The Circle Bastiat

The US Federal Trade Commission (FTC) building is seen in this September 2006 in Washington. (Paul J. Richards/AFP Photo/File)

Is the FTC concealing information?

By S.M. Oliva, Guest blogger / 04.01.10

Our “Bureaucrat of the Day” is Willard K. Tom. Tom has served as a government lawyer in many capacities, including the Federal Trade Commission’s Bureau of Competition and the Antitrust Division of the Department of Justice. Last year, he was appointed the FTC’s general counsel by Democratic Chairman Jon Leibowitz.

I feature Mr. Tom in this space today because of a letter I received from him yesterday. For the past six months, I’ve been trying to get a piece of data from the FTC. Rather then answer a simple request–no different then several such requests I’ve made over the years–Tom and his minions have chosen to hide behind banal, quasi-legal technicalities that only make him, and his superiors, look like they’re trying to coverup something. Maybe that’s because they’re trying to coverup something.

Last year, I posted two items on this blog about William Isely, an 84-year-old retiree who got caught up in the FTC’s ongoing campaign to cleanse the Internet of non-government-approved information regarding medicinal herbs and “alternative” medicine. The first post addressed a lengthy decision by the FTC’s own administrative law judge, dismissing the Commission’s complaint due to the fact the FTC had prosecuted Isely for owning and operating a website that, in fact, he neither owned nor operated. (The Mises Institute later reprinted this post in The Free Market.) My second item addressed the FTC’s apparent retaliation against Isely when the agency’s secretary illegally posted a confidential document containing all of Isely’s personal financial information to the FTC website. Subsequently, I have done further reporting at my personal blog about Isely’s ongoing efforts to receive compensation from the FTC–he spent over $130,000 defending himself–and how Commission lawyers have dragged their feet in negotiations.

As part of my reporting, I filed a Freedom of Information Act request with the FTC simply asking how much the Commission spent falsely prosecuting Isely. This was not an unusual request. In nine years of writing about the FTC, I’ve asked for case-specific spending data before, and the agency has always replied without issue. Indeed, in some cases the Commission has volunteered a greater amount of detail then I would have accepted.

But that was before Tom was general counsel. Apparently, he’s decided to crack down on non-professional journalists who think they have a right to how the FTC spends taxpayer funds.

As part of my FOIA letter, I also asked the FTC to waive any fees associated with the search for, and reproduction of, documents responsive to my request. Again, this isn’t unusual. I’ve always asked for and received such waivers in the past. The FOIA itself contains a fee-waiver rule that the courts have constructed quite liberally to maximize public access to information. And let’s keep in mind, the only thing I asked for here were two numbers: How much the FTC spent on the Isely case, and specifically how much was spent to procure an expert witness report. (That report, incidentally, was worthless, since it addressed the merits of the FTC complaint, which the judge never reached.) It’s not like I was asking them to pull files from the 1940s out.

The FTC lawyer who reviewed my FOIA request denied my waiver request, without any explanation or citation of legal authority. Because she denied the waiver, she refused to answer my request unless and until I agreed to pay an unspecified amount of fees. My position on this is absolute: I’m not paying for information about how a government agency spends its money. I never paid for it in the past, and just because the Democrats are running the FTC now, I’m still not paying for it. So now we’re at a standoff.

I appealed the first lawyer’s decision to Mr. Tom, who as general counsel makes a final ruling. He also denied my request, but he sent an explanation. Well, it was a half-assed attempt at an explanation.

The thrust of Tom’s argument is that I failed to provide enough information to justify my fee-waiver request. He said I did not persuade him that (1) I would actually disseminate the requested information to the public and (2) the public would actually benefit from the information. The first charge is curious. As I explained in my filings, I’ve already written widely-disseminated articles at Mises.org about the Isely case. It should have been obvious that I would have also disseminated the spending information here and through other media. The fact that I did not specify the exact methods of dissemination can’t defeat a fee waiver request. Indeed, Tom’s letter actually cited a case to me that said as much!

The second argument–I failed to prove the public would benefit from disclosure of the information–is pretty remarkable. Tom insisted that “the agency has only denied you access to the information you seek free of charge” (italics his). So, if I understand his position, the FTC believes that information about the Commission’s spending should not be freely available to the public. Tom said the burden was on me to show disclosure of spending information would “contribute, significantly,” to the public’s knowledge of FTC operations. I would think that would be self-evident. Apparently not.

The real thrust of Tom’s argument, it strikes me, is that he doesn’t consider websites like Mises.org a legitimate source of public information. If I were a reporter at the Washington Post and filed a FOIA request asking for spending data, without further explanation, I don’t think there’s any doubt Tom’s office would have released the information, free of charge and without incident. Especially given FTC Chairman Leibowitz’s recent calls for the government to “save” newspapers and traditional media, Tom’s actions smack of discrimination against the truly independent press.

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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

Secretary of State Hilary Clinton (l.) and Russian Prime Minister Vladimir Putin meet at the presidential residence Novo-Ogaryovo outside Moscow, March 19. Russia on Friday said that Iran was letting the opportunity for dialogue with the international community slip away and warned that the Islamic Republic could face new sanctions. (Alexei Nikolsky/Pool/RIA Novosti/REUTERS/File)

Sanctions on Iran will fail

By Michael Martin, Guest blogger / 04.01.10

Hillary Clinton telling Iran that the US is looking for sanctions that bite is like telling them they’re going to be grounded and cannot go outside.

Sanctions don’t work as far as political threats are concerned in the Middle East – at best they are “hit or miss.” And as reported in Daniel Ammann’s new book, The King of Oil, Israel got 60-90% of its oil from Iran at a time that they weren’t officially recognized because it was in everyone’s interest to be business partners although publicly they had to “not save face” and remain bitter enemies.

So all this jawboning about Iran does nothing but keep the War Machine moving forward. More importantly, it keep donors’ wallets open for the Dems who may need all the help and support they can get in November.

Officially, the US wants to stop Iran from developing a uranium enrichment program. Iran is the second largest producer of crude oil in OPEC. They can go buy a nuclear weapon or dozens of them. Pragmatically, I don’t think there’s much the US can do but fight this in the headlines.

Iran needs to keep the oil flowing and they will…to China and India or anyone else who needs it. After crude oil, Iran’s largest exports are, ready for this, Persian carpets, pistachios, and saffron and its main trading partners are Japan and Germany.

Secretary Clinton was quoted in the NYT article as saying “parts of Iran’s government are ”a menace” to the Iranian people and the Middle East.” If I didn’t know any better, that sounds a lot like the United States…parts of our government are a menace to me and you, especially the FRB and the CFTC. We have a lot in common with the Persians from that standpoint.

“Clinton said that if Iran developed a nuclear weapon, it would embolden terrorists and spark an arms race that would destabilize the Middle East.” It might be me, but I think poking a stick in their eye emboldens them more than anything else. My guess is that they have them already, not officially speaking.

Politicians will get behind this because they are elected by their donors, not their constituents, but in the end, Iran will stare down the US and win.

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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

Tea party supporters cheer as they listen to Sarah Palin at the "Showdown in Searchlight" tea party rally in Searchlight, Nev., Saturday, March 27. (Jae C. Hong/AP Photo)

Are Tea Partiers ungrateful?

By Jeffrey Tucker, Guest blogger / 03.29.10

From the NYT:

When Tom Grimes lost his job as a financial consultant 15 months ago, he called his congressman, a Democrat, for help getting government health care. Then he found a new full-time occupation: Tea Party activist… Mr. Grimes is one of many Tea Party members jolted into action by economic distress… they found common cause in the Tea Party’s fight for lower taxes and smaller government…. The Tea Party vehemently wants less — though a number of its members acknowledge that they are relying on government programs for help. Grimes, who receives Social Security…has filled the back seat of his Mercury Grand Marquis with…Frederic Bastiat’s “The Law,” which denounces public benefits as “false philanthropy.”

Ok, we get the point. Anyone mad at government is just acting like a spoiled hypocrite, ignorantly decrying the very thing that makes life worth living. Tea Party people are ungrateful wretches who will someday regret the effects of their protests. In the same spirit, we can imagine what the New York Times would be writing in the 1850s, reporting on new political movements in slave states.

When the middle-aged slave Jim developed a boil on his foot after a long day in the fields, he went crawling to the plantation to get it treated and bandaged. The master gladly obliged. Today Jim expresses a rising interest in the new abolitionist movement and is even demanding what he calls his freedom. This new freedom would mean an end to the amenities that are a mainstay of his life. He depends of plantation-provided food, housing, and medical care, but his living quarters are filled with pamphlets by William Lloyd Garrison and others agitating for a “new liberty.”

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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

Women in countries with good healthcare systems report a preference for feminine men over manly men. (Newscom)

Does good healthcare increases demand for metrosexual men?

By Douglas French, Guest blogger / 03.29.10

The folks over at Face Research Laboratory in Aberdeen, Scotland tested women’s preferences for manly men vs. more feminine types and found that women living in countries with better healthcare preferred what they believed to be metrosexual types. Women residing in countries that lacked good healthcare went for the masculine men.

For those that follow evolutionary psychology, this makes perfect sense. The theory of sexual selection dictates that “women are the choosier sex because they take on most of the risk and burden of reproduction and child rearing. While a man can sleep around with 100 women in a year’s time and have 100 kids, a woman who sleeps with 100 men in a year will only have one baby (barring multiples). She has more at stake in each pregnancy. Therefore, it is in her best interest to at least choose a high-quality mate. And one of the hallmarks of a quality male is good health.”

American women rank fifth in preference for masculine types, while their nation’s healthcare ranks 20th. But a peek at American cultural leads one to think that the fifth place ranking is too high.

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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

Here's a Libertarian version of the Socialist alarm clock story. (Newscom)

Samizdat: The Libertarian alarm clock

By Art Carden, Guest blogger / 03.26.10

You might have read the story about the Socialist Alarm Clock. Here’s one version. A friend who wishes to remain anonymous sent his libertarian version and asked me to post it (cross-posted at Division of Labour and The Beacon):

“This morning I was awoken by my alarm clock built by the ingenuity of millions of individuals all working for their own gain, but whose efforts were coordinated by the prices for labor and materials and finished goods provided by the free market. I then took a shower in the clean water provided by the shower head, pipes, and sanitation facilities whose construction also involved the efforts of thousands of people acting in their independent interest. After that, I turned on the TV to The Weather Channel, whose owners include one of the largest multi-national corporations and private equity companies, to see the week’s forecast presented in a clear, informative (and even entertaining) manner. I watched this while eating breakfast of General Mills’ inspected food and taking drugs whose strong brand name gives me confidence in its safety.

At the time which millions of people coordinate their activities to take advantage of each other’s knowledge and skills, I leave for work. I get into my Japanese-designed, Mexican-supplied, Michigan-assembled automobile and set out to work on the roads built by construction contracting companies and named after corrupt politicians, possibly stopping to purchase additional fuel that was shipped from the Middle East by an oil company at a per gallon cost many times lower than the price of having a letter delivered across the street by the government monopoly that loses millions of dollars each year. To make the purchase there is no need to leave the pump; I am able to slide a piece of plastic into a small slot and get credit extended to me by a bank who has never met me in person. On the way out the door, I put out the Fed-Ex envelope containing the documents I need to arrive across the country tomorrow morning and drop the kids off at the public school which is attended by only the best students, thanks to the high home prices in the area.

After work, I drive my Japanese-Latino-Midwestern car back home, to a house which has not burned down in my absence because of materials developed in the research and development departments of hundreds of corporations and which has not been plundered of all is valuables thanks to the lock on the door and a sign advertising the security company whose services I employ. My piece of mind was not interrupted by the thought of these events anyway, as I have both fire and homeowners insurance through privately held insurance company.

I then log on to the internet to watch and listen to artists who don’t appeal to a broad enough audience to make it onto one of the few channels that a government monopoly allows to be broadcast. I then log onto the democraticunderground.com to post about how DEREGULATING the medical industry is BAD because low-cost, quality health care can never be provided by greedy, self-interested people.”

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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

A for sale sign is posted outside a newly constructed home in Derry, N.H in September 2009. Sales of existing homes fell for a third straight month in February, 2010, pushing sales down to the lowest level since last July. There is concern that the fragile housing rebound could falter, making it harder for the overall economy to recover. (Charles Krupa/AP Photo/File)

The coming ‘double dip’ in real estate

By Ryan McMaken, Guest blogger / 03.25.10

Zillow reports a double dip in real estate prices in 12 American cities, while The Federal Housing Finance Agency (formerly OFHEO) has released new data showing that housing prices nationwide are going nowhere. Meanwhile, Bank of America has announced that it will begin writing down the principal on $3 billion worth of loans.

These are all good developments for many people, of course, since it means both that for-sale housing continues to become more affordable and that mortgage servicers are beginning to come to grips with reality, which will help home prices move to prices that reflect actual market demand.

It’s probably a safe bet that most of the non-performing loans being serviced by B of A were originated by Countrywide before it was acquired (viz., bailed out) by B of A. And given that the ratio of non-performing loans in general are at an all-time high, B of A and the investors who actually own the loans have probably come to the conclusion that it is best to have some revenue rather than foreclose and have zero revenue.

The B of A move with single-family is a move toward the sort of “amend, extend and pretend” strategy that is now being employed in dealing with problematic commercial loans. Although such a strategy is viewed with resignation in the industry it is probably preferable to the strategy of most single-family loan servicers which is probably best described simply as “pretend.”

The possibility of an extended double dip likely won’t be a surprise to those who’ve long wondered what would happen after the home-purchase tax credits took their course. The first credit from last fall, which provided a tax credit of $8,000 to first-time buyers set of a mild buying spree in many markets, propping up home values in the 3rd quarter of last year. Congress extended the credit beyond first-time buyers to a rate of $6,500 for repeat buyers. The second credit is scheduled to expire in April. The second credit appears to have not produced nearly the bump the first one did, and a second extension is likely to produce even less of a bump.

Yet, the credits and the frantic efforts by the Fed to keep interest rates low have produced a nationwide decline in home values of 1.2 percent. Nevada is still off by 17 percent and Arizona is off 13 percent, year over year. The feds can claim that things might have been much worse, but the fall out of this policy of subsidize and inflate has yet to be seen.

Again, from an Austrian perspective, the decline in home prices is a good development since it moves housing toward a price that reflects demand. However, the Federal government’s policy has been to prop up home prices and to produce another housing boom in the belief that this will drive job creation and economic growth.

The anemic growth in home prices nicely illustrates the limits of efforts by Congress and the Fed to produce a new boom through subsidy and monetary expansion. The feds have simply been unable to do anything about the 8.5 million American jobs lost since the peak of the boom, and without job creation, it’s difficult to see where home sellers will find legions of ready buyers no matter how low the interest rate is. Back in the boom times, Indymac and Co, may have been happy to hand out loans to people without jobs, but those days are over. At least for now.

As the Austrians predicted, the current federal strategy has done little more than drag out the recession indefinitely as home prices are prevented from finding a true bottom while resources should have been allocated elsewhere. The absurdly low interest rates that accompany such a strategy have failed to produce the desired spending, but they have successfully prevented Americans from engaging in any meaningful amounts of savings or investment.

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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

Michael Lerner pumped gas into his car in January at the Speedway gas station in Cleveland Heights, Ohio. Some economists make the case that high gas prices aren't really bad for the economy. Really? (Amy Sancetta/AP/File)

Silly consumer, higher gas prices are good for you

By Ryan McMaken, Guest blogger / 03.24.10

This piece at CNN Money falls into what is an entire sub-genre of business writing in which economists and business writers get together to explain why the latest development in government-induced market failure is not a problem at all.

The piece explains why $3 gasoline is absolutely no problem whatsoever and is actually good for the economy. Now, move along and get back to spending your money on shiny trinkets.

The claims in the piece are perched upon the assumption that needless spending on gasoline is fine because it is still spending, and that expensive gasoline has only a minimal psychological effect because people will just shrug their shoulders and keep spending on consumer goods. Spending on consumer goods, of course, is the most important thing in this line of thinking since it is seen as the most important source of economic growth.

What is ignored is the fact that gasoline is only as expensive as it is because of artificial limits imposed on supply by government regulations, and because of the devaluation of the dollar. Every dollar buys less gasoline as the money supply continues to expand. And let’s not forget the 40 cents or so per gallon in taxes paid at the pump. And we’re just talking taxes paid by the end user. The taxes paid at various steps of the production process are hardly negligible.

Also ignored is the possibility that households that don’t have to spend an extra $100 on gasoline every month due to these effects might actually save that money or invest it.

The talk about psychological effects is simply rubbish. People may indeed shrug their shoulders and continue to buy the same amount of gasoline as they might have bought at $2 per gallon, but there will be a real world effect on the household budget that has nothing to do with how the consumer feels about it. The consumer now has less money to save for retirement or education or investment or anything else.

But none of this matters to the economists whose full time jobs consist in patting the heads of the masses and assuring them that all is well no matter what.

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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

Jon Leibowitz, chairman of the Federal Trade Commission, discussed new actions to combat fraud against consumers in the housing markets at a September press conference. Courts sometimes rely on regulators' experience to justify rulings in their favor. (Roger L. Wollenberg/UPI/Newscom)

Just how experienced is a regulator's experience?

By S.M. Oliva, Guest blogger / 03.15.10

A simple but effective trick the state uses to eliminate due process and violate individual rights is experience. What do I mean? The foundation of all regulatory “law” is the notion that any body of regulators created by Congress possess, by virtue of said creation, unlimited expertise and experience over whatever subjects they regulate. This regulatory “experience” creates a strong judicial presumption in favor of the regulator; the presumption of innocence and individual rights gives way to disproving the “experience” of the regulator.

I was reviewing a 2005 Federal Trade Commission case earlier. The details are unimportant. The Commission decided a certain activity was harmful to consumers. There was no empirical data to support this claim, but the reviewing court reasoned that data was unnecessary, because the Commission’s “experience” allowed it to instinctively know the challenged activity was bad. Ergo, it was the defendant’s burden to disprove the Commission’s experience, which of course it couldn’t. Victory to the FTC.

Regulatory “experience” is a strange type of patent. Most FTC members are, of course, antitrust lawyers. Their “expertise” derives largely from having graduated law school. Yet with an FTC commission in hand, they become authorities on health care, manufacturing, retailing, et al. There’s no mechanism for an accused individual or firm to dispute this “expertise,” because any such process would require the regulator himself to acknowledge he’s, in reality, not an expert. As Ralph Wiggum would say, “that’s unpossible!”

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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

At an inaugural meeting of the International Monetary Fund, economist John Maynard Keynes (right) was greeted by World Bank Assistant Secretary Harry Dexter. The ongoing economic debate between Keynes and Austrian School economist F.W. Hayek was captured in a recent rap video. (HO/AFP/Getty/Newscom)

Hayek vs. Keynes rap video: Thoughts from the man behind it

By Jeffrey Tucker, Guest blogger / 03.15.10

Last night’s session at the Austrian Scholars Conference was nothing short of magical. After a full day of presentations on new research, and a fascinating and well-delivered talk by Caroline Baum of Bloomberg, John Papola, maker of the Hayek-Keynes rap, presented his video and then gave a talk about how it was made.

All the technical details were fascinating. We learned about the creative process and how the music came to be written. We learned about the paths not taken and why they chose what they did. We heard about how John personally drove to Barnes and Nobel to pick up the copy of the General Theory that makes an appearance in the first scene. We heard about the marvelous 16-hour stretch of filming.

There were moments when John brought down the house. For example, he jokingly spoke about the affinity between libertarianism and rap. There is the belief in gun rights. And drug freedom. People laughed uproariously about that. But then he went one better: he said that after all the rap community is on the gold standard.

Mostly, however, I must say that what I found inspiring about John’s talk was its freshness in overall philosophy. Several points stood out to me. He spoke about the need to put aside whatever factionalism exists within the Austro-libertarian community, about which he knows and cares nothing, in order to focus on the larger goal of educating for liberty.

He drove home the point that we live in a new world in which information is spread in unpredictable ways, and how the old command-and-control model of learning is evaporating. That means that we must be willing to take new risks and use every means possible to get the word out in every format. It means that the state is at a major disadvantage here but so is any institution that is unwilling to evolve and progress.

I also appreciated his interesting point about how important it is to assume that your audience is smart. Never talk down to them. Don’t take cheap shots. Always be fair. Never think of yourself as rallying a tribe but rather think of recruiting others into the smart set. It was striking here how much he sounds like a combination of Nock and Mises, and yet he is experimenting with this model in new and surprising ways.

He is a very young man and he was speaking before a community that included some much older and well-established scholars. And yet everyone present was really inspired, and learned from him. After all, he was repeating old wisdom but repackaging it in a lovely way. It was especially touching to hear Roger Garrison’s comments on the video and the talk. Here we had the meeting between the older generation and the young one, the established scholar and the artist in new meeting. Somehow it all seemed to work. The mood after John finished was nothing short of exuberant.

We were all honored to have him here. It is probably the last thing he imagined doing two years ago but he served a crucially important role at this conference in his comportment, craft, and even philosophical pedagogy. We are all in his debt.

View the video here:

Related post: Interview with Papola

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The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.