Rossputin.com Rational Thinking About Our World

Here's a great note from Karol Boudreaux about what really works in efforts to reduce poverty in developing nations:

July 3, 2008

Editor, The New York Times
229 West 43rd St.
New York, NY 10036

To the Editor:

I work routinely in Africa and was heartened by Nicholas Kristof's account of Beatrice Biira's success at escaping poverty in Africa ("The Luckiest Girl," July 3). But his account needs clarification. Contrary to what readers might infer from Mr. Kristof's favorable mention of Jeffrey Sachs's encounter with Beatrice, this young woman's experience does not support Mr. Sachs's approach to ending world poverty. Mr. Sachs famously calls for large-scale, collective action by international organizations - for a "big push" based on big plans designed by big brains.

In contrast, an anonymous private donor started Beatrice on her path to success. A private charitable organization delivered a goat to her family and other private donors brought her to the US. Beatrice's success, far from supporting the Sachs model of development, instead supports William Easterly's contrary thesis - namely, that escaping poverty requires a multitude of small-scale, mostly private efforts.

Sincerely,

Karol Boudreaux
Senior Research Fellow, Mercatus Center
George Mason University
and
Lead Researcher, Enterprise Africa

On this most important of American holidays, as we consider the liberty enshrined in our founding documents...the liberty that has made this country great...I urge all my readers to consider where that liberty has been going in recent years and how much worse it is likely to get in coming years unless we have something like another Reagan Revolution.

I think it's important to note that while liberals (and terrorists) think they're getting the best of it these days, that could turn on a dime and suddenly you could see liberals getting wrecked by the Court if conservative justices ever decided to act as politically as the liberals do. This, however, is somewhat less likely because conservative justices more frequently believe the Constitution means what it says.

The chief culprit in our steady loss of liberty is the Supreme Court, whose liberal justices have plainly decided to ignore what the Constitution says and instead to rule based on their preferred outcomes.

A great example comes from Justice Stephen Breyer's approach to the recently-decided Heller case in which a 5-4 majority ruled that the Second Amendment provides an individual right to gun ownership.

According to an AP article in which the left-leaning AP is trying to make Americans believe that the ruling will cause increased suicides in America,

The high court's majority opinion made no mention of suicide. But in a dissenting opinion, Justice Stephen Breyer used the word 14 times in voicing concern about the impact of striking down the handgun ban.

"If a resident has a handgun in the home that he can use for self-defense, then he has a handgun in the home that he can use to commit suicide or engage in acts of domestic violence," Breyer wrote.

The idea that our right to own a gun goes away because a judge dislikes one potential use of that gun is insane, and I mean that word literally, for a Supreme Court justice to accept.

If anything it would be the liberal judges who would most likely stand up for hate speech to be protected by the First Amendment, as it should be. Many people don't like that outcome and don't think people should be using their right to open their mouths in that way. Yet those same judges who would uphold that right would then deny the Second Amendment because they don't like the outcome of that right.

Such subjective and transient adherence to principle and the black-and-white words on the parchment represent a danger to our nation...not just a danger to conservative's goals.

Conservative judges get it wrong to, such as Justice Scalia's ridiculous agreement that the growing of marijuana for personal (and, in that case medicinal) use can be prevented by the federal government under the Commerce Clause. There's one example of a decision which was incorrect and which would be more likely to bother liberals than conservatives.

Of course, the Mother of All Court Errors was the 5-4 decision in the Kelo case, a case which should cause people of all political stripes except for government bureaucrats to scream. In that ruling, the Court decided that a locale can, through eminent domain power, take private property (in this case Suzette Kelo's home) and give it to another private owner whom they expect to pay more property tax. The Court did this by ruling that this so-called "public benefit" satisfied the Constitution's explicit requirement that property taken by eminent domain must be "for public use", as in a park, road, post office, etc. Conservatives must have wanted to severely beat Justice Anthony Kennedy, who cast the deciding vote along with the 4 liberal Justices. I know I did. Liberals must realize that this ruling is exceptionally dangerous for poor people because 1) they pay less property tax than others do, typically, and 2) they can't afford the best lawyers to defend them against such takings. This ruling will victimize far more poor people than rich people.

In all of these cases and quite a few more (such as giving habeas rights to terrorists), the Supreme Court majority has ruled based on the outcome they'd like to see rather than on what the Constitution clearly says...or doesn't say.

Not only are the decisions reprehensible in their own right, but they show this nation clearly walking down a path toward tyranny, away from the rule of law.

Liberals and conservatives alike should only support justices who swear to uphold the Constitution as it is written, not as they (or some Europeans) think it should have been written, and without regard to their personal views as to possible bad outcomes from ruling that people do indeed have rights. (To the extent that bad outcomes are to be addressed by government, it must be done in the legislature.)

If we continue to allow the Court to go down this path, on some July 4th in the not too distant future we will be wondering what happened to our Independence.

Unfortunately, I do not see anything changing, except for the worse, especially when our next President is a Democrat with a huge Democrat majority in the Senate. Our only hope is that someone Obama appoints will turn out to be the converse of David Souter, appointed by and assumed to be a conservative but who has turned out to be a reliably anti-Constitution vote on the Court.

So, on this July 4th, enjoy your Independence...while you still can.

Some of us think of Al Gore as the guy who claimed to invent the Internet and then got rich, using massive amounts of energy in his own home, while telling us to live in the dark and pay $5 for a gallon of gasoline. With Obama's new commercial, "Dignity", Obama has taken a step down the same road, exaggerating his accomplishments and reminding us that he's hardly a "man of the people", but rather just another lawyer/politician intent on getting rich through hypocrisy.

Please read my full article about Obama's new ad at:

Obama’s 'Dignity' Ad isn't Dignified (Or truthful), Ross Kaminsky, HumanEvents.com,7/3/08

http://www.humanevents.com/article.php?id=27327

Although I’ve known Joshua Sharf from the blogging world for a couple of years, I’ve paid closer attention to his race for the State House of Representatives because of being his replacement here on the Gang of Four. It turns out that the race, especially the Republican primary, is very interesting as it pits Joshua, a politically-conservative Orthodox Jew, against Rima Barakat aka Rima Sinclair, described (I assume by herself, since it’s a bio of her as a speaker) as a “Palestinian-American business woman and translator…active in the Denver Muslim community.”

For the record, although I do not live in Joshua’s district, I have made a very small contribution to his campaign. I do not work for his campaign in any paid or volunteer status.

Much has been already discovered and written about Ms. Barakat’s anti-Semitic and anti-Israeli affiliations and statements, but it’s so shocking to me that someone like Ms. Barakat could have been selected as the GOP’s initial nominee in House District 6, the most Jewish district in the state. Are all the Jews in the district Democrats? They really must not have been paying attention, but I bet they are now….

Rima Barakat calls herself Rima Sinclair on her campaign web site, but Rima Barakat on her Facebook page.

A browse through her Facebook friends is instructive. Here’s a particularly interesting one:

Mazin Qumsiyeh, a Palestinian activist who is a Board Member of “The Association for One Democratic State in Israel/Palestine” (which is code for the destruction of Israel.) Qumsiyeh was, for a time, a Yale University biologist, did not have his contract renewed by Yale because he sent an e-mail to a Yale anti-war group giving them the membership of a Yale pro-Israel group and calling them a “pro-war cabal”. Qumsiyeh is also a founder of “Boycott Israeli Goods” and participant in web sites such as “The Electronic Intifada”.

Qumsiyeh is the author of a “statement of support” for Barakat which is the basis for a petition being circulated by the “International Solidarity Movement”, a pro-Palestinian group whose most famous member is probably the late Rachel Corrie, who was crushed under a bulldozer whose driver didn’t see her as she was enacting the group’s direct goal of “confronting tanks and demolition equipment”. Although it has not been proven that the ISM was aware of their goals, the two British citizens who murdered three and injured over 50 in a suicide bombing in Tel Aviv in 2003 had met with ISM just prior to the bombing and maybe have been aided by ISM in gaining entry into Israel. While ISM claims to be non-violent, their words as well as actions of their members cast doubt on those claims. Here’s another interesting article about someone who covertly went to an ISM training meeting in California.

Another organization which appears to be taking an interest in Rima Barakat’s political well-being is the Council for the National Interest (“CNI”), a pro-Palestinian group founded by American politicians and bureaucrats. CNI recently sponsored a trip for several people to meet with “officials and activists in Egypt, Lebanon, Israel, Gaza, and the West Bank”. One of those travelers, a former US diplomat, who had his picture taken with Ismail Haniya, the leader of Hamas, just a few days ago and who called Haniya a “thoughtful politician”.

Steve Emerson, probably the nation's leading expert on activities in the US of Islamic terrorist organizations and their supporters, offered his view of CNI in a radio interview. He noted that "it pretends to be in support of the national interest. What it doesn't say is that it's not the US national interest. It's more often the Saudi national interest. It's one mission is to destroy public support for Israel and for anything that smacks of fighting radical Islam."

Rima Barakat’s anti-Israeli rantings are well known. Here’s a brief review of two:

A YouTube video in which she claims, among other things, that Israel is “imprisoning millions of people” and that “Israeli soldiers are known to be bombing and killing babies.”

An opinion piece written by Barakat in 2006 in which she equates the Israeli relationship with Palestinians “slavery, apartheid, and Nazi concentration camps” and, regarding American Jews, says that “these atrocities (in the Palestinian territories) continue to be committed in their names.” She adds that “the world sees” (more likely she sees) “the United States as a collaborator”.

Of course, Barakat doesn’t see just the Palestinians as victims of America, but she sees herself that way too (as well as a victim of her own political party). In a Denver County Republican Breakfast, on June 5, Barakat claimed that “the Republican Party, national and in Colorado, including Mr. Schaffer, they declare war on anything called illegal immigrants, on anything called Arab-American, on anything called Muslim.”

Woe is Rima. The GOP has declared war against her, she says…which must explain how someone with no apparent qualifications got the initial nod to be the party’s candidate in November. (Apparently she claimed to be pro-live to get the nomination, although apparently she said in a 2004 Rocky Mountain News article that she “would like a pro-choice president.”)

Muslim radicals have encouraged American Muslims to achieve a stealth jihad here by running for political office. Democratic allies of this attack on the foundation of America, even if they are unwitting, have a lot to answer for. In September, Democratic National Committee Chairman Howard Dean told American Muslims at a meeting near Chicago "You need to run for political office. The only way you can achieve your goals is to stand up and say who you are and be proud of it." Doesn’t he understand what some of those goals are?

I admit that I often think the Democratic leadership is out of touch with reality and anti-American. (This is not to say that I think the GOP leadership is a bunch of geniuses but at least I don’t question which nation they want to succeed.) But this was a Republican assembly that sanctioned the candidacy of a woman who admires Yasser Arafat and terrorist “scholars”. I don’t know who Ms. Barakat beat at the assembly, when she got the nod by a 2-vote margin, but I can’t imagine what the assembly participants must have been thinking or how embarrassed they must be now. Of course Ms. Barakat is free to believe and say whatever nonsense she wants to. But even in a district where a Republican is a longshot to win, the GOP, the state, and the nation can not risk a Muslim Manchurian Candidate.

Ms. Barakat deserves to be soundly beaten at the Republican primary in August, and I hope that District 6 voters, especially many of my fellow Jews, will come to realize that there’s absolutely no rational reason that Jews should so reflexively vote for Democrats when the Democratic Party, other than the unusual case of the anti-Semitic Rima Barakat, is now the home of the most active, outspoken, and influential opponents of Israel.

David Sirota is guilty of the same intellectual error as many on the left are when it comes to economics. They assume that anything they expect should happen or anything they wanted to happen did in fact happen. A great example is Sirota’s anti-free trade assertion that because of NAFTA, “left for dead, of course, is a place like Ohio”, an assertion utterly belied by the facts.

Again, I am not saying that there are no losers in free trade or any other competitive system. But Sirota and friends argue that the losses from free trade are in aggregate much larger than the gains to the nation. I do not know of one serious economist or one serious economic study which demonstrates anything other than free trade being a substantial net winner for the nation which participates in it…even if its trading partners trade less freely!

But the subject for today is the economic death of Ohio, something which didn’t happen despite the fondest wishes of anti-free traders and anti-capitalists. Sure, they can find workers who lost their jobs. But do you think they take even a moment to look for workers who found new employment, or the creation of new jobs which caused new workers to move to Ohio for the opportunities? Of course not, because they know the facts would contradict their deep desire for free trade to produce uniformly bad outcomes. Unfortunately for these tools of organized labor, they’re entitled to their own opinion but not to their own facts.

First, let me start with a macro concept. Sirota and others might argue that NAFTA has killed our manufacturing base. If that were the case, then you’d expect the balance between goods and services production in the US to have shifted far more dramatically than the balance in countries which didn’t join NAFTA.

But the following chart from the Bureau of Labor Statistics shows something very different. It shows that from 1965 to 2005, the United States’ shift in output towards more services and fewer manufactured goods was not remarkable compared to 6 other modern economies, including European countries not known for free trade. Yes, the chart covers a much longer period than the years since just before NAFTA, but nevertheless I would have expected the US to look like a serious outlier if our manufacturing base had been wrecked by free trade treaties which other nations were not participants in.

Let’s move on to some interesting facts about Ohio.

Here’s a chart of Ohio’s labor force (people in jobs, not unemployment rate) from 1980 to today:

Now here’s another chart. For the moment I won’t tell you what the data series is.

Would you agree that these charts are exceptionally similar? Look at the dips or flat areas around 1983, 1991, 1995, and 2003.

OK, here it is again, properly labeled:

What does this tell us? It tells us that Ohio’s unemployment is directly correlated with the nation’s economy, not that Ohio is somehow worse off than the rest of the nation. If you look at 1994, when NAFTA was implemented, onward, there is no evidence that Ohio has underperformed the national economy. Indeed, Ohio seemed to have done slightly better during the economic weakness around 2002 than much of the rest of the nation.

Here’s another pair of graphs for your perusal:

First, Ohio’s unemployment rate from 1980 until now, and immediately following is the national unemployment rate over the same period.

Ohio’s unemployment rate in December, 1993, the month before NAFTA came into force, was 6.5%, which was the lowest it had been for about two years. In January, 1994, Ohio’s unemployment rate dropped an impressive 0.4% to 6.1%. As of May, 2008, Ohio’s unemployment rate had NEVER AGAIN reached as high as 6.5%. So much for “left for dead”.

In the four years after NAFTA’s enactment, Ohio’s unemployment rate dropped MORE than the national unemployment rate. Indeed, as you can see from the charts, Ohio has done as well or better than the rest of the nation in unemployment rate during almost the entire span of this chart, except for a couple of years from roughly 2005-2007, which I doubt even David Sirota would try to blame on NAFTA. (Actually, I don’t doubt it.)

In case you still don’t believe that free trade is good for Ohio, let me give you another comparison, this time to Colorado (which I choose simply because I live here.)

According to the International Trade Administration, based on 2006 data (the latest available), “Export-supported jobs linked to manufacturing account for an estimated 3.6 percent of Colorado's total private-sector employment. Over one-sixth (18.6 percent) of all manufacturing workers in Colorado depend on exports for their jobs.”

Now the same info for Ohio: “Export-supported jobs linked to manufacturing account for an estimated 6.7 percent of Ohio's total private-sector employment. Nearly one-quarter (23.1 percent) of all manufacturing workers in Ohio depend on exports for their jobs.”

Here’s more about Ohio: “In 2005, foreign-controlled companies employed 213,800 workers in Ohio, the eighth largest total among the 50 states. Major sources of Ohio's jobs in 2005 included Japan, the United Kingdom, Germany, France, and Switzerland.

Almost half of these jobs (45 percent, or 95,400 workers) were in the manufacturing sector in 2005. Foreign-controlled companies accounted for 11.7 percent of total manufacturing employment in Ohio in 2005 (more than one of every nine manufacturing workers).

Foreign investment in Ohio was responsible for 4.5 percent of the state’s private-sector employment in 2005.”

(All of these numbers are larger than the equivalent numbers for Colorado, including in percentage terms.)

And more: “Ohio's export shipments of merchandise in 2007 totaled $42.4 billion, up 42 percent ($12.6 billion) from 2003. Ohio recorded the eighth largest export total of all 50 states in 2007.” Ohio’s 2003-2007 increase was the 9th largest in the nation.

Besides NAFTA not “leaving Ohio for dead”, how about this NAFTA-specific information: “Ohio exported globally to 213 foreign destinations in 2007. The state's largest market in 2007, by far, was our NAFTA trading partner Canada, which received goods exports of $19.6 billion. This was nearly half (46 percent) of Ohio's total exports that year. Ohio's second-largest market was our other NAFTA partner Mexico ($3.0 billion), followed by Japan ($1.5 billion), China ($1.5 billion), and the United Kingdom ($1.4 billion).”

The Cleveland area exported over $8 billion in merchandise in 2006. Dayton was over $4 billion, Akron $3.5 billion, Columbus over $3 billion, and Toledo $2 billion.

If that’s “left for dead”, I wonder if anti-free trade and pro-labor activists will ever admit to an economic policy which increases competition against unions having been successful.

I'm offering some "Wesley Clark as Democratic VP nominee" futures for sale at 10.8% on intrade.com after Clark's performance on CBS's "Face the Nation" on Sunday.

Although he said a few things that questioned whether John McCain's military service qualified him to be commander-in-chief, the statement that I'm sure Obama wishes he could stuff back in Clark's mouth was this: "Well, I don't think riding in a fighter plane and getting shot down is a qualification to be president."

In a speech Tuesday, Obama distanced himself from Clark's comment, and an Obama spokesman put out this statement: "As he's said many times before, Senator Obama honors and respects Senator McCain's service, and, of course, he rejects yesterday's statement by General Clark."

Obama desperately needs some foreign policy and/or military qualifications on the ticket, so Wesley Clark seemed an interesting possibility. And indeed he may still be if the public and media's memory are short enough.

But I think those words would be played over and over again, showing McCain just after being tortured, and calling into question both the judgment and the patriotism of the Democratic ticket if Clark were on it.

Basically, I think Wesley Clark just wrote his own political suicide note...and I certainly hope he did.

And for anyone who's following such things, I'd note that in the last week Hillary has gone from 11% to 18% to be the VP nominee. I still think that won't happen, especially with Obama already leading in polls in swing states. In fact, now that I write this, I'm going to offer some Hillary VP at 20%.

Many Americans are discovering something disturbing in the supermarkets this summer. Just in the past few weeks, there has been a stealth increase in the price of two of the four major food groups, namely breakfast cereal and ice cream.

The Cinnamon Toast Crunch that you claim to buy for your kids has gone from 14 ounces to 12.8 ounces. The Cheerios have gone from 10 ounces to 8.9 ounces. And for after dinner, that container of ice cream which you have thought for years was half a gallon but was really only 1.75 quarts is now only 1.5 quarts. If you are wondering how much the prices of these items have dropped as a percentage of the size reduction the answer is almost precisely 0%.

Although cereal and ice cream are the two most visible examples of “downsizing”, it’s also happened in many other of the most common products Americans buy, from mayonnaise to crackers to chewing gum.

The cause is no surprise to anyone who trades commodities or eats food. (Commodities traders are frequently too busy to eat...) The three charts below show one year of futures prices from June 20, 2007 to June 20, 2008 in corn, soybean oil, and crude oil. Although it captures the most headlines, crude oil is the laggard with “only” a 95% price increase in the past year, half of the gain for corn futures. While people may not think much about the price of petroleum when looking at a box of cereal or a tub of ice cream, the cost of our food can be as affected by oil as by its direct inputs due to the cost of running a factory and transportation of ingredients going in and final product heading out to supermarket shelves.

The bottom line is that the food companies have to protect their bottom lines. And that means passing along at least some fraction of their cost increases to customers. According to a consumer affairs representative at General Mills, they hadn’t increased prices since 2005. What’s different about this price increase is that it’s being done, if not exactly secretly, in a way designed to minimize its impression on consumers.

Food companies from General Mills to Kraft to Wrigley have determined that while shoppers will tolerate a higher price per ounce or per piece, we have reached a point where won’t tolerate a higher price per box or per pack. If a person has a $100 budget for food, she can live with paying an extra few cents per ounce of cereal, but not with a box of cereal that costs more than $4. So instead of raising the $4 box to nearly $5, the price stays the same but the amount of cereal in it decreases.

Each company has a slightly different spin on their downsizing. General Mills says that their package sizes were larger than competitors’ packages, so similar sizes will let consumers compare better. (Yes, and I liked the larger packages better!) And they do directly acknowledge that “consumers are more likely to pay the same price for a smaller package than more for the same package.” The company also notes that their changes are tested and examined by focus groups before being put in place: “Our decisions are based largely on extensive research”.

Other products with high grain content are being downsized as well. Triscuit crackers, a Nabisco/Kraft product, have replaced their 13 ounce box with a 12 ounce box. But Ritz and Wheat Thins haven’t downsized. According to a Kraft representative, “prices change more than sizes with Nabisco products”. He added that the company is reducing costs so that it can minimize cost increases or package downsizing, including working on “source reduction”, namely reducing the size and cost of packaging without reducing the quantity of product. For example, a 16 ounce package of Chips Ahoy cookies has been reduced to 15.5 ounces net weight, without putting in fewer or smaller cookies, by using thinner paper, less plastic, and changing the way the package opens. Of course, they claim that their motivation to reduce packaging is “for environmental reasons”, but I’m more pleased that they’ve found a way to lessen price increases for my cookie fix.

Lay’s potato chips have gone from a 13 ounce package to 12.5 ounces. When asked about public reaction, a Lay’s representative was…representative of the industry: “Customers are not happy about it, but they understand and they’ll continue to buy the product.”

Other packages have been downsized as well. Hellmann’s mayonnaise went from 32 ounces to 30 ounces, and even the Wrigley chewing gums in the “slim package”, such as Big Red, Extra, and DoubleMint have gone from 17 pieces to 15 pieces, effectively a 12% price hike.

But for this dessert-aholic, the real trauma comes from the downsizing of ice cream packages. Breyer’s, Dreyer’s, and Edy’s have all dropped their container sizes from 1.75 quarts to 1.5 quarts, nearly 15% less mint chocolate chip or Moose Tracks to satisfy the summer snacker. According to Breyer’s, a division of Unilever, “while (higher ingredient prices) are an industry-wide problem, we’re working to offset cost increases through hedging, reformulation, and cost savings programs.” The “r-word” scares me.

A representative for Edy’s, a Nestlé company, made a point which sounded like she knew my ice cream habits: “In addition to the price of ingredients going up generally, consumers want more indulgent ingredients, like cookies and swirls and cake mixes.” She added that they faced “a very difficult decision” between maintaining package size and maintaining quality, and they decided on the latter.

While I don’t like paying the same price for a smaller container of ice cream, if my options are tolerating 1.5 quart boxes versus having to give up my Breyer’s Fried Ice Cream Overload (“Cinnamon caramel light ice cream swirled with honey caramel with cinnamon tostada pieces”), it’s not really a difficult decision.

As if the mortgage bailout bill isn't enough of a travesty, it also includes an unrelated but dangerous provision which should concern us all. I doubt whether this horrible legislation can be stopped, at least in the Senate, but I urge you all to contact your Senators and your Representative and urge them to vote against the bill, both for its stated purpose and for the danger which Matt Kibbe, President of FreedomWorks, points out in this article:

Chucking Privacy

American Spectator -- Matt Kibbe

If one were to list the seven wonders of the Internet, that massive online auction site eBay would be near the top of the list.

It's a virtual flea market in which you can browse and buy everything from anthropomorphized socks to Barack Obama's half-eaten waffles. eBay allows anyone with an Internet connection to satisfy their urge for garage-sale eccentricities from the security and privacy of their own home.

But if Iowa's Senator Chuck Grassley gets his way, any expectation of privacy will soon go the way of Netscape Navigator. Grassley snuck a provision into the mortgage bailout bill currently winding its way through Congress that will require credit card processing companies to track and store data on any online vendor who makes more than 200 transactions a year or sells any item with a value of more than \$10,000. Once these payments are tracked and reported, any profits they generate can be taxed.

Thought the IRS knew too much before? Wait till it's got access to the sales records for your diamond-studded, gnome-shaped salt-and-pepper shaker collection.

Believe it or not, increased tax demands from the IRS aren't the biggest problem with the mandate. Ostensibly, the purpose of the law is to raise money. It's being pitched as a revenue offset for other spending in the mortgage bill. But the amount the law's authors estimate they will collect is relatively small -- only about a billion dollars a year.

Instead, the biggest threat is the tracking itself, which is almost certainly a foot in the door to greater government snooping into online sales that effectively conscripts private organizations to do the bureaucracy's dirty work.

FORCING PRIVATE organizations to busy themselves with the government's record keeping sets a dangerous precedent. For one thing, it puts a heavy recordkeeping burden on small businesses. In House testimony, Todd McCracken of the National Small Business Association argued that, under this law, many business will be "subject to greatly increased audits," despite having done nothing illegal.

It also sets the stage for the further use of business intermediaries as extensions of the tax-and-regulatory infrastructure. That's a disincentive for businesses to add services -- more records-keeping and administrative costs will make new risks less likely --and it undermines trust in the market. When any online business becomes an informant, that's likely to scare off business.

Some believe the current scheme won't even work. As David Sohn of the Center for Democracy and Technology recently explained to Congress, "it is quite likely that the government will need even more information in order to make use of the information that banks would be required to report initially..."

In other words, the law would mandate the collection of just enough information to be dangerous, but not enough to be effective. And when the current plan fails it will only lead to calls for more detailed -- and more invasive -- data collection.

In general, the best way to promote privacy is to collect and store as little information as possible. You can't steal, abuse, or garble information that doesn't exist. But when bad actors know valuable personal data is there, it makes any business storing it a more attractive target. Stockpiling sensitive details will only increase the risk of identity theft or data breach.

THERE IS NO question that the information the law would require be stored is quite sensitive.

The law would require companies to track these transactions using Taxpayer Identification Numbers (TINs). Often, especially in the case of small businesses, TINs are just Social Security numbers. And when it comes to online identity, Social Security numbers are the most precious family jewels. When the FTC investigated online identity theft last year, it found that Social Security numbers were the "most valuable commodity" for thieves.

Further, the FCC said that reducing the use of Social Security numbers -- which presumably includes their storage -- was the single most important step that could be taken in reducing incidents of electronic ID fraud. That means Grassley's mandate would explicitly contradict the government's own recommendations for preserving online privacy.

Perhaps that's not surprising. As John Barlow, a Grateful Dead lyricist who co-founded the privacy watchdog Electronic Frontier Foundation, once said, "Relying on the government to protect your privacy is like asking a peeping tom to install your window blinds."

That's especially true when Sen. Grassley's involved. He has developed an unfortunate fetish for reporting more information to the government. As head of the Senate Finance Committee, he's spent years investigating the tax status of various non-profit organizations.

The same nosy impulse that's caused Grassley to root around in the dealings of televangelists is what's driving the current law.

It's an impulse based on a false understanding of public accountability. In many cases, when someone notes that a politician wants more accountability, that's a good thing. But Grassley's notion of how it ought to work is grass backwards.

You see, the government is supposed to be accountable to the people, not the other way around.

Matt Kibbe is president of FreedomWorks.

It's nobody's fault but ours that so many of our citizens are susceptible to advertising which tries to make someone look bad simply for being part of a particular industry.

It would be amusing if it weren't so dangerous to the economy that millions of Americans seem to hate the oil industry, as if we'd have oil and gas without the industry.

A left-wing group (probably affiliated with Mark Udall's environmental extremist wife) has been running an ad tying Bob Schaffer to the oil industry. Objectively, we should be thanking Schaffer for being involved in trying to increase world energy supplies, but liberals don't think that way. And unfortunately, the average American has such a poor understanding of economics and is so easily manipulated that they're almost certainly interpreting the ad as a negative for Schaffer.

So, I'm very glad that one of Denver's two major papers has finally stepped in to make some points which my readers my find obvious but which too many Coloradans need to have explained.

See "Buying into the Big Oil smear" (Rocky Mountain News, Editorial, 6/28/08)
http://www.rockymountainnews.com/news/2008/jun/28/buying-into-the-big-oil-smear/

Here's another must-read article by someone from the outside looking in on the dangerous econo-nonsense being proposed by those who want to stop "speculation" in futures markets.

see "Misguided US plan to curb oil futures speculation", The Australian, 6/26/08
http://www.theaustralian.news.com.au/story/0%2C25197%2C23923062-5005200%2C00.html