The latest mile marker on our road to fascism is the regulation being crafted by the administration and Barney Frank and the alternative being crafted by Chris Dodd. The two people most responsible out of politicians for the mess we are in are now the ones claiming they are going to fix it.

Both bills are intended to cover more than just companies that are engaged in financial activities. Following the administration’s lead, both provide that a company engaged in a financial activity “in whole or in part, directly or indirectly” could be subject to enhanced regulation and supervision.

The Frank bill seems intended to regulate all financial firms as though they are banks. Thus it requires financial activities to be transferred out of operating companies into a separate entity, which would then be regulated like a bank (even in its relations with its parent company).

The Dodd bill is a blunter instrument, proposing to regulate all companies that include financial activities “in whole or in part.” But almost all companies—retailers, manufacturers and service organizations—engage in some financial activities, if only to promote the sale of their products and services. If the administration’s health-care proposal has the potential to nationalize one-sixth of the economy, Messrs. Frank and Dodd are bidding to cover the rest.

“in whole or in part, directly or indirectly” and “in whole or in part” sure sound all encompassing. It would seem to me that every business is “engaged in financial activity” to a point. Add the control of government health care to this equation, and you pretty much have complete control of business.

The administration’s original legislation would give the Federal Reserve authority to regulate and supervise all large nonbank financial institutions and, if they are in danger of failing, take control of them and resolve their problems outside the bankruptcy system. The underlying notion is that the failure of one of these companies—which include bank holding companies, securities firms, insurance companies, finance companies, hedge funds and possibly others—could cause a systemic collapse.

Although the administration likes to give the impression that its proposal is limited to exceptional cases and the largest financial institutions, its draft legislation, and the Frank and Dodd bills, use very broad language to describe the triggering event for either enhanced supervision or a subsequent bailout.

Putting it bluntly, the administration’s proposal, and the House and Senate draft bills, would establish too big to fail as national policy. Whether the companies are regulated by the Fed or by a new agency, they will still have been marked as threats to economic well-being—and thus seen by creditors and investors as specially protected by the government. This will give them the same advantages enjoyed in the mortgage business by Fannie Mae and Freddie Mac, with the same result for competitors and taxpayers.

This sure sounds like welfare for the rich to me. Basically if you are lucky enough to have your business labeled “too big to fail” (I’m sure we’ll see more lobbyist pushing to have their business classified as such), then you basically do not have to worry about your actions. Take your profits while you can and things are good, and when things get bad, don’t worry about it. The American taxpayer will have to eat it. The investors and the executives reap the rewards and have all upside.

The Frank bill would explicitly authorize the Federal Deposit Insurance Corp. (FDIC) to provide financing that would restore a failed company to health. The craftier Dodd bill implies that creditors will take a hit, but then authorizes the FDIC to pay off creditors in full if that would avoid “serious adverse effects to financial stability or the United States economy.”

Moreover, under the Dodd bill, after the government has settled with its creditors, a failed company can have a public offering of its shares and return to the competitive fray. That’s good news in one sense, of course, but not for everyone; under the Dodd plan, the government is authorized to recover what it spent by taxing all financial firms—that is, firms such as bank holding companies and others involved “in whole or in part” in financial activities—with total assets of more than $10 billion.

In effect, the legislation creates moral hazard by transferring the risks and losses of a failing company from its creditors to its competitors. The protection of taxpayers may be a mirage anyway, since the FDIC is authorized to put off these collections indefinitely to avoid an “adverse effect on the financial system or economic conditions.”

via Peter J. Wallison: The Permanent TARP – WSJ.com.

This regulation amounts to “there are no losers here” policies. It’s like all the kids participating in a sporting event getting a trophy, because they are all winners. Meanwhile, they lose their sense of competition and drive. There is no downside for a company once it’s classified as too big to fail. This is a scary proposition. If they have bad management, they don’t have to worry. The government will step in, usher them back to “health” with tax payer money, and then more bad management can come in and make profits until it falls apart again. Talk about wealth distribution. I didn’t know Obama meant this when he was talking to Joe the Plumber. I should have known when he said he was for “Trickle Up Economics” instead of Reagan’s “Trickle Down Economics”. Apparently with trickle up economics, the wealth that the poor and middle class have moves up to the rich that have political connections.

This morning, Ralph R. Reiland has a funny and yet disturbing description of how the UK government controls citizens via health care cost control.

In other universal health care news, the December 2009 issue of Reason magazine reports that government inspectors working for the Stoke City Council in England “warned residents to remove welcome mats and potted plants from their porches.”

With government running health care, it becomes the state’s business if someone trips over a porch plant or welcome mat, or if some numbskull runs into a hanging basket.

And what about sled riding, something more likely than a potted palm to raise hospital costs?

In a nation that can’t stomach the risk of a welcome mat, how long will people be permitted to ice skate or race cars? Will kids still be allowed to build snowmen, given the danger of frostbite and subsequent medical interventions?

So what will be the allowable winter sport in England, given the need to cut the level of red ink in health budgets? Stay inside and bake gingerbread people? Still risky. To make 30 little gingerpeople, just 2.5 inches tall, Betty Crocker says to use a full cup of packed brown sugar, 1.5 cups of dark molasses, 7 cups of flour, and 1/3 cup of shortening, plus cinnamon, allspice, cloves and ginger.

There’s also frosting — 4 more cups of sugar, powdered, plus vanilla and some raisins and chocolate chips for the faces and buttons.

That comes to 270 calories per gingerperson. Eat the whole batch (they’re small) and that’s 8,100 calories, enough to become the business of the obesity cops and the central committee’s watchers of budget busters in the health sector.

On top of fat, there’s also the gingerperson’s fuel squandering and its link to climate calamities and drowning polar bears, with ginger, cloves and cinnamon, respectively, coming from half a warming world away in India, Madagascar and Sri Lanka.

via Appendectomy? Make it a double – Pittsburgh Tribune-Review.

While reading this article in the Wall Street Journal this morning, it struck me that we have some lessons we should learn ourselves.

This is not to suggest an endorsement of the status quo. Cardinal Rodríguez has plenty of criticism for a system that has left so many Hondurans mired in poverty while a small number live extravagantly. He denounces the lack of equality under the law which has damaged economic mobility. “In Latin America, when you have money, you can buy justice.” Such corruption is what led to “the implosion” of political parties in Venezuela,” he says. “And in the vacuum there was this messiah, Chávez, who came. This is the danger in all our nations.”

Yet the cardinal also recognizes progress since the birth of the constitutional democracy in 1982. “Now the army is respected, because they have dedicated themselves to the constitutional role of defending the law and the borders.” The trouble, he says, is that with the advent of democracy, “the political parties took politics as an industry for enrichment. We need to change that.”

Cardinal Rodríguez sees the rule of law as an important link to development. “The key is to assure justice,” he says, “because if you don’t have legal security, you are not going to invest. Investment is very important. With investments there are more jobs for our people.”

Speaking of investors, the cardinal says, “of course they are not all saints,” and human rights must be protected. “But what should we do without those jobs?” he asks. Then he adds, “Maquilas [assembly plants] are especially important for women, because their jobs have been a source of dignity. When they earn their own money they are no longer slaves to the macho man in their lives, who often is not even their husband.”

Honduras will hold a presidential election on Nov. 29, and many hope Mr. Zelaya will soon be a bad memory. Yet the struggle for liberty, and the social justice that comes from equality under the law, will continue. Cardinal Rodríguez says he hopes the political class has learned a lesson. Amen to that.

via Mary O’Grady: The Cardinal and the Constitution – WSJ.com.

Cardinal Rodríguez mentions that because of corruption in Venezula, the populace turned to “this messiah, Chavez”. Hmm, sounds familar. Because Americans were fed up with government manipulation by Wall Street and the excesses of bad monetary and fiscal policy, we fell for the very demagogic but vague messiah, Barack Obama. Americans, in wanting to corruption removed from Washington, turned to a corrupt politician to do it. Sadly, Obama is turning out to be the most corrupt. He’s in bed with Wall Street and the Fed.

The Cardinal then goes on to explain that investors aren’t angels, but they are the ones who create the opportunities for the rest of society to participate in the economy. This participation is what brings dignity, not the government.

Social justice is usually code for socialism, but I love how the Cardinal turns it, “the social justice that comes from equality under the law”. He is right, social justice comes from equality under the law. It does not come from government coercion of one group to the benefit of another. The very act of coercion is the destroyer of “social justice”.  Good call Cardinal, and Amen to that. Let’s just hope Americans wake up and realize that the government is not our messiah, and that we should not be looking to the government to impose “social justice”.

Here’s an article from the Wall Street Journal this morning about the rationing commission.

Like most of Europe, the various health bills stipulate that Congress will arbitrarily decide how much to spend on health care for seniors every year—and then invest an unelected board with extraordinary powers to dictate what is covered and how it will be paid for. White House budget director Peter Orszag calls this Medicare commission “critical to our fiscal future” and “one of the most potent reforms.”

On that last score, he’s right. Prominent health economist Alain Enthoven has likened a global budget to “bombing from 35,000 feet, where you don’t see the faces of the people you kill.”

As envisioned by the Senate Finance Committee, the commission—all 15 members appointed by the President—would have to meet certain budget targets each year. Starting in 2015, Medicare could not grow more rapidly on a per capita basis than by a measure of inflation. After 2019, it could only grow at the same rate as GDP, plus one percentage point.

……

Worse, it makes little room for medical innovations. The commission is mandated to go after “sources of excess cost growth,” meaning treatments that are too expensive or whose coverage will boost spending. If researchers find a pricey treatment for Alzheimer’s in 2020, that might be banned because it would add new costs and bust the global budget. Or it might decide that “Maybe you’re better off not having the surgery, but taking the painkiller,” as President Obama put it in June.

In other words, the Medicare commission would come to function much like the National Institute for Health and Clinical Excellence, which rations care in England. Or a similar Washington state board created in 2003 to control costs. Its handiwork isn’t pretty.

The Washington commission, called the Health Technology Assessment, is manned by 11 bureaucrats, including a chiropractor and a “naturopath” who focuses on alternative, er, remedies like herbs and massage therapy. They consider the clinical effectiveness but above all the cost of medical procedures and technologies. If they decide something isn’t worth the money, then Olympia won’t cover it for some 750,000 Medicaid patients, public employees and prisoners.

So far, the commission has banned knee arthroscopy for osteoarthritis, discography for chronic back pain, and implantable infusion pumps for pain not related to cancer. This year, it is targeting such frivolous luxuries as knee replacements, spinal cord stimulation, a specialized autism therapy and MRIs of the abdomen, pelvis or breasts for cancer. It will also rule on routine ultrasounds for pregnancy, which have a “high” efficacy but also a “high” cost.

Currently, the commission is pushing through the most restrictive payment policy in the nation for drug-eluting cardiac stents—simply because bare metal stents are cheaper, even as they result in worse outcomes. If a patient is wheeled into the operating room with chest pains in an emergency, doctors will first have to determine if he’s covered by a state plan, then the diameter of his blood vessels and his diabetic condition to decide on the appropriate stent. If they don’t, Washington will not reimburse them for “inappropriate care.”

via The Health Care Rationing Commission – WSJ.com.

Here is more of the government deciding that if not everyone can have the expensive medical procedures, then no one will.  If this is the way you encourage growth and innovation, I must have missed it in my Econ 101 class. I said this in a previous blog, and I’ll say it again. Jealousy of the rich, who have more health care options, does not help the middle class or the poor. It’s the rich who pay for the innovations at first, and once companies begin recouping their R&D cost and run out of rich people (there aren’t that many of them), then prices begin to decline bringing the new technology to the masses.

While the government would argue that these limits are only on government plans, we all know that eventually we are going to fall under a national health care plan with government health care for all. Government never stops once a program is implemented. It only gets bigger. Government programs have to grow and get more people dependent on them. They are similar in this respect to private companies, except private companies have to grow by you voluntarily deciding to use them. Government just changes it’s rules and forces you to abide by them.

There is something seriously wrong when a communist government is lecturing us on our monetary policy, and they are right. Then again, it seems the communist government of China understand capitalism and it’s benefits more than our President.

BEIJING — China’s top banking regulator issued a sharp critique of U.S. financial management only hours before President Barack Obama commenced his first visit to the Asian giant, highlighting economic and trade tensions that threaten to overshadow the trip.

Liu Mingkang, chairman of the China Banking Regulatory Commission, said that a weak U.S. dollar and low U.S. interest rates had led to “massive speculation” that was inflating asset bubbles around the world. It has created “unavoidable risks for the recovery of the global economy, especially emerging economies,”

via China’s Blunt Talk for Obama – WSJ.com.

Appparently, GE doesn’t believe in growing business by supplying goods and services that the consumer wants. Instead it believes in coersively taking money from the consumer via governments to grow their business. I guess it doesn’t hurt to have helped elect the President with your TV networks. It also doesn’t hurt to fake concern for the favorite causes of the left with “Green weeks” and “Service weeks”. I’m pretty sure on the road to fascism, this is a rest stop.

General Electric Pursues Pot of Government Stimulus Gold

BY ELIZABETH WILLIAMSON AND PAUL GLADER

The financial crisis hasn’t been kind to General Electric Co. Its stock has lost almost half its value, the government has stepped in to prop up its enormous financial arm, and sales have slumped in core industrial businesses.

But Chief Executive Jeffrey Immelt now has his eye on a huge new pool of potential revenue: Uncle Sam’s stimulus dollars. Mr. Immelt, a registered Republican, quips about the shift in thinking in the nation’s corner offices: “We’re all Democrats now.”

GE has high hopes for the strategy. It says that over the next three years or so it could bring in …

via General Electric Pursues Pot of Government Stimulus Gold – WSJ.com.

Popular Science just released it’s Best Of What’s New 2009 list with 100 innovations. With a small glimse of the the winners, you will see the ingenuity of the human mind. There is no crisis (ie Health Care) that cannot be solved by unleashing human innovation, which is best driven by the self interested entreprenuer. While innovation is possible with government intervention, the innovation is in spite of the intervention not the result of it. If government encouraged innovation, the Soviet Union would have been the most innovative nation on earth.

Take some time to look at some of the innovations, and then tell me the unleashed innovation of the free human mind can’t solve the government created health care “crisis”.

The standards by which we judge the year’s greatest innovations are simple. The objects don’t necessarily need to be beautiful (although some, like the all-glass TKTS building in Times Square, certainly are). They don’t have to be eco-friendly (although the packaging made of biodegradable fungus certainly is). They don’t even have to be difficult to build (with all due respect to the telescope designed to find Earth-like planets).

They just have to push past what we thought was possible just twelve months ago. And the following 100 innovations have all blown us away, beginning with the headliner, our product of the year: something so simple yet so smart, with the ability to improve countless lives.

via Best Of What’s New 2009 | Popular Science.

Here’s a great post with examples of how the free market is already solving health care issues. Now if we can just get the government out of health care completely, we’d be set.

So while Congress now debates how to control rising healthcare costs and expand access to medical care through government intervention and a public option, the private marketplace has already started many healthcare reforms on its own—providing affordable access at more than 1,000 retail clinics in pharmacies, truck stops, and workplaces around the country; lowering drug costs with prescriptions for $4 or less anywhere in the country; introducing innovative prepaid medical and concierge plans that restore the direct patient-doctor relationship; and covering eight million employees with HSAs.

When it comes to lowering costs and improving quality and service, government enterprises have a miserable track record, and competitive markets have a proven, excellent record. If we want to make healthcare affordable and accessible, we should encourage greater competition and more market-based solutions like the examples above; and less government intervention, not more. Unfortunately, the politicians in Washington have it backwards.

Check ou the full article at Congress to Healthcare Market: Drop Dead — The American, A Magazine of Ideas.

Bob Murphy had a great post on his blog, FreeAdvice, about how the Right-Wingers (I’ve always considered myself a right-winger) are always blasting the government for it inefficient and disasterous social programs, but yet we act like things are different when it comes to the military, war, and safety. Here’s a snippet of his post.

Army Wasn’t Told of Hasan’s Emails

A person familiar with the matter said a Pentagon worker on a terrorism task force overseen by the Federal Bureau of Investigation was told about the intercepted emails several months ago. But members of terror task forces aren’t allowed to share such information with their agencies, unless they get permission from the FBI, which leads the task forces.

In this case, the Pentagon worker, an employee from the Defense Criminal Investigative Service, helped make the assessment that Maj. Hasan wasn’t a threat, and the FBI’s “procedures for sharing the information were never used,” said the person familiar with the matter.

So the above suggests to me that even if we gave up enough civil liberties to transform the entire country into one big military barracks, we still couldn’t trust the government to protect us from obvious terrorist threats.

Since that’s the case, I vote that we don’t give up our civil liberties and test the theory.

Of course, what will happen is that they will “streamline agency cooperation” and implement other reforms, so that the above doesn’t happen again. Just like Fannie and Freddie and General Motors will keep revising their procedures every time they lose another few billion dollars.

“Just give us some more money and liberty, we’ll get it right eventually. We’re from the government and we’re here to help.”

via Free Advice: Right-Wingers: “Gov’t Can’t Run the DMV or Health Care, But It Will Keep Us Safe From Terrorists”.

Bob is completely right. Right-wingers (me) have a contradiction in their ideas of government. We know the government is horrible at basically everything it does, and the free market is much better at handling the allocation of resources and meeting needs, but we still think it is better equiped to protect us and to wage war. Why would that be? Protection and war are basically just services. Think about it on a local level. Police don’t actually protect you. At best, the thought of police deter some from committing crimes against you, but for those who disregard the threat of police force, you are unprotected. Police can only come after the crime has been committed.

In this case, the military couldn’t even protect it’s soldiers against an obvious threat. So, how did the government actually function in it’s role as protector? It had the exact opposite effect, as government always does. Instead, it disarmed soldiers with idiotic gun control, so that the soldiers had no defense against this mad man. This is the same thing you have in most shootings. The government forces citizens to disarm, and the citizen is left unprotected against those who would do them harm.

The only way to prevent episodes like this or to at least minimize their damage is to rid ourselves of these ridiculous gun laws. “Whoa, whoa, whoa there militia boy. You can’t just have people running around with guns everywhere. It’s too dangerous.” Why is it too dangerous? Study after study have shown that crime is lowered as gun rights are increased and vice versa. If everyone carried guns or at least everyone could be packing, do you think it would not make those who want to do harm hesitate before they do it? Are we to believe that Hasan would have had the stupidity to start his rampage if he knew the other soldiers were armed? Are we to believe that he was not emboldened by the knowledge that the soldiers were unarmed?

Let’s walk through a small scenario. Say there is a guy who wants to kill another guy. He isn’t suicidal, and he doesn’t want to die. He knows where the guy is. Now, let’s say the victim carries a gun. Do you think the killer is going to plan his attack based on where the victim goes? Let’s say the victim works at a school, about the most unprotected place on the planet. Where do you think the killer is going to attack? He’s going to attack the guy when he’s working, because the guy remains unprotected, and no one around the guy will be able to help him either. Everyone is unprotected. Now, if you have unregulated gun ownership as the constitution allows, the killer doesn’t know who has a gun. The killer, not wanting to die himself, will hesitate because the victim could have a gun as well, or anyone around him could have a gun. The more people in society that have guns the more of a deterance to those like our killer here.

“Well, yeah, but what if he doesn’t care if he dies like this Hasan?” Well, if that’s the case, you will not prevent the attack no matter what, but you will end the attack quickly with less lives lost. In the case of Ft. Hood, if the soldiers were allowed to carry, someone would have taken Hasan out after his first kill. It’s horrible to have even one death, but it’s much better than a massacre.

To take it to the next step, would we even have had Hasan if we didn’t have 9/11. Without 9/11, we wouldn’t be fighting two wars against muslims. Because the government prevents anyone from carrying arms onto a plane, you had unprotected passangers unable to do anything to prevent the terrorist attacks. Do you think the terrorists would have hijacked the planes if they knew there were people on the plane with guns and they didn’t know who was armed? So in order to prevent hijackings by armed criminals, we get the exact opposite result of what we wanted.

This is a tough subject, but one that must be thought through rationally. We can’t just wish the world to be the way we want it to be, and then try to regulate it to conform to our ideals. As I’ve said, you end up with the exact opposite of what you wanted. Below is a video from Freedomain Radio. It’s a bit long, but he has a great way of explaining how going against our intution is a much better solution. He even takes it as far as leading to world peace. I don’t know if I’d go that far, but he makes a great case.

In my home town, they have been talking about a Maglev train for years now. Here is an example of government waste at it’s finest.

It’s argued that a multibillion-dollar, taxpayer-fleecing Pittsburgh maglev line would make the region the epicenter for this technology across the country. Except the country needs maglev as much as it needs more debt.

In remarks last week to state lawmakers, Randal O’Toole of the Cato Institute explained why expensive high-speed magnetic-levitation trains are beyond the realm of reasonable implementation.

Just ask China.

The 19-mile maglev line from Pudong Airport to downtown Shanghai rarely sees more than one out of four seats filled, says Mr. O’Toole, an expert in transportation issues. Which explains why China opted for less costly conventional high-speed trains between Shanghai and Beijing.

A $5 billion-plus proposed line between Pittsburgh International Airport and Greensburg wouldn’t fare better.

Even an optimistic projection of 28,000 round-trip passengers daily is a fraction of Pittsburgh travelers, O’Toole said. Moreover, research shows rail service to U.S. airports typically carries only 2 percent to 15 percent of air travelers, he said.

And because maglev uses vastly more energy than conventional high-speed trains, it produces that much more pollution, according to the Center for Clean Air Policy.

Economically and environmentally, Pennsylvania can’t afford to be taken for maglev’s ride.

via Maglev’s myth – Pittsburgh Tribune-Review.

$5 billion for an train from Greensburg to the Airport? This will do absolutely nothing to boost the economy. The $5 billion would have to be taken from the pockets of productive citizens to fund a useless train. Those people who have been robbed would have used $5 billion for purposes that would result in economic value and job creation. Instead, slime ball politicians believe their pet projects are more important.

If the Maglev was such an economic boon, the private sector would be producing it already. Instead the free market and entreprenuers would use that money for other more profitable ventures. Those ventures would create more wealth and more jobs. Central planning resulted in disaster for Soviet economies, but yet here we are, the supposed capitalist country doing the exact same thing.