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  BACK TO BASIC W/ DAN CLEMENTS

  Dan Clements

  Date / Time: 12/8/2009 3:00 AM UTC

  Category: Politics Conservative

  Call-in Number: (347) 945-5379

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• Featured Episode

  BACK TO BASIC W/ GUEST HOST STANGER 73

  Dan Clements

  Date / Time: 7/29/2009 2:00 PM UTC

  Category: Politics Conservative

  
  

  Fellow travelers of earth join Stanger 73 as he takes the reigns of BACK TO BASIC and talks with Vicki Behenna about the plight of Michael Behenna, an Army Ranger that was wrongfully prosecuted for defending himself and his squad from a known Al Qaeda operative for some political purpose. Read up on this at http://defendmichael.wordpress.com/

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  Date / Time: 10/10/2008 12:06 PM UTC

  The Myth of the Robber Barons

  by Burton W. Folsom, Jr.

  This article is adapted from a lecture Professor Folsom gave at the History and Liberty seminar at FEE in June. For readers who are interested in finding out more about these lost lessons of history we recommend Professor Folsom's popular book, The Myth of the Robber Barons, now in its fifth edition.

  In the ongoing war of ideas in American history, those who advocate government action as an engine of economic development have been encouraged by a general and all-too-human tendency to avoid thinking deeply. Because we have a long history of government intervention in the economy, the assumption—both among those who design government programs and among the constituencies that support them—has usually been that government action accomplishes its objectives. Even people who have reservations about bureaucratic inefficiency reason that we wouldn't have turned to government so many times in the past if government hadn't accomplished something.

  Three Assumptions About Capitalism

  This shallow conclusion dovetails with another set of assumptions: First, that the free market, with its economic uncertainty, competitive stress, and constant potential for failure, needs the steadying hand of government regulation; second, that businessmen tend to be unscrupulous, reflecting the classic cliché image of the “robber baron,” eager to seize any opportunity to steal from the public; and third, that because government can mobilize a wide array of forces across the political and business landscape, government programs therefore can move the economy more effectively than can the varied and often conflicting efforts of private enterprise.

  But the closer we look at public-sector economic initiatives, the more difficult it becomes to defend government as a wellspring of progress. Indeed, an honest examination of our economic history—going back long before the twentieth century—reveals that, more often than not, when government programs and individual enterprise have gone head to head, the private sector has achieved more progress at less cost with greater benefit to consumers and the economy at large.

  Competition Versus Subsidy in the Steamship Industry

  America's early experience with the steamship industry provides an illustrative case. By the 1840s,the technology of steam-powered water transport had reached the point where it became practical to build large ocean-going vessels, and steamships began plying the route between New York City and Liverpool, England. An enterprising fellow named Edward K. Collins approached the U.S. Congress with a plan to develop a steamship fleet that could compete with Britain's Cunard Company. Since the Cunard operation was subsidized by the British government, Collins asked Congress to provide him with a grant of $3 million to underwrite the construction of five vessels and a yearly supplement of $385,000 so he could strive to best Cunard's fare of $200 per passenger and its rates for carrying freight and mail.

  Playing skillfully on congressional fears about British domination of the transatlantic trade, and promising that his ships could serve as the basis of a merchant marine fleet in the event of war, Collins got his money. He then proceeded to build four very large and luxurious ships, instead of the five smaller vessels provided for in the agreement, and he took far longer than anticipated to get his fleet into operation.

  Collins ran his ships on the same schedule as Cunard, sailing every two weeks, and he often did beat Cunard's crossing time by one day, though at considerably higher operating costs. But while he had promised Congress that his yearly subsidy could eventually be phased out, he was soon lobbying for annual increases to about $500,000, $600,000, $700,000, and then to more than $800,000 per year.

  Cornelius Vanderbilt, who had made his mark as an operator of river steamboats, approached Congress with a proposal for an “Atlantic ferry,” promising to match Collins's two-week sailing schedule at half the cost of Collins's subsidy. Congress debated Vanderbilt's proposal. But it doubted his ability. Having made a commitment to Collins—and by now a considerable investment as well—Congress turned Vanderbilt down.

  Vanderbilt was undeterred. He went into operation without a subsidy, using privately financed ships, set up a self-insurance arrangement by which he was able to save on payments to outside insurers, and ran his ships at slower speeds to save fuel. He also reduced the fare, and he invented a new, cheaper passenger class, by which people could travel below decks, in what was called steerage, for as little as $30. Vanderbilt's “sardine class” made it possible for many immigrants to come to America.

  After a year, Vanderbilt's operation was flourishing, and Collins, in serious trouble from competition with Vanderbilt, went to Congress to ask that his subsidy be raised, yet again, to more than $850,000. Collins managed to persuade the congressmen to conclude that since they started with Collins, it would be disloyal to take his money away now.

  But Collins recognized that each time he went back to Congress for more money, the vote was closer. He decided that if he couldn't beat Vanderbilt on price, he would concentrate on beating his crossing time, demonstrating that the Collins line clearly offered the most efficient way to get from Liverpool to New York City. This strategy had its dangers. Long beset with maintenance problems because their engines were too large for their hulls, Collins's ships began to feel the strain of this high-speed policy. Two of the ships—half his fleet—sank, killing almost 500 passengers, and Collins faced the humiliation of going back to Congress to beg for an emergency $1 million appropriation to construct a replacement vessel.

  Again Congress funded him. But the new ship, The Adriatic, was so hastily and poorly constructed that it had to be sold at auction after its first voyage—at a $900,000 loss. When Collins went back to Congress for still more money to build yet another ship, he was finally turned down.

  It is interesting to look at the reaction in Congress after being embarrassed again and again by the subsidies to Collins. Senator Judah Benjamin of Louisiana said, “I believe [the Collins line] has been our most miserably managed.” Senator Robert Hunter of Virginia went even further. “The whole system was wrong,” he said. “It ought to have been left, like any other trade, to competition.” Senator John Thompson of Kentucky insisted, “Give neither this line nor any other line a subsidy. Let the Collins line die. I want a tabula rasa . . . a new beginning.”

  Collins had his subsidy stripped and had to compete head to head—unsupported—with Vanderbilt. Within a year, Collins went bankrupt, and Vanderbilt was the dominant force on the seas from the American side.

  Competition Versus Subsidy in the Railroad Industry

  It would be comforting to report that the United States learned its lesson about the effects of federal subsidies from the Collins/Vanderbilt experience. Unfortunately, less than a decade later, would-be railroad builders were coming to Congress begging for money to span the nation with transcontinental lines. Congress subsidized three transcontinental rail-roads: the Union Pacific, the Central Pacific, and later the Northern Pacific.

  These companies, which were provided with money and land by the government, had no incentive to build their lines efficiently, along straight routes with even grades and proper materials. Eventually they went bankrupt. The Union Pacific and the Central Pacific did so only after eating up 44 million acres of free land and $61 million in cash loans. Large sections of the lines they did complete soon had to be rebuilt and sometimes even relocated due to shoddy construction.

  The privately funded Great Northern, which, by contrast, operated on a shoestring budget, was a success. Unlike his competitors, James J. Hill built the Great Northern for durability and efficiency. “What we want,” he said, “is the best possible line, shortest distance, lowest grades, and least curvature that we can build.” That meant he personally supervised the surveying and construction. “I find that it pays to be where the money is being spent,” he noted. He believed that building a functional and durable product actually saved money. For example, he usually imported high-quality Bessemer rails, even though they cost more than those made in America. He was thinking about the future, and quality building cut costs in the long run. When Hill constructed the solid granite Stone Arch Bridge—2,100 feet long, 28 feet wide, and 82 feet high across the Mississippi River—it became the Minneapolis landmark for decades. Yet today Hill is regarded as just another member among the ranks of the greedy, amoral “get-rich-quick” capitalists.

  After the transcontinental railroad episode, Congress increasingly began to take the position that American business success would be based on entrepreneurship, not subsidy, relying on those whom I call market entrepreneurs rather than political entrepreneurs. If you look at industries after the Civil War—particularly steel, oil, and chemicals—you find that time and again American market entrepreneurs stepped in and defeated competition from Europe, without subsidies.

  Andrew Carnegie and the Steel Industry

  When Andrew Carnegie founded Carnegie Steel in 1872, the biggest steel producer in the world was England and the going price of steel rails was about $56 per ton. Carnegie was an eager innovator. He adopted the revolutionary Bessemer process and introduced new accounting methods to make his operations more efficient, applied a merit-pay system to reward his workers, and implemented many employee-suggested ideas. Carnegie Steel became so efficient that by 1900 the company could produce steel rails at $11.50 per ton, and its rail output surpassed that of all the steel mills in England combined. Other U.S. firms followed Carnegie's lead, and America became the dominant steel producer of the world.

  John D. Rockefeller and the Oil Industry

  Our story would not be complete without recalling the success of John D. Rockefeller. By the 1890s, Standard Oil had a 60 percent market share of all the oil sold in the world. Rockefeller sold the oil at eight cents a gallon—that would be around $1.60 today. Eight cents a gallon! Nobody in the world could do it that cheaply. Kerosene was so inexpensive that people could light their homes for less than one cent an hour.

  Rockefeller, the first billionaire in U.S. history, made a fraction of a cent on each gallon of oil his company sold. He had the foresight to say that his goal was to make it for six cents, sell it for eight cents, and use the two cents for research and development. Rockefeller realized that finding new uses for oil was the key to success. (Other companies would take a barrel of oil out of the ground, heat it to get the kerosene, and dump the excess as waste into rivers.) Eventually Standard Oil discovered and produced scores of byproducts, including candle wax, soap, petroleum jelly, tars, and lubricating oils.

  Because of this resourcefulness, Rockefeller might well be called the first environmentalist. (He also could be credited with species preservation: the whaling industry declined precipitously as kerosene displaced whale oil in lighting.)

  But all this did not make him popular. Competitors did not like him, and public opposition mounted. Standard Oil had already begun to lose market share to competitors because it failed to invest in the Texas oil fields in 1900. But despite this declining market share, successful antitrust litigation resulted in the company's being split into 34 companies.

  Time and again, experience has shown that while private enterprise, carried on in an environment of open competition, delivers the best products and services at the best price, government intervention stifles initiative, subsidizes inefficiency, and raises costs. But if we have difficulty learning from history, it is often because our true economic history is largely hidden from us. We would be hard pressed to find anything about Vanderbilt's success or Collins's government-backed failure in the steamship business by examining the conventional history textbooks or taking a history course at most colleges or universities. The information simply isn't included.

  The Greatest Generation?

  I want to end on a positive note. The success of the market entrepreneurs of the post-Civil War era depended on their ability to serve consumers. When they started their enterprises, the United States was a second-rate power; during their lifetimes they spurred American industry to world dominance. Their accomplishments in transportation, steel, oil, and chemicals led to the unparalleled economic progress of the late 1800s, contributed to American prosperity, and prepared the way for future innovation.

  Along with our Founding Fathers and the World War II generation, this remarkable group of entreprenurs, has a rightful claim to being America's greatest generation.

   

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• Date / Time: 10/9/2008 9:24 PM UTC

  FAMOUS QUOTE

  "Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost."
  John Quincy Adams
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• Date / Time: 10/8/2008 11:55 AM UTC

  SOMETHING WICKED THIS WAY COMES

  By Darrell L. Castle

  Constitution Party 2008 Vice-Presidential Candidate

   

  Crystal water turns to dark

  Where ere it’s presence leaves it’s mark

  And boiling currents pound like drums

  When something wicked this way comes.

  (Original poem by Ray Bradbury)

   

  Laws, originally evolving out of the New Deal legislation written in response to the great depression, once protected the American financial system. Starting in the 1990’s, in response to intense lobbying efforts by the financial industry, those laws were stripped away. The most important one was Glass Steagall which separated commercial banking from the type of investment work of a stockbroker. Glass Steagall was signed out of existence in 1999 by President Clinton and less than 10 years later the entire financial system is bankrupt. Another law, known as The Uptick rule, prevented companies from crashing due to large scale shorting of company stock. A company’s stock could not be sold short as long as it was in continuous decline. Short sellers had to wait for an uptick in the stock before shorting. The Uptick Rule ended in 2007 just about one year ago.

   

  The end of the laws protecting the American public from unscrupulous speculators disguised as bankers caused changes in the way our banks do business. The banks decided that simple banking, that is loaning money at interest, was not profitable enough so they began investing in risk paper. This changed them from banks into something akin to casinos. Now that the gamble has finally failed these new casinos are asking the American taxpayer to pick up the tab for their greed and excess.

   

  Now all this risk paper, known in the financial world as “the derivatives market” is collapsing. Derivatives are not stocks or bonds or anything else substantial. They are simply paper derived from other paper such as futures and options. Futures and options are exchange traded derivatives, but the largest group of derivatives is not even traded on the exchanges. These are called “counterparty derivatives” and consist of such things as collateralized debt obligations, mortgage backed securities, and credit default swaps. It is estimated that total derivative exposure of the financial system is between one quadrillion and one and a half quadrillion. A quadrillion is 1000 trillion. To put that in perspective, the entire GDP of all the world’s countries in 2007 was approximately 60 trillion. GDP is basically everything that is produced for sale. The American people are now being asked to shoulder the risk of the entire derivatives market and if they do, 700 billion will prove to be a drop in the bucket.

   

  The rapid increase in the price of fuel during the last year is a good example of the destructive nature of the derivative market. Much of the price increase was due to speculation in futures especially by Goldman Sachs (Henry Paulson’s company) and Morgan Stanley. These companies, it is believed, are responsible for about 50% of the speculative price of oil. What that means is that every time we buy gas we subsidize the parasites who feed off us so they can continue their existence. We are now being asked to accept increased taxes to cover their losses.

   

  Now that this mess has been created, what should be done to resolve it with the least amount of pain for the American People?

   

   1. All failed and at risk financial companies, not just those we constantly read about, should be seized by the F.D.I.C. (Federal Deposit Insurance Corporation) and put into involuntary Chapter 11 Bankruptcy. The money people have on deposit would carry the same FDIC guarantee as before so there would be no need for panic. The Chapter 11 trustee would examine the assets of these institutions and all derivative paper should be discharged in bankruptcy. The American people should not accept one penny of risk for derivative paper. The real assets such as mortgages on residential real estate should be separated and foreclosure should be indefinitely frozen. The at risk mortgages, whether subprime or not, could be written down to the current value of the property and re-amortized for a payment the homeowner could afford. The mortgage could then be returned to the bank for service or referred to Fannie and Freddie if the bank did not survive Chapter 11.

   

  2. The Federal Reserve Banks should be seized by Congress under Article 1 Section 8 of the Constitution. The FED banks could survive as Clearinghouse banks but the Federal Reserve that has robbed the American people for 100 years would cease to exist. The debt owed by the American people to the FED banks would be discharged in bankruptcy. Congress would take monetary policy from the FED and would simply stand in place of the FED through a monetary board. The FED credit computers would be transferred to Congress who would issue new credit (money) because under our present system 97% of all money originates as credit. This new credit would keep the system going and prevent collapse. It could all be done without interest and without debt. The backs of the international banking cartel would be broken forever and the American people through their elected representatives would control monetary policy i.e. money in circulation, interest rates, and credit availability.

   

  3. Glass Steagall and the Uptick Rule should be returned. Speculation in the futures markets of essentials such as fuel, food, and medicine should be banned or at least have a punitive tax say 50% attached.

   

  4. The Chapter 11 Bankruptcy Trustee would immediately move to seize any assets taken by the CEO’s and Boards of Directors from the bankrupt companies during the prescribed time period. No bankruptcy system would allow the CEO of the bankrupt company to keep hundreds of millions as in some of these cases. At the same time, the U.S. Attorney should be directed to examine the process for criminal sanctions where laws have been violated.

   

  In conclusion, this plan would return our monetary system to the American People and ignite a new wave of prosperity and liberty. Every crisis presents opportunities if we only look for them. This is an opportunity for the American people to throw off the yoke of debt bondage that has enslaved them for 100 years and gain direct control of monetary policy through representatives answerable directly to them. No particular philosophy has been respected or spared in this plan. I am more interested in saving the system for the American people than I am in respecting anyone’s philosophy of money or government. This is intended to be a simple, easy to understand, explanation of our banking crisis with a Consitutional solution.

   

   

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• Date / Time: 10/7/2008 4:37 PM UTC

  Act as free men, and do not use your freedom as a covering for evil

  By: Dan Clements       October 7, 2008

   

              What a wonderful admonition, what a lofty goal and idea.  The apostle Peter in 1 Peter 2:16 admonished first century Christians to act as free men!  It seems to me that lately the American people have been acting anything but like free men.  There are too many Americans that want the government to decide how we ought to live our lives, when the average American can and should decide how they are going to live their lives.

              What does it mean to act as free men?  Eleanor Roosevelt said “Freedom makes a huge requirement of every human being. With freedom comes responsibility. For the person who is unwilling to grow up, the person who does not want to carry is own weight, this is a frightening prospect.”  As Christians we are responsible before God on how we act towards him, our fellow man and the government that God has set in place over us.  I encourage you to read the second chapter of first Peter and see what the apostle has to say about God and country.

              With freedom comes responsibility.  If practicing my freedom takes yours away or diminishes it, then I am no longer free, I have become a tyrant and a slave to my decisions.  If I take away your freedom by force or by deception, I have become a tyrant.  You may be asking yourself, how can my decisions make me a tyrant?  How can exercising my freedom diminish someone else’s freedom?

              Some Americans recognize that we are endowed by our creator with certain inalienable rights that among these are life, liberty and the pursuit of happiness.  When we act as free people, we are saying we are responsible for our actions, no matter what the outcome is.  We don’t look for safety nets and when we do what is morally right, we are less likely to infringe on someone else rights.  When we choose to do what is morally wrong, then our actions, no matter how noble they may seem, always take something away from someone else.  Folks this is what a tyrant does.

              This whole Fannie Mae, and Freddie Mac, sub prime, no documentation, no credit, no down payment, living beyond our means, no saving, out and out greed in our government and our financial sector, is the result of making decisions without regard for a moral standard, or how it will effect our fellow citizens. This mentality of profit at any cost, having everything we want, regardless if we can afford it or not, living like the world owes us something, and just an out right disregard for personal responsibility, is what is at the root of our economy’s collapse. 

              We have a congress that thinks it can go on spending whatever amount of money they deem is proper without regard for the consequences. Yes we can vote them out of office, but very few ever get prosecuted for their action while in office.  This has got to stop.  These men and woman cannot and should not be allowed to go to Washington D.C and think they can do whatever they want regardless of what the people want.  We have men and woman of very low moral fiber in Washington D.C., that think they do not have to answer to WE THE PEOPLE!  They feel more beholden to PACS, lobbyist, and special interest groups, instead of WE THE PEOPLE!   If U.S. Representatives, Senators, Presidents, and Supreme Court Justices, had to face consequences for their actions, maybe they would think twice before they made a decision that takes away any freedoms from WE THE PEOPLE!

              When you make a series of decisions that puts our economy at risk, and then those decisions prove to be fatal to our economy, then you should be held accountable!  I don’t care if you are a congress person, a Wall Street tycoon, or some ordinary person walking down the street, you should be held accountable.  And to think that the very people who put us in this mess can get us out is the joke of the millennia!!   We need a people’s court independent of the government and Wall Street, to sort this mess out and hold those people at fault accountable.  We need to get back to a moral decision making process that takes into account how my actions and decisions will affect my fellow citizen.  We need to start being more accountable for our actions and stop waiting for someone to catch us when we fall!

              There is only one political team that has it right when it comes to the economy, and that’s Chuck Baldwin and Darrell Castle of the Constitution Party.  Go to www.baldwin08.com and see for yourselves.

              If we chose the wrong men and woman for congress and the presidency, then we have only ourselves to blame.

   

   

  Dan Clements is a member of the Constitution Party and the host of BACK TO BASIC a Christian/political internet talk show. You can listen to Dan live from 10am-12 noon EST. M-F at www.blogtalkradio.com/dan-clements and www.constitutionalwarrior.com

   

  
  

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