Somewhat Reasonable

Syndicate content
The Policy and Commentary Blog of The Heartland Institute
Updated: 5 days 23 hours ago

In The Tank Podcast (ep9): Star Wars, Robots, and Biden’s Out

October 23, 2015, 12:51 PM

In episode #9 of the In The Tank Podcast, Host Donny Kendal is joined by John Nothdurft via Skype, who is out of town. This weekly podcast features (as always) interviews, debates, roundtable discussions, stories, and light-hearted segments on a variety of topics on the latest news. The show is available for download as part of the Heartland Daily Podcast every Friday.

In today’s episode of In The Tank, Donny and John discuss the most important news of the week – the release of the latest Star Wars trailer. They talk about the reoccurring themes of big government in fiction including films like The Hunger Games and Maze Runner. Also in this episode is the latest edition of “Another One Bites the Dust” as Presidential candidate Jim Webb dropped out of the race. Vice President Joe Biden also said he won’t run for President. Donny and John also talk about Stephen Hawkins comments on how automation could spell disaster for the average citizen.

I hope you’ll listen in, subscribe, and leave a review for our podcast on iTunes. We welcome your feedback in our new show’s inbox at or follow us on twitter @InTheTankPod.

[Please subscribe to the Heartland Daily Podcast for free at this link.]


Categories: On the Blog

Why the FCC Approach to Special Access Regulation Is All Wrong

October 23, 2015, 11:27 AM

The FCC’s approach to special access is all wrong because they should be doing the exact opposite of what they are doing. The FCC should be price de-regulating special access, not signaling increased micro-regulation of special access rate terms and conditions.

Like an ostrich, the FCC has its head hidden in the sand on its approach to special access regulation, hoping that no one notices that the rest of its body is fully exposed.

If the FCC can convince everyone to join them and put their heads in the sand too, and to look at special access regulation in the dark of self-defined isolation, and ignore the broader context of the competitive U.S. communications sector visible all around them, the FCC has a reasonable chance of sounding reasonable.

However, if anyone has their head out of the FCC’s regulatory sandpit and looks around for a moment at special access regulation in the broader context of the real world, more special access regulation looks ridiculous, just like the exposed back-end of an ostrich does when it hides its head in the sand.

What can anyone see and learn about the FCC’s backward and counter-productive special access approach if they only look?

Business to business special access is the only market the where the FCC still regulates the rates of retail services.

How can the FCC justify that only business-to-business special access warrants the special treatment and protection of FCC micro-regulation of rate terms and conditions when all other customers and consumers of retail services do not?

More specifically, why is the FCC still regulating business-to-business special access with “old-style telephone” utility rate regulation when the FCC represented that its 2015 Open Internet Order did not need utility rate regulation to protect customers/consumers?

The Order bars the kinds of tariffing, rate regulation, unbundling requirements and administrative burdens that are the hallmarks of traditional utility regulation. No broadband provider will need to get the FCC’s approval before offering any price, product or plan. (paragraphs 37-38, 417, 451-452, 497-505)… Old-style telephone regulation required companies to file tariffs with the FCC and await regulatory review before they could bring new products to markets – such an approval process does not exist and is not permitted under this Order. Broadband providers will be able to adjust retail rates without Commission approval and without having to wait even a minute. (paragraphs 37, 451-452, 497-505)”

The FCC can’t justify such an obviously incongruous double standard where select special access companies warrant special regulatory treatment that is more favorable than any other group enjoys.

The FCC also wants the public to ignore that TDM special access is a relatively small market overall, about 4% or ~$24b of the overall U.S. telecommunications services market of ~$600b — according to U.S. census statistics.

The FCC also is interested in diverting attention away from the reality that special access rate regulation is increasingly an anachronistic segment of the market that depends on reselling obsolescing equipment of the 20th century legacy copper network that naturally is going away over time. In other words, rate regulated, non-Ethernet special access is a shrinking market of the past, not a growing market of the future.

In addition, the FCC doesn’t want the public to connect the dots that the 96% of the communications services retail market that is not price regulated has enjoyed over a trillion dollars in private risk capital, Internet infrastructure investment, while the rate-regulated, special access market is not attracting new investment, because one can’t earn a market-based return on new investment there.

In sum, if we don’t put our head in the sand, what really is going on here is clear.

Sadly, what most characterizes today’s special access market and makes it truly “special” is the naked rent-seeking of crony capitalism and regulatory capture.

To fulfill its need to remain relevant as a legacy price regulator in the 21st century, the FCC encourages too many reseller companies to remain too dependent on FCC regulation for artificial business advantages, rather than encouraging market-based, facilities competition — via investing in faster, modern access infrastructure.

If the FCC truly wants more competition and investment in faster broadband access for businesses, it should do what has worked in the other 96% of the market – de-regulate FCC special access pricing.

[Originally published at Precursor Blog]

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.

Categories: On the Blog

Heartland Daily Podcast – Charles Battig: The New Ozone Rules Nightmare

October 22, 2015, 4:00 PM

In today’s edition of The Heartland Daily Podcast, physician, electrical engineer and Heartland policy advisor Charles Battig joins Environment & Climate News managing editor H. Sterling Burnett to discuss the Obama administration’s new ozone rules.

Battig discusses the bureaucratic impulse to overregulate.  He breaks down these new regulations and explains why they will have a high cost, but only produce very limited benefits. Contrary to the administration’s claims, ozone is not causing asthma. The real negative health impacts will actually be the result of these rules. The ozone regulations will raise energy and food costs which may be devastating for the those living in poverty.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

HRC and the Left Loathe Businesses – Why Are Republicans Helping Undermine Them?

October 22, 2015, 11:23 AM

The Left loathes business and businesses. But business and businesses are mere symptoms of the disease they REALLY loathe – capitalism. For which they bizarrely think the “cure” – is uber-failed Socialism/Communism.

The Left is absolutely monolithic. No dissent is allowed – everyone must conform. And its political manifestation is the Democrat Party. Thus, all Democrats must conform – they must all loathe business.

The Democrat Party is currently conducting a presidential primary. The alleged moderate alternative to avowed Socialist Bernie Sanders is Hillary Clinton (despite the fact that she voted 0.1% less Left than he when they served together in the Senate). In last week’s debate, the candidates were asked “Which enemy are you most proud of?” Secretary Moderate’s response?

“Well, in addition to the NRA, the health insurance companies, the drug companies,…umm, the Iranians,…um, probably the Republicans.” 

(Overlooking the other ridiculous answers,) the drug and insurance companies – are your ENEMIES, Secretary Moderate? Two sets of job-and-product-creating entities? That are now (too late) fighting desperately to save We the People from ObamaCare – your government “cure” to private sector health care? Oh wait – asked and answered.

Some other candidate “enemies?” Sanders – Wall Street (en toto) and the pharmaceutical industry. Lincoln Chaffee – the coal industry. That’s a whole lot of business loathing going on. (Jim Webb cited an actual enemy – from the Vietnam War in which he nobly served. Which makes him such a Donkey outlier that he is already considering an independent run.)

Despite decades of government school indoctrination, capitalism still thankfully remains at least a little more popular than Socialism/Communism. Which leaves a wide-open majority-making opportunity for the Republican Party. Simply defend legal businesses and their reasonable, Constitutional interests from government’s uber-heavy hand – and congratulations, you’re a winner.

So why are Republicans sponsoring this?

Under consideration in Washington, D.C. is legislation that will fundamentally transform our patent system. It will render this Constitutionally protected intellectual property product – dramatically less protected. The bills to which I refer are the Innovation Act (House) and the Patent Act (Senate)….

These “reformers” are…considering another really, REALLY TERRIBLE idea. That sets the stage for near-limitless government-caused damage to not just patents – but the entire private economy….They want to “pierce the corporate veil.”

“(A) legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood….”

So why is DC looking to end this protection?

“One of the discussion points about the new PATENT Act reform proposal making the rounds is the ‘reach through’ that pierces the corporate veil for those entities….I’m left scratching my head and wondering whether this is where we want to make our stand, heading down the slippery slope of corporate veil piercing….”

And it is indeed a very slippery slope. If government shreds the corporate veil here – the precedent is set.

Of COURSE the Democrat Party – an operational partner of the trail lawyers bar – will seize on it to dismantle this lawsuit bulwark everywhere they can.

Which yet again begs the question: Why are Republicans giving Democrats this litigious impetus? And doing so in the name of “lawsuit reform?” Unless by reform” they mean exponentially increasing the number of lawsuits to come.

And as bad as is the lawsuit landslide this will incept – it is but one of the many, MANY terrible results of this legislation. The damage will be omni-directional – and devastating.

Undermining legal corporations – and the protections they provide – yanks away a fundamental pole upholding capitalism’s big tent. If you can’t shield your personal assets from assaults on your business, it is quite likely you – and most people – simply won’t go into business.

Which is a Leftist dream come true.  So why are Republicans helping make that dream a reality?

[Originally published at Redstate]

Categories: On the Blog

Ninety-Seven Percent of Obamacare “Newly Insured” Medicaid Expansion Patients

October 21, 2015, 1:08 PM

According to the latest reports from the Obama Administration, nine million more Americans are now covered by health insurance than were before the Affordable Care Act passed Congress. Although the Administration prefers to use numbers associated with “access,” which encompasses a greater number of people as it allows the Administration to account for potential applicants as well as actual ones, the “nine million” number has been something of a staple of recent reports, especially as Obamacare premiums climb in most states. has routinely questioned the “nine million” number, pointing out that while around two million may have elected to pursue an application through a state or Federal marketplace, a large majority of the newly insured were likely adults and children eligible for the expanded medicare benefits, or young, uninsured individuals now eligible to stay on a parent’s plan until they turned 26 – hardly “new”  insurance applicants. According to newly released research from the Heritage Foundation, however, it looks as though an even greater percentage – 97% – of the “newly-insured” are those who benefited from Obamacare’s massive Medicaid expansion.

We were told that 48 million Americans lacked affordable health insurance and something had to be done, but even five years after the passage of Obamacare, 33 million Americans are still uninsured.

If you dig deeper into the actual numbers and realize what really happened with those 9 million “newly insured”, there’s little reason to cheer.

The number of Americans with health insurance increased by 9.25 million in 2014, the first year that two key provisions of Obamacare took place: the subsidies for coverage purchased through the exchanges and Medicaid expansion. And according to recent research by The Heritage Foundation, out of that 9.25 million, “the vast majority of the increase was the result of 8.99 million individuals being added to the Medicaid rolls.”

In other words, over 97 percent of last year’s newly insured Americans were from Medicaid expansion.

Medicaid is designed to assist people who lack the capacity to work, thus making them unable to access employer-provided insurance options, and those who are too poor to afford individual private health care plans. The Obamacare program, however, has expanded those parameters to include the young, the able bodied, and those who are capable of working but choose not to, exploding Medicaid’s ranks and taxing (pun intended) an already at-risk program running straight into bankruptcy. As Kristina Ribali of Uncover Obamacare points out, each dollar spent on those Medicare isn’t designed to serve is a dollar taken away from those who Medicare was designed to help: the truly poor and needy.

Of course, a Medicare expansion isn’t anywhere near ideal – in any way – but it’s interesting that the Obamacare program can, essentially, count as it’s only success a Medicare expansion, something that could have been accomplished without passing a multiple-thousand-page Federal law that has had such a disastrous impact on the way health insurance functions in America. According to the Heritage report, even the parts of the ACA that were supposed to help those in need have failed: while Obamacare counts 4.79 million new enrollments, the same program forced 4.53 million people off their employer-provided insurance, meaning a whopping net 260,000 people were actually served by Obamacare.

It’s no small wonder that the Department of Health and Human Services is rolling back expectations on how many new enrollments to expect for 2015. According to the Heritage foundation’s research, the best they can expect is a massive change from “off-exchange” plans (those offered by employers, or those purchased directly through insurance companies but are not listed on state and Federal exchanges) to “on-exchange” plans. HHS had predicted, intiailly, that 26 million new enrollments would occur by this point in the program’s implementation. They’ve since downgraded that expectation to just over 10 million enrollees at the conclusion of Obamacare’s open enrollment period.

Categories: On the Blog

Shaking Out the Lies Surrounding Earthquakes and Hydraulic Fracturing

October 21, 2015, 10:39 AM

The Great ShakeOut, the annual “PrepareAthon” that advocates earthquake readiness, took place across the globe on October 15, at 10:15 AM—10/15 @10:15. Unless you have a child in a participating school, the “Ready Campaign” may have passed without your awareness. I grew up in Southern California, where earthquakes were so routine, we paid them no mind; we didn’t have earthquake drills.

But that was then. Now, the Great ShakeOut is a global campaign. Now, Oklahoma has more earthquakes than California—and students in Oklahoma participated on 10/15 at 10:15. As if choreographed, Oklahomans had a reminder 4.5 earthquake just days before the drill.

The anti-fossil crowd has declared the cause. Headlines claim: “Confirmed: Oklahoma Earthquakes Caused By Fracking” and “New study links Oklahoma earthquakes to fracking.”

MSNBC’s Rachel Maddow gleefully teased the earthquakes in Oklahoma as “the story that might keep you up at night.” On her October 16 show, she stated that Oklahoma’s earthquakes are: “The terrible and unintended consequence of the way we get oil and gas out of the ground. …from fracking operations.” Yet, when her guest, Jeremy Boak, Oklahoma Geological Survey Director, corrected her, “it’s not actually frackwater,” she didn’t change her tune.

Despite the fact that the science doesn’t support the thesis, opponents of oil-and-gas extraction, like Maddow, have long claimed that the process of hydraulic fracturing is the cause of the earthquakes. Earthworks calls them “frackquakes” because the quakes, the organization says, are “fracking triggered earthquakes.”

The anti-crowd doesn’t want to hear otherwise. If you were to fully read the two previously mentioned news reports (linked above) that declare “fracking” as the culprit, you’d see that the actual text, and the study they reference, doesn’t say what the headlines insinuate. The 2014 study they cite, blames the earthquakes “on the injection of wastewater from oil and gas operations”—which as Boak told Maddow is not “actually frackwater.” Even the Washington Post announced: “Fracking is not the cause of quakes. The real problem is wastewater.”

But the ruse goes on. CNN meteorologist Chad Myers announced: “The fracturing fluid seems to be lubricating existing faults that have not moved in recent years. The fracturing process is not creating new faults, but are exposing faults that already exist.”

Earthworks believes that states like Oklahoma are not doing enough to solve the problem. Its website says: “Despite the increasingly apparent threat posed by fracking-related earthquakes, many states are ignoring the issue.”

In fact, many scientific studies have been, and are being, done—as once the cause is determined, a remedy can be found. These studies, as the Washington Post reported, have concluded that “wastewater” is the problem.

If you don’t know what it is or how it is being disposed of, “wastewater” sounds scary. It is often called “toxic”—although it is naturally occurring. This wastewater, according to a study from Stanford researchers, is “brackish water that naturally coexists with oil and gas within the Earth.” As a part of the drilling and extraction process, the “produced water” is extracted from the oil and/or gas and is typically reinjected into deeper disposal wells. In Oklahoma, these wells are in the Arbuckle formation, a 7,000-foot-deep sedimentary formation under Oklahoma.

“Industry has been disposing wastewater into the Arbuckle for 60 years without seismicity,” Kim Hatfield told me. He is the chairman of the Induced Seismicity Working Group—which includes members from a variety of entities including the Oklahoma Geological Survey, Oklahoma Corporation Commission, Oklahoma Department of Energy and Environment, and Oklahoma Independent Petroleum Association. Hatfield continued: “So, we know some level of disposal is safe. We need to figure out the exact mechanism by which this wastewater injection is triggering these seismic events and modify our procedures to prevent them.”

Addressing water quality, Hatfield explained that in the area of the seismicity, ten barrels of produced water—which contains five times more salt than ocean water—is generated for each barrel of oil.

The Stanford study, done by Stanford Professor Mark Zoback and doctoral student Rall Walsh, found that “the primary source of the quake-triggering wastewater is not so-called ‘flowback water’ generated after hydraulic fracturing operations.” Zoback, the Benjamin M. Page Professor in the School of Earth, Energy & Environmental Sciences, states: “What we’ve learned in this study is that the fluid injection responsible for most of the recent quakes in Oklahoma is due to production and subsequent injection of massive amounts of wastewater, and is unrelated to hydraulic fracturing”—which is contradictory to the premise on which the study was launched.

Explaining the study, Walsh said: “it began with an examination of microseismicity—intentionally caused small quakes like those resulting from hydraulic fracturing,” which he referred to as their “jumping off point.” When I asked Walsh if he was surprised to find that fracking wasn’t the cause of the earthquakes, he told me: “We were familiar with the few cases where hydraulic fracturing was known, or suspected to be associated with moderate sized earthquakes. In the areas of Oklahoma where the earthquakes first started (just outside of Oklahoma City) we knew that the extraction process was predominantly dewatering, not hydraulic fracturing, which led us to suspect that produced water would be the source of the issue, even before we did the volume calculations to show it.”

Science writer Ker Than reports: “Because the pair were also able to review data about the total amount of wastewater injected at wells, as well as the total amount of hydraulic fracturing happening in each study area, they were able to conclude that the bulk of the injected water was produced water generated using conventional oil extraction techniques, not during hydraulic fracturing.” Additionally, Boak told me: “Less than five percent is actually frackwater.”

“So what?” you might ask. The distinction is important as there is an aggressive effort from the anti-fossil-fuel movement to regulate and restrict—even ban—hydraulic fracturing. The more scare tactics they can use, the more successful their efforts. They are unimpeded by truth. Remember the disproven claims about fracking causing tap water to catch on fire and those about fracking contaminating drinking water?

Now, you can add “Oklahoma earthquakes caused by fracking” to the list of untruths propagated by the anti-fossil-fuel crowd. The true headline should read: “Oklahoma earthquakes not caused by fracking.” But, that conflicts with their goal of ending all fossil-fuel use. More than ninety percent of the new oil-and-gas wells drilled in America use hydraulic fracturing. Therefore, if they can ban fracking, they end America’s new era of energy abundance and the jobs and economic stimulus it provides. Groups like Earthworks seem to hate the modern world.

Here some advice from singer Taylor Swift might be warranted. Instead of “getting down and out about the liars and the dirty, dirty cheats of the world,” after all, she says: “And the haters gonna hate, hate, hate,” her solution is: “I’m just gonna shake, shake, shake. Shake it off.”

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column. Follow her @EnergyRabbit.

Categories: On the Blog

Heartland Daily Podcast – Howard Baetjer: Government Regulation vs. Market Regulation

October 21, 2015, 10:25 AM

In this episode of the Heartland Daily Podcast, managing editor Jesse Hathaway and Towson University economics lecturer Howard Baetjer talk about how free-market forces are more efficient than government regulatory boards and commissions at “regulating” the quality of consumer goods and services.

Often, when people think of the word “regulation,” they usually think of bureaucrats enacting new laws and rules, but the free market’s forces surround us all the time, “regulating” the prices of goods and services, and even what services are provided.

Baetjer explains how using the free market to regulate consumer quality is more effective than using the government to restrict consumer choices, explaining how voluntary standards boards and associations, like Underwriters’ Laboratories for the rest of the economy, remove the need for complex government restrictions that may not even work in consumers’ best interests.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

New Ozone Rule is Unnecessary and Costly

October 21, 2015, 9:12 AM

Most of what Americans “know” about air pollution is false.

Polls show most Americans believe air pollution (1) has been steady or rising during the past few decades, (2) will worsen in the future, and (3) is a serious threat to people’s health. Despite the impression created by government bureaucrats, environmental lobbyists, and the media, air quality in the United States is the best it has been since before the Industrial Revolution and is continuing to improve. Environmentalists and regulators paint a false picture of the nation’s air quality to pad their budgets and increase their power.

The Obama administration imposed a new 70 parts per billion (ppb) ozone limit on October 1. States and counties will have to meet the standards by 2037.

Obama’s predecessor, George W. Bush, last made the ozone standard more stringent in 2008, his last year in office. Even before many states have begun implementing recently approved plans to meet the previous standard, the Environmental Protection Agency (EPA) has chosen to make the standard even stricter, throwing more counties and cities out of compliance with federal ozone standards and necessitating a new round of hearings, the formulation of new state plans to meet the new standards, and a high likelihood of costly litigation.

EPA estimates the new rule will be among the most expensive in history, costing more than $1.4 billion per year. Research examining previous federal estimates of the costs of regulations show agencies, including EPA, consistently miscalculate the costs of the regulations they impose on the economy. Government cost estimates are routinely far lower than actual costs, so the cost of the new ozone rule could be much higher than EPA claims.

Despite spending billions, possibly trillions, to meet the new standard, the government’s own data show air quality has improved and continues to do so, indicating stricter rules are unnecessary. Real-world experience shows the new rules are unlikely to protect human health.

Air quality in America’s cities is better than it has been in more than a century. Ozone in particular has declined 33 percent since 1980 and 9 percent since 2008, despite the limits imposed by the Bush administration only recently having been implemented in many jurisdictions.

What makes these air quality improvements so extraordinary is they occurred during a period of increasing motor vehicle use, energy production, and economic growth. Miles driven each year and the dollar value of goods and services (our gross domestic product) have both more than doubled since ozone was first regulated as a pollutant.

The Obama administration has justified making ozone limits stricter, as all scoundrels do when proposing illegitimate expansions of government power, by claiming it’s “for the children.” In particular, EPA claims the ozone limits will reduce childhood asthma attacks.

That claim is bunk.

Although the incidence of asthma among children has doubled since 1980, air pollution cannot be the cause: It declined while asthma prevalence increased. Moreover, emergency room visits and hospitalizations for asthma are lowest during July and August, when ozone levels are highest.

Researchers have offered several hypotheses to account for the rise in asthma, none of them linked to air pollution—such as increased exposure to roach castings in urban areas, a deleterious effect on the immune system by squeaky-clean suburban homes, and the increase in obesity.

If ozone could be reduced for free, making the standards stricter wouldn’t matter, but it isn’t free. And even EPA admits the new standard would, at best, only reduce hospital visits for asthma and other respiratory diseases by a few tenths of a percent while being among the most costly regulations ever. People will ultimately pay these costs through higher prices, lower wages and fewer choices, and fewer jobs. The higher costs of energy and goods and services due to Obama’s unneeded ozone regulations reduce people’s discretionary income, preventing them from spending more on healthier foods, exercise, and medical care, which are much more effective at improving health and welfare than stricter air rules.

Recognizing the high costs and negligible benefits of the proposed lower limit, approximately 260 organizations—businesses, trade associations, unions, and consumer and public interest groups—asked the administration to keep the existing standard, saying research shows the current 75 ppb standard already protects public health.

The newly proposed EPA standard poses a significant risk with little reason to expect much in the way of benefits. EPA should withdraw its proposal to tighten the ozone standard and acknowledge the current standard already protects Americans’ health—with room to spare.

[Originally published at The Hill]

Categories: On the Blog

Heartland Daily Podcast – Jessica Sena: Those Fracking Feds Pt. 2

October 20, 2015, 3:19 PM

(Part 2) In this two-part edition of The Heartland Daily Podcast, Jessica Sena and research fellow Isaac Orr give the listeners an update on the state of fracking at the federal level, and how these rules are affect oil and natural gas production.

Many new rules and regulations regarding hydraulic fracturing and energy policy have been enacted by the Obama Administration and federal agencies during the course of this year. This two-part podcast discusses a wide variety of topics, from a Federal Judge halting Bureau of Land Management fracking regulations on federal land, the impact of the Endangered Species Act as it pertains to listing of the sage grouse, and how the jungle of red tape enacted by federal regulators opens the door for more and more litigation from environmental groups.

[Please subscribe to the Heartland Daily Podcast for free at this link.]


Categories: On the Blog

Campbell Brown’s The Seventy Four

October 20, 2015, 1:33 PM

Most people know Campbell Brown as a news anchor from her time at NBC and CNN. Today, she uses her knowledge of journalism and media to highlight and advocate for education reform. Her latest project is The Seventy Four, a news website that focuses on important education-related topics. The title of the website references the 74 million students in U.S. K–12 education.

In an interview with The Chicago Jewish News, Brown said, “The public school system in this country is broken. … Every education law should be based around the question, ‘Is this good for children?’ And it’s not.”

Brown’s co-founder Romy Drucker said, “Research shows that the most significant school-based factor in a child’s learning is the quality of his or her teacher … We must make it a priority that every child, regardless of their ZIP code, background or skin color, has a high-quality, effective teacher in the classroom.”

This initiative of news by subject is an interesting phenomenon. While The Seventy Four isn’t the first of its kind in the education space, it quickly raised its profile by hosting a 2016 Presidential Candidate forum in August. A unique feature of The Seventy Four is its attempt to reach the general public instead of focusing exclusively on education professionals.

Categories: On the Blog

Individualism VS. Sacrificial Collectivism

October 20, 2015, 11:32 AM

Free, competitive markets have been the engine for both freedom and prosperity. In addition, free market capitalism is morally based on the principle of individual rights to life, liberty and honestly acquired property, in which all social relationships require the voluntary and mutual consent of the participants.

Private property rights are central to the free society. The most fundamental private property right is the right of each person to own himself – his mind, his body, his peaceful actions, and the fruits of his efforts either on his own or in interaction with others.

The opposite of owning yourself is slavery. Under a slave system some individuals assert the right to own and control the actions of others under the threat or use of force. The slave lives and works for and obeys the commands of another human being with violence the ultimate instrument of control.

Slavery in All Forms is the Opposite of Freedom

For the friend of freedom, it does not matter whether the slave-master is one private individual on his own, or a private group or gang imposing their coercive rule on a number of others in society. Nor does it matter if the group is a political collective that imposes its will on another segment of the society based upon a “democratic” decision-making process.

Regardless of the institutional circumstance and situation under which one person is made to live and work (completely or partly) for another, it remains a total or partial restraint on the individual’s right to live his own life as he sees fit for the purposes that he considers of value and of importance so he may give meaning and possible happiness to his existence.

Critics of this “individualistic” understanding of freedom and its opposite often brand such a perspective as “selfish” or “egotistical.” If to say that an individual should be treated and respected as an end in himself and not the compelled pawn or a tool to serve the ends of another is selfish or egotistical, then the very definition of liberty – if liberty is to mean anything – cannot be separated from the person’s right to be self-oriented.

Collectivist Confusions and Misconceptions

There is no collective mind, or body, or purpose. The fact is, the world is comprised only of individuals. What often causes confusions and misconceptions is that individuals are born into families, grow up in communities, and live their lives in arenas of societal interaction and association.

And due to this many of the beliefs, values, and purposes we hold as individuals have been taken as our own from the surrounding people, groups, and communities of others with whom we have grown into adulthood.

We find ourselves holding many of the same beliefs, values and purposes as many of the others around us. They are the commonly shared and taken-for-granted ideas, ideals, attitudes, and presumptions about “the way things work” and how things are or supposed to be.

Yet, nonetheless, unless and until those beliefs, values and purposes become accepted and motivating for each and every individual influenced by them, they have no effect or power over him.

These beliefs, values and purposes seem to be outside and independent of ourselves, with a seeming life and reality of their own; an transcendent entity of some sort that defines who and what we are, and outside of which our individual life seems to have neither existence nor meaningful orientation.

Philosophers have referred to this as the “fallacy of misplaced concreteness.” To assign physical or some other objective reality to an idea or concept that is used to categorize or classify a series of beliefs, attitudes, or other characteristics that a group of individuals are postulated as possessing in common and which are then is used to define who and what those individuals are, and outside of which those people have no real existence.

Soviet Collectivism and Social Class-Based Sacrifice

If this seems rather abstract or amorphous, the seeming reality of such a transcendent collective entity into which we are born and live out our lives, and for which we are expected to serve and sacrifice has been used as the basis for some of the most manipulative and brutal ideologies of our times.

Marxian socialism conjured up the image of everyone in society divided into “social classes” defined by whether they privately owned the means or production or sold their labor services to those private owners. It was insisted that these two “classes” of people were in irreconcilable antagonism and conflict with each other over the control and use of the land, resources and capital equipment without which needed and desired goods and services cannot be produced.

In this Marxian world, the property-owning capitalists were the exploiters of the workers, who were deprived of part of what they produced. The Marxian socialists portrayed the human condition under capitalism as a great morality play between the exploited and the exploiters.

By definition, anyone in the other “social class” was an inescapable “enemy” of everyone one in your own social class. The Marxian ideologues leading the socialist revolutions of the twentieth century often viewed themselves as, or at least took on the public mantle of appearing to be, secular prophets bearing sword and fire to cleanse the world of the exploiters denying “social justice” to the greater part of humanity.

To cleanse the world not only were tens of millions condemned to death through execution, torture, slave labor, or starvation, but also all members of the righteous “workers’ class” had the obligation to live, work and obey the revolutionary leaders claiming to speak for the good of “humanity” as a whole.

To not do so, to not sacrifice, work, and live for the socialist collective was a sign that one was a “wrecker,” an “enemy of the people,” or an agent of the “class enemies” trying to undermine or destroy the great socialist revolutionary cause. (See my article, “The Human Cost of Socialism in Power.”)

Nazi Collectivism and Race-Based Sacrifice

The other great and destructive twentieth century manifestation of this fallacy of misplaced concreteness was the racial ideology of the National Socialist (Nazi) movement in Germany. Human identity as a biological and social being was determined by one’s genetic make-up, with the defining characteristic of who and what you were being based on “the blood” that flowed in your veins.

Nazism was an outgrowth of the eugenics movement that asserted that what a person is, was dictated by their genetic make-up. But this was not only a matter of the physical characteristics that one inherited from one’s ancestors through one’s parents. No, it was claimed that genetics also was a, if not “the,” defining basis of personality and behavioral proclivities.

Thus, whether one was prone to be a murderer or a malcontent or a moocher on others could be predicted by one’s biological ancestry. Thus, the “sins” of the father and the mother could be predicted to fall upon the children through genetic transmission. The conclusion was that the spreading of the “bad seed” to future generations could be contained through compulsory sterilization and through managed sexual bleeding to create a biologically and socially superior human type. (See my article, “The Nazi Connection.”)

Hitler and the National Socialists defined “the Germans” as the superior and “master” race in physical, mental and social characteristics; they then proceeded to classify all other “races” in descending order of “purity.” Of course, the “Jews” were placed at the lowest level, as sub-humans portrayed as vermin and rats threatening to biologically and socially undermine and destroy German genetic superiority through interbreeding and social penetration of German society.

In the name of racial purity and protection, all those that the National Socialists classified as “Jews” had to be eliminated. Both German and Jew was defined and identified by pseudo-biological characteristics – the shape of one’s nose, the slope and size of one’s forehead or earlobes, the religion of one’s ancestors as indication of one’s genetic inheritance, and one’s attitude and allegiance and loyalty to the Nazi ideology.

Six million Jews, three million Poles, half a million Gypsies, over ten million Russians and Ukrainians and Byelorussians, were sacrificed at the altar of Nazi racial collectivism. Plus hundreds of thousands of others who fell under Nazi control during the war.

But neither were racially pure Germans exempt from the commanded sacrifice. As the Second World War was reaching its end in Europe in April 1945, Hitler said to Albert Speer, his favorite prewar architect and wartime Minister of Munitions, that if the Germans lost the war they will have failed their “fuhrer,” and had shown their racial inferiority in comparison to the victor to the East (the Russians); the German people will have forfeited their right to exist and should perish in the rubble and ashes of the aftermath of the war.

If Soviet collectivism is estimated to have required the sacrifice of upwards of 68 million lives to build the “bright future” of Marxian socialism, and if Nazi collectivism imposed the sacrifice of as many as 25 million lives in the name of pursuing a racially pure, German-dominated Europe, we continue to see the effects of the fallacy of misplaced concreteness in our contemporary world today.

Islamic Collectivism and Faith-Based Sacrifice

The world has been seeing the return of violent religious fanaticism in the form of Islamic extremism. It has been captured in the imagery from the Middle East in the form of the Islamic State, though it is certainly not confined to this one variation of religious collectivism.

Are you Muslim or are you not? Do you follow the asserted correct reading of the Koran, or not? Are you willing to kill and die in pursuit of the earthly fulfillment of God’s will and purpose?

All non-believers are to be either converted or threatened with death in a multiple of cruel and brutal forms – thrown off a rooftop, beheaded on social media, burned alive in a cage, or shot in acts of mass execution with the victims thrown into rivers until the water runs red. Or forced into slavery for compulsory labor and/or sexual abuse.

And if you are a “believer” it has to be the right belief system of ideas, practices, and rituals within the Islamic faith, otherwise one is condemned to the same fate as the infidel, the non-believer.

The Islamic collectivism of religious sacrifice requires not only the non-believer to forfeit his life if he does not accept, believe and follow the “true” faith, the believer must rigidly limit his life to the practice and performance of all that is expected and demanded from a member of the community of Islam.

The individual has no right to live, act, or believe other than what the voices who claim to speak for God declare to be the path to righteousness in this life and after. The individual’s mind and body have no existence outside of the prescriptions of Islamic dogma; one is a human cog in the cosmic wheel of God’s purpose as God’s voices on earth dictate your place in the greater and higher cause of the “pure” faith.

In all of these variations on the collectivist theme, the individual is considered “selfish” or “egotistical” if he refuses to accept and act within the confines of the group identity that others conceptually impose on the world and to which he is demanded and commanded to conform under threat of punishment for refusing to sacrifice for a purpose or cause not of his own making or acceptance.

Individualism the Enemy of All Forms of Collectivism

This is why all forms of collectivism – philosophical, religious, political, or economic – reject and condemn all philosophies of political and economic individualism. Philosophical individualism argues that “society” – any formed and continued association of people for shared or mutually advantageous purposes – does not exist and does not have a reality independent of, or separate from, the individual human beings who comprise the participants in these associative relationships.

Political individualism insists that nations and states do not have an existence independent from or superior to the individuals who may be members of a particular nation-state. The purpose of the political authority is to secure and protect each individual’s right to his life, liberty and honestly acquired property (i.e., property acquired through peaceful production and voluntary exchange).

Government’s purpose is not to make the individual a slave or a sacrificial animal to some declared “higher cause,” because there are no higher causes separate from the purposes, values and goals that individuals choose for themselves and non-violently pursues through their actions and interactions with others.

Economic individualism emphasizes that production, work, and creative and innovative entrepreneurial discovery are the results of individual effort and imagination. The “nation,” the “society,” does not produce, work or create. Individual human beings do these things and they do not happen separate from these individual actions and activities.

Economic individualism explains that order and coordination of the actions of multitudes of tens of millions of people do not required government central command or regulatory dictation or direction. From the time of Adam Smith, economic individualists have shown that a system of individual rights, voluntary exchange, and associative interdependence through division of labor – what Adam Smith called a “system of natural liberty” – brings about self-interested incentives and opportunities for individuals to mutually improve their own lives through a network of trades and transactions that rebounds to the benefit of all, without the imposed and compulsory political hand of governmental control.

Philosophical, political and economic individualism, rightly understood, is the ethical and practical bulwark against collectivism and its demands for compulsory sacrifice for imaginary “higher goods” or “greater causes” that justify the denial or reduction of human freedom to the limits of what the collectivist controllers permit.

The philosophy of individualism is the foundation of a free society; it is the basis of a community of men that does not require or demand the sacrifice or enslavement of some for the one-sided benefits of others. Individualism is the premise of a morality for mankind that recognizes and respects the liberty and dignity of every human being. It is the ethical philosophy of freedom.





[Originally published at Epic Times]

Categories: On the Blog

Elizabeth and Sheldon Torquemada: Agenda of Intolerance and Retribution Against Critics of Ultra-Liberal Policies

October 20, 2015, 10:59 AM

As Grand Inquisitor of the Spanish Inquisition for 15 years, Tomas de Torquemada presided over the interrogation, torture, imprisonment and execution of thousands, for the “crimes” of religious heresy and pretended conversion to Christianity. Historian Sebastián de Olmedo titled him “the hammer of heretics.”

Today Senators Elizabeth Warren (D-MA) and Sheldon Whitehouse (D-RI) are pursuing their own inquisition against perceived “heretics.” Thankfully, they don’t have Friar Torquemada’s torture devices or sentencing options. But they are vindictive and effective nonetheless – abusing their congressional powers to silence critics of their policy agendas, often with the help of media, White House, Justice Department, Internal Revenue Service and Big Green allies.

Warren’s latest coup was sacking economist Robert Litan from his position as a scholar with the liberal Brookings Institution, for having the temerity to criticize financial rules she was championing. The fact that Litan is a “progressive” Democrat and former Clinton administration official was irrelevant.

Whitehouse wants the Justice Department to use the Racketeer Influenced and Corrupt Organizations Act (RICO) to investigate and prosecute organizations and individuals who challenge his view that mankind’s use of oil, natural gas and coal is causing climate catastrophes. He has targeted “skeptical” organizations and scientists, while alarmists like Michael Mann and Jagadish Shukla have their own enemies lists.

Their attitudes and actions epitomize today’s liberals, who cannot stomach anyone who disagrees with their views or policies. These modern “hammers of heretics” refuse to debate and instead do all they can to silence critics and destroy their careers. As Fox News commentator Kirsten Powers observes, too many liberals support tolerance only for themselves and only to advance their intolerant agendas.

More than ever before, says political analyst George Will, they are “aggressively and dangerously … attacking the theory of free speech, the desirability of free speech, the very possibility of free speech.”

They compound the outrage with double standards. Senator Whitehouse rages about climate skeptics – but utters not a peep about biased government-funded science, models and propaganda; not a word about EPA’s far-fetched “social cost of carbon” estimates and refusal to even mention how its regulations kill jobs and reduce living standards, health and welfare. Senator Barbara Boxer disgraced Congress when she excoriated physician, medical researcher and author Michael Crichton, for daring to suggest that “double blind” studies be required for climate research, just as FDA does for medical research.

Senator Warren’s intolerance and double standards make her colleagues look like pikers.

Former Brookings VP and economic studies director Robert Litan is highly regarded as an expert on the unintended effects of regulations on businesses, workers and families. But when he testified before Congress last July, saying a proposed regulation would deprive poor and middle class investors of valuable financial advisors and advice, Ms. Warren was livid. She had vigorously supported the Labor Department rule, even though many Democrats and virtually all Republicans in Congress oppose it.

In September, Senator Warren suddenly discovered that the Litan study behind his testimony had been funded in part by the Capital Group, a major investment management company whose business would likely be affected by the regulation. Both the study and testimony made the arrangement crystal clear.

But Senator Warren saw her chance to pound the heretic. Instead of trying to rebut his testimony, Wall Street Journal columnist Gordon Crovitz observed, she decided to punish the witness. At 8:30 am September 29, the Washington Post posted her letter to Brookings criticizing Litan and claiming his funding disclosure was somehow “vague.” An hour later, spineless Brookings president Strobe Talbott threw Litan under the bus, despite his loyal and productive decades of service to the institution.

The senator is on a roll. She has also prevented economist Antonio Weiss from getting a senior Treasury position, and former Harvard president and Clinton and Obama official Larry Summers from becoming Federal Reserve chairman, because their views on certain issues offended her ultra-liberal sensibilities.

She is fortunate that the lofty, inflexible standards she inflicts on others are not applied to her. reveals that Warren has accepted over $600,000 from securities and investment firms, including some $6,000 from Capital Group executives! Law firms that stand to benefit from her legislation, advocacy and policy interventions have lavished $2.2 million on her campaigns – and the education industry that benefits from her constant promotion of increased education subsidies has given her a hefty $1.4 million, the Wall Street Journal reports.

Even more outrageous is the BFF relationship Ms. Warren has with Better Markets. This tax-exempt 501(c)3 “educational” organization in Washington, DC is funded almost entirely by multi-millionaire hedge-fund manager Michael Masters, via some $3 million a year that flows from him or his Marlin Fund to his Spring Foundation charity to Better Markets – which testifies and lobbies persistently, consistently and quite successfully for legislation and regulations advocated by the progressives’ favorite senator.

As political reporter Brendan Bordelon observes in the National Review, “By failing to adequately disclose its relationship with Masters to lawmakers, observers say Better Markets is doing exactly what Warren accused Brookings of doing – covertly taking money from a finance-industry player to influence regulators with the power to approve policies from which that player can earn huge profits.”

Former Obama appointee to the Commodity Futures Trading Commission Jill Sommers calls it a “huge” and “unprecedented” conflict of interest. It’s “outrageous,” says a former SEC counsel.

Masters uses market “triggers” to identify stocks whose prices may rise or fall in response to investor anxiety over political events such as proposed financial rules, Bordelon says. In spring 2015, The Marlin Fund held “call options” worth hundreds of millions of dollars in MetLife, CitiGroup and Prudential. A proposed regulation, reclassifying them as “systematically important financial institutions,” would have increased federal controls and driven their share prices downward – giving Marlin and Masters big profits from “short selling” shares, and using their call options as a hedge against unexpected price increases.

Better Markets president Dennis Kelleher testified before Warren’s Senate Banking Committee and filed an amicus brief supporting the rule change. But they never disclosed their obvious self-interest in the change: their sole source of income (Marlin and Masters) stood to profit enormously from the change.

Warren would have gone ballistic if an opponent of the rule had such an arrangement. But she has said nothing about this classic conflict of interest. That’s hardly surprising.

She was a keynote speaker at a 2013 Better Markets meeting, wrote a laudatory testimonial for its website, and works closely with Kelleher and his group to ensure support for her legislative, regulatory and political crusades, Bordelon notes. Campaign contributions may create more ties that bind.

Meanwhile, Kelleher has testified at numerous Dodd-Frank and other Capitol Hill hearings, and is the go-to guy for many journalists who want insights on the finance industry or Senator Warren’s viewpoints.

Ms. Torquemada is clearly not content to have or win debates on policy issues. She intends to prevent debates, penalize anyone who challenges her, intimidate and silence would-be critics, and impose her agenda – regardless of its impacts on the “poor and helpless” she professes to care so much about.

So much for the Senate as “the world’s greatest deliberative body,” or the notion that, despite disagreeing with what you say, liberals would “defend to the death your right to say it.” Torquemada’s reincarnation must not become the new reality for constitutional rights, robust debate, and informed decision-making.

Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow (, author of Eco-Imperialism: Green power – Black death, and coauthor of Cracking Big Green: Saving the world from the Save-the-Earth money machine.

Categories: On the Blog

Heartland Daily Podcast – Jessica Sena: Those Fracking Feds Pt. 1

October 19, 2015, 3:33 PM

In this two-part edition of The Heartland Daily Podcast, Jessica Sena and research fellow Isaac Orr give the listeners an update on the state of fracking at the federal level, and how these rules are affect oil and natural gas production.

Many new rules and regulations regarding hydraulic fracturing and energy policy have been enacted by the Obama Administration and federal agencies during the course of this year. This two-part podcast discusses a wide variety of topics, from a Federal Judge halting Bureau of Land Management fracking regulations on federal land, the impact of the Endangered Species Act as it pertains to listing of the sage grouse, and how the jungle of red tape enacted by federal regulators opens the door for more and more litigation from environmental groups.

[Please subscribe to the Heartland Daily Podcast for free at this link.]

Categories: On the Blog

Heartland Weekly: Angelo Codevilla and Don Devine on the New Ruling Class

October 19, 2015, 10:04 AM

If you don’t visit Somewhat Reasonable and the Heartlander digital magazine every day, you’re missing out on some of the best news and commentary on liberty and free markets you can find. But worry not, freedom lovers! The Heartland Weekly Email is here for you every Friday with a highlight show. Subscribe to the email today, and read this week’s edition below. Profile of the Week: The Xerces Society is a new Heartland Institute project devoted to creating accurate profiles of prominent individuals and organizations on the political Left with a special focus on groups in the global warming (a.k.a. “climate change”) debate. Project Manager Emily Zanotti and principal researcher Ron Arnold have written a devastating exposé of The Xerces Society, a Portland-based non-profit organization fighting the use of pesticides and genetically modified organisms. Zanotti and Arnold document the organization’s founding, funding, and latest scandals. READ MORE

Heartland Releases Third Study on Frac Sand Mining
Heartland Institute Research Fellow Isaac Orr and geologist Mark Krumenacher recently released a third Policy Study about frac sand mining. The collection represents the most up-to-date and thorough examination of this important part of the hydraulic fracturing industry. The trio of studies covers frac sand mining’s environmental impacts, economic benefits, and effects on roadway infrastructure. Links to these comprehensive studies on frac sand mining can be found in a media advisory Heartland sent out this week. READ MORE

Angelo Codevilla and Don Devine on the New Ruling Class, Part 1
Listen in to a conversation led by Heartland Institute President Joseph Bast with scholars Angelo Codevilla and Donald J. Devine. Codevilla and Devine were featured speakers at The Heartland Institute’s 31st anniversary benefit dinner last week and recorded a conversation in Heartland’s new public meeting space during a special VIP reception. In Part One they talk about their latest books and how a new Ruling Class is waging a war against traditional American values. LISTEN TO MORE

Michigan Pols Battle over Obama Clean Power Plan
Tiffany Taylor, The Heartlander
Michigan Gov. Rick Snyder (R) announced his state will not challenge the Obama administration’s Clean Power Plan (CPP) despite Michigan Attorney General Bill Schuette’s decision to join a lawsuit challenging CPP’s legality. Schuette sides with affordable energy advocates who say it is better for Michigan to fight back against the expensive, legally questionable federal mandates than simply accept them. READ MORE

Heartland’s New Event Space Is Open for Business!
The Heartland Institute’s beautiful new event space is open, and we have several great events already lined up. Heartland is dedicated to bringing you the best content the liberty movement has to offer with debates, lectures, book talks, and luncheons. Upcoming events include a book signing with Peter Ferrara, author of Power to the People, and a panel on women in politics. Register for an upcoming event today! And if you require space for your own liberty-centered event, let us know! We can host groups up to 77 people. READ MORE

West Virginia Sin Taxes and Vaping
Matthew Glans, Heartland Research & Commentary
West Virginia has become increasingly reliant on revenues from sin taxes on tobacco, alcohol, and gaming to close budget gaps. The state justifies such “sin taxes” as a way to discourage unhealthy behavior, but recent calls to apply “sin taxes” to electronic cigarettes will not achieve this goal. In fact, increasing taxes on e-cigarettes would remove economic incentives for smokers to switch from tobacco to this healthier alternative. READ MORE

EPA’s Methane Rules Come from Same Playbook as Clean Power Plan
Isaac Orr, Townhall
A new rule proposed by the Environmental Protection Agency would require a reduction of 40 percent or more of methane emissions by 2025. Like the Obama administration’s Clean Power Plan, the proposed new regulations would impose enormous costs on energy consumers and producers without having any meaningful impact on the environment. But then, maybe that’s the point? READ MORE

Lies, Damned Lies, and Common Core
Joy Pullmann, School Choice Weekly
Only Common Core supporters were surprised that one of the central promises they made isn’t coming true: The New York Times reports states are labeling the same test scores in wildly varying ways despite using the same Common Core tests. In other words, what counts as proficient in Ohio still doesn’t count as proficient in Massachusetts, despite federal officials having bribed states to use the same tests by promising they would create national standards. READ MORE

Bonus Podcast: Dan Simmons on New Ozone Regulations
Dan Simmons, vice president for policy at the Institute for Energy Research, joins Heartland Institute Research Fellow H. Sterling Burnett to discuss the Obama administration’s new ozone regulations. As Simmons explains, the new ozone rules would provide few if any public health or environmental benefits while imposing a high cost on the economy. Gosh, who would have thought? LISTEN TO MORE

Jeb Bush Offers Both ‘Tricks’ and ‘Treats’
Justin Haskins, Consumer Power Report
Republican presidential candidate Jeb Bush recently released a policy outline for repealing and replacing the Affordable Care Act, or Obamacare. However, while some parts of the plan aim to impose free-market reforms, other portions of the unpopular Obamacare system would remain in place. If this is the best Jeb can do, it’s no wonder he’s failing to ignite much interest among voters. READ MORE

Colorado Must Exercise Patience Using Marijuana Revenues
Justin Haskins, The Denver Post
The end of marijuana prohibition in certain states has led to the collection of millions of dollars in new tax revenue. In fact, the State of Colorado has collected so much money that it is having trouble determining what to spend it on. In their haste to spend this new income, legislators should avoid adopting a plan that is harmful to the state and taxpayers. READ MORE

Invest in the Future of Freedom! Are you considering 2015 gifts to your favorite charities? We hope The Heartland Institute is on your list. Preserving and expanding individual freedom is the surest way to advance many good and noble objectives, from feeding and clothing the poor to encouraging excellence and great achievement. Making charitable gifts to nonprofit organizations dedicated to individual freedom is the most highly leveraged investment a philanthropist can make. Click here to make a contribution online, or mail your gift to The Heartland Institute, One South Wacker Drive, Suite 2740, Chicago, IL 60606. To request a FREE wills guide or to get more information to plan your future please visit My Gift Legacy or contact Gwen Carver at 312/377-4000 or by email at  
Categories: On the Blog

Congress Tackles Climate Repression and Ignorance

October 19, 2015, 12:34 AM

Rep. Lamar Smith (R-TX), chairman of the U.S. House of Representatives Science, Space, and Technology Committee, sent a letter to Dr. Jagadish Shukla, a professor of climate dynamics at George Mason University who founded the non-profit Institute of Global Environment and Society (IGES), notifying him IGES may be investigated for its support of suppressing the work of skeptical climate researchers. Shukla is the lead author of a letter posted on IGES’s website signed by 20 climate scientists sent in September to President Barack Obama encouraging the Obama administration’s Justice Department to open Racketeer Influenced and Corrupt Organizations Act (RICO) investigations into the work of individuals, organizations, and companies opposed to Obama’s actions on climate change.

Smith’s letter notes, “IGES appears to be almost fully funded by taxpayer money while simultaneously participating in partisan political activity by requesting a RICO investigation of companies and organizations that disagree with the Obama administration on climate change. In fact, IGES has reportedly received $63 million from taxpayers since 2001, comprising over 98 percent of its total revenue during that time.”

Because IGES removed the letter from its website and may be investigated, Smith directs IGES to preserve “all e-mail, electronic documents, and data created since January 1, 2009, that can be reasonably anticipated to be subject to a request for production by the Committee.”

The old saying, “what’s good for the goose, is good for the gander,” comes to mind.

And in the Senate, climate shyster’s took a beating recently.

At a Senate Judiciary Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts hearing titled “Opportunity Denied: How Overregulation Harms Minorities,” Sen. Ted Cruz (R-TX), who chaired the hearing, said overregulation robs minority Americans of opportunity. He blamed stagnant household income and slow job growth since the 2008 crash, in part, on overregulation and an “invasive and bloated government.” After noting the number of federal regulations increased dramatically in the past half-century, from 20,000 pages in the Federal Register to 175,000, Cruz remarked, “They seemingly regulate everything under the sun.”

Aaron Mair, president of the Sierra Club, testified the science linking human actions to dangerous global warming “is settled, … it’s not up for scientific debate.” In an exchange for which Mair clearly seemed unprepared, Cruz asked why, if humans are warming the planet, satellite date showed no planetary warming in the past 18 years. Mair seemed unfamiliar with that fact. When pressed by Cruz to say whether he would retract his statement about the science being settled if data proving the warming pause were provided to him, Mair remained silent. Cruz said, “You know, Mr. Mair, I find it striking that for a policy organization that purports to focus exclusively on environmental issues, that you are not willing to tell this committee that you would issue a retraction if your testimony is objectively false under scientific data.

“That undermines the credibility of any organization,” said Cruz. The Houston Chronicle put it best: Ted Cruz 1, Sierra Club 0.

Categories: On the Blog

Opinions vs Facts

October 18, 2015, 9:09 AM

Climate is always changing, but luckily we live in an era with a stable, benign, warm climate and a healthy, abundant bio-sphere.

Alarmists who claim that today’s climate changes are unprecedented have not checked climate history written in the rocks, the ice cores, the satellite registers and the tide gauges.

Ice core records show that current temperatures and sea levels are not extreme – they are more stable than they were as the last ice age ended just 12,000 years ago. At that time, global temperature increased quickly, the great ice sheets melted, sea levels rose rapidly (130 metres), and the warming seas expelled much of their dissolved carbon dioxide into the atmosphere. As a result of this natural global warming and the additional moisture and carbon dioxide plant food in the atmosphere, plant life recovered and the great forests and grasslands were re-established.

Not one coal-fired power station, diesel truck or feedlot of belching bovines contributed to those massive climate changes; and ancient witch-doctors were unable to prevent flooding of coastal settlements by sacrificing humans. Then, as now, nature controls the climate.

More recent evidence from ice cores, sediment layers and even historical records show that for the last 7,000 years Earth’s climate has been relatively stable. Even more recently, satellite records show that global temperatures have not risen significantly for 18 years. The tide gauges surrounding the Pacific show that sea levels are barely rising and satellites show that there is little change in the average area of polar ice. Our climate is NOT changing rapidly, no matter how often alarmists and their media mates repeat this lie.

Today, witch-doctors wearing UN/IPCC head-dress are demanding that humans sacrifice their industry and jobs on the carbon altar in the hope of changing the climate. This sacrifice will enrich green vested interests but will fail to change the climate.

Alarmists should check the facts. Just one stubborn fact or careful observation will beat 97 pal-reviewed opinions.

They should heed Senator Moynihan’s advice:
“You are entitled to your opinion. But you are not entitled to your own facts.”

Categories: On the Blog

So Fat and Salt Aren’t So Bad for Us: Why We No Longer Trust the Government’s Food Guidelines

October 17, 2015, 9:18 AM

Co-Authored by Jeff Stier & Julie Kelly

Over the past 30 years, the Dietary Guidelines for Americans have become as bloated as the nation’s collective waistline, serving up a thick brew of revolving-door nutrition advice, confusing messages, and perhaps even politically influenced eating recommendations.

In 1985, the report — which gives updated nutrition advice to Americans every five years — was just 19 pages long. It resulted in a simple brochure with commonsense advice: “If you are too fat, your chances of developing some chronic disorders are increased. . . . To lose weight, you must take in fewer calories than you burn.” It advised against vomiting or using laxatives to lose weight (back when anorexia, not obesity, was a major concern). Only two charts were included: one with the desired weight for average adults and another with the calorie-burn for exercises such as ballroom dancing and chopping wood.

In 2015, the report is a 571-page behemoth and more overwhelming than a Cheesecake Factory menu. It takes on more than it can chew, from sustainability to labor concerns to tax policy. The findings — compiled by a committee appointed by the USDA and Health and Human Services agency — are important because they serve as the scientific basis for the actual dietary guidelines, which are the federal government’s official recommendations on how to eat. The recommendations greatly influence federal food programs such as SNAP and child nutrition.

For the guidelines to have any credibility, they must be free from political wrangling. The 2015 guidelines, which are due out by the end of the year, are already far off track. In a last-ditch effort to keep politics out of the final guidelines, the House Agriculture Committee held a hearing last week to examine how the process of developing updated nutrition advice became so ideological.

Democrats and Republicans alike took to task Agriculture Secretary Tom Vilsack and HHS Secretary Sylvia Burwell — both of whom will sign off on the final recommendations — about whether the process jeopardized the integrity of the guidelines and ignored public input (the report received more than 29,000 public comments, including from some who believed new scientific research had been overlooked).

“There has been a strong reaction to the report,” said Democrat Collin Peterson, ranking member of the House Agricultural Committee. “The public is skeptical of the whole process. I’m a little concerned that we’ve lost sight of what we’re doing, and there seems to be more focus on ideology and marketing food products than on providing nutrition advice to the general public.”

His criticism is well-founded. Over the past few decades, Americans have received conflicting and confusing advice about what — and what not — to eat. The most up-to-date science now undermines the government’s harsh warnings about saturated fat, cholesterol, and sodium. Following that misguided advice, Americans have seen tripled obesity rates and a huge rise in diabetes. Given how they skewed our diets from fat to carbohydrates, the guidelines may have indeed played an unsavory role.

And as the liberal culinary elite continues to politicize food, its agenda of sustainable, organic, local, and eco-friendly food production has influenced the dietary-guidelines process. For the first time, the committee highlighted the issue of “food sustainability and safety,” in Chapter Five of its report:

The environmental impact of food production is considerable and if natural resources such as land, water and energy are not conserved and managed optimally, they will be strained and potentially lost. The global production of food is responsible for 80 percent of deforestation, more than 70 percent of fresh water use, and up to 30 percent of human-generated greenhouse gas (GHG) emissions.

Of course, modern American agriculture has long been a target of the culinary elite and climate-change activists; they seized on the dietary guidelines as another opportunity to advance their agenda and tie environmental policy to nutrition standards. They scored:

The major findings regarding sustainable diets were that a diet higher in plant-based foods, such as vegetables, fruits, whole grains, legumes, nuts, and seeds, and lower in calories and animal-based foods is more health promoting and is associated with less environmental impact than is the current U.S. diet.

To his credit, Vilsack announced last week (after plenty of pushback, including from Bob Dole, who was one of the authors of the original legislation) that he didn’t believe the guidelines were “the appropriate vehicle for this important policy conversation about sustainability.”

The pro-sustainability advocates couldn’t have worse timing. Their continued attempts to shun an animal-based diet mostly for political reasons now flies in the face of recent scientific research proving that much of what the government has told us about saturated fat (derived mostly from animals) has been flat wrong.

The controversy escalated last year with a major meta-analysis published in the Annals of Internal Medicine by top researchers; their findings couldn’t confirm a clear link between saturated fats and heart disease. The study concluded that “current evidence does not clearly support cardiovascular guidelines that encourage high consumption of polyunsaturated fatty acids and low consumption of total saturated fats.”

Around the same time, Nina Teicholz’s book, The Big Fat Surprise: Why Butter, Meat & Cheese Belong in a Healthy Diet, stunned both the public and the medical community. Teicholz presented a damning case based on nine years of research that indicts the scientific community, government, the media, and food companies for promoting a low-fat, high-carb diet that has wreaked havoc on Americans’ health.

Teicholz has since become one of the many independent critics of the Dietary Guidelines for Americans. “The report does not review the preponderance of the evidence, nor the ‘best and most current science,’ per its mandate, on important topics, especially on saturated fats and low-carbohydrate diets,” Teicholz wrote in her stinging rebuke to the government report. She counters nearly every pending recommendation, from low red-meat consumption to higher carbohydrate intake.

The main risk of giving out more bad advice, according to Teicholz, is creating a wary and weary public. “There is widespread concern that if the guidelines cannot do a better job of combating obesity and diabetes, and if they aren’t grounded in solid science, then the public will lose faith in them,” Teicholz told us. “They need to be based on a systematic, transparent, and rigorous review of the best and most conclusive science available.” Might it be too late?

Lawmakers share the same concern. “Why are we even doing this?” Representative Peterson asked Secretary Vilsack and Secretary Burrell last week. “Most of my constituents don’t believe this stuff anymore. You’ve lost your credibility with a lot of people, and they are flat-out ignoring this stuff.”

When the government finally releases the guidelines by the end of the year, we hope it takes these lessons to heart by including a healthy portion of humility.

— Julie Kelly is a food-policy writer and cooking teacher in Orland Park, Ill. Reach her on Twitter @julie_kelly2. Jeff Stier is a senior fellow at the National Center for Public Policy Research. Follow him on Twitter @JeffAStier.

Read more at:

[Originally published at Pundicity]

Categories: On the Blog

In The Tank Podcast (ep8): The Arts and Liberty, Steve Jobs, and the Democratic Debate

October 16, 2015, 5:18 PM

In episode #8 of the In The Tank Podcast, Host Donny Kendal is once again joined by Jim Lakely while John Nothdurft is out of town. This weekly podcast features (as always) interviews, debates, roundtable discussions, stories, and light-hearted segments on a variety of topics on the latest news. The show is available for download as part of the Heartland Daily Podcast every Friday.

In today’s episode of In The Tank, Donny and Jim talk with actor and libertarian, Robert Anthony Peters. Robert’s most recent role is a supporting role in the upcoming Steve Jobs biopic. Robert talks about his time on the set as well as some of his other projects. In the second half, John phones in to discuss the Democratic Debate.

I hope you’ll listen in, subscribe, and leave a review for our podcast on iTunes. We welcome your feedback in our new show’s inbox at or follow us on twitter @InTheTankPod.

[Please subscribe to the Heartland Daily Podcast for free at this link.]


Categories: On the Blog

Quakes, Wastewater and Hydraulic Fracturing

October 16, 2015, 9:53 AM

It turns out disposing of hydraulic fracturing wastewater may not be to blame for the earthquakes in Oklahoma after all. A new study conducted by seismologists from Stanford University confirms the widely held belief that injecting large volumes of fluid into underground disposal wells is likely responsible for most of the recent quakes in Oklahoma. The study also found the source of the vast majority of this fluid is unrelated to hydraulic fracturing.

No state has experienced a more significant increase in earthquakes than Oklahoma, which has had 585 of the 688 recent earthquakes of magnitude three or larger in the Midwest, with the increase beginning largely in 2009. The increase coincides with an increase in wastewater disposal into the Arbuckle Formation—a 7,000-foot-deep sedimentary formation under Oklahoma—from about 3.36 billion gallons per month in 1997 to about 7.6 billion gallons per month in 2013.

Anti-fracking groups have been quick to point fingers at hydraulic fracturing, claiming the technique has greatly increased the volume of wastewater in need of disposal into injection wells, which in turn is causing the increase earthquakes.

Fracking does generate wastewater, approximately 800,000 to 1,000,000 gallons per well. However, the Stanford researchers found hydraulic fracturing wastewater comprised less than 10 percent of the wastewater generated from oil and natural gas production in the three areas of Oklahoma with the highest rates of seismicity.

About 90 to 95 percent of the wastewater injected into underground disposal wells in these areas of Oklahoma is classified as “produced water,” a naturally salty type of water that is often present along with the hydrocarbons in oil reservoirs. This water is coproduced when the oil is pumped to the surface, hence the term “produced water.”

Although fracking generates approximately 800,000 to 1 million gallons per well on average, the amount of wastewater generated by all of the hydraulically fractured wells in Oklahoma constitutes a tiny fraction of the 7.6 billion gallons of wastewater generated on average each month in the state. In fact, the U.S. Geologic Survey (USGS) reports much of the wastewater is produced in rock formations that did not experience any hydraulic fracturing. Much of this wastewater is “produced water” associated with oil production in the Mississippi Lime formation, a rock formation that contains a high ratio of produced water to hydrocarbons.

Wastewater disposal has undoubtedly resulted in incidents of induced seismicity, but USGS reports it is rare for a wastewater disposal well to induce these types of quakes. Of the 35,000 wells used to dispose of oil and natural gas wastewater, USGS reports only a few dozen are known to have triggered tremors large enough to be felt at the surface, meaning the vast majority of these wells are aseismic, causing no earthquakes.

The Stanford study is important because it not only gives us a more in-depth look at how injection wells can induce seismicity and demonstrates where the fluid is being injected from; it also gives us insight into how we can prevent future seismic events.

By carefully monitoring injection well pressures, oil and gas producers in Oklahoma and Texas can avoid over-pressurizing formations, such as the Arbuckle Formation, which may be more likely to cause induced seismicity. Producers may also inject produced water back into formations such as the Mississippi Lime, which is unlikely to change the formation pressure because that’s where the water originated. This strategy could greatly reduce the risk of tremors.

There is no question there is still work to do to prevent earthquakes, but it appears fracking and disposal of fracking flow-back water may not be the culprit for Oklahoma’s earthquakes after all.

[Originally published at the Oklahoman]

Categories: On the Blog

U.S. Economy Is Worse Than Claimed

October 16, 2015, 9:38 AM

Courtesy of

The above chart shows a growing divergence between the Consumer Price Index and what it would be if the method of calculation had remained consistent. Beginning in 1983 the government changed its method of calculation to show lower inflation by excluding food and energy, claiming they were too volatile to be reliable indicators. The result is the so-called “core inflation” CPI, which is a favorite of the Federal Reserve. The latest figure for this CPI reported by the Bureau of Labor Statistics is 0.4% (for August and also July), but if calculated by the method used in 1980 the inflation rate would be 7½ percent, as shown by Shadow Government Statistics (

The chart shows the difference in the inflation rate only from the change in 1983. The divergence would be even greater if the effects of several later adjustments were also included. For example, a reconfiguration of this statistic by the 1995/96 Boskin Commission made the CPI an even worse indicator of the cost of living for most Americans. It has been estimated that from 1996 to 2006 this adjustment reduced by over $680 billion what the U.S. Government would have paid in cost-of-living increases in salaries, social security, federal employee pensions, and other benefits.

It seems no one attempted to objectively determine the real cost of living without the influence of the flawed government model. The Chapwood Index sought to remedy that. Its founder, Ed Butowsky, said it is “our attempt to help people understand why they feel like they aren’t keeping up and why, as they get older, they feel as though their money does not go as far – even when they’re following the rules, working hard and supposedly beating inflation.”

The Chapwood Index reports the unadjusted actual costs and price fluctuations of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation. The latest average price increase of the 50 cities is 8.9%. Not a single one of the cities was even close to the near zero (0.4%) inflation of the CPI reported by the U.S. Bureau of Labor Statistics. The lowest of the 50 cities in the Chapwood survey was Tucson, Arizona, at 5.7%.

Butowsky notes that routine corporate pensions and private salary increases are often keyed to the CPI. “The middle class has seen its purchasing power decline dramatically in the last three decades, forcing more and more people to seek entitlements when their savings are gone. And as long as pay raises and benefit increases are tied to a false CPI, this trend will continue.” The Chapwood Index shows where people actually spend their money. The CPI is not a true indicator of the cost of living since it excludes food and energy, which are not only necessities but for many people their largest expenditures.

Like the inflation numbers, the unemployment statistics have been manipulated by the government to present a more favorable picture.

Courtesy of

John Williams, founder of Shadow Government Statistic, says, “The seasonally-adjusted SGS Alternate Unemployment Rate depicts current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers. The U-3 unemployment rate is the monthly headline number [Note that this is the least complete category—has the most exclusions—and thus shows the lowest, most favorable unemployment numbers]. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.”

Notice that the most complete measure of unemployment (SGS) places today’s unemployment rate at 23 percent. That is not only worse than in the recession of 2007-09 but comparable to what occurred in the Great Depression of the 1930s. The so-called recovery from our recent recession has been the weakest since World War II despite the most massive effort in history to promote economic growth and employment with the stimulus of “quantitative easing,” which is simply a scholarly-sounding term for printing money.

In addition to the above charts, there are many other indications that quantitative easing has not benefited the economy. The labor participation rate (those working or looking for work) fell in September 2015 to 62.4%, the lowest level since 1977. Wages have increased by the slowest rate since the 1980s, and median household incomes are still falling, down 1.5% in 2014 from 2013, according to new census data available mid-September 2015.

Small businesses account for most new jobs and employ about half of the private workforce.   But small business deaths now exceed births for the first time since the Census Bureau began keeping records more than 30 years ago.

The September jobs report was a jolt. It said only 142,000 new jobs were created, compared to economists’ forecast of 206,000. The numbers for August and July were revised downward by 59,000, showing an average of only 167,000 for the third quarter. That’s down from the monthly average of 198,000 for all of 2015 so far, which is down from 260,000 a month in 2014. (Previously, April and May were revised downward by 54,000 jobs.) And of the 142,000 jobs created in September, only 118,000 were in the private sector. Some 350,000 Americans left the labor force in September. An all-time record of 94 million people are not employed or actively looking for work.

Obama’s $787 billion (later adjusted to over $800 billion) stimulus program was a failure of the Keynesian idea that government spending produces a multiplier effect as dollars would be spent again and again throughout the economy, multiplying wealth. Franklin Roosevelt tried the same thing. Didn’t work then—in fact, prolonged the depression. Didn’t work for Obama either. Keynes’ biographer Hunter Lewis says, “There is just no evidence” that spending ever cured a recession, and Keynes “wasn’t much interested in evidence.” Harvard economics professor Robert Barro has written, “What few people know is that there is no meaningful theoretical or empirical support for the Keynesian position.” I discuss this subject at greater length in my book, but here is a convincing admission about it by Roosevelt’s treasury secretary before the House Ways and Means Committee on May 9, 1939: “We are spending more than we have ever spent before and it does not work….After eight years of this Administration we have just as much unemployment as when we started….And an enormous debt to boot.”

Here is a more recent statement, in July 2015, from a paper by Stephen Williamson, economist and vice president of the St. Louis Federal Reserve Bank:

“There is no work, to my knowledge, that establishes a link from QE [quantitative easing, i.e., bond-buying to increase the money supply] to the ultimate goal of the Fed—inflation and real economic activity. Indeed, casual evidence suggests that QE has been ineffective in increasing inflation….Indeed, mainstream monetary theory and the experience of Japan for the last 20 years tells us that extended periods of ZIRP [zero-interest-rate policy] lead to low inflation, or even deflation. (emphasis added.)”

Japan is now in its fourth recession since 2008. Annual growth has averaged 0.85% since 1992, and Standard & Poor’s just downgraded the ratings on its massive national debt, which the other two major ratings agencies had already downgraded.

Shinzo Abe was elected prime minister by campaigning for a more aggressive version of the monetary stimulus policies that have failed Japan for 20 years. He said, “Countries around the world are printing more money to boost their export competitiveness. Japan must do so too.” That was his prescription for a degree of “needed” inflation to bring the country out of economic stagnation and avoid the growing fear that deflation was now a greater threat than inflation. On October 31, 2014, Japan’s central bank and its main government pension fund said they would pump trillions more yen into the long-stagnant economy, now growing at 0.2%. The bank of Japan would now buy at the market more than twice the amount of new bonds issued by the government, and it would buy not just government bonds but stocks, ETFs, and real estate funds.

The European Central Bank is engaged in a QE policy of buying 60 billion euros ($67.5 billion) per month in hopes of raising inflation by increasing the money supply and reducing borrowing costs. That program, which amounts to more than a trillion euros ($1.1 trillion), is scheduled to end in September 2016, but on September 3, 2015, ECB President Mario Draghi said he is prepared to expand the program. He previously said he would do “whatever it takes” to save the euro. Deflation could stifle consumer spending and make it more difficult for European governments and businesses to repay debts. In response to Draghi’s comments, the euro tumbled 1% against the dollar. Jean-Michel Six, Standard & Poor’s chief economist for Europe, said he would not be surprised if the ECB’s program extended into 2018 and reached 2.4 trillion euros, twice what was initially committed.

“The next stage for both the Bank of Japan and the ECB is more easing; they’re going to keep putting fuel on the fire, but at some point the fire’s big and there’s nothing left to burn — What do we do?” said Philip Moffitt, the Asia-Pacific head of fixed income at Goldman Sachs Asset Management, which oversees about $1 trillion globally. “So your immediate response to that would be a huge sell-off in risk assets.”

The stock market is poised for a huge sell-off of risk assets.  Stocks are terribly overpriced in view of the economic weaknesses I’ve cited.

Since 2008 the combined balance sheets of the world’s five largest central banks have increased by a staggering $9 trillion. The addition of all this fiat paper has inflated financial assets just like it inflated the stock market bubble in the 1920s and the housing/mortgage bubble in the 2000s. Today’s stock prices have also been boosted by companies buying back their own stocks with near-zero interest rate borrowing. And those same low interest rates have led many people to withdraw from traditional savings and shift to riskier investments such as the stock market in hopes of higher returns—and very likely also because of concern about the future value of the dollar. What is the point of saving for the future when interest on savings is almost zero and printing vastly more dollars will surely make the currency worth less in the future? If central banks achieve the 2% inflation they now view as optimal, nearly half the principal of today’s savings accounts—43%—will be gone in 25 years. Do you want to settle for that or roll the dice for greater return? With those two bad choices gold becomes more attractive.

With all the fiat money being printed by central banks, it should be no surprise that people all over the world have been turning to gold. As we have pointed out in previous writings, there is a global shift of gold from the West to the East and increased demand for physical possession of gold. The Shanghai Gold Exchange has become the world’s largest gold market, and here we are talking about physical delivery. According to the China Gold Association Yearbook, China in 2014 imported at least 1,250 tonnes and domestically mined 452 tonnes, for a total of 1,702 tonnes. In the week ending September 25, 2015, the Shanghai Exchange delivered over 65 tonnes of gold, making a year-to-date total of 1,958.7 tons—an annual rate of nearly 2,700 tonnes, which represents about 90 percent of world’s gold mine production this year.

The remaining 10 percent cannot possibly meet the demand. Indian demand is conservatively estimated at 950 tonnes, and there is little variation in this since it is determined largely by cultural and religious factors. Some of this demand will no doubt be met by smuggling and recycling of “scrap” gold, but those cannot possibly make up the difference. Nor have we included here any demand from other Asian countries, the Middle East, Europe and the United States, which collectively usually account for up to 50% of global demand. Most likely China has grossly understated the amount of gold it produces domestically, but in any case only a far higher price will determine how newly-mined

gold is rationed to world demand.

President Franklin Roosevelt outlawed private ownership of gold in the 1930s, but there remained one final link between the dollar and gold. Foreign central banks could still exchange dollars for gold until 1971, when President Nixon ended that policy.

When Deng Xiaoping ascended to power in China, he made many far reaching market reforms that transformed the rigid, backward communist nation into an economic powerhouse. Through its exports to the U.S., it accumulated trillions of dollars. Some of these were used to buy U.S. Treasury Bonds—in effect, recycling China’s trade-surplus dollars back into the U.S. There were benefits to both sides. China could use the dollars for investment in developing the country and paying wages for its workers, and the U.S. government needed a buyer for its bonds to pay for its huge deficit spending.

It seemed that both sides were “trapped” in a relationship that neither wanted to give up nor could see a way out of. But China grew increasingly uncomfortable about accumulating greater amounts of dollars whose future value would be eroded by the expansion process it was financing. China was fearful that U.S. printing of money would lead to inflation and a hard fall of the dollar, which would seriously reduce the value of China’s holding. In 2009 Zhang of the China Gold Association stated: “In view of the declining US dollar value, it is paramount that China steps up gold reserves. How to do this is the only question that China is debating these days. The possible steps include opening up new gold mines, aggressively going for gold mining, buying gold from the open market etc. All said and done, it is imperative that China needs to buy more gold,”

China has done all the things Zhang recommended, and more. For instance, the government takes out ads on television urging people to buy gold. It has established gold stores throughout the country. They look like jewelry stores but exist to sell gold. Any person can walk into any such store or bank and buy gold for cash. No questions asked. It’s all part of the goal of “storing wealth among the people.”

Meanwhile, China’s currency, the yuan, has climbed in stature. It is now in fourth place as the most-used currency in cross-border payments, having surpassed the Japanese yen in August. As recently as 2012, it was in twelfth place. It is now behind only the U.S. Dollar, the euro, and the British pound. The volume of foreign exchange trades in yuan reached more than a million in a single month in August, rising 50% from the same period last year. More than 1,000 banks in 100 countries can now use the yuan. According to a Bank of England survey, trading in the yuan rose 25% in the six months to April this year while trading in other currencies fell 8% on average.

The London Metal Exchange, the oldest futures exchange in the world, in now owned by the Hong Kong Exchanges and Clearing Ltd., which has launched yuan-denominated futures contracts for some industrial metals.

China is no longer “trapped” into buying U.S. treasuries to finance U.S. profligate spending. Although China and other countries can no longer exchange dollars for U.S. Treasury gold, they can instead exchange their dollars for gold on the Shanghai Gold Exchange and other exchanges.

The New York Comex is the leader in gold futures contracts, accounting for 82% of the world trade in them. But the overwhelming majority of these do not involve any physical exchange of the metal. They are simply paper trades because most positions are closed out before the delivery date. A buyer will almost always sell his contract before delivery is due, and a short seller will do just the opposite. Neither trader will see the gold, and the Comex will have exactly the same amount of gold in storage as before those traders participated. The Comex warehouses gold to provide a delivery option, but historically most participants haven’t used it. That has changed in the last few years.

Recently the website, a highly respected observer and analyst of monetary happenings, noted that the Comex supply of deliverable gold had declined to barely 10 tons, its lowest ever, resulting in a record-high ratio of 124 ounces of outstanding open interest for every physical ounce of gold in storage. Fears of default were quickly calmed by the Comex “boosting its eligible gold by a whopping 78% overnight, from 362K ounces to 643K,…However, this was not achieved with an infusion of actual new gold into the Comex, but thanks to JPM [J.P. Morgan] reclassifying 276K ounces of gold from the Eligible into the Registered category, even as actual eligible gold continues quietly hemorrhaging out of the Comex.”

Delivery troubles on the Comex and increased demand for delivery by buyers, fearing they may have problems doing so later, point to a higher gold price. That does not augur well for the dollar, but another trend is developing that is also negative for the dollar. In an article headlined “Central Banks Dump U.S. Debt,” the Wall Street Journal stated: “Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis.

“Sales by China, Russia, Brazil and Taiwan are the latest sign of an emerging-markets slowdown that is threatening to spill over into the U.S. economy. Previously, all four were large purchasers of U.S. debt….China, the biggest owner of U.S. treasury securities, owned $1.241 Trillion at the end of July, according to the latest data from the Treasury. That is down from the record $1.371 trillion in November 2013.”

[Originally published at American Liberty.]

Categories: On the Blog