Sunday, June 14, 2009

Why States' Rights?

It has been my observation over the years that few people truly understand why "States' Rights" were first instituted. Once that is understood it becomes a crucial principle, as opposed to just a concept that feels good because we tend prefer more local control.
Remember first the government that our founders and citizens had fled was enormous, and centrally controlled. These were the days of "The sun never sets on the British empire". They had witnessed, and suffered under, the corruption that ensued.
That said, we need not look much further than the name of our nation to understand what they were attempting to accomplish. The definition of the word "state" at that time was a sovereign government body. Noah Webster's 1828 edition defines it "A political body, or body politic; the whole body of people united under one government, whatever may be the form of the government." The premise under which this nation was formed, and named, is that we we would be individual sovereign governments forming a sort of Co-Op for specific purposes, such as common defense, commerce regulation, negotiating with foreign nations, etc. We were to be a group of sovereign states, united together for protective strength and position. (The electoral college is a fascinating tangent to this discussion. It creates a delicate balance in which it is the 'several states', not the people, that actually elect the president.) It's interesting to note that the term "States' rights" is actually a Civil War era creation, in response to the federal government expanding beyond its intended parameters. To our founders the concept was axiomatic.
The Constitution does not give rights to individuals. It gives very limited powers to the federal government with the presumption all others remained with the several states. The Bill of Rights was added later, only after intense debate. Proponents wanted to delineate some of our most important rights in order to protect them. Opponents feared that listing any rights would leave the impression that the list was all inclusive. The 10th amendment is the compromise between the two arguments.
Somewhere along the way most of our citizens lost track. Proposals made by elected federal officials began being debated on the merits of the idea, rather than on whether it is a legitimate federal function. As a result we now have, in practice, the type of government that our founders most feared. They foresaw that a powerful, centralized government would be a breeding ground for corruption.
I think time has proven them correct.

Monday, June 1, 2009

I hope I'm wrong, but....

I hate to be pessimistic, but as I look on the horizon I think I see some hyper-inflation in our future.
There are many factors that can contribute to economic inflation. The most pernicious is the devaluation of currency. There are also many factors that contribute to devaluing a currency. The two most common are listed here. See if they sound similar to our current economic conditions.
* Oversupply of money - In keeping with the basic law of supply/demand, when a government prints currency, particularly currency not backed by anything, the increase in the money supply creates a decrease in the value of that currency.
* Creditor confidence - As a nation's debt load increases, potential creditors (bond purchasers) confidence that the debtor will be able to repay it decreases. This has the two-edged effect of devaluing the currency and forcing the debtor to pay higher interests rates on debt. The long term effect of the higher interest rates will be even higher debt. Which will mean even further devaluation of the currency. (note- we have record deficits, record debt, and diminishing international interest in purchasing our treasury bonds)
Increased costs in the production of goods is another major contributor to inflation. These costs are passed along to the consumer in higher prices. Given the priorities announced by the administration it seems quite likely, in fact inevitable, that there will be initiatives that will make the cost of current forms of energy rise sharply, and that corporate taxes will be increased. These costs will be passed along.
Inflation then can begin to feed upon itself. Prices rise, including those associated with production of goods and services, which in turn causes prices to rise again. The traditional methods for attempting to stem inflation (increasing interest rates to slow down the supply of money) has its own deleterious side effects.
The wise solution it would seem is sound economic policy. Reduced governmental spending to prevent current and future debt. Reduced taxation to encourage economic activity and growth. Unfortunately it appears we are heading in exactly the other direction.

So now I know you're reading.

As I look down the list of previous posts to this site, and some of the weighty issues I've brought up, I have to confess surprise that it took a comment about Facebook to inspire comments from readers.
Fascinating!