What Went Wrong

McCain-Palin lost this campaign when they fell for the Democrat bait in wrongly responding to the banking crisis. This post of mine explains the details.

The anti-capitalist mentality must be hit between the eyes once and for all. But when even conservatives fall into it, you know you have an uphill battle.

There are powers behind the scenes which seem to understand this. It could be that such powers (e.g., George Soros) precipitated the credit crisis, anticipating such an outcome. Somehow Henry Paulson got maneuvered into it. The arch-liberal Paul Krugman alludes to this.

Perhaps someday we'll know the truth about what actually happened in this election. Right now, our work is cut out for us.

Crossroads

America is at a crossroads.

This election can go one of two ways: victory for Barack Obama, or victory for John McCain.

If McCain wins, it will mean that God has granted us more time to get our house in order before He lowers the boom. The Constitution will continue on life support, so to speak, with issues regarding abortion, homosexual marriage, and the like -- fundamentally, the question of the source of law, God or man? -- still yet having to be dealt with decisively, or else He will give us over forever to the forces of the Kingdom of Man.

If Barack Obama wins, then all bets are off; God will have given us over to the forces of the Kingdom of Man, and Man, both through the legislature and through the courts, will enact an agenda of godlessness that will dwarf any previously enacted in the United States of America, making it difficult to see how we will ever get out of it.

If McCain wins, muddledness continues until America chooses for life, for godliness, for divine standards of justice (read: the Ten Commandments); if Obama wins, clarity obtains: the choice is made, the die is cast. It will spell the triumph of the Entitlement Mentality, which is the root of political evil.

(By the way, no, I do not speak for God, but I do claim to be able to speak in general accordance with His will; after all, I have His promise: "Then said Jesus to those Jews which believed on him, If ye continue in my word, then are ye my disciples indeed; And ye shall know the truth, and the truth shall make you free " (John 8:31-32).)

Turnabout is Fair Play

Well, the Democrats have fallen into the carefully laid trap laid for them by the devious McCain campaign. I say, turnabout is fair play. The Democrats started this by springing their carefully laid trap on McCain back in mid-September, when he was still enjoying the Palin Bounce. That's when Secretary Paulson (a Democrat) let Lehman Brothers go under, prompting Paul Krugman to write, "Henry Paulson’s decision to let Lehman fail, on Sept. 14, may have delivered the White House to Obama." It certainly precipitated the credit crisis and prompted McCain's knee-jerk condemnations of Wall Street greed, thus diverting criticism from where it truly was merited, namely, Washington Democrats and the sub-prime culture.

So McCain fell for their ruse. It has taken him a while to get back on message, more appropriately putting the criticism at the Democrats' doorstep. Then along came Joe the Plumber, who got Obama to admit that what he was after was wealth redistribution. This prompted shocked responses from the Obama campaign and from the media in general, who argued that it was not redistribution but "tax cuts" that Obama was after. (Joe the Plumber, they claimed, was a McCain plant, a Rove ruse. If so, perhaps the monicker "McBrilliant" will be dusted off for use again.)

They argue this because they know that opinion polls decisively show that Americans favor wealth creation over wealth redistribution to deal with economic difficulty. They do not like this line of questioning, as witness the over the top response to direct questions on the subject, asked by an honest journalist by the name of Barbara West.

But now there has surfaced audio of Obama arguing in favor of "economic justice" and "redistributive justice," that the very liberal Warren Court really wasn't that liberal because it did not take the step toward this kind of justice, and that community organizing is necessary to organize power to get redistributive justice accomplished in the legislature.

How is the Obama campaign and the media going to spin this? My guess is, by ignoring it. Will they get away with it? Time will tell. I'm sure that talk radio and Fox News, not to mention the blogosphere, will do their best to get this out there. If it does, perhaps people will begin to question the content of Obama "hope and change."

What a ploy, John! Well, perhaps it wasn't in your campaign strategy after all, but it sure couldn't have come at a better time. Or in a better way. They cannot argue their way out of this, they can only hope that people will not pay attention.

The King's Heart

There is another Bible verse we should remember during this time of troubles:

"The king’s heart is in the hand of the LORD, as the rivers of water: he turneth it whithersoever he will" (Proverbs 21:1).

The king is the sovereign; in our Republic, it is the people who are sovereign. So, to paraphrase Solomon, the people's heart is in the hand of the Lord to turn it in whatever direction He wishes.

Do we believe that? Do we believe He can actually turn the hearts and minds of the people in the face of the onslaught of monolithic media representations?

Is there anything too difficult for God? Not according to the archangel Gabriel, this time speaking to a frightened teenager by the name of Mary: "For with God nothing shall be impossible" (Luke 1:37).

Pray now or forever hold your peace.

Struggle in the Heavenlies

What is happening now is a spiritual struggle the likes of which we may not have seen in our lifetimes. The forces of ungodliness and overthrow, of disorder and irreligion, of Anti-Christ, are unleashed in such coordinated fashion as to be unprecedented. Therefore our calling is contrition and prayer, for if God does not see fit to deliver us from the hands of our enemies, they will conquer us.

The spiritual struggle is going on "in the heavenly places" (e.g., Ephesians 3:10) as well as on Earth. It is like what the archangel Gabriel was alluding to when he said to Daniel (Book of Daniel, ch. 9):

10 And, behold, an hand touched me, which set me upon my knees and upon the palms of my hands.
11 And he said unto me, O Daniel, a man greatly beloved, understand the words that I speak unto thee, and stand upright: for unto thee am I now sent. And when he had spoken this word unto me, I stood trembling.
12 Then said he unto me, Fear not, Daniel: for from the first day that thou didst set thine heart to understand, and to chasten thyself before thy God, thy words were heard, and I am come for thy words.
13 But the prince of the kingdom of Persia withstood me one and twenty days: but, lo, Michael, one of the chief princes, came to help me; and I remained there with the kings of Persia.

The angels themselves were in a struggle with the political leaders of the day. And I am sure they are struggling with the forces of evil even as we speak. But our prayers are necessary, just as Daniel's prayers and confession of sin were the catalyst of Gabriel's appearance to him.

There is so much at stake in this election. Far more than mere economics. Pray for God's mercy -- we cannot hope for more than that.

Stocks Are Down...

and the polls seem to show a looming Democrat victory on November 4. Of course, the real reason stocks are down is "investors sorting through earnings reports" or some such claptrap. Ignore the elephant in the room, guys.

The Terms of the Debate Have Shifted

Finally, the political debate in an election season revolves not around the question, "who should pay more taxes," but around the question, "why should anyone pay more taxes?" In other words, the very presupposition of the inherent goodness of government action is being questioned. This seems to me to be unprecedented. That it happened only a few weeks before the election, and was precipitated by a mere citizen ("Joe the Plumber") makes it even more extraordinary. The question now is, can it be kept at the forefront of average citizens' minds? Will it make them realize that the government is not the be-all-and-end-all of problem-solving? That the game of salvation by government is a dead end? If it does, the debate which has now hit the mainstream will carry on far beyond this election season. It could signal the turning of a tide.

Was I Right or Was I Right?

Let's see, McCain scores in the debate, polls show tightening race, stock markets go up. Hmmmmmmmm.

I Do Not Wish to Tempt Providence...

but if McCain scores in the debate tonight, especially regarding connecting the ACORN-Ayers-Fannie and Freddie-Obama dots (am I forgetting anything?), not to mention calling Obama on his ridiculous "tax cut" claims, then watch for a solid stock market rally.
Investors of all people do not buy into anti-capitalist rhetoric. At least not with their money. There may be those who want a Democratic administration, but they know that their investments won't be safe, at least their stock investments. This makes such investors schizophrenic -- on the one hand wishing for something which on the other hand they know will be bad for themselves. But that's why its best to view left-wingism as a religion, an expression of faith.

What is a Crisis of Trust?

We hear a lot these days about the current financial crisis being one of trust. Banks don't trust each other any more, lenders don't trust borrowers, investors don't trust who or what they are investing in. That is all true, but it does not get to the heart of the matter.

What is trust? It is confidence that commitments will be honored, that agreements will be kept. Which gives us an indication of the true nature of the capitalist economy.

Classical economics has many virtues, but it has also saddled capitalism with the concept of homo economicus, the egotistical, self-serving economic actor as the core of the capitalist system. This is a gross misconception. Capitalism is not built upon self-serving egotists but upon people willing to make commitments to each other, both short-term and long-term, regarding their economic resources. That is what credit and debt, borrowing and lending, are all about. The commitments are mutual. When these commitments are reneged on on the scale they have been in the current crisis, the system fails.

Therefore it is a much better characterization of capitalism to label it the "commitment economy" rather than the "greed economy," which is what the Left paints it as, thanks to classical economics.

Capitalism is commitments, not greed. The trust one hears so much about is trust in keeping commitments. Capitalism, friends, is the commitment economy.

A Psalm for the Times

If election politics are getting you down, just recall Psalm 93:

1 ¶ The LORD reigneth, he is clothed with majesty; the LORD is clothed with strength, wherewith he hath girded himself: the world also is stablished, that it cannot be moved.
2 Thy throne is established of old: thou art from everlasting.
3 The floods have lifted up, O LORD, the floods have lifted up their voice; the floods lift up their waves.
4 The LORD on high is mightier than the noise of many waters, yea, than the mighty waves of the sea.
5 Thy testimonies are very sure: holiness becometh thine house, O LORD, for ever.

And take Natalie Grant's advice:



I have been a wayward child,
I have acted out,
I have questioned sovereignty,
and had my share of doubts,
And though sometimes,
my prayers feel like their bouncing off the sky,
the hand that holds won't let me go,
and is the reason why
I will stumble,
I will fall down
But I will not be moved
I will make mistakes,
I will face heartache,
But I will not be moved
On Christ the solid rock I stand,
All other ground is sinking sand,
I will not be moved
Bitterness has plagued my heart,
many times before,
My life has been a broken glass,
and I have kept the score,
of all my shattered dreams,
and though it seemed,
that I was far too gone,
my brokenness helped me to see,
it's grace I'm standing on.
I will stumble,
I will fall down
But I will not be moved
I will make mistakes,
I will face heartache,
But I will not be moved
On Christ the solid rock I stand,
All other ground is sinking sand,
I will not be moved
And chaos in my life,
has been a badge I've worn,
and though I have been torn,
I will not be moved
I will make mistakes,
I will face heartache,
But i will not be moved
On Christ the solid rock I stand,
all other ground is sinking sand,
I will not be moved

Anticapitalism as Default Mode

What explains the uphill battle Republicans have in convincing people that their agenda is better for the economy than that of the Democrats? What explains the ease with which Democrats can pretend that economic woes are attributable to Republicans, in the face of all evidence to the contrary?

One may blame the monolithic left-wing mainstream media for the one-sided coverage they provide on the issue, but that in fact begs the question a bit. For how is it that the media can come to be so one-sided?

The bottom line is, human beings have a basic anti-capitalist bias that is the default mode in the face of any crisis. Facts don't matter, emotions take over, and no amount of explanation seems to penetrate. Democrats simply appeal to this emotion.

Like taking candy from a baby.

Let Me Repeat This...

(a la Joe Biden) let me repeat this: the collapse of the stock market is not due to the bailout per se, but due to the prospect of an Obama presidency coupled with a filibuster-proof Democratic Congress. The better the prospects become of a McCain presidency and/or Republican holds or gains in the Congress, the better the markets will perform. The world markets are following ours. It is all that simple.

Are Government Buyouts Socialism?

On the subject of bailouts and government buyouts or buy-ups of banks, a caveat: the objection is making the rounds that such activity is "socialism." That is not the case. Socialism endeavors to cancel out the market. When it takes over business activities, it removes them from the sphere of the market. But these buyouts are not doing this at all. In fact, they are intended not to cancel out the market but to restore it. They work within the strictures -- key among which is free ingress and egress -- of the market and seek only to get malfunctioning markets running again. Objections to this activity are certainly apropos, in particular the objection of moral hazard. But that is something other than socialism. Of course, governments can get so involved in markets as to dominate them and in so doing to render them nugatory. That is a danger to be guarded against. But the current buy-up activity is not of that sort. It may be the only thing that will work in the current crisis.

Obama is a Revolutionary

This is the point behind the Bill Ayers connection. No one believes that Barack Obama condones or has condoned the terrorism practiced by Bill Ayers. But the underlying goal of Revolution is what they share. The one tried to accomplish it through violent means; the other will attempt to accomplish it through the ballot box. This explains why Ayers mentored Obama in his early political career. This is the significance of the Annenberg Challenge. Obama's community organizer activity must also be seen in this light. Community organizing (cf. ACORN) is all about mobilizing the proletarian masses to accomplish the Revolution of wealth confiscation and redistribution through the ballot box.

The Revolution pursued by Barack Obama is antithetical to the revolution pursued by the Founders of this nation. In the one case, traditions, customs, institutions are overthrown by innovating government; in the other, traditions, customs, institutions are preserved from innovating government.

Why is the stock market tanking? Because investors see the Revolution coming and are getting out while the getting's good.

What's Behind the Meltdown

The stock markets continue to plummet in unnerving fashion. The blame for it is centering on the "bailout" package -- was it too little too late, was it too much, was the passage of it a dispiriting display of bad leadership. I think it goes deeper than that. The bailout was never meant to solve the problem, only to stave off something worse. But what it most of all did was spark the fear of ever-more government takeover of the private sector, which combined with polls indicating Democratic victory in both Congress and the Presidency in November, has spooked the investor class to get out while the getting's good. Let's face it: if the Democrats win in November, this bailout package is going to look like libertarianism compared to the stuff they're going to pull to "solve the crisis."

The Bottom Line: False Weights and Measures

At bottom, the issue involved in this financial crisis is false weights and measures. That is, a standard of valuation that is manipulated, making people believe they are receiving something other (of lesser value) than they actually are.

The Bible has this to say about such false weights and measures:

Le 19:36 Just balances, just weights, a just ephah, and a just hin, shall ye have: I am the LORD your God, which brought you out of the land of Egypt.
De 25:13 ¶ Thou shalt not have in thy bag divers weights, a great and a small.
De 25:14 Thou shalt not have in thine house divers measures, a great and a small.
De 25:15 But thou shalt have a perfect and just weight, a perfect and just measure shalt thou have: that thy days may be lengthened in the land which the LORD thy God giveth thee.
De 25:16 For all that do such things, and all that do unrighteously, are an abomination unto the LORD thy God.
Pr 11:1 ¶ A false balance is abomination to the LORD: but a just weight is his delight.
Pr 16:11 ¶ A just weight and balance are the LORD’S: all the weights of the bag are his work.
Pr 20:23 ¶ Divers weights are an abomination unto the LORD; and a false balance is not good.
Eze 45:10 Ye shall have just balances, and a just ephah, and a just bath.
Eze 45:11 The ephah and the bath shall be of one measure, that the bath may contain the tenth part of an homer, and the ephah the tenth part of an homer: the measure thereof shall be after the homer.
Eze 45:12 And the shekel shall be twenty gerahs: twenty shekels, five and twenty shekels, fifteen shekels, shall be your maneh.
Mic 6:10 Are there yet the treasures of wickedness in the house of the wicked, and the scant measure that is abominable?
Mic 6:11 Shall I count them pure with the wicked balances, and with the bag of deceitful weights?
Ho 12:7 ¶ He is a merchant, the balances of deceit are in his hand: he loveth to oppress.

In the current financial muckup, this falsification of the standard of value occurred thanks to a complete failure of functioning by the leading credit rating agencies. Subprime mortgages were packaged into bonds that were passed off as AAA -- the highest rating possible. Given the great demand for such safe-haven assets in a global economy awash in liquidity, these bonds were purchased like hotcakes, making for ever-increasing demand for subprime mortgages to be packaged into these bonds (CDOs, MBSs). They thus spread throughout the world. The questions which now arise are:

1. How many banks and other lending agencies have these assets on their balance sheets, and to what degree?
2. What is the degree that each of these assets is contaminated with subprime mortgages which either have already failed or will fail?
   

The recent "bailout" package passed by the Congress is intended to get this auditing process under way in the US. The question is, will it accomplish what it is supposed to, without subverting the system even further? Be that as it may: who is going to take care of this process in the rest of the world? And what is the best way to take care of it? It is the mother of all tangled messes.

The bottom line is, this was a catastrophe from start to finish egged on and smiled upon by the government, in pursuit of social justice, of Joe Biden's "fairness." It is the government that is supposed to supervise the functioning of such services as credit rating, simply as a matter of averting fraud. Instead of doing that, it turned a blind eye on the whole procedure, the better to achieve the stated goal of affordable housing.

Capitalism was set to work under the constraints set by the government. Now that government has nearly destroyed capitalism, it is going to fix it. How: with more of the same?

The Book of Amos speaks of a judgement upon a nation addicted to false weights and measures:

ch 8, verse 4: Hear this, O ye that swallow up the needy, even to make the poor of the land to fail,
5 Saying, When will the new moon be gone, that we may sell corn? and the sabbath, that we may set forth wheat, making the ephah small, and the shekel great, and falsifying the balances by deceit?
6 That we may buy the poor for silver, and the needy for a pair of shoes; yea, and sell the refuse of the wheat?

Amos's Israel was judged and found wanting; it was given over to conquest by the Assyrians.

What judgement awaits us? For we keep voting in people who, this time around in the name of the poor, love the false balance, the small ephah and the great shekel, who have hung this catastrophe around our necks and then blame the faithful servant (Wall Street) who in fact carried out their bidding; who want us to return them to office for more of the same.

That in itself is judgement I cringe to think about.

It's Starting

The Fannie Mae-Freddie Mac push which, I argued in a previous post, needs to be made by the McCain campaign has finally begun. May Senator McCain not let up on this until election day -- and beyond, regardless of outcome.

The consequences of not exposing this are too serious to even contemplate. These people, willingly or unwillingly, knowingly or unknowingly, are destroying the entire capitalist edifice. Come to think of it, perhaps they wouldn't mind it so much if the whole thing did go down. They could take over each failing element one by one, until the entire economy is government-owned and operated. What a prospect!

More than an Analogy?

One of the themes running through my head regarding a description of the current financial crisis is that of the similarity of subprime mortgages to HIV. Just as HIV gets in the bloodstream and destroys immune capacity, subprime mortgages were packaged together in MSOs and CDOs which, circulating through the banking system, in turn have destroyed the banking system's capacity to deal with bad risk.

But the analogy is even more appropriate given the latest news that Barney Frank's boyfriend was the one in charge of coming with the affordable housing schemes at Fannie Mae that precipitated this HIV infection of the capitalist bloodstream.

Makes one shudder just to think about it.

Maybe the Start?

This ad the National Republican Congressional Committee may be the start of the "onslaught" I advocated earlier. We'll see.

She Did It Again

Sarah Palin starred again, and has truly solidified her status as a Great Communicator of conservative ideals. Not that everything she said last night was conservative, but given the constraints of a McCain campaign, all in all an admirable performance. And what a capacity to bond with the listeners. Which is something altogether different from bonding with journalists and pundits. The quicker the media learn that distinction, the quicker they'll stop making fools of themselves.

And she did mention Fannie and Freddy. Not enough to shut down the Democrat "deregulation as cause of meltdown" argument. Perhaps that is still in the offing. Let us hope so. For it will not be until the root of the problem is recognized that the problem will be solved. To wit, it will not be until liberalism, in the guise of the push for affordable housing, is recognized as the catalyst for the explosion of easy credit and the relaxation of standards, leading to the spread of bad debt throughout the global financial system, that the buck will stop where it should, inside the Beltway, in Washington, from whence this push derived, and for which Wall Street firms were but the willing accomplices.

I Have a Dream

I have a dream.

That Sarah comes out tonight and exercises the nuclear option.

That is, that she calls out the Democrats for the Community Reinvestment Act, Fannie Mae & Freddy Mac, and all the rest of it.

This signals the start of an all-out onslaught on the part of the McCain campaign to bring that message directly home to the voters, via speeches, press conferences, interviews, advertisements, whatever. All means available.

Connecting Obama to Fannie Mae's largesse, and his community activism to the furtherance of the overthrow of capitalism.

Morphing a picture of Obama into Ché. Now that would be good advertising.

This would signal the start of a new and decisive phase in the campaign. And might just win not only the presidency but make significant gains in House and Senate.

But only if McCain and Palin stay on message.

But after all, McCain is apparently biding his time before naming names.

We'll see.

The Palin Bounce

Sarah Palin's lift to the McCain ticket seems to be evaporating. Not surprising given the uniformly negative coverage the mainstream media have given her, combined with the rather idiotic strategy pursued by the McCain campaign to present her to the nation precisely via the news media the favor of whom, she claimed in her acceptance speech, she would not be seeking.

She and McCain were going to shake up Washington. But regarding the seminal issue of the day, the "Wall Street Bailout," she has followed McCain precisely in assiduously assigning blame to capitalism run amuck rather than to where it truly lays: in Washington. The issue was given McCain on a silver platter to run on. Instead, it is successfully being used by Obama and the Democrats to undermine his candidacy. Guilt by association, deregulation, Republican congress, eight years of Bush presidency, all of these are the reason for the current crisis, and the Democrats have the echo chamber of the major media to repeat the charges ad nauseum.

The facility by which people swallow this line is yet further evidence of the visceral, yea even religious, antagonism people have to capitalism. The anti-capitalist mentality is on full display here, and the usual demagogues resort to it with impunity, even when they themselves are so blatantly, obviously, responsible for this. The truth is simple, straightforward, and can be summarized in a few phrases, each of which builds on the previous one: affordable housing (Community Reinvestment Act, National Homeownership Strategy), subprime loans, securitization (loan packaging and selling), absurdly inflated credit ratings, home price implosion, foreclosures, collapse in the value of those securitized loans, destruction of the balance sheets of entities holding those loans (Wall Street, banks throughout the entire world), collapse of all forms of credit. At the heart of this whole process were the GSEs (government-sponsored entities) Fannie Mae and Freddie Mac, who while they were sponsoring the subprime securitization explosion, also funded Democratic party activism and paid off Congressional sponsors who looked the other way. And Senator Obama in three short years received over $100,000 in campaign contributions from this sponsor of our economic destruction.

The reason why McCain-Palin ratings are tanking is because McCain-Palin have not acted on their claim to shake up Washington, and instead look suspiciously as if they are holding back so as not to rock the Washington beltway boat. This, if true, is not only a missed chance but a travesty. Come on Sarah! Get that old goat to change his bipartisan ways. If you don't, you may end up going back to Alaska for good. And that's the last thing this country needs.

My Two Cents

I'm hard at work on a common-law conservative perspective on the current financial crisis. But before I'm done with it, I thought I'd chime in with two thoughts.

1. The "bailout" plan is something that in general has to happen. It is not unthinkable that the state enters the markets and buys and sells on the markets. After all, that is what the Treasury does every day when it sells bonds. That is also what the Federal Reserve does every day when it buys bonds. Andy Kessler's article in yesterday's Wall Street Journal provides the basic framework for understanding the way this would work. The question about what the government would do with the proceeds is the key here. A separate agency should be established with its own budget, insulated from the federal budget, so that the monies do not disappear a la the Social Security "trust fund." Those monies should rather be rebated to the taxpayers, from start to finish completely separate from the federal budget.
2. There can never again be a socialist-paradise inspired venture to set aside market discipline in the name of social justice or equality. This is what by now has nearly destroyed our financial system. Our hot-shot financial experts thought they had developed a new angle on risk so that non-creditworthy borrowers could be covered by creditworthy borrowers in super-sophisticated loan packages which in turn could serve as collateral for new lending. That they were allowed to do this was the hook by which the government got them to cooperate with its push for "affordable housing." The linchpin for this rickety setup was Fannie Mae and Freddy Mac. This we all now know. We also return to the basic understanding of credit. Credit depends on faith, on trust. This contagion of bad risk mixed with good has done for collateral what bad currency did for good currency back in the old days of metallic coins. There was a term for this phenomenon: Gresham's Law (coined by Henry Dunning Macleod): bad currency drives out good. Perhaps we need a new law (Alvarado's law?): bad risk drives out good. This packaging of risk has backfired bigtime, and the guys who developed the schemes, with their computerized risk calibrations, have proven once again that basic laws of economics cannot be repealed. Bad credit cannot be lifted by good, good credit will only be destroyed by bad.

God Does Answer Prayer

A couple of posts back, I asked the rhetorical question, "Does God answer prayer?"

Lee Culpepper answers:

Palin is an answered prayer. She is exactly what America and John McCain needed. She is a proven leader. And leaders have an obligation to inspire others to do what is in the nation’s best interest.

That question is more than rhetorical. It is a wonder-filled acknowledgement that God is in control. Sarah Palin=God's avenging angel.

The text for this morning's sermon was Psalm 124:

If it had not been the LORD who was on our side, when men rose up against us
Then they had swallowed us up quick, when their wrath was kindled against us
Then the waters had overwhelmed us, the stream had gone over our soul
Then the proud waters had gone over our soul.
Blessed be the LORD, who
hath not given us as a prey to their teeth.
Our soul is escaped as a bird
out of the snare of the fowlers
the snare is broken, and we are escaped.
Our help is in the name of the LORD, who made heaven and earth.

I would be remiss not to acknowledge the events of the past week as an answer to fervent prayer: for they were.

She Did It

Sarah Palin has embarked on her journey toward restoring representation to its proper meaning. Her acceptance speech at the Republican National Convention incorporated red meat in this regard. To wit:

I’m not a member of the permanent political establishment. And I’ve learned quickly, these past few days, that if you’re not a member in good standing of the Washington elite, then some in the media consider a candidate unqualified for that reason alone. But here’s a little news flash for all those reporters and commentators: I’m not going to Washington to seek their good opinion - I’m going to Washington to serve the people of this country. Americans expect us to go to Washington for the right reasons, and not just to mingle with the right people.

This is the proper function of representation: to channel the influence of the people into the state, not to channel the influence of the elite to the people. The latter is what the political process has become, and it takes gutsy, brilliant, compelling persons like Sarah Palin to divert the flow back to its proper course.

Palin's Qualifications

In one area at least, Sarah Palin will be a great improvement: she is definitely a better shot than Dick Cheney.

All-American Girl

She even anchored the sports news in Anchorage.

Sarah Palin seems to be the conservative dream woman, straight out of Proverbs ch. 31. And from everything I´ve seen and heard, this may be correct. If so, the threat of a Democrat tsunami in November has been overthrown in one fell swoop. In one of my previous posts, I gloomily reflected on the condition of politics in America today. The Democrats are bent on destroying the traditional understanding of law and liberty, while the Republicans are too intent on retaining power to make a stand against that threat. Or so it seemed, at least in the case of the Republicans. For the past two months or so, the McCain campaign has started to make an effective case against Obama and the Democrats, especially in the areas of foreign policy (Russian invasion of Georgia) and oil (drill, drill, drill). But by bringing Palin onto the ticket, McCain solidifies a common-sense approach to energy policy while also bringing front and center the theme of confronting the elites in power rather than mollifying them. In short, restoring representation to its proper direction, from the people to the government rather than the reverse.

If this truly is the case, August 29th -- the day Sarah Palin was nominated vice president -- may well become a national holiday of sorts. If she makes good on her promise, and the ticket wins in November, she will be first in line to be the next President of the United States. If she does not get corrupted by Washington politics -- a big if -- and brings that Northwest no-nonsense grit to the table day in and day out, they may end up erecting a monument to her some day.

Does God answer prayer?

Read Kudlow

Just a quick note to my army of readers (!): if you don't read Larry Kudlow's blog, you should. His latest entry on the mortgage bailout and prospects for a "drill bill" is excellent. Check it out.

Popular Sovereignty as Pitfall

As some of you are aware of, I am working on (in fact, nearing completion of: word count is now approaching 100,000) the constitutional law volume of Stahl's Philosophy of Law. Just this morning I translated a section which, at first glance, seems "over the top" in terms of its utter rejection of the concept of popular sovereignty. But the more I think about it, in the light of my earlier posts regarding the machinery of manipulation, the more I can see the truth in what Stahl is arguing. And that truth is this: that popular sovereignty severed from a confession of faith and subjection to Almighty God is the most powerful means the machinery of manipulation has to work its own will. The version of popular sovereignty Stahl argues against is the version put forward by Rousseau and the French Revolutionaries -- but how much of it was likewise in the minds of men such as Thomas Jefferson? America has founding fathers such as John Adams, James Madison, and Alexander Hamilton (not to mention the de facto supreme importance of George Washington) to thank that popular sovereignty did not take the turn there that it did in France. But how much of the theory was to thank for that, and how much was simple stubborn adherence to received institutions, even in the face of theory? And how much of that theory has since been used to corrupt and undermine the institutions making for America's greatness? That is the question facing Christians who wish to be faithful to the republican tradition not as shibboleth but as historical artifact from God's hand, and therefore answerable to Him.

Here is the relevant text (State Law and the Doctrine of State, §. 147):

As is the case with every untruth, the doctrine of popular sovereignty is not even in agreement with itself, not even capable of implementation in terms of its own principle and standard. It is already an impossibility to determine the will of the people. What is to be recognized: the decisions of the chamber, the declarations of journals and associations, or the shock of insurrection? Even with the general acclamation of the primeval assembly, in view of the fact that its composition changes through death and accession to voting age up until a result is determined, the end result will no longer be the will of the now-existing people. There is further the undeniable consequence: when the popular majority is not bound to the given ruling authority and fundamental law, the minority and the individual is no longer bound to the popular majority. For then the law of majority vote is itself a sort of fundamental law. And thus it is not the will of the people but the will of each party and every individual that is sovereign. In the end, it is obscurity from the start regarding the concept of sovereignty upon which this doctrine is constructed.

For sovereignty is precisely the state power in its center, by which it in uniform manner joins, supervises, leads the functions which unfold in manifold directions; it cannot (as Rousseau asserts) be separated from government and exist apart from it, but is itself the innermost moving power of government. Therefore only a self-conscious being unified in itself can be sovereign, and therefore only a personality can be so in the fullest sense. Even the popular assembly in the republic has the capacity for sovereignty only through the artificial imitation of this unity by means of ordered forms and through a supplementation by the natural personality of the magistracy (§. 130).

But that the collective mass of individuals, thus the people, precisely apart from the unity of its constitutional order, according to which it beforehand is subject to authorities, is to be sovereign, is factually impossible. This is why with the doctrine of popular sovereignty one understands sovereignty not as a power in the state organism, which is what the concept truly is, but a power apart from and over the state organism. Thus also not a power restricted by law, which is what sovereignty always is (§§. 74, 75) but a completely unrestricted arbitrary power. The people is not to be sovereign, i.e., state power, but a power over the sovereign or the state power and over the laws of the state, authorized to dismiss the state power at any moment and appoint another, to abolish the law and issue another. Popular sovereignty thus is a power of the people not to rule the state but continually to eliminate the state and constitute it afresh. And herein lies the self-deception of the originators and the proponents of this doctrine, that they opine that the people can exercise an absolute power accruing to it apart from and over the state order, which yet is something ordered; for from whence are order and law to come to it, in that its essence is not to be bound to order and law?

Popular sovereignty is the denial of order not merely in factual consequences but already in the concept itself. With it one does not proclaim, as he fancies he does, another relation of rulership in the state, but the abolition of the state, societal chaos.

At its deepest level, the doctrine of popular sovereignty is precisely the reversal of the ethical world-order. In that the people subject themselves to no order and personal authority as something given over them, the human will is the lord of the ethical world rather than an obedient member thereof.

Barack Obama and the Ugly American

Democrat presidential candidate Barack Obama has compared Americans unfavorably with Europeans, which seems to be a recurring theme among Democrats in general. This time it has to do with language. When Europeans come to America, says Obama, they speak English along with their French and German. But when Americans go to Europe, all they can say is "Merci beaucoup." I guess that assumes they all go to France when they go to Europe. But be that as it may, the point seems to be, Europeans can speak the language of the country they visit, while Americans can't.

That is not the case. In fact, it is a ridiculous argument. An indication of this is given in Obama's further corollary to this supposed American language deficit: America doesn't need an official language, because immigrants all automatically learn English; rather, Americans should all teach their children Spanish. Perhaps Obama should also tell Europeans the same thing. Because I have yet to encounter a non-Spanish European who could also speak Spanish.

When Europeans visit Spain (which they do in droves), do they speak Spanish? Perhaps the equivalent of "Merci beaucoup" but not much more than that. Not to mention when they visit Latin America. What language do they speak then? English. How chauvinistic! And how about when Europeans visit Portugal, or Denmark, or the Netherlands, or Poland, or the Czech Republic, or Italy, or.... What language do they speak? Either their native German or French (if that's where they're from), or ... English.

I live in a border town in the Netherlands -- Germany is just a few kilometers up the road. What do Germans speak when they come over here? Dutch? HA HA HA. No dice. They speak German, and they expect you to understand it. Or at least they hope you do.

At least Americans have the decency to speak English....

Bowyer, the Common Law, and Monarchy

One of the writers I regularly pay attention to in matters of economics is Jerry Bowyer, chief economist of Benchmark Financial Network, regular contributor to National Review Online, CNBC, and regular guest on that network's Kudlow and Company. Jerry usually has interesting things to say. Lately he has been emphasizing the importance of the mineral deposits located in Pennsylvania, where he lives. He has been making some telling points regarding the importance of these deposits in the current climate of energy shortage and government regulation.

But his latest offering misses the mark somewhat. Not that the point he is trying to make is wrong; it isn't. The article of which I speak is Back to Monarchy in Land Rights?, in which Jerry argues for the benefit of the common-law regime of mineral rights, whereby private landowners enjoy the rights not only to the surface level of their property but to all underlying levels, extending straight downward. (It used to be that property rights also extended straight upward, but the government has usurped those rights in order to regulate air traffic.) This regime is contrasted by Jerry with the regime of "monarchy," whereby the crown reserved the right to all mineral deposits, so that landowners could be dispossessed of the resources lying below the surface of their land, and that without compensation. Thus, Jerry avers, "not surprisingly, farmers went to great trouble not to find subterranean resources, and to hide any they’d uncovered."

This was the system of the Spanish crown, and was exported to the countries Spain colonized. Thus, in Mexico, in Venezuela, the oil is the state's, and the state exploits the oil fields. Contrast this with Pennsylvania, where private landowners hold the rights to the oil under their lands. Because mineral rights (including oil) accrue to private landowners, the first commercial oil well was located in Titusville, Pennsylvania. Private enterprise exploits resources when and where they are needed, as opposed to government agencies, which act not in terms of market needs but in terms of elite policy. "Central planning environmentalists cordon off great swaths of energy-rich property from the use of any consumers except a few disproportionately wealthy eco-tourists."

All of this is well and good, accurate and to the point -- except for one thing. And that is Jerry's inveterate obsequiousness to natural rights ideology in general and Thomas Jefferson in particular, to which he attributes this common-law regime of private property rights. Apart from the fact that Jefferson did nothing for property rights, not even mentioning them in the Declaration of Independence -- which is his sole contribution to the institutions of America -- the common-law regime in which these property rights were embedded was imported from England, and the English common law is royal law.

That's right. Common law is the product originally of the English monarchy. Including the regime of mineral rights Jerry is so quick to ascribe to the Man from Monticello. Actually, the matter is even more cumbrous than that. The convention of property rights extended straight up into the air and straight down into the ground is originally derived from Roman law (which English law absorbed early on, prior to any so-called Reception: see here.) From Cawood and Minnitt, A Historical Perspective on the Economics of the Ownership of Mineral Rights Ownership [I'm not sure if that second "ownership" in the title is intended or not!]:

However, we [South Africans] inherited the principle rule of property law from Roman Common Law. This principle stated ‘Cuius est solum eius est usque ad coelum et usqne [sic] ad inferos’-Accurcius [sic], 13th century—meaning the owner of the land is not the owner of the surface only, but also of the ‘fruits of the land’ extending to the space above (up to the heavens) and below it (to the centre of the earth). In modern terminology this simply means the
recognition of private property rights (p. 370).

Thomas Jefferson did not discover the principle of private ownership of mineral rights. Those rights were enshrined in Roman law and later royal law, at least in England, but not exclusively there. After all, the Roman law served as a common law for all of Europe, and it took special legislation to overturn its principles. Some monarchs availed themselves of that. As are governments of every stripe today. All one has to do is run a Google search for mineral rights and one will see just how complex the situation has become, with original common law rights being undermined by state legislation (as for instance with rights to air space). See for instance this discussion.

Neither Thomas Jefferson nor natural rights had anything to do with the entailing of mineral rights onto private property. It was a common law and Roman law principle. Jerry should stick to the economics of the issue and leave the history to those who are not so interested in pushing a particular ideology.

Deconstructing the Declaration

America has now celebrated her 232nd birthday, and the world celebrates with her. If any secular nation could be a "city upon a hill," as John Winthrop, founder of the Massachusetts Bay Colony put it, then America is. The greatest nation the world has ever seen, whether in terms of wealth, power, influence, liberty, equality, tolerance, or true religious devotion. America is the fruit of the pan-Western common law tradition, and the single greatest hope this world has for the continuation of that tradition.

That being said, there are some issues that make the celebration problematic. Not that America is destroying the planet, using up all its energy, engaging in cowboy diplomacy, invading defenseless little dictatorships. All of that is perfunctory pusilanimous posh. Not to mention poppycock. No, what I have in mind is something of another order. It is the ideology in terms of which the American Revolution was conducted, as enshrined in the Declaration of Independence. The rhetoric of the Declaration is unforgettable, as high-flown as there has been in the history of nations; but for all that it is dangerous. It contains in it the seeds of the liberalism which we as conservatives must oppose with might and main. I do not say that liberalism originated with the Declaration; I do say that the resort to the Declaration to defend America and her principles against the attacks of liberalism hamstrings that defence.

Let me get specific. I wish to address perhaps the most important clause in the entire document. It is contained in the second paragraph, and runs thus:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

The argument is that rights precede government, that government is instituted to protect these rights, that these governments derive their powers from "the consent of the governed."

So then, rights are the source of law. The problem is, everybody has an opinion about rights, what they are, how far they extend, what they encompass. We now have rights to transgender operations, to homosexual marriage, even polar bears have rights to be protected from your carbon dioxide emissions. But according to this doctrine the law cannot contravene these rights. This is the heart of judicial activism. When rights are the source of law, judges, not legislatures, have the legislative power.

But for me the really serious problem in this formulation is this, that government derives its powers from the consent of the governed. This is to turn matters on their head, both historically and logically. Historically, the governed derived their powers from the consent of the government, i.e., the sovereign. Rail against this as much as you like, it is the historical fact. Liberty is an outgrowth over time of subjects gaining ever more freedoms in a covenantal process with the sovereign, in exchange for services, i.e., tax revenues. That is the nutshell history of the growth of representative institutions. So what happened in the American Revolution is that historically acquired liberties, derived from the consent of the sovereign, were being infringed, thus breaking the historical covenant between sovereign and subject. This is a far cry from government deriving its powers from the consent of the governed.

But even logically the statement makes no sense. For if the governed give power to the government, then what is governed and what is government? Government is instituted to rule over citizens and subjects, but if the citizens and subjects have to consent to that rule -- otherwise they may overthrow it -- then where is subjection? We are then all chiefs and no Indians. We then end up with pandering government acting as if it is there to meet all your wants and needs, all the while making you completely dependent upon it. No, government is instituted by God and invested with power by Him, and those powers are not to be disputed by the subject nor the citizen. Those powers are established in terms of the outline given by Paul in Romans ch. 13. They do not require the consent of the governed. What is required is the keeping of covenants, whereby liberties acquired by the governed must be respected, whereby life, liberty, and property must be upheld, not by virtue of human right but by virtue of the Ten Commandments. Citizen participation in government is a great good, and a fruit of the history of liberty; it is not a declaration of the governed as the source of the powers of government.

If Christians and conservatives do not learn these lessons, and learn them fast, I fear the Republic's days are numbered.

Larry Kudlow to Fed Board of Governors?

The Federal Reserve is currently faced with a crisis of sorts: unfilled places on the Board of Governors, the group which makes the monetary policy decisions such as the target for short-term interest rates. Currently two of the seven seats on the board are unfilled, and another will become vacant when Frederick Mishkin departs on August 31st. Because board members must be approved by the Senate, and because Democrats now run the Senate, new board members cannot be appointed because the Senate blocks everything. Typical but a fact of life that no one seems to be able to do anything about.

So even though the chance is minimal that anyone will be appointed to the board anytime soon, this being an election year, it does not stop me from speculating as to who would be a good candidate for the position. Not that I am any sort of banking-world expert, but my choice would go to Larry Kudlow, host of CNBC's Kudlow and Company and prolific economic commentator. Why Kudlow? Because it seems to me that if the Fed had been following his advice over the past few years, it would have done a better job of staving off, or at least cushioning, the credit crisis and the weak dollar.

The credit crisis seems to have been instigated by the Fed's raising of the federal funds target rate from a low of 1% over the entire year 2003 to 5 1/4% by mid-2006. This precipitous increase seriously upset apple carts and could well have sparked the wave of foreclosures in the subprime market. I recall Kudlow arguing during this period that the Fed was overreacting, that it had raised interest rates too far too fast, and it needed to drop them back down if it did not want to kill economic growth. But the Fed held onto this rate, even in the face of an inverted yield curve (long-term rates lower than short-term rates) all the way until September 2007. By this time, of course, the crisis was full-blown.

Federal Funds rate, 2002-2005

But then the Fed's response appears again to have been overdone. From September 2007 until April 2008, it lowered the rate from 5 1/4% to 2%, a drop of 3 1/4%, again precipitous. This cut in interest rates may have helped stave off recession but it exacerbated the problem of the already-weak dollar and thus worsened the already-tight energy market, leading to skyrocketing oil prices.

Federal Funds rate, 2005-early 2008

During this period, Kudlow was arguing against such a precipitous cut in the federal funds target. His main rationale was to defend the dollar. A strong dollar would help ease inflationary pressure, which has become increasingly evident in 2008.

If Kudlow's advice had been followed, the situation regarding the credit crisis, the weak dollar, and high oil prices might not be as bad as it is. And Kudlow has advocated a consistent policy, instead of being tossed by every wind of economic and political doctrine. Therefore, my vote (if I had one) would go to him to be appointed to the Fed Board of Governors.

That being said, there is one weakness in his strong-dollar advocacy. Not that there's anything wrong with it, but it gives the impression that if the dollar were strong these other problems would not be such problems. But here in Europe, from where I am posting, similar problems are being faced. Not a credit crisis per se -- only those banks that got involved in buying up US mortgage-backed securities are having a problem there -- but an inflation crisis and high energy prices crisis. Gasoline prices have gone up in the same proportion as they have in the US, despite the fact that in terms of euros, oil prices have not gone up as much. (What's up with that?) And inflation is becoming a stubborn problem, despite the fact that here the European Central Bank has stuck to higher interest rates (currently 4%). So there seem to be structural pressures at work beyond the level of individual monetary policy. That is the subject for another post, perhaps by someone with more insight than I can muster. But at the least it is food for thought.

Caption the Picture

And now for a change of pace.

We move from high-brow to low-brow fare. To wit, we solicit your input to the following challenge: caption the picture!
And the picture is:

Ominous Developments

Two developments in the last few days have made even more clear the danger to the republic we face in our generation. First, the US Supreme Court decision granting constitutional rights to foreign combatants; second, the sponsorship of homosexual marriage in California. Both of these developments are the long-developing fruit of the doctrine of natural rights, the dogma upon which all Western nations are founded.

The conservative cries, "governments are instituted to protect our God-given rights!", to which the liberal retorts, "yes, human rights are the source of law, which is why homosexuals have a right to marry, which is why foreign nationals captured on the battlefield have the same rights as US citizens, because rights are not the product of parchments and covenants but exist in the very nature of things, prior to the state and law and lawmaking, and must be recognized by the state and enshrined in law."

The doctrine of natural rights was introduced as a surrogate for God's law, in a Faustian agreement to have the church removed from public life. This is the fruit of the Enlightenment, be it French or Scottish, the result is the same. Recourse was had to human nature, not to the Word of God. So instead of saying "So God created man in his own image, in the image of God created he him; male and female created he them.... Therefore shall a man leave his father and his mother, and shall cleave unto his wife: and they shall be one flesh" (Genesis 1:27, 2:24), that therefore it is male and female that are to be one flesh, not male and male, not female and female; no, instead of this, we are to stammer, "Why, it's just not right! It's never been done in the history of mankind that such relationships were recognized as marriage!", to which the liberal replied with a yawn, "what of it? That was then, this is now."

A return to the true source of law, God's Word as revealed in the Old and New Testaments, can save this civilization. But conservatives stand dead-set against such a proposition. When will they come to understand that natural rights, far from being a bulwark against government intervention, in fact form a pretext by which to manufacture new excuses for government intervention? It is the Trojan Horse which must be wheeled back out of the city, ere the city perisheth altogether.

Liberalism in the role of underdog

In understanding the phenomenon of liberal dominance of leadership positions in society, it is helpful to look at things from their point of view. Liberals view the market as an overpowering reality against which they must constantly struggle to save society from the egotism, exploitation, rapine, and devastation caused by uncontrolled economic activity. And, aside from the false moralizing, this viewpoint is accurate. Government in the modern era is angled to form the "opposition" to the baseline capitalist condition inherent in the private-law regime of property and contract. In this context, the market is an overriding reality that a liberal can only view as something monstrous and overbearing. Therefore they view government as the savior from the preponderance of the market economy. In their view, they are the little guys fighting against Goliath. From the conservative point of view, of course, they control all the positions of power over society and the way society views itself.

McIlwain's distinction between gubernaculum and jurisdictio expresses this dual reality in the state (see his Constitutionalism: Ancient and Modern). Gubernaculum is the action of government agency, jurisdictio is the common-law adjudication of disputes. The former is the positive action of command, the latter the negative action of establishing boundaries. Through the former, the state as government acts as one agent among many; through the latter, the state as adjudicator withdraws from active participation to perform its role as umpire and arbiter, through which action it establishes and confirms the institutions of private law.

Supplement this understanding with Hayek's distinction between nomos, the law of liberty, and thesis, the law of organization (cf. Law, Legislation, and Liberty). Nomos is private law, which regulates the relations between associations; thesis is the law regulating relations within associations. The state has a thesis, which is public law, including administrative law. It also is the institution charged with maintaining and upholding nomos. As Hayek vividly brings out, the problem is that thesis turns on nomos and begins to absorb it. This is the problem all republics face, and which citizens must be made aware of if they are to exercise responsible citizenship.

Liberals therefore view nomos as the enemy and thesis as the means to overcoming it. Conservatives must not fall into the trap of reversing the relationship, viewing thesis as the enemy and nomos as a weapon to defeat it. That leads to radical contractualism and undermines all internal distributive relationships. Public law and administrative law have proper roles, the point is to delimit those roles, establish proper boundaries, and maintain them.

The Politicians' True Constituency

Just to complete the thought of the earlier post on politics and politicians (The Sovereign, the Elite, and the Machinery of Manipulation), ask yourself this question: what is a politician's true constituency? Ostensibly, in a representative democracy a politician represents those who voted for him or her; therefore, his constituency is his voters. But recall the discussion of the machinery of manipulation. There is a machine that exercises such influence over the voters and how they vote that this concept of constituency becomes baseless. For if those voters in turn are in the hands of a powerful machine, then the politician's constituency is no longer the voters per se but those who control the voters -- thus, the machine. This machine, which is manned by what we call "the elite," is what politicians tailor their remarks, speeches, positions, strategy to -- not to the voters. For the voters can be won over by the powers, and the politicians have therefore learned that it is the powers, the elite, that must be appeased. Which explains the maddening behavior of so-called conservatives once they get to Washington (or wherever the capital might be). As I said in the above-mentioned post, politicians are there to represent government to you, not to represent you to the government. And the manipulation machine ensures their continued obedience to Central Planning.

The Sovereign, the Elite, and the Machinery of Manipulation

American conservatives are looking around rather glumly these days, as their political fortunes appear to have dwindled to near-nothingness. Among the leading presidential candidates, none inspires any hope in the kind of change conservatives could appreciate. John McCain, the candidate who comes closest to a conservative viewpoint, is not a conservative despite his protestations to the contrary. It is a sign of the times that he could even become the Republican presidential candidate, given his record of less-than-conservative legislative achievements and his penchant for appealing to the news media precisely by bashing conservatism. In fact, the biggest news in this presidential cycle may be the rupture between the conservative movement and the Republican party.

That this has been accompanied by a decline in the fortunes of the Republican party does not seem to have fazed the party leadership, which, it appears, would rather cut deals with its Democrat opposition the better to apportion power in Washington, as a loyal part of the Washington establishment, than stand up to that Washington establishment and demand government accountability.

Apart from conservative alternative media sources, there is no attempt at government accountability. What government does is good, what the private sector does is tolerated in the best case and demonized in the worst.

Of course, the things government is supposed to do are bashed along with the private sector. Law enforcement is frowned upon; punishment of criminals is an evil to be averted; respect for property and contract is an old-fashioned concept to be superseded. Only progressive implementations of government are favored, with the latest fad being the use of the courts to foist counter-customary social values onto the people (e.g., judge-made homosexual marriage).

This is in-your-face liberalism at its haughtiest and most frightening level. It shows government elites not only not in touch with the people they are supposed to represent, but conscious of the divide and acting in flagrant opposition to it.

The question arises over and over: how do they get away with it? If the people ultimately are the sovereign, then how do the elites continue to shove their agenda down the people's throats?

To answer that, one must understand the phenomenon of the elite and the character of the elite structure.

The elite is essentially a structure of manipulation.

Human societies create authority structures which in turn generate legitimating visions or stories so as to maintain that authority. They thus project an image of reality onto the populace aimed at cementing their position of power. This is not a bad thing in itself. Authority is necessary and must be obeyed. "Let every soul be subject unto the higher powers. For there is no power but of God: the powers that be are ordained of God. Whosoever therefore resisteth the power, resisteth the ordinance of God: and they that resist shall receive to themselves damnation" (Romans 13:1-2, KJV). The church has always taught obedience to civil authority, except at extreme levels of tyranny; and even then, the debate for and against has been fierce.

Be that as it may, an entire machinery of legitimation is built up which is geared to keeping the people under control and obedient. This machinery serves the ruling authority, whoever it may be.

There is another form of machinery as well, geared not to maintaining subjection to authority but manipulating authority. This is clearly to be seen in history in the the courts which have surrounded monarchs. Courtiers have always sought to flatter and debauch the prince, the better to manipulate him to their own ends. That this was a dangerous game was understood as "coming with the territory." All efforts were geared to positioning oneself most favorably with the sovereign, gaining his or her ear, leading him or her in the desired direction, the better to establish control over the power of the state.

Hence, in addition to the machinery which was established to legitimate government authority to the subjects, another set of machinery was built to represent reality to the sovereign, in order to steer him. A whole apparatus slowly took shape, geared to manipulating, flattering, steering the sovereign in the direction the "happy few" wished to take it. This machinery, as I said, was complementary to the machinery by which the populace was manipulated. With the growth of parliamentary representation, these two machines began to be meshed together: the power of the machine over the prince was used to manipulate the people, and the power of the machine over the people was used to manipulate the prince.

This third power thus began its enormous career of influence which it has carried into the modern world -- the power of the manipulator, between sovereign and subject, beholden to both, beholden to neither, master of the universe.

This is the power of the modern elite, once characterized by C. Wright Mills as "The Power Elite" (although his military-industrial complex was more of a left-wing fantasy, indeed itself a weapon in the elite's arsenal of manipulative imageries), composed of the higher ranges of academia, politics, the entertainment industry, and the news media. These form an interlocking directorate which manipulates all possible information in all possible ways in order to steer the sovereign.

Who is the sovereign in modern democracies? The people. And the people are also the subjects. So the two machines, which are now one, operate in full synchronization, on the one hand to flatter and debauch the people, and on the other hand to put the fear of raw power into them.

What about the political parties? They have an important role to play in this, for they are the instruments through which a good portion of debauchment is channeled to the citizenry, through programs of economic dependency. In this manner they attach the citizens to the fortunes of government and then turn around and make very clear to them that their fortunes do depend on government, and any attack on government is an attack on them. The problems this dependency racket creates in society is then blamed on non-government agents in the private sector. This model is extended not only to problems created by dependency but to problems ginned up by the manipulation machine itself: gay rights, animal rights, environmental catastrophe, global warming, etc. Government is the solution, submit to government, give up your freedom. The role of the political parties within the manipulation machine is to act as a transmission belt for this message to the constituents. Their role is representative, absolutely; but it is representative in only one direction. The political parties do not represent your interests to government; they represent government's interest to you. The quicker you understand that, the quicker you will acquiesce to the "six in one, half a dozen in the other" range of choices the political establishment provides you.

Or perhaps the people may in fact wake up to the machinery of manipulation? A sovereign who realizes he's been deceived is a dangerous proposition.

Dollar Bashing -- Overdone?

Sometimes the Wall Street Journal is a little too transparent in its editorial bias. Take the article, "Oil Is Up Because the Dollar Is Down" from page A13 of the May 23rd issue. Granted, this is a signed editorial by David T. King, not someone the Journal staff, but it faithfully reflects the viewpoint of the staff, which is that the European Central Bank is maintaining a strong euro through robust monetary policy, while the Federal Reserve is pursuing a weak dollar through lax policy. In King's view, this policy is to blame for high gas prices at the pump.

Mr. King points to the dollar-euro parity of 2002, when oil was selling at "about 25" dollars a barrel. He contrasts that with now, when a barrel of oil is running for "about 75 euros a barrel," a threefold increase, versus "over $120 a barrel" in the US, a fivefold increase. His conclusion: "The sole reason for this enormous difference is the incredible depreciation of the dollar against the euro." One can't argue with that. The differential is by definition the result of dollar depreciation. But one can certainly argue with the inferences he draws from this fact.

"If it wasn't for the falling value of the dollar, the price of gasoline wouldn't be an issue," he claims, adding that "It's to blame for the excessive price of gasoline, and now is pushing dangerously into wholesale price inflation, based on the most recent data published by the Labor Department."

This statement raised red flags for me, seeing as how I live in a euro-currency country -- the Netherlands -- and actually fill my car here with gasoline paid for in euros. In fact, I just filled up last Saturday. How much did I pay for a gallon of premium? Well, for a liter I paid €1.66. Convert that over to dollars per gallon, and you have $9.88. Hmmmmmm. Boy I'm glad I'm paying in euros! Otherwise, in dollar terms I'd be paying less than $4.00, or 2 1/2 times less. Which is roughly the ratio I've been familiar with ever since I can remember, and I've lived in the Netherlands since 1990. So the falling dollar hasn't helped me a bit as far as filling the tank's concerned.

This bias against Fed policy does not appear to be borne out by consumer price index data, either. Take this simple graph I made, contrasting US and EU CPI data against the background of the dollar-euro exchange rate (sources: exchange rate: Yahoo Finance, CPI data: International Monetary Fund Data Mapper [www.imf.org]):

Dollar depreciation was accompanied by US CPI gains between 2002 and 2007, while EU CPI remained stable. But in the last year-plus, EU CPI has jumped along with US CPI, nearly equalling it, even as the dollar has dropped further and the short-term interest-rate differential has widened (maybe I'll put that in a graph too at some point). So where is the correlation between spiking prices for the US as opposed to the EU? It hasn't been there, at least since 2007, when the dollar really tanked.

Dollar bashing is all the fashion, but don't get caught up in it, otherwise poor investment decisions could well follow -- that's my nugget of advice.

The Anti-Capitalist Mentality

The flip side to the "salvation by politics" view of reality I criticized in a previous entry is the anti-capitalist mentality, whereby capitalism is scapegoated, leaving Government (who else?) to come to the rescue of the oppressed masses.

In The Anti-Capitalistic Mentality, Ludwig von Mises enumerated a laundry list of reasons for this curious state of mind. There is, firstly, resentment, from a variety of sources. The transition from status society to capitalism bred resentment from those who by birth were others' betters, who occupied positions of leadership in society not by merit but by bloodline. In their view the "new man" could never efface the stain of his humble birth. But in a capitalist society the opportunity for social advancement is open to all, regardless of birth.

Similarly the resentment of the intellectual, who does not look askance at lineage or lack thereof but rather at cultural refinement. Capitalism enables those to advance who do not possess any apparent class or good taste. In fact, its commercialism positively favors the least common denominator, the mass-produced, common forms of culture, whether in art, literature, cinema, music, or what have you.

Resentment is also felt by those who for whatever reason feel as if they have been skunked by those who have done better or become more well-off. Educated professionals may feel as if their income does not match their true worth to society, and resent those who have been rewarded by that society, whose "achievements" may be trivial indeed on any scale of eternal values.

And, finally, resentment is felt simply by those who do not have what others do. Capitalism fosters not equality of outcome but equality of opportunity, but that distinction is lost sight of when envy takes root, and when its flames are fanned by demagogues using the political process to promise rectification of the alleged injustice, and to the degree that citizens are taken in by this prospect, ensuring for themselves an ever-expanding power base.

Mises has some interesting things to say about the entertainment elites, the stars who have made it big, and why they become anti-capitalist. It has to do with their utter dependence upon popularity. The hype which raised them to stardom could just as easily cast them into utter oblivion. They come to believe that in a communist or anti-capitalist system they would occupy positions of status without being subject to the whims of the entertainment marketplace.

This resentment and envy truly lies at the heart of the anti-capitalist mentality. How, then, did capitalism take root in the West? For, as Helmut Schoeck emphasized (Envy, 1969), it is this factor which has kept peoples and nations from economic advancement in the first place.

The answer lies in the atonement-oriented social order of Western civilization, otherwise known as Augustinianism. I have addressed this point in my book Common-Law Conservatism, and I work it out further in my book Covenant and Capital (forthcoming). The gist of it is, that all civilizations have tried to find a way to achieve atonement for the burden of guilt which they generate. And all civilizations generate guilt, for all civilizations are mired in sin -- the doctrine of original sin, for those of you who are ignorant of Christian theology. The problem is, guilt is conflated with debt. And indeed, guilt and debt are correlate phenomena, which is why many languages, including German and Dutch, use the same word for both. (And in fact the King James Version of the Bible (Matthew 6:12) translates Jesus' words as "forgive us our debts, as we forgive our debtors" -- the Greek word for debt [opheilema] being the same as for sin.) Now then, capitalism, being built on debt, is conflated with guilt-generation, guilt and debt being left undistinguished. Therefore the institutions of capitalism are not allowed to grow beyond a minimal level -- the one civilization in a greater degree, the other civilization to a lesser degree -- because the level of guilt (debt) they create is unbearable.

But the Atonement set forth in Augustinianism separates guilt and debt by separating atonement from the administration of justice. The Atonement is achieved once and for all through the work of Christ on the cross; the church administers the sacrament of Holy Supper as the celebration of that work. Thus atonement is removed from the repertoire of the organized political society, leaving the administration of justice and the capacity to enforce the regime of private law in the hands of the state. And this liberation, brought about by the Augustinian separation of church and state, allowed the civilization of capitalism to be engendered.

The "guilt" that capitalism engenders, debt, fuels the drive for atonement which underlies the religious fanaticism all civilizations have exemplified. For consider that it was the most capitalistic societies of the ancient world, the Phoenician and Carthaginian, which also exhibited the most blatant and revolting forms of the quest for atonement: child sacrifice.

The flip side of debt is interest, which then becomes the target of obloquy. The aristocrat Aristotle best formulated this criticism:

As this is so, usury is most reasonably hated, because its gain comes from money itself and not from that for the sake of which money was invented. For money was brought into existence for the purpose of exchange, but interest increases the amount of the money itself (and this is the actual origin of the Greek word: offspring resembles parent, and interest is money born of money); consequently this form of the business of getting wealth is of all forms the most contrary to nature (Aristotle in 23 Volumes, Vol. 21, translated by H. Rackham. Cambridge, MA: Harvard University Press; London: William Heinemann Ltd., 1944), ch. 1, sec. 1258a-b).

Taking offence at money begetting money -- interest -- lies at the heart of the anti-capitalist mentality. It lies at the heart of Marx's critique, for the capitalist simply skims the surplus value from the labor of the working man, rather than himself working to earn that value. Unearned income, that -- which is why capitalism is exploitative and why it must be overthrown. Eugen von Böhm-Bawerk, realizing this, set about defending interest precisely as earned income (see the introduction to his monumental Capital and Interest). His effort in the end may have proved unsatisfactory, but his motivation was unimpeachable.

Ultimately, the capacity for capitalism can only be found in the ability to separate atonement from justice, guilt from debt. It is this which then allows the regime of interest to be established, which is nothing other than the regime of private law -- the two are inseparable. (The concept of property premium makes this clear.) That is why capitalism is the product of the Augustinian West. And that is why it cannot be sustained if that civilization is allowed to be destroyed by multiculturalism, relativism, and a false doctrine of the neutrality of the state. For the "neutral" state, by abandoning the Augustinian distinctive, dismantles the separation of atonement and justice, and opens the door to the return of the politics of envy.

Chapter from Stahl, State Law and the Doctrine of State available

The introductory chapter to the translation (in preparation) of F.J. Stahl's State Law and the Doctrine of State has been published in the latest issue of Christianity and Society. The issue may be downloaded at the Kuyper Foundation website or purchased separately. For details see the Kuyper Foundation website.

Mises on Natural Rights

Ludwig von Mises, the great Austrian-school economist, had a way with words. In The Anti-Capitalistic Mentality he put them to especially good use. The following excerpt, from the section "Injustice" in ch. 4, "The Non-Economic Objections to Capitalism," absolutely skewers the claims of economic justice derived from the doctrine of natural rights. It repays, with dividend, close reading.

It is a gratuitous pastime to depict what ought to be and is not because it is contrary to inflexible laws of the real uni­verse. Such reveries may be considered as innocuous as long as they remain daydreams. But when their authors begin to ignore the difference between fantasy and reality, they be­come the most serious obstacle to human endeavors to im­prove the external conditions of life and well-being.

The worst of all these delusions is the idea that “nature” has bestowed upon every man certain rights. According to this doc­trine nature is openhanded toward every child born. There is plenty of everything for everybody. Consequently, everyone has a fair inalienable claim against all his fellowmen and against society that he should get the full portion which nature has allot­ted to him. The eternal laws of natu­ral and divine justice re­quire that nobody should appropri­ate to himself what by rights belongs to other people. The poor are needy only because unjust people have deprived them of their birthright. It is the task of the church and the secular authorities to prevent such spoliation and to make all people prosperous.

Every word of this doctrine is false. Nature is not bounti­ful but stingy. It has restricted the supply of all things in­dispens­able for the preservation of human life. It has populated the world with animals and plants to whom the impulse to destroy human life and welfare is inwrought. It displays powers and el­ements whose operation is damaging to human life and to human endeavors to preserve it. Man’s survival and well-being are an achievement of the skill with which he has utilized the main in­strument with which na­ture has equipped him—reason.

Men, cooperating under the system of the division of labor, have cre­ated all the wealth which the daydreamers consider as a free gift of nature. With regard to the “distribution” of this wealth, it is non­sensical to refer to an allegedly divine or natural principle of justice. What matters is not the allocation of portions out of a fund presented to man by nature. The problem is rather to fur­ther those social institutions which enable people to continue and to enlarge the production of all those things which they need.

The World Council of Churches, an ecumenical organi­za­tion of Protestant Churches, declared in 1948: “Justice demands that the inhabitants of Asia and Africa, for in­stance, should have the benefits of more machine produc­tion.”* This makes sense only if one implies that the Lord presented mankind with a def­inite quantity of machines and expected that these contrivances will be distributed equally among the various nations. Yet the capitalistic countries were bad enough to take possession of much more of this stock than “justice” would have assigned to them and thus to deprive the inhabitants of Asia and Africa of their fair portion. What a shame!

The truth is that the accumulation of capital and its in­vest­ment in machines, the source of the comparatively greater wealth of the Western peoples, are due exclusively to laissez-faire capi­talism which the same document of the churches passionately misrepresents and rejects on moral grounds. It is not the fault of the capitalists that the Asiatics and Afri­cans did not adopt those ideologies and policies which would have made the evolution of autochthonous capitalism possi­ble. Neither is it the fault of the capitalists that the policies of these nations thwarted the attempts of foreign investors to give them “the benefits of more machine production.” No one contests that what makes hundreds of mil­lions in Asia and Africa destitute is that they cling to primitive methods of production and miss the benefits which the employ­ment of better tools and up-to-date technological designs could be­stow upon them. But there is only one means to relieve their distress—namely, the full adoption of laissez-faire capitalism. What they need is private enterprise and the accumulation of new capital, capitalists and entrepreneurs. It is nonsensical to blame capitalism and the capitalistic nations of the West for the plight the backward peoples have brought upon themselves. The remedy indicated is not “justice” but the substitution of sound, i.e., laissez-faire, policies for unsound policies.

It was not vain disquisitions about a vague concept of jus­tice that raised the standard of living of the common man in the capitalistic countries to its present height, but the activi­ties of men dubbed as “rugged individualists” and “exploit­ers.” The poverty of the backward nations is due to the fact that their poli­cies of expropriation, discriminatory taxation and foreign ex­change control prevent the investment of for­eign capital while their domestic policies preclude the ac­cumulation of indigenous capital.

All those rejecting capitalism on moral grounds as an unfair system are deluded by their failure to comprehend what capital is, how it comes into existence and how it is maintained, and what the benefits are which are derived from its employment in production processes.

Who Cares About "Retaining Power"?

I am getting soooo disgusted with politicians these days. Case in point: I was reading a Mike Gallagher commentary on John McCain over at Townhall.com (link). Gallagher was interviewing David Frum, whom he claims makes a good case for John McCain as "possibly the perfect GOP candidate in an ever-changing country" over against "torchbearers of conservatism like Ann [Coulter] and Rush Limbaugh and others who believe that the real peril is in Republicans even considering moving one inch to the center." (As if it was all simply a matter of linear displacement -- quantitative, not qualitative, distinction.) Frum's clinching argument: "if the GOP has any chance of retaining power in D.C., the party should realize that this isn’t our father’s Republican Party anymore."

And there you have it. The bottom line in politics and with politicians and with beltway pundits and various and sundry satellites orbiting Washington is this: "retaining power." All else must serve the goal of "retaining power." Nothing is more important than "retaining power." Ideas, principles, interests, all must bow to "retaining power." Is there anything that is not subservient to "retaining power"?

My conclusion is that party politics is destroying conservatism just as it destroyed Christianity in the Netherlands. Why bring up the Netherlands? Because it is an entirely apropos case in point. After the Netherlands established a, for all practical purposes, godless atheistic state in the 19th century, conservative Christians developed an ideology and an institutional framework for participating within that "neutral" structure. Abraham Kuyper pioneered an ostensibly Christian version of participation within the neutral democratic state, which was and is unique to the Netherlands. In tandem with his establishment of an independent church denomination (the Gereformeerde kerk, in opposition to the established Hervormde kerk) he established a new political party, the Anti-Revolutionary party (ARP), closely allied to this denomination. When he became Prime Minister of the Netherlands, he and the ARP led the charge for establishing state funding for Christian education, whereby a group of parents could establish a school according to their beliefs and receive state funding for it. The system has become part of the structure of the Dutch way of life. There were other expressions of this "denominalization" of public life as well, as church denominations -- and other groupings: socialists, humanists, and the like -- each had their own newspaper, their own radio and TV (shared out under government auspices), their own sports clubs.

All of this led to the balkanization of Dutch society (verzuiling). Which would be bad enough in itself. But it also led to something worse. Dutch Christians were convinced that the best way to bring the Christian influence to bear on public life was through the ballot box, that political organization within the framework of the neutral state was the only viable alternative within a secularized framework. But what has happened is that the influence has gone all in one direction. There was a pipeline established between the church and the government via the political party. But that pipeline had valves opening in only one direction. All the influence went from the government, and from the state, to the church, deforming and undermining the church to the point that the church became the mirror image of the fashionable politics of the day, completely sold out to the secular, godless, pro-death, pro-dependency, pro-victimization, pro-multiculturalist, pro-earth-worship welfare state. And the role of Christian political parties is not to make the state listen to the church and the Christians, but to make the church and the Christians listen to the fashionable cultural power elite in Hilversum (where the media resides) and The Hague (where the politicians reside)!

The bottom line is that party politics is destroying Western civilization. And this should not be surprising. Politicians do not get elected to represent the citizenry in government, they get elected so as to represent government to the citizenry. They have a vested interest in government and the power of government. They exist to bolster and strengthen government. They are an interest group like any other. That is why, for them, power is the be-all-and-end-all. That is why they are not to be trusted. That is why they always disappoint when in power: because they promise the world in order to get elected, and blame everyone else in order to stay elected.

They then turn to scapegoating, which is the mode du jour for politicians. The fault always lies elsewhere, even when it is plain to see that the fault is of the politicians' own making. Oil is now the scapegoat for both the energy and the environmental crises, both of which are faux crises created by politicians for the purpose of growing government.

How long will citizens go along with this? Who knows? Will Rogers once said "This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer" (my thanks to a Townhall poster for that quote). One thing that has to be realized is that politics is out of control. Constitutional reform is required to put the brakes on it. Friedrich von Hayek realized this and in his monumental Law, Legislation, and Liberty proposed constitutional reform as well as a renewed strengthening of private law as bulwarks against politicians gone wild.

Ultimately, though, constitutional reform will have to embrace the notion that there is no neutrality, that a confession of Christianity will have to be made in order to anchor law and the state in absolute, transcendent, unchanging principles, so that power can be put under control. The ballot box is not enough: there must be ground rules outside of which politicians and government cannot go. The natural-rights framework for restricting the power of the state has proven bankrupt; it cannot restrict because it keeps providing new pretexts for government expansion! Alexander Hamilton realized this when he proposed the establishment of a Christian Constitutional Society in 1802 -- yet another reason for his unjust vilification.

Stahl's pithy aphorism puts it best: "Authority, Not Majority." As he himself explained: "The opposition of authority and majority, which I made use of in my answer to an entirely unexpected attack from Bassermann (Erfurt, April 15th, 1850; cf. my Reden, p. 86) has since then been the catchword even for the opposing parties, a sign that it struck the focal point of the political struggle in our time. However, this had its final ground in nothing other than whether the ruling authority is from God or from men" (State Law and the Doctrine of State, forthcoming, WordBridge Publishing).

We appear to be heading into a "Perfect Storm" of left-wing control of government, regardless of political party. Not surprising -- ultimately, all political parties exist to ensure their own survival! May the havoc they wreak serve to discredit the putative messianic power of government once and for all. If only the churches had the nerve to pray thusly.