St. Pete Times Editorial Response: Abortion

On April 24th, 2007, Steve Kennedy from Safety Harbor made the following submission to the St. Petersburg Times:

In abortion ruling, our system worked

Let's see. Conservatives twice vote a president into office, and the majority rules.The president then appoints conservative judges to the U.S. Supreme Court, reflecting the views of the majority. The court's decision on the abortion issue happens to coincide with the views of those in the majority, and the majority's views are reinforced. It seems with this court, "moral concerns" are a consideration to the law where in recent previous courts they were not.

At this time, the majority of voters, men and women, are against abortion and outnumber those who are for it. It all started at the ballot box. So the country does not go backward just because you don't agree with the decision. It goes forward and our system of representation is maintained.

My response to the editorial board:

The role of the United States Supreme Court never was, isn't, and never should be to interpret cultural and contemporary morality. Furthermore, the judicial review was created to protect the rights of citizens against the very thing you seem to be advocating--popular will. As James Madison himself has quoted, "Wherever the real power in Government lies, there is the danger of oppression. In our Governments the real power lies in the majority of the Community, and the invasion of private rights is chiefly to be apprehended, not from acts of Government contrary to the sense of constituents, but from acts in Government is the mere instrument of the major number of its constituents."

As discussed by Clint Bollick, the Litigation Director at Institute for Justice, the Brown v. Board of Education decision "invalidated scores of laws reflecting passionately held social views, overturned well-established precedent, and cast America into upheaval." The United States of America is not, and should not be, for that matter, a pure democracy. It is a constitutional republic, one where oppression of the minority by the majority is checked and balanced by an impartial entity--the Supreme Court. The role of justices is not to interpret morality, it is to apply the constitutional criterion, one that not even a majority can overturn.

Future Revealed

I thought that I'd quickly run over as to which topics readers can expect to be covered in the next few weeks:

1. Capitalism & Judicial History (coming soon)
2. Affirmative action: judicial, rational, and practical failure.
3. Continuation of our antitrust series (first post concerned the definition of a monopoly)
4. Amtrak: A failure
5. Presidential candidate analysis

Though I am hoping to adhere to this outline, if you have any suggestions, feel free to leave a comment!

Monopolies: Definition Discourse

Because a great portion of my posts focus on the idea of monopolies in a free-market environment, perhaps it is time that we embark on a brief discourse of the issue. This will be the first of the many posts that will follow, providing a critical analysis of the idea of corporate efficiency and coerciveness.

First, as always, let us be clear on what a "monopoly" is. From my personal experience, it has been everything from "a business that can do anything it wants to" to "business that's the best in whatever business they do." For the purposes of objectivity, let us define monopoly as a single seller in a given field. Keep in mind that this definition does not take into account (1) how the monopoly came to be about, (2) the extent of powers and advantages that it has over its competitors, and (3) the venue for obtaining the advantages gained in point #2.

Rockefeller's Standard Oil refined 90% of America's oil in 1899--it was a monopoly. Though not adhering to the aforementioned definition, it can be persuasively argued that 90% did, indeed, constitute a monopolization of the market. Microsoft Corporation's operating system is said to run on 95% of the modern computer systems--as with Rockefeller, Microsoft is considered a monopoly in the modern business context. The United States Postal System, however, has exclusive rights to sell first and third class mail without any threat of private competition--it too is a monopoly, though many, especially the advocates of monopolies constituting the demons of modern society, certainly don't see it as so. Finally, Amtrak, the federally-owned railroad company that has never made a profit in its 32 year old history is certainly a monopoly.

Because of the diversity of businesses and corporations constituting as monopolies, we must assume an objective evaluation to determine whether the "monopoly" is "evil," or, as Nathaniel Branden, author of Question of Monopolies, published in the Intellectual Ammunition Department of The Objectivist Newsletter in June of 1062, put it, whether it has "exclusive control of a given field of production which is closed to and exempt from competition, so that those controlling the field are able to set arbitrary production policies and charge arbitrary pries, independent of the market, immune from the law of supply and demand." Theodore Roosevelt took a similar approach when he distinguished between "good trusts", or, the ones that helped the people, and "bad" trusts, the one that exploited the public (The Northern Securities Company was one of such trusts. It controlled Northern Pacific Railway, Great Northern Railway, Chicago, Burlington and Quincy Railroad and was subsequently dissolved).

Thus, let us look to Mr. Lawrence W. Reed, a scholar at the Mackinac Center for Public Policy. According to Reed, "When governments, by one method and to one degree or another, limit competition by means described above, the result is a coercive monopoly for producers who benefit from the limitation of competition." In contrast, the "efficiency" monopoly is one that gets its "high market share not because of any government grant of exclusive privilege, subsidy, special tax treatment, or the like, but because it simply does the best job."

Thus, we can conclude that a monopoly can be either (a) a coercive monopoly or (b) an efficiency monopoly. The USPS is a coercive monopoly--it has exclusive rights to sell and deliver 1st and 3rd class mail not because of its ability to do so at the lowest price, but because the United States government has granted exclusive privileges to the corporation, hampering private corporations from competing and ultimately lowering prices. As my analysis of the USPS found earlier on this blog indicates, because of the government benefits, USPS lacks accountability, is victim to arbitrary price shifts, and is a burden on the U.S. revenue. An efficient monopoly, in contrast, is one that has reached its dominant position on the market through its efficiency and ability to lower the means of production. Walmart is one such monopoly, it has achieved its market position because of its ability to provide the lowest prices, driving the competitors out of business.

Before moving onto our next article, covering (1) the kinds of benefits coercive monopolies are granted and (2) a general outline of the checks provided by free-market economy in impeding the growth of an abusive monopoly, it is crucial that we have a succinct understanding of what a "monopoly" truly means.

Until then, let me know if you have any questions!

Chinese Act: Analysis

While at the YLP (Youth Leadership of Pinellas program) retreat, my friend Andrew N. and I embarked on a debate of whether it is in America's best national interest to impose a 27% tariff on all Chinese products. The China Act of (formally known as the Currency Harmonization Initiative through Neutralizing Action Act of 2005; title HR 321 for reference purposes), was reintroduced in the United States House of Representatives on January 9th, 2007, contending that the U.S. Secretary of Treasury must ensure that "additional tariffs be imposed on products of that country on the basis of the rate of manipulation by that country."

Present data indicates that 8.3 yuan is equal to one U.S. dollar, an exchange rate that has existed for decade, leading "some U.S. lawmakers and manufacturers [to] argue that [the practice] vastly undervalues the currency, [letting ]Chinese companies undercut U.S. rivals. " The American business community and protectionist supporters are additionally concerned about the subsidies that the Chinese government provides to Chinese corporations. According to Franklin L. Lavin, Undersecretary of Commerce for International Trade, the practice "gives Chinese exporters an unfair advantage in the U.S. market."

The idea of any sort of government involvement in corporate regulation deserves but most severe condemnation. In that aspect, I myself am critical of the Chinese government subsidizing domestic corporations. In retrospect, however, the system only corroborates an economic argument that shall (hopefully) one day permeate the international community: harmful and coercive monopolies can only be formed through government intervention. At the same time, however, U.S. doesn't have exactly a clean record either. As argued by Hua Min, head of the World Economy Research Institute at Fudan University in Shanghai, "United States just a few years ago was found to be giving illegal tax rebates to companies such as Boeing and Microsoft."

With subsidies aside, let us look to the resulting implications of a successfully passage of the Chinese Act. Before doing so, however, we need to be clear on the intent of of the legislation's author, Representative Phil English. Rather than giving our own corporations a competitive edge in the market, English argues that "It puts pressure on them [China] to move and it comes at a time where they seem to be digging in their heels." Essentially, the policy is meant to temporarily symbolic, rather than imposing any sort of a long-term protectionist mindset on the global economy. That is, until the Chinese reevaluate the alleged undervalue of their currency. With this information in mind, let us now move onto an analysis of the economic impacts of the legislation.

According to Myron Brilliant, vice president for Asia at the U.S. Chamber of Commerce, "Tariffs being imposed on foreign goods does negatively impact consumers; it limits their choices and raises their prices." The idea of tariffs imposing negative economic externalities, including those cited by Brilliant, is effectively explained in one of my other entries specifically focusing on the topic of tariffs (Import tariffs: Decline of reason). Because several of the stores that American citizens are accustomed to (Wal-Mart, Home Depot, and Best Buy come to mind), it is likely that we'll see a decline in the general availability of low-cost goods, as even now, individuals as Gao Junjie, a manager at the Shandong Chenming Paper Holdings, are condemning Washington. Because the 27% tax increase will act as a deterrent to Chinese products, we'll begin to see a decline in the general availability of low-cost Chinese goods.

On the other hand, however, in the words of Alan Greenspan, the Federal Reserve Chairman, "The broad tariff on Chinese goods that has recently been proposed, should it be implemented, would significantly lower U.S. imports from China but would comparably raise U.S. imports from other low-cost sources of supply." Because the demand for low-cost products would not decrease, we'd be faced with the reality of having to purchase products from other low-cost areas, including Taiwan and Indonesia. It seems then, that the the argument of "dumping" foreign, low-cost products into the American domestic market fails dismally at this level.

What then, one might ask, should be done to rectify this global, economic strife?

First, the Chinese government needs to stop arguing that the subsidies it provides to private corporations are "temporary assistance that the government provides state-owned companies to ease their transition toward capitalism." State-based assistance to private economy is a perversion of any ideal even remotely associated with capitalism, as it is only through government intervention in the economy that coercive monopolies can be created.

Second, arguably, the United States is right in asserting that the yuan should not be regulated by the Chinese government. Because several economic analysts have argued that the price of yuan is severely undervalued in contrast to its real value in a free-market economy, it is clear that the supply and demand business model needs to be applied in this situation. In fact, because the yuan is so undervalued, the Chinese government, who purchases the great majority of our treasury bonds, is able to increase our deficit through reduced interest rates.

The Chinese economic structure, however, is largely dependent on exports, rather than domestic demand. Because of this reality, the process of instituting tariffs as an economic deterrent is alarming, as it would have a detrimental impact on the Chinese economy. And while this may, in retrospect, achieve the the protectionist goals, the use of tariffs is a risk that may ultimately negatively effect the consumers in the short term, and would defeat the purpose of the legislation (to call for "fair" competition practices) in the long term.

So how can the U.S. achieve their goals without violating the very same principles that we're so adamantly fighting for? We have several options before us:

1. The U.S. needs to work towards deficit reduction by curbing finances to fruitless efforts (i.e. the Iraq war)
2. The U.S. ought to facilitate diplomatic debate as to encourage China to pursue a gradual elimination of its state regulation of both the foreign and domestic economic practices. The recent passage of a comprehensive legislation increasing property rights of foreign investors is a clear step toward this direction.
3. As argued by Fred Bergsten, a Director for the Institute for International Economics, "the first step...is that we go to the (International Monetary Fund), which has very clear rules against currency manipulation. If that itself doesn't work, then I would go to the World Trade Organization and file a case that China is violating two or three different obligations that are there, which would require them to move their exchange rate and, if not, face trade retaliation." I agree with Bergsten in that international pressure may be a tangible option in forcing China to migrate to the free market model. As China is currently one of the top 5 nations with the highest voting power in IMF, political deterrent seems a more viable alternative to tariffs (e.g. decreasing its voting percentage.) Indisputably, however, an all comprehensive tariff should not be discounted off the table. Rather, let's leave it as last line of defense.
   

References:

http://news.com.com/On+challenging+China+with+a+tariff/2008-1082_3-5746354.html
http://www.imf.org/external/np/sec/memdir/members.htm#total
http://www.appletreeblog.com/?p=1647
http://www.foxnews.com/story/0,2933,161160,00.html
http://www.washingtonpost.com/wp-dyn/content/article/2007/04/02/AR2007040201496.html
http://www.chinadaily.com.cn/english/doc/2005-06/24/content_454322.htm

Ethical Obama

An interesting article outlining Barrack Obama and the "ethical mishaps" of his campaign...

Virginia Tech Shootings

I give my sincere and genuine condolences to the victims and their families of today's shooting at Virginia Tech.

More information can be found here.

St. Pete Times Editorial Response

I just finished reading this editorial on the St. Pete Times web page:

Where's the racism?

You got to be kidding me. State Rep. Don Brown's e-mail was racist? Since when is telling the truth racism? (The e-mail said, "Don't forget to pay your taxes - 12-million illegal aliens are depending on you!")

Illegal immigrants in this country are a drain on our social system. Many work under the table and pay no taxes to begin with. Of those who file (using illegally obtained Social Security numbers) many often pay virtually nothing anyway.

Their kids get free education. They get free medical care in our emergency rooms. Yet they broke dozens of our laws to be here. So explain to me again how that e-mail could have been racist?

Vilmar Tavares, Spring Hill

My response that I sent to the editorial board:

In his letter, Vilmar Tavares from Spring Hill contended that illegal immigrants in this country are a drain on our social system. I beg to differ.

According to the National Research Council of the National Academy of Sciences (NRC), "immigrants indirectly raise the incomes of U.S.-born workers by at least $10 billion each year just by paying taxes and increasing the general productivity of the economy." Furthermore, a "typical immigrant family pays about $80,000 more in taxes than all of its members together will ever receive in local, state, and federal benefits."

Because immigrants are still human beings, they have basic needs. These needs are reflected in shopping for food, clothing, and other products (another reason to institute a sales tax, as to increase the potential revenue.)

Furthermore, let us remember that under Clinton's Personal Responsibility and Work Opportunity and Reconciliation Act, it is much more difficult to actually receive welfare benefits.

Finally, "Yet they broke dozens of our laws to be here" can be applied to George Washington, Thomas Jefferson, John Adams, and James Madison.

Yes, I do agree that this nation needs a comprehensive immigration reform, as several hospitals, especially those in California, have been closed because of immigration influx. It is crucial, however, that we stop perpetuating the negative stigma surrounding the immigrants in this nation.