Ron Morley's Freedom Blog

This is the place where I do my little bit to explain the evils of the State.

March 2009 - Posts

Constitution? What Constitution?

The President of the United States fired the President of General Motors Corporation over the weekend. This would have been unthinkable even a decade ago. But, things have changed and, apparently, this doesn't bother most of the American people or the great majority of the mass media's talking heads. However, it is troublesome for several reasons. Where is the Constitutional power granted to the President of the U.S. to make such decisions? There's nowhere that I can see that there's a clause which, even given the twisted reasoning lawyers are so proud of, gives the Executive the power to reach into the board rooms of private corporations and pick and choose who will be allowed to head up those organizations. Surely no one can argue with a straight face that the Commerce Clause grants the President this sort of power. If it does then there is no limit on the powers of the Federal government and no one is safe from the exercise of arbitrary government power. For if the President can fire the head of General Motors, then there is nothing to prevent him from firing the head, or, indeed, any employee, of any business in America. An extremely dangerous precedent has been set over the weekend and a large number of the American people, if not an outright majority, are applauding the move; indifferent to the potential harm that such power can do to everyone in the country. Instead, the State's propaganda machine continues to spout the party line: the move was “necessary” in order to give President Obama's plan to save the domestic auto industry a chance to succeed politically; Rick Wagoner was too “old school” General Motors to be able to make the changes to the company that the President has deemed necessary for the corporation to be considered for nationalization, er, excuse me, more "bridge loans"; the firing “sends a message” to the automakers that it is “no longer business as usual” to quote one commentator on NPR yesterday.

The only person who seems upset by President Obama's firing of Mr. Wagoner is Michigan Governor Jennifer Granholm, who seems almost offended by the move. This is ironic in that Governor Granholm was one of the prime cheerleaders for a Federal bailout of the Detroit automakers. Apparently, the good governor of my state overlooked the fact that granting the Federal government unconstitutional powers by way of allowing it to “lend” money to individual companies, would lead to further abuses of power. Was she really so naive as to think that the Federal government would not impose all sorts of new rules and regulations upon the companies that it was moving to “save”? Did she really imagine that the Federal government would not seek to exercise that power in such a way as to strike fear into the hearts of any in the business community who might oppose it? If that's the case it's no wonder that the State of Michigan is in the severe economic trouble that it finds itself. Of course, even the good governor's objections to the President's action is not based on Constitutional or other legal grounds, but on the fact that Rick Wagoner is a “good man” who was, according to the governor, leading GM out of its troubles.

There is an extremely dangerous mindset growing in this country – that only the Federal government can solve the nation's economic ills and that it must be granted virtually unlimited powers in order to be able to accomplish this goal. Almost no one is heard objecting to the vast expansion of power over the nation's economy that has occurred over the last few months. There is no longer any debate as to whether or not the Federal government has the Constitutional authority to undertake any particular action. No, the debate is now only over how much money a certain program is going to cost and what group it will favor when put in place. We are seeing the culmination of the many precedents that we've allowed our presidents, ever since at least the days of Franklin D. Roosevelt's tenure, if not earlier, to set in the direction of increasing the amount of power wielded by the occupant of the house at 1600 Pennsylvania Ave. The President is now looked upon as the one person upon whom all of the nation's hopes, fears, and troubles lie. To paraphrase (and greatly condense) an article from Reason Magazine sometime last year, Americans are so used to placing all blame or, conversely, all accolades upon the President for whatever is happening that the Presidents over the years have found it more and more easy to argue that they “need” all the power in order to match the supposed responsibility they have for everything that is going on. The cultural trend away from persons accepting responsibility for their own actions and, instead, placing that responsibility on some third party is finding its logical conclusion here. If individual Americans are not accountable for their own actions then they do not need power to decide how to live their lives: that power should, by rights, be given to the person who is primarily accountable for everything that goes on – the President of the United States. It is not right, constitutionally, morally, or ethically, but it is now a fact of life. The government of the United States, in the person of the President, has asserted that it has the right to dictate the smallest details of the operations of businesses and the manner in which individual citizens may live.

Many people will say that I'm being overly-pessimistic, that the Federal government will not make it a habit to fire corporate executives, or set business policy, or interfere in matters of citizen's private affairs. Those who maintain that idea are sorely lacking in historical perspective and understanding of the nature of the State. A few examples of how Federal power has expanded over the decades should be sufficient to show the trend. When the income tax was first put in place, in 1913, it was limited to 1% on income above $3,000 (a large income for the period) rising to 7% at $500,000 and the people were assured that there was no reason to think the rates would ever increase. As of 2008 the lowest tax rate is 10% for those making less than $8,025 per year to 35% for those making over $357,701 per year and those rates will have to increase in order to pay for the Obama regime's “economic stimulus” packages. Indeed, we've already been told that $250,000 per year is to be considered as making too much money. (Figures from: The New Deal brought with it the minimum wage, first set at $.25/hr. it covered only workers directly engaged in interstate commerce or those producing goods sold in interstate commerce, the minimum wage has grown to $7.25/hr. and covers virtually every worker in America. (figures from: The Federal Occupational Safety and Health Administration is another example of the growth of Federal power and interference in the lives of citizens and ways in which businesses may operate; with precise standards set for such things as the height above the floor for fire extinguishers, the construction of ladders, and the placement and types of myriads of safety equipment – even though there is no constitutional justification for the agency. The ubiquity and power of the Federal government is such that most people don't even stop to think whether or not that government has any right to operate as it does – they simply acquiesce and attempt to carry on as best they can. To believe that the Federal government, especially in light of the furor over the retention bonuses paid to AIG employees, will not continue to expand its power in what was once called “the private sector” is the equivalent of believing that the local McDonald's will suddenly appear with three stars in the Michelin guide.

Now that President Obama has established that he has the authority to fire the heads of corporations we can expect to see yet more interference in the operations of private enterprises, in particular those which have accepted the poison pill of Federal bailout funds. Furthermore, I will not be surprised to see the definition of “Federal aid” expanded to include taking advantage of so-called “tax loopholes”. The reasoning will be relatively straightforward for Washington. We have already been told, repeatedly, that paying Federal taxes is patriotic. It follows, therefore, that failure to pay the maximum Federal tax one may be eligible for is unpatriotic. Taking advantage of “tax loopholes” is to avoid paying the maximum tax to the Federal government. Therefore, taking advantage of “tax loopholes” is unpatriotic in that it amounts to taking money from the American taxpayer. As we know from the actions of the Federal government up to this time, taking money from the American taxpayer gives the Federal government the right to determine how a business may operate. Thus, the power of the Federal government, which will become ever more hungry for tax revenue, will be extended. And, again as the recent AIG case attests, one cannot rely on Congress not to at least attempt to change the rules retroactively; so that what is permissible today will be illegal tomorrow, in spite of the Constitutional ban on bills of attainer and ex post facto laws.

President Obama has nearly completed the job of destroying the U.S. Constitution in the arena of what was formerly considered “private activity”. He is doing for Federal regulatory agencies what the G.W. Bush regime did for Federal law enforcement and espionage agencies with the PATRIOT ACT – extending the power of the State and destroying the foundation of civil liberties that this nation was founded upon. The truly sad part is that the American people are largely applauding him as he does so.

More money to be wasted on U.S. auto industry

It's the day before we are supposed to be told whether or not the Federal government will continue to shovel money into the hands of the moribund American automakers, GM and Chrysler. In spite of protestations from the White House that “bankruptcy is an option” there is, and I don't think I'm going out on much of a limb here, no chance that the companies will be allowed to enter Chapter 11 proceedings. This situation can no longer be viewed as strictly an economic question: what's best for the economy overall?, but from a political viewpoint: what's best for the Obama regime? Looked at from that standpoint the answer is obvious as to the course the Federal government will take – more money will be wasted in an attempt to keep ineffective corporations afloat, the only question will be – how much more of the taxpayers' money will be wasted to gain political favor for the new President?

The Obama regime (yes, I'm aware of the connotations of the word, but “group of sycophantic toadies” is too long for general use), and its allies, will mount a large propaganda campaign in order to justify the waste of still more money that the country doesn't have, in order to prop up corporations that have shown themselves incapable of making good use of their resources. Nothing has really changed since the last time the Federal government made “bridge loans” to the automakers. The unemployment situation is worse than it was in late November, so we'll be told that the country can't take the chance of losing the supposed three million jobs that directly or indirectly depend on the U.S. automakers continuing in business. On top of that, since the State now has a financial interest in the companies, we'll be told that further “investment” is needed in order to “protect the investment taxpayers have already made” - the State's excuse for throwing good money after all. And, I suspect, we'll hear about how our “national security” depends on the continued existence of a “viable” American automotive industry.

This last is totally specious as automotive factories are not suitable for manufacturing tanks, APCs, or most of the rest of the panoply of modern war. The only vehicles the auto companies produce, on a routine basis, for the armed forces are Hummers and trucks – which could be purchased elsewhere if needed. The idea that automobile plants could be converted to the production of heavy equipment, as was done during WWII, is no longer viable. Given the pace of any large conventional war the conflict would be over long before the needed conversion could take place. Even in WWII it took the better part of eighteen months before significant military production was rolling off Detroit's assembly lines and the process was sped up to some degree because large amounts of manufacturing capacity was still idle from the effects of the Great Depression and didn't need to be shut down prior to being converted to military use. In the long run our nation's security interests would be far better served by strengthening the economy over the long run by ending State interference in the marketplace – the very sort of interference that is being pushed as the solution to our economic ills.

We will be told that the recent report of General Motors' auditors, which expressed grave doubt as to the company's ability to continue as a “going concern”, is overly pessimistic. The State's propaganda mill will push the idea that all that is needed is to make sure that GM continues to operate during the current economic crisis. The company will announce that its coming products, such as the Chevy “Volt”, a high-priced (recent estimates put the price at ~$35,000) “green” vehicle, will allow the organization to regain profitability as soon as the economy recovers from the current downturn. We will be asked to suspend disbelief, in much the same manner as when we go see a science fiction movie, and accept the idea that the automakers will be competitive when things improve, in spite of all the historic evidence to the contrary. All that will need to be done is to shovel more billions of dollars of “loans” to GM, loans which are supposed to be repaid, in order to assure that this rosy view of the future comes true. No mention will be made of the fact that GM's indebtedness to the Federal government will approach the amount it owes its UAW-approved healthcare trust fund. It is costs associated with on-going healthcare expenses (an estimated $47 billion) that are a large part of GM's financial problems; yet, somehow repaying government loans will not have the same effect on the corporation's balance sheet. This type of thinking can only come from government employees who have access to unlimited funds thanks to their ability to reach directly into the pockets of every American.

Finally, the Obama regime cannot afford to alienate the country's labor union movement, which would surely happen if the UAW was not to be given a huge chunk of the public's money. The simple fact is that the UAW, in spite of all the damage it has done to the automakers over the last fifty years, is to be rewarded by being granted the opportunity to feed at the public trough. Ordinary Americans, most of whom make considerably less than the average UAW worker, will be required to subsidize the lifestyles of those workers. Labor inefficiency will be rewarded at the expense of the overall economy. The majority of Americans will be required to accept a lower standard of living so that a few politically connected workers may be spared the “economic turmoil” that the rest of us will be subjected to.

So, come midweek, don't be surprised to hear that the Federal government, after having carefully examined “all options”, will “invest” more money in the dying American automotive industry. It will make no sense economically. Indeed, it will be counterproductive in the long term. However, politics is more important, in Washington, D.C., than anything else, including the long term health of the overall American economy.