If I Were Mayor: Defending Spec's Liquor Store

Spec's--Houston's largest liquor chain--recently opened a new store new Memorial Park. Now it finds itself caught between two government entities who can't seem to agree on whether the store is legal or not.

State law allows local governments to restrict alcohol sales within 1,000 feet of a school, and at the request of Houston Independent School District, the city has done so. Memorial Elementary is 665 feet away. Spec's received permission from the city to build the store, at a cost of $400,000. Now the Texas Alcoholic Beverage Commission wants to revoke the store's license. Last week, the Harris County Attorney's office filed suit to shut down the store.

The entire situation is unjust on several fronts. First, Spec's was required to obtain permission from both the city and the state to open the store. This alone is a violation of their rights--the freedom to act without interference from others. Second, the state now wants to revoke that permission, at great expense to the store owner.

County attorney Marc Hill told the Chronicle:

There’s strict liability laws, and you’d think Spec’s, as experienced as they are, would understand that. If they have no regard for the law, somebody has got to bring them to bear.

Apparently Hill has no regard for the truth, given that Spec's did in fact attempt to follow the law in seeking city permission. The store owner--John Rydman--double-checked with the city and was told that neither the city nor the school opposed the store. What else was Rydman supposed to do to demonstrate a "regard for the law"?

Rydman took reasonable steps to insure that he was honoring the law. He is a businessman, not a seer. The city erred in granting permission without a formal variance, and now Spec's is expected to bear the consequences of that mistake. Rydman is understandably upset, but he is failing to address the fundamental issue:

I had no idea they could come back after this and change their minds. I
wasn’t about to spend a whole lot of money for nothing.

You get everything from the city that you need and go ahead with your
plans and six months later they come in and try to take the permit away.

What Rydman doesn't understand is that this is the very nature of arbitrary laws. When an individual can act only be permission, and not by right, that permission can be withdrawn at any time. When one accepts the premise that government can regulate and control the actions of individuals, he can only complain about the details--in this case, the distance from a school.

If I were mayor, I would pursue a formal variance for Spec's. In fact, so long as any land-use restrictions remained on the books, I would pursue a variance for every property owner requesting one. I would issue a formal apology to Mr. Rydman and demand that the state compensate him for any expenses incurred as a result of its attempt to revoke his permit. I would defend the right of every property owner to use his land as he chooses, rather than grovel at the feet of city officials for permission.

In typical fashion, the rights of adults are being trampled in the name of "protecting the children". The city has numerous restrictions on the actions of adults in areas around schools, churches, and parks. All were enacted under the pretense of protecting children from unsavory activities. The fact is, the mind destroying Progressive education taught in schools and the mysticism taught in the churches are far more dangerous than the sale of a six-pack or a bottle of Thunderbird.

I Have Rights, But You Don't

It is not uncommon for an individual or group to advocate contradictory political positions. Such a situation is currently on display in neighborhoods near the Medical Center. Neighborhoods in the area are fighting to defend their property rights while simultaneously fighting to violate the property rights of a local developer.

The neighborhoods of Center City, Southampton, and Boulevard Oaks are supporting legislation that will remove the ability of the Medical Center to use eminent domain to seize property. The Medical Center has possessed this power for fifty years, and in recent years has used it to condemn numerous houses and thereby violate the property rights of the owners of those homes. Home owners in the area fear that they could be next.

For more than a year, two of these neighborhoods—Southampton and Boulevard Oaks—have fought to stop Buckhead Development from constructing the Ashby High Rise. The neighborhoods have enlisted the help of City Hall to delay the project, and thereby have violated the property rights of the developers.

The right to property is the right to own, use, and dispose of material values. Ownership means control in both the use of a property and the terms of its sale. A property owner has a moral right to use his property as he judges, so long as he respects the mutual rights of others. Eminent domain violates the right to property by compelling the owner to sell against his desires and judgment. Similarly, City Hall (and the neighborhoods) is violating the rights of Buckhead by prohibiting the developer from using his property as he chooses.

These contradictory positions by the neighborhoods greatly undermines their credibility and their argument. They cannot effectively defend their own property rights while simultaneously advocating the violation of Buckhead’s rights. Rights are not relative—they apply to all individuals in all situations, no matter the expediency of the moment.

The purpose of government is the protection of individual rights, including property rights. The neighborhoods are correct and justified to fight the use of eminent domain—government power—to take their property. They are wrong and unjustified to use that same government power to stop Buckhead from using its property. In principle, if eminent domain is wrong so are the attempts to stop the Ashby High Rise by political means.

In advocating the violation of Buckhead’s property rights, the neighborhoods embrace the premise that government can and should control the use of private property. No matter how they try to justify their position on Ashby—the will of the people, the good of the community (or neighborhood), or anything similar—the same arguments can be used in favor of eminent domain. If it is justified to use force to stop Ashby for the purpose of “protecting” a neighborhood, it is justified to use force for the purpose of economic development.

In truth, the use of force to violate rights can never be justified. Such force compels an individual to act contrary to his own judgment and in defiance of his own values. To argue otherwise is to embrace the premise that might makes right—that political power supersedes morality and individual rights. One can then only quibble over the use of that power and the details of its implementation. And that is precisely the position the neighborhoods now find themselves in.

Consistency and justice demand that the neighborhoods support the right of Buckhead to build the Ashby High Rise. To do otherwise is to advocate that property rights can be violated if enough people, or those with political power, deem it proper. Yet that is the very principle that they are fighting in regard to eminent domain.

In fighting eminent domain the neighborhoods have morality and the principles of individual rights on their side. What they must realize is that those same principles apply to Buckhead. If they want to have their cake, they must let Buckhead have its cake. But if they choose to eat Buckhead’s cake, then they cannot complain when the Medical Center wants to eat theirs.

Don't Sweat the Small Stuff 20

Visualizing $1 Trillion
If you have not seen what $1 trillion looks like, this site has an impressive visual presentation. As they say in Washington, a trillion here, a trillion there, and pretty soon you are talking serious money.


Taking the Risk (and fun) Out of Life
The growing trend to ban everything that poses a risk, such as tanning beds, reminds me of some of my childhood experiences. During my pre-teen years, I spent countless hours recklessly climbing trees, engaging in various daredevil activities on bicycles, and other assorted mischief. I no longer remember how many times I fell out of a tree, or flew over the handle bars of my bike, or otherwise inflicted large bumps, bruises, and gashes on my body.

I usually tried to hide these injuries from my mother, for fear that she would prohibit me from participating in the offending activity. Somehow, I once managed to hide a fractured nose. Despite my seemingly constant attempts to hurt myself, I survived with little more than a few scars and a slightly crooked nose. And I was much better for the entire experience.

While I agree that some limits should be imposed on children, those restrictions are the responsibility of parents, not the government. In the process of "protecting" children legislators are enslaving adults (as well as those children when they ultimately become adults) and taking the fun out of life.


A Different View on AIG
Wendy Milling has an excellent article at Real Clear Markets on AIG. (HT: Freedom is the Solution)

The common interpretation of the downfall of AIG is so popular that it has become accepted as unquestionable, if not axiomatic. The paradigm is as follows: AIG executives were compromised by greed. This led them to take reckless risks with their capital in an unregulated atmosphere. These risks eventually became a house of cards as the executives who did not really understand their newfangled products continued to pump them out beyond the point of prudence. When the housing bubble burst and the mortgage defaults began, the house of cards collapsed and the company was stuck with bad bets. As a result, AIG became insolvent...

But what if this paradigm is completely and totally wrong?

Wendy then demonstrates why this paradigm is wrong and who the true culprits are. The article is definitely worth reading.


Could She Do This Today?
Heroes of Capitalism carried the story of Marion Donovan this week. In 1946 the young mother tired cloth diapers quickly soaking through and began work on a plastic diaper cover. When she perfected that invention, she then began working on a disposable diaper, which she eventually sold to the inventor of Pampers.

When my wife read this story, she wondered what government regulations would have stalled, impeded, or even prevented the invention of disposable diapers today? Environmentalists would oppose it for filling landfills. Cloth makers would oppose it for threatening their market (and then demand a federal bail out). Minorities would demand race specific diapers. And the poor would demand a federal disposable diaper program.

An "Honest" Liberal

Occasionally I find a liberal who is "honest" about his ideas. (I put honest in quotes because those ideas are an evasion of reality, which is never honest.) One such liberal is Steve Kangas, who offers a substantial FAQ page on his web site.

Liberals believe that group survival is more efficient than individual survival. That is why true hermits are so extremely rare. But any group effort requires group agreement, cooperation and coordination. This in turn necessitates a social contract defining each member's rights and responsibilities. In the U.S., voters have created their social contract in the form of their constitution and laws. Breaking the law constitutes breach of contract, and legitimizes the appropriate law enforcement measures.

Kangas ignores the fact that individuals living today had little or no input into most of the laws that exist. As a matter of justice, an individual cannot be held accountable to a contract he had no part of drafting and did not voluntarily accept. He regards rights as a social convention, subject to the whims of society. If society decides that blacks, or Jews, or gays, or any individual is somehow a threat group survival, society can legitimately violate the rights of such individuals. He confirms his completely subjective view of rights:

What forms the basis of rights and property found in the social contract?

Whatever the voters agree to -- which means they can be anything, as indeed history has shown.

This is a complete renunciation of rights. According to this view, you possess rights so long as voters allow you to do so. But a "right" that can be revoked at will is not a right. In truth, a right is a sanction to act without interference from others. Rights are derived from man's nature, and the fact that he must act to sustain and enjoy his life. To subject his "rights" to the whim of society is to declare that his life belongs to society.

Many conservatives consider rights to be natural, inalienable, God-given and self-evident. But rights cannot be natural, like the laws of nature, because they can be broken. They cannot be inalienable, because history is filled with examples of people who never had rights in the first place, or had them taken away. They cannot be God-given, because the world's religions widely disagree on what rights are; even Judeo-Christianity allowed slavery for thousands of years, whereas today it doesn't. Rights cannot be self-evident, because slavery was viewed as natural by Aristotle and defended by the Church as such until the 19th century. The fact that rights have changed so much throughout history demonstrates that they are social constructs. Liberals believe that advances in moral philosophy and science are responsible for our improving concept of rights.

I won't attempt to address every error contained in this passage. But several are worthy of note. First is his equivocation on the word "natural". In the context of rights, "natural" means "according to the nature of man". Man can act differently from his nature because he possesses free will--he can choose to unfocus his mind and embrace falsehoods. He can choose to ignore and violate the rights of others. But this does not change the fact that man has a particular nature, and that life requires that he act accordingly.

Second, Kangas ignores the context in which the Founders proclaimed rights to be self-evident. In their culture, individual rights were widely understood and embraced (with some notable contradictions) by the citizenry. There was no serious disagreement on the issue in the American colonies, and within that context they regarded rights as self-evident. However, rights are not self-evident--validated by direct observation--for they require a complex intellectual chain of thought.

Third, the assertion that rights are social constructs is pure Kantianism. According to Kant, reality--and therefore rights--are the result of the "collective will".

What do liberals believe about equality vs. merit?

Liberals believe that a completely unrestricted meritocracy is like a knife fight -- the absence of rules allows the strong to eliminate or subjugate the weak...

Liberals therefore advocate a moderated meritocracy: those with the most merit continue to earn the most money or power, but a percentage of it is redistributed back to the middle and lower classes. This is accomplished by progressive taxes, anti-poverty spending, and other forms of regulation. Liberals do not see this as a "giveaway" to the poor -- on the contrary, they view the runaway profits of the rich (especially in the later stages of wealth accumulation) as undeserved, so redistributing them back to the workers who produced them is necessary to prevent exploitation. A moderated meritocracy retains the best of both worlds: incentive to achieve, and a healthy talent pool from which merit is drawn...

Still, liberals do not advocate going too far in the other direction, towards strict egalitarianism, after the problems experienced with it by the Soviet Union.

In other words, liberals want to have the productive and eat them too. But they don't want to be so principled as to consistently apply their ideas--that would lead to dictatorship. They would much rather give the productive enough carrots to keep working and carry everyone else on their backs. But their pragmatic rejection of principles prevents them from seeing that "strict egalitarianism"--the Soviet Union and its gulags--is the logical result of their ideas.

Term Limits Aren't the Answer

Anger over the profligate spending of Congress is leading to renewed cries for term limits. If we throw the "bums" out, the thinking goes, we can elect representatives who are more responsive to voters. While the appeal of such thinking is understandable, it is fundamentally flawed.

The real problem is not in Congress, but in the voters. Voters are the ones who put the "bums" there in the first place. Congress is simply responding to the demands and values of voters. Wholesale replacement of Congress will not change this fact. We will just wind up with a different group of statists.

Politics is not a primary--it derives from ethics. Ultimately, the dominant ethics of a culture will determine its political system. So long as Americans embrace altruism--the belief that the individual must sacrifice his values to others--they will elect politicians who are eager to enact that tenet into law. Just as re-casting the roles in a poorly written play will not transform it into an inspirational performance, changing the actors in Washington (or any other governing body) will not change the plot in Congress.

Consider Houston city council for example. Enacted in the early 1990's, Houston limits council members to three two-year terms. This has only changed the faces, but not the essential policies. Houston has seen a steady parade of members pushing "quality of life" issues and seeking to expand city control of land-use. Before term limits we had Eleanor Tinsley and Jim Greenwood; today we have Sue Lovell and Peter Brown.

When voters demand that their rights be recognized, respected, and protected they will elect politicians who will do so. When voters reject the premise that government should be used to dispense political favors, engage in social engineering, and regulate the economy, they will elect politicians who share those views.

The web site for US Term Limits (USTL) states:

American politicians, special interests and lobbyists continue to combat term limits, as they know term limits force out career politicians who are more concerned with their own gain than the interests of the American people.

USTL stands up against this practice. We are the voice of the American citizen. We want a government of the people, by the people, and for the people, not a tyrannical ruling class who care more about deals to benefit themselves, than their constituents.

Notice that there is no mention of individual rights or the proper purpose of government. The premise behind the term limits movement is that government should reflect the opinions and values of "the people". They are not opposed to violations of individual rights; they are opposed to legislation that does not reflect the voice of "the people". If "people" wish to enslave their neighbors, presumably USTL would not oppose such measures. In other words, they are opposed to a tyranny of the few, but not a tyranny of the many.

Democracy--unlimited majority rule--is precisely what the term limits crowd advocates. They want to put an end to career politicians and give "ordinary" citizens greater opportunities to run for office. But what will those citizens advocate? Will they support and defend individual rights? Or will they simply impose their pet causes upon the citizenry? USTL does not tell us because USTL does not regard the ideas being advocated as an important issue.

Term limits are not the answer because they are not addressing the question: What is the proper purpose of government? Until the citizenry can answer that question properly--the protection of individual rights--the term limits movement is simply tilting at windmills.

When Prudence is Declared Imprudent

Via HBL comes the story of East Bridgewater Savings Bank. The FDIC recently gave the bank a "needs to improve" rating because it hasn't been lending enough money.

“There are no apparent financial or legal impediments that would limit the bank’s ability to help meet the credit needs of its assessment area,” the FDIC said in its CRA evaluation.

FDIC examiners also faulted East Bridgewater for not advertising and marketing its loan products enough. The bank, which does not have a Web site, offers fixed-rate mortgages.

At a time when taxpayers are on the hook for trillions of dollars to bail out irresponsible businesses, the government is penalizing East Bridgewater for being too responsible. The bank has no delinquent loans or foreclosures. The bank even managed to make a small profit in 2008, while the industry as a whole was losing $26.2 billion in the fourth quarter alone.

But this isn't good enough for regulators--they consider East Bridgewater stingy because it refuses to engage in the same reckless behavior of its colleagues.

As Richard Salsman writes:

Besides a desire for re-election, shared by all politicians, at root the Obama Administration wants individuals and firms to become more dependent on government. That requires not merely a more intensive redistribution of wealth to the needy (whether needy people or needy firms), but also programs and plans that might proliferate the ranks of the needy, even if that requires turning otherwise healthy people and firms into unhealthy, needy ones.

When the Bush Administration first offered "assistance" to financial institutions, they made an offer that literally couldn't be refused. They forced healthy banks, as well as those in trouble, to take the money. The Obama Administration is taking this even further.

In an industry that is increasingly dependent on the government, East Bridgewater stands as a refutation of government policies. So long as East Bridgewater is allowed to act according to its judgment, it will provide concrete evidence that prudent lending practices are not only possible, but actually good for business. This of course, doesn't fit with Obama's agenda.

Forcing East Bridgewater to loosen its lending standards is about destroying independence:

Independence is the recognition of the fact that yours is the responsibility of judgment and nothing can help you escape it—that no substitute can do your thinking, as no pinch-hitter can live your life—that the vilest form of self-abasement and self-destruction is the subordination of your mind to the mind of another, the acceptance of an authority over your brain, the acceptance of his assertions as facts, his say-so as truth, his edicts as middle-man between your consciousness and your existence.

The destruction of independence is in full-swing. Whether it is forcing financial institutions to take government money against their judgment, or pressuring AIG employees to return their bonuses, or forcing Detroit to make "green" cars, or forcing East Bridgewater to alter its lending practices, the trend and the purpose is to prohibit individuals (and businesses) from acting according to their own judgment. The purpose is to penalize the prudent for the benefit of the imprudent. The purpose is to vest power and control over the lives of individuals in the hands of politicians and bureaucrats.

Your Home is not Your Castle

The phrase "a man's home is his castle" has its roots in English common law, and it means that an individual's home is his property, secure from arbitrary searches or seizures. No matter how modest one's home, an individual can do with his property as he chooses. The essence of this phrase is captured in the Fifth Amendment to the United States Constitution.

Over the past one hundred years (or more) it has become clear that a man's home is no longer his castle. Your home can be seized by government for the purpose of selling to another individual (see Kelo). You can be prevented from remodeling your home if it does not meet standards established by government (see any zoning ordinance). And you can be forced to sell your home to another party against your wishes.

The right to property is the right to own, use, and dispose of material values, including land and one's home. Ownership means control, including to whom one will sell one's property and under what conditions. When control is removed and vested in others, ownership and the right to property is also removed.

For years, Houston's Mayors and City Councils have trod roughshod on the right to property. They have restricted the right of property owners to erect signs, to modify or demolish "historic" buildings, to plant certain types of trees, and many other land uses. And now they demand that a citizen (Matthew Prucka) sell his property to a neighbor, and threaten him with fines if he refuses to do so.

What is particularly galling about the Prucka case is that the city is speaking out both sides of its mouth. On one hand it wants to prohibit certain modifications to "historic" homes. Mr. Prucka owns a 1920's home, which he restored. When a neighbor wished to purchase the home, and make modifications that would alter the home in a manner inconsistent with its "historic" status, Mr. Prucka refused to sell. The city is now intervening and suing Prucka for discrimination.

Had Prucka chosen to demolish the home, rather than restore it, the city (or at least some noisy "preservationists") would have raised a stink and perhaps threatened to sue him under the city's preservation ordinance. So they get him coming and going. The city can use one ordinance to prevent him from demolishing or altering his home, and can use another to force him to sell it against his wishes. In both instances his property rights are being violated.

If I were mayor, I would vigorously pursue the repeal of both the preservation ordinance and the fair housing ordinance. Indeed, I would seek the repeal of any ordinance that violates individual rights, including property rights.

The myriad city ordinances that violate individual rights have been enacted under the pretense of protecting "the public". But there is no such entity as "the public"--there are only individuals. To "protect the public" really means to enact laws that favor some individuals at the expense of others. Both the preservation ordinance and the fair housing ordinance are cases in point. Further, the preservation ordinance was enacted to protect our "heritage". As I testified to city council during hearings on that ordinance, our true heritage is one of freedom, that is, the right to property.

If you examine the statements and positions of candidates for mayor and city council, you cannot find a single reference to freedom or individual rights. You cannot find an inkling of a hint that a single candidate has any understanding that the proper purpose of government is the protection of individual rights--freedom.

Instead, they promise that they will solve our problems--real and imagined--by expanding government, by taking more of your money, by placing more restrictions on your actions. They tell us that they will solve the problems of "the public"--that is, individuals--by enacting more controls on individuals. They will improve your life by prohibiting you from having the freedom to improve your own life. They will tell you what you can and cannot do, and that, we are to believe, will make your life better.

If I were mayor I would not make such promises. First, they are impossible to fulfill. Second, I have no right (nor does anyone) to tell you how to live your life. Each individual has a moral right to his own life, liberty, and pursuit of happiness. Nobody--not the mayor, not city council, not the President, not Congress, not your neighbors--has a right to dictate how you should live your life, so long as you respect the mutual rights of others.

While candidates for mayor and city council grovel before assorted groups seeking political support, I will continue to seek support from the only "group" that matters--individuals. Each of us is an individual, and each of us has the same essential need--freedom. Each of us has the same right to live our life according to our own judgment in the pursuit of our own values and goals. This applies to whites and blacks, Anglos and Hispanics, gays and straights, men and women, property owners and renters. And it applies to Matthew Prucka as well.

You Can't Fly a Plane with Chains Around Your Neck

Continental Airlines Chairman and CEO Larry Kellner wants more government regulation of his industry. In an interview with the Chronicle, Kellner said:

If the government wanted to re-regulate the business, I wouldn’t be opposed to it.

What we are doing today isn’t working. It isn’t creating a stable industry. That is not good for communities, that is not good for employees, and that is not good for customers. It needs something and it doesn’t need to be 1978 (Civil Aeronautic Board-style) regulations, so when I say, ‘I would not oppose regulations,’ that doesn’t mean I just want to go back to the past.

The only solution to the industry's woes, according to Kellner, is more government control. But he wants those controls to be different from what existed prior to airline deregulation. In other words, Kellner wants to be put in chains, but he doesn't want those chains to be too tight.

By implication, Kellner blames deregulation (that is, more freedom) for the airline industry's problems. Demonstrating his short sightedness and lack of principles, he correctly identifies the Railway Labor Act as a contributing factor, but goes no further. Loren Steffy, one of the Chronicle reporters who interviewed Kellner, writes:

Kellner said he prefer new government rules that would remove some of those cost constraints, allowing airlines to make money, employees to earn decent pay and passengers to feel they’re getting a good deal.

Among the biggest rule changes would be revamping the Railway Labor Act, which has governed labor agreements since the dawn of passenger air travel.

The RLA was designed to keep railroads running during labor disputes at a time when trains were the nation’s lifeblood of commerce and travel. For airlines, it means lengthy contract talks, which often wind up in mediation that leaves both sides unhappy.

“The problem is the structure of the RLA creates a very cumbersome process,” Kellner said. “It hasn’t worked well since deregulation. It creates a tremendous amount of angst on both sides.”

Kellner is correct that the RLA should be revamped--right out of existence. The RLA forces airlines to recognize and negotiate with unions, which invariably drives up labor costs. The government has no right to mandate any aspect of the employer/ employee relationship, including negotiating with labor unions. The RLA is bad law--it forces employers to act contrary to their own judgment.

While recognizing that the RLA is a major source of problems, Kellner stops short of calling for its repeal. While implicitly recognizing that government intervention has created problems, he explicitly calls for more government intervention. Kellner can't see the forest for the trees--all he sees are isolated, concrete details, rather than the underlying principles.

Government intervention always creates distortions in the market. Those distortions lead to calls for additional interventions to correct the problems created by the initial intervention. We see it in the auto industry and the financial industry. Rather than point to the fundamental cause--government intervention--pundits, politicians, and often the industry itself claim that a lack of regulation and oversight is the cause.

Speaking about Obama's views on reregulating the industry, Kellner said:

I think he actually does understand that you need to have a marketplace economy but need to have a rule book that is fair. … So when I talk about re-regulation, I think I would welcome some more rules or some amendments to the rules we have in a way that works for everybody and then I want the government to enforce those rules levelly and then let competition work.

Certainly the marketplace needs fair rules. But those rules should be objective and protect individual rights. Those rules should allow each individual to act according to his own judgment in the pursuit of his own goals and values. And this is precisely what individual rights do--they sanction an individual's freedom of action. They allow him to act without intervention from others, so long as he respects the mutual rights of others. If Kellner truly wishes to have fair rules that work for everyone, he would advocate individual rights.

This would mean the repeal of the RLA and all other legislation that interferes with the employer/ employee relationship. It would mean the repeal of all legislation and regulations that dictate how airlines operate, where they fly, or any other detail. In short, it would mean a complete separation between government and the airline industry.

Despite Kellner's claims, deregulation is not the cause of the airlines problems. The fact is, the industry is not and has not been deregulated. Some controls were lifted, but other controls (such as the RLA) remain. Those controls are the true cause of the industry's current and ongoing woes. And so long as Kellner and other airline executives accept chains around their necks, they are going to find it difficult to fly a plane profitably.

Don't Sweat the Small Stuff 19

Yaron Brook at Rice
President and executive director of the Ayn Rand Institute will speak at Rice University on March 31. His talk is titled “The Financial Crisis: The Free Market as the Only Practical and Moral Solution”.


Article in The Objective Standard
My article, "Houston, We Have a (Zoning) Problem", is now available online at The Objective Standard.


Chains Will Leave a Tan Mark
The Texas legislature is taking up a bill that will make it harder for teens to enter a tanning salon (HT: Gus Van Horn) Citing increased risks for cancer, a Republican legislator wants to require anyone under 18 to have a note from a doctor before using a tanning bed. Reading about proposals such as this gives me a headache, but I don't see any legislators rushing to ban their inanity.

Sharon Raimer, a dermatologist and president of the Texas Dermatological Society, said:

Epidemiological studies have now shown that even one exposure to tanning beds before the age of 35 can increase your risk for melanoma.

Drinking too much water can lead to death, so I suppose meddling politicians will want to regulate our water consumption next. The fact is, every activity in life poses some form of risk. The premise underlying laws such as this logically leads to regulating every human activity. And that is precisely where we are headed. We are on the road to slavery and our chains are going to ruin an otherwise beautiful tan.


When Not Telling the Truth is Not a Lie
On Tuesday Senator Chris Dodd denied any involvement in the AIG bailout bonus scandal. On Wednesday he admitted that he was responsible for the loophole in the stimulus bill, saying that his previous denial had been "misconstrued". Apparently, actually believing what Senator Dodd says is to "misconstrue" his statements.


A Colossal Waste of Time
Earlier this week I commented on the arrest of a Houston couple on prostitution charges, noting that efforts to interfere in voluntary interactions between consenting adults is immoral and a waste of time. As more details emerge regarding this case, the waste of time and other resources is even more evident.

The Chronicle reports that police spent more than a year investigating this case. And in another case, the police spent five years collecting evidence before pressing charges. In both instances, officers posed as prostitutes and "johns". And in both cases, prosecutors are pursuing money laundering charges in an attempt to get stiffer prison sentences.

Regardless of one's personal opinions regarding prostitution, it is a voluntary act between consenting adults. (And when it isn't--such as a woman being forced into prostitution--there are already appropriate laws on the books.) Any law that prohibits voluntary interactions between adults is immoral--it prevents those individuals from acting according to their own judgment in the pursuit of their own values. Prostitution does not violate anyone's rights, and should therefore be legal.

Let's Make a Deal

In news that shouldn't be surprising, the Washington Post reports that Countrywide Financial executives routinely broke company policies to give below-market rate mortgages to those with political connections.

Recipients of special loans included senators and other officials, prominent businessmen, congressional aides, celebrities and journalists, including Sen. Kent Conrad (D-N.D.), Sen. Christopher J. Dodd (D-Conn.), former U.N. ambassador Richard C. Holbrooke, former Fannie Mae chief executive James Johnson, former Department of Housing and Urban Development secretary Alphonso Jackson, Jackson's daughter and others.

The article goes on to quote a Countrywide employee:

I'm usually in favor of settling on the side of the borrower with political influence.

Countrywide, which handled many of the sub prime loans that created the current financial mess, clearly recognized the "benefits" of stroking the politically powerful. It was a case of "you scratch my back, and I'll scratch yours."

Mutually beneficial agreements are not inherently wrong. Indeed, they form the very basis of trade in a free market. In such situations, each party trades one value for another, to the mutual advantage of each party. But in an industry that is highly regulated by the government, such as the financial industry, such trades often involve political favoritism. Countrywide traded below-market mortgages for political favors.

Countrywide was hardly alone. ABC reports that AIG employees continued to make campaign contributions even as the company was going down the toilet and begging for a federal bailout. Among the recipients:

1. Sen. Chris Dodd, D-Conn., $103,100
2. Sen. Barack Obama, D-Ill., $101,332
3. Sen. John McCain, R-Ariz., $59,499
4. Sen. Hillary Clinton, D-N.Y., $35,965
5. Sen. Max Baucus, D-Mont., $24,750
6. Former Gov. Mitt Romney, (R) Pres $20,850
7. Sen. Joe Biden, D-Del., $19,975
8. Rep. John Larson, D-Conn, $19,750

Many pundits--including Rush Limbaugh--are ascribing these shenanigans to a network of the rich and powerful who work in concert to rape and pillage the citizenry. But the fact is, the citizenry has as much, if not more, responsibility for this than the politicians and their donors. It is the citizenry that demands government regulations and oversight of private businesses, and it is this regulatory environment that motivates businesses to cull political favor.

An increasing number of executives are more adept at politics than business. Business success increasingly depends on having the right political connections, and less on developing new products, or having marketing savvy, or any other traditional business skill.

Businessmen who play this game are unprincipled hacks who could never succeed in a free market. They literally sell their soul for the expediency of the moment, while their run their company into the ground. But their political connections "protect" them from the consequences of their incompetency--their political benefactors simply proclaim that the situation is dire and push through a bailout.

These schemes are not limited to the federal level. Indeed, earlier this week I quoted Houston mayoral candidate Gene Locke:

The reality is that to play and influence the outcome you must be eligible to be on the team and unfortunately or fortunately, whatever the deal is, the ability to make a campaign contribution at least gets you suited up for the team.

If a politician openly asked for campaign contributions or special loan rates in exchange for voting a particular way, he would rightly be charged with corruption. But when the Chairman of the Senate Committee on Banking, Housing and Urban Affairs (Chris Dodd) receives such donations and special treatment, it is simply how the "game" is played. When a candidate for mayor in the nation's fourth largest city openly declares that campaign contributions are necessary for him to give your position consideration, it barely makes the news.

The more cynical and unprincipled commentators are railing against the "fat cats" and politically powerful. Many are saying that politicians are ignoring the "will of the people", and they should be replaced with individuals who are more responsive to voters. This will be as effective as replacing pandering, power lusting Democrats with pandering, power lusting Republicans, which is essentially what is being demanded. Fundamentally, the problem is not the people running "the system"; the problem is the "system".

So long as the public believes it proper for government to regulate business, then businessmen will seek to influence those regulations and politicians will enjoy being influenced. It is not an issue of "throwing the bums out", it is an issue of rejecting bad ideas and embracing the idea that individual rights are inviolable. Until that occurs, there will be no shortage influence peddling.

Sell Me Your House, or Else

The city of Houston has sued a home owner under the city's fair housing ordinance. The misdemeanor charge carries a potential fine of $500, and stems from the refusal of Matthew Prucka to sell his $8.2 million home to a neighbor. Randy Zamora, chief prosecutor for the city, told the Chronicle:

After looking at statements he [Prucka] made in a deposition, it seems pretty clear he just didn’t like the idea of ramps and widening halls and did not want his house to be used by his neighbor’s disabled daughter.

The neighbor--Anthony Petrello--has literally made this a federal case, filing a federal lawsuit against Prucka. Both lawsuits (Petrello's and the city's) allege that Prucka is guilty of discrimination against the neighbor's disabled daughter--the house was to be used to house medical personnel who care for the daughter.

This entire issue boils down to a situation with a willing buyer and an unwilling seller. For whatever reason, Prucka did not want to sell his home to Petrello. His reason may be perfectly rational and valid, or it may be completely irrational. In either case, it doesn't matter. It is his choice.

That the city is involved in this illustrates how meddling the local government is becoming. The government's proper function is the protection of individual rights. It should not be in the business of forcing individuals to sell their property against their own judgment.


In this particular case, Petrello desired to purchase a property, but Prucka did not desire to sell it to him. Prucka's property rights allow him to choose the conditions under which he will sell his property, and those conditions may be appropriate and valid, or they may be silly and bizarre. That is Prucka's right and his prerogative. If Petrello does not like the conditions, he can simply refuse to close the deal.

Petrello refuses to recognize Prucka's rights. Petrello seeks to force Prucka to sell his home, contrary to his own judgment and against his own desires. And by siding with Petrello, the city is demonstrating that it has no regard for individual rights.

Anti-discrimination laws are inherently irrational and a violation of individual rights. Such laws prohibit individuals from acting according to their own judgment. Such laws force individuals to act according to values that they may not embrace. Such laws should be abolished, and the city should drop its lawsuit.


If the city is truly interested in "fair" housing it should quit regulating land-use and repeal all building codes. Indeed, if the city wants "fairness" in any realm, it should be protecting individual rights. There can be no "fairness" without individual rights. Without individual rights, society becomes a battle over the use of government power for the purpose of dispensing favors and punishing the recalcitrant.

Wine and Women, but no Song

Texas legislators have introduced a bill legalizing the sale of liquor on Sundays. The Texas Package Stores Association (TPSA) opposes the bill, even though it would grant the owners of liquor stores more freedom. The association recently released a poll that shows 67% of Texas voters oppose the plan and has said that the bill will result in longer working hours for the owners of liquor stores.

Apparently most liquor stores are small, family owned operations. The owners fear that competition will require them to open on Sundays, even though the legislation does not require it. So what they are really fearing is competition, and they want the legislature to limit that competition.

The fact is, if a business wishes to open on Sunday, it is not appropriate or moral for the government to prohibit it from doing so. And it is no less immoral if most of the businesses in that particular industry support such prohibitions. The decision to open on Sunday should be left to the discretion of each individual store owner, not politicians or industry lobbyists.

Along a similar line, distributors of alcoholic beverages are seeking legislation that will allow them to sell directly to bars and restaurants, a practice that is currently prohibited. As might be expected, liquor store owners, who benefit from the current legislation, are opposed on the grounds that the bill will reduce competition.

According to the Austin Statesman:

Under Texas law, liquor manufacturers sell to liquor distributors, who in turn sell to about 2,300 retail package stores, which sell to consumers. About 600 of those stores have special permits to sell to the more than 9,000 bars and restaurants holding mixed-beverage permits.

Texas is one of three states — Kansas and South Carolina are the others — that have this additional link in the chain of commerce for liquor. In all states, most beer and wine is sold by their manufacturers to distributors who, in turn, to retail stores, including restaurants and bars.

In short, the current law is anti-competitive. It prohibits businesses from voluntarily selling their products to willing purchasers. The state has no right to be interfering in that process. Liquor store owners, who see their legally protected cash cow being threatened, argue that granting the distributors greater freedom would limit competition. Greg Wonsmos, president of TPSA:

Under the wholesaler plan, all competition is eliminated by law. That would be an outrage.

This statement is simply dishonest. The bill does not outlaw competition--it removes a prohibition on the actions of distributors. But because that prohibition provides a significant benefit to retailers, TPSA considers any move that creates greater freedom for distributors to be anti-competitive. In both instances TPSA is opposing legislation that is pro-freedom--both bills remove prohibitions that should not exist. Rather than actually compete, TPSA seeks legislation that will impose restrictions on others.


The Chronicle reported yesterday that police have broken the city's largest prostitution ring. A Houston couple was charged with aggravated promotion of prostitution. Their clients, who were charged $300 an hour or more, reportedly included lawyers, doctors, and athletes.

The investigation, which required the use of undercover police officers, wasted countless hours and resources for the sole purpose of arresting individuals engaged in voluntary activities. And the lives of many of the clients will likely be damaged as news of their involvement is leaked to the media.

Any law that prohibits voluntary interactions between consenting adults is improper and should be repealed. And that includes prostitution. Individuals have a moral right to act according to their own judgment. The fact that others may dislike those actions is no justification for banning them.

Mayoral Candidates Talk Money

Last week the South Asian Chamber of Commerce hosted an event for four candidates for mayor. (I was not invited, a snub that is common.) The Chronicle's political blog reports that former city attorney Gene Locke had this to say when asked why citizens should donate to mayoral campaigns:

The reality is that to play and influence the outcome you must be eligible to be on the team and unfortunately or fortunately, whatever the deal is, the ability to make a campaign contribution at least gets you suited up for the team.

Doesn't mean that you're going to be on the first team or that you are going to win, but at least you are a player in the process. Now to those of us who hate to give money, that sounds like a bad thing, but let's understand that everybody who has a vested interest in the outcome of government decisions, they are participating -- and some of the decisions that they want government to undertake are not decisions in your best interest. So it's in your self-interest to participate...

This may be politics as usual, but it is nothing more than influence peddling. Locke is surprisingly candid--if you want the government to make decisions that are in your best interest, you should be prepared to pay for it. Such short-term thinking is ultimately in nobody's best interest, as it turns city government into a battle of competing groups seeking to influence government policy. You may win today's battle, but lose tomorrow's. And slowly, over time, the rights of all individuals are gradually eroded.

If government were limited to its proper purpose--the protection of individual right--this would not be possible. Government would not have the power to make decisions that benefit one group at the expense of another. Government would not have the power to dispense favors to political allies.

Roy Morales argued that "there will be plenty of ways to reduce the city budget, opening the way to property tax cuts." While I agree with Mr. Morales, the Chronicle did not report any specifics and his web site is still in development. Mr. Morales was the only candidate who even hinted at reducing city spending.

Annise Parker said that "there is no room for wholesale budget cuts because most of the budget pays for public safety-related programs, but that 'strategic' money-saving efforts still can be made." Parker is simply wrong. In My Virtual Platform: Taxes, I identified numerous ways to reduce the budget:

• More than $60 million can be cut from the city budget by eliminating building inspections and similar functions. Building codes, regulations controlling occupancy of residential and commercial buildings, and similar ordinances violate the rights of individuals to use their property as they choose. Such functions are not proper for government and they should be eliminated.
• Nearly $5 million can be cut from the city budget by eliminating sign administration. Ordinances regulating and controlling billboards and signs violate the rights of individuals to use their property as they choose. Such functions are not proper for government and they should be eliminated.
• Nearly $10 million can be cut from the city budget by eliminating the Mobility Response Team. Clearing roadways is not a proper function of government. This particular program takes money from some Houstonians to use for the benefit of other Houstonians. This program should be eliminated.
• Nearly $9 million can be cut from the city budget by eliminating the Planning and Development Department. Planning and development are not government functions and should be left to the discretion of private individuals.

The reason that Parker sees no room to trim the budget is because she regards the city's current activities as legitimate and proper. She has no problem violating individual rights by imposing restrictions on development and building. She does not hesitate to impose her values on the entire community by advocating "quality of life" issues. Reducing government spending is not on her radar, because she does not want to reduce the size and scope of government.

Peter Brown said that "the way out of the fiscal morass is to bring business to Houston, thereby expanding the value of property the city taxes." Brown also sees no reason to cut city spending--he is a big government advocate, just like Parker. His solution is to find more people to slave away fueling the city's coffers.

The solution to the city's financial issues is really quite simple--cut spending. Privatize those services that are not proper to government--trash collection, water, wastewater, parks, libraries, etc. Repeal all laws that violate individual rights--building codes, sign restrictions, land-use regulations, and controls on businesses. Limit government to its proper functions and the city's financial needs drop significantly. Pay off the city's debt and further savings can be realized.

Politicians like to talk about making tough decisions. They will whine about budget constraints and their inability to provide an endless stream of political favors. Their only "tough" choice is deciding which groups and individuals to stroke for more political support. Having rejected proper political principles, the mayoral candidates can only fly by the seat of their pants, dealing with each concrete as expediency demands.

The fact is, in city government there are very few (if any) truly tough choices. If I were mayor, the tough choices would be which parks to sell first, how to privatize the water and wastewater systems, and how to cut the budget to the bone. I would end political favoritism because government should not be in the business of dispensing favors. It should be protecting individual rights, and that doesn't cost nearly as much money as mayoral candidates would have us believe.

Truth in Advertising

The Federal Trade Commission (FTC) enforces "truth in advertising" rules. According to the FTC web site, the following rules apply to advertising:

• Advertising must be truthful and non-deceptive;
• Advertisers must have evidence to back up their claims; and
• Advertisements cannot be unfair.

The site goes on to say that an ad is deceptive if it contains or omits information that:

• Is likely to mislead consumers acting reasonably under the circumstances; and
• Is "material" - that is, important to a consumer's decision to buy or use the product.

Finally, the site states that an ad or business practice is unfair if:

• it causes or is likely to cause substantial consumer injury which a consumer could not reasonably avoid; and
• it is not outweighed by the benefit to consumers.

Using the above criteria, it would seem that the FTC could stay extremely busy simply prosecuting politicians. For example, consider this statement from Rep. Barney Frank made during hearings on Freddie Mac and Fannie Mae in 2003:

I think it is clear that Fannie Mae and Freddie Mac are sufficiently secure so they are in no great danger... I don't think we face a crisis; I don't think that we have an impending disaster... Fannie Mae and Freddie Mac do very good work, and they are not endangering the fiscal health of this country.

As we all know, a few years later these two government sponsored enterprises had to be bailed out because of bad loans. Frank's statement in 2003 was made in response to warnings by the Bush administration that Freddie Mac and Fannie Mae were heading towards financial problems. Frank denied this truth in 2003, and he subsequently argued for more government intervention into the housing market. His "advertising" was not true, it was misleading and material to the government's subsequent actions, and it resulted in substantial harm to taxpayers. Yet rather than be prosecuted for false advertising, Frank has been rewarded with more power.

Consider Mr. Thompson’s Barry Obama's promises to cut the taxes of 95% of Americans. He could confiscate all of the income of the top 5% of American earners, and still not have enough money to fund his spending proposals. The numbers don't add up, and yet Barry won't be prosecuted for false advertising.

In Houston, zoning advocates have long said that tougher land-use regulations are necessary to attract businesses and fuel job growth, and to protect property values. Yet Houston--the city without zoning--led the nation in job creation in 2008. We did not experience the devastating effects of the housing bubble--our property values remained relatively stable. The facts belie the promises made by zoning advocates, and yet they won't be prosecuted for false advertising.

Politicians are largely immune from the laws that they impose on everyone else. They can make grandiose promises, and when those promises fail to materialize they get a free pass. They can make statements which deny the facts and they respond by casting aspersions on their political opponents. They can advocate proposals that cause immense harm to taxpayers. They can engage in the types of distortions that would get a businessman thrown in jail forever, and they simply get re-elected. They hold businessmen to impossible standards, and impose none on themselves. And that is the truth.

Don't Sweat the Small Stuff 18

One Little Victory?
I did a search on Yahoo using the keywords "2009 houston mayoral election" and to my surprise and delight, my announcement for the virtual campaign came up #1. A similar search on Google returned my Challenge to Houston's Mayoral Candidates on the first page. While this certainly won't lead to a landslide victory, it should help inject my ideas into the debate to some extent.


Petition to Reduce Government
If you live in Houston, be sure to sign our online petition calling for candidates to take a public position on reducing the size and scope of government.


The Financial Product Safety Commission
Sen. Dick Durbin has sponsored a bill that will stop mortgage companies from extending loans to individuals who can't afford them. In announcing his legislation, Durbin said:

We don’t say ‘buyer beware’ when people are buying prescription drugs or when they’re concerned about lead paint in toys. But when Americans purchase financial products ... they often have little idea what those products ... contain and whether they’re good for their families.

These are the same people who threatened mortgage companies with legal action if they didn't extend loans to people who couldn't afford them. Now they are going to run to the rescue with another regulatory agency--the Financial Product Safety Commission. This is like hiring a pedophile to work at a day care.


Things That Make You Go... Huh?
Every once in a while I will stumble across a web site that leaves my mouth hanging wide open. This site, which appears to very sympathetic to socialism, contains a list of "some truly dramatic government success stories that every American should know. Private enterprise could not have accomplished a single one of these feats." A few are listed below, followed by my comments.

The Federal Reserve System: Using Keynesian policies to expand or contract the money supply, the Fed has completely eliminated the depression from the American economic experience in the last six decades.

As we are mired in the worse economic crisis since the Great Depression, the owner of the site may want to re-think this one.

Ban on DDT and PCBs: Industry did everything in its power to stop the ban of these highly poisonous pesticides, which devastated wildlife populations. But from 1970 to 1983, the amount of DDT in human body fat fell 79 percent.

And the number of deaths from malaria--which had been virtually wiped out by DDT--is an estimated 2.7 million each year. I am sure that the nearly 100,000,000 people killed by malaria consider this a real success story.

Federal Home Loans: This agency helps half a million Americans buy homes each year by guaranteeing their mortgages. Without them, millions of first-time buyers would have been denied home loans.

Yes, and without those loans many of those people wouldn't be facing foreclosure and we wouldn't have experienced a housing bubble.

Securities and Exchange Commission: Before this agency was created, insider-trading and deceptive stock dealings ran rampant on Wall Street. The SEC enforces full and honest disclosure of all stock transactions, and fights to curb insider trading.

Can anyone say Bernie Madoff or Stanford Financial?

If massive death, a horrible economy, and corrupt financiers are examples of government success stories we don't need to speculate as to the motivation of this site's owner. It certainly isn't human welfare.


Hazlitt Predicted the Housing Bubble
Henry Hazlitt predicted the housing bubble in 1946, writing in Economics in One Lesson:

Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to "buy" houses that they cannot really afford. They tend eventually to bring about an oversupply of houses compared with other things. They temporarily overstimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly over expansion. (page 47)

Whim and Fear

Many pundits have laid much of the blame for the housing bubble and the subsequent economic turmoil on the Community Reinvestment Act (CRA). The Act was first enacted in 1977. It was revised in 1995 and amended in 2005. According to the Federal Reserve web site:

CRA requires that each depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities.

Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution's individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner. [emphasis added]

In other words, lending institutions are supposed to "meet the credit needs of its entire community" but the standards that will be used to make this evaluation are left to the discretion of regulators--after the fact. A lending institution can only guess as to what criteria will be used, and if it guesses wrong, it could be subject to the wrath of regulators. Such non-objective laws place businesses at the complete whim of bureaucrats.

As Ayn Rand wrote in "The Nature of Government":

All laws must be objective (and objectively justifiable): men must know clearly, and in advance of taking an action, what the law forbids them to do (and why), what constitutes a crime and what penalty they will incur if they commit it.

The result of the CRA is that lenders had little choice but to lower their standards. If they didn't, they could be accused of breaking the law. And when they lowered their standards, they subjected themselves to defaults. The government however, covered its backside: "the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner."

In short, the CRA forced lenders to extend loans that they previously thought imprudent--otherwise the lenders would have extended such loans--while simultaneously telling the lenders to be prudent. Thus, lawmakers were able to wash their hands of the entire affair and blame it on greedy bankers. "We told them to be careful," we can imagine legislators saying.

I cannot say to what extent the CRA contributed to the housing bubble and the subsequent economic turmoil. But it is clear that the CRA created an atmosphere of fear within the financial industry--the unknown edicts, standards, and whims of regulators were a constant threat hanging over the heads of lending institutions.

Non-objective law is precisely what the statists in Washington need to advance their cause. To quote Ayn Rand again:

An objective law protects a country’s freedom; only a non-objective law can give a statist the chance he seeks: a chance to impose his arbitrary will-his policies, his decisions, his interpretations, his enforcement, his punishment or favor-on disarmed, defenseless victims.

The financial industry was caught between the unknowable and the impossible. They were caught between the whims of regulators and the principles of sound lending. They could not appease the caprice of bureaucrats and also make a profit. They sacrificed their own judgment and integrity in an attempt to evade the realities of the market. In the end, reality won. It always does.

Alvarado's War on the Mind

Tuesday's Chronicle ran an editorial supporting Texas Rep. Carol Alvarado's bill to ban trans fats in the state.

It takes just a quick trip around the grocery store perusing the signs on display cases to confirm what you already knew: “No trans fats!” “Zero trans fats!” No doubt about it: Trans fats are bad for us.

If one accepts the premise of the Chronicle's argument--things that are bad for us (such as reading the Chronicle) should be banned--there is no end to the number of activities that should be under control. And why stop at activities that are typically harmful? Why not go after any activity that can have a negative consequence--such as driving, or starting a business, or having sex? (These are rhetorical questions--I am not advocating such legislation.)

But the premise underlying this bill is much more insidious than controlling what we may eat. If the government can control what we consume physically, it is only a small step away from controlling what we "consume" intellectually. If the government can control what we put in our bodies, it won't be long before it controls what we put into our minds.

The argument used for banning trans fats--that they are bad for us--could also be used in favor of banning certain ideas. For example, those who question Obama's proposals could be accused of undermining public morale, instilling rebellion, and in general being harmful to the nation.

Bans on trans fats--as well as similar laws--explicitly prohibit individuals from acting according to their own judgment. Controls on the body are implicitly controls on the mind--they render an individual's judgment moot. If one accepts such bans, one cannot argue against an expansion of that principle to the realm of ideas. Because the law is often a process of extending a principle to its logical conclusions, it will not be long before those controls are made explicit.


That Alvarado would aspire for such despotism is not surprising to those who have much familiarity with her career. A Chronicle profile quotes former fellow Council member Gabriel Vasquez as calling Alvarado's political style the "Chicago ward-boss model." "It's about power, authority and control," Vasquez said.

Ayn Rand often wrote that the initiation of force is ultimately directed at the mind. They compel an individual to act contrary to his own judgment. They force an individual to follow the dictates and judgment of others. This is precisely the end that Alvarado is pursuing. Whether it is banning smoking in restaurants (she led that effort in Houston) or banning trans fats, Alvarado does not want to allow individuals the freedom to make their own choices and act accordingly.

Alvarado and her ilk invariably argue that the actions of one individual have an impact on others through higher insurance costs, or higher government spending on health care, or something similar. They treat the individual as a cell in the organism called "society"--as subservient to the collective. If the "public good" or "general welfare" requires removing a few cancerous cells, so be it.

But individuals are not chattel to be disposed of by Alvarado or the public. Each individual has a moral right to his own life, liberty, and pursuit of happiness. Each individual has a moral right to act according to his own judgment, so long as he respects the mutual right of others.

In the end, the ideas advocated by Alvarado have killed far more individuals than trans fats. Collectivism and statism have been responsible for the concentration camps of Nazi Germany and the gulags of Soviet Russia. They have been responsible for the killing fields of Cambodia and the genocide of Darfur. They are the true threat, not trans fats.

Tax the Rich

Texas State Representative Lon Burnam has filed H.B. No. 1735, which calls for a personal income tax on all income above $100,000. (Texas is one of a few states without a personal income tax.) Calling the Texas tax system "profoundly unfair", Burnam told the Lubbock Avalanche-Journal:

Not only do we have a tax system that is unfair on the working middle class, it doesn't generate enough funds for whatever we need to do. So, I filed this income tax bill that is selective. All it proposes to do is an income tax on income in excess of $100,000 and the thing is that most working people don't make that much.

He went on to say:

But you know what? Everybody can live on $100,000 a year and many of my constituents don't have enough to live on and they're paying a much higher percentage of their income in taxes than the people who make $100,000 a year. It is not fair, it is not right.

But apparently it is fair for Burnam to forcibly take money from those who earned it so that he can spend it. Apparently Burnam believes that might makes right.

As I have pointed out previously, when faced with a budget deficit, politicians automatically look for something to tax. The concept of cutting spending is as foreign to them as a polar bear in the Sahara.

Burman is rather explicit in his envy and class warfare:

Most people who bother to study it and learn and understand it say 'this is a no brainer'. Look how much money we could get from the extremely wealthy and give tax relief to the rest of us.

According to Burman anyone making $100,000 a year is "extremely wealthy". Either he is extremely naive (in which case he shouldn't be in the legislature) or he is extremely dishonest (in which case he shouldn't be in the legislature). This is nothing more than a money grab. If a private citizen took money from someone else, he would be labeled a thief. The principle does not change simply because one sits in the Texas House of Representatives.

Burman's dishonesty goes beyond merely pretending that his proposal is fair and right. While singling out the "extremely wealthy", he conveniently ignores that the same argument was made regarding the federal income tax when it was first proposed. But it wasn't long before the tax was expanded to the middle class. The same will happen in Texas, because politicians will raise taxes long before they will cut spending.

As if penalizing productivity isn't bad enough, Burman proposes to apply the $100,000 to each individual. Consequently, if one spouse makes $100,000 while the other makes less, they would still pay taxes on $100,000.

Fortunately, it is unlikely that the bill will pass. But that won't stop Burman from trying--he introduced a similar bill in the last legislative session.

Peter Brown's Lessons

Councilman and Mayoral candidate Peter Brown has posted a series of "Lessons from U.S. cities" on his web site. The lessons he has learned are quite revealing regarding the direction he would like to take Houston.

From New York City, he learned:

Government services in New York are delivered from 59 “Borough Districts”... Each District has a Board appointed by the Mayor and an Executive Director with a small staff, which facilitates high levels of citizen participation.

Categorical performance standards are set for each District. Citizens therefore have real access to their government, with direct contact and coordination among the various city agencies at the “street” or grass-roots level, where it counts. Efficient government is all about “making connections,” rather than just dealing with crime, education or job training separately from a central “command” station.

What this means in actual practice is that NYC is composed of separate fiefdoms, with local special interest groups imposing their values upon their "Borough District". Rather than protect individual rights, Brown wants to allow communities to dictate what happens within their boundaries. If a community wishes to ban development, or impose landscape regulations, or prohibit signage, so be it. This is grass-roots democracy, in which those who have "made connections" have the political power to use force against their neighbors. But rather than conduct a city-wide war, statists can conduct a series of small, localized battles.

Brown's concludes that NYC's "success" is based on several important principles:

• Establish a Plan, with associated policies and programs.
• Make the city safe – continue community oriented policing.
• Focus on quality economic global growth – knowledge industry jobs, major real estate development, significantly increase the tax base.
• Expand rapid transit, pedestrian and bicycle connections.
• Expand and connect attractive public places, parks, squares and greenways.
• Encourage and assist the arts.

Other than making the city safe, these other "principles" are improper functions of government. They can only be achieved by imposing restrictions on individuals and businesses, by taking money from some to be used for the benefit of others, and by interfering in the lives of citizens.

For example, a centralized plan can only be implemented by prohibiting development that conflicts with the plan. Rapid transit, parks, and support for the arts can only be achieved by taking money from taxpayers to fund such projects--projects that many taxpayers oppose but are forced to support financially.

What I find particularly interesting about Brown's lessons is that he turned to other cities for advice, rather than making an attempt to understand why Houston led the nation in job growth in 2008, was named the best city to buy a home or find a job, and was at the top of many other "best of" lists in 2008. If any city is to be considered worth emulation, it should be Houston. Yet, Brown turned his attention elsewhere--to the Big Apple, Dallas, and Denver. Why?

The answer can be found in the conclusions that Brown drew from each of his visits. In each city, he found that centralized planning was a key component to whatever successes had been experienced in those cities.

The Denver we experienced has benefited from nearly two decades of planning, clearly defined policies, high standards and effective programs. Whether its rail transit, the new airport or “Stapleton New Town”, neighborhood revitalization, redevelopment of the urban center, building new sports venues downtown connected to the Riverfront Park, or the Homeless Initiative – the programs have worked, planning has worked, citizen participation has worked.

Brown is a long time proponent of centralized city planning (and a supporter of zoning in the 1990's), so his conclusions are hardly surprising. But they raise a lot of unanswered questions. Such as, what does he mean that "planning has worked"? For whom has it "worked"? Did it work for those whose personal plans were destroyed because those plans did not conform to the central plan? Did it work for those who had their money and property confiscated to build rail lines, sports venues, and other public projects that they personally opposed? Or did it work for those with political connections who received special favors from the city government?

The projects advocated by Brown all involve an expansion of government power and control. He is opposed to individual freedom--the right of each individual to act according to his own judgment in the pursuit of his own values. He treats individuals as incompetent to handle their own affairs--only government can solve the ills that face us.

I reject this vision of individuals and I reject Peter Brown's vision for Houston. The city government should be protecting our rights, not controlling our actions and dispensing favors to political cronies.

Taxes and Fiscal Responsibility

City Controller and Mayoral candidate Annise Parker demonstrated one of her strong points in an OpEd in Sunday's Chronicle--the ability to write 800 words without saying much. But she does attempt to provide some comfort to anyone concerned about the city's finances:

I want to assure Houstonians that we are exploring every possible option and taking utmost care with your tax dollars during these difficult times.

This claim is simply untrue. The most viable, easy to implement, and moral option is not even being considered. The city should reduce spending by limiting itself to its proper function--the protection of rights. But this would mean cutting government services through privatization, reducing taxes, and allowing individuals more freedom. This would be virtually impossible for a politician like Parker, for she would have to cede most of her power.

Politicians like to talk about how responsible they are with taxpayer money. But the truth is, the most responsible thing a politician can do in that regard is to let taxpayers keep more of their money--that is, cut taxes. It is condescending to talk about responsible stewardship while advocating ideas that require confiscatory taxes.


Parker's article is little more than a self-congratulatory pat on the back. She prattles on about the "innovative" and "responsible" measures she has taken--like having the city buy the debt of other government entities, such as Metro and the Harris County Flood Control District. But the real kicker is the city buying its own debt, a process which she claims is profitable to the city because it receives an interest payment of 1.5 percent to 2 percent.

Where I come from, a profit is the result of income minus expenses. If the city is receiving an interest payment on the debt it has purchased from itself, the city is also making that interest payment. Whatever interest the city is receiving it is also spending, which makes the entire deal a wash. And, if the city has the money to purchase its own debt, why incur the debt? Why not just use the cash, instead of creating needless steps to shift the money from one pocket to another?

Such financial voodoo is not uncommon in politics. Politicians frequently believe that they can suspend the basic laws of economics and accounting, not to mention reality. They believe that if they wish it to be, passing a law will make it so. And they can always find an expert or two who will pander to them.

Municipal finance can be very complex, but the overriding principle is simple: a disciplined focus on the long-term financial health of the city. Experts in the industry agree with our strategies, giving the city an excellent credit rating and characterizing our decisions as “fiscally responsible.”

Continuing to rack up debt is certainly not responsible. It is a mortgage on future Houstonians, and Parker and her ilk have no qualms about piling more debt onto that mortgage. More importantly, the reason municipal finance is complex is because government must resort to all types of schemes in order to finance its profligate spending.

The city's budget for fiscal 2009 is nearly $4 billion. Approximately 60% of this money is spent on functions that are not proper for government--such as parks, airports, building code enforcement, etc. And of the money spent on legitimate government functions--the police and courts--a large percentage is consumed by the enforcement of laws that violate individual rights by restricting the voluntary actions of adults.

In short, if Parker (or any politician for that matter) is truly concerned about the city's financial health, she should begin by reducing government to its proper sphere. Doing so would not only greatly reduce the funds required by government, it would allow citizens to keep more of their money. And in the end, the financial health of individuals will determine the financial health of the city.

Don't Sweat the Small Stuff 17

I Want To Be Free

For the first fifty years of my life I often wondered what I wanted to be when I grow up. Thanks to Rational Jenn and her children, I now know. I want to be free when I grow up.

Barbie and the End of the World
With the world as we know it coming to an end, a West Virginia legislator has decided that banning Barbie dolls is just what the state needs.

The proposal from Democratic Delegate Jeff Eldridge said such toys influence girls to place too much importance on physical beauty, at the expense of their intellectual and emotional development.

"Basically, I introduced legislation because the Barbie doll, I think, gives emphasis on if you're beautiful, you don't have to be smart," Eldridge said.

It may be true that Barbie promotes beauty over brains, but Mr. Eldridge is promoting brawn over brains. Rather than use reason and persuasion to make his point, he chooses to use the point of a gun. One can only conclude that he played with a lot of dolls as a child, as his own intellectual and moral development seems to be rather stunted.


Rush and the Lap Dogs
The clamor over Rush Limbaugh and his desire to see President Obama fail is both enlightening and entertaining. Republicans are oscillating between distancing themselves from Rush while attempting to avoid alienating his millions of listeners. It is a comical dance that illustrates the problem within the Republican party.

Though I am only an occasional listener, I did catch a fairly good monologue by Rush this week. He exhorted Republicans to quit acting like Democrats and return to their principles. The problem, he said, is that Republicans are debating policies rather than principles. And he is correct. But the problem goes deeper than that--Republicans can't debate principles because they accept the same basic principles as the Democrats.

Both parties accept the premise that moral behavior consists of serving others. Both accept the premise that the individual is subservient to the "general welfare" or the "public good". So long as Republicans accept these premises, they can only bicker over the details.

If Republicans wish to have a true debate over principles, then they must reject these premises. They must embrace the principles of individual rights and their moral foundation--rational egoism. Until they do so, they will remain lap dogs to the Democrats.


Treating the Public Like Mushrooms
Despite the trillions of taxpayer dollars spent to bail out financial institutions, the Federal Reserve does not want to reveal the names of the companies receiving our money. Doing so, the Fed says, might cast a stigma over those institutions, according to Bloomberg. Bloomberg has filed a lawsuit under the Freedom of Information Act seeking the names of these institutions.

Banks oppose any release of information because that might signal weakness and spur short-selling or a run by depositors, the Fed argued in its response.

We certainly wouldn't want the public to know which banks are not healthy--the public might act on that truth. Instead, the Fed prefers to keep taking our money while keeping us in the dark. So much for transparency.


West Virginia has Nothing on Texas
As if to prove that Texas has its fair share of prattling politicians, State Senator Mario Gallegos has filed a bill to force the Houston Livestock Show and Rodeo (HLSR) to create more diversity on the show's board. According to KTRK:

"No Latinos, no African-Americans, no women of any color," said Texas Senator Mario Gallegos. "It's 100 percent, nineteen members, are all white males."

Senator Gallegos on Friday made it official, filing a bill which would require non-profits to appoint a board of directors that reflect the diversity of its constituents, answer fully to all open records requests and make reasonable efforts to increase minority participation in contracts.

The dear Senator conveniently ignores the fact that HLSR is a private organization, and as such, it has a right to do whatever the hell it wants. As far as charities go, it is one of the best. It raises hundreds of millions of dollars for scholarships. It provides teenagers with a venue for showing their livestock. And it provides something of value to the "donors".

(You may wonder what the big deal is about a livestock show and rodeo. As the world's largest livestock show and rodeo, HLSR is truly a spectacle. To see hundreds of kids proudly showing livestock they have raised is a pure joy. To watch the calf scramble--kids get to keep the calf they capture--is both fun and sometimes agonizing. To watch bronco riding and calf wrestling provides an appreciation of the skills that are so vital on ranches. And as an added bonus, there are star performers, such as ZZ Top, Reba, and Clay Walker.)

Sheila Jackson-Lee, the Congressentity with the perpetual scowl, also had to chime in:

If it has to be through laws and oversight, then that it must be. But we will have a livestock show that is representative to all of the state of Texas, and can be a shining example in this nation of change, productivity and respect.

Actually, the livestock show is representative of Texas--it is based on the voluntary consent of all involved. Those who participate, attend, volunteer, donate money, or anything else, do so of their own free choice. But this is what Gallegos and Lee find distasteful. They don't like the fact that individuals might make choices that they don't like, and as legislators, they can can use force to impose their values upon others. If Lee really wanted to set a shining example, she would start repealing laws and protecting individual rights. That would be a real change, and would show some real respect.