Senators Threaten Facebook

Four Senators took time out from their busy schedules to deal with a serious issue: Facebook

We hope that Facebook will stand by its goal of creating open and transparent communities by working to ensure that its policies protect the sensitive personal biographical data of its users and provide them with full control over their personal information. We look forward to the FTC examining this issue, but in the meantime we believe Facebook can take swift and productive steps to alleviate the concerns of its users. Providing opt-in mechanisms for information sharing instead of expecting users to go through long and complicated opt-out processes is a critical step towards maintaining clarity and transparency.

Sincerely,

U.S. Senator Charles E. Schumer (D-NY)

U.S. Senator Michael Bennet (D-CO)

U.S. Senator Mark Begich (D-AK)

U.S. Senator Al Franken (D-MN)

At times like this, it's easy to blame politicians for such ridiculous pandering, but the blame truly belongs with the voters for approving of stuff like this. Repealing the Seventeenth Amendment would remove this kind of idiocy because state legislatures would appoint Senators based on results, not demagoguery.

The Dodd Bill Weakens Federalism

As Justice Brandeis pointed out many years ago, “It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of country.” So long as state legislation is limited to regulation of firms incorporated within the state, as it generally is, there is no risk of conflicting rules applying to the same corporation. Experimentation thus does not result in confusion, but instead may lead to more efficient corporate law rules.

In contrast, the uniformity imposed by [the Dodd Bill] will preclude experimentation with differing modes of regulation. As such, there will be no opportunity for new and better regulatory ideas to be developed—no “laboratory” of federalism. Instead, we will be stuck with rules that may well be wrong from the outset and, in any case, may quickly become obsolete.

... Competitive federalism promotes liberty as well as shareholder wealth. When firms may freely select among multiple competing regulators, oppressive regulation becomes impractical. if one regulator overreaches, firms will exit its jurisdiction and move to one that is more laissez-faire. In contrast, when there is but a single regulator, such that exit by the regulated is no longer an option, an essential check on excessive regulation is lost.

Worse than that, the Dodd bill will actually unleash the worst elements of corporate law on the federal government, and therefore the entire country. States that would otherwise successfully inhibit corporate corruption will be unable to. As a result, corporations will actually be even more incentivized to corrupt the federal government in their favor, especially when the prevailing view is for the federal government to give tons of goodies and freebies to its backers. The congressional-corporate complex will fit the very definition of fascism: rule by the wealthy.

Corruption is the result of centralization of power. Put that much power in one place, and it draws corruption like moths to a flame. The only way to limit it is to decentralize our government by repealing the 17th Amendment, so the Senate would once again serve its original Constitutional function.

Senate To Vote On New Financial Regulations

Emboldened by public anger at Wall Street, Democrats set the first key vote for Monday on a bill to rein in the financial industry — even though Reid lacks a bipartisan deal or any guarantee that he’ll get the crucial 60th vote needed to break a filibuster.

And if no Republican cracks, and the bill goes down, Reid is calculating that would be politically devastating for the GOP, because the party would appear to be standing shoulder to shoulder with the Wall Street bankers many Americans blame for the recession.

“We have the upper hand,” said New York Sen. Chuck Schumer, a member of the Senate Democratic leadership.

The problem is that this bill does not "rein in" the financial industry. What does it do? Well...

At the top of the list is the $50 billion fund that the Federal Deposit Insurance Corp could use to pay off creditors of firms identified as systemically risky -- i.e., "too big to fail."

"The Dodd bill," writes Democratic Rep. Brad Sherman, "has unlimited executive bailout authority. That's something Wall Street desperately wants but doesn't dare ask for."

Politically connected creditors would have every reason to assume they'd get favorable treatment. The Dodd bill specifically authorizes the FDIC to treat "creditors similarly situated" differently.

Second, as former Bush administration economist Larry Lindsey points out, the Dodd bill gives the Treasury and the FDIC authority to grant an unlimited number of loan guarantees to "too big to fail" firms. CEOs might want to have receipts for their contributions to Sen. Charles Schumer and the Obama campaign in hand when they apply.

Lindsey ticks off other special favors. "Labor gets 'proxy access' to bring its agenda items before shareholders as well as annual 'say on pay' for executives. Consumer activists get a brand new agency funded directly out of the seniorage the Fed earns. No oversight by the Federal Reserve Board or by Congress on how the money is spent."

Then there are carve-out provisions provided for particular interests. "Obtaining a carve-out isn't rocket science," one Republican K Street lobbyist told the Huffington Post. "Just give Chairman Dodd and Chuck Schumer a s---load of money."

More bailouts for billionaires:

But, as critics led by Kentucky's Sen. Mitch McConnell, have pointed out, the bill, sponsored by Sen. Chris Dodd, doesn't end "too big to fail" -- under any fair reading.

It says that failed financial firms must repay taxpayer money "unless the United States agrees or consents otherwise." It says, too, that Washington can bail out bondholders to financial firms as long as officialdom "determines that such payments or credits are necessary or appropriate to minimize losses."

This bill puts all taxpayers on the hook for billions of dollars for politically-connected businesses. This is crony capitalism at its worst.

The only way to restore sanity to the federal government is to repeal the 17th Amendment.

Schumer's U-Turn On Wall Street

Sen. Schumer (D-NY) has long been willing to fight to get his Wall Street friends whatever they ask for. But now that some public attention is being given to these kinds of connections, he's discovered a new face.

Because of the 17th Amendment, politicians, especially in the Senate, can safely pretend to go along with whatever public opinion is at the moment, because they can vote for their special interests for five years, and then be a populist during election year.

One reason why representatives were scheduled for re-election every two years is to keep them close to the demands of the people. Senators, who originally were overseen by their state legislatures, didn't need short terms because the state legislature would review their entire record, and not just their campaign rhetoric.

The best way to get politics out of the Senate is to repeal the 17th Amendment.

A "Public Option" For Grocery Stores

Sen. Gillibrand (D-NY) proposes what is essentially a "public option" for grocery stores:

Sen. Kirsten Gillibrand proposed $1 billion in loans and grants Monday to help build 2,100 grocery stores in areas around the nation that lack access to fresh food.

Gillibrand said the measure would help about four million New York residents living in so-called food deserts by providing the funding for more than 350 stores statewide, many in low-income areas. Modeled on a similar program in Pennsylvania, the legislation would provide startup grants and loans in rural and urban areas to expand access to fresh food and to create jobs.

Because the hundreds of billions currently being redistributed to the poor in exchange for their vote to give government ever-increasing power just isn't enough. Medicare, disability benefits, WIC, food stamps, and all the other federal welfare programs are underserving the poor.

Thankfully, such a ridiculous expansion has no chance whatsoever of passing.

The Obama administration has already dedicated $345 million in his 2011 budget for a similar proposal.

Crap.

Senator Gillibrand is yet another reason to repeal the 17th Amendment.

Hat tip: DrewM. at Ace of Spades

The Federal Government Bribes States With Their Own Money

Dan Mitchell points out:

New York City is running ads in foreign languagues asking people to stick their snouts in the public trough. The City is even signing up prisoners when they get out of jail. The state of New York, meanwhile, actually set up quotas for enrolling new recipients. And on the federal level, there apparently is a program that gives states “bonuses” for putting more people on the dole. No wonder one out of every eight Americans is receiving food stamps. By the way, this is not just the fault of Democrats. The ranking Republican on the Agriculture Committee is a big defender of the program, in part because of the sordid pact among urban and rural politicians to support each other’s handouts. And President George W. Bush’s food stamp administrator actually had the gall to assert “food stamps is not welfare.” No wonder the burden of federal spending skyrocketed during the reign of so-called compassionate conservatism. The correct policy, of course, is to get the federal government out of the welfare business. If Mayor Bloomberg thinks it is a “civic duty” to expand food stamps, he should see whether New York City voters agree with him – and want to foot the bill.

Alexander Tytler is rumored to have said,

A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.

Frederic Bastiat was a little more verbose:

Now since man is naturally inclined to avoid pain -- and since labor is pain in itself -- it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly. And under these conditions, neither religion nor morality can stop it.

When, then, does plunder stop? It stops when it becomes more painful and more dangerous than labor.

It is evident, then, that the proper purpose of law is to use the power of its collective force to stop this fatal tendency to plunder instead of to work. All the measures of the law should protect property and punish plunder.

But, generally, the law is made by one man or one class of men. And since law cannot operate without the sanction and support of a dominating force, this force must be entrusted to those who make the laws.

This fact, combined with the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort, explains the almost universal perversion of the law. Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds.

Men naturally rebel against the injustice of which they are victims. Thus, when plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter -- by peaceful or revolutionary means -- into the making of laws. According to their degree of enlightenment, these plundered classes may propose one of two entirely different purposes when they attempt to attain political power: Either they may wish to stop lawful plunder, or they may wish to share in it.

Woe to the nation when this latter purpose prevails among the mass victims of lawful plunder when they, in turn, seize the power to make laws!

Until that happens, the few practice lawful plunder upon the many, a common practice where the right to participate in the making of law is limited to a few persons. But then, participation in the making of law becomes universal. And then, men seek to balance their conflicting interests by universal plunder. Instead of rooting out the injustices found in society, they make these injustices general. As soon as the plundered classes gain political power, they establish a system of reprisals against other classes. They do not abolish legal plunder. (This objective would demand more enlightenment than they possess.) Instead, they emulate their evil predecessors by participating in this legal plunder, even though it is against their own interests.

It is as if it were necessary, before a reign of justice appears, for everyone to suffer a cruel retribution -- some for their evilness, and some for their lack of understanding.

It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.

What are the consequences of such a perversion? It would require volumes to describe them all. Thus we must content ourselves with pointing out the most striking.

In the first place, it erases from everyone's conscience the distinction between justice and injustice.

No society can exist unless the laws are respected to a certain degree. The safest way to make laws respected is to make them respectable. When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law. These two evils are of equal consequence, and it would be difficult for a person to choose between them. The nature of law is to maintain justice. This is so much the case that, in the minds of the people, law and justice are one and the same thing. There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are "just" because law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it. Slavery, restrictions, and monopoly find defenders not only among those who profit from them but also among those who suffer from them.

Of course, America was not founded as a democracy. The original role of the Senate was to limit centralized power. There will always be those who support bad policies, either through malevolence or ignorance, but the federal government would never be allowed to bribe states to implement these bad policies if Senators were chosen by state legislatures.