Senator Tom Harkin, whose outspoken opposition to Wall Street generally and for-profit schools specifically has made him a leading voice in Congressional regulation of career and for-profit colleges. His office is set to release a report this month – the second in a series – detailing the horrific ramifications of applying free market principles to higher education, but it seems his office may have much to be concerned about given recent details that have emerged about the Senator’s direct involvement in not only the creation and distribution of faulty past reports, but in back-door dealings that should give any American pause.

Last fall, Harkin released a report that his office claimed detailed a host of transgressions on the part of for-profit or “career” colleges from misuse of student loan money to misleading counseling services and high default rates among graduates. The report was criticized by Senate Republicans as “unfair,” and Republicans boycotted subsequent hearings. It was later revealed that the report, compiled – with Harkin’s help – by the GAO, was faulty and many of its findings either fabricated or unusable and the GAO issued fix:

In November 2010, the GAO was forced to release a significantly changed report. The correction affected 16 of the 28 findings in the original report. The bias of the original report was also reflected in the fact that all 16 revisions were all of the same type: changing flawed statements that cast the for-profits in the worst possible light. Error after error took statements out of context or did not accurately portray what was said.

The report, however, had Harkin’s desired effect. Just days after the report was presented at a Senate hearing, the value of for-profit schools’ stock dropped 14% and companies that ran free-market educational facilities lost over $4 billion dollars.

(more…)

A small-town newspaper (scroll down to Section B after hitting the link) profiled a local land developer, explaining how he started and grew his own business.

Harry Fox, Jr. spent the past few decades becoming a successful land developer in the Commonwealth of Pennsylvania. (Fox generally does not build but instead acquires large tracts of land and goes through the necessary steps in order to subdivide the land into lots and bring them to market.) He mentioned to the newspaper that if he had tried getting into the land developing business today he would have a much harder time doing so because of all the government regulation that exists. I wanted to know what he meant by this so I contacted him and conducted an interview of my own.

South-central Pennsylvania on a foggy, autumn day. Photograph © Paul Hair, 2011.

I wanted Fox to explain to me all the steps needed to bring a piece of land to market in the Commonwealth of Pennsylvania. However, government regulations and requirements are so extensive that we couldn’t go through all the steps in just a few hours. So we focused on just one area: what a developer needs to do to bring a piece of land to market with that piece of land having a private septic system. The description that follows pertains only to Pennsylvania. Any errors made are mine and mine alone.

(more…)

From Accuracy in Media’s Benjamin Johnson:

Bad economic policies have consequences. Senator Dick Durbin thought the big, greedy banks were making too much money and regulated their profits.  Our President, eager to jump on the ‘Government Knows Best’ bandwagon offered his support and signature to the Dodd-Frank Bill. Accuracy in Media teamed up with Let Freedom Ring to find out what happens when banks are forced to comply with government price controls. Just as predicted, the customer gets a shake down.

(more…)

At FreedomFest 2011, Reason’s Matt Welch spoke with Fox News’ Juan Williams about his passion for school choice reform, which Williams describes as the “civil rights issue of our time.”

Williams is the author of the new book Muzzled: The Assault on Honest Debate, which recounts in part his controversial firing from National Public Radio. He’s also the author of the critically acclaimed 1988 history of the civil rights movement, Eyes on the Prize.

Williams says he first came to the issue of education reform in the 1990s, when he was astonished by the level of dropout rates in inner-city schools, which disproportionately affects low-income and minority students. He credits George W. Bush for coining the phrase “the soft bigotry of low expectations” to describe the educational status quo and remains surprised by the lack of widespread outrage from parents whose children are stuck in such failing schools. Still, he believes that the forces of school choice are making huge headway in breaking up a public school monopoly that fails to serve students and parents.

(more…)

There’s no way to appreciate fully the contributions of Nobel Prize-winning economist Milton Friedman (1912-2006), who would have turned 99 years old this weekend, to the growth of libertarian ideas and a free society.

This is the man, after all, who introduced the concept of school vouchers, documented the role of government monopolies on money in creating inflation, provided the intellectual arguments that ended the military draft in America, co-founded the Mont Pelerin Society, and so much more. In popular books such as Capitalism and Freedom and Free to Choose, written with his wife and longtime collaborator Rose, he masterfully drew a through-line between economic freedom and political and cultural freedom.

Yet his ultimate contribution to freedom and liberty is found less in any of the specific argument he made and more in the ways he made them. Friedman provided an all-too-rare example of a public intellectual who was scrupulously honest, forthright, and fair in every debate he entered. Whether he was duking it out with fellow Nobel Prize winners and other high-profile economists or making the case for the morality of capitalism with TV hosts such as Phil Donahue and angry students, he always argued in good faith, admitted when he was wrong, and enlarged the circle of debate.

(more…)

For thousands of years, philosophers have told us that if we are to live our lives at their best, we should seek truth, beauty, and goodness. Of course, each of these qualities has raised thorny issues and provoked ongoing arguments. That people have carried on such arguments, rather than surrendering themselves to their raw appetites and animal instincts, may be counted a valuable thing in itself. A final resolution of such deep questions may lie beyond human capacities.

In regard to goodness and beauty, I have nothing worthwhile to add to the discussion. For guidance in seeking goodness, we may look to saints, theologians, moral philosophers, and moral exemplars of our own acquaintance. For demonstrations of beauty, we may turn to nature and to artists, great and small, who have adorned our lives with the grace of music, poetry, and the visual arts. My own professional qualifications, as an economist and an economic historian, do not equip me to contribute anything of value in these areas.

I do feel qualified, however, to speak with regard to truth, because the search for truth has always served as the foundation of my intellectual endeavors. Moreover, my study, research, and reflection within my own professional domains have brought home to me a relationship that others might do well to ponder and respect―a relationship, indeed, an array of relationships, between truth and freedom, such that anyone who seeks the triumph of truth must also seek to establish freedom in human affairs.

When I began my academic career in 1968, my research specialty was the economic history of the United States. I was expected to publish the findings of my research in reputable professional journals. For a young man just beginning to master his field, carrying out publishable research was a daunting task. Thousands of other writers had already contributed to building up the literature in my field, so adding something of enough importance to merit its publication in a good journal was hardly an easy task.

I discovered, however, that one way to proceed was by identifying significant mistakes in the existing literature and correcting them. Moreover, I soon found that many such mistakes had been made. To put this statement in another way, I found that the existing sources often failed to tell the truth about one thing or another, and in some cases the falsehoods propounded by one writer led later writers, who relied on those false statements, to make errors of their own.

We often think of the scientific or scholarly enterprise as a cooperative process in which the establishment of one truth facilitates the establishment of another, but, unfortunately, the process often works in an adverse way, too, as the establishment of one falsehood fosters the establishment of another.

The errors in my fields of study and research take two main forms: factual and interpretive.

(more…)

If any one thing estimated in the Commerce Department’s National Income and Product Accounts may be described as the engine of economic growth, private domestic business net investment is that thing. This variable has such tremendous importance because, if accurately gauged, it tells us better than any other measure how many resources are being devoted to building up the private business capital stock and improving it by innovation. An economy that has anemic private business net investment almost certainly will falter soon, if it is not doing so already.

Notice that every aspect of this awkwardly named variable is critical.

• First, it has to do with private investment, not so-called government investment. The latter, which looms fairly large in the official accounts, ought never to have been labeled as investment, because it comes about not as a result of wealth-seeking motives and rational economic calculation, but as a result of political motives, calculations, and actions that often clash with the creation of real wealth, rather than contributing to it.

• Second, we are looking here at business investment, excluding what the Bureau of Economic Analysis calls private “household and institutions” investment, which has somewhat murky underlying objectives, determinants, and consequences.

• Third, we are examining net, rather than gross, investment. The latter includes a large element of expenditure aimed merely at compensating for the wear and tear and obsolescence of the existing stock of private business capital. For example, even at the most recent peak for gross private domestic business investment, in the third quarter of 2007, it was running at $1,661 billion (annual rate), whereas net private domestic business investment was only $463 billion (annual rate), or about 28 percent of the total. (The investment data cited in this article are taken from Table 5.1, Saving and Investment by Sector, in the National Income and Product Accounts, accessed 02/16/11.)

It is obviously important that businesses compensate for ongoing depreciation of their existing stock of capital goods, which includes structures, tools and equipment, software, and inventories. But unless firms do more than make up for depreciation, they do not expand their productive capacity except to the extent that they can embed improved technology in their replacements for worn-out or obsolete capital goods. In general, economic growth requires net investment, and more rapid economic growth requires a greater rate of net investment.

(more…)

President Obama, in his State of the Union address Tuesday night, was right to focus on the challenges the United States faces as domestic companies try to compete with low-cost global competitors. But he was wrong to suggest that the United States can “win the future” by getting Washington more involved in innovation and education.

As the president conceded elsewhere, Washington is, in fact, a big part of the problem—with high corporate tax rates and excessive regulation.

Just a week earlier in a Wall Street Journal article, the president elaborated on this, rhetorically declaring a truce with business and laying out the administration’s strategy for moving “toward a 21st-century regulatory system.”

Mr. Obama said this new system would need to strike a balance between the innovativeness, job-creating capacity and robust growth produced by free markets and the responsibility of government to impose “common-sense rules” to protect the public. He called for a “government-wide review of . . . rules already on the books,” and said that “careful consideration” would be given to the costs and benefits of all pending regulations. But as Yogi Berra once said, “This is like deja vu all over again.”

Presidents Clinton and Reagan both signed executive orders requiring that proposed federal regulations be implemented only if their economic benefits exceeded the costs of complying with them. Reagan even established a branch within the Office of Management and Budget—the Office of Information and Regulatory Affairs (OIRA)—to make sure executive branch agencies complied. The executive orders by and large were ineffective.

In fact, the federal government has been expanding its control of the private economy since the 1890s, on the theory that vulnerable people must be protected from cradle to grave by an omniscient bureaucracy that knows what’s best for them. The growth in regulation typically has been justified by analyses, prepared by the regulatory bureaus themselves, which grossly overstate regulation’s benefits and understate its costs.

(more…)

After Barack Obama’s historic victory in 2008, many in the Democratic Party and on the political left argued that the GOP and the conservative movement were finished and that Democrats were destined to control, in perpetuity, the presidency, Congress, and culture, writ large. But then something unexpected happened–millions of sleepwalking, mall-shopping Americans finally woke up.

The activist left, which denigrated the previous president in a merciless fashion, took the reins of power with reckless abandon and shoved its brand of poisonous hope and change down the throats of the American people. So we the people, the reawakening silent majority, responded in the form of a grassroots movement that is turning into a juggernaut set to roll past November 2nd and become something transcendent and long-lasting. Our Founding Fathers would be proud that we have rediscovered the spirit and the essence of their ideas.

While the Tea Party has not been specifically partisan–many Republican carcasses lie in its rubble–this conservative and constitutional checks and balances has created a rejuvenated GOP, chastened and wiser.

This weekend I have the honor of sharing the stage with one of the Tea Party’s and Republican Party’s fearless leaders, Sarah Palin. Since her arrival on the national stage, the Democratic Party has recognized her potential as a political powerhouse and has worked in tandem with its partners in crime, the mainstream media, to wage an unprecedented personal campaign against her and her family. The Tea Party can relate.

But the power of Alinsky and the politics of personal destruction vis a vis the Democrat Media Complex has reverse effects when the object of the hate bravely stands up to the bullies and thugs. The Tea Party and Sarah Palin have given America a great lesson in standing up to the bullies who have co-opted the Democratic Party and the American media. (more…)

It’s no secret that Democrats and organized labor have long shared a love affair that’s lasted for decades and burns even stronger under the Obama administration.  As more and more legislation has been enacted over the years in the interest of protecting workers, including state and federal safety and environmental regulations, voluntary union membership in the private sector has decreased.  Yet, public sector unions have grown under big government policies.  And they continue to grow.

Creating union jobs has become far less of a worker protection issue and far more a political tool for vote pandering.  With 12% of the overall workforce, labor union leaders invest their members’ dues in Democrats and rally their members to turnout at the polls and check off the box for those candidates.  Democrats in turn reward the unions with bigger government – more public sector jobs, more government projects, more schools and other facilities…more spending means more union dues.  And more union dues means more money to spend on political campaigns.  And so the cycle goes.  All too often, big government is a reflection of special interest paybacks, not of well-intended policy.

But for the other 88% of us equally hard working Americans who, primarily by our own choice, are NOT union members, where does that leave us?  Usually, with more taxes and without much of a voice.  And nowhere near as much voting power as Big Labor has amassed over all these years.

But all that is about to change, thanks to The Concord Project.  Finally, a tool for liberty-loving Americans that’s sure to bring out the community organizer in all of us.  And give the average voter a fighting chance against powerful unions and overbearing lefty groups during election season. (more…)

Suddenly the American public is shocked.  Perhaps there is no economic recovery.  Perhaps the One really does favor Islam.

Democrats and Republicans shake their heads and wonder, how could our President pursue such divisive and unpopular policies?  What is the rationale for his decisions?  Is he incompetent?  Is he naive?

The answer is none of the above.

I have said before and I will say again, Barack Obama does not share the values of Americans.  His vision is completely anathema to an America based on individualism, private property rights and Judeo-Christian morality.

When one argues that Barack Obama is merely mistaken in his economic program, they completely discount the notion that he knows exactly what he is doing and that he has been 100% successful in achieving his policies and their intended ends, means and ends that any objective viewer would realize were insane.  After all, an economy is nothing more than the collection of mutually beneficial voluntary exchanges of labor and the fruits of labor.  Anything that impedes one’s labor, or the trading of its fruits is necessarily bad for the economy.  Hence, almost everything a government does to try to stimulate an economy, impeding the natural spontaneous harmony of such a system necessarily postpones any recovery.

We were in major trouble with unsustainable public and private debt prior to this President, coupled with a completely insolvent financial system, a destined to fail monetary system and numerous stagnant businesses sucking up economic resources.  A real financial restructuring would have taken significant time, and even the most “fiscally conservative” President and Congress would not have been able to move enough roadblocks out of the way to make this recovery painless or quick.  I question whether or not anything could change the direction of the economy in the long run, save for a collapse that would force us to let the free market work and liquidate the welfare state.  But this President ensures that there will not even be a chance for recovery for many many years, regardless of who the next President is.

And it is all by design.

(more…)

I pose this question seriously, not as a physiologist, but as an economic historian. I am provoked to raise the question by an advertisement that Amazon sent me recently, calling my attention a book titled Can Capitalism Survive? Creative Destruction and the Future of the Global Economy. Seeing this sales pitch, my immediate reaction was my usual sadly amused reply to such a question: Can capitalism survive? What an odd question! Assuming that capitalism ever existed at all, it has been dead for at least a century.

At first glance, I did not recognize that the book being advertised is one for which, in a sense, I am responsible. It turns out that the “new” book is only an old (portion of a) book, now adorned by a new subtitle and two new introductory paragraphs by the Newsweek columnist Robert J. Samuelson. If I reveal that the book’s author is Joseph A. Schumpeter, many readers will recognize it immediately as Part II of that famous economist’s best-known work Capitalism, Socialism and Democracy, first published in 1942, with subsequent editions in 1947 and 1950.

The new book’s front cover has a blurb from Fortune that declares Schumpeter to have been “the most influential economist of the twentieth century . . . a major prophet.” The back cover has an embarrassingly superficial blurb by publisher Steve Forbes that, among other things, describes Schumpeter as “the twentieth century’s foremost economist.”

I do not consider Schumpeter entitled to be called the most influential economist of the past century―that distinction unfortunately belongs to John Maynard Keynes, and Milton Friedman surely deserves the second place. As for Schumpeter’s rank as a prophet or as the intellectually foremost economist, I would place him below Ludwig von Mises and F. A. Hayek.

Nevertheless, Schumpeter was unquestionably one of the most important economists of his day, and his work has continued for good reason to attract readers ever since his death in 1950.

(more…)

With great sadness, I convey the news I have just received that Manuel F. Ayau has died. Known to his friends as Muso, Ayau was one of the greatest persons I have had the privilege to know. I am not given to hero worship, but I do not hesitate to affirm that, to me, Muso was a hero.

Ayau was the principal founder of the Universidad Francisco Marroquin in Guatemala City. He was also a successful entrepreneur, an active participant in the public affairs of his country, and a dedicated champion of liberty there and throughout the wider world. The proud patriarch of a beautiful family, a warm friend to countless adherents of classical liberalism, and man of tremendous energy and striking courage, he exemplifies the realization of the finest potential that human beings can achieve.

(more…)

There’s an old joke about a Transylvanian cookbook. The recipe for an omelet starts off with this: “First, steal two eggs.” If that note really appeared in some country’s cookbook, don’t look for constitutional government or a free market system to arise there anytime soon. That’s because democracy is not something you can just plant, like shaking seeds out of an envelope.

Americans were blessed to have extensive experience of self-government when we made our bid for independence in the 1770s. And Americans at that time–all the most thoughtful ones at least–recognized the profound contradiction that human bondage represented. It was difficult to assert on the one hand that all government “derives its just powers from the consent of the governed” while holding millions of human beings as slaves. Amid many blessings, slavery was held to be a curse. It took another eighty years and fratricidal Civil War before those contradictions were resolved.

A free market can do many things efficiently and justly, but the free market is perverted when it treats humans as objects. Thus, almost all people recognize that slavery and international sex trafficking are wrong. Our laws protect artistic expression, but we demand strict enforcement of laws against child pornography. Such illicit trade cannot be honored as a part of legitimate commerce.

We already know something of the unusual ideas of human rights and commerce held by U.S. Solicitor General, Elena Kagan. Kagan has been nominated by President Obama to succeed the retiring Justice John Paul Stevens. Kagan also served in the Clinton White House, where she left an extensive paper trail of documented opinions.

Most interesting, perhaps, is Kagan’s support for cloning human beings. Clinton Library documents show that she opposed any effort by Congress to prevent human beings from being cloned specifically to create embryos that would be experimented upon, then killed. Gallup recently reported that 88% of Americans oppose cloning human beings. Kagan does not.

(more…)

The U.S. economy is on the mend and has been for some time. The reason is that, as Marx acknowledged in The Communist Manifesto, the capitalist system is an engine of powerful forces.

Market capitalism, true capitalism and not big government colluding with big business to engage in what Bastiat called “legalized plunder,” is the most efficient way of organizing resources. As a system it drives innovation, which is the source of our increased standard of living. In fact, this system is so powerful and efficient that our economy is doing well in terms of producing goods and services, not because of government intervention, but in spite of it. There is no question that the federal government has been engaged in activities that have suppressed and will continue to suppress economic growth and will leave millions of our person unemployed for lengthy periods. But the economy as a whole will be productive and our gross domestic product will continue to increase in the near future.

There is substantial empirical evidence that the economy is recovering. Fourth quarter real GDP grew at a 5.6% annual rate, the Federal Reserve Industrial Production Index was up in March for the 9th month in a row, the ISM manufacturing index was up in March to 59.6 and the employment index was at 55.1, the fourth straight month above 50, housing starts and existing home sales were up in March, the Conference Board’s Index of Leading Indicators increased 1.4% in March, and one can cite more data showing the upside of the business cycle is underway.

At issue is why is the economy recovering and is it likely to be a sustained recovery? We may also ask why unemployment remains stubbornly high while production is increasing. Normally, as the economy comes out of a recession productivity increases, part-time employment increases, and finally full-time employment increases. Why have we yet to see the last stage of this process?

(more…)

Big Government would not exist were it not given sanction by the people.  Those who continue to support it have been duped in large part as a direct or indirect result of the ideological subversion of our academic institutions.  The leaders in all fields of our society were raised in the politically correct, militantly liberal academy, and so it is only natural that the influence of socialist ideas has infected every aspect of our culture.  In so doing, academia has produced leaders that undermine our society rather than helping it to flourish.

It is evident that educational institutions are turning society on its head when we see the kinds of leaders they herald as the shining examples for our students to follow.  On May 17th of this year, the graduating students of Columbia University will spend their morning listening to their Class Day speaker, Benjamin Jealous.  Readers may recall that Mr. Jealous penned a piece for the Huffington Post in which he ardently defended and praised Van Jones, calling him “an American treasure.”  He is being called on to speak because he is a star in the social justice movement.

For as Columbia’s Dean puts it, “Columbia’s undergraduate experience is built on the idea that our college must not only help students develop their capacities for critical thinking, but also nurture in them the responsibilities of citizenship in a democratic society. Benjamin Todd Jealous wonderfully personifies the value that Columbians have long placed on active engagement in the world and in finding the solutions to society’s challenges.”  Jealous does so by leading what he refers to as “a volunteer army for social change” in the NAACP.  That he would describe the organization in such a light should come as no surprise as Jealous is a former New York community organizer and AFL-CIO spokesman.

Mr. Jealous’ address to my class will mark a fitting end to my four years at Columbia in which I witnessed the attack on members of the Minutemen, the speech of Mahmoud Ahmadinejad, a professor pushing for students to join the peace corps in the middle of his science class and Israeli Apartheid Week amongst innumerable other travesties.

(more…)

One of the few opportunities Americans have to witness and participate in true national unity happens every two years during the Olympic Games.  Spurred on by the tradition and spirit of the games, Americans come together to root for their favorite athlete or event, setting aside, almost wholly, entrenched political views to witness the raw power of…Capitalism.

In actuality, the setting aside of political views for the Olympics is done by only one side of the political spectrum, the Left. This is common with a polarized political system, for true political unity one side, more often than not, is forced to cave. What many liberals fail or refuse to recognize however is that they are caving to conservative principles daily and the Olympics helps to unveil the true liberal love affair with capitalism.

At the heart and soul of both the Olympic Games and the free markets you will find the same driving force, competition.

(more…)

The President’s National Commission on Fiscal Responsibility and Reform is what everyone really knows it is—a bipartisan group of former and current political elites that will listen to hours of testimony by a select group of witnesses in order to create a report that will justify a tax increase for which there does not exist political support. The fact that the commission is being created by Executive Order rather than by congressional action tells us what the expected conclusion of the commission will be.

We do not need another commission to know that decades of programs that tax those who work in order to provide benefits to those who are in political favor has led to the point where the promises made to millions of Americans cannot possibly be met. To quote from the Social Security and Medicare Board of Trustees 2009 Annual Report: “Projected long run program costs are not sustainable under current program parameters.” This is government-speak for: “the jig is up.” The Social Security cash flow will be negative by 2016, at which time the baby-boomers will start to retire and things go south ever faster.

To again quote from the report: “Medicare’s financial status is much worse…Medicare already runs cash flow deficits…For the third consecutive year, a ‘Medicare funding warning’ is being triggered, signaling that non-dedicated sources of revenues—primarily general revenues—will soon account for more than 45 percent of Medicare’s outlays. A Presidential proposal will be needed in response to the latest warning.” We don’t need a bipartisan commission to tell us what the problem is. Social Security and Medicare have total unfunded liabilities in excess of $100 trillion. We need Presidential leadership that will address the spending problems that are the result of a government that has been shorn of the limitations of the 10th amendment.

(more…)

As President Obama concludes his first jobs summit, almost a year into his presidency, the nature of the guest list hints at a deliberate initiative that’s been underway for over 15 years – and it’s not one of the obvious presumptions that most would make.  Notice that of the list of leaders invited, the majority are labor union leaders, leaders of businesses with government contracts, or leaders of businesses that operate on partial public funding.  There is a common element across most of the businesses represented:  in one capacity or another, even if they are private sector businesses, most on the list benefit from some form of public money.

There is a legal precedent over 15 years old that is the pervasive push behind such a premise, one that was the product of ACORN and labor union coalitions.  And judging by Change to Win / SEIU’s Anna Burger’s plan for today’s jobs summit, it’s evident that this precedent is in play as we speak.

It’s no coincidence that in the wake of America’s economic crisis, some lawmakers have been pushing for infusions of public funds into the private sector.  No, we’re not just talking bank and insurance company bailouts. We’re talking about tax credit and incentive programs, health care reform proposals, green jobs programs, energy efficiency initiatives,  and even real estate development companies.  As the conservative accusations of socialism have begun to sink in with progressive leaders -especially with union leaders, who are especially sensitive to being perceived as public spenders – the language has been changing.  Adam Smith’s “Invisible Hand” doesn’t sound so scary when it’s wrapped in the glove of words like “co-ops” and “public-private partnerships” and “national service”, which are now quickly being mainstreamed into the rhetoric.

(more…)