Saturday, January 30, 2010

Everclear and Present Danger

In its never-ending quest to keep its citizens safe from their own actions, by treating them all like idiot children, the state of Iowa is investigating whether to ban or severely regulate the sale of Everclear, a highly concentrated alcohol (HCA) beverage. In other states Everclear is available up to 95% alcohol (190 proof), but last year Iowa officials limited Everclear sold in this state to 75.5% alcohol (151 proof).

The Iowa Alcoholic Beverages Commission recently held a meeting at Drake University to hear public opinion on the topic. In November 2009 a Drake student was rushed to the hospital for alcohol poisoning after consuming copious amounts of Everclear, creating the massive debate about the drink in Iowa. Since one young college punk got sick on the stuff, obviously the state needs to make new regulations to restrict the freedom of three million other Iowans. After all, it wasn't that kid's fault, the other kids "made" him do it.

Holding its hearing at any college campus, much less one recently rocked by the near-death of one of its students, is probably not the best place to hear dispassionate and well-reasoned arguments calling for government restraint. The Commission probably doesn't want to hear those anyway.

If you would like the Commission to hear some, you can email comments on the topic to dusold@iowaabd and read public comments for and against increased regulation of HCA's at the Iowa Alcoholic Beverages Commission's website.

Wednesday, January 27, 2010

"Free Market Makes a Lot of Sense" Redux

In November I posted an excerpt and a link to a guest column I had in the Cedar Rapids Gazette. Since I'm not sure how long the Gazette will maintain that link on their website, I present the original unedited version of that article below:

By now it’s well-known that the Obama Administration’s “Manufacturing Czar” Ron Bloom raised a few eyebrows when he stated that “the free market is nonsense.” If the waning months of the Bush Administration are any indication, the leaders of both major parties now basically share this philosophy. That’s a pity.

Our “nonsensical” free (though increasingly regulated) market has given America one of the highest standards of living in the world. Even our poor people could have it much worse. According to the Heritage Foundation, of poor households in the United States: 46% own their own homes, 76% have air conditioning, nearly 75% own a vehicle (30% own two), 97% own a color television, 62% have cable or satellite television. 89% of poor families say they have enough to eat, while only 2% say they "often" do not have enough to eat. Imperfect, but not bad.

If we don’t have a free market economy, then we have a command economy wherein government regulators control wages, prices and production rates. (Sure, it’s a sliding scale between the two, but an administration that views one end as “nonsense” will obviously only let us slide one way.)

When I was young, the Soviet Union was the ultimate embodiment of a command economy. I spent some time there in the summer of 1991 as a “student ambassador.” A group of American students and I toured the country, seeing Moscow, Leningrad (now St. Petersburg) and the Estonian countryside. We stayed with some nice Russian families. Although my three weeks there certainly doesn’t make me an expert on all things Soviet, it was an eye-opening trip for a sixteen year old Iowa farm boy nonetheless.

I saw the blocks-long lines of people waiting for bread and other necessities. I toured GUM department store in Moscow. A great Soviet achievement, we were told it was the largest department store in the world. It’s shelves were bare.

Somewhere I got a small toy Soviet army tank. The price was stamped right into the steel bottom of it at the time of manufacture. (I forget what the price was. Let’s say two rubles.) That price, as well as the number to be produced, presumably, had been set by some panel of government planners months before the toy tank rolled off the production line.

What would the price have been if the toy tank had become the “must-have” toy for Russian kids, with demand quickly outstripping production? Two rubles, get in line! What would the price have been if it was sold in a store on the far side of Siberia, burning up 4,000 miles worth of fuel resources to get there? Two rubles. And if Russian kids hated the new toy and would rather play with a broken piece of cobblestone? Then they would gather dust on store shelves, available for the low, low price of… two rubles.

It’s easy to see that a market system based upon the logical decisions of bureaucrats a month or a week ago quickly becomes a system based upon no logic at all. This is the “sensible” system that the Manufacturing Czar and, by extension, his boss President Obama advocate?

Although I hope that we don’t follow the Soviet economic model, there’s at least one thing that the Soviets got right. They got rid of their czars.

Friday, January 22, 2010

The Once and Future Foreign Policy

Most of us who grew up in the 20th century probably assume that the twin pillars of our foreign policy, dollar diplomacy and big stick diplomacy, are America’s traditional methods of international relations. Not so. At her founding, and for a good many years afterward, America maintained a policy that (in the technical parlance of international diplomacy) was called “minding our own damned business.”

In President Washington’s farewell address he reminded Americans, “The great rule of conduct for us, in regard to foreign nations is, in extending our commercial relations, to have with them as little political connection as possible.” In his inaugural address, with his usual eloquence, President Thomas Jefferson advised that America should seek "peace, commerce, and honest friendship with all nations, entangling alliances with none."

Did this mean America was afraid to wield a “big stick” when needed? Not at all. The Barbary Wars (1801-1805, 1815) and the War of 1812 demonstrate that when America had clear and immediate threats to it’s people or tangible interests it would defend them.

America retained this policy of non-interventionism roughly until the Spanish-American War (1898). Someday, when the federal government can no longer afford to maintain a global empire because of the weight of its own indebtedness, this may again become the de facto foreign policy.

The best articulation of traditional American non-interventionism is John Quincy Adams’ Independence Day speech to the U.S. House of Representatives in 1821, when Adams was serving as U.S. Secretary of State. His speech explains this premise passionately and poetically. Here it is:

John Quincy Adams on U.S. Foreign Policy (July 4, 1821)

And now, friends and countrymen, if the wise and learned philosophers of the elder world, the first observers of nutation and aberration, the discoverers of maddening ether and invisible planets, the inventors of Congreve rockets and Shrapnel shells, should find their hearts disposed to enquire what has America done for the benefit of mankind?

Let our answer be this: America, with the same voice which spoke herself into existence as a nation, proclaimed to mankind the inextinguishable rights of human nature, and the only lawful foundations of government. America, in the assembly of nations, since her admission among them, has invariably, though often fruitlessly, held forth to them the hand of honest friendship, of equal freedom, of generous reciprocity.

She has uniformly spoken among them, though often to heedless and often to disdainful ears, the language of equal liberty, of equal justice, and of equal rights.

She has, in the lapse of nearly half a century, without a single exception, respected the independence of other nations while asserting and maintaining her own.

She has abstained from interference in the concerns of others, even when conflict has been for principles to which she clings, as to the last vital drop that visits the heart.

She has seen that probably for centuries to come, all the contests of that Aceldama the European world, will be contests of inveterate power, and emerging right.

Wherever the standard of freedom and Independence has been or shall be unfurled, there will her heart, her benedictions and her prayers be.

But she goes not abroad, in search of monsters to destroy.

She is the well-wisher to the freedom and independence of all.

She is the champion and vindicator only of her own.

She will commend the general cause by the countenance of her voice, and the benignant sympathy of her example.

She well knows that by once enlisting under other banners than her own, were they even the banners of foreign independence, she would involve herself beyond the power of extrication, in all the wars of interest and intrigue, of individual avarice, envy, and ambition, which assume the colors and usurp the standard of freedom.

The fundamental maxims of her policy would insensibly change from liberty to force....
She might become the dictatress of the world. She would be no longer the ruler of her own spirit....

[America's] glory is not dominion, but liberty. Her march is the march of the mind. She has a spear and a shield: but the motto upon her shield is, Freedom, Independence, Peace. This has been her Declaration: this has been, as far as her necessary intercourse with the rest of mankind would permit, her practice.

Sunday, January 17, 2010

10th Amendment Revival In 2010?

Could 2010 bring a resurgence in the importance of the Tenth Amendment to the U.S. Constitution, after it spent most of the 20th century in relative obscurity? At least one group that studies Constitutional governance thinks so.

According to Michael Boldin, founder of the Tenth Amendment Center,a Los Angeles-based think tank, "With people looking to resist D.C. through state laws on everything from national health care to medical marijuana, the 10th Amendment appears ready to be front and center in the national debate once again this year."

The Tenth Amendment states, "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." It is an encapsulation of the principle of federalism, reserving much sovereignty for states and individuals.

"Already, over a dozen states are considering laws or state constitutional amendments that would effectively ban, or nullify, any proposed national health care plan in their state, and we expect that number to reach at least twenty in 2010," said Boldin. "In conjunction with 20+ states that have already said 'No' to the Bush-era Real ID act, another dozen or more considering state laws to nullify federal gun laws, and the steady growth of states refusing to comply with federal marijuana laws, some might consider what we see today to be an unprecedented state-level rebellion to the federal government."

This nonviolent "rebellion" is based upon the traditional (yet long neglected) principal of nullification. By nullifying a federal law, a state declares that law to be null and void within that particular state. "Nullification has been used to stand up for free speech, resist the fugitive slave laws, reduce tariffs and more," explains Boldin. "It's a peaceful and effective way to resist the federal government, and might be our only hope for moving towards the constitution."

In addition to the many state government efforts to proclaim sovereignty under the Tenth Amendment or to nullify various federal laws, Tenth Amendment rallies are planned in at least 10 states in January.

With so much activity afoot, 2010 may indeed be the year of the Tenth Amendment.

Related posts:
  1. 10 Questions with TAC Founder Michael Boldin
  2. The Growing Movement to Nullify Nat'l Health Care
  3. The Great Debate, Part 1: The General Welfare Clause
  4. The Great Debate, Part 2: The Commerce Clause
  5. The Great Debate, Part 3: What Now?

Wednesday, January 13, 2010

Honey Creek Money Pit

In July I reported to you on Honey Creek Resort in southern Iowa. I pointed out at that time that, in addition to diverting funds (about $58 million) from other more legitimate government projects, the state was creating a taxpayer assisted entity that would directly compete with private industry. I argued that the jobs "created" at Honey Creek were actually jobs stolen from around the state.

Now the Cedar Rapids Gazette reports that in its first 9 months of operation the resort lost $900,000. A state audit showed that between September 2008 and June 2009 Honey Creek had revenues of $3.1 million but expenses of almost $4 million.

In a separate piece, Gazette columnist Todd Dorman, who visited the resort last summer, said, "Although some lawmakers are talking about pulling the plug on state ownership, I’m withholding judgment until I see how a fully completed resort does this year in a slightly more stable economy." True enough. Plenty of businesses lost money in the last year. Unfortunately I'd be opposed to government ownership of the resort even if it posted a tidy profit, for the philosophical reasons listed above.

Dorman also added the warning: "If the state’s going to own a resort, it needs to think more like a crafty entrepreneur than a drowsy bureaucrat." Here Dorman misses the point. Rather than trying to teach bureaucratic ducks to bark like entrepreneurial dogs*, why not just sell the thing to real entrepreneurs in the private market?

It might be hard to find willing buyers right now, however, since entrepreneurs tend to be more wise with their own money than the legislature is with ours.

*Not every metaphor I come up with can be a gem, people!

Saturday, January 9, 2010

Business Bogeyman Du Jour: Payday Lenders

There appears to be some momentum in the upcoming Iowa legislative session to restrict payday loans in the state. Sometimes called a “payday advance,” payday loans are short-term (usually two-week) loans where the borrower issues a post-dated check to the lender.

According to the Community Financial Services Association of America (CFSA), the industry organization for payday lenders, the typical fee charged by payday lenders is $15 per $100 borrowed. So a customer wishing to borrow $100 would write a check to the lender for $115. The lender would then give the borrower $100 cash. Two weeks later the lender would cash the customer’s check, keeping the extra $15.

This simple arrangement has managed to stir the ire of legislators across the country, including Iowa. State Senator Joe Bolkcom, D-Iowa City, head of the Senate Ways and Means Committee, said, "The payday loan industry is our local counterpart to the crooks on Wall Street." Other critics, such as Tom Chapman, executive director of the Iowa Catholic Conference, point out that interest rates on payday loans can run as high 400 percent. "We believe these types of interest rates are unjust and should be outlawed," said Chapman. "Instead of promoting the financial stability of consumers, the system actually creates a financial incentive in the failure of Iowa families rather than their success."

But CFSA’s website points out: “The typical fee charged by payday lenders is $15 per $100 borrowed, or a simple 15 percent for a two-week duration. The only way to reach the triple digit APRs [annual percentage rates] quoted by critics is to roll the two-week loan over 26 times (a full year). This is unrealistic considering that many states do not even allow one rollover. In states that do permit rollovers, CFSA members limit rollovers to four or the state limit—whichever is less.”

If a payday loan customer somehow did carry his loan for a whole year, how would that APR compare to other alternatives to low-income consumers? Again from the CFSA:

$100 payday advance with a $15 fee = 391% APR
$100 bounced check with $54 NSF/merchant fees = 1,409% APR
$100 credit card balance with a $37 late fee = 965% APR
$100 utility bill with $46 late/reconnect fees = 1,203% APR.

So compared to these and other “quick cash” alternatives, like pawn shops, payday loans are not terribly out of line. If consumers with poor credit ratings could get small, quick loans elsewhere (such as conventional banks) they no doubt would. Since the payday lenders offer an apparently popular service that consumers can’t get elsewhere, why shouldn’t they be able to charge a premium price for it?

So, what is the problem? The words of State Representative Janet Petersen, D-Des Moines, head of the House Commerce Committee, who favors new restrictions on payday lenders, offer some clues. Petersen says that, by restricting payday loans, “lenders will be forced to take some responsibility for ensuring that Iowans don't end up in a vicious debt cycle." [Emphasis added.]

In the minds of people like Peterson, consumers are ignorant sacks of meat that mindlessly throw their money to greedy, unscrupulous businessmen (in this instance payday lenders). Without smart and benevolent legislators like Peterson and Bolkom to protect them every moment of the day, the people they represent are little more than sheep to be shorn by capitalist predators. If anyone is to "take some responsibility" for the lives of Iowans, it must be the lenders (and the legislators) who apparently draw from a more intelligent gene pool than mere citizens.

Experience in other states has shown that restrictions on payday lenders result in fewer of those lenders. This would obviously mean fewer payday loans available to Iowans. Therefore, restricting payday lenders might allow liberal lawmakers to slap each other on the back for helping the “little guy,” but without reducing the NEED for or providing some new alternative to payday loans, they have only succeeded in worsening the little guys’ circumstances.

Saturday, January 2, 2010

Life, Liberty and Property in '09

It's time once again to examine the old year and hope for a good new year. Let's review some of the top developments in 2009 in the Lockean categories of life, liberty and property.


According to the FBI's preliminary report, murders in the first 6 months of 2009 were down 10% compared to the previous year. Final crime rates for 2009 won't be released until sometime in 2010, but if the trend continues throughout 2009, it would be the biggest one-year decrease in murders since at least 1960, the earliest year for which Bureau of Justice Statistics data is available. It would also give 2009 a per capita murder rate 51% lower than the all-time high in 1991.

During the same time six-month period, U.S. gun sales (as measured by the number of transactions on the FBI's National Instant Criminal Background Check System [NICS], the "background check" when a gun is purchased from a dealer) were up by about 24%. As the National Rifle Association Institute for Legislative Action (NRA-ILA) points out, the number of privately owned firearms in the U.S. rose by about 2%, to record levels. NRA-ILA also stated: "[T]he firearms that were most commonly purchased in 2009 are those that gun control supporters most want to be banned – AR-15s, similar semi-automatic rifles, and handguns designed for defense."

In a nutshell, in the last several years gun ownership has reached all-time highs while crime rates remain at or near record lows. "What this shows," said Alan Gottlieb, Executive Vice President of the Second Amendment Foundation, "is that gun prohibitionists are all wrong when they argue that more guns result in more crime. Firearms in the hands of law-abiding citizens are no threat to anyone. Perhaps violent criminals were actually discouraged by all of those gun sales earlier this year, because the media made a point of reporting the booming gun market.

He continued: "Anti-gunners have lost another one of their baseless arguments. Millions of Americans bought guns during the first six months of [2009], many of them for the first time. Yet with all of those new guns in circulation, coupled with an increased demand for concealed carry licenses around the country, the streets have not been awash in blood, as gun banners repeatedly predict."

In a slightly different vein (yet still in the life category), for the first time since the Gallup Poll began asking the question in 1995, a majority of Americans (51%) called themselves "pro-life" in 2009. According to Iowa Right to Life the number of abortions performed nation-wide peaked at about 1.6 million in 1990 (almost the same year as the all-time high murder rate mentioned above, hmm...) but has been trending downward since. It was at about 1.2 million in 2006 and is "back to levels not seen since the late 1970s."

Iowa had 5,888 abortions in 2005, 6,728 in 2006 and 6,649 in 2007. I haven't read any hard numbers for '08 or '09, but I would imagine they remained in that same range.


The big news in Iowa this year was that Iowa became the third state to legalize gay marriage. The Iowa Supreme Court issued a ruling in April on the case Varnum v. Brien. It was argued that Iowa's law violated same-sex couples rights to equal protection and due process.

Not everyone was happy with the decision however. “A handful of people who were not elected to office — they were appointed — have rendered a decision, a decision that is contrary to the will of the people, it is contrary to God’s law and it’s time for the people through their elected officials and elected representatives to decide what the law is going to be in this state,” said Danny Carroll, chairman of the Iowa Family Policy Center’s board of directors.

But government exists to protect the rights of individuals from tyranny (even tyranny of the majority). Regardless of whether you morally approve of homosexuality or not, the ruling is certainly good for individual rights in Iowa. The argument made by social conservatives, that gay marriage is destructive to society, doesn't seem to be resonating with anyone but conservatives themselves. Nonetheless, efforts are underway to reverse the ruling.

Second Amendment supporters ended the year with more friends than they started with. This summer the gun control group Iowans for the Prevention of Gun Violence (IPGV) dissolved due to lack of funding. However, a new group of Second Amendment defenders sprung up in the state. The group Iowa Gun Owners was formed in January '09. In their first year in existence they managed to get a "Vermont/Alaska style" right-to-carry bill introduced in the Iowa legislature and earned it a tied procedural vote (to proceed, not be enacted) of 49-49 in the Iowa House. Not a bad first showing.

There was some work done on legalizing medical marijuana in Iowa in 2009. In July the Iowa Board of Pharmacy began holding hearings on the issue, but has not yet voted on its recommendation to the state legislature. In March a state Senate subcommittee held a hearing on medical marijuana bill, but the bill didn't advance out of the subcommittee. Although it remains to be seen what will happen, at least there is discussion of legalizing the pharmaceutical use of a drug that is less dangerous and addictive than many other commonly prescribed drugs.

In 2009 storm clouds continued to gather at the national level, with healthcare "reform" set to mandate insurance coverage and involve the government in some of our most personal decisions.


In June I reported on a county government flanking maneuver to circumvent the state's anti-Kelo eminent domain law. The Clarke County Reservoir Commission voted to condemn the farmland of two dozen families in order to build a new 900-acre reservoir near Osceola. Critics have charged that planners have inflated the areas water needs in order to justify the new reservoir. In August the Clarke County Farm Bureau stated that they would NOT be helping the landowners whose land will be taken. Construction of the lake has not yet begun at this time.

In Washington and Des Moines our elected officials continued to bury this and future generations in debt in 2009. Since this will have to be paid back (with interest) it will obviously cost Americans a lot of money, therefore leaving less money available to us to acquire property (and less to pursue happiness with as well).

Governor Culver signed bonding issues adding almost $1.7 Billion in state debt, despite the fact that a Des Moines Register poll showed that 71% of Iowans opposed it. In D.C., President Obama and the Democrat Congress added about $1.45 Trillion in U.S. debt in 2009 alone. The U.S. public debt currently stands at over $12 Trillion. Our total unfunded liabilities amount to almost $107 Trillion.

So 2009 was a mixed bag for freedom lovers. Unfortunately, I think the few advances in personal freedoms are vastly overshadowed by the fiscal crisis looming on the horizon. Will we draw that crisis closer or will we begin to back away from it in 2010? I'll tell you next year.

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