In a 1992 three-way, townhall style debate between incumbent George H.W. Bush, challenger Bill Clinton and his pet gerbil, Ross Perot, the nation was introduced to the infamous “Ponytail Man.” Likely a plant from the Clinton campaign, a man with a ponytail (hence the name) asked the candidates to put aside the rancor. Describing voters as “symbolically the children of the future president,” he implored a focus on “meeting our needs.”

Conservatives at the time rightly mocked such a paternalistic political stunt. Citizens are not children; government should not be parental. A truly free people must provide for their own needs. That is the foundation for our nation’s great success. Modern liberals have never understood this idea, while conservatives have simply lost sight of it, countering liberal paternalism not with freedom, but with their own paternalism, or “compassionate conservatism.”

Citizens are not children; government should not be parental.

It is this turn toward nanny-state government which disillusioned small government conservatives and ultimately cost republicans the 2006 election. But there is reason to hope that the tide is turning. The alliance between big government conservatives and liberals has been, at least for the moment, defeated in their effort to pass a massive government “bailout,” thanks to those conservatives ready to shed the ponytails they’ve grown over the last decade.

In a letter urging his colleagues to oppose the bailout, Rep. Mike Pence stood on principle:

Economic freedom means the freedom to succeed and the freedom to fail.

The decision to give the federal government the ability to nationalize almost every bad mortgage in America interrupts this basic truth of our free market economy.

…Before you vote, ask yourself why you came here and vote with courage and integrity to those principles.

If you came here because you believe in limited government and the freedom of the American marketplace, vote in accordance with those convictions.

In the past I’ve chastised those who put party before principle, supporting RINO’s like Lincoln Chafee for no other reason than that he was, for some odd reason, registered republican. Now, thanks to the disproportionate defeat of RINO’s in the last election (there’s a lesson there), conservatives have a stronger say in the republican party than before. Certainly, conservative principles have not yet been restored as the primary driver of party policy, but stands like this give me hope that they yet will be.

The False Explanation

You’re going to hear a lot of stories in the coming days, and probably have heard a few already. Following the high profile collapse of the giants in the financial sector, there are going to be a number of groups jumping to advance their agenda by telling you falsehoods about who is to blame. Socialists, statists, anti-capitalists and all manner of other market and freedom haters are already jumping to lay blame at the feet of capitalism. Yet many of these people have themselves played a part in this mess. The Obama campaign is already out to make “deregulation” a dirty word, and has released an ad making two false claims: first, that deregulation had anything to do with the financial crises and, second, that allowing competition in health care would create a similar situation. Even the New York Times, criticizing the ad for its falsehoods, acknowledged that “[deregulatory changes] were viewed by many as having benefited consumers by encouraging competition, and those changes have not been linked to the current crisis.” But in order to advance the socialist regulatory agenda, it is constantly necessary to demonize the free market.

The most hypocritical market-basher, by far, is long-time Democratic Party embarrassment Barney Frank. Frank has been making the rounds dispensing his distorted account of what has happened. For instance, he attributed AIG’s troubles to “lack of regulation,” and self-righteously declared, “the private market screwed itself up and they need the government to come help them unscrew it.” On the overall financial meltdown he says, “Some private-sector people made irresponsible decisions because there wasn’t adequate regulation.” Not quite. There was inadequate regulation, but of government, not the private-sector. It is government policy and government sponsored entities Fannie Mae and Freddie Mac that are the drivers of this meltdown. And when it came to regulating their behavior, Barney Frank was a chief roadblock.

Freddie and Fannie became a half-way house for democrats heading out of government.

In 2003 President Bush attempted to address the problem created by Fannie and Freddie’s insulation from market incentives. The President proposed an agency to oversee the quasi-governmental companies. Democrats, bought and paid for by F&F, were strongly opposed.

Granted, I would have preferred that President Bush had chosen market incentives over regulation by cutting Fannie and Freddie loose from government altogether. But, and this is a big but, if government is going to insist on socializing risk, it’s better that it also provide even a crude form of accountability (and crude is all the accountability government can muster compared to markets), to make up for it. Leaving F&F roaming free as part-private and part-governmental, with the dueling and often contradictory missions it implies, without either market or government forms of accountability, was the worst possible solution. It’s also the one Barney Frank demanded when he opposed Bush’s effort and declared that, “[Fannie and Freddie] are not facing any kind of financial crisis,” before also concluding, “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” And that is exactly what led us to this mess: the government’s reckless demands for “affordable housing.”

A Government Created Mess

In 1977 a Democratic Congress, working with a Democratic President, produced the Community Reinvestment Act (CRA). The CRA forced banks to make unsound loans to poor, uncreditworthy borrowers, all in the name of liberal fairness. Required to keep extensive records of their minority lending practices, banks became targets of racial shakedown artists. If they weren’t satisfied with a bank’s submission to their extortionist demands, they could have them denied the right to expand or merge with other banks.

In 1994 Clinton revamped the CRA and kicked off a new wave of reckless lending. This is where Freddie and Fannie jumped in to corner the market on bad loans, loans which wouldn’t have ever been made if rules requiring money down and sufficient sources of income hadn’t been thrown out the window in the name of racial equality.

Another contributing government factor was the loose monetary policy pursued by the Fed. By keeping interest rates too low, the Fed contributed to an influx of dollars into the market. When money is created faster than productivity warrants, it results in a misallocation of resources in certain assets, creating “booms.” Former vice president and economic advisor at the Federal Reserve Bank in Dallas, Gerald P. O’Driscoll Jr., blames the Fed for not properly weighing the costs of their inflation targeting methods:

In a vibrant market economy with technological innovation and ever new profit opportunities, the monetary policy that maintains price stability in consumer goods (or zero price inflation) requires substantial monetary stimulus. That stimulus will have a number of real consequences, including asset bubbles. These asset bubbles have real costs and involve misallocations of capital. For example, by the peak of the tech and telecom boom in March 2000, too much capital had been invested in high-tech companies and too little in “old economy firms.” Too much fiber optic cable and too few miles of railroad track were laid.

The Democrats’ Revolving Door

While government policy was meddling with the financial markets, government officials made themselves quite comfortable in the financial sector. Freddie and Fannie became a half-way house for democrats heading out of government. Franklin Raines, currently Barack Obama’s financial advisor and former Clinton era budget director, spearheaded Fannie Mae into countless Enron-style accounting manipulations and scandals. Foreshadowing the left’s current strategy to peg their failures on advocates of free markets, Raines derided those who pointed out his companies risky and shady practices as “ideologues” trying to “undermine” Fannie Mae.

Jim Johnson, also a former Fannie CEO and a board member of Goldman Sachs, is a policy advisor who was chosen by Obama to lead his vice-presidential selection team. Johnson was forced to fall on his sword when it was revealed he and several other prominent democrats received special perk loans from Countrywide Financial’s CEO Angelo Mozilo. With no banking or financial experience whatsoever, Jamie Gorelick, former Deputy Attorney General under Clinton, was appointed Vice Chairman of Fannie Mae in 1997, and got fat off of Raines’ accounting scandals. Rahm Emanual, the 4th highest ranking democrat in the House, was similarly shuffled onto Freddie’s board after leaving the Clinton White House.

Meanwhile, their Democratic colleagues who remained in government were assured their part of the take. Chris Dodd, now Chairman of the Senate Banking Committee, raked in the most from Freddie and Fannie, at $165,000. Perhaps these donations are what Dodd had in mind when, in July, he referred to Fannie and Freddie as “fundamentally sound and strong.” Number 2 on the graft list is Barack Obama, who took in over $125,000 in his short tenure in the Senate. The government’s pet mortgage lenders further feathered their nests by opening “partnership offices” in the district of key members of Congress, where they could funnel millions of dollars to their supporters. The bribes paid off. Compared to IndyMac, which didn’t offer democrats any protection money and was thrown to the wolves by Chuck Schumer, Fannie and Freddie are now looking at billions in taxpayer support.

It’s not hard to see why, when President Bush sought to counter Fannie and Freddie’s government created incentives for recklessness, he was fought by Democrats at every turn. According to the White House, 17 attempts at reform were blocked by democrats. Government’s inability, thanks to Democratic cronyism, to replace the market checks which it destroyed by demanding reckless behavior on the one hand, and subsidizing risk with an implied guarantee on the other, provided the perfect financial storm for disaster.

One would think it would be difficult for those on the left to so easily absolve themselves of any responsibility, while simultaneously blaming those who attempted to stop them from creating this disaster, but that is exactly what they’ve done. Phil Gramm, who sought to relax the Democratic created requirements that banks issue risky subprime loans, has been tagged a “deregulator,” which is, in their view, automatic proof of guilt. Barack Obama blames the problem, as he does everything, on “Bush-McCain,” even as he found room in his campaign for those actually responsible and belongs to a party which protected Fannie and Freddie from reform. In short, the left is trying to rewrite history even as it’s being made. The ink hasn’t yet dried on the reporting of their government sponsored mess, and already they are blaming those who believe in freedom and oppose their interventionist programs. They think the failures of government should justify yet more government. They are wrong and their lies shouldn’t be allowed to disguise this fact.

Some things just make you shake your head in disgust, wondering how so many people could possibly be so stupid.  Rasmussen reports, “60% of Voters Say Supreme Court should Base Rulings on Constitution.”

During his acceptance speech last night at the Republican National Convention in Minnesota, John McCain told the audience, “We believe in a strong defense, work, faith, service, a culture of life, personal responsibility, the rule of law, and judges who dispense justice impartially and don’t legislate from the bench.” Most American voters (60%) agrees and says the Supreme Court should make decisions based on what is written in the constitution, while 30% say rulings should be guided on the judge’s sense of fairness and justice. The number who agree with McCain is up from 55% in August.

What the other 10% think should be used is a mystery - ouija boards maybe.  Don’t laugh, they couldn’t be worse than something as frightening as the “sense of fairness and justice” of a small group of judges.  If that’s how our law is to be decided, why even bother with a democracy?

From Britain, but the same basic story could just as well be told from America:

The head of the NHS rationing watchdog has said he is ‘genuinely sorry’ for a delay in approving a new treatment for blindness.

But campaigners said Andrew Dillon’s comments would be of little consolation to the thousands of Britons who have lost their sight in the two years it took NICE to make its final decision.

The watchdog has now approved Lucentis, which is used to treat wet age-related macular degeneration, a condition which affects 26,000 new sufferers every year.

NICE’s original recommendation was that patients had to wait until they went blind in one eye before they would be given treatment to save the sight in the other.

The proposal caused a huge public outcry from doctors and campaigners, prompting a U-turn in December last year before further consultation resulted in the final decision today.

NHS thought it was their responsibility to decide what level of risk warranted use of this drug. The public vehemently disagreed with the determination that the drug was only worth taking after eye-sight was lost in one eye.

Why is the individual’s own judgment not sufficient? Let people decide when they want to take a drug and risk the side-effects, not government. If they want to wait until they are blind in one eye, then they can. But no one knows better than the individual how to properly weigh the consequences of their choices.

Proponents of government interventionism always promote these watchdog groups as protecting consumers, but what they really do is needlessly delay the operation of the market. The real beneficiaries are the drug manufacturers, whose already approved products need not face the level of competition they otherwise would without government meddling.

Freedom is a wonderful thing. Let it happen.

Hat tip: OpenMarket.org

Regular readers will know I have many issues with Ron Paul. From his quirky and misguided obsession with the gold standard to his head-in-the-sand isolationism (and his tendency toward kook conspiracies), he often rubs me the wrong way.  But on many other issues he is one of only a few voices representing federalism and limited government.  In that vein, this op-ed by Dr. Paul is worth reading, especially considering the type of big-government rhetoric that is about to bombard us from Denver.

On a similar matter to the video I posted yesterday, it seems Britain is seriously considering taking a hint from the Swedish and might actually allow their citizens a bit of educational freedom.

This summer, at least 25,000 children will drop out of English schools without a single qualification to show for their years of compulsory education. Some 240,000 will graduate from primary school unable to read or write properly. By autumn, some 250 schools judged to be failing will welcome an intake of new pupils. Youth unemployment will probably hit an 11-year high. It will, tragically, be just another year in one of the world’s highest-funded education systems.

Two strategies are available to David Cameron in addressing this scandal, should he get to No. 10. He could perform his own surgery on the comprehensive system pretending, as all prime ministers pretend, that he can actually control it. The Local Education Authorities, with whom the power rests, would almost certainly ignore him, as they did Tony Blair. But the second policy would be a new one. He would invite anyone to set up a new state school, run it independently of government, and receive a sum likely to be more than £6,000 a pupil.

He would, in short, seek to bring the Swedish education revolution to Britain. When Mr Cameron first promised to do this at the Tory conference in Blackpool (along with Wisconsin-style welfare reform), it sounded a rather abstract idea, the stuff of think-tank seminars rather than everyday life. Yet in the last five months Michael Gove, the shadow schools secretary, has been carefully designing a blueprint which would enable the establishment of a new breed of local independent schools, funded by the state but not run by it. It is potentially a plan of huge significance.

…

Freedom works.  Maybe one day the unions and other entrenched interests can be defeated here in that State’s and we can have some.

Continuing their war against free choice, Democrats are ramping up their crusade to save people from themselves, this time by bringing tobacco under the control of the FDA.

The House voted 326-102 Wednesday to approve legislation granting FDA authority over tobacco products, paving the way for the Senate to possibly consider the bill in the fall.

Lawmakers have tried for more than a decade to place tobacco products under FDA purview in an effort to stem smoking.

The bill has wide bipartisan support, but Republican leaders and the Bush administration oppose it. They assert FDA would not have the resources to take on a new responsibility and argue agency oversight would give the public the wrong impression that tobacco is safe.

The administration threatened to veto the bill Wednesday, arguing the bill would disproportionately tax low-income Americans. The measure would assess user fees from tobacco companies to raise an estimated $5 billion over 10 years to underwrite FDA’s efforts.

The debate turned heated when House Minority Leader Boehner, perhaps the House’s highest profile smoker, took the floor.

“Most of my colleagues know that I smoke,” he said. “I know that smoking is probably not good for my health. Most Americans know cigarettes are probably not good for their health. Do we need the government to tell us? Do we need to spend $5 billion of smokers’ money for the government to tell us?”

Summoning the self-righteous hot air of all the liberal crusaders in this nation’s history, Dingus responded by patting himself on the back for his noble purpose.

“This legislation is on the floor because people are killing themselves by smoking these evil cigarettes,” Dingell said.

“The distinguished gentleman, the minority leader, is going to be amongst the next to die,” said Dingell. Then with a wide smile, he added, “I am trying to save him, as the rest of us are, because he is committing suicide every time he puffs on one of those things.”

What exactly makes Dingus more qualified to evaluate the risk versus reward of Boehner’s smoking than Boehner himself?

Some might be wondering why Phillip Morris broke from the rest of the industry and supported this legislation. The easy answer might be that they saw the writing on the wall and sought to mitigate the extent of the damage. I believe the answer is something else.

These kinds of regulatory interventions in the name of consumer protection are nothing new. What apparently only Phillip Morris realized, however, is that after do-gooders get what they want, they lose interest. The regulatory bodies they created are then free to be co-opted by industry, where they are then used to prevent competition.

When the uproar began against the railroad industry, far thinking railroaders realized they could use the federal intervention to their advantage. After the creation of the Interstate Commerce Commission they were able to do just that. Because no one understood the railroad industry more than railroaders, the more regulatory power was granted to the ICC over railroads the more their own bureaucrats were drawn from the industry itself. By the time trucking became a major threat to the railroad industry, ICC was perfectly placed to defend the railroads from competition. The Motor Carrier Act of 1935 gave the ICC authority to regulate truckers (to protect the railroads), which they used to severely limit the ability of new truckers to enter the industry.

The story of the ICC is hardly unique. Indeed, it represents the natural history of government intervention, as described by Milton Friedman:

A real of fancied evil leads to demands to do something about it. A political coalition forms consisting of sincere, high-minded reformers and equally sincere interested parties. The incompatible objectives of the members of the coalition (e.g., low prices to consumers and high prices to producers) are glossed over by fine rhetoric about “the public interest,” “fair competition,” and the like. The coalition succeeds in getting Congress (or a state legislature) to pass a law. The preamble to the law pays lip service to th rhetoric and the body of the law grants power to government officials to “do something.” The high-minded reformers experience a glow of triumph and turn their attention to new causes. The interested parties go to work to make sure that the power is used for their benefit. They generally succeed.

The history of the FDA itself meets this pattern. Reformers were concerned about the conditions at meat-packing plants. Special interests quickly hoped on board. Meat-packers were more than happy to have government certify the cleanliness of their product, and have taxpayers pay for the process.

Today’s FDA does far more harm than good. It prevents the creation and distribution of valuable new drugs, benefiting manufacturers who face limited competition once they’ve established themselves. Phillip Morris is apparently more forward-thinking than other tobacco companies and has learned from this history. They realize government can grant them far more power than the market ever would allow, and they know that high-minded reformers are the vehicle through which they can successfully grab this power.

Senators Wyden and Snowe are proposing a 5-year ban on state increases on cell phone taxes.

According to a copy of the bill seen by Ars Technica, “No State or local jurisdiction shall impose a new discriminatory tax on or with respect to mobile services, mobile service providers, or mobile service property, during the 5-year period beginning on the date of the enactment of this Act.” Local tax raises are fine, but they cannot single out wireless service.

I applaud the belief that such taxes should be kept to a minimum.  I cannot, however, support the federal government usurping the right of the states to make such decisions simply because I do not like the decisions they are making.  It is up to voters to hold their state reps accountable.  That is the proper functioning of our federalist system; this bill is, therefore, misguided.

If there’s any doubt left as to why the republican party has suffered the collapse that it has, let it go. The reason is obvious: republicans have turned into democrats - big government, big spending, control your life democrats.

Here’s a prime example:

An influential Republican senator suggested Thursday that Congress might want to consider reimposing a national speed limit to save gasoline and possibly ease fuel prices.

Sen. John Warner, R-Virginia, asked Energy Secretary Samuel Bodman to look into what speed limit would provide optimum gasoline efficiency given current technology. He said he wants to know if the administration might support efforts in Congress to require a lower speed limit.

Congress in 1974 set a national 55 mph speed limit because of energy shortages caused by the Arab oil embargo. The speed limit was repealed in 1995 when crude oil dipped to $17 a barrel and gasoline cost $1.10 a gallon.

As motorists headed on trips for this Fourth of July weekend, gasoline averaged $4.10 a gallon nationwide, with oil hovering around $145 a barrel.

Warner cited studies that showed the 55 mph speed limit saved 167,000 barrels of oil a day, or 2 percent of the country’s highway fuel consumption, while avoiding up to 4,000 traffic deaths a year.

There is no case for government intervention here. The benefits of driving 55 are had by those who are doing the driving, therefor they have every incentive to do so already. They can balance the considerations on their own (using less gas versus more time spent driving) and decide which matters more to them.

If people actually care about using less gas and saving money, then they will drive at about such a speed without government mandate. If they don’t care, then there’s no justification for a politician, elected to represent the people, to institute something they don’t want. In either case, government should butt out. A republican should know better.

It is accepted conventional wisdom that the American polity is contentiously divided along partisan lines in a way unlike ever before. While the veracity of this statement is historically debatable, it cannot be doubted that Americans are strongly entrenched along partisan lines. Barack Obama has sold himself as the candidate best suited to bridge this divide.

Embedded in Obama’s soaring rhetoric is a bold collectivist agenda. He sees a future where we, through government action, “provide care for the sick and good jobs to the jobless.” He mocks those who want to reduce the size and scope of government - by allowing people to choose their own health care, their own schools and their own futures - as supporting “social Darwinism.” Obama proposes to implement these government programs in the name of social justice, but an understanding of democracy demonstrates that what we’ll actually see is a further erosion of social cohesion. He’d replace the Ownership Society with a Nanny Society.

Democracy is more inherently responsive to the preferences of citizens than any other form of government. This should not mask the fact that government, even when democratic, cannot come close to matching the ability of free markets to respond to the wide variety of preferences of ordinary people. Conversely, government action forces individuals into choices they do not want. Milton Friedman observed that, “the characteristic feature of action through explicitly political channels is that it tends to require or to enforce substantial conformity.”

Imagine two neighboring families of different backgrounds looking to school their children. Each family wants to ensure their children’s education does not conflict with their cultural and religious traditions. In a free market system these families can both find adequate education by placing their children in schools that meet their own standards. In the present system, however, government education has forced conformity, meaning that both of these families preferences cannot be simultaneously satisfied. The two families must place their children in the same school due to their geographic proximity, despite their expressed differences. If they wish to influence their children’s education, they must then do so through political channels. Thus, when these two families both lobby the local school board for conflicting educational goals they become, thanks to government, not just neighbors but political opponents.

Over the decades, as government has vastly expanded the scope of its involvement in private affairs, citizens have been forced into an ever growing number of these confrontational situations. With so much personally at state in every governmental decisions, it is little wonder that many have taken an adversarial view of politics. Further expansion of government is clearly not the answer. If we want to restore social cohesion we must begin extracting government from the decisions that matter most to us. Barack Obama’s optimistic rhetoric, no matter how expertly delivered, cannot heal America so long as he is advocating for more of the collectivist action which has brought us here in the first place.