  annually starting in 2018 from the delay in developing Leviathan. “Beyond that, it’s a blow to Israel’s credibility,” he argued.

On the matter of Gilo’s express goal of enhancing competition and energy pricing, Globes noted comments of   a conference participant who said, ‘If you want to talk about responsibility, Israel’s responsibility is to bring gas to factories. There are factories in the outlying areas that closed down because of their energy costs. At enterprises like Phoenicia Flat Glass Industries and Shaniv Paper Industry Ltd. (TASE: SHAN), it was a do or die question. Today, they’re hooked up to natural gas and saving money. That’s the most important thing.”

Should PM Netnayahu win the March 17th election perhaps a priority will be to pass legislation amending the mandate of the IAA remodeling it in on 100 year precedent of the U.S. Federal Trade Commission.  Otherwise , director General Gilo of the IAA, will thwart Israel’s economic future and energy independence.

EDITORS NOTE: This column originally appeared in the New English Review. The featured image of the Tamar deep oil platform is courtesy of Oil in Israel.

Ronald Reagan’s Free-Market Mentors by John Fund

Have you ever gone back and revisited or recalled the books or mentors who shaped your political or philosophical thinking? I got that chance this past weekend when I attended the annual summit meeting of the Foundation for Economic Education in Ft. Myers, Fla. A slim pamphlet reprinted by the Foundation for Economic Education was given to me by Dennis Miller, a school teacher, when I was 14 years old. It was “The Law,” by the 19th-century French economist FredericBastiat, and it set me on my current path of thinking.

I’m not the only one whom FEE has influenced. Milton Friedman described “I, Pencil,” FEE’s account of the hundreds of people and the raw materials that contribute to the making of that humble writing instrument, as “one of the clearest explanations of how markets work to benefit consumers” he had ever encountered. The Nobel Prize–winning economist F. A. Hayek said that FEE had helped inspire him to found the free-market Mont Pelerin Society. Ronald Reagan credited FEE materials he read in the 1950s with aiding his conversion to conservatism.

FEE says its mission is to “inspire, educate, and connect future leaders with the economic, ethical, and legal principles of a free society.” In the last five years, it has shifted its emphasis to reaching young people ages 14 to 24 through seminars, readings, and social media. Detroit’s public schools have made FEE’s Common Sense Economics its primary textbook for tenth-graders studying the economy. With a budget of only $3.6 million a year, FEE punches way above its weight in reaching future “influencers” who will populate academia, business, the media, and legal circles.Founded in the immediate aftermath of World War II by Leonard Read, a former head of the Los Angeles Chamber of Commerce, the free-market outreach group has distributed millions of copies of classic texts such as Henry Hazlitt’s Economics in One Lesson, Hans Sennholz’s Up from Poverty, and Lawrence Reed’s Are We Rome?

Take Romina Boccia, a 30-year-old German immigrant of Italian ancestry. “When I was in state schools in Bavaria, I realized that there must be other perspectives on society I wasn’t getting,” she told me. “Then someone handed me a copy of Bastiat’s ‘The Law’ on a train, and I was hooked.” She now is a research fellow in economic policy at the Heritage Foundation.

Another person who got hooked on FEE’s materials was a middle-aged actor named Ronald Reagan. The story is fascinating, as detailed in the 2006 book The Education of Ronald Reagan, by Thomas Evans.

From 1954 to 1962, Reagan worked as the host of CBS’s top-rated General Electric Theater and served as General Electric’s official spokesman. For weeks at a time he would tour GE’s 139 plants, eventually meeting most of the 250,000 employees in them. Reagan himself estimated that he spent 4,000 hours before GE microphones giving talks that started out with Hollywood patter but ended up as full-throated warnings about Big Government. “GE tours became almost a post-graduate course in political science for me,” he later wrote. “By 1960, I had completed the process of self-conversion.”

Evans, a lawyer who served in the Reagan administration before turning amateur historian, identified Reagan’s mentor at GE as Lemuel Boulware, the man behind both the company’s PR efforts and its labor-negotiation policy. Boulware believed that at the start of contract talks, GE should make an offer it viewed as fair to stockholders, workers, and customers and then stick with it, allowing for almost no changes. This “take it or leave it” approach was so successful (strikes became almost unknown at GE) that it entered the lexicon of labor relations as “Boulwarism.”

But Boulware also believed that the policy would work only if executives went over the heads of union officials and educated the workers directly about why they had a stake in GE’s prosperity. Evans notes that “a worker who learned that GE’s profit margin was much smaller than he had been led to believe or that union officials had not been truthful with him” was unlikely to join a picket line or insist on over-the-top demands. Thanks to his outreach to workers, and his surveys of them, Boulware was “reputed to understand blue-collar workers better than anyone in the country.”

Boulware’s efforts included an elaborate campaign to educate GE’s workers as well as the public on the moral and economic benefits of free enterprise. He encouraged workers to form book clubs and read free-market texts published by FEE, especially Hazlitt’s Economics in One Lesson and Wilhelm Ropke’s Economics of the Free Society. He also encouraged his managers to read William F. Buckley Jr.’s brand-new National Review.

Boulware’s free-market message so penetrated GE’s work force that Reagan, his traveling ambassador, quickly saw how important it was for him to become familiar with what the workers were reading. Over time, his own reading and his conversations with GE workers had an effect. By the late 1950s, Reagan was lambasting those “who can’t see a fat man standing beside a thin one without automatically concluding the fat man got that way by taking advantage of the thin one.” Historian Rick Perlstein has concluded that “Reagan was an integral component in the Boulwarite system.”

The lessons Reagan had learned during his GE barnstorming stuck with him. Several passages in his famous 1964 speech on behalf of Barry Goldwater came directly from his GE talks. (“There is no such thing as a left or right. There is only an up or down: up to man’s age-old dream, the ultimate in individual freedom consistent with law and order; or down to the ant heap of totalitarianism.”)

The influence of those years lasted well into Reagan’s presidency. The Timemagazine journalist Hugh Sidey recalled admiring some of Reagan’s White House speeches so much that he asked a speechwriter who exactly had written them. “Reagan,” he was told. “They were actually pretty much the speeches he had given when he worked for General Electric.” And for the GE talks, Reagan was his own speechwriter.

Of course, few of the people that FEE has influenced turned out to be the gifted popularizer of liberty that Ronald Reagan was. But FEE marches on, adapting its outreach to the digital age and the fourth generation of young people to have come on the scene since its founding. Not a bad record at all for a group that shuns harsh rhetoric in favor of quiet persuasion.

This piece was first published here at National Review Online. Reprinted with permission.

ABOUT JOHN FUND

John Fund is currently the national-affairs columnist for National Review Online and a senior editor at the American Spectator.

Civil Rights Icon Rosa Parks’ Exposure to Armed Self-Defense

On Wednesday, the Library of Congress made the Rosa Parks Collection available to researchers. The compilation includes 2,500 photos and 7,500 manuscripts pertaining to the civil rights icon. Among these documents is a short autobiographical piece highlighting some of Parks’ early experiences with armed self-defense.

A February 3 Washington Post article details the “biographical sketch.” According to the Post, Parks explains how her grandfather used a shotgun to protect the family home in Pine Level, Ala., from potential attack by the Ku Klux Klan. One excerpt states that her grandfather “would stay up to wait for [the Klansmen] to come to our house… He kept his shotgun within hand reach at all times.” Another portion notes that Parks’ grandfather “declared that the first to invade our home would surely die.”

Stories like Parks’, where firearms were used to protect against racially motivated violence before and during the Civil Rights Era, are common. At a time when law enforcement officials were sometimes indifferent to acts of violence perpetrated against African-Americans (or in some cases even complicit in them), those seeking any protection at all had few other options.

History could certainly have been altered in dramatic fashion had the Parks home been left undefended against the depredations of the Klan. Thankfully, Parks’ family had access to an effective means of self-defense, even as they strove to obtain other basic human rights.

Examples abound of the beneficial role arms have played in the struggle for civil rights in the U.S. Local NAACP leader Rob Williams, author of Negroes with Guns, notably chartered a National Rifle Association affiliated club in order to train and arm members of his Monroe, N.C., community to combat the Klan. Chapters of the heavily armed Deacons for Defense and Justice formed throughout the Deep South to protect their communities from racial violence. According to UCLA Professor Adam Winkler,  Martin Luther King Jr. unsuccessfully applied for concealed carry permit in Alabama after his home was bombed, and lived surrounded by what was described as “an arsenal.” In his book,  Restricting Handguns: The Liberal Skeptics Speak Out, Don B. Kates Jr. recalls his time spent as a civil rights worker in the early 1960s South, stating, “The black lawyer for whom I principally worked did not carry a gun all the time, but he attributed the relative quiescence of the Klan to the fact that the black community was so heavily armed.”

The story of armed self-defense revealed in the Rosa Parks Collection is a welcome and important addition to the already well-established history of the use of arms to deter and defend against racially-motivated violence.

EDITORS NOTE: This article and featured image of Rosa Parks originally appeared on NRA-ILA.com.

The Great 2016 TEA Party Dilemma

I had the honor of hanging out with a great group of patriots, the Fort Lauderdale TEA Party. I was the keynote speaker at their 309th consecutive meeting. My message articulates why Conservatism is best for all Americans and why Liberalism is destructive. My presentation also includes me singing which enhances my message because music strikes a universal emotional chord.

The audience at the meeting included the president of a high school Republican club. I asked why he chose Conservatism. He chucked and attributed it to his high IQ. There is hope for the future folks.

The extremely faithful and fired-up patriot leaders of the group are Danita and Jack; new friends of my wife Mary and me.

Jack informed me that a poll revealed that Jeb Bush topped his group’s list of least favored presidential candidates for 2016. A gentleman bent my ear for quite a while, ranting about how he will stay home on election day if Jeb Bush is our candidate. He vowed never again to hold his nose and vote for a RINO, citing having voted for McCain and Romney.

Remember, Obama was reelected in 2012 because four million Republicans chose not to vote. Some thought whats the point – Romney vs Obama, six of one, half a dozen of the other. Some Christians said they could not vote for a Mormon. I thought, “Great, so you sat at home and allowed a true devil to win!” Having said that, I do respect and appreciate that Conservatives are thinkers and are driven by character and principles.

I held my nose and voted for Romney because I knew the alternative was much, much worse; giving the most America hating arrogant out-of-control president in U.S. History four more years to urinate on our Constitution; purposely lower our status on the world stage and correct what he erroneously perceives as America’s injustices.

Our president is obviously an anti-America-as-founded far left radical operative; an enemy from within. During the Cold War some feared the Communists would overtake us without firing a shot. Ladies and gentlemen, I give you Barack Hussein Obama.

My faith in God keeps me upbeat and confident that we will overcome the evil seeking to destroy our great nation. God’s Word instructs us not to grow weary in well-doing.

As for Jeb Bush becoming our nominee, I am thumbs down on him because of his support for Common Core (big government overreaching control of education) and amnesty for illegals.

However, if it comes down to Jeb Bush or another flaming RINO as our candidate, the Tea Party will be faced with a difficult dilemma.

Think of the consequences of Hillary becoming the first woman to sit in the big chair in the Oval Office. The Dems and MSM will make every issue about her gender. To silence all opposition to President Clinton continuing Obama’s fundamental transformation of America (socialist/progressive agenda), the Democrats and MSM will update their propaganda, branding all opposition “sexist” rather than “racist.”

We’ve seen this movie before. The MSM will beat the public over the head 24/7 with their lie until the public is repeating it; opposing Hillary is sexist, white cops murder blacks, white privilege is a problem, Republicans are at war with women and so on.

Hillary Clinton occupying the White House will in essence mean at least four more years of a Democrat regime believing themselves invincible, free to continue using the Constitution as toilet paper.

We can not allow the deep-pocketed GOP establishment or mainstream media to select our presidential candidate.

So, how do we avoid the great 2016 Tea Party dilemma, having to vote for a RINO? We must rally around a conservative candidate who probably will not walk on water (be perfect on every issue). I can support a non perfect conservative candidate as long as they are fearless and laser focused on stopping Obama’s insane evil agenda.

I am starting to hear patriots say they are “all in” for their favorite 2016 presidential candidate; Ted Cruz, Scott Walker, Dr. Ben Carson and so on. Fine, I am cool with that. I am not ready to go “all in” for anyone at this stage.

All I ask is that we unite and rally around the last conservative standing. Folks, I pray that our nation can recover and turn back the mess of 8 years under Obama, America’s first king. The last thing America needs is Hillary, America’s first queen.

Florida Report Outlines Lasting Property Insurance Market Reform Recommendations    

jmi property insuranceUnprecedented hurricane landfall inactivity in Florida presents opportunity for policymakers to help shield Florida’s economy from inevitable, storm-related threats report states.

A hurricane has not made landfall in Florida for nine years; however, a new report from The James Madison Institute (JMI) warns this nearly decade long respite should not be considered the norm, but rather a fortuitous anomaly.

In it Backgrounder: “Lasting Reforms for Florida’s Property Insurance Market,” JMI adjunct scholar and R Street co-founder, R.J. Lehmann explores solutions that could reasonably be considered during the 2015 legislative session to shield Florida from economic hardship in the event of a major storm or series of storms.

The report states that because of the last few years of hurricane landfall inactivity, Citizens Property Insurance Corp., the Florida Hurricane Catastrophe Fund (Cat Fund) and the state’s private insurance sector are all in ideal financial positions to absorb reforms without undue adverse impacts on taxpayers, ratepayers or the state’s economy.

“Florida has been struck by the most hurricanes of any U.S. state, including the most powerful hurricane on records and seven of the 10 costliest hurricanes to have affected the nation. Unfortunately, this lull of dormancy has resulted in a misplaced public policy goal of insurance rate suppression leading to a dysfunctional property insurance system,” said Lehmann. “What happens when a storm finally arrives? Although no set of reforms can make Florida entirely immune to all of the problems that it could face, a sensible approach that recognizes the state’s role in Florida’s property insurance system, but trusts the market to solve many problems, will work best and bring the greatest sustainability.”

Recommendations include:

Citizens Reduction and Reform

  • Continue incremental reduction of Citizens coverage limits for two additional years to $500,000;
  • Remove non-primary residences from Citizens, with exceptions;
  • Implement incremental Citizens eligibility reform with a “circuit-breaker” ensuring Citizens shrinks slowly, but steadily
  • Allow excess and surplus lines carriers to take out policies from Citizens, with conditions; and
  • Establish stricter notification requirements for future depopulation initiatives.

Cat Fund Reduction and Reform

  • Gradually decrease the Cat Fund’s statutory capacity from $17 billion to $14 billion, with an emergency “override;”
  • Gradually increase the Cat Fund’s statutory “deductible” from $7 billion to $8 billion;
  • Ensure surplus protection mechanisms cover second-year claims;
  • Explicitly authorize (but not require) Cat Fund managers to negotiate the purchase of private risk transfer;
  • Allow flexibility to primary insurers in years when the Cat Fund is projected to experience a shortfall;
  • Include taxpayer protection in the Cat Fund’s mission statement;
  • Require reports from financial advisors to explicitly discuss second event and second season claims-paying capacity;
  • Redefine “funds” or “cash balance” as any money that does not have to be repaid; and
  • Include taxpayer protection efforts in bi-annual reports.

Claims-Paying Estimate and Conflict-of-Interest Reform

  • Require an annual report on the combined post-storm bonding capacity of Citizens, the Cat Fund and the Florida Insurance Guaranty Association, assuming all three may attempt to issue bonds simultaneously after a significant hurricane event or season; and
  • Enact conflict-of-interest rules to preclude financial advisers from deriving financial gain from bond issuances.

Providing background on state-run Citizens and the Cat Fund, the report also establishes how these state-run entities are both “one-hit wonders” designed to cover just one adverse hurricane season with no practical means to cover a second or third season without economically devastating consequences.

Although legislation has enabled a “glidepath” that allows yearly rate increases for Citizen’s policies, and some areas of the state now pay actuarially adequate rates, Citizens coverage remains significantly underpriced in much of the state’s coastal and other high-risk regions. Such underpricing would mean that if disaster strikes and Citizens were to run a deficit, it must first impose surcharges on its own policyholders, but may subsequently impose so-called “emergency assessments” on policies issued in Florida in nearly every property and casualty line of business.

“These assessments could amount to a “hurricane tax” that could add up to 30 percent to the cost of each insurance policy paid by the roughly 78 percent of homeowners, renters, drivers, boaters, businesses, charities and civic organizations statewide who derive no benefit from Citizen’s subsidized, underpriced rates,” describes Lehmann. “With its imposing size and its power to levy assessments, Citizens has the potential to place Floridians on the hook for billions of dollars if a sufficiently bad hurricane season wipes out the surplus it has slowly accumulated over the past nine years.”

Further complicating this serious threat, Citizens relies on another taxpayer-backed entity, the Cat Fund, to provide roughly $4.63 billion in reinsurance, which accounts for the majority of Citizen’s reinsurance support following a catastrophe.  The Cat Fund covers a portion of the risk when insurers’ total losses exceed certain levels. However, unlike private reinsurers, it keeps no funds on-hand to pay the promised claims. The Cat Fun instead has the authority to issue bonds, which it repays by imposing assessments on policies in a way similar to Citizens.

“By relying on post-event financing, the Cat Fund charges substantially lower rates than the private sector for comparable coverage. To pay off the Cat Fund’s bond debts, dating back to the 2004 and 2005 hurricane seasons, Floridians were forced to pay 1.3 percent assessments on their homeowners, auto, renters and other insurance policies until Jan. 1, 2015,” continued Lehmann. “The Cat Fund turns the principles of diversification on its head by concentrating Florida’s peak hurricane risk within the state, rather than spreading it around the world, as private reinsurers do.”

Diving deeper into the explanation of the report’s solutions, the JMI backgrounder offers a comprehensive look into opportunity that Florida’s lawmakers have during the 2015 legislative session. The report concludes lawmakers should continue to shrink Citizens, reduce the size of the Cat Fund, and promote reforms that would result in a surge of capital to the state after a storm to help it quickly recover both physically and economically, rather than saddle it with debt.

“Florida surpassing New York to become the third most populous state should be another wake-up call for policymakers that the resulting risk of a major storm or a very active hurricane season is greater than ever. As our scholar has said, our coastal exposure alone has increased to more than 2.9 trillion,” said Dr. Bob McClure, president and CEO of The James Madison Institute. “Instead of worrying about a hurricane trajectory when it’s too late, Florida leaders should take action now on property insurance reforms to better ensure an economic trajectory that bounces back quickly into the positive after an inevitably active hurricane season.”

Read the full report by clicking here.

How Markets Tell the Truth and Politics Tells Lies

Or, how to get more trust in society by Gary M. Galles:

Have you ever tried to work with people you couldn’t depend on to tell you the truth? It isn’t pretty. Without the ability to rely on what you’ve been told (or the assurance that you’ve been told everything relevant), effective cooperation at almost every margin of choice is reduced. That’s because the foundation on which cooperation is built has been undermined.

As John Donne succinctly put it, “No man is an island.” In a modern economy, all of us are dependent on multitudes of strangers not just for our prospering, but for our survival. So the problem of effective cooperation increases exponentially when we expand our horizons to the countless areas in which people — the vast majority of whom don’t even know each other — interact.

People aren’t always truthful because being dishonest can serve one’s interests. Sometimes we perceive a strategic advantage in lying to gain at another’s expense. Our words are also often post-hoc rationalizations, both to ourselves and to others, for why whatever we said or did was a good idea.

But with time, that can make what people say a frail reed to hang upon. And when political power is involved, the incentives for such deception and self-delusion are put on steroids. The payoffs of deception are far greater when it comes to politics, because politics rarely rewards honesty. As the level of dishonesty goes up, the level of trust goes down. And in the absence of trust, information that is vital to cooperation becomes increasingly scarce.

Making matters worse, the amount of information out there is vast. No individual can possibly know the infinite permutations of who, what, when, where, why, and how. As Hayek famously reminds us, knowledge is mostly local, distributed among billions of people. But voluntary market arrangements, based on private property rights, provide a powerful mechanism for overcoming problems associated with our limited knowledge.

The price is right

Most of the time, we don’t really care to know all the details that might have affected our interactions with others. In commercial interaction, we mainly just want to know, “How much?” In that price, we get a glimpse of what trade-offs others are willing to make between goods and services, current versus future consumption, labor versus leisure, and so on. Regardless of the specific determinants from person to person, others’ trade-offs determine what is and isn’t possible for us in any society where people are free to choose.

By revealing more and more accurate information, more and more social coordination is possible. Mutually beneficial arrangements are expanded. Others, including all prospective central planners, don’t know the trade-offs each individual would make; only the individuals involved know for sure. Coordination requires a process that reveals accurate information to those who make choices. Otherwise, the information will be lost, along with any wealth creation that might have followed.

Undistorted market prices provide that information. While what people say may be misleading, people reveal many truths when they engage in market behavior. After all, what you do is often far more truthful than what you say. For example, if you buy a product for $10, you reveal that it is worth at least $10 to you; similarly, if you sell a product for $10, you reveal that what the money might purchase is worth more to you than the product. And those choices reveal valuable information about the real alternatives available to those who might deal with you in the future.

The mendacity of politics

In contrast, because politics is based more on what people say than on what they do, it often short-circuits the mechanisms for discovering the truth: prices, profit, and loss. Politics becomes less about cooperation and more about creating perceptions. In fact, government interference in people’s voluntary relationships substitutes lies for the very truths that might otherwise be revealed. And in a world where relative scarcities are generally what we really want to know the truth about, politics can be very damaging. Consider the following:

1. Price ceilings lie

Price ceilings, such as rent controls, lie about scarcity. In the absence of such controls (truth), market rents tell you the prices at which you can find apartments and reflect the opportunity costs landlords really face. But rent controls impose a price divorced from landlords’ opportunity costs, and a price at which many prospective tenants will be unable to rent an apartment. The price lies to people, telling them that the opportunity costs are cheaper than they really are. In the process, it distorts the terms at which apartments can generally be rented successfully.

2. Price floors lie

Price floors, such as minimum wages, act in a similar manner. In the absence of such controls (truth), market wages tell you the prices at which you can generally find jobs and hire employees. But a minimum wage dictates a price that is divorced from prospective workers’ opportunity costs, and at which many people will be unable to find jobs. Such wages misinform people that unskilled labor’s opportunity costs are higher than they really are. And in the process, minimum wages distort the terms at which jobs can be successfully gotten.

3. Taxes lie

Taxes, which are the price of an artificial input — “government permission to produce and sell” — reflect coercively imposed government burdens rather than opportunity costs of inherently scarce goods and services. Taxes tell buyers that products are scarcer than they really are.

The same is true of import restrictions such as tariffs and quotas, which raise prices above opportunity costs.

The burdens of government regulations and mandates also act like taxes. Government barriers to entry and operation in markets similarly raise prices above what relative scarcity would dictate. All of these interventions result in artificially high prices, underuse, and waste.

4. Subsidies lie

Subsidies act in a parallel manner to taxes, but in the other direction. They communicate to prospective buyers that products are more abundant than they really are, leading to artificially low prices, overuse, and waste.

Not only do voluntary market interactions better reveal the truth about relative scarcities through pricing; they also allow more accurate evaluation of other aspects of trading, such as product and service quality.

Reputation promotes honesty

The key (though often ignored) factor is repeat business. The usual scare stories to justify a “need” for government regulation involve one-time interactions in which others can gain by “cheating” on what they promise. The relevant question, however, is not whether they can cheat, but whether it is in their interest to do so.

We don’t need government protection against acts people will choose not to engage in. And since almost everyone we deal with economically wishes to continue in business, effects on future business act as a performance bond against misbehavior — both directly, as when current customers refuse to deal with such suppliers in the future, and indirectly, through reputation effects on other current and prospective trading partners.

Reputation leads to far better outcomes than scare stories imply. As students of game theory recognize, one-shot games and repeated games generate very different strategies.

Repeat business discourages cheating

Consider an example. Suppose I can cheat you today by providing lower-than-promised quality, and doing so would generate $1 million in increased profits. If it would leave my future business relationships unchanged, I have an incentive to cheat.

But what if I expect the resulting damage to my reputation to cost me $1 million or more in future discounted profits? I can cheat you, but I will not, because I have no incentive to.

The problem in this case is completely solved by markets’ reputation mechanisms. Even if the future losses don’t completely eliminate my incentives to cheat, they sharply reduce them, letting much of the air out of the “we need government regulation” balloon.

Ancient reputation markets

This mechanism, while ignored by ubiquitous state acolytes, is far from new. For instance, the famous 11th-century Maghribi traders of Northern Africa did not rely on government enforcement of international trade arrangements but on reputation-based self-regulation. In fact, a core role of Maghribi trader guilds was to protect themselves against government extortion by threatening them with the loss of future business relationships.

Modern technology has done nothing but improve voluntary reputational institutions. It allows people to detect “cheating” on quality more quickly, reducing the gains to be had from that misbehavior, as with the constantly improving transaction-by-transaction feedback from those on both sides of exchanges on eBay and other websites. Further, it spreads the word to other potential trading partners far faster and more broadly than was once the case, increasing the ability to punish, and thereby deter, such misbehavior.

Government promotes dishonesty

What has been the role of governments in all of this? They have been orders of magnitude behind markets in their creation and utilization of reputational mechanisms. In fact, their efforts have more frequently been turned against efforts to better serve customers, defending the old ways that governments have found to control and extort against potentially superior new options (for example, heavily regulated taxis versus Uber and heavily taxed hotels versus Airbnb) without such parasitic attachments.

This sort of intervention is not new, either. For example, it is striking how taxi regulations targeting Uber and Lyft, to benefit those enriched by government restrictions at the expense of consumers, mirror cities’ earlier strangulation of the jitney (unregulated cab) market, because jitneys were taking too much business from municipality-owned streetcar systems. Further, unlike those who have their own money at stake in preventing or solving abusive behavior in markets, government overseers have far worse incentives to watch as carefully or innovate as much.

Ask yourself if you get more, better, and quicker oversight from Airbnb or the hotel commission.

A great deal of social coordination is only achievable when based on the truth.

Not only does the truth set us free, but freedom in our cooperative endeavors reveals truths we have no other way of knowing.

ABOUT GARY M. GALLES

Gary M. Galles is a professor of economics at Pepperdine University. His recent books include Faulty Premises, Faulty Policies (2014) and Apostle of Peace (2013).

5 Reasons Progressives Should Support Economic Freedom

Freer economies are wealthier, healthier, and more liberating – by Matt Palumbo:

Advocates of interventionism characterize capitalism as the freedom to exploit — that is, as freedom to pay sweatshop wages, freedom to amass unequal wealth, freedom to degrade the environment to enable production, and freedom to discriminate.

While a free market does sometimes allow individuals the freedom to act in ways progressives may not like, the overall effect of economic freedom is to promote many of the values its opponents claim to champion.

Market competition penalizes exploitation and rewards those who contribute to the general welfare.

Skeptics may scoff, but the empirical data support our claims.

The Fraser Institute releases reports on its Economic Freedom of the World (EFW) index annually. The simplified criterion for economic freedom is determined by the size of government (which encompasses spending and taxes), security of property rights, access to sound money, freedom for international trade, and regulation of credit, labor, and business, though there are actually 42 different data points used as measurement, all of which fit into the five categories listed. In other words, the more capitalist the economy, the more it’s considered economically free in Fraser’s index.

Do countries with more economic freedom truly pay poor wages, abuse their environment, and suffer from other flaws critics contend that they do?

Spoiler alert: no.

Listed below are five reasons to support economic freedom.

1. Economic freedom is good for economic growth

To start with the blatantly obvious, economic freedom is good for the economy.

As the chart below shows, in the 20-year period between 1990 and 2010, the most economically free nations grew at rates more than double those of the least free nations.

Even a tiny level of growth compounds heavily over time. An economy that grows half a percent faster than it would have otherwise grown over a 100-year period will experience 400 percent more growth overall than without that extra half a percentage point. The difference between 4 percent and 3 percent annual growth determines whether it will take an economy 18 years to double in size or 24 years (simply divide 72 by average annual growth to determine how long it will take for an economy to double in size).

Critics argue that due to rising inequality, those at the top have captured all the benefits of economic growth. According to this argument, less economically free nations may have slower growth, but the increase in wealth is more evenly distributed among the population. I refute this argument in the next section.

2. Economic freedom makes everyone richer

Economic growth translates to higher incomes not for just the wealthy, but for everyone. To quote from Fraser’s findings, in purchasing power parity adjusted 2011 dollars, per capita income in the freest nations was $39,899, compared to $6,253 in the least free nations. These numbers are just averages, so technically they may be overstated if an income distribution is right-skewed.

But the poor are richer in more economically free nations than in the least economically free nations by a multiple of eight, with a per capita income of $11,610 compared to $1,358. Fraser researchers even note that the average income of the poorest 10 percent of the population in the freest nations is nearly double the average income in the least free nations. So whatever one thinks about inequality, purchasing power is stronger in economically freer nations. And greater purchasing power for the poor means a higher standard of living.

3. Economic freedom smooths the business cycle

Economic freedom not only helps the economy grow faster overall, but it also makes growth less volatile. There are only three studies on the subject that I am aware of (published by Noel Campbell and Thomas Snyder in 2012, Jody W. Lipford in 2007, and John W. Dawson in 2010), but all yield the same results: a negative correlation between economic freedom and volatility in the business cycle. Campbell and Snyder do find that there are diminishing returns to the positive effects economic freedom yields for the business cycle, but there is no doubt that the effects are positive.

The boon that economic freedom provides translates to employment stability. Research published at the St. Louis Federal Reserve found that, domestically, the freest economies (using the Fraser Institute’s index) experienced faster employment growth. To give some exact figures, the paper found that a one-unit increase in economic freedom (Fraser uses a scale of 1–10, with one being the least free and 10 being the most free) resulted in increased employment growth of 3.8 percentage points from 1980 to 1990, 4.5 percentage points from 1990 to 2000, and 1.4 percentage points from 2000 to 2005.

These results are found after adjusting for other differences that would affect employment growth, such as the percent of population with a college degree, countries with a larger percentage of the population employed in declining industries (e.g., manufacturing), and population density. The authors argue that economic freedom stimulates employment growth in two ways: by encouraging entrepreneurial activity and by reducing costs for existing businesses.

Such benefits to employment occur internationally as well. Summarizing some of the existing research on the topic, economist Horst Feldmann writes:

A substantial body of evidence supporting these hypotheses has accumulated in recent years. For example, using country averages from 45 industrial and developing countries, Feldmann (2007) finds that a higher level of economic freedom in 1980/1985 is correlated with a decline in both the unemployment and the youth unemployment rate over the period to 2000–2003. Furthermore, he finds an increase in economic freedom from 1980/1985 to 2000–2003 to be associated with a fall in the youth unemployment rate over the same period. Additionally, using panel data from 81 industrial and developing countries he finds that a higher level of economic freedom is correlated with a lower youth unemployment rate.

4. Economic Freedom Helps the Environment

Before we dive into the evidence, it’s worth exploring why we should expect economic freedom to help the environment. The most basic explanation is that private ownership incentivizes the conservation of resources. When everyone owns a resource in common, the incentive to conserve is removed. This is called the tragedy of the commons. While someone may conserve a resource on their own private property because they know it will be worth more in the future, the incentive to conserve disappears when the possibility that someone else can take the resource becomes part of the equation.

To give a few examples of theory in action, Richard L. Stroup of PERC (the Property and Environment Research Center) writes:

Access to clean water, sanitation measures, life expectancy, and deforestation all are more favorable in nations with stronger private property rights. When property rights were well protected, for example, about 90 percent of the population had access to safe water; but in nations with weak property rights, only about 60 percent of the people had that key health advantage.

The Fraser Institute finds that more economically free nations have higher levels of air quality, and the Heritage Foundation finds that nations with the greatest protection of property rights have the most favorable scores on Yale University’s Environmental Performance Index.

Environmental regulations come with a cost. If the United States imposed all of its environmental regulations on developing nations, it would destroy their economies. A country must have a certain degree of wealth to be able to afford such regulations, which is itself a reason for environmentalists to support economic freedom. “Wealthier,” as they say, “is healthier.”

5. Economic Freedom Helps Women

In her honors dissertation at Florida State University, Signè Thomas examines a potential social benefit of economic freedom: it improves the socioeconomic status of women.

Thomas compares three different metrics of socioeconomic status against the economic freedom indices in those countries. These metrics include the Gender Empowerment Measurement (GEM), Gender Inequality (GI) Index, and Gender Equality Rating (GER). The GEM is based on the number of seats held in parliament by women; the number of female legislators, senior officials, and managers; the number of female professional and technical workers; and the ratio of female to male income. The GI index measure looks at the maternal mortality ratio, adolescent fertility rate, female parliamentary representation, educational attainment, and female labor force participation rates. The GER looks at the degree to which a country enforces laws and policies that promote equal access for men and women in education, health, economic participation, and legal protection.

After controlling for religion, political rights, ethnic diversity, natural resources, and GDP, the results are clear: more economic freedom leads to a nation performing more favorably on the metrics discussed.

The evidence refutes the critics of capitalism. The market system benefits not only the rich but the poor and middle classes as well by raising incomes for everyone and stabilizing economies. The benefits of free enterprise stretch far beyond mere monetary benefits, as capitalistic countries have cared better for their environments and helped elevate the social status of women more than any piece of legislation could hope to.

The Nonsense of Open Borders

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Jeb Bush

Liberal Republican presidential contender and former Florida Governor Jeb Bush stated “I can persuade conservatives on amnesty.”  Of course, Bush is referring to the federal government’s refusal to build a viable fence and enact reasonable measures to protect our republic from the vicious hordes of invading illegal immigrants.  I find this most infuriating.  Here we unfortunately have individuals who voluntarily run for political office. Those fortunate enough to fool us and win election take an oath of office.  That oath includes swearing or affirming to defend and uphold the United States Constitution.  The Constitution itself instructs office holders to defend the United States from enemies both foreign and domestic.

So when I see, read, or hear about congress and the president or any individual more willing to govern on behalf of illegal immigrants than for example ranch owners killed by illegal immigrants, it is high time to make  some logical changes.  I am sure that Jeb Bush and every other presidential contender is well aware of the clear and present dangers presented by the teaming masses of illegal immigrants.  It does not matter if the majority of them are strolling into our country illegally for better opportunities.  The United States is a nation of laws and illegal immigrants are continuously breaking our immigration laws.  Thus they are law breakers and should be dealt with accordingly.  If the current president, presidential candidates or those in the legislative branch care so much about those living in impoverished conditions in other countries, perhaps setting a better example would be better in the long run.

What I am zeroing in here is that the United States should first begin to once again restore real economic growth and authentic opportunities for Americans!  After which, the United States should export those worthy free market concepts to other nations like Mexico and Honduras, for example.  The only thing happening now regarding thirty million illegals in our republic is that they are replacing numerous Americans in the workplace throughout the country.  To add insult to injury, those born in America and are blessed to have a job or run a business are forced to foot the bill for a myriad of government/Obama administration hands to the illegals. Those handouts include medical care, nice houses, drivers licenses, automobiles, education and more.

If the federal government officials in office continue to refuse to show disregard for the republic they were elected to serve, then perhaps we would be better off if they go and serve in Mexico or some other nation whose values they hold in higher esteem than ours. After all, those in office who won’t even work to secure our borders are doing the bidding of the United Nations agenda 21 effort to do away with our national sovereignty.  To add insult to injury, the federal government refusal to properly secure the borders has opened wide the door of opportunities for dedicated muslims from around the world to freely saunter into our republic.  So now, I believe that some of earths most dangerous dedicated muslim terrorists are comfortably encamped within the United States and could soon unleash destructive terrorist havoc.  I believe it will not be on the level of the 9-11 attacks that obliterated the World Trade Center, but brutal none the less.

The dedicated muslim group ISIS has threatened to murder Americans in America.  Cities like Dearbornistan, MI could in my opinion house beehives of terrorist planning activities.  History will prove whether I am right or wrong. But it is fool hearty for our elected officials to leave this nation so vulnerable to the possibility of a dedicated muslim terrorist attack.  I am still shocked and amazed that president Obama has not been taken to the wood shed for doing the traitorous bidding  of the United Nations.  Remember when he threatened the state of Arizona because of the effort to simply secure that states border with Mexico?

No nation of any major significance has ever remained so after losing or giving up their border security.  Such utter nonsense cannot be tolerated, unless of course the goal is to rid the United States of her God given sovereignty.   Progressives like Presidential advisor Valerie Jaret and Attorney General nominee Loretta Lynch support the very open border policies that could be the undoing of this, the greatest nation EVER!  If the government big wigs will not secure the borders, then sadly history will reveal the extreme stupidity, and betrayal exhibited by those we elect.  That will be the just reward granted “We the People” if we shrink from the challenge to restore the Love of God and country throughout our beloved republic.

May God bless America and may America bless God.

What Economic Elites Don’t Want You to Know about Crashes

A 1921 event will change your understanding of depressions by Douglas French:

The Great Recession drags on everywhere except for Wall Street, Washington, DC, and Ben Bernanke’s consciousness. “By stabilizing the financial system, we avoided much, much worse, persistently bad consequences for our economies,” Bernanke said in an interview with his old friend Mervyn King (former head of the Bank of England) on the BBC.

Bernanke says he was stimulated by the opportunity to open up his monetary bag of tricks. “I feel that the work I did as an academic paid off and that I was able to use that to help solve these problems,” he said. “That’s very satisfying, though it’s not an experience I would voluntarily repeat.”

Maybe it’s paying off for Bernanke as he makes $200,000 per speech, but for the rest of us, not so much. The former Fed chair famously told Milton Friedman the central bank wouldn’t make the same mistakes as the 1930s Fed. From his analysis, Bernanke thinks the central bank tightened the money supply in the ‘30s to cause the Great Depression. That lesson prompted him after the 2008 crash to unleash a barrage of rounds of quantitative easing and an Operation Twist while quadrupling the central bank’s balance sheet to “stabilize the financial system.”

Jim Grant sees it differently, thinking Bernanke and company should have kept their hands off the money supply and interest rates. Grant, the financial world’s foremost wordsmith, provides the depression of 1920–21 as his evidence.

His book The Forgotten Depression: 1921: The Crash That Cured Itself chronicles how the market works marvels if left alone. Grant tells the reader right away, “The hero of my narrative is the price mechanism, Adam Smith’s invisible hand.”

Yes, there was a Treasury and a still-new Federal Reserve. But Lord Keynes had not yet published his General Theory, the bible of today’s meddling monetary bureaucrats. Presidents Woodrow Wilson and Warren G. Harding ignored the downturn at best, “or [implemented] policies that an average 21st century economist would judge disastrous,” Grant writes.

The nation’s money was backed by gold, and the monetary mandarins had actual business experience to draw upon rather than just theories and equations running through their heads. The man who headed the central bank was William P.G. Harding (no relation to the president), who was born in tiny Boligee, Alabama, and was a career commercial banker. The Treasury secretaries during the period were David F. Huston, who had been secretary of agriculture, and industrialist, businessman, and banker Andrew W. Mellon.

The depression in question lasted 18 months, from January 1920 to July 1921, far shorter than the 43 months of the 1929–33 Great Depression and a fraction of the recent Great Recession. Government’s inaction proved the point Murray Rothbard made in his book America’s Great Depression (quoted by Grant): “If a government wishes to alleviate, rather than aggravate, a depression, its only valid course is laissez-faire — to leave the economy alone.”

The numbers in 1920–21 are jaw dropping. Producer prices fell 40.8 percent, industrial production dropped 31.6 percent, corporate profits plunged 92 percent, and stock prices fell by 46.6 percent. Joblessness was as high as 19 percent.

All of this pain after the Dow Jones Industrial Average nearly doubled from 1918 to the start of 1920. Speculative fever was such that those playing the market on margin were willing to pay 20 percent interest to bet on such a sure thing. “That much was evident to the miscellaneous company of lay investors who were knocking down Wall Street’s doors,” Grant writes. “Hotel chefs, undertakers, union officials and leisured ladies were among the latecomers to the frolic.”

The Federal Reserve raised its discount rate from 6 percent to 7 percent on June 1, 1920, and by Election Day of that year, the Dow was down 29 percent. Business owners demanded wages be reduced while American Federation of Labor president Samuel Gompers countered with, “We will tolerate no reduction of wages.” In the end, management won.

Herbert Hoover, who took over as secretary of commerce in 1921, sounded almost Rothbardian about the boom and bust, quoted by Grant as saying, “we speculate, overextend our liabilities, slacken down our effort, lower our efficiency, waste our surplus in riotous living instead of creation of new capital, drive our prices to vicious levels, lose our moral and business balance.” People would “have to come into the cold water in the end.”

Upon taking office in March 1921, Andrew Mellon said citizens should save the government’s money rather than spend it. Besides fiscal constraint, America benefited from the country’s high interest rates, which attracted a continuous inflow of gold. Grant explains that in the summer of 1920, gold covered 40 percent of the notes in circulation. By May 1921 that percentage doubled and the notes at the New York Fed were collateralized completely. Commodity prices collapsed and money (gold) flowed where it was most highly valued.

As quickly as it began, the depression was over. Benjamin Anderson, then an economist for Chase National Bank, wrote in his Economics and the Public Welfare: A Financial and Economic History of the United States, 1914–1946, “In 1920–21, we took our losses, we readjusted our financial structure, we endured our depression, and in August 1921, we started up again. By the spring of 1923, we had reached new highs in industrial production and we had labor shortages in many lines.”

Note to Drs. Bernanke and Yellen: this bounce was not fueled by an increased money supply. Grant makes clear in a footnote that the money supply fell 14.4 percent from March 1920 to January 22, 1921, and what the Fed had direct control of — the monetary base — fell 17 percent from October of 1920 to January 1922. From this tightness, the Roaring ‘20s was spawned.

But Lord Keynes believed the cure — instability of prices — was instead a thorn in society’s side. “The more troublous the times, the worse does a laissez-faire system work,” Keynes told the National Liberal Club in December 1923. He believed instability caused unemployment, profiteering, and precarious expectations. In the wake of laissez-faire’s great triumph, Keynes put forth the idea that has stayed with us ever since: “Mandarin rule was the new idea: governance by economists,” Grant writes.

In February 1936, Keynes’s General Theory was published and the price system was replaced by central bank stabilization forever, so far. “The General Theory is nothing less than an epic journey out of intellectual darkness,” Nobel Prize winner Paul Krugman gushed.

Grant’s Forgotten Depression makes an airtight case for a return to intellectual darkness. Keynesian enlightenment has brought us prolonged financial suffering and substandard economic growth. Bailing out big banks and failed entrepreneurs keeps capital in the hands of the inefficient, to be wasted. Remembering Hoover, we have lost our “moral and business balance.” The Fed and Treasury must get out of the way, allowing us “cold water in the end.”

ABOUT DOUGLAS FRENCH

Douglas French writes for Casey Research, Laissez Faire, and other publications. He is the author of three books: Early Speculative Bubbles and Increases in the Supply of MoneyWalk Away, and The Failure of Common Knowledge.

ABOUT JAMES GRANT

Obama is agreeing to ‘De Facto Nuclearization’ of Iran

After years of stating (hundreds of times)the U.S.will not allow Iran to achieve nuclear weapons Obama is doing the opposite.

Recently at a Senate hearing former Secretary of State under President Reagan criticized the administration’s Iran policy, reminding lawmakers that the“first point to remember is Iran is the leading state sponsor of terrorism.” He also said ‘No Empty Threats’ if you want people to trust U.S. foreign policy. Clearly Obama has lost the trust the U.S. once had.

  • U.S., Iran Discussing Nuclear Compromise – George JahnWith time for negotiations running short, the U.S and Iran are discussing a compromise that would let Iran keep much of its uranium-enriching technology but reduce its potential to make nuclear weapons, two diplomats tell AP. Such a compromise could break the decade-long deadlock on attempts to limit Iranian activities that could be used to make such arms: Tehran refuses to meet U.S.-led demands for deep cuts in the number of centrifuges it uses to enrich uranium.The proposal could leave running most of the nearly 10,000 centrifuges Iran is operating but reconfigure them to reduce the amount of enriched uranium they produce. Experts warn that any reduction in centrifuge efficiency is reversible more quickly than a straight decrease in the number of machines, an argument that could be seized upon by powerful critics of the talks in the U.S. Congress.Washington demanded a year ago that Tehran reduce the number of operating centrifuges from nearly 10,000 to fewer than 2,000. That would increase the time it would need to make enough weapons-grade uranium from a few months to a year or more. By November, when the talks were extended, diplomats said the U.S. and its partners were ready to accept as many as 4,500, but Iran had not significantly budged. (AP-Washington Post)
  • Continued Diplomacy with Iran Means Its De Facto Nuclearization – Bret StephensOn May 18, 2009, President Obama said of nuclear diplomacy with Iran: “We’re not going to have talks forever. We’re not going to create a situation in which talks become an excuse for inaction while Iran proceeds with developing a nuclear – and deploying a nuclear weapon.”
    Since then, diplomatic efforts have included the 2009 “fuel swap” proposal; the 2010 Brazil-Turkey-Iran declaration; the 2011 Russian “step-by-step proposal”; the 2012 diplomatic rounds in Istanbul, Baghdad and Moscow; and finally the 2013 “Joint Plan of Action,” a six-month interim deal that is now in its 13th month. (Wall Street Journal)

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Terrorists and Our #@*%+ President

obamacairYou know something is terribly wrong when three former Secretaries of State, Henry Kissinger, George Schultz and Madeleine Albright tell a Senate Armed Services Committee that the President of the United States is an idiot with no idea how to conduct foreign affairs. Well, they didn’t say it in those words, but that was pretty much the message. That was January 29.

Two days earlier retired 4-Star General James Matthis, former head of U.S. Central Command, former Army Vice Chief of Staff and 4-Star General Jack Keane, and Navy Admiral William Fallon, also a former CentCom chief, had also testified before the Committee. They had a similar message as the diplomats. Obama and the other idiots in the White House are completely clueless regarding the threat of radical Islam in general and a potential nuclear Iran in particular.

This is, after all, a White House that is trying to call those intent on taking over the entire Middle East and, after that, the rest of the world anything other than “terrorists.” They have used terms such as “insurgents”, “activists” and “militants.” Here at home, they are still referring to the killings at Fort Hood as “workplace violence.” Don’t any of these idiots understand that the terrorists, whether they call themselves al Qaeda or the Islamic State, Hezbollah, Hamas or any other name all constitute the same threat?

That’s what the generals addressed. They told the Senate committee that absence of a White House strategy makes the ISIS, Iraq, Syria, Afghanistan wars “unwinnable.” I have been around since the end of World War II and that stretch of U.S. history is one in which we fought to a stalemate in Korea and a loss in Vietnam. After we won the conflicts in Afghanistan and Iraq, Obama pulled out and now they are lost too. There was a time when Americans and their leaders knew how to win wars.

Indeed, there was a time when Americans preferred to elect generals to be their President, starting with George Washington. Among those with that rank were Andrew Jackson, Zachary Taylor, Franklin Pierce, Andrew Johnson, Ulysses S. Grant, Ruther P. Hayes, James A. Garfield. Chester A. Arthur. Benjamin Harrison, and Dwight D. Eisenhower. All the others had also served in the military in some capacity…except Barack Hussein Obama.

Obama not only doesn’t have experience in the military, he doesn’t seem to like them much. He has done everything he can to reduce our military capacity to fight a war anywhere or to show any genuine respect for the troops on active duty. The only uniform he ever wore was as an Indonesian Boy Scout.

Retired Marine Gen. Jim Mattis told the Congress “America needs a refresh national security strategy. We need to come out from our reactive crouch and take a firm, strategic stance in defense of our values.” Apparently those values don’t matter to the White House or to those left-wingers who wet their pants over the popularity of “Sniper”, a film that pays tribute to our troops who fought the war in Iraq.

Obama - Failed Foreign Policy

Under Obama’s term in office, radical Islam has increased four-fold in the past five years, ISIS ten times since 2012 and Iran has masterminded control of the capitols in Beirut, Lebanon, Damascus, Syria, Baghdad, Iraq, and now in Sanaa, Yemen. It has been the power behind Hezbollah in Lebanon and Hamas in Gaza.

Gen. Keane described Obama’s withdrawal from Iraq and Afghanistan as an “absolute strategic failure.” He called radical Islam “the major security challenge of our generation.”

Regarding Iran, Gen. Keane said, “In 1980, Iran declared the United States as a strategic enemy and its goal is to drive the United State out of the region, achieve regional hegemony, and destroy the state of Israel.”

“Is there any doubt that Iran is on the march and is systematically moving toward their regional hegemonic objective?” asked Gen. Keane. “Iran has been on a 20-year journey to acquire nuclear weapons, simply because they know it guarantees preservation of the regime and makes them, along with their partners, the dominant power in the region, thereby capable of expanding their control and influence. Add to this their ballistic missile delivery system and Iran is not only a threat to the region, but to Europe, as well.” The U.S. in time will be in missile range.

“We have no comprehensive strategy to stop it or defeat it,” said Gen. Keane.

Thanks to Barack Obama, the United States of America can no longer be seen as the world leader, opposing the forces that seek to impose control. Former allies, particularly in the Middle East, no longer have any confidence that we would come to their defense if they were attacked.

Thanks to Barack Obama, our enemies have been emboldened and our allies confused, but it is not that confusing. He is an idiot who lacks any grasp of history’s lessons and he is a coward who cannot be expected to seriously respond to our own and our allies’ enemies.

© Alan Caruba, 2015

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Food Fight in Sarasota County Public Schools

The Sarasota County School Board some time ago voted to have Meatless Mondays, much to the chagrin of parents and students. At the February 3rd, 2015 school board meeting one school board member, after listening to parents and students, offered the board the opportunity to rethink its decision to dictate what students should and should not eat, making a motion to end Meatless Mondays (see video below). Three members of the school board rejected that motion. Why?

Wendy McElroy in her column “Eating Right: Your freedom to choose your food is sacred” writes:

Political correctness now drives the civics of food with bountiful nations attempting to dictate what people can eat and how much. Why? For their own good.

The public debate revolves around whether a particular food choice is healthy or not. The real debate is, “Who should choose: you or someone else?” The defense of food freedom needs to turn on the right of people to express themselves through dietary choices that reflect not only their preferences but also their judgment. Food is self-expression as much as music or literature is. If the government can control the flavors of life you choose to swallow, then it can control everything else.

The three school board members who believe that “government can control the flavors of life you choose to swallow” are Caroline Zucker, Jane Goodwin and Shirley Brown. Because of this food freedom died in Sarasota County’s public schools.

VIDEO: Sarasota County School Board Votes Against Student (Lunch) Choice:

But why is food freedom important to our children and parents? Because food is much more than a health matter.

McElroy notes, “The State uses two basic arguments to justify the micromanagement of what people eat. First, laws are necessary to force people to make healthy choices. This argument assumes that politically motivated bureaucrats know what is best for people better than they do themselves. Second, people’s unhealthy choices make them tax burdens on the socialized medical system. Having “relieved” or deprived people of the responsibility for their own medical maintenance, the State uses their dependence as an excuse to impose social control. It is important to counter both arguments, but doing so often ignores an equally essential point.”

“Food is not merely a matter of health or sustaining life. It is one of the main ways people express themselves in terms of culture, ethnicity, religion, psychology, family history, and pure preference. Food choices are personal; they define our identity as surely as choices in attire or music do,” writes McElroy.

The government’s increasing interference in food choice is often viewed as benevolent, because it is discussed in terms of health benefits. Food regulation is anything but benevolent. The government is not only trying to define who and what you are; it is, at the same time, trying to convince you that the denial of freedom is “for your own good.”

If you are what you eat, then food laws are an attempt to control your identity.

Meatless Monday is “local control of your child’s identity” courtesy of Sarasota County School Board members Zucker, Goodwin and Brown, nothing more and nothing less.

ABOUT WENDY MCELROY

Wendy McElroy (wendy@wendymcelroy.com) is an author, editor of iFeminists.com, and Research Fellow at The Independent Institute (Independent.org)

Hijacking a Tribute to Pioneering Black Republicans

A year ago, I went to see Reince Priebus, chairman of the Republican National Committee (RNC), who happens to be a good friend. I wanted his approval for an idea that I had. The previous year, the GOP had just come off of a disastrous election cycle with Mitt Romney losing his bid to become president. Barack Obama had beaten him in every demographic except White males. Reversing recent inroads into the Black community, Romney received only 4 percent of the African American vote.

Rather than simply bemoan that setback, I suggested that we create an annual Black History Month honor to be called the Black Republican Trailblazer Award. Essentially, it was a luncheon to recognize, pay homage to, and to honor African American Republicans who have paved the way for people like me and others to be active in our party while making a major contribution to America along the way.

Priebus immediately saw the value of my idea and gave me the greenlight to move forward, though some staffers were not enthusiastic about the idea. I offered to raise money to underwrite the event, but Priebus insisted that the RNC pay for it.

The 2013 honorees were William T. Coleman and Robert J. Brown. Our keynote speaker was David L. Steward. Coleman was the brains, along with former Supreme Court Justice Thurgood Marshall, behind the landmark Supreme Court case Brown v. Board of Education. He was Secretary of Transportation under President Gerald R. Ford.

Bob Brown was the highest ranking Black staffer for former President Richard Nixon. Coleman and Brown were both civil rights icons who never forgot their obligation to fight on behalf of Blacks. The keynote speaker was Dave Steward, head of World Wide Technology in St. Louis. He operates the largest Black-owned business in the U.S. with annual revenues in excess of $ 6 billion.

I was able to organize and execute the event in less than 30 days, despite people trying to sabotage me every step of the way. We had more than 250 people in attendance, probably 40 percent of them were Democrats who appreciated our honorees’ trailblazing contributions.

Fast forward to 2014 when the honorees were former Assistant Secretary of Labor Bill Brooks, former Ohio Supreme Court Judge, Sara Harper and former Secretary of the U.S. Department of Health and Human Services, Louis Sullivan. The keynote speaker was former Texas Education Commissioner Michael Williams.

Though Priebus didn’t know it, members of his staff had unilaterally decided that they no longer needed me and organized the event without me or my input. Just looking at the names of this year’s awardees, you can tell that I had nothing to do with it: Senator Tim Scott (R-S.C.), Congressman Will Hurd (R-Texas), and Congressman Mia Love (R-Utah). They are good and honorable people whose election to Congress as Black Republicans were historic – but not trailblazing.

An award is something you are given; an honor is something you have earned. They deserve an award, but not this honor.

In my view, a true trailblazer should be like a candle: they should consume themselves to serve as a light for others. The more light a candle gives, the less noticeable it becomes. Without a doubt, Bill Coleman, Bob Brown, and Sara Harper are trailblazers. They not only helped change America, but they also opened doors within the Republican Party for Blacks like me.

Because the RNC staff has prostituted and perverted the clear intent of the annual Black Republican Trailblazer luncheon, I cannot, in good conscious, attend this year’s event. To all my supporters who packed the first two events, I apologize. This was not of my making and I regret I am just finding out about this gross betrayal of trust.

To those who have asked whether I am leaving the party, the answer is an emphatic no. I can’t walk away because of petty staff jealousies over my personal relationship with the chairman. To walk away now would be a betrayal to everything these Black Republican trailblazers endured.

To avoid being placed in this position again, however, I am going to narrow the scope of my work strictly to party organizations and elected officials who are going to treat me with the respect that I deserve and have earned over the past 25 years. No longer will I be so quick to reflexively roll up my sleeves when the party is in need.

I am determined to walk the path that Bill Coleman, Bob Brown, Sara Harper, and Dave Steward have blazed before me. To do anything less we make me unworthy of their sacrifices.

EDITORS NOTE: This column originally appeared on BlackPressUSA.com. The featured image of black Republicans is from the National Archive.

The Greatest Liberal in the World

What evil deed must be done to win the “Greatest Liberal in the World” award?

Bibigate – The Contretemps over Netanyahu’s Speech to Congress on Iran’s Nuclear Program

Last Saturday night a retired U.S. Navy officer said “I’ll bet you even money that Bibi will withdraw from the proposed speech before a joint session of Congress”. I joshed him and said “I wouldn’t count on it.”

Sunday, I received suggestions that Israeli Prime Minister Netanyahu should have a Plan B given the rising contretemps in the media over US House Speaker John Boehner’s invitation to talk about Iran before a Joint Session of Congress. There  was a welter of criticism from the White House, Minority Leader Nancy Pelosi and mainstream media talking heads  included David Brooks of the New York Times and  Chris Wallace and Shepherd Smith of  FoxNews.  They were admonishing Speaker Boehner and Israeli Ambassador Ron Dermer with terms like “dicey, wicked more for photo op” and “partisan politics” and “unwise for Israel.”  It was ostensibly about the lack of courtesy shown the President by not giving prior notice to the White House of the invitation extended to Netanyahu.  There was pique by certain unnamed senior officials in the White House over what some might call Bibigate.

However, let us remember there was increasing  bi-partisan support for new Iran nuclear sanctions legislation despite  the President’s warning that he would veto it if it was passed. New Jersey Democratic Senator Bob Menendez was particularly incensed at the President for his questioning his motivations.  Menendez said: “The more I hear from the administration and its quotes, the more it sounds like talking points that come straight out of Tehran. And it feeds to the Iranian narrative of victimization, when they are the ones with the original sin.”  Lest, we forget, the President had threatened a veto if increased Iran legislation passed.  It was abundantly clear in the January 16th Joint Press Conference at the White House when the President Obama agreed with UK PM David Cameron’s remarks, urging Senators on Capitol Hill not to take up new sanctions legislation at a “sensitive time”. Thus, one could speculate that Speaker Boehner’s invitation to Netanyahu on January 21st to speak to a Joint Session of Congress in early March was a rebuttal to the President.

The rancor over Bibigate was visible in the final week of January into February.  Wednesday, January 28thCNN released a clip of Fareed Zakaria’s February 1st GPS interview with President Obama.  Obama suggested that a visit with Netanyahu was “inappropriate,” as it was too close to the upcoming March Knesset elections.  The President said, “I’m declining to meet with him simply because our general policy is, we don’t meet with any world leader two weeks before their election, [I] think that’s inappropriate. And that’s true with some of our closest allies.”  Those comments engendered another rebuttal that the White House may have been giving tacit support to the involvement of Presidential Campaign aide Jim Byrd in advising the Labor-Hanuat opposition to Netanyahu in the Knesset general elections.

Friday, January 30th, Jeffrey Goldberg published an interview in The Atlantic with Israeli Ambassador to Washington, Ron Dermer, a former US Republican strategist and member of the Netanyahu’s inner circle.   Dermer discussed the background for Boehner’s issuance of the invitation to Netanyahu to speak to Congress on Iran. Dermer suggested that while the Prime Minister “meant no disrespect towards President Obama … Netanyahu must speak up while there is still time to speak up”.

That led Cornell Law Professor William Jacobson on the blog Legal Insurrection to opine that Obama’s not offended; he just wants Bibi out of office.

The Hill round up on the Sunday Talk shows had comments from Rep. Paul Ryan on NBC’s “Meet the Press” and Arizona Senator John McCain on CNN’s “State of The Union.”  Over the issue of Speaker Boehner’s invitation to Netanyahu Ryan said,” The Invitation to Israeli prime minister was ‘absolutely’ appropriate. I don’t know if I would say it’s antagonizing”.  McCain drew attention to the new low in U.S. – Israel relations under Obama saying, “It’s the worst that I’ve ever seen in my lifetime.”

Virtually out of nowhere, Sunday, February 1st, commentary from an “Insight” blog post of the Israeli Institute for National Security Strategic Studies at Tel Aviv University shed light on a bizarre theory of what was behind Bibigate.  The author of the INSS post, Zaki Shalom, suggested:

The backdrop for the Administration’s expressed dissatisfaction with Israeli Prime Minister Netanyahu’s intention to present his position on negotiations with Iran to Congress, creating a rather transparent linkage between Israel’s positions on negotiations with Iran and sanctions, and U.S. willingness to assist in combating the Palestinian attempt to exert international legal and diplomatic pressure on Israel.

On Thursday, January 30, 2015, the Senate Banking Committee voted out a ‘softer’ version of the Kirk –Menendez Sanctions legislation by a vote of 18 to 4, including six Democrats.  As reported by The Hill, the legislation:

… Would impose sanctions on Iran if a comprehensive agreement to roll back its nuclear program is not reached by June 30 and would allow the president to waive sanctions indefinitely for 30 days at a time.

However, the bill would be shelved until March 24th for a possible floor vote.  Senator Bob Corker (R-TN) said, “All of us understand it’s not going to be voted on before March 24”. While the measure may portend a possible override vote should President Obama veto it that still requires Senator Menendez to keep the group of 17 Democratic Senators who support this version of sanctions legislation in the bi-partisan alliance.

Israeli concern over a weak final agreement by March 24th  is reflected  in a Times of Israel report published  Sunday, February 1st,” US sources deride Israeli ‘nonsense’ on Obama giving in to Iran.”  Israeli  sources contend that Iran is likely to get 80 % of what it is seeking- the ability to continue enrichment with  upwards of 9,000 centrifuges, especially the advanced IR-2s. The Israelis believe that would give Iran nuclear breakout within weeks.  Add to that mix Iran flaunting pictures in a ToA  report of a Medium Range Ballistic Missile (MRBM) capable of covering all of Europe. That is to be followed in 2015 to 2016 by one cap ICBM range. Of course there a number of us who believe that Iran may already have purchased nuclear weapons from rogue regimes, but may lack nuclear warheads, which are likely to be supplied by North Korea to be mounted on those ICBMs.

Especially as the President observed, there is less than a 50/50 chance of reaching an agreement. Then assuming the current polls are correct and Bibi retains the ability to form a new Knesset coalition after the March 17th election, he may speak with both authority and strength.

As a usual astute observer of Israel from Europe, Imre Herzog, opined when I wrote him on my side bet “you might win the bet”.

EDITORS NOTE: This column originally appeared in the New English Review. The featured image is of U.S. House Speaker John Boehner and Israeli PM Benjamin Netanyahu. Washington Times File Photo  5-24-2011.