How the Supreme Court Should Have Ruled

June 30, 2012

The following is how a unanimous Supreme Court should have ruled with regard to the Affordable Care Act (Obamacare).

The issue before this court is whether the Affordable Care Act passed by Congress in 2010 is constitutional.  Specifically, does the Congress have the power to legislate medical care or medical care insurance coverage?  This Court finds that it does not.

Congress’ enumerated powers are found in Article 1 Section 8 of the U.S. Constitution.  No less than James Madison confirmed in Federalist Paper #45 that “The powers delegated by the proposed Constitution to the federal government are few and defined.  Those which are to remain in the State governments are numerous and indefinite.  The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected.”   And in fact, nothing in Article 1 Section 8 of the Constitution can be construed to mean that Congress has any power to legislate medicine, medical care, or the insurance coverage thereof.

Now, some will claim that Congress retains powers not enumerated in the Constitution.  In the first place, why then did the authors enumerate any powers at all in the Constitution?  Secondly, how can the meaning of the Tenth Amendment be ignored?  There is no ambiguity as to the meaning of, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”  James Madison in Federalist Paper 45 again, “The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.”  Thus, the power to legislate health care, like marriage, education, driving licenses, and other “objects of the ordinary course of affairs” resides with state governments not the federal government in our system of governance.

But, even that explanation of enumerated powers does not satisfy those that are voracious in their hunger to do good and enact measures at the federal level of government that will take care of us from cradle to grave.  It is not the job of this Court or really any court to determine the social worthiness of legislation.  The job of the courts is to determine the law, decide constitutionality, and dispense justice by protecting rights.

So, it is wrong for political forces to use vague terms from the Constitution to further their ends.  The most often used term is the so-called Interstate Commerce Clause.  The 16 words in the clause have historically been used to allow Congress to regulate everything from speed limits on the nation’s roads to handicap ramps on sidewalks to regulating lawn mower emissions.  But the original intent of, “To regulate commerce with foreign nations, and among the several states, and with the Indian tribes” was not to give Congress the power to regulate all things commercial.  It was to make “normal” or “regular” commerce between the states.  Under the Articles of Confederation the States had a habit of enacting impediments to free trade between them.  Alexander Hamilton alluded to this in Federalist Paper #22 and indicated his belief that a “national control” (Interstate Commerce Clause) to restrain this impulse was necessary.  Thus, in the case Gibbons v. Ogden (1824), this Court used the Interstate Commerce Clause to strike down an anti-free trade act of the legislature of New York.

Therefore, it is found by this Court that the Affordable Care Act of 2010 is hereby deemed unconstitutional.  No justification whatsoever can be found for Congress to have assumed the power under the U.S. Constitution to pass this act.  It is hereby declared null and void.

Of course, it is not surprising that the Court did not follow the Constitution in its ruling.  A long time ago, we lost all semblance of the constitutional republic the Founding Fathers gave us.  Now we are stuck with a make-it-up as you go, lawless regime.  Consequently, we are stuck with a massive federal boondoggle which will ultimately raise the costs of health care, bankrupt the county further, and move us closer to National Socialism where government funnels through legislation and regulation consumers to favored corporations.  In this case the insurance industry.

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


America’s Lost Decades

June 25, 2012

Not too long ago an industrial giant experienced one of the greatest economic booms in its history.  Thanks to easy credit and low interest rates investors in that country ran up astronomical debts and used those proceeds to bid up the price of real property and the stock market.  With home values and pensions way up in value, folks were feeling very secure about their economic futures. For the average investor in that country it seemed like the good times would never end.

Then the bottom fell out.  Realizing the boom was becoming unsustainable, the country’s central bank raised interest rates.  Suddenly, the enormous debt built up during the boom years went bad.  Banks began to fail and the government responded by bailing out the “too big to fail” financial institutions in order to avert a total collapse of the economy.

Anyone who remembers the 1980s and early 1990s knows the country in question is Japan.  Beyond bailing out the “too big to fail” banks, the Japanese government also attempted to use fiscal stimulus and the Japanese central bank attempted to use low interest rates to produce an economic recovery.  The result has been two decades of little or no economic growth and an unemployment rate that has hovered around two times what it was in the 1980s.  This period in Japanese history has come to be known as Japan’s Lost Decades

Now, you may have guessed that the country being described in the first two paragraphs above was the United States.  Obviously, you would have also been correct.  During the 2000s, we experienced our own phony, central bank induced economic boom.  Easy credit and low interest rates were used by many Americans to amass huge debt while bidding up the price of housing and the stock market.  New found wealth through asset appreciation gave many a false impression that they were set for life and the good times would never end.

Like Japan, the bubble burst when interest rates rose and a heck of a lot of homeowners were holding mortgages that they could no longer afford.  Banks failed and were bailed out by the federal government.  Stimulus packages were passed and interest rates lowered to produce economic recovery.

If emulating Japan is not bad enough, the really scary thing is the Federal Reserve’s Survey of Consumer Finances report that was released earlier this month.  According to the report, the median net worth of American families dropped by 39 percent between 2007 and 2010.  That means the typical American family is roughly worth what it was worth in 1992 – 18 years without any economic advancement!

And it gets worse.  The report indicated that the median net worth of the middle class had the biggest drop – owing mostly to declining property values.  At the same time, the median net worth of America’s wealthiest families rose slightly.

So what does all this tell us?  For one thing, we are in for a long period of sluggish economic performance and above average unemployment because the powers that be in America responded to the bust of 2008 in the same fashion the leaders of Japan handled their downturn in the early 1990s.  Propping up failed financial institutions, stimulus spending, and below market interest rates did not produce recovery in Japan.  In fact, 20 years later, the Japanese economy still has not recovered.  Likewise, the same policy initiatives have not produced recovery in America some four years out from the crisis and if economic policy in the U.S. doesn’t change soon, economic historians may be calling the next twenty years America’s Lost Decades.

Secondly, the wealth that was produced in the last 20 years was phony.  It was built on artificially cheap and widely available credit. This in turn produced false property values and huge consumer debt.  When the crisis hit it the floor under the economy was apparently a long way down – at least 18 years down according to the Fed’s report.

Lastly, what can be learned from our most recent economic experience is that Washington and Wall Street have hoodwinked the country into believing prosperity is a result of everyone spending beyond their means.  In reality, true prosperity comes from hard work, thrift, and saving.  It comes from the formation of pools of capital made available to business to borrow in order to open or expand operations.  Simply having the central bank print more money does not produce wealth.  In fact, the Fed’s monetization of the government’s debt has done more to destroy the American middle class than any other factor.  Devaluing the dollar diminishes disposable income and erodes savings.  Conversely, the price inflation produced by the Fed enhances the assets and investments of the wealthy.

At the end of the day, there are significant similarities between Japan’s financial crisis in the early 1990s and America’s in 2008.  Due to its government’s policies after the crisis, Japan has lost two decades of economic growth.  According to the Fed’s Survey of Consumer Finances report, Americans have already lost two decades of economic gain.  Given that Uncle Sam’s response to the financial crisis of 2008 mirrored Japan’s in the 1990s, two more are potentially on the horizon.  At that point, it would almost be a lost half century.

Article first published as America’s Lost Decades on Blogcritics.

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

Actions Speak Louder than Words

June 18, 2012

When my wife and I began dating about 14 years ago, it didn’t take long for me to realize that she was the one for me.  Being the affectionate type, I had no trouble verbalizing my feelings to her.  She rarely reciprocated and this caused tension in our relationship.  She kept telling me that she came from a background where saying “I love you” did not come naturally.  Instead her love for and commitment to me could be discerned from how she treated me on a daily basis.  In other words, her actions spoke louder than any words.

And so it is with Kentucky Senator Rand Paul.  Many members of the Freedom Movement, better known as rabid followers of Republican Presidential Candidate Congressman Ron Paul, were stunned and then subsequently devastated when Rand announced on the Sean Hannity Show that he was “happy” to endorse Mitt Romney for president of the United States.  On the internet, their devastation was expressed in blogs, comments boards, and facebook postings that oozed venom toward Rand.  On the surface, Rand’s misguided support for the neo-con, big government, bankster puppet Mitt Romney appeared to be a treasonous act to those that have given so much to the cause of liberty and the Ron Paul for President Campaign.  But, as it was in my own case, this situation also needs to be analyzed from an actions speak louder than words standpoint.

There is no question that Rand Paul did endorse Mitt Romney for president which could be construed as a betrayal of everything his father has fought for these last thirty-five years.  But let’s not forget how the endorsement was delivered.  It was not done on the steps of the Capitol or even with Romney at a campaign rally somewhere.  It was done way more low key than that on the Sean Hannity Show on Fox.  This venue was chosen no doubt to appeal to traditional Republicans who have been the people most hostile to his father’s movement and whose support in the future may be beneficial to both Rand and the Liberty Movement.  In his endorsement, he spoke first about how his father was still his first choice for president.  When asked about what he had in common with Romney, instead of fudging the truth and saying they agreed on economic and foreign policy, Rand talked about their fathers and shared family values.

To me, this was hardly an endorsement of Romney.  It was more of an obligatory political move meant to benefit Rand way more than Romney.  After all, most if not all of Rand and Ron Paul supporters will never vote for Romney.  Many Republican officials only care about winning elections.  Even Rand’s hollow support for Romney makes him look like a team player which could benefit him in a future presidential run.

But what really matters most are Rand’s positions on the issues.  With the exception of his support for sanctions on Iran, Senator Paul’s record on the issues most important to the Liberty Movement is sterling.  He opposes the Patriot Act and was one of only two Republicans to vote against renewal of some of its provisions. He favors abolition of the Federal Reserve and is on record as endorsing H.R. 120, the Federal Reserve Transparency Act.  He has proposed a plan that would cut $500 billion from federal spending in one year and agrees with his father that the U.S. can only go to war with a declaration from Congress.  He opposes campaign spending limits, subsidies to industry, and the TSA.

At the end of the day, Rand Paul’s feeble endorsement of Mitt Romney is completely overshadowed by his pro-liberty voting record and stance on many of the issues important to libertarians.  Let’s not forget that in his career Ron Paul actually voted for John Boehner, Dennis Hastert, and Newt Gingrich for Speaker of the House.  He did it not because he had anything of substance in common with them; he did it to try to work with his party’s leaders in an attempt to further his own agenda.  No one has ever accused Ron Paul of being a sell-out.  And that is because actions do speak louder than words.