It’s Time to Cut Our Losses in Afghanistan

April 25, 2012

Last Sunday the Obama Administration and the Afghanistan government finalized an “agreement” that commits the U.S. taxpayer to financially support the Afghan people for 10 years after the withdraw of American troops from Afghan soil at the end of 2014.  According to U.S. and Afghan officials the pledge of U.S. support will be finalized when both Afghan president Karzai and President Obama sign the document.

Naturally both sides claim the agreement is in the best interests of the U.S. and Afghanistan.  The Afghani’s will get about $2.7 billion a year to build infrastructure, train their security forces, and maintain democratic institutions.  The U.S. will get a stable nation in an unstable neighborhood and a reliable friend in the fight against international terrorism.  At least that is what the party line is from both sides.  Of course one doesn’t have to look to hard at historical examples where our foreign aid actually had the opposite effect on a situation.

Now, in the first place this “agreement” is indicative of how far we have moved away from being a constitutional republic.  In essence, the Obama Administration has negotiated a treaty with Afghanistan.  Dictionary.com defines a treaty as “a formal agreement between two or more states in reference to peace, alliance, commerce, or other international relations.  Granted this is an open-ended definition, but I would lump what this agreement does with Afghanistan into the alliance category (against terrorists) and into other international relations (foreign aid).  Thus, why is the Senate not required to ratify this treaty as specified by Article 2 Section 2 of the U.S. Constitution?

Beyond the illegality of the agreement, it also just doesn’t make sense for our president to commit us financially or otherwise to Afghanistan.  On Sunday, U.S. ambassador, Ryan Crocker told Afghanistan’s national security council that the United States was pledged to helping Afghanistan as “a unified, democratic, stable and secure state”.  The question is when has Afghanistan ever been “a unified, democratic, stable and secure state”? After over a decade of American occupation She is still crippled by sectarianism, nepotism, instability, and corruption.  The agreement looks more like a scheme to prop up the Karzai government as the only long term option American policymakers have for Afghanistan.  This tactic has been repeated over and over again with American foreign aid all over the world.  It’s never worked effectively.   Why do we think it will be different this time?  Why do we think that our money won’t end up in the Swiss bank accounts of Afghani officials or even Karzai himself?

Entering into a long-term agreement with Afghanistan will simply bog us down in another no-win situation in that country.  It will no doubt contribute to more hostilities toward America and inflame the resolve of our current enemies.  Americans will be called upon to pay even more to prop up the frail Karzai regime or worse yet sacrifice their lives for this unworthy cause.

It is past the time for the United States to cut its losses in Afghanistan.  Financially, physically, and mentally we can no longer continue to support this historical lost cause.  What we couldn’t accomplish in the last decade with boots on the ground we will not be able to achieve with money after the boots have gone home.  That is a historical fact.  It’s time to turn off the lights and close the door on this part of our nation’s history.

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The Pot Calling the Kettle Black

April 17, 2012

In what must be the epitome of the pot calling the kettle black, last week the U.S. government announced that it and 15 states are suing Apple and other major book publishers for price fixing electronic books. The Justice Department is alleging that the price fixing publishers have agreed to convert the retailers who sell their e-books into agents who continue to sell their e-books but no longer have the ability to decide what retail price to charge for them.  Thus, all prices are determined at the publisher level allowing the executives in those companies to collude to ensure higher profits for all to enjoy.  The DOJ estimates that by adding $2, $3 or as much as $5 to the price of many New York Times bestsellers and mass market paperback titles over the last two years consumers have been ripped-off by over $100 million.

Now, on the surface this may sound shocking.  You are probably thinking here is yet another example of corporate big-wigs gouging the little guy.  And that is what Attorney General Eric Holder and President Obama want you to think.  See, then they can ride in on white horses, file a lawsuit that will cost the defendants so much money that they settle out of court and therefore look guilty of actually doing something wrong , and save the day for average e-book buying Americans.  It fits into that government as the great protector of the masses mentality.

But, the real truth is that even without knowing that publishers may have conspired to increase book prices no one was forced into buying them in the first place.  Consumers make choices about what to buy every day and many if not most of the time those decisions are based on cost.  If they felt the jacked-up prices of the e-books were too expensive they could have chosen not to buy them.  Enough consumers making this choice would have broken the back of the conspirators and forced them either collaboratively or individually to lower prices down toward the market level (equilibrium point).  Consequently, the collusion would have been destroyed through natural means and consumers would have reasserted their position of dominance in the market economy.

Additionally, it is America and consumers have other options.  Instead of buying the overpriced e-books, consumers could have purchased any of the potentially millions of used books offered on Amazon for literally pennies on the dollar.  To say nothing of used book stores and thrift shops which usually stock an ample selection of good reads.

Naturally, whenever the feds bring lawsuits against sellers for any kind of anti-trust or price fixing scheme, they always neglect to take into account property rights.  After all, who owns the product to be sold and why is the consumer entitled to it?  In the case of the most recent assault on property rights by the DOJ, the publishers own the rights to the e-books and can choose to sell them to consumers or not.  If they choose to sell them they have the right to charge whatever price they wish even if they limit selection or competition through collusion.  The e-books are the property of the publishers like a person’s home is their property.  When selling, do homeowners not retain the right to set their own price?

In a market economy, prices are determined through interactions between buyers and sellers.  If sellers venture outside of this process they run the risk of lost revenue, or mal-investment.  If they arbitrarily set a price for a product that is below market expectations, that is to say the equilibrium price where the amount supplied equals the amount demanded at a given price then a shortage will result and the seller will lose revenue – the difference between the artificially low set price and the equilibrium price for each book.  If the seller arbitrarily sets the price for a product above market expectations, once again the equilibrium price, a surplus will result and the seller will experience mal-investment – using capital to produce a quantity that wasn’t completely sold.  Of course the seller can always lower prices toward the equilibrium price and thereby clear his inventory and this is what would ultimately happen.  The fact that this did not happen in the case of Apple and its co-conspirators is proof the price fixing was not egregious enough to deter consumers from buying the e-books at the alleged inflated price.  So where is the harm anyway?

At the end of the day no one is entitled to another’s property through the coercive power of government.  Instead of meddling in affairs that are better handled by the free market, Uncle Sam should worry about the truly monopolistic price fixing scheme that he has been complicit in since 1913.  And this is where this whole ordeal reeks of the pot calling the kettle black.  Unlike the market where consumers have choices and options, through legal tender laws Americans do not have any choices or options with regards to the money they use.  Since 1913, the Federal Reserve Bank with Congress’ blessing has arbitrarily fixed the price of the dollar through interest rate setting and monetary manipulations.  This price fixing scheme is responsible for the dollar losing 95 percent of its value over the last 99 years.  It is the price fixing scheme that affects real people’s lives through erosion of savings and higher living costs.  It is the one responsible for forcing both spouses to work to make ends meet and the destruction of the middle class.  So while Attorney General Eric Holder is concerned about $100 million that he alleges e-book purchasers have been ripped-off for in the last two years he really should be concerned about the trillions of dollars Americans have been ripped-off by the Federal Reserve since 1913. In other words Mr. Attorney General, “Why worry about a speck in your friend’s eye when you have a log in your own?”

Article first published as The Pot Calls the Kettle Black on Blogcritics

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina


Obamacare Must Go!

April 5, 2012

Let’s get right to the point:  the Affordable Care Act also known as Obamacare needs to go away.  Far away.  It doesn’t matter if the Supreme Court rules it unconstitutional or if Congress can come to its senses and repeal the legislation.  One way or another, it must go.

The record of our federal government providing services outside of its constitutional jurisdiction is atrocious to say the least.  It includes big wasteful bureaucracy, questionable accounting practices, and massive cost overruns.  Speaking of cost overruns, Social Security, Medicaid, and Medicare alone face 10s of trillions of dollars in unfunded future liabilities.  So it was no surprise this past week when Republican Senator Jeff Sessions’ office reported that it discovered the long-term funding gap of Obamacare to not be $1 trillion as the President has claimed all along, but a whopping $17 trillion.  Nancy Pelosi was right all along – they had to pass the bill to see what was in it.  And boy we are now beginning to see what a rook job has been pulled over on the American people.

Now, I suppose that costs don’t matter if you think government debt is irrelevant.  After all America could never end up like Greece, Spain, Portugal, Ireland, or Hungary.  And the Japanese, Chinese, and Arab nations will continue to buy up our debt allowing us to borrow cheaply for everything we no longer make but still need.

Unfortunately government debt is not irrelevant and the day of reckoning is coming.  All Federal Reserve induced financial bubbles (dot.com, housing, etc…) burst eventually.  The Fed’s U.S. debt bubble is no exception.  It is likely that at some point our lenders stop buying our debt.  Interest rates will have to rise dramatically to entice foreign investors to service our debt again.  The Fed will print even more money to cover the shortfall increasing our debt further and devaluing the dollar to the point where exponential price inflation of goods and services will result.  Life savings will be wiped out and Americans’ standard of living destroyed.

I’m not minimizing the problem of 40 million Americans without health insurance, but the consequences of the federal government being all things to all people will eventually destroy the economy for everyone.  In fact, the reason health care costs are so high is precisely because of government involvement in the industry.  In the first place, government limits competition through licensing laws and the drug approval process thereby eliminating an important mechanism in controlling costs.  Secondly, increased government spending on health care bids up the price of care.  If Obamacare is allowed to exist it will quicken our economic downfall.  Insuring 40 million more Americans for a short period of time is little consolation for destroying our way of life.

At the end of the day, it is more likely the Supreme Court will void the law rather than Congress repealing it.  Even if the Republicans were capable of intestinal fortitude, when January 2013 rolls around at the very least the Democrats will be able to prevent a cloture vote in the Senate and at the most a veto wielding Barak Obama will still be occupying the White House.