Mainstream Misdirection in SCOTUS Search

 

Photo courtesy Envios, flickr

Photo courtesy Envios, flickr

Antonin Scalia’s death has begun a new Supreme Court battle. And much of it will be expressed in terms of whether nominees are “mainstream” or not.

Senator Charles Schumer already demonstrated this pattern. In 2007, he said any Bush nominee “must prove … that they are in the mainstream rather than we have to prove that they are not,” but has now doubled down in the opposite direction, saying, “many of the mainstream Republicans, when the president nominates a mainstream nominee, will not want to follow Mitch McConnell over the cliff.”

Why so much mainstream rhetoric? To be in it sounds good; to be out of it sounds bad. But it rests on a distorting analogy.

The analogy equates mainstream to “normal,” or majority, views. They are then further equated to “correct” views. But while majorities choose representatives, our Constitution was far from majority rule (“mob rule,” to many founders). It put many choices off-limits to political determination, and subjected others to very stringent standards. In short, it defended liberty against government encroachment. This is especially critical in evaluating justices, whose primary role is preserving the Constitution against majority abuses.

The analogy presumes a speaker’s mainstream evaluation is accurate. But where the mainstream is and how far from its supposed center is acceptable are indefinable.

The core issue is not, then, about being in the current mainstream, but where that mainstream should be. Advocating respecting the Constitution as written, as Scalia was famous for, focused on that.

That is, the mainstream may be in the wrong place. It has clearly changed in our country, but only because some were out of the previous mainstream. Men being created equal, with inalienable rights against government abuse, is far from the once mainstream belief in the divine right of kings. And our Bill of Rights freedoms to speak, write and worship as we choose, and to have our property protected from government predation, were not always mainstream.

Federalist 78, America’s most famous statement of the judiciary’s role, reveals that the political mainstream has indeed jumped its constitutionally enumerated banks, arguing for re-routing it toward its original course: “A limited Constitution…can be preserved in practice no other way than through…courts of justice, whose duty it must be to declare all acts contrary to the manifest tenor of the Constitution void. Without this, all the reservations of particular rights or privileges would amount to nothing.”  Further, “whenever a particular statute contravenes the Constitution, it will be the duty of the judicial tribunals to adhere to the latter…to guard the Constitution and the rights of individuals.”

If the mainstream has moved from its original American course, only those now out of it can shift it back. For example, the now-common view that using government to rob Peter to pay Paul is acceptable means anyone acting to undo such policies would be outside today’s mainstream, though not that of our founders. As Jefferson said, “The majority, oppressing an individual, is guilty of a crime, abuses its strength, and…breaks up the foundations of society.”

In fact, “out of the mainstream” nominees are the only ones who might resist further expanding government encroachment or even reclaim eviscerated freedoms once taken for granted. In contrast, those recently advocated as mainstream have enabled “new and improved” encroachments.

Expanding the divide between the Constitution and current interpretation increasingly threatens our founders’ mainstream belief in liberty and the Constitution they designed to defend it. Consequently, advocates for the modern mainstream are opposing the mainstream that made America great. That is why Antonin Scalia fought vigorously for our founders’ understanding. It is also why Americans don’t need more justices from the modern mainstream, but more from its original channel.

Gary M. Galles is a Research Fellow at the Independent Institute and a Professor of Economics at Pepperdine University. His books include Lines of Liberty (2015), Faulty Premises, Faulty Policies (2014) and Apostle of Peace (2013).

They Do Not Own Us As Property

Lysander-SpoonerIn recent years, Americans have been burdened with historic expansions in government control, with a proliferation of fees, regulations, czars and bureaucracies, along with profligate spending that guarantees higher future taxes. Such dictates violate Americans’ inalienable self-ownership.

That is why Lysander Spooner, born January 19, deserves renewed attention. Spooner laid out why our natural right of self-ownership, combined with its implied right to enter voluntary arrangements, made government coercion of peaceful people illegitimate. Since we are rapidly accelerating away from that moral standard, we need to rediscover Spooner’s vision. In particular, his 1870 No Treason illuminates our current situation:

That men may rightfully be compelled to submit to, and support, a government that they do not want … [is] self-evidently false … a man, thus subjected to a government that he does not want, is a slave. And there is no difference, in principle … between political and chattel slavery. [Each] denies a man’s ownership of himself and the products of his labor; and asserts that other men may own him, and dispose of him and his property, for their uses, and at their pleasure.

A man’s natural rights are his own … any infringement of them is equally a crime … whether committed by one man, calling himself a robber or by millions, calling themselves a government.

To say that majorities, as such, have a right to rule minorities, is equivalent to saying that minorities have, and ought to have, no rights, except such as majorities please to allow them.

The principle that the majority have a right to rule the minority, practically resolves all government into a mere contest between two bodies of men, as to which of them shall be masters, and which of them slaves.

How does [a man] become subjected to the control of men like himself, who, by nature, had no authority over him … as if their wills and their interests were the only standards of his duties and his rights … force, or fraud, or both.

A man finds himself environed by a government that … forces him to pay money, render service, and forego the exercise of many of his natural rights, under peril of weighty punishments.

Governments … [are] tyrannies to that portion of the people … compelled to support them against their will.

Getting the actual consent of only so many as may be necessary to keep the rest in subjection by force…is a mere conspiracy of the strong against the weak … a presumption that the weaker party consent to be slaves.

Government, like a highwayman, says to a man: “Your money, or your life.” [But] The highwayman … does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit.

No government … can reasonably be trusted for a moment, or reasonably be supposed to have honest purposes in view, any longer than it depends wholly upon voluntary support.

If [Congress] own us as property, they are our masters, and their will is our law. If they do not own us as property, they are not our masters, and their will, as such, is of no authority over us.

On what ground can those who pretend to administer [The Constitution] claim the right to seize men’s property, to restrain them of their natural liberty of action, industry, and trade … at their pleasure or discretion?

A tacit understanding between A, B, and C, that they will, by ballot, depute D as their agent, to deprive me of my property, liberty, or life, cannot at all authorize D to do so. He is none the less a robber.

In an era where what remains of our self-ownership is threatened with further evisceration, rediscovering Spooner’s vision, which Murray Rothbard called “a great bulwark against the State’s eternal invasion of rights,” is crucial. Coerced obedience cannot be derived from our natural rights or our Constitution. The individual, rather than the ever-more-powerful State, must be re-established as the basis of our society.

Gary M. Galles  is a professor of cconomics at Pepperdine University.

Government Hypocrisy: “Save More”

Photo courtesy of kenteegardin, flickr

Photo courtesy of kenteegardin, flickr

American government is so ubiquitous it even offers advice about New Year’s resolutions. However, its guidance to citizens mainly illustrates ideas government violates. Consider one example from the About USA.gov site: “Save more.”

That is not a very controversial resolution for an uncertain world. But the massive and still growing government debt and its far larger unfunded liabilities makes it the largest violator of its own resolution. Talk about “do as I say, not as I do.” Further, the main reason people save too little is that government does so much that discourages saving and investment, making the Hippocratic oath –“First, do no harm” — a better means to increase savings.

One huge illustration is Social Security. People have been led to substitute its “contributions” and retirement benefits for funds they would have saved to finance their “golden years.” Its promises also dramatically exceed what funds will be available, making people anticipate richer retirements than they will actually have, reducing savings more. Those who save enough to provide well for retirement also face income taxes on most of their Social Security benefits as well.

Social Security exacerbates the adverse effects of budget deficits, which divert funds that would have added investment into government spending.

Taxes on capital reduce the after-tax return on saving and investment, also reducing saving. These include property taxes that, while relatively small percentages of the capital value, represent sizable fractions of annual income generated. Then state and federal (and sometimes local) corporate taxes take further bites from after-tax returns. The implicit “tax” imposed by regulatory burdens must also be borne before earnings can reach investors.

Personal income taxes at up to three levels of government reduce saving further. Investment income left after other taxes is taxed again if paid out as dividends.  Earnings from saving and investment can also trigger additional tax burdens by triggering phase-outs of income tax deductions and exemptions.

If investment earnings are retained and reinvested, increasing asset values, they are taxed as capital gains. And even increases in asset values from inflation are taxed as real increases in wealth.

Medicare, whose unfunded liabilities are far greater than Social Security’s, reduces incentives to save for future medical costs. Current earners, forced to cover three quarters of the cost, are left with less to save. Medicaid coverage of nursing home costs only after other assets are virtually exhausted undermines another savings motive.

Unemployment benefits, along with food stamps and other poverty programs, also reduce the need for a nest egg, “just in case.” And as illustrated by so many disasters and crises, government steps in to assist those who “need” it, reducing the incentives for financial self-responsibility.

Estate taxes also reduce successful savers’ ability to pass on assets as bequests, eroding another savings motive. And monetary policy that has long kept interest rates near zero have undermined incentives to save as well.

Together, these government policies punish savings heavily, resulting in large numbers without appreciable savings. But fixing that saving problem doesn’t require government to tell us to resolve to save more. It doesn’t require ever more government intervention to “solve” a problem its existing interventions have created. It only requires a government resolution to stop aggressively undermining incentives to save as it does now.

Gary M. Galles is a research fellow with the Independent Institute in Oakland, and a professor of economics at Pepperdine University. His books include Lines of Liberty (2015), Faulty Premises, Faulty Policies (2014), and Apostle of Peace (2013).

Electric Cars – The Promise and the Reality    

BMW_i3_01

By Abe Ostrovsky with contribution from Peter Whealton

I leased an electric car nine months ago. A 2014 BMW I3 rex. The BMW advertising was clear. Eighty-seven miles per full charge plus 48 miles of additional range from the range extender, a built-in gas driven generator that recharges the battery while driving. The gas tank serving the generator is 1.5 gallons. The extender is meant for the occasional short additional miles to reach a charging station when a destination turns out to be just beyond the electric range or mishaps on the road mandate a detour.

My discussions with the sales person reinforced the claimed range and I was further reassured as I read that since BMW did not expect the range extender to be used regularly, it would automatically come on and cycle for 5 or 6 minutes every 2 months to keep it lubricated and ready.

The battery charger that is included with the car is classified as a level 1 and takes 20 hours for a full charge. BMW sells a level 2 charger (an extra $980 accessory which requires wall mounting to a 220 Volt, 30 Amp source – it cost me $250 to provide this power in my garage). This charger will charge a depleted battery in 3+ hours. The logical operating radius for the car is therefore 43.5 miles one way assuming there is no time to recharge the battery at the destination.

In my case, 43 miles was sufficient to reach most addresses in Los Altos Hills and San Jose was reachable depleting the battery one way. This covered most of my needs so I leased the car, bought a level 2 charger and had an electrician install it in my garage.

Soon I learned that the car was capable of delivering the 87 mile range only when driven carefully (no quick acceleration and no extensive brake usage) on flat streets (no San Francisco hills) in a mode that deactivated many features (no AC or heat or seat heaters) at a maximum speed of 56 miles per hour (no expressway driving). The actual range being driven normally (I am told I am an aggressive driver) on San Francisco hills and Bay Area expressways is around 50 miles, just a few miles more than half  the advertised range.

Just so there is no misunderstanding, I think the I3 is a great city car. It is well featured, easy to drive, has nice pep, handles well, parks easily and transports 4 comfortably. As a city car in San Francisco, a city that is approximately 7 miles by 7 miles, it is terrific. But if normal usage requires more than 25 miles one way, the battery system is inadequate.

My investigations into battery technology indicate that advances in battery density (the amount of stored electricity available per pound of battery) is rapidly increasing. Chevrolet has recently announced the Chevy Bolt, a compact expected to deliver 200 miles of range on a fully charged battery which should be available by end of 2016. I expect that battery technology advances will allow a doubling of range for same size and weight batteries by 2017. At that point the lower price electrics will have sufficient battery power to compete with gasoline powered cars at competitive pricing.

Until then, I will continue to rent Zip cars when going further than the short rides to San Carlos airport, Walnut Creek or Lucas Valley.

Where is the further conversation?

“Check your privilege” has become a mainstay of social justice rhetoric. Assumed privilege is also a presumption behind microaggression accusations now seeming to sprout by the second. Those employing the terms frequently describe them as reminders to be empathetic and sensitive, elevating social relations. But they are often little more than assertions that others are members of an oppressor class, fundamentally mistaken in their views and responsible for a cornucopia of complaints.

The “kinder, gentler” version offers a sometimes-useful reminder that you might be including some inappropriate assumptions in your understanding, because something that may be sensible for you, given your characteristics and circumstances — i.e., your privilege — may not be sensible for others, leading to insufficient consideration of others and therefore erroneous evaluations.

Max Borders has described the latter meaning (or demeaning) as:

Your rights and opinions are invalid and you have no real complaints or suffering because you belong to X group. Or … you are obligated to pay because people who look like you in some ways did bad things at some point.

In other words, others need not listen to, much less respect, your arguments. Further, your inherent “wrongness” sacrifices your rights and property to satisfy those claiming to be oppressed, an aggression justified as undoing your alleged privilege or responding to your microaggression.

How are we to judge between such dramatically opposed interpretations?

The key is that, where confusion reigns, better evaluation requires clearer, more accurate understanding. That demands a real, ongoing conversation. So ask what would be entailed if “check your privilege” or its microaggression progeny was intended to advance such a conversation.

When such terms are used to preemptively cut off communication by stopping those who disagree from being heard or taken seriously, neither clarity nor empathy will be improved. So they must not end discussions; they must facilitate more complete conversations.

By themselves, the terms say you are wrong in your understanding and views, and too self-absorbed to notice. However, they leave how and why unspecified, beyond somehow relating to membership in an allegedly privileged group defined by accusers. Progress toward better understanding requires several additional steps.

Such progress would require specifying precisely what faulty premises, assumptions or arguments a person holds to, as well as why they are inappropriate for the issues considered. The appropriate premises to replace them would then need articulation.
How the “new and improved” premises would alter one’s conclusions would need to be demonstrated, followed by considering the appropriate remedies based on the alternative analysis. It would have to explain how proposed remedies were not merely “more for me” gambits, connected to the rationales offered only by self-interest. It would have to justify any special privileges to be created now for those claiming victimhood status, including any coercive impositions on members of supposedly dominant or victimizer classes who had nothing to do with the “sins of their fathers.”

When “check your privilege” and microaggression claims communicate that we should think carefully about others’ circumstances, which may be far different than ours, and be empathetic, it can be a useful reminder in advancing mutual understanding. But it can bear good fruit only as the beginning of a far deeper discussion.

In contrast, when they are used to peremptorily declare victory in social justice disputes, they assert special privileges for speakers to define themselves as morally superior and disqualify those who disagree from any consideration, without any coherent argument. And when that social demonization is leveraged into coercive imposition of “solutions” at the expense of those they decide must make it up to them, it undermines social cooperation, by undermining the rights upon which it is built, without advancing understanding or empathy.

Gary Galles is a professor of economics at Pepperdine University and a research fellow at the Independent Institute. His books include Lines of Liberty (2015), Faulty Premises, Faulty Policies (2014), and Apostle of Peace (2013).

A bitter pill from sweeteners 

 

Sugar“Corn syrup, sugar battle in L.A.” read the headline. The story focused on legal wrangling between competing enablers of America’s sweet tooth. The sugar industry accused high fructose corn syrup makers of misleading the public with an ad campaign that it is “nutritionally the same as sugar,” asking for $1.5 billion in damages in a Los Angeles federal courtroom. Corn syrup producers had already filed suit for $530 million in damages, alleging that big sugar falsely depicted corn syrup as less healthy than sugar. And both claimed to be on consumers’ side.

It is instructive, however, that while the story treats sugar and corn syrup as intensely competing “Rock ‘em Sock ‘em” robots, the producers involved back each other’s pet government special interest supports. Corn and corn syrup producers back import quotas on sugar that restrict sugar supplies and increases its price; sugar producers are on board with U.S. methanol mandates that absorb much of the corn crop, increasing the price of corn products. And consumers lose from both.

How can we understand these seemingly inconsistent actions? One fact explains both the false advertising rumble and the political alliances. Sugar and corn syrup are substitutes for one another. That is why advertising tarnishing just one harms one set of producers and benefits the other. But because they are substitutes, anything that artificially boosts the price of one benefits the other by increasing its demand, regardless of adverse effects on other groups.

Consider an analogy to ice cream and frozen yogurt. Assume the products are made by different firms. If some protectionist policy raised the price of ice cream, producers of frozen yogurt, a substitute for ice cream, will benefit, because a higher price of ice cream will increase demand for frozen yogurt. And if some government mandate forced up the price of frozen yogurt, producers of ice cream will benefit, because a higher price of frozen yogurt will increase the demand for ice cream. At the same time, ice cream makers would like to tarnish frozen yogurt’s health effects and frozen yogurt makers would like to tarnish ice cream’s health effects, as long as the stain didn’t extend to their competing products.

Replace ice cream protectionism with import quotas that drive up U.S. sugar prices and frozen yogurt mandates with ethanol mandates, and you have the sweetener marketplace.

Those government intrusions have increased U.S. prices of both sugar and corn syrup, raising profits artificially for both groups at the expense of consumers. But those hikes have also driven many candy makers and the jobs they entail out of the U.S., harming those workers and their communities, with parallel effects for other major sweetener users.

Consequently, if we were interested in consumer well-being, we might pay more attention to policies that benefit both sugar and corn syrup producers, at the expense of consumers who must pay substantially higher prices, rather than their false advertising bickering. After all, whether we are talking about sugar or corn syrup, everyone already knows that too much can harm them.

In this, case, we could benefit from Adam Smith’s insight:

The interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. …But … the interest of the consumer is almost constantly sacrificed to that of the producer … who [has] generally an interest to deceive and even oppress the public … to narrow the competition … can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.

Gary M. Galles is a professor of economics at Pepperdine University and a research fellow at the  Independent Institute. His books include “Lines of Liberty” (2015), “Faulty Premises, Faulty Policies” (2014) and “Apostle of Peace” (2013).

Why conservatives should favor assisted suicide

assisted suicideGov. Jerry Brown recently signed the “assisted suicide” law, which came with significant criticism from those on the right. Many say life is sacred, from conception to natural death. What do these conservatives fail to realize? They should be in favor of this legislation.
As conservatives, we’re always talking about how the government needs to step out of our lives. This a prime example of when government intervention is unacceptable. If an adult wishes to end his or her life, they should have the ability to do so. It’s their life and therefore their decision. Isn’t is better for them to consult their family and physician before making that decision?
Because my mom is a chemotherapy nurse, I’ve seen her patients who are struggling to fight cancer. I’ve heard their stories and watched some of them struggle with such a difficult battle. There are a handful of them who get tired of fighting for their lives. They’re constantly in pain and can’t do what they love because they’re going through chemotherapy and radiation. When they’re not undergoing treatment, they’re feeling sick. It’s a continuous, never ending cycle.
Who are we – the healthy – to tell these people that they should continue being miserable because it’s not the end of their natural life?
If a family member were wanting to end their life, I would rather have them go to the doctor and end their life that way. That would prepare me for the real likelihood of losing them. I would rather know beforehand than to find them dead because they overdosed on pain killers or shot themselves in the head.
“Suicide goes against everything God teaches us.”
While this maybe true, remember, every person’s afterlife is determined by God, not us. What happens between a person and God is between them and no one else.

Property Rights and The American Democrat

James Fenimore Cooper widely influenced American literature. However, one of his books–The American Democrat, a civics primer–gets scant attention. Given that Cooper was born (September 15) so close to Constitution Day, it merits revisiting now.

Cooper defended the limited government the Constitution authorized, because political power not tightly controlled would be abused. In particular, he emphasized private property rights as necessary to liberty, our “right of self-government.

Unfortunately, the erosion of property rights Cooper warned against has only accelerated. Consequently, his understanding, echoing our founders, may be even more important today, because “vigilance in the protection of principles is even more necessary in a democracy.”

Cooper began from an insight few recognize today: “The rights of property [are] an indispensable condition of civilization.” Consequently, “we must take those consequences of the rights of property inseparable from the rights themselves.”

Since “property is the base of all civilization,” it follows that “its existence and security are indispensable to social improvement.” So “the first great principle connected with the rights of property is its inviolability,” leading to “the safe and just governing rule … permitting everyone to be the undisturbed judge of his own habits and associations, so long as they are innocent, and do not impair the rights of others to be equally judges for themselves.”

Given the foundational role of private property rights to effective social cooperation, Cooper concluded that for public policy, that meant property rights. “shall have no factious political aids.” That denial of unequal treatment implies “it is a great mistake … to take sides with the public, in doubtful cases affecting the rights of individuals, as this is the precise form in which oppression is the most likely to exhibit itself in a popular government.”

That led Cooper to dissent from democratic orthodoxy that has only intensified since: “As between the public and individuals, therefore, the true bias of a democrat … is to take sides with the latter. This is opposed to the popular notion, which is to fancy the man who maintains his rights against the popular will an aristocrat.”

Cooper connected this to individuality, which property rights protect. “Individuality … lies at the root of all voluntary human exertion … because we know that the fruits of our labors will belong to ourselves, or to those who are most dear to us.” Consequently, “all which society enjoys beyond the mere supply of its first necessities is dependent on the rights of property.” In other words, “property is an instrument of working most of the good that society enjoys,” because “it encourages and sustains laudable and useful efforts in individuals.” In sum, “Property is desirable as the groundwork of moral independence, as a means of improving the faculties, and of doing good to others, and as the agent in all that distinguishes the civilized man from the savage.”

The upshot of Cooper’s logic of liberty was that “the man of property … is privileged to use his own means … in the pursuit of his own happiness, and they who would interfere with him, so far from appreciating liberty, are ignorant of its vital principles.” Unfortunately, that is radically at odds with “the habit of seeing the public rule,” which “is gradually accustoming the American mind to an interference with private rights that is slowly undermining the individuality of the national character.”

The American Democrat was a civics book. But with the declining respect for property rights since Cooper wrote, it doesn’t read like current civics books.  Americans today would greatly benefit by remembering that “All who love equal justice, and, indeed, the safety of free institutions, should understand that property has its rights, and the necessity of rigidly respecting them.” It would serve us far better than the prevailing view, which applauds using government power to give majority coalitions what they want by blatantly violating others’ property rights.

Gary M. Galles is a professor of economics at Pepperdine University.

DWP Rate Hike Plan Makes Customers Mad as Hell

Today I’m opening the mailbag to share comments from Valley residents about the Los Angeles Department of Water and Power and its proposed five-year rate hike of 25-30 percent:

“The DWP needs to tighten their belts before they ask us for more money.”

“Cutbacks on the least important actions or redundancies should come first before asking for more money. That is how any true business would work.”

“The 8 percent of its gross revenues going to L.A. city treasury boggles the mind.”

“I find this so offensive. … It feels as though DWP is punishing me by increasing the rates because I am using less water. Why can’t the DWP employees take a 5 or 10 percent pay decrease in their salaries or be furloughed for 1 day per 2 week schedule, or maybe lay off a few employees — at least until the drought is over. This is not the time for DWP or the City Council or unions to be greedy at the expense of consumers/constituents.”

“We just celebrated our 50th anniversary and have lived in our Porter Ranch home for over 41 years. Our home is one-story, under 1,500 square feet, no pool and a now-brown lawn because of the drought. We try to avoid using the air conditioning or leave it at no lower than 78 degrees — sometimes 80. However, our DWP bills range from $350 to $400 in the winter to over $850 in the summer. We simply cannot afford those bills now and would be devastated if they were to go even higher. We don’t want to have to choose between turning off the air conditioner to afford our mortgage and medical bills or losing our home where we raised our family.”

“Prior to the installation of the 2nd meter, my domestic water usage was calculated and averaged more than 5 times my true usage. I’m certain that anyone who has not installed a 2nd meter is being inaccurately (almost fraudulently) charged more than 5 times what they are responsible for.”

“It seems like the DWP pays a far greater salary than the private sector and gets better retirement benefits, too. Something is wrong here.”

“The DWP should be run like a corporation, not a cozy club.”

“The DWP should be replaced with a new organization that places great value on keeping spending tight, watching everyone’s overtime, and eliminate waste and fraud. So far, the DWP has proven that it lacks leadership that responds to ratepayers, yet has policies that empower the employees.”

“Roll back all senior level DWP management salaries 10%. Appoint an independent auditing committee to oversee exactly what some of these positions are within the DWP structure and do away with the vast majority of them.”

“For the past four years, I have taken many measures in cutting back on my water usage but I continue to have extremely high bills. I have called DWP 3 times asking for an inspection and have been told that they don’t have time.”

“The DWP replaced our water meter, and the next bill was for $3,277.93!”

“NO matter what the citizens are doing to ‘save the planet,’ the more we do, the more we are punished for our complying with the requests.”

“That there is about $230 million of overcharging being sent to the City is a travesty. Of course, we get to pay a 10% City tax on that overcharging, so it is only compounded. Our DWP should not be a taxing authority!”

“I have been so upset with the excessive spending and loss of funds that have happened with the DWP, and now for them to have the nerve to say they must raise our bills. Why can’t they eliminate some of their unnecessary “management analysts” or reduce some of their outlandish salaries?”

“Giving money to the city of Los Angeles is outrageous … how did this happen??”

“We have lost two pine trees because of not watering in this drought. No rewards for conservation! Higher ‘taxes’ instead. Private business would tighten belt, but our government is increasing salaries!”

“The accumulated effects of continued cost increases and tax hikes are forcing me to leave the state.”

“In my opinion, DWP is nothing but a bloated, redundant, multilayered bureaucracy with little accountability.”

“I am sick & tired of additional fees, taxes, costs, gouging, etc.”

“Could you interview the DWP ‘Ratepayer Advocate,’ Fred Pickel? The public would like to know what he has been doing.”

Email your comments to me at the address below — everyone’s voice should be heard.

Susan Shelley is a San Fernando Valley author, a former television associate producer and twice a Republican candidate for the California Assembly. Reach her at Susan@SusanShelley.com, or follow her on Twitter: @Susan_Shelley.

Government is hardly the solution to short-term bias

Hillary Clinton’s latest campaign salvo attacked “quarterly capitalism,” the supposedly irresponsible corporate focus on short-term results at the expense of long-term growth. She promised government fixes. But she is short on logic and history.

Is there too much short-termism in business firms? Look at participants’ incentives.

Shareholders own the present value of their pro-rata share of net earnings, not just present earnings. They do not discard good investments which raise that expected present value. Good short-term results raise stock prices not because of short-termism, but because of their implications for the likely future course of net earnings.

Share prices are a primary metric for managerial success and basis for their rewards. That makes their time horizons reflect those of shareholders, far beyond the present. Bondholders, who want to be paid back, incorporate future repayment risks into their choices. Worker and supplier relationships also reflect firms’ future prospects.

Beyond misinterpreting share price responses to short-term results, Clinton’s main evidence was increased stock buybacks, supposedly sacrificing worthwhile investments by returning funds to shareholders. She ignores that those funds will largely be invested elsewhere. But she also ignores that the buyback binge reflects the Fed’s long-term artificial cheapening of borrowed money, leading firms to shift toward debt financing. But a firm substituting debt financing for equity controls no fewer funds for investments.

Confusing business responses to Fed interventions as business short-termism only begins the list of such government-created biases. For example, constant proposals to raise corporate tax rates and worsen capital gains treatment reduce the after-tax profitability of investments. Regulatory mandates and impositions pile up, with more coming, doing the same. Energy policy threatens cost hikes, reducing investment returns. And so on.

That government will put more emphasis on the future than the private sector is also contradicted by political incentives. Owners bear predictable future consequences in current share prices, but politicians’ incentives are far more short-sighted.

An election loser will be out of office, and capture no appreciable benefit from efforts invested. So when an upcoming election is in doubt, everything goes on the auction block to buy short-term political advantage. And politicians’ incentives drive those facing the D.C. patronage machine. That is why so much “reform” meets Ambrose Bierce’s definition of “A thing that mostly satisfies reformers opposed to reformation.” The mere passage of bills in the political nick of time, even largely unread ones, can be declared victorious legacies, with harmful consequences never effectively brought to bear on decision-makers.
There is also a cornucopia of examples of government short-termism at the expense of the future, whose magnitude dwarfs anything it promises to reform.

Unwinding Social Security and Medicare’s 14-digit unfunded liabilities will punish future generations, caused by massive government overpromising to buy earlier elections. Other underfunded trust and pension funds threaten similar future atonement for earlier short-term “sins.” Expanding government debt similarly represents future punishment for short-term political payoffs. Foreign and military policy have similarly turned away from dealing with long-term issues. But serious long-run issues like immigration escape serious attention because “public servants” are afraid of short-run interest group punishment.

Political attacks on short-termism, and reforms to fix it, are beyond confused. They ignore financial market participants’ clear incentives to take future effects into account. They are clueless about what provides evidence of short-termism. They treat private sector responses to government impositions as private sector failures. They ignore far worse political incentives facing “reformers.” And they act as if the most egregious examples of short-termism in America, all government progeny, didn’t exist.
There is little to Clinton’s criticism and alleged solutions beyond misunderstanding and misrepresentation. We should recognize, with Henry Hazlitt, that “today is already the tomorrow which the bad economist yesterday urged us to ignore,” and that expanding government’s power to do more of the same is not in Americans’ interests.

Gary M. Galles is Professor of Economics at Pepperdine University