Posted by Michael A. LaFerrara on
Thursday, October 23, 2014
NJ's Consumer Fraud Act: Non-Objective Law in Action
In the fictional person of Atlas Shrugged’s Judge Narragansett, Ayn Rand labeled non-objective law “humanity’s darkest evil.” Elsewhere, she wrote:
When men are caught in the trap of non-objective law, when their work, future and livelihood are at the mercy of a bureaucrat’s whim, when they have no way of knowing what unknown “influence” will crack down on them for which unspecified offense, fear becomes their basic motive, if they remain in the industry at all—and compromise, conformity, staleness, dullness, the dismal grayness of the middle-of-the-road are all that can be expected of them. Independent thinking does not submit to bureaucratic edicts, originality does not follow “public policies,” integrity does not petition for a license, heroism is not fostered by fear, creative genius is not summoned forth at the point of a gun.
Non-objective law is the most effective weapon of human enslavement: its victims become its enforcers and enslave themselves.
Keep this in mind when you read the following.
The fallout from the Great Recession continues, and the scapegoating of the mortgage lending industry continues apace. In Court brightens homeowners’ hope, lawyer Adam Deutsch hailed a recent court ruling against a mortgage lender:
New Jersey’s Legislature has always been at the forefront in drafting laws to protect the consumers of this state from foreseeable and unanticipated harms put in place by commercial enterprises in the state. The apex of consumer protection regulation is the New Jersey Consumer Fraud Act.
Note the term “unanticipated harms.” Deutsch continues:
Broadly speaking and with few exceptions, the CFA prohibits any company from engaging in an unconscionable commercial practice.
The housing crises in New Jersey is far from resolved, and now is the time for a sea change brought on by the recent judicial decision in Freedom Mortgage Corporation v. Major.
The quintessential finding of this recent decision is that it is an unconscionable business practice to sell a homeowner a refinance loan when there is little to no net benefit to the consumer.
Deutsch goes on to cite two alleged “unconscionable commercial practices”:
Arguably any loan that contained a negative amortization provision where the homeowner was instructed to make payments that did not even cover the full interest payment is unconscionable.
Likewise, any homeowner who was the target of a loan-flipping scheme, where they were induced to refinance two or more times within one or two calendar years is also unconscionable.
Consider the market conditions pre-crash. Housing prices were rising rapidly, inflated by government policies—a process that had been going on in varying degrees for so long that people believed housing prices would always keep rising. And for those who understood the process and the risks, how were they to know whether the music would stop in a year or ten or 25 years? Financial bubbles are inherently unpredictable. Under these conditions, many negative amortization loans may have seemed to make sense to both borrower and lender. If your home value is rising faster than your mortgage balance, your net worth is rising. If your pay rises over time, you could pay down the balance or refinance out of your negative amortization loan. If not, you could always sell, cashing in on the home appreciation even as you pay off your inflated loan balance.
Hindsight is 20/20. What seemed like a good deal pre-crash became, in retrospect, a bad deal—an “unconscionable commercial practice.” Is it fair to demonize lenders for failing to see the crash coming? Most of the distressed homeowners could have sold at a profit if home values kept rising, as had typically been the case for decades. If that were the case, would lenders have been entitled to the profits? After all, they put the homeowners into the loans that enabled the homeowner to profit. No? Then why are they responsible for the “unanticipated” losses resulting from the home price crash? Are homeowners not responsible for loans they voluntarily took out?
I left these comments:
Non-Objective law is law that is so vague that no one can be sure what, exactly, is unlawful until after one acts; law that, essentially, is up to the momentary whims of lawyers, judges, and juries. It amounts to ex-post-facto law. It is an essential facet of tyranny.
The banning of “unconscionable commercial practice” is just such non-objective law. It is so undefinable that virtually any business practice can be declared illegal after the fact, including actions believed to be legal and ethical at the time of implementation, and the two examples presented here prove it.
How is a lender who helped a borrower that wanted to take advantage of tumbling interest rates “refinance two or more times within one or two calendar years” to know that he would be subsequently accused of “inducing” that borrower into a “loan-flipping scheme.” That, in fact, was my wife and I. If we now have an underwater mortgage, and are in “distress,” is that the lender’s fault? How is a lender to determine whether or not the home loan sought by the consumer is of “little to no net benefit” to every individual consumer that voluntarily walks through its doors—especially considering the utter unpredictability of government housing, monetary, and regulatory policies? How is a lender to determine what some future judge or jury will declare to be an “unconscionable commercial practice”? It would require omniscience on the part of the lender.
This is not to say that businesses shouldn’t consider the best interests of their customers. Good businessmen know that harming their customers is not the path to long-term profitability. Nor is it to say that fighting fraud is not a proper focus of the law. It is. But the fraud must be precisely and objectively defined, such as deliberately misrepresenting or hiding relevant loan terms. Businessmen should know precisely what is illegal before acting.
The NJ Consumer Fraud Act is, at least as described here, non-objective law dressed up in anti-fraud packaging. Any borrower that gets into trouble is another opportunity for some shyster lawyer to manufacture a new “unconscionable commercial practice” with which to prey on innocent lenders, most of whom were as much victims of the housing boom and bust brought on by government policies as consumers. The CFA is a law that inverts the fundamental American principle of “government of laws and not of men”; is another bailout for irresponsible or unlucky borrowers at the expense of lenders; and creates lush hunting grounds for predatory law firms.
The definition of non-objective law given above is not a complete definition. Ambiguous language and ex post facto (retroactive) law are the parts most directly relevant to the article. For the record, I quote Tara Smith’s more comprehensive definition:
Essentially, non-objective law is law that does not serve the legitimate purpose of government. It exercises coercive power to accomplish ends other than the protection of citizens’ rights. Whether intentionally or unwittingly, non-objective law transgresses the boundaries that the [proper] function of government imposes on the government’s activities. (p. 343)
“That which cannot be formulated into an objective law,” Ayn Rand observed, “cannot be made the subject of legislation—not in a free country, not if we are to have ‘a government of laws and not of men.’ An undefinable law is not a law, but merely a license for some men to rule others.”
What is Objective Law?, by Harry Binswanger
Labels: Business and Economics, Constitution and Law, New Jersey, Sub-Prime Mortgage Crisis
Posted by Michael A. LaFerrara on
Tuesday, October 21, 2014
Huber on the Personalized Medicine Revolution—and the Government Roadblocks
The convergence of two technological revolutions—biochemical and digital—has given rise to personalized medicine, which allows drug treatments to be tailored to the individual’s own unique genetic profile.
Huber is a senior fellow at the Manhattan Institute for Policy Research, and his book is a fascinating read. He gives us an in-depth look at the modern drug science he dubs “intelligent design.” Huber observes:
In the last three decades, biochemists have made the transition from blind guesswork to the systematic design of precisely targeted drugs [which, in turn, has] transformed molecular medicine into an applied science anchored in immaterial code of almost limitless power and plummeting cost. [P. 23]
For example, scientists using powerful computers can now peer into the genetic makeup of individual patients to identify “biomarkers”—genetic traits that enable scientists to determine which particular drugs work for which individual patients.
But the FDA’s standard drug approval protocols, rigidly geared to one-size-fits-all “crowd” treatments for what Huber calls the “legacy germs”—infectious diseases like smallpox, cholera, and polio which earlier medicine was mainly concerned with—doesn’t jibe with the new sciences. The result: Countless valuable drugs go unlicensed or are severely restricted in their usage.
Huber also shows:
There’s more. Huber’s interesting book is rich in history, facts, insight, and policy prescriptions covering the science, economics, and regulation of modern drug development. He systematically pulls it all together into a convincing call for—if not a fully free healthcare market—at least a much freer one.
From this layman’s perspective, The Cure in the Code is not only a valuable addition to the intellectual arsenal of anyone concerned about freedom and individual rights in healthcare, but also of interest to anyone—rich or poor, of whatever political persuasion—who values a future of quality, ever-more-affordable healthcare.
Close the FDA’s “Loopholes” of Statism, not Freedom
Labels: Books, Constitution and Law, Healthcare
Posted by Michael A. LaFerrara on
Sunday, October 19, 2014
The Job Creators: Santa Claus Government or Private Business?
A recent letter appearing in the NJ Star-Ledger was titled Government, private sector create jobs together.
Actually, the content of the letter is even worse than the title suggests. Walt Lukasik opens with:
Republicans abound in their assertion that the private sector produces jobs in America, not the government. However, the U.S. government is the largest consumer of private-sector goods and services. If our government decided to halve its budget, is there any doubt that businesses would close and millions of Americans would be jobless?
Any guesses on what Lukasik's solution to job creation is? I left these comments:
And just where does the funding for government consumption and "investment" come from? Lukasic apparently believes that the government is Santa Claus; that government creates wealth out of thin air (or in some Polar fantasy land).
But, there is no free lunch. The government gets its money by forcibly seizing it from productive private citizens through direct taxes, future taxes (borrowing), or hidden taxes (printing press money, which is a tax on private purchasing power). Every dollar government spends is one dollar less that private citizens have to spend or invest. The only difference between public and private spending is that government officials, rather than the people who earned it, spend it as they please. Not only is this fundamentally immoral, it is economically destructive, because most government spending is driven by political calculations, rather than economic self-interest.
The source of government revenue is the private initiative of free individuals pursuing their life's goals. The only role of the government, to the extent it "consumes" and "invests," is to transfer money from some individuals to other individuals—and nothing more. Beyond its fundamental job to protect individual rights, the government can only harm the economy. Without the productive private economy, the strength of which depends on economic and political freedom, there could be no government consumption, investment, or jobs. The leaders of the private economy are those extraordinaire individuals whose intellectual energy exceeds his physical capacity to realize his productive vision—and whose ambition leads to action. The result is the businessman, who takes the risks, identifies the markets, organizes the factors of production—including the creation of jobs—and provides the vision and direction of the enterprise toward the creation of products and services that consumers are willing to voluntarily spend their money on.
But in Lukasic's fantasy land, "improving the standing of middle-class America" entails turning productive Americans into a giant welfare class, where every day is Christmas and people wait greedily for prosperity to shower down from Santa Claus government.
This would be hilarious if it weren't so serious. Many powerful people buy into this gunk; or worse, know it's gunk but exploit those who buy it to buy votes and expand their own power. A giant chunk of government policies, called Consumption Economics or Keynesianism, is built on this fantasy, and productive taxpayers foot the bill.
There is no question that jobs are created under government-funded economic activity, but only at the expense of even more job creation under private spending. Government can only help the job creation process by interfering less—lower taxes and regulations—or hinder it, by higher taxes, higher government spending, or more regulations.
In the past 15 years, government has hindered rather than helped. The results are clear for all to see; the housing bubble and bust and related Great Recession; the slowest recovery ever; a semi-permanent underclass of unemployed; record levels of official poverty; slow wage growth; restrained private business (i.e., real) investment; all within the context of what, according to the Santa Claus theory, should have produced economic nirvana— record spending, record debt, and record monetary expansion.
Mazzucato’s Fantasy: The “Courageous, Entrepreneurial State”
What is the "Key" to Job Creation?
"Government Help" Leads to Totalitarian Socialism
Labels: Business and Economics, Government and Economics, Government Spending
Posted by Michael A. LaFerrara on
Friday, October 17, 2014
NAFTA, Whatever its Flaws, Was a Good Thing
A letter criticizing NAFTA and opposing other free trade agreements appeared in the New Jersey Star-Ledger recently. Rob Kneller cited a study that concludes that "an estimated 682,900 U.S. jobs have been 'lost or displaced' because of the agreement and the resulting trade deficit."
I left these comments:
Regarding the "estimated 682,900 U.S. jobs [that] have been 'lost or displaced'" because of NAFTA—assuming it's true—so what? Jobs are always "lost or displaced" as the economy evolves. Mature U.S. firms shed 1 million jobs annually, on balance, yet new firms create 3 million new jobs for a net average gain of 2 million American jobs.
As Frederic Bastiat noted, a good economist always considers secondary consequences ("what is NOT seen"), not just immediate consequences that are more easily seen. What about the domestic jobs created through increased U.S. exports or expanding domestic sales in industries that grow because of the extra spending power U.S. consumers enjoy due to lower prices of foreign-made goods? No study can trace all of the positive secondary consequences of free trade. [But] in the 14 years after NAFTA, the U.S. job force grew by 27 million.
That's the practical side. More important is the moral side. What right does anyone have to stand in the way of Americans buying or selling goods and services from or to individuals in other countries? Kneller wrings his hands over "secret" trade agreements, yet he has no problem interfering with the rights of other Americans. Trade is a win-win—a mutually beneficial transaction. What's wrong with two producers from different countries getting better together? Individuals trading the product of their labor with each other for mutual betterment fosters prosperity. If the trade is between individuals in different countries, it benefits the economies in both countries. The arrogant and derogatory smear of "sweatshop countries" is a cheap shot at people in poor countries taking a job to better themselves. Anyone concerned with overall U.S. economic strength and job creation should want economic growth in other countries, which only comes from individual's pursuing a better life for themselves and their families through production and trade.
The "free" in free trade means the absence of physical force or coercion. Laws restricting trade between citizens of different countries are based on force, and are immoral unless they serve to prop up tyrannies (as with the old Soviet bloc or, today, with North Korea). There may be things wrong with NAFTA or other trade liberalizing treaties, but the extent to which free trade among citizens is liberalized is not one of them.
Anyone truly concerned about American jobs should focus on U.S. government policies that stifle job creation, like occupational licensure, environmental regulations, minimum wage laws, local zoning restrictions, and forced unionization. Stop trying to block your fellow Americans from exercising their inalienable right to trade with others, be they from Canada, Mexico, or another state within U.S. borders.
Bangladesh Building Collapse Not a Result of Free Trade
Labels: Global Trade, Political Economy, World Affairs
Posted by Michael A. LaFerrara on
Wednesday, October 15, 2014
Independent Voters are Independent for a Reason
What does it mean to be
a Democrat of Republican (or a member of any political party)? It means you get
to play a part, via primary elections, in choosing your party's candidates
to run against opposing party candidates in general elections.
What does it meant to be
"unaffiliated"? It means you do not belong to any political party,
commonly known as an Independent. Not being a member of any political party,
you don't get a vote on which candidates political parties run in general elections.
Considering that every
registered voter can choose his party affiliation, this would seem
uncontroversial and fair.
But, apparently, there
are some Independents who don't know what "independent"
means. Jaime (“Jim”) Martinez, a member IndependentVoting.org, and
Rebecca Feldman, president, Morristown Town Council published a letter in the New Jersey Star-Ledger
highlighting and supporting a federal lawsuit that "demands that
every voter have an equal vote at every stage of the state-funded election
process." They write:
Primary elections are a critical
juncture in the democratic process. But in New Jersey, independents — who are
47 percent of registered voters — are forced to join a party in order to vote.
This is the independent’s plight: We are first-class taxpayers when it comes to
funding elections, but second-class voters.
A change is clearly needed, so the voices of millions of
independent voters who do not now have full voting rights can be heard.
This letter brings to
mind the old saying about eating one's cake and having it, too.
I'm a former Republican who registered as an Independent in 2006 because
neither [major] party any longer substantially represented my principles and
viewpoints. When I did so, I willingly gave up the ability to vote in
primaries. I did not give up "full voting rights." What business does
an Independent have to help choose candidates of parties he chose not to belong
The idea that Independents are "first-class taxpayers when it comes to
funding elections, but second-class voters" is absurd on its face. We are
not "second-class voters." We are voters who exercised a particular
choice with full knowledge of the consequences. (Taxpayer funding of candidates
is a problem, and should be abolished. But that is another issue.)
If this ridiculous and juvenile lawsuit succeeds, and non-party members are
allowed to pollute the primary process, then any ideological distinction
between the parties would likely be diluted and washed away. If that happens,
there will be no truly independent political parties, and no real ideological
choice in many contests. We might as well have one-party rule.
It's true that the rights of Independents are violated by being forced to fund "public matching funds" to political candidates. But everyone's rights are violated by government funding laws. Taxpayer funding of elections is what should be challenged.
Posted by Michael A. LaFerrara on
Monday, October 13, 2014
The Great Achievement of Christopher Columbus
Excerpts from an op-ed in the Bucks County Courier Times, October 11, 2007.
Columbus Day Celebrates Western Civilization
By Thomas Bowden
On October 12, 1492, Christopher Columbus discovered the New World.
We need not evade or excuse Columbus’s flaws--his religious zealotry, his enslavement and oppression of natives--to recognize that he made history by finding new territory for a civilization that would soon show mankind how to overcome the age-old scourges of slavery, war, and forced religious conversion.
On Columbus Day, we celebrate the civilization whose philosophers and mathematicians, men such as Aristotle, Archimedes, and Euclid, displaced otherworldly mysticism by discovering the laws of logic and mathematical relationships, demonstrating to mankind that reality is a single realm accessible to human understanding.
On Columbus Day, we celebrate the civilization whose scientists, men such as Galileo, Newton, Darwin, and Einstein, banished primitive superstitions by discovering natural laws through the scientific method, demonstrating to mankind that the universe is both knowable and predictable.
On Columbus Day, we celebrate the civilization whose political geniuses, men such as John Locke and the Founding Fathers, defined the principles by which bloody tribal warfare, religious strife, and, ultimately, slavery could be eradicated by constitutional republics devoted to protecting life, liberty, property, and the selfish pursuit of individual happiness.
On Columbus Day, we celebrate the civilization whose entrepreneurs, men such as Rockefeller, Ford, and Gates, transformed an inhospitable wilderness populated by frightened savages into a wealthy nation of self-confident producers served by highways, power plants, computers, and thousands of other life-enhancing products.
On Columbus Day, in sum, we celebrate Western civilization as history’s greatest cultural achievement. What better reason could there be for a holiday?
In another op-ed on Fox News.com, Let's Take Back Columbus Day, Bowden said this:
We’ve been taught that Columbus opened the way for rapacious European settlers to unleash a stream of horrors on a virgin continent: slavery, racism, warfare, epidemic, and the cruel oppression of Indians.
This modern view of Columbus represents an unjust attack upon both our country and the civilization that made it possible. Western civilization did not originate slavery, racism, warfare, or disease--but with America as its exemplar, that civilization created the antidotes. How? By means of a set of core ideas that set Western civilization apart from all others: reason and individualism.
Excerpts from an op-ed in Pittsburgh Tribune-Review, October 10, 2008
Columbus was a hero
By Dimitri Vassilaros
Christopher Columbus could not have discovered a better spokesman than Thomas A. Bowden.
The accomplishments of Columbus should speak for themselves. But thanks to political correctness, the moronic multicultural mob keeps talking them down. Mr. Bowden has been speaking passionately and forcefully about Columbus for years.
"My ancestors were savages," says Bowden matter-of-factly. Everyone can say the same, depending on how far back one is willing to look at lineage. "It's nothing racial or ethnic; it's historical fact."
"Columbus critics have a disguised criticism of Western civilization because Europeans replaced Stone Age Indians. They believe that this continent would have been better off without Europeans, that industrial civilization is an evil that is to be lamented and regretted.
"That is the real criticism of Columbus. I reject it completely."
Indians typically were widely scattered Stone Age tribes, he says. "They had little agriculture and lived in poverty, fear, ignorance and superstition. They had no concept of government, ownership or private property rights.
"Slavery was perfectly common.
Well, didn't Indians at least live in harmony with nature?
"No," says Bowden. "Man should not live in harmony with nature in the sense of simply keeping it pristine. We live by impacting the environment. The environment has no intrinsic value. Our civilization is more in harmony with nature by making it serve our ends."
Well, what about all the land supposedly stolen from the Indians by European settlers?
Indians did not own the vast reaches of land that they traveled on, Bowden says. Ownership of land is deserved, he says. By that, he means a settler can acquire property rights by making the land more valuable by, say, digging it up for farming. Or to build his homestead or business.
Columbus essentially was an explorer and discoverer bringing Western civilization's cures, science and technology, he says. The philosophical legal process was another gift the Europeans gave to the Indians, he says. "Indians got all that for free."
Columbus' critics should fall down on their knees and thank the Founding Fathers for creating a nation based on the moral principle of the individual's right to life, liberty and, Bowden stresses, the selfish pursuit of happiness.
"It's the only nation that came about in such a way. Anyone who has humanity's interest at heart should love America," he says.
Excerpts from Man's Best Came With Columbus—Michael S. Berliner
Did Columbus “discover” America? Yes, in every important respect. This does not mean that no human eye had been cast on America before Columbus arrived. It does mean that Columbus brought America to the attention of the civilized world, i.e., the developing scientific civilizations of Western Europe. The result, ultimately, was the United States of America. It was Columbus’s discovery for Western Europe that led to the influx of ideas and people on which this nation was founded and on which it still rests. The opening of America brought the ideas and achievements of Aristotle, Galileo, Newton, and the thousands of thinkers, writers, and inventors who followed. What they replaced was a way of life dominated by fatalism, passivity, superstition, and magic.
Happy Columbus Day
Columbus Day Without Guilt—Thomas A. Bowden
Labels: Americanism, Famous People, Holidays
Posted by Michael A. LaFerrara on
Sunday, October 12, 2014
Memo to John D. Atlas: How About Let's Not Suppress Anybody's Vote, or Voice
Another election is fast approaching, so the issue of “voter suppression” has predictably surfaced again. John D. Atlas, a NJ Voices contributor and self-described “writer and activist lawyer,” weighed in on the issue. Under cover of concern about low voter turnout, Atlas smuggles in a pro-statist agenda. He notes that those least likely to vote “tend to be working poor, minority and young people.” But . . .
When they do vote, they tend to vote for candidates who favor redistributionist policies, such as higher taxes on the rich, raising the minimum wage, government-supported job training, and universal health-care. And they typically don’t vote Republican.
Why do so few of this group vote? Atlas “speculates” that:
Most non-voting Americans, especially the working-poor, are alienated from mainstream politics and don’t vote because they see politicians as unresponsive to their needs or perspectives. Moreover, minority voters have long faced obstacles-literacy tests, poll taxes, intimidation, threats, and violence.
Atlas doesn’t bother to “speculate” on why past obstacles to voting—which, aside from literacy tests, a reasonable requirement, ceased decades ago—should inhibit people from voting today.
Atlas asserts that this trend “is bad for our democracy, bad for equality, and something should be done about it.” This is a strange statement, given that our “democracy” has spawned an almost total conversion from a predominantly free, capitalistic society to today’s gargantuan regulatory welfare state over the past century, including a “great leap forward” for the welfare state in the past 15 years under both party’s rule. If anything, these facts tend to support the conclusion that the statist/socialist trend was driven more by the intellectuals and wealthier voters than by poor people looking for a handout.
Atlas doesn’t explain this contradiction, but wants to do “something about” what appears, from a Leftist’s perspective, not to be broken.
Do what? After hinting darkly about some “powerful financial interests” that somehow causes young adults to believe “it makes no difference who you vote for,” blaming Republicans’ “protracted struggle over voting rights,” and calling for some technical election reforms, Atlas gets to the meaty stuff: “Campaign finance reform that eliminates corporate special interest money would help.”
It sure would help, but whom?
I left these comments:
I’m under no illusions that my lone vote will “count,” in the sense of swaying an election one way or another. It doesn’t. But I vote regularly. Notwithstanding the excuses for not voting listed here, people who choose not to vote are either uninterested, unmotivated, or just plain lazy. Whatever past practices of actual voter suppression once existed, the universal right to vote is now firmly protected. Anyone who wants to vote can vote.
This article is really all about suppressing the votes of people who favor less government intrusion into our lives—intrusions like mandatory sick pay and redistribution of earnings to those who didn’t earn it.
The tip-off is the call to ban corporate campaign spending, but not union spending. Atlas calls for silencing the free speech rights of those “financial interests” most likely to advocate for less regulation and lower taxes, thus silencing and suppressing millions upon millions of Americans who agree with the pro-liberty message. Unions are big “financial interests,” too. NJ.com’s Matt Friedman recently reported that, between 1999 and 2013, unions accounted for 55% of special interest spending in NJ; some $171 million. Why not ban union spending? Because unions are more likely to advocate for statist, redistributionist policies, and thus speak for millions upon millions of people who agree with that message.
This transparent article is all about advancing an ever-more-statist government and silencing statists’ victims—a Leftist agenda. How about this: Don’t silence anybody—whether individuals or associations of individuals—and let elections be shaped on the public battleground of ideas. That’s what the First Amendment is for.
"McCutcheon" Advances Free Speech and Republican Government
Labels: Campaign Finance Laws, Elections