Join the members of the Liberty Conspiracy as they discuss issues ranging from the “Incorporation Doctrine” and gun rights, to the NBA, to protests conducted at military funerals, protests that are being challenged by government, and which will be heard by the philosopher kings in the U.S. Supreme Court.

All these items are discussed, and more, by Citizen X, Furb, Gard, and Ziggy, who are just part of the shadowy group of libertarians who comprise the world-wide phenomenon of the Liberty Conspiracy!

Join us at www.libertyconspiracy.com!
Join X at www.adventuresofcitizenx.com
Join Furb at www.freedombookclub.com
Join Zig at www.libertyhub.com

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Welcome back to the Conspiracy. In this audio production, Gardner Goldsmith offers a long-lasting lesson on the U.S. Constitution, the Bill of Rights, and the so-called “incorporation doctrine.” He takes the leap point of the recent lawsuit challenging the city of Chicago’s ban on firearms, and extends his analysis to the Bill of Rights and even to scholars who miss some major points when it comes to understanding the wording and dynamic working of the Constitution of the U.S. (which, by the way, Gard believes does not even go far enough in defending his freedom).

It’s a production that we hope will have a lot of value and that you’ll recommend to your friends.

Check it out, as Strongbad would say!

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Statement of Congressman Ron Paul

United States House of Representatives

Statement for the Record

Madame Speaker, I would like to enter into the record the following letter from Professor Robert D. Auerbach, a professor at the LBJ School of Public Affairs at the University of Texas. This letter provides additional information regarding remarks I made at yesterday’s Financial Services Committee Humphrey-Hawkins hearing, remarks which Federal Reserve Chairman Bernanke categorized as “bizarre.”

Thank you Congressman Ron Paul for bringing these important facts to the public’s attention.

I thank Congressman Ron Paul for bringing to the public’s attention the Federal Reserve coverup of the source of the Watergate burglars’ source of funding and the defective audit by the Federal Reserve of the bank that transferred $5.5 billion from the U.S. government to Saddam Hussein in the 1980s. Congressman Paul directed these comments to Federal Reserve Chairman Ben Bernanke at the House Financial Services Hearing February 24, 2010. I question Chairman Bernanke’s dismissive response.

BERNANKE: “Well, Congressman, these specific allegations you’ve made I think are absolutely bizarre, and I have absolutely no knowledge of anything remotely like what you just described.”

The evidence Congressman Ron Paul mentioned is well documented in my recent book, Deception and Abuse at the Fed (University of Texas Press: 2008). The head of the Federal Reserve bureaucracy should become familiar with its dismal practices.

First, consider the Fed’s coverup of the source of the $6300 in hundred dollar bills found on the Watergate burglars when they were arrested at approximately 2:30 A.M. on June 17, 1972 after they had broken into the Watergate offices of the Democratic Party. Five days after the break-in, June 22, at a board of directors’ meeting of officials at the Philadelphia Fed Bank, it was recorded in the minutes [shown on page 23 of my book] that false or misleading information had been provided to a reporter from the Washington Post about the $6,300. Bob Woodward told me he thought he was the Washington Post reporter who had made the phone inquiry. The reporter “had called to verify a rumor that these bills were stolen from this Bank” according to the Philadelphia Fed minutes. The Philadelphia Fed Bank had informed the Board on June 20 that the notes were “shipped from the Reserve Bank to Girard Trust Company in Philadelphia on April 3, 1972.” The Washington Post was incorrectly informed of “thefts but told they involved old bills that were ready for destruction.”

The Federal Reserve under the chairmanship of Author Burns not only kept the Fed from getting entangled in the Watergate coverup, which the Fed’s actions had assisted, it allowed false statements about bills the Fed knew were issued by the Philadelphia Fed Bank to stand uncorrected. Blocking information from the Senate and House Banking Committees [letters shown in my book, Chapter 2] and issuing false information during a perilous government crisis imposed huge costs on the public that had insufficient information to hold the Fed officials accountable for what they had withheld from the Congress. Had the deception been discovered the Fed chairmen following Burns may have been forced to rapidly implement some real transparency to restore the Fed’s credibility. That would have reduced or eliminated many of the lies, deceptions, and corrupt practices that are described in my book.

The second subject brought up by Congressman Ron Paul is the exposure of faulty examinations of the Federal Reserve of a foreign bank in Atlanta, Georgia through which $5.5 billion was sent to Saddam Hussein that a Federal Judge found to be part of United States active support for Iraq in the 1980s.

On November 9, 1993, several federal marshals brought a prisoner, Christopher Drogoul, into my office at the Rayburn House Office Building of the U.S. House of Representatives. The marshals removed the manacles. Drogoul took off his jump suit and changed into a shirt, tie, and business suit. He immediately looked like the manager of the Atlanta agency with domestic headquarters in New York City of Banca Nazionale. Drogoul had come to testify about a “scheme prosecutors said he masterminded that funneled $5.5 billion in loans to Iraq’s Hussein through BNL’s Atlanta operation. Some of the loans allegedly were used to build up Iraq’s military and nuclear arsenals in the years preceding the first Gulf War.”¹

Drogoul’s “‘off book’ BNL-Atlanta funding to Iraq began in 1986 as financing for products under Department of Agriculture programs.”² The loans allegedly had been authorized by the U.S. Department of Agriculture. Since Drogoul told the committee he was merely a tool in an ambitious scheme by the United States, Italy, Britain and Germany to secretly arm Iraq in their 1980-88 war, the testimony was politically contentious and unproven. He was sentenced in November 1993 to 37 months in prison and he had already served 20 months awaiting his sentencing hearing.

U.S. District Judge Ernest Tidwell found that the United States had actively supported Iraq in the 1980s by providing it with government-guaranteed loans even though it wasn’t creditworthy. The judge said such policies “clearly facilitated criminal conduct.”³

Gonzalez was drawn to Drogoul’s answer about the Fed examiner who had visited his Atlanta operation. Gonzalez said that:

“At the November 9, 1993 Banking Committee hearing I asked Christopher Drogoul, the convicted official of the Banca Nazionale Del Lavoro agency branch in Atlanta, Georgia, how the Federal Reserve Bank examiners could miss billions of dollars of illegal loans, most of which ended up in the hands of Hussein.”

Mr. Drogoul stated:

“The task of the Fed [bank examiner] was simply to confirm that the State of Georgia audit revealed no major problems. And thus, their audit of BNL usually consisted of a one or two-day review of the state of Georgia’s preliminary results, followed by a cup of espresso in the manager’s office.”

Gonzalez was appalled at the of lack of effective examination of a little storefront bank and also appalled by the gifts exchanged by officers of the New York Federal Reserve and the regulated banks in New York City where the main U.S. office of BNL was located. A description of what followed is in my book.

The Fed voted in 1995 to destroy the source transcripts of its policy making committee that had been sent to National Archives and Records Administration. Chairman Alan Greenspan had the committee vote on this destruction, telling the members: “I am not going to record these votes because we do not have to. There is no legal requirement.” (p. 104 in my book.) Greenspan thus removed any fingerprints on this act of record destruction. Donald Kohn, who is now Vice Chairman of the Board of Governors at the Federal Reserve, answered some questions I had sent to Chairman Greenspan about this destruction. Kohn replied in a letter on November 1, 2001 to me at the University of Texas that they had destroyed the source records for 1994, 1995 and 1996, they did not believe it to be illegal and there was no plan to end this practice. That is one reason why the Federal Reserve audit supported by Congressman Ron Paul is needed. The Fed must stop destroying its records.

Robert Auerbach is Professor of Public Affairs at the Lyndon Baines Johnson School of Public Affairs, The University of Texas at Austin. He was an economist with the House of Representatives Financial Services Committee during the tenure of four Federal Reserve Chairmen: Arthur Burns, William Miller, Paul Volcker, and Alan Greenspan. Auerbach also served as an economist in the U.S. Treasury’s Office of Domestic Monetary Affairs during the first year of the Ronald Reagan administration and as a financial economist with the U.S. Federal Reserve System. Auerbach has been a professor of economics at the American University in Washington, D.C. (1976-83), and a professor of economics and finance at the University of California-Riverside (1983-93). He has written numerous articles, and two textbooks in banking and financial markets. He received two Masters degrees in economics, one from the University of Chicago and one from Roosevelt University, where he studied under Abba Lerner, and a Ph.D. in economics from the University of Chicago, where he studied under Milton Friedman.

1 Marcy Gordon, “Banker Imprisoned in BNL Case Tells Story to House Committee,” The Associated Press, November 9, 1993.

2 U.S. Newswire: “Former Executive of Atlanta Agency of Italian-Owned Bank Pleads Guilty to Conspiracy”, from U.S. Department of Justice, Public Affairs, June 2, 1992.

3 Peter Mantius, “Drogoul given 37 months Judge in BNL case also blasts actions of U.S. prosecutors,” The Atlanta Journal and Constitution, December 10, 1993, Section A, p. 12.

The National Taxpayers Union has once again recognized Congressman Ron Paul as a “Taxpayers’ Friend” in its 2009 ratings of Congress.

The award is presented to those Members who achieve an “A” grade in NTU’s annual Rating of Congress. The Rating, which is based on every roll call vote affecting fiscal policy, assigns a “Taxpayer Score” to each Member of Congress that indicates his or her support for reducing or controlling federal spending, taxes, debt, and regulation.

“I take my mission to fight for taxpayers very seriously, especially in times like these when money is so tight and people are struggling to pay their bills. The cost of government is immoral and unjust and I am working hard in Washington to change that. It is nice to see others, like the NTU, join me in that fight and recognize my efforts,” stated Congressman Paul.

In 2009, only 55 lawmakers attained scores sufficient to win the “Taxpayers’ Friend Award” (earning at least 90 percent in the House or Senate). Meanwhile, 267 Senators and Representatives captured the title of “Big Spender” for posting “F” grades (scores of 15 percent or less in the House and 16 percent or less in the Senate).

“Congressman Paul’s pro-taxpayer score of 96 percent was one of the best in the entire Congress,” NTU President Duane Parde stated. “By voting time and again to reduce federal spending, taxes, and debt, Ron Paul has led by example in the fight to defend overburdened taxpayers across the country.”

["Ron Paul Smile" photo by Richard DeYoung; CC BY 2.0]

Is the Timelord a socialist, or is he, as one would expect, a libertarian who believes in the primacy of the individual? Ziggy offers his thoughts on a subject that has recently become a hot topic of debate in many countries. BIG THANKS ZIGGY!!!!!!!!!

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Join our old friend Citizen X as he explores the history of the U.S. Constitution from a skeptic’s perspective. Using Boston T. Party’s Hologram of Liberty as a guide, we find that, far from being a limiter on government, the Constitution has been the facilitator of big government. Was this an accident or was it by design? The answer may surprise you.

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Still on display in the National Archives and revered as one of the most important documents in U.S. history, the Declaration of Independence tells us that a just government requires “the consent of the governed.” But a Rasmussen poll released Thursday shows that only 21 percent of Americans believe the U.S. government has the consent of the governed.

Among the “Political Class,” which Rasmussen defines as people who implicitly trust the government and political leaders, 63 percent think that the government has the consent of the governed, but among voters it defines as mainstream, only 6 percent believe it.

The 1776 Declaration of Independence from British rule, the first document to establish the United States as political entities, says in part:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

“That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,

“That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”

Rasmussen found that 78 percent of Republicans, 65 percent of independent voters, and 44 percent of Democrats believe the government does not have the necessary consent.

People were split not only along party lines but along income levels as well. Those making the most money were more likely to say the government has the consent of the governed, while the poorest voters were least likely to believe it.

Moreover, 71 percent of all voters now believe that the federal government is a special interest group, and 70 percent think that government and big business collude to harm consumers and investors.

In his new book, In Search of Self-Governance, Scott Rasmussen observes that the American people are “united in the belief that our political system is broken, that politicians are corrupt, and that neither major political party has the answers.” He adds that “the gap between Americans who want to govern themselves and the politicians who want to rule over them may be as big today as the gap between the colonies and England during the 18th century.” — Rasmussen Reports

This is a golden opportunity for the liberty movement. We know we have the answers for today, just as our ideological forefathers had the answers for 1776. The challenge ahead of us is to communicate our principles to our fellow Americans and show them how liberty and freedom will restore the economy and improve their lives.

The telephone poll of 1,000 likely voters was conducted February 15 and 16 and has a margin of error of ±3 percentage points.

(P.S. Gardner Goldsmith says that Thomas Jefferson made a huge mistake when editing the Declaration of Independence. If you’re into alternate history fiction, L. Neil Smith’s The Probability Broach explores what America might have looked like had Jefferson not made this particular edit to the Declaration. Gard also explores what “consent of the governed” actually means.)

On Thursday, February 18, a man flew his plane into a building housing an office of the IRS, which had been taking his money for years without his consent.

In this valuable Conspiracy production, Gardner Goldsmith investigates the contemporary views of such violence. Is it self defense? It is justified to stop the theft? What does one consider “just” government and “consent”?

It’s a fascinating production, and is combined with a look at the term terrorism, and how it is often incorrectly defined.

Please listen, and pass the links on to friends!

Call us at 206-984-1069 to discuss your ideas on it!

Be Seeing You!

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It’s tax season again. And for many of us, the idea of doing taxes and giving the IRS the pound of flesh they demand is a harrowing thought. One Austin, Texas, man, claiming to have been fed up with being ripped off by the IRS for over 20 years, flew a small plane into a building containing the local IRS office Thursday morning.

Joseph Andrew Stack, 53, flew a Piper Cherokee PA-28 into the side of the Echelon 1 building at 9430 Research Drive at around 10 a.m. Central time. According to FAA officials, the plane took off from nearby Georgetown Municipal Airport at about 9:40.

Stack was killed in the resulting explosion. Two people in the building were injured, and one person is unaccounted for, according to reports. The IRS said it is still trying to account for its 190 employees who were in the building at the time. News reports disagree on whether firefighters have been able to bring the building fire under control.

A lengthy diatribe posted to Stack’s web site this morning, since taken down at the request of the FBI, revealed that Stack suffered what he considered years of abuse by the IRS and laws meant to harm businesses like his, noting that “this rant could fill volumes with example after example if I let it.”

Stack’s apparent suicide note speaks of the irony of stockbrokers killing themselves after the 1929 crash, while after the 2007 crash the wealthy get bailed out at the expense of the poor, who pay for it all. (This much is true.)

“I know I’m hardly the first one to decide I’ve had all I can stand. . . . I can only hope that the numbers get too big to be white washed and ignored that the American zombies wake up and revolt; it will take nothing less.”

Federal officials are saying they do not consider this a terrorist attack. “At this time, we have no reason to believe there is a nexus to terrorist activity,” says a Department of Homeland Security news release.

Before leaving for the airport this morning, Stack set his home on fire, according to local officials. Worse, he apparently set the fire while his wife and daughter were away, leaving them shocked and distraught when they returned home to find it on fire.

It’s easy to understand what drove Stack over the edge: “In a government full of hypocrites from top to bottom, life is as cheap as their lies and their self-serving laws.” He makes a number of legitimate complaints about the U.S. government, grievances which we all suffer and are all unlikely to see redressed any time soon.

But Stack seems to think that if enough people kill themselves in government offices, perhaps taking some bureaucrats with them, the rest of the country will “wake up and begin to see the pompous political thugs and mindless minions for what they are.” Violence, he concludes, “not only is the answer, it is the only answer.”

I must disagree: Few people woke up after September 11; in fact, that event put nearly everyone to sleep. But the continuing decline of the U.S. economy which began in earnest in 2007 and shows no signs of stopping certainly began to wake people up.

Those of you who are desperate, understand first that you aren’t alone, and there are ways out of this mess which don’t involve killing yourself or IRS agents. A good place to begin would be to learn the economics behind how we were all taken for a ride. Then you can recognize and denounce the people who want to do more of the same to you. There is a way out, and it’s called liberty. Learn the philosophy of liberty, why it is the only way to have real prosperity, and then join the rest of us who are working hard for a free society.

Get ready for the final vote for the Freedom Book Club’s Book of the Year! You still have time to vote at www.freedombookclub.com – hit “Past Selections” and then choose the book you want! Voting ends on Feb 15th!

Here’s Gard and Furb discussing the book club and the books! Great stuff here! Be Seeing You!

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Ever wonder about the strange image of people applauding utterly meaningless statements made by politicians? About the nationalistic rhetoric employed by the politicians as they try to appeal to the multitudes? About the seeming derangement of people who appear to NEED approval from their “leaders” before they can feel good about themselves?

Gardner Goldsmith has some thoughts for ya. And he has some rebuttals of the substantive lies promulgated by the Commander-in-Chief as well. This is a good one, Conspirators, with a little punk rock in there for good measure! Be Seeing You! www.libertyconspiracy.com!

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[Photo by Elizabeth Cromwell; CC BY-SA 3.0]

Jersey Shore? Fuhgeddaboudit. Jersey City is the gem of reality TV. Shore is MTV. Jersey City is FBI. Like, how real is that? Killer videos of pols talking trash and passing cash have been unspooling in federal court in Newark at the trial of Jersey City Deputy Mayor Leona Beldini. Beldini was busted last summer in an FBI sweep that corralled dozens of Jersey pols. It was one of the largest corruption roundups in Jersey’s thick history of roundups. The majority of the busted were from Hudson County, parent entity of Jersey City, second largest city in the state. Twelve public servants have pleaded guilty; Leona Beldini is first to stand trial. Charges? Bribe taking, attempted extortion, and conspiracy to commit extortion. MTV’s Jersey Shore has hot munchkin Snooki, but Jersey City has the far classier — albeit far older — Beldini. Back in the day, Beldini was burlesque queen “Hope Diamond.” “The Gem of Exotics.”

In the here and now, Deputy Mayor Beldini is a prominent Realtor, past president of the Hudson County Board of Realtors. Until suspended as deputy mayor (an appointed position) Beldini was Jersey City Mayor Jerramiah Healy’s liaison to various development-related municipal agencies. Beldini also headed the board of the quasi public Jersey City Economic Development Corporation, which among other things, administers the city’s Urban Enterprise Zone projects. One third of Jersey City is Urban Enterprise Zone. Development projects in The Zone are eligible for a wide array of tax exemptions and utility breaks.

Mayor Jerramiah Healy hasn’t been indicted but he appears in FBI videos featuring Beldini. (There are other tapes, starring other pols.) As does former Jersey City Housing Authority Commissioner, Vice President of the Board of Education, and Hudson County Affirmative Action Officer Edward Cheatam. (Yup, Ed wore 3 hats.) Also appearing: the late Jack Shaw, a well worn political consultant. Cheatam has pleaded guilty to conspiring with Beldini and others “to accept corrupt cash payments” in return for “official influence.”* Consultant Jack Shaw died of a Valium overdose a few days after being busted.

Mayor Jerry Healy is Jersey City’s version of Jersey Shore’s bod-flaunting JWOWW. JHOWW-come-he-keeps-getting-elected and Beldini go back decades. A Healy son has a license in Beldini’s real estate office and Beldini and the Healys are neighbors in Jersey City. They have summer homes a block from each other in Bradley Beach at the — where else — Jersey shore. In 1999, when Healy was Chief Judge of Jersey City Municipal Court, cops visited his vacation crib. Neighbors were bitching about party hearties. Healy wrestled with the cops on his porch. In the nude. (Though one neighbor said he was clutching a towel when the fracas began.) Healy pleaded guilty to a minor disorderly conduct charge.

In 2004, mayoral candidate Jerry Healy was seen — and photographed — passed out naked on his front porch in Jersey City. The nudie pic, which was posted on the Internet by an opponent, might have discouraged a less determined electorate. But Healy swept to victory.

In 2006, Mayor Healy was back for a rematch with the Bradley Beach cops. (This time he was clothed.) Two officers rassled him to the ground outside his sister’s bar and gave him a few shots of pepper spray. The shots chased a good deal of beer. Healy was convicted on disorderly conduct charges in 2007. The same year he was made chairman of the Hudson County Democratic Organization, a monster political machine that’s been somewhat weakened by a decade of corruption indictments and flaccid leadership.

By the Spring of 2009, Jerramiah Healy was on the mayoral campaign trail again, with Leona Beldini as campaign treasurer. Things were looking good. New York City Mayor Mike “The Situation” Bloomberg was set to toss a $1,000-a-head fundraiser for Healy at his NYC townhouse. (The Situation and his deputy mayor, Kevin Sheekey, have Jersey City roots. Sheekey’s family goes way back with the Healy family.) Another big bux event was scheduled at the Beacon, an elegant condo fortress in one of Jersey City’s poorest nabes. Plus, a new developer in town was spreading cash around.

Developer David Esenbach wanted to build a high-rise luxury condo project of 750 units on land next to a site contaminated with chromium in an inner city neighborhood. Esenbach was confident the units could be marketed for half-a-mil each. But he worried the city’s planning, zoning, and overall development process might be too slow and cumbersome.

Esenbach conveyed his concern to Mayor Jerry Healy, Deputy Mayor Leona Beldini, Housing Commissioner Ed Cheatam, and political consultant Jack Shaw in meetings at Healy’s favorite luncheonette (City Hall is so impersonal) and other eateries. The foursome assured Esenbach that Jersey City was developer-friendly. Healy touted “a planning department let’s put it that way, that’s receptive.”** Beldini and Cheatam praised the director of the Division of Zoning Enforcement. “Tony’s Good” opined Cheatam. “He’s good” echoed Beldini. “Tony’s good. Tony’s been good for a long time” said Cheatam.

Despite the real estate slump, Beldini seemed to think Esenbach’s projected price of half-a-mil each for his condos was on target. Saying “with what’s happening, the inner city is the place to invest.” Esenbach granted Beldini exclusive dibs on marketing the condos. Beldini touted her ability to “cut through red tape” and cited her position at the Economic Development Corporation and as the mayor’s liaison to the Parking Authority. (Parking being a huge issue in large scale development projects.) She also tried pitching a “shovel ready” former sausage factory for a potential condo project but Esenbach didn’t bite. He’d already passed on a macaroni factory pitched by Cheatam.

(In ye old days, Jersey City produced something other than oleaginous pols and real estate capers.)

As the meetings progressed Esenbach made “donations” totaling $20 thousand. (A slice of what he was laying out at other meetings with Shaw, Cheatam, and myriad other officials.) Leona Beldini didn’t handle the cash but was enthusiastic about the transfer. Saying $10 thousand was for “J” (Jack Shaw) and the “Jersey City Democratic Committee”. She delineated how the money would be broken down into “different funds” (to beat legal limits on contributions) in order to “funnel it back into the mayor . . . which everybody does.” Esenbach said he’d “do him (Shaw) another 10 for Healy” and would “do more before election.” “Beautiful” replied Beldini.

Mayor Healy didn’t handle the cash. Cheatam and Shaw did the blunt talk. Esenbach did the taping.

Oh nooo! Developer David Esenbach didn’t exist. He was really developer Solomon Dwek, serial Ponzi schemer. In 2006, Dwek was nailed by the Feds for bank fraud after kiting tens of millions in bad checks. Apres bust, Dwek turned informant. Dwek was a natural for the job of Sting Boy. At Beldini’s trial, he admitted bribing countless public servants re development deals for some 10 years in Jersey and New York. He’d laundered the bribes through his family’s Yeshiva in Monmouth County. Dwek’s gift of grifter gab served him well with Healy, Beldini, Cheatam, and Shaw. On the FBI tapes the Fab Four echo each other’s lines and finish each other’s sentences like folks in a very old marriage. Dwek picked up their dialog and fed it back. Riffing on the slippery chit chat.

As for visuals, the tapes are cinema verite as shot from under a shirt. A herky jerky chest level camera catches Mayor Healy fist-pumping pepper onto potato salad. His tie hangs unknotted as if he’s starting to strip. His face looks red even in black and white. On one tape Leona Beldini describes the upcoming Healy fund raiser at the Beacon as an “elegant affair” with “carving stations” and “champagne.” The guests would be swell as well. “We want people who’ll look good.” One wonders — was Healy invited?

Political consultant Jack Shaw lends a touch of Banquo to the vids. As said, he died of a Valium overdose a few days after being busted. Accident? Only his shadow knows. His shadow hangs over the FBI’s case in Hudson County. After his arrest, Shaw allegedly agreed to cooperate with the Feds. His input would have been invaluable. It was Shaw who introduced Esenbach/Dwek to many of the indicted or suspect pols and it was Shaw who collected $40,000 from Dwek as an alleged bribe for the biggest fish in the batch — Joseph V. Doria, state commissioner of the Department of Community Affairs (DCA). As DCA head, Joe Doria chaired the New Jersey Redevelopment Authority, the Housing and Mortgage Finance Agency, and the Council on Affordable Housing. Doria, a Hudson County machine man elevated to state power by former Governor Jon Corzine, admits meeting with Shaw and Dwek but denies taking bribes. Doria resigned as DCA head last summer, after his offices were raided by the FBI. He has not been indicted.

Jack Shaw cut his corruption teeth in Cook County, Illinois. He told Solomon Dwek that of all the places he knew, Hudson County was the most like Cook County. When the state’s attorney in Cook investigated Shaw in the late 70s, he emigrated to Hudson County. (He was invited in.) In Hudson, Shaw was jack of all trades. Among other things, he served as campaign manager and advisor to ex Hudson County Executive Robert Janiszewski. In 2002, Janiszewski pleaded guilty to extorting bribes from developers. Until his arrest became public knowledge, he wore a wire for the Feds. There went another batch . . .

Jack Shaw had his ups and downs. He riled a few cronies by allegedly embezzling from them to support a cocaine habit. The State Commission of Investigation said scathing things about how Shaw and a buddy ran the Hudson County chapter of the Society for the Prevention of Cruelty to Animals. But in Hudson County, tomorrow is always another day. As the new millennium glided along, Shaw was guiding New York developer George Filopoulos of Metrovest Equities through the shoals of Jersey City’s development process. The result? The Beacon. An elegant condo fortress in one of Jersey City’s poorest nabes. FHA mortgages available! By the buy, Jack Shaw’s girlfriend was/is property manager for the Beacon. Money that Dwek gave Shaw flowed back to Mayor Jerry Healy’s campaign through her checkbook.

Even after death, Jack Shaw is a go-to guy. Leona Beldini’s attorney claims Jack was the real grafter. Cheatam? How ’bout that name? Solomon Dwek is a deceitful rat, Beldini an honest public servant. So pure she didn’t need to take the stand in her own defense. She just sat next to her attorney, shining . . .

As this is being written, the jury is out onU.S. v. Leona Beldini. In the FBI tapes, Deputy Mayor Beldini kept her hands clear of Dwek’s cash. Quid pro quo was at tongue’s length. Perhaps the jury will say “not proven.” But whether Beldini is convicted or not, the Feds deserve some sort of media award. Jersey City is a Reality TV classic. Its images are forever.

*Ex-Hudson County Official Admits Conspiring with Numerous Others to Extort Cash in Return for Official Influence, USDOJ, U.S. Attorney, District of New Jersey, 09/18/09

**Unless otherwise noted, all quotes are from the following transcripts of videos and audio tapes played during the U.S. v. Leona Beldini trial, and published in the Newark Star-Ledger:

• Dwek, Cheatam, Shaw body recording transcript 2, March 11, 2009
• Jersey City diner hidden camera video: Mayor Healy, Beldini meet with Dwek, March 13, 2009
• FBI informant, Jersey City deputy mayor Beldini discuss campaign donations, March 24, 2009

Carola Von Hoffmannstahl-Solomonoff
Mondo QT

Send comments or confidential tips to:

mailto:editor@mondoqt.com

["Jersey City, New Jersey" photo by Oquendo; CC BY 2.0]

Join the Conspiracy as we explore some pretty important ideas that often get overlooked in contemporary society. At issue is the recent Supreme Court ruling in the case ofCitizens United v. Federal Election Commission. Gardner Goldsmith poses a question that we hope will be explored my more people in the libertarian movement: Corporations are entities that have been given special status under government law; they are not, as they presently exist, naturally occurring entities. Should the members of the corporation be allowed to employ speech rights under the name of the corporation? Tricky stuff.

Call us on our Liberty Hotline, 206-984-1069, to let us know what you think! Be Seeing You!

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The U.S. Bureau of Labor Statistics announced last week that for the first time, the number of government employees in unions exceeded the number in the private sector, which fell to a new low of 7.2 percent, down from 7.6 percent in 2008. At the same time the number of government employees in unions rose from 36.8 percent to 37.4 percent.

But private sector union membership has been on a slow and steady decline for decades. While union leaders decry the numbers, saying that good union jobs are disappearing, the reality behind unions is much more complex. To an extent, they have become a victim of their own success.

The AFL-CIO, the largest union federation in the U.S., claims on its Web site that unions help “build stronger workplaces” and “give workers a voice on the job about safety, security, pay, benefits — and about the best ways to get the work done.” Further, it says, unions “represent working families before lawmakers, and make sure politicians never forget that working families voted them into office.”

All of that, it turns out, is somewhere between misleading and blatantly untrue.

“They artificially increase wages in unionized industries, limit employment opportunities, depress wages in nonunion jobs, lower rates of return on investment in unionized firms, and slow the growth of productivity,” writes James A. Dorn, professor of economics at Towson University and editor of theCato Journal. “Unions politicize labor markets and have used the threat of violence to protect their wage premiums. In addition to using their monopoly power to secure higher than market wages, unions spend huge sums of money to maintain their power and limit competition.”

In its first issue of 2010,Cato Journal asks, Are unions good for America? The answer may surprise you, especially if you are a member of a union.

(Before going on I should disclose that I once paid union dues to the United Food and Commercial Workers when I worked at a grocery store.)

In 232 short pages of hard-hitting analysis, (but don’t do what I did and read it all in one sitting) Cato exposes some of the myths behind labor unions that practically everyone believes. Here are a few of them.

Myth: Unions work to ensure a level playing field for employees.

Fact: Unions advocate for laws which tilt the playing field in ways that are unfair to both employers and employees. Those laws often impair economic growth and innovation, as well as destroy the freedom to contract, according to Randall G. Holcombe and James D. Gwartney, economics professors at Florida State University. Over time, these labor laws actually cause a shift in employment from union jobs to nonunion jobs. In fact, research shows that the growth of labor unions during the Great Depression actually increased unemployment. Unions are still destroying jobs today.

“In the short run, because labor law has given to unions an advantage in the bargaining process, union contracts have had the effect of increasing the wages and benefits of union workers,” they wrote. “In the long run, the higher cost of union labor brought on by those union contracts has resulted in a steady decline in private sector unionism, and has eroded U.S. manufacturing in unionized industries — most visibly, the railroad and auto industries.”

Myth: Unions bargain on behalf of their members to get employees the wages and benefits they deserve.

Fact: Unions “bargain” with the guns of government in hand, to get employees more wages and benefits than they deserve, with a little for themselves on the side. By crawling in bed with government to pass laws which benefited the unions at the expense of employers — and, in the long run, employees — union leaders have drained American businesses dry. The long, slow decline of private sector unions reflects the economic destruction they left in their wake as they searched for fresh blood to leech. And today they’ve found the biggest source yet, the government.

Armand Thieblot, an economic consultant who has written books on union corruption and violence, writes:

When Samuel Gompers, then head of the American Federation of Labor, was asked in the early 1920s what unions wanted, he famously replied, “More.” At the time, everyone correctly understood that unions’ targets were the capitalists from whom additional wages and benefits would be wrested by force, and also that if unions were successful, capitalists would have to be content with “Less,” thus, just a transfer of economic rents within the system from one factor to another.

By the 1980s and 1990s, however, when unorganized capitalists had become thin on the ground and those already organized had mostly been rendered uncompetitive by past concession to union demands, unions’ new guiding trope became “More government.” To achieve it, unions became mordantly political. In economic terms, after unions had absorbed all of the readily available economic rents from their capitalist opponents, they have turned to seeking rents from new sources beyond the system — from the polity at large (from taxpayers), using government as the intermediary.

Myth: Project labor agreements reduce project costs and delays and are good for construction workers as a whole.

Fact: Project labor agreements increase costs and only help union workers. PLAs are agreements between construction project owners and unions that contractors on the project must use union labor, even if they otherwise would not. David G. Tuerck, economics professor and chair at Suffolk University, cites numerous examples of how nonunion workers were harmed when they worked under PLAs, “first by forcing them to pay twice for benefits already offered their workers and second by forcing pay cuts on their workers.” Then, unions use veiled threats to “labor peace” to intimidate project owners into accepting PLAs for “job stability.” Further, PLAs increased costs for every project studied which used them, sometimes as much as 20 percent.

“PLAs are motivated by a desire on the part of the construction unions to shore up the declining union wage premium against technological changes and other changes that make traditional union work rules and job designations obsolescent,” Tuerck writes. “Now the PLA has evolved into an instrument that the unions employ in tandem with the prevailing wage laws in order to reduce the competitive advantage of nonunion contractors.”

Myth: Prevailing wage laws are good for competition, improve safety and quality, and help train new workers.

Fact: Prevailing wage laws stifle competition, have no effect on job safety and quality, and do nothing to help train new workers. The Davis-Bacon Act of 1931, signed into law by President Herbert Hoover, mandates that on federal construction projects, workers be paid the so-called “prevailing wage” for similar local workers. In practice, the wage is set far higher than the actual prevailing wage, closely mirroring union pay scales. This virtually locks out nonunion construction workers from federal contracts.

George C. Leef, director of the Pope Center for Higher Education Policy, finds that all of the arguments for prevailing wage laws fail to stand up to even the slightest scrutiny. Worse, the Davis-Bacon Act was racially motivated: “The hearings and debate on the legislation revealed some ugly racial overtones with comments on how ‘cheap colored labor’ was driving down wages of white workers.” Robert Bacon originally proposed the bill because he was upset that a construction firm from outside his district, employing black workers, built a veterans’ hospital in his district.

Myth: Organized labor has worked to promote racial equality.

Fact: Unions have used racial discrimination as a tool to enrich themselves, and continue to do so today. In 2008, Richard Trumka, who is now the president of the AFL-CIO, said, “We know, better than anyone else, how racism is used to divide working people.” He should, because the unions have been doing it for their entire existence, and still are, as Paul Moreno, history professor at Hillsdale College, illustrates. It isn’t — and probably never was — the employers oppressing the black, or the Chinese, or the Hispanic people. Most employers, as it turns out, really are color blind, as Martin Luther King, Jr., noted in 1957: “With the growth of industry the folkways of white supremacy will necessarily pass away. Moreover, southerners are learning to be good businessmen, and as such realize that bigotry is costly and bad for business.”

As racism goes, unions made the KKK look like amateurs. Big Labor lobbied for, and got, special laws to make them completely immune for whatever they did — all the way up to outright murder. InUnited States v. Enmons, in 1973, the Supreme Court held that unions were immune from prosecution under the Hobbs Act if their violent acts were in furtherance of a “valid union objective.”

Moreno concludes:

The problem of racial discrimination in organized labor in America was less solved than it was outgrown. The story of racial discrimination in the American labor movement confirms the view that unions act as cartels that attempt to limit the supply of labor and raise its price. An easily identified and culturally disfavored minority group provided a convenient category for exclusion. But most unions were unable to succeed without state power, and by the time that they acquired such power, blacks had already fought their way into the industrial workforce. Discrimination within, rather than exclusion from, unions then became the chief problem — one that spawned the policy of “affirmative action.” Finally, the macroeconomic costs of unions decimated the ranks of private sector unions.

And Trumka? He talked a good game about ending racism in organized labor, but whether anything will change remains to be seen.

Myth: Unions help preserve manufacturing jobs.

Fact: Unions were a contributing factor in the decline of American manufacturing, especially in the automobile industry. Detroit makes a great example. At the start of the 20th century, Detroit was a boom town and its manufacturing jobs were paying 33 percent above the national average. Union organizers brought their message of capitalist greed and exploitation to already highly paid auto workers, where it largely fell on deaf ears. Until the Great Depression, when union organizers used a variety of underhanded tactics to force automakers, steel plants and other manufacturers to unionize.

(Interestingly, Henry Ford at the time threatened to break up his company rather than submit to union demands; he finally gave in when his wife threatened to leave him.)

Stephen J.K. Walters, economics professor at Loyola, explains what happened next. Companies, squeezed hard and struggling to survive, would move their operations out of Detroit and other cities, and later, out of the country entirely.

In sum, at the onset of World War II most of America’s great industrial firms — which, thanks to agglomeration economies were concentrated in cities throughout the East and upper Midwest — now faced labor cartels. These cartels needed some time to consolidate their power, so increases in employers’ wage costs would be significant but gradual. Further, WWII and its aftermath, during which time America’s industrial rivals’ productive capacity suffered heavy damage that would be restored only slowly, insulated the unions and firms to some degree and for some time from the most severe competitive consequences of monopolistic and opportunistic prices for labor. But the employers started to adapt immediately in ways that standard economic theory would predict — and that would ultimately help create what became known as America’s Rust Belt. Union actions, clearly, were not the only reason that industrial cities would decapitalize, depopulate, and become poorer in the second half of the 20th century, but they merit inclusion on the list.

If you’ve lost a manufacturing job any time in the last 50 years, thank your union boss for destroying your job, with a one-finger salute.

Myth: Teachers’ unions work to increase the quality of children’s education.

Fact: Teachers’ unions work to increase their membership rolls and their political power, at the expense of your children’s education. While collective bargaining has done little to increase the salaries of union public school teachers over nonunion public school teachers, these unions perform a different service for their members: preventing them from having to educate children. Andrew J. Coulson, director of the Center for Educational Freedom at the Cato Institute, explains that teachers’ unions strongly oppose government reforms which would improve the quality of K-12 education, such as charter schools, vouchers, and property tax credits.

The NEA and AFT spend large sums on political lobbying so that public school districts maintain their monopoly control of more than half a trillion dollars in annual U.S. K-12 education spending. That monopoly, in turn, offers a more than 40 percent average compensation premium over the private sector, along with greater job security. And since both the U.S. and international research indicate that achievement and efficiency are generally higher in private sector — and particularly competitive market — education systems, the public school monopoly imposes an enormous cost on American children and taxpayers. We are paying dearly for the union label, but mainly due to union lobbying to preserve the government school monopoly rather than to collective bargaining. (Emphasis in original)

Myth: Public sector unions work for the general prosperity of their members and all Americans.

Fact: Public sector unions dramatically increase the cost of government to unsustainable levels. The cost of employee wages and benefits accounts for half of the $2.2 trillion that state and local governments spent in 2008, and that number is set to grow dramatically as employees retire and generous pension packages kick in. Though, calling them generous is an understatement.

Moreover, according to Chris Edwards, director of tax policy studies at the Cato Institute, those pension obligations are grossly underfunded, which will make the fiscal crisis even more acute this decade.

The upshot of all this is that policymakers will need to make large budget reforms in the years ahead. They will to need to deliver public services more efficiently, to privatize services when feasible, to cut staffing levels, and to terminate low-value programs. Policymakers often hesitate in making such reforms, but the high level of unionization in many state workforces will make reforms even harder to achieve. During labor negotiations, for example, public officials often succumb to pressure to make short-term concessions that end up damaging public finances in the long run.

Businesses can and do mitigate the inefficiencies of a unionized workplace, but governments are much more constrained and have less incentive to do so, driving up taxpayer costs even further. And public sector unions use their large war chests to buy influence and protection. “So the problem with public sector unions is not just that they block compensation reforms, but that use their privileged status to control broader policy debates.”

Myth: Right-to-work laws harm employees and prevent employers from freely contracting with unions.

Fact: Right-to-work laws improve the economy, and employers freely contracting with unions is prohibited by the Wagner Act. That Act forces employers to bargain with unions “in good faith,” which is interpreted to mean that employers must capitulate to virtually every demand of the unions or be accused of acting in bad faith. This is hardly freedom of contract. Right-to-work laws mitigate, but do not entirely fix, this problem.

I have some experience with this, since I once worked in a non-right-to-work state and was forced to join the union. I would rather have negotiated my own terms; I’d likely have gotten a better deal. It seems many Americans agree, as millions of them have moved from non-right-to-work states to right-to-work states in the last decade, a migration that shows no signs of stopping. Richard Vedder, economics professor at Ohio University, found that both predictive models and real world evidence show that right-to-work states experience more economic growth than non-right-to-work states.

Myth: Labor unions support trade liberalization because it lowers the prices of goods that workers buy.

Fact: This used to be true, but today’s labor unions oppose trade liberalization. They believe that increasing globalization has directly led to the decline of their unions, and thus their power. This isn’t exactly true, according to Daniel Griswold, director of the Center for Trade Policy Studies at the Cato Institute. “Although the evidence is lacking to implicate globalization as a whole, two aspects of the trend have been found to have significant negative effects on labor unions: inward foreign direct investment (FDI), and ’social integration’ across borders.”

When foreign companies invest in the U.S., companies here realize that they can also invest in other countries. “The correlation of FDI and declining rates of union density suggests that ‘many workers feel greater insecurity from seeing capital mobility in their sectors, even if not in their own particular firms,’ Slaughter (2007: 344–45) concluded.”

And social globalization, “the spread of ideas, information, images and people,” a natural result of advances in communications and transportation, “reinforces what Dresher and Gaston (2007: 176) call a ‘growing normative orientation towards individuals rather than collectivism [which] makes collective organization more difficult.’ Adding to the trends are rising levels of immigration and perceptions of younger workers who view unions as old-fashioned and anachronistic institutions.”

In competitive product markets, the drag that unions impose on firm performance can be debilitating to the firm and its workers over time. As described above, firms facing vigorous competition are not able to pass along higher costs to consumers without risk of losing significant market share. Newly unionized firms in such markets face the cruel choice of passing along higher labor costs to consumers, thus losing market share to more cost-efficient competitors, or eating the higher costs in the form of lower profits and less reinvestment in physical and intellectual capital. Either choice will result over time in an erosion of the unionized firm’s market share.

Myth: Paying workers higher wages will reduce unemployment and stimulate the economy.

Fact: The “high-wage doctrine” increases unemployment and drags down the economy. This doctrine originated with a 1921 report that Hoover commissioned while he was Secretary of Commerce dealing with what was, in retrospect, a minor recession. In addition to recommending higher wages, the report also said that government spending (now known as the stimulus package) can help the country recover from a recession. Neither is true, of course, and the report might have been completely forgotten had Hoover not become President. He put his disastrous ideas into practice, and the rest, as they say, is history.

Worse, proponents of these theories, which John Maynard Keynes gleefully signed on to, are more concerned with theories than facts, according to Lowell E. Gallaway, economics professor at Ohio University. That’s just a polite way of saying they’re full of crap. Galloway writes:

In the intellectual world, the high-wage doctrine continues to have its appeal. Prior to his appointment as chairman of the Federal Reserve Board, Ben Bernanke, collaborating with Martin Parkinson, noted: “Maybe Herbert Hoover and Henry Ford were right. Higher real wages may have paid for themselves in the broader sense that their positive effect on aggregate demand compensated for their tendency to raise costs” (Bernanke and Parkinson 1989: 214). More recently, Paul Krugman reiterated this view in a New York Times oped (3 May 2009), arguing, “Many workers are accepting pay cuts in order to save jobs.” He then asks, “What’s wrong with that?” His answer refers to what he calls “one of those paradoxes that plague our economy right now . . . workers at any one company can help save their jobs by accepting lower wages, but when employers across the economy cut wages at the same time, the result is higher unemployment.” This is simply a reprise of Klein’s (1947) views. Never mind the existence of more than a century of empirical evidence to the contrary. Krugman’s concern is not with the empirical problem, but with the theoretical connection between wage rates and employment. The high-wage doctrine still lives. In all probability, this persistent adherence to an incorrect doctrine once again will prove to be detrimental to the U.S. economy, just as it was in the 1930s.

Myth: Unions currently operate in a free market.

Fact: Unions are heavily dependent on the government to provide them unfair leverage over employers and control over their members. It is possible for unions to exist and provide valuable services to their members in a market free of government-sponsored violence and control, but those services would likely have to be geared toward helping employees improve themselves, rather than extracting undeserved compensation from employers.

Charles W. Baird, professor emeritus of economics at California State University, East Bay, examines what constitutes a free market, how existing labor laws destroy freedom, and what a union might look like in a true free market. It won’t happen any time soon, though, he says: “It is politically impossible, at this time in America, to repeal the Norris-LaGuardia Act and the National Labor Relations Act and replace them with any sort of free-market union law. Nevertheless, it is worthwhile to prepare the ground now for doing so in some future, more enlightened time.”

If you’re wondering why you’re out of a job, why Detroit is a wasteland, and why the economy is on the verge of collapse, don’t be so quick to blame Wall Street: Some of the blame belongs to the labor unions.

["AFL-CIO building, Washington, D.C." photo by Derek Blackadder; CC BY-SA 2.0]

Haiti. A tragic situation as thousands die during and after a massive earthquake. Politicians promise millions in other peoples’ money to help the victims.

Gardner Goldsmith explains why Haiti is in such bad shape compared to other places that have had such natural disasters, and why government-run aid is the wrong idea. Markets are the answer. Freedom is the answer.

A big chunk of thinking in this one. Be Seeing You!

[Audio clip: view full post to listen]