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Orson Welles on Contracts and the Rule of Law

July 19, 2013 in Economics

By Peter G. Klein

From Peter Biskind’s hilarious and irreverent My Lunches with Orson, the edited transcripts of Orson Welles’s conversations with director Henry Jaglom in the mid-1980s:

HJ: In the old days, all those big [movie] deals were made on a handshake. With no contract. And they were all honored.

OW: In common with all Protestant and Jewish cultures, America was developed on the idea that your word is your bond. Otherwise, the frontier could never have been opened, ’cause it was lawless. A man’s word had to mean something. My theory is that everything went to hell with Prohibition, because it was a law nobody could obey. So the whole concept of the rule of law was corrupted at that moment. Then came Vietnam, and marijuana, which clearly shouldn’t be illegal, but is. If you go to jail for ten years in Texas when you light up a joint, who are you? You’re a lawbreaker. It’s just like Prohibition was. When people accept breaking the law as normal, something happens to the whole society. You see?

Of course, the US today is a society in which every citizen is a lawbreaker, virtually all the time — and it’s often impossible to know which law you’ve broken until ex post facto, when a government official decides. What can the rule of law possibly mean in such a system?

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Washington Times Op-Ed: A union cloud over Obamacare

July 19, 2013 in Politics & Elections

‘If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.’
- President Obama, July 2009

As the details of Obamacare become more known, Americans become more concerned, and for good reason. President Obama promised that if you were happy with your health care, you could keep it. As with so many other government promises, this, too, turns out to be an empty one.

Even people you think would be solid Obama supporters are waking up to the more damaging aspects of the Affordable Care Act.

The Teamsters and two other major unions sent a letter to Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi this week, writing: ‘When you and the president sought our support for the Affordable Care Act, you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat.’
The union letter continued: ‘The unintended consequences of the ACA are severe. Perverse incentives are already creating nightmare scenarios: First, the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly.’
The letter concludes: ‘The impact is two-fold: fewer hours means less pay while also losing our current health benefits.’

In 2010, Mrs. Pelosi, then House speaker, famously said of Obamacare, ‘We have to pass the bill to find out what’s in it.’ As Americans find out what’s in it, even significant parts of the Democrats’ base don’t like it one bit.
Government intervention ends up causing higher taxes or the costs of regulation being passed on to the consumer. Obamacare is no different, and as a result many employees no longer will be able to keep their current health care.
Those of us who champion the free market and understand how it works knew this would happen, even as the president promised it wouldn’t. Now Americans happy with their health care are seeing it threatened.
That is just one aspect of this highly problematic law. We know that Obamacare will cost more than any of its authors predicted, and many individuals will begin to see their premiums go up significantly. Even the White House is afraid of …read more


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Federal, Indiana Governments Dole out Corporate Welfare Together

July 19, 2013 in Economics

By Tad DeHaven

Tad DeHaven

The Indianapolis Star’s July 21 investigation of a contractor hired by the Indiana Economic Development Corporation to select companies to receive taxpayer handouts is further evidence that a separation of commercial interests and state is needed. For that to happen, however, the states will need to separate themselves from the federal money that perpetuates “crony capitalism.”

The unfolding story of Elevate Ventures appears to be a prime example. Founded in late 2010 by Howard Bates, “a well-connected businessman and Republican campaign donor,” Elevate was soon awarded a $1.5 million per year contract by Republican Gov. Mitch Daniels’ administration to decide what businesses would receive taxpayer subsidies. According to The Star, Elevate proceeded to give almost $500,000 to a company run by Bates and another $300,000 to a company run by Bates’ son.

The money, however, came from the federal government; specifically, a $1.5 billion federal business subsidy program created by the Small Business Jobs Act of 2010. Essentially another attempt to stimulate the economy, the legislation was created and passed by a Democratic Congress and signed into law by a Democratic president.

Politicians do not possess special knowledge that enables them to allocate capital more efficiently than markets.”

At first blush, it would seem ironic that partisan Democratic legislation at the federal level would lead to partisan Republican uses at the state level. There is no irony, however, as this sort of arrangement is standard fare. For all of the partisan bluster one reads or hears in the media, the truth is that politicians in both parties — and both levels of government — are partners in the corporate welfare racket.

Remember Solyndra? Republicans held up the now-defunct solar energy company as the prime example of the failure of crony capitalism under the Obama administration’s stimulus efforts. But while they were making political hay out of Solyndra, many congressional Republicans were busy petitioning the federal Department of Energy behind the scene to deliver similar subsidies to companies back in their districts.

One of those members of Congress was the current governor of Indiana, Mike Pence. Indeed, then-Rep. Pence — a vocal critic of the Obama administration’s economic policies — was one of four Indiana Republican signatories to a letter asking the Energy Department to subsidize a manufacturing facility in Tipton for a company called Abound Solar. The company was awarded a $400 million federal loan guarantee, but ended up filing for bankruptcy a …read more

Source: OP-EDS