Special Posting: Birthright Citizenship

You are being told that children of illegal aliens, who are born in the USA, become citizens automatically and that this is ordained by the Constitution.  Neither is true!

By: George Noga – November 2, 2018

       This is a special unplanned posting. Suddenly, the issue of birthright citizenship has been thrust into the national spotlight and the media (surprise) have it all wrong. We first wrote about this seven years ago. What follows is not political or partisan, but simply a logical, fact-based and principled assessment of birthright citizenship.

       You likely have heard that children of illegal aliens, born within the USA, ipso facto are US citizens and that is explicitly ordained by the Constitution. Neither proposition is true! The 1789 Constitution did not define citizenship; however, the 14th Amendment ratified in 1868 states, “all persons born in the US and subject to its jurisdiction” are citizens. The purpose was to grant citizenship to former slaves in the aftermath of the civil war. Being born in the USA is only one of two conditions.

If the intent of the 14th Amendment was that everyone born in the USA is a citizen, then why was the conjunctive “and subject to its jurisdiction” added?

       Those five words, and subject to its jurisdiction, is where all the controversy lies. At the time (1868) it was generally understood to mean full political allegiance. That’s why Indians were excluded – because it was assumed they owed allegiance to their tribes. However,  Section 5 of the 14th Amendment gives Congress power to “enforce by appropriate legislation” provisions of the amendment. Congress subsequently has done so, giving Indians and other explicit categories citizenship. But Congress never has given citizenship to children of illegal aliens or to everyone born in the USA.

      There have been Supreme Court cases on topic. Proponents always cite U.S. v. Wong Kim Ark (1898) (decided 5-4) as a source of birthright citizenship. However, in that case, the court held only that children of legal permanent residents automatically were entitled to citizenship. The court never has opined on children of illegal aliens.

Four Takeaways About Birthright Citizenship

1. A constitutional amendment is not required to address birthright citizenship. Congress has this power under Section 5 of the 14th Amendment and could pass a law either granting or denying citizenship to children of illegal aliens born in the USA.

2. There is nothing in the Constitution, laws passed by Congress or cases decided in the Supreme Court that grant birthright citizenship to children of illegal aliens.

3. Because of the lack of legislative or judicial clarity directly on point, an executive order by the President of the US is entirely appropriate. Such an order could instruct the executive branch how to deal with children of illegal aliens – including instructing them not to confer birthright citizenship unless mandated by Congress or the courts.

4. Ultimately, this matter will wind up in the Supreme Court – whether as a result of an executive order or a law enacted by Congress and signed by the President.

      No European or western country grants citizenship based on place of birth. Nearly every country on earth bases citizenship on blood rather than on soil, i.e  on parental citizenship – not on place of birth. Ideally, Congress should settle this question as one part of comprehensive immigration reform legislation. Good luck with that!

Watch for our special pre-election posting on Election Day – November 6th.

Our next post November 6th offers perspective about the midterm election.

 

Special Posting: Birthright Citizenship
By: George Noga – November 2, 2018

Liberals Believe the Strangest Things

Liberalism is the philosophy of failure, the creed of ignorance and the gospel of envy.
Liberals Believe the Strangest Things
By: George Noga – December 2, 2018

          It’s time to throw some red meat to our conservative readers and to challenge our progressive ones. The quote in the preheader above is from, you guessed it, Churchill. The liberal credo is sentio ergo sum, i.e. I feel, therefore I am. Liberalism is an emotional state in which obvious contradictions, disdain for facts, utopian fantasies, obsessive desires to control others and antipathy for all who differ – in various degrees and patterns – come to dominate a person’s thinking. For those who believe this definition is too long, it can be reduced to just four words: liberalism is a lie!

        Progressivism is antithetical to objective reality; it embraces dogma, mythology, political correctness, identity politics, unreason, ad hominem attacks and junk science. Progressives have corrupted politics, science, media, religion, government and even sports. It is the god that failed. Their ideas have gone bad: Obamacare, welfare, public housing, government schools, affirmative action and diversity programs. They have contempt for America, western civilization and all who differ. The failure of liberalism explains why progressives are eagerly turning to socialism as their next best hope.

       Liberals accept preposterous contradictions. They believe in manmade global warming but oppose natural gas which lowers CO2. They are against nuclear power although more people died at Chappaquiddick than at Three-Mile Island and Fukushima combined (from radiation). They tout Nordic nations as socialist successes even though they are capitalist, while ignoring real socialist states like Venezuela. They believe America is racist despite a two-term black president; they believe unions help workers even though 94% of private sector workers reject unionism as a bad deal.

       They believe in government health care despite its failure with the VA, Native Americans and in Canada and England. Sixty percent (60%) of Americans pay no income tax (net of credits), but they believe the tax system is not progressive. They demand organic food although there is no difference in taste, vitamins or pesticides and it uses 30% more land and costs much more. They panic over GMOs which feed the poor of the world and reduce the land required for agriculture. They believe in gender specific abortions because it is necessary to kill females in order to protect their rights.

       Progressives believe it is okay for a young girl to have an abortion without parental consent but not to open a lemonade stand; fifty million abortions are good but 1,000 executions are evil. They fanatically support choice but oppose a woman’s right to choose where to school her children, to own a gun, whether or not to buy health insurance or to join a labor union. They profess compassion and good intentions, but it is all virtue signalling. They oppose school choice, but not for their own kids.

        Liberals oppose corporate money and Citizens United, while vastly outspending their opponents. There was no blue wave this past election, but there was a green wave of money from unions, Soros, Bloomberg and Steyer. They supported Beto O’Rourke, who has an hispanic nickname but no hispanic heritage, over Ted Cruz, whose father was 100% hispanic. They believed Brett Kavanaugh’s uncorroborated accusers while dismissing much more credible charges against Keith Ellison. They use scare tactics about climate change while fiercely opposing common sense forest management.

       Progressives cluster in bi-coastal, bien-pensant tribes, living, learning, working, socializing and intermarrying, often for generations. Many don’t know even one Christian or anyone from flyover land. They live in intellectually vapid and isolated bubbles where their myths are constantly reinforced. Life in the liberal tribe is easy; tribal members never have to think; whatever the tribe believes is right; whatever others believe is wrong. Consequently, liberals believe the strangest things.


Next week’s posting contains a collection of short topics.
More Liberty Less Government  –  mllg@mllg.us  –  www.mllg.us

Slaves, Socialism, Supreme Court and ICE

Did the US Constitution consider slaves 3/5 of a person? Can socialism ever appear to work? Can the world run out of money? These questions and more.
Slaves, Socialism, Supreme Court and ICE
By: George Noga – October 28, 2018

Micro Topics: “Medicare for all” is the new cry of lefties. Single-payer health care has been tried and it failed miserably – with Native Americans and veterans. It adds trillions to the deficit, but the real cost is in lives. . . . . “The left destroys everything it touches, sports, comedy, schools, fun, everything”. (Charlie Kirk) . . . . . In the latest PC craze, schools abolish homecoming kings and queens, substituting “royals“. But aren’t royals a privileged hereditary aristocracy? . . . . . For 2015-16, uber-liberal NPR can confirm only 11 school shootings; with 96,300 schools, that is one shooting per 8,755 schools. . . . . Not long ago, liberals and media applauded when jack-booted ICE agents conducted a pre-dawn raid to seize a 6 year old boy; his name: Elian Gonzalez.

Only 3/5 of slaves were counted per the Constitution but it was not due to southern racists, but northern abolitionists. Nor did the 3/5 have anything to do with the putative human worth of a slave. In 1789, there were 1.8 million freemen in the north but only 1.1 million in the south. The south wanted to count all 650,000 slaves to achieve equal representation in the House of Representatives; the north didn’t want to count any, hence, the 3/5 compromise. The Constitution refers to slaves as “persons“, nowhere as 3/5 of a person. This issue is misunderstood and often demagogued by liberals.

Socialism can appear to work  briefly because socialists plunder a nation’s wealth to create the illusion of progress. They confiscate assets, loot industries, banish managers and pad payrolls with hacks. They strip natural resources and despoil the environment. They run giant budget deficits and borrow all they can before defaulting. They tax the upper and middle classes into oblivion. They hyperinflate and print worthless currency. They pillage banks and make phoney loans to acolytes. They impose price and rent controls and prohibit evictions. They freeze prices and impose currency exchange controls. Wealth creators flee along with their capital and knowhow. After socialists ransack a nation’s patrimony, it always ends the same, i.e. starvation amidst plenty. Never has socialism created sustained prosperity, only short-term pillage and plunder.

The world is running out of money. The supply of money is finite and when it’s gone, it’s gone. Seriously! We can’t just keep printing money because that only inflates, i.e. more money chasing the same supply of goods and services. Space aliens, pandemics or climate change won’t do us in; in the end, the planet simply runs out of money. World government debt is $64 trillion while GWP is $76 trillion for a ratio of 84% and spiraling upward. Total global debt (public and private) is $230 trillion, over 300% of GWP. Who will be the one to borrow the last dollar in the universe?

SCOTUS confirmations are circuses as Congress quit legislating, leaving lawmaking to courts. Uncertainties about vacancies create angst, as justices now can serve 40+ years. To fix this, MLLG resurrects an old, but simple and elegant, idea which may be new to readers. Justices (limited to one term) would serve staggered 18-year terms with one term expiring every 2 years. Every president would have 2 appointments each term. This removes all the angst and uncertainty and no president could ever appoint a majority. Eighteen years is enough to serve; moreover, this change would enable more experienced justices to be appointed because longevity would no longer matter.


Our next post November 4th offers perspective about the midterm election.

Protect Your Assets During the Spending Crisis

Protect assets during the spending crisis; fortunes will be made at the bottom.
Protect Your Assets During the Spending Crisis
By: George Noga – October 21, 2018

         This is the second and final post about protection during the coming spending crisis. Last week’s post, available on our website www.mllg.us, focused on timing issues and on protection for your family. This post is about protecting your assets.

         Protecting assets during the crisis is hugely complex as it is difficult to know what peril to protect against and when. We must consider (1) deflation and depression; (2) economic collapse; (3) inflation and hyperinflation; and (4) repudiation, restructure and repression. Moreover, we must consider these perils singly, successively and in combination. We will address each scenario and suggest essential protective actions. Finally, we will reveal how you can profit from the greatest crisis of our time.

Deflation and Depression

           Deflation, followed by depression, is likely but may follow a period of inflation, as government initially floods America with newly printed money. Assets that provide the most protection from deflation and related perils are cash (treasury bills), US dollars, long bonds and quality dividend-paying stocks of companies that make products essential for survival. Avoid real estate, commodities and precious metals.

Economic Collapse

       A prolonged depression (or hyperinflation) could lead to economic collapse. Many banks will go under. For protection, you should have an account at an ultra safe US bank, of which there are only a few; research this on the internet. You also should have a foreign bank account; for simplicity, consider opening an account in a Canadian bank denominated in Canadian dollars. During the crisis, government will prohibit new foreign accounts and will impose exchange controls to prevent money leaving the US.

      Avoid debts and US government securities. Be dependent on government for as little as possible. Protection can be gained from precious metals and foreign currencies. Consider government or corporate bond funds in developed countries with low debt ratios such as New Zealand (22%), Chile (24%), Switzerland (44%), Nordic countries (40%), Germany (64%) and Canada, which has a high, but stable or declining, ratio.

Inflation and Hyperinflation

      Government’s first instinct will be to print money, at least temporarily while it gropes for solutions. Prolonged inflation is distinctly possible. Protect with TIPS (Treasury Inflation Protected Securities), commodities, real estate, precious metals and foreign assets. Avoid stocks, bonds, cash and US dollars. It is better to be a borrower than a lender. To combat hyperinflation, own blue chip foreign equities and assets in resource rich countries such as Australia, Brazil, Canada and New Zealand.

Repudiation, Restructure and Repression

      Although outright and total debt repudiation is unlikely, restructure and repression are very much in play. Government could: (1) reduce interest rates or even impose negative rates; (2) lengthen maturities; (3) accrue (rather than pay) interest; and (4) mandate conversion into some other (less desirable) security. As happened in Poland, government could confiscate a portion of all IRA, 401(k) and pension assets. As in Cyprus, there could be a forced “bail in” whereby government overnight confiscates a percentage of all bank accounts. Cash transactions can be banned. To counter this, avoid government debt directly and indirectly in money market accounts. Keep funds outside the US and denominated in other currencies to the extent possible.

Five Low Risk Actions to Consider Now

       To get started, following are five actions to take now. These are the most obvious, embody relatively low risk, work under the most crisis scenarios and deliver the most bang for the buck. Nor will they be unduly penal in the unlikely event you are wrong.

  1. Open a foreign bank account denominated in foreign currency. Switch most of your cash into uber-strong US banks – of which there are only a precious few.
  2. Hold 5% to 10% of your assets in precious metals. Keep small denomination gold and silver coins at home for use during a crisis.
  3. Invest a portion of your assets in TIPS.
  4. Own bond funds focusing on highly rated bonds in places with low debt ratios.
  5. Retain some portion in a quality stock portfolio, invested mainly in dividend paying stocks of companies producing essential products.

How to Profit from the Spending Crisis

You can profit by leveraging safe assets, shorting government bonds and through options, derivatives or hedge funds geared to benefit from the crisis. However, merely protecting and preserving your assets will result in considerable profit. If you preserve your assets intact while everyone around you loses most of theirs, you are a big winner.

The bottom of the spending crisis will represent the best buying opportunity of a lifetime. Many fortunes will be made acquiring valuable assets at or near the bottom. This is harder than it appears. Everything seems darkest at the bottom and precious few investors will be able to summon the courage to act at that time. Will you?


Next we present ultra short topics including socialism and the Supreme Court.

Protection For Your Assets and Your Family

Protect your assets and your family against the inevitable spending crisis.
Protection For Your Assets and Your Family
By: George Noga – October 14, 2018

         The United States is on track to surpass the critical 90% public Debt to GDP ratio within the next few years; however, the crisis may not begin until years later when the ratio is much higher. The timing is highly uncertain and depends on economic cycles, interest rates and events, many of which are unknown and/or unknowable.

      The crisis will begin abruptly at the Minsky Moment, after which nothing is the same. The Minsky Moment could be an event of seemingly little consequence like a routine Reuters or Bloomberg story that goes viral and, by the end of the day, the government no longer can borrow on acceptable terms and the crisis is upon us.

     Timing is crucial. Repositioning your assets too soon may mean many years of missing out on higher returns. Waiting too long has serious and obvious consequences. The best approach is to reposition assets gradually, beginning now and culminating as the debt ratio is around say 125%. Your actions can be phased such that early changes won’t be unduly penal if the timing proves wrong. There is one timing issue about which we can be fairly confident. After the Minsky Moment, the Fed will create money to keep the government running, but it soon will become apparent that this is a short term fix to buy time. Printing money can work for only about 6-18 months.

       I am confident about the final outcome but the timing is highly uncertain. For example, if the Fed keeps interest rates ultra low, the US may be able to survive a much higher debt ratio and postpone a full blown crisis for many more years.

The Spending Crisis Goes Thermonuclear

      After the Fed money printing is no longer effective and it becomes obvious no magic solutions exist, the crisis will be in full bloom. Treasury securities owned by banks, insurance companies, mutual funds and pensions will plummet in value like Venezuelan bonds, triggering a financial meltdown of epic proportion. Simultaneously, government must slash spending, including on Social Security, Medicare and pensions.

       There is but one certainty, i.e. all the excess debt must be purged. The only ways to accomplish this are through some combination of: (1) tax increases and spending cuts; (2) hyperinflation; (3) debt restructure and repudiation; and (4) financial repression. No matter how we purge the debt, it will require a generation (15-25 years) to accomplish and when the US crisis hits, it will plunge the entire planet into a period of darkness. Note: MLLG will publish a post in the next several weeks about financial repression.

Protecting Your Family

         Before the crisis begins, it is prudent to plan for civil unrest, breakdowns of law and order, interruptions in public services and financial/monetary chaos. I have faith in the American people that lawlessness will be limited, but given the volatile situation in our country, anything could happen. During the crisis we also will be highly vulnerable to foreign threats due to defense cutbacks. Even if you consider societal collapse or foreign aggression to be remote, it is judicious to take steps to protect your family.

        Caution dictates you do at least the following: (1) maintain a supply of gold and silver coins in small denominations; (2) have firearms and ammo; (3) stockpile water, available in 55 gallon drums; (4) keep a supply of non-perishable foodstuffs; and (5) have a supply of propane or a generator as well as batteries, flashlights and candles.

Part II Next Sunday

       The second and final part of this posting focuses on protecting your assets from the various perils that could happen during the worst of the spending crisis. And yes, it is possible to profit from the crisis and that will be addressed as well in Part II.

Nordic Nations and Socialism

Liberal politicians and media celebrities conflate Nordic nations and socialism. 
Nordic Nations and Socialism
By: George Noga – October 7, 2018

         The stunning victory of democratic-socialist Alexandra Ocasio-Cortez squarely inserted socialism as an issue for 2018 and 2020. Polls show more Democrats have a favorable view of socialism than of capitalism. Bernie Sanders and Hillary Clinton praised Nordic countries as veritable socialist utopias. Joy Behar on The View cited Nordic countries as proof socialism works. The media, millennials, progressives and many regular Americans believe Nordic nations owe their success to socialism.

          This post addresses that issue head on. Please visit our website www.mllg.us and read our posts of April 24, 2016Is Scandinavian Success Due to Socialism? and October 15, 2017, Socialism, Sweden and Scandinavia for background information. For brevity, this post focuses on Sweden; however, the same narrative, to varying degrees, applies to the other Nordic nations: Denmark, Finland, Iceland and Norway.

The Progressive Nordic Narrative

         Circa 1970, Sweden (and other Nordics) morphed into a big government, social welfare state; Swedes sharply increased taxes and public spending and discouraged private enterprise. Over the next two decades, public spending soared from 30% of GDP to 60%. Sweden instituted a cradle to grave welfare state with uber-generous benefits including heavily subsidized child care, preschool, university, maternity, family and sick leave, unemployment benefits, pensions and health care.

       During this same timeframe (1970-1990), Sweden was rich; in 1970 it was the fourth wealthiest country. Therefore, the liberal perspective is that Sweden was both wealthy and socialist at the same time. This narrative of the Nordics as successful socialist states is beguiling because, taken without context, it has the color of truth.

 
The Truth About Nordic Nations and Socialism

            During the 19th century, Sweden was so dirt poor it sent waves of immigrants to America. Circa 1870 Sweden turned to classic laissez-faire liberalism and began a century of rapid economic growth culminating in becoming the fourth richest country. During the 100 years it took Sweden to get wealthy, public spending was 10% of GDP and it was a capitalist economy. Also, Sweden was neutral during both world wars, profited from trade with all sides and preserved its industry and male population intact.

             From 1970 to 1990 Sweden was a social welfare state as described supra. By 1990 it all unraveled. There was Kafkaesque bureaucracy, drug addiction, welfare dependency and crime; the educated and affluent fled Sweden. The economy ground to a halt; inflation skyrocketed and no new private sector jobs were created for 20 years. Sweden dropped from 4th to 14th in wealth. By 1990 Swedes viewed their socialistic experiment as a colossal failure and reversed course; they cut taxes, deregulated, privatized, restored free markets, cut pensions, and voted out leftist governments.

Takeaways from Nordic Nations and Socialism

1. No Nordic ever was truly socialist, i.e. with government ownership or control over the means of production, distribution and finance. They were big-government, social welfare states, which liberals conflate with socialism when it suits their purpose. True socialist states are Venezuela, North Korea and Cuba. Sweden was a capitalist success and a socialistic failure; today, all Nordics have capitalist market economies.

 

2. Nordic people saw their socialistic experiment as an abject failure and rejected it. Moreover, their big-government social welfare model also is vastly underperforming. Nordic GDP growth is about half that of the US and other more laissez-faire states.

 

3. Sweden was rich prior to its socialistic flirtation; it became much poorer during it. Socialism turned Sweden’s big fortune into a small one, just as Venezuela, once the richest nation in South America, has been rendered a basket case under socialism.

 

4. No socialist economy ever has generated enough wealth to fund social benefits on a Nordic scale. No socialist economy ever has produced sustained prosperity; they only plunder wealth that already has been created. They create hunger amidst plenty.

 

5. Nordics are not as wealthy as Americans believe. The GDP of Houston, Texas is bigger than Sweden’s; if Sweden were a state, its per capita GDP would be similar to our poorest state. But Sweden is 30% more expensive than Mississippi, which means, that in terms of purchasing power, Sweden would be the poorest US state by 30%.


Next: Protecting your assets and your family during the coming spending crisis. 

Victory in the War on Poverty!

The War on Poverty is over. America won – poverty, hunger and homelessness lost.
Victory in the War on Poverty!
By: George Noga – September 30, 2018

          We have written for years that poverty per se barely existed in America; now,  it’s time to declare victory in the War on Poverty! The White House Council of Economic Advisers recently issued a report which included the following: “Based on historical standards of material well-being . . . our War on Poverty is largely over and a success.” Predictably, progressives and poverty pimps won’t accept victory; they continue to rant that anti-poverty programs are insufficient and must be expanded.

          Please note we use the term “per se“. There are about 8 million Americans, or 2.5%, living in material poverty. The normal distribution of human IQ dictates 2.5% will have IQ below 70, which is de facto retardation. That means there are 8 million Americans in that category – the same number as in material poverty. It should be incandescently obvious that those two cohorts are one and the same; a Venn diagram would show the two circles nearly 100% overlapping. This is the basis of our statement that there is no poverty per se, because the real problem is retardation, not poverty.

          In addition to poverty, low cognitive ability accounts for hunger, homelessness and a host of other social pathologies. Venn diagrams for these also would mostly overlap with low IQ. As with poverty, hunger per se has been eliminated. Nearly 40% of Americans are obese and food insecurity has replaced hunger in the liberal lexicon. We have reversed the centuries old paradigm; today, the wealthy are thin and the poor fat. Homelessness also is extinct, apart from low IQ and untreated mental illness.

        By far, the biggest flaw with usual measures of poverty is that they are based entirely on reported income. When we look at spending instead of income, the picture changes dramatically. The poorest quintile of Americans spend $2 for each $1 of reported income. Official measures of income fail to take into account benefits such as SNAP, EITC, public housing, Medicaid and many others. They ignore the underground (cash) economy estimated at $3 trillion and concentrated among low income groups. They also fail to account for quality changes and shifts to uber low-cost stores.

       Today, the bottom quintile of Americans live as the middle class did a generation ago – as measured by size of homes, number of rooms per person, air conditioning and  other amenities. The top income quintile spend only about twice as much per person as the bottom quintile, showing low inequality. The poorest 10% of Americans live equal to or better than most Europeans. If Sweden, touted by many as a socialist paradigm, were a US state, its per capita GDP would be similar to Mississippi, our poorest state.

         No discussion of poverty is complete without noting relative poverty, defined as less than 50% of a nation’s median income. By this stilted metric, the US has more people in poverty than many third world countries. A country uniformly and utterly destitute has less relative poverty than America because in places where everyone is dirt poor (Haiti, Congo, Guinea), no one is relatively poor. When you see news stories asserting high poverty rates in America, they invariably are based on relative poverty.

         America has extinguished poverty, hunger and homelessness per se. Nonetheless, there are 8 million still living in material poverty – many of whom also are hungry and homeless. These people deserve our compassion and assistance. We do not help them by being politically correct and ignoring the true cause of their predicament. Instead, we need to tailor solutions to deal with low ability and untreated mental illness.

         We also should recognize our victory over poverty. This truly is a great American accomplishment and worthy of being honored and celebrated throughout the land.


Next: The definitive account of socialism in the Nordic countries.

Balanced Budget Amendment and Spending Cap

The debt crisis is misnamed. At root, it is not an economic crisis, it is a moral crisis and it is not a debt crisis, it is a spending crisis.
MLLG’s Continuing Series About the Spending Crisis
Balanced Budget Amendment and Spending Cap
By: George Noga – September 23, 2018

        This is the latest in MLLG’s ongoing series about the US spending crisis. I will publish regular, periodic (non-consecutive) posts as the runaway debt train hurtles toward the cliff. I have been inundated with requests to write about what actions can be taken to protect you and your family against (or to profit from) the greatest and most predictable crisis of our time. I listened and in October I will publish such a post.

        Americans overwhelmingly (80%) favor a balanced budget amendment (“BBA”) in the belief it will force fiscal discipline on the government. However, a BBA is doomed to fail and the following list identifies twenty one of its numerous flaws.

  1. Writing a BBA is tough; how do we define budget; what does balanced mean?
  2. How do we deal with economic cycles; do we balance annually or over a cycle?
  3. What about exceptions/waivers for wars or disasters; how are they defined?
  4. Lawsuits will challenge the BBA and judges will wield enormous influence.
  5. Do we distinguish annual expenses from capital; how?
  6. How do we deal with off budget spending such as Fannie, Freddie and USPS?
  7. Is interest on the debt exempt; what happens if interest rates skyrocket?
  8. How about special taxing districts of which there are 50,000 nationwide?
  9. Are entitlements like Social Security, Medicare and pensions included?
  10. Are there restraints on user fees? If not, watch out for  outrageous new fees.
  11. Loan guarantees can be used to fund programs off budget. Isn’t this spending?
  12. Regulations can be used instead of taxes for de facto government spending.
  13. California, Illinois and New Jersey have BBAs; what does that tell you?
  14. Greece, Italy and France have anti-deficit laws but are in or near bankruptcy.
  15. A BBA would be the only part of the Constitution subject to waiver/exception.
  16. The tax code can be larded with tax expenditures, incentives and earmarks.
  17. Don’t forget mandates; the Obamacare mandate survived judicial scrutiny.
  18. A budget can be balanced via tax increases instead of spending cuts.
  19. You can’t take the politics out of politics. Watch for unintended consequences.
  20. There are myriad paths around, through, over and under a BBA to eviscerate it.
  21. A BBA would beguile us into falsely believing the crisis is permanently solved.

The debt crisis is misunderstood. At its heart, it is a moral crisis, not an economic crisis. The debt crisis also is misnamed. It is a spending crisis not a deficit or debt crisis and in the future MLLG always will refer to it as the spending crisis. It can’t be solved by artifices like a BBA. It can’t be solved until the American people make some incredibly difficult and painful choices, which they are not yet prepared to make. Moreover, the USA has, in all likelihood, already passed the point of no return.

If a BBA can’t work, can anything else work? Since we really are in a spendingcrisis, a hard constitutional spending cap is a better alternative. Switzerland (Article 126) and Hong Kong (Article 107) have constitutional spending caps that work as did Colorado (TABOR) for many years until voters opted for a “time out” in 2005. A hard spending cap takes tax increases off the table and is much better than a BBA; however, spending caps are subject to most of the same 21 problems noted supra for BBAs.

The ineluctable and bitter truth is nothing will work because we have dug the hole too deep and are blissfully continuing to dig it deeper. Also, there isn’t enough time. Simply to freeze the debt ratio at its present level requires permanent spending cuts of $1.25 trillion a year, equal to over 25% of federal government spending, most of which must come from entitlements. This is impossible politically and absolutely nothing will happen until America is deeply enmeshed in the worst crisis of our time.


Our next post on September 30th declares victory in America’s war on poverty.

Reality and Denial in America

“Reality is that which, when you stop believing in it, won’t go away.” (Philip Dick)
Reality and Denial in America
By: George Noga – September 16, 2018

        Mokita is a word in the Kivila language of Papua New Guinea; it describes a truth everyone knows but agrees not to talk about or pretends doesn’t exist. There’s no comparable English word; however, mokitas are regular topics in conversations behind closed doors, around kitchen tables and office water coolers throughout America. Political correctness or “PC” demands such conversations not take place publicly or even be acknowledged. This post intrepidly addresses mokita in America.

        Reality does not go away because it is unpopular, politically incorrect or even offensive. Objective realities exist despite what we want them to be, despite what political correctness demands they be and despite aggressive suppression of the truth that is a central fact of modern progressivism. Subordination of objective reality to political imperatives has always been a central tenet of totalitarian regimes.

         Progressives assert benign motives for PC such as preventing loss of self-esteem. Some are willing privately to acknowledge reality but argue that the truth would be unnecessarily hurtful to protected groups. But clinging to false PC narratives does not alter the underlying facts – which John Adams famously noted are stubborn things. But lies have consequences and any society choosing fantasy over reality is at grave risk.

        PC is particularly virulent when it involves groups with victim status. Of 325 million Americans, statistically 2.5%, (8 million) have an IQ two standard deviations below the norm (below 70 IQ), which means de facto retardation. Not uncoincidentally, there are about 8 million Americans in material poverty. It is incandescently obvious these two cohorts are the same; nonetheless, we delude ourselves about the cause of poverty because it is politically incorrect to blame it on low cognitive ability. To varying degrees, the same is true of homelessness, crime and even failing schools.

        Mokita thrives at the University of Pennsylvania where law professor, Amy Wax, was savaged for openly criticizing Penn’s racial preference policy. Wax, intending to be supportive of blacks, noted that quotas can harm their ability to succeed by putting them in over their heads at elite schools. Penn’s law faculty and administration knew Wax was correct and never tried to refute her facts. Instead, they brutally attacked her, not for being wrong but, for violating a mokita by publicly speaking a known truth.

       The Law School Admission Council has compiled data on 27,000 law students in 90% of law schools. After one year, 50% of blacks ranked in the bottom tenth versus 5% of whites. Two-thirds of blacks were in the bottom fifth while only 10% were in the top half. After 5 attempts, 22% of blacks did not pass the bar versus 3% of whites. Racial preferences are to make white liberals feel good about themselves and to create jobs for diversity, equity and inclusion bureaucrats. The beneficiaries of preferences suffer; they fail to get choice clerkships, law firm slots or even to pass the bar.

         Whenever we see someone from an identity or victim group occupying a position that seems incongruous, we wonder whether it is a result of merit or quotas; whether it is due to qualifications or to political correctness; or if it stems from competence rather than from preferences or window dressing. This is grossly unfair to and demeans those members of victim groups who achieved their positions solely through merit.

        Mokita is present whenever truth yields to power. Mokita is present whenever fear of reprisal yields to political correctness. Mokita is present whenever facts yield to identity or victim group politics. But, in the end, objective reality always prevails and, unlike progressive denials, it wont go away when people stop believing in it.


Our next post on September 23rd continues our discussion of the debt crisis.

Capitalism and Pope Francis

Capitalism is not moral because it works; it works because it is moral.
Capitalism and Pope Francis
By: George Noga – September 9, 2018

       As someone born Catholic, who attended parochial school and was observant much of his life, I take no pleasure in this posting. But Pope Francis is astoundingly callow and ignorant of even elementary economic concepts. Because 1.25 billion Roman Catholics (1 of every 6 souls on the planet) look to the Pope for enlightenment, it is important to set the record straight. Go to our website www.mllg.us to see our related March 13, 2016 posting entitled “Pope Francis Enters the Twilight Zone”.

      Recently, the Pope (directly and via Vatican pronouncements) has criticized capitalism for, inter alia, consumerism, fossil fuels, environmental harm, materialism, lack of charity, speculation, seeking profit, promoting individualism, harming the poor, credit rationing, injustice, legal tax avoidance and credit default swaps. He advocates more government intervention, regulation, politics, taxes and central planning.

        If you missed it, read the September 2nd post on our website. It reports capitalism cutting extreme poverty in the world by 75% and lifting 1.2 billion humans out of the grip of poverty in the past 25 years. Every day, capitalism raises 135,000 more living, breathing people out of extreme poverty. Again thanks to capitalism, every metric of human well being is improving. Capitalism has produced a cornucopia of wealth and is the greatest human success story of all time for the common man. Yet strangely, there is never any mention of this economic miracle by Pope Francis – only vitriol.

         Capitalism is effective and also moral. A market economy is based on voluntary transactions in which both parties benefit; that’s why, upon concluding a transaction, both buyer and seller say “thank you”. Capitalism is peaceful and non-coercive; it channels human nature and self interest toward the common good. Capitalism is a positive sum game since both parties win in all transactions; there are no losers. The most powerful force on earth is a consumer armed with a free choice and even the biggest and most powerful corporation cannot make someone buy its product.

         There is space to address only a few of the Pope’s naif criticisms. Nations must be wealthy (capitalist) to be good environmental stewards; the worst degradations of all time took place under the commies and now are  being cleaned up by capitalists. The Vatican labels credit default swaps “economic cannibalism that profits from the misfortune of others“. Such swaps are merely insurance against defaults and make it easier for poor countries to borrow. The Pope condemned derivatives and speculation, both of which make markets more orderly and especially help third world agriculture.

          Pope Francis doesn’t grasp that squandering trillions for uncertain, infinitesimal climate benefits means the money cannot be spent now to alleviate suffering from unsafe water, malnutrition and lack of electricity and medicine. The last thing a poor child in an African slum needs is a solar panel. The Pope has called money “the dung of the devil” – no riposte needed. Capitalism doesn’t cause consumerism; it responds to it. If consumers demanded more bibles, the market would instantly supply them.

        The Pope is concerned for the poor but attacks the greatest anti-poverty engine in human history. Poor countries suffer due to insufficient capital; wealth must be created before it can be shared and private charity is much more effective than government redistribution. Pope Francis said building a wall is “unchristian”. Is the US unchristian for creating great wealth amidst liberty and becoming a magnet for emigrants?  Or, are socialist nations unchristian for creating great poverty, stifling liberty, fomenting civil unrest and making life so miserable that their people desperately flee their homes?

        Capitalism is not moral because it works; it works because it is moral. Capitalism has achieved, and continues to achieve, miracles that in earlier ages could only have been ascribed to the gods. However well-meaning Pope Francis may be, he fails to understand the morality of free markets and the immorality of statism and collectivism.


Our next post on September 16th addresses reality and denial in America.