Coping: With the Continuing Decline of (#12) America

There is a fine line between democracy and “mob rule.”  And honestly, I can’t tell you where that line is.

What I can reassure you – with some solid backup – is that the US has since 2000 sunk from being in the top three of economically “free” countries in the world to 2012’s number 12 world-wide.

That’s not my opinion, but rather a report from the prestigious Cato Institute.

Coming to such conclusions is not done lightly or quickly, either.  It takes a little more than a year and a half to collect the data and for the report,

If you get some time, you might want to read the report in its entirety.

But, since we both know everyone’s too busy in today’s hurried-up world, let me share with you the part of the report I found most interesting.

From the Executive Summary:

Chapter 1: Economic Freedom of the World
The authors of the report, James Gwartney, Robert Lawson, and Joshua Hall, provide an overview of the report and discuss why economic freedom is important. They also review the decline of economic freedom in the United States.

Since I picture myself a pretty good unconventional economic thinker, I was anxious to get to this part of the report.  Because reports like this are designed to stimulate thinking and broaden public awareness, I don’t think Cato or the study authors would mind me sharing their findings discussed in Chapter 1:

“What accounts for the US decline? While US ratings and rankings have
fallen in all five areas of the EFW index, the reductions have been largest in the Legal System and Protection of Property Rights (Area 2), Freedom to Trade Internationally (Area 4), and Regulation (Area 5). The plunge in Area 2 has been huge. In 2000, the 9.23 rating of the United States was the 9th highest in the world.

But by 2012, the area rating had plummeted to 6.99, placing it 36th worldwide.

While it is difficult to pinpoint the precise reason for the decline in Area 2, the increased use of eminent domain to transfer property to powerful political interests, the ramifications of the wars on terrorism and drugs, and the violation of the property rights of bondholders in the auto-bailout case have weakened the tradition of strong adherence to the rule of law in United States.

We believe these factors have contributed to the sharp decline in the rating for the legal-system area.

Expanded use of regulation has also been an important contributing factor
to the declining ratings of the United States. During the past decade, non-tariff trade barriers, restrictions on foreign investment, and business regulation have all grown extensively. The expanded use of regulation in the United States has resulted in sharp rating reductions for components such as independence of the judiciary, impartiality of the courts, and regulatory favoritism.

To a large degree, the United States has experienced a significant move away from rule of law and toward a highly regulated, politicized, and heavily policed state.

The decline in the summary rating between 2000 and 2012 on the 10-point
scale of the index may not sound like much, but scholarly work on this topic indicates that a one-point decline in the EFW rating is associated with a reduction in the long-term growth of GDP of between 1.0 and 1.5 percentage points annually (Gwartney, Holcombe, and Lawson, 2006).

This implies that, unless policies undermining economic freedom are reversed, the future annual growth of the US economy will be only about half its historic average of 3%.”

As long as we’re kicking around the Cato Institute site, you might also be interested in their finding that some of what’s called healthcare law in the us may not be constitutional. As a summary on the latest Cato Regulation magazine summarizes:

The Emergency Medical Treatment and Active Labor Act (EMTALA ), enacted in 1986, requires Medicare-contracting hospitals with emergency rooms to screen and stabilize anyone presenting for emergency care, regardless of ability to pay. An article in the new issue of Regulation proposes that EMTALA regularly violates the Fifth Amendment’s Takings Clause.

This last article is particularly on point when you read about how the US government and co-conspiring state and local governments engage in other arguably illegal practices including civil asset forfeiture and, as noted in the Economic Freedom report, excessive use of eminent domain.

Alright, Ure…interesting stuff, but how does this relate to the mob rule versus democracy that works problem?”

Ah!  Just so….

The reason for this whole discussion this morning is not to sell you on Cato’s point of view.

It is, rather, to offer you a much different way of looking at ‘NEWS.’

I’ve often wondered, for example, if there’s much point to excessive attention to the daily flow of events.  In other words, if you had two groups of people, and one group watched Fox and CNN all day long, and the other group simply hit Drudge for two minutes, if there would be any difference in health, happiness, and income over some period of time?

I suspect there would be.

And that gets us to the discussion about how to turn around #12 America. 

As I see it, one of the biggest “mob rule” problems we have is too much media. 

Take Ebola for example.  The story popped up several weeks back, my consigliore  ran  out the numbers and we look for a range of 0.5 to 10-million infected by next spring, depending on RO (retransmission rate).

But is our comprehension of events aided by seeing pictures of the victim with her dog?  Not so far as I can see, unless the pooch carries the disease, which which case it becomes a 25-cent problem with a souvenir shell casing at the other end of it, so to speak.

The problem with mass media is that there is very little of Cato’s approach (deeply grounded in core American values). 

Over the next few week’s I’d like to enlist your assistance in finding best of class (preferably non-partisan) groups of smart people.  Like Cato, or the folks who run First Monday, which deals with internet-related policies. 

First Monday’s featured issue this month (over here for the index) is a look at the music industry, the digital distro issues (remember rootkits?_) and all the rest of it, 15-years on.

A fair number of words, but my personal bottom line seems to keep coming around to “Once you see a basic news story, find the smartest people on the planet on that issue, and read their take on it.”

I think you’ll find it saves a lot of time and reduces stress levels by removing the near-hysterical pitch of discussion.

It’s hard to find good sources like these, but I find them useful.  I’m willing to delegate a lot of personal opinion-making time to people who are experts. Especially when the experts are largely grounds in the principles which until 2001 saw America in the world’s top 3 economically free places.

The Other Drought

We can’t help but notice that California is looking a lot more like Arizona than anywhere else as the drought drags on there.

But keep an eye on Brazil, which is also  crossing a drought threshold.  With it, coffee and sugar prices will likely rise, and with the deaths in Africa, cocoa prices ought to also head moonward in a few months.

There go the breakfast beverage options…

OK, off to do look at markets…

Write when you break-even…