New Hampshire:

-- Among the many paternalistic things politicians in Concord have proposed since returning to the State House this fall (lest we forget Doug Scamman and Ted Gatsas fomenting for state heating aid for poor and “needy” citizens – money taken from others), there is a new contender for Statist/Anti-Constitutional Idea of the Year. On Monday, November 7, Governor John Lynch (as clearly written by his Press Secretary, Pamela Walsh) announced to reporters that he would push for mandating that all NH children be forced to stay in school until their eighteenth year. According to Meg Heckman, of the “Concord Monitor” (AKA “Pravda West”), Lynch announced that this proposal go into effect in the 2008-2009 school year. The plan would, of course, need legislative approval before becoming law.

Attempting to preempt justified criticism from some who might resent yet another state mandate on their local schools, Walsh, through Governor Lynch, stated: “This is not a mandate for communities of schools, because they’re already required to educate our (emphasis added) children. This is a mandate to our children that they must stay in school until they’re eighteen.”

Before many of us were cognizant, Alice Cooper wrote a song called “Eighteen”. In it, he described a “youth” of that age, who didn’t know what he wanted in life. Many eighteen-year-olds don’t know what they want in life, but they do know one thing, they don’t want to be in government schools. Besides the fact that his new proposal could hold highly gifted seventeen-year-olds and sixteen-year-olds in school when they could be heading to college in some rare cases, Lynch’s idea will also keep teenagers in school who do not want to be in school. There’s nothing like packing disinterested and potentially disruptive kids into the classroom to create a wonderful environment for learning.

Perhaps most important, Lynch’s proposal does a great disservice to the Constitution of New Hampshire, which, as stated in Section One, Article Six, gives the towns (or parishes, as they were called in the Constitution) the full right to contract with their school employees. Any state dictate upon local school districts that impinges on this right stands in contravention to the wording of the very document that gives John Lynch his seat as Governor. Ahh, but Lynch has told us this is not a “mandate on the schools.” Instead, we are told, it is a mandate on the parents. Well, it’s both. Clearly!

Some legislators were ambivalent about Lynch’s breakthrough idea. Senator Dick Green, a “Republican” from Rochester, has proposed funding vocational training outside school for those kids who would have stayed out of school and worked were it not for the Lynch proposal. Of course, this begs the observation: The state wants to take kids who are leaving school to work (usually vocations in the blue collar fields), and force them to stay in school. When it does, it will then try to fund special vocational opportunities outside the school, where students who don’t want to be in school can get “work experience”.

So, kids who don’t want to be in school and leave it in order to go to work, thus decreasing the drain on government education budgets, will be forced to stay in school, and given special classes/work programs outside school, where they can gain valuable work skills?! Someone find the beginning of this logic circle, please.

Nationally:

-- “Todayonline.com” reported on Thursday, November 10, that a commission mandated by the US Congress (so you know it’s gotta be good!) to look into international trade with China, called for sanctions against that nation “as part of a four-track policy response, if Beijing does not adopt a more flexible currency regime.” It stated that the Yuan was “highly undervalued”, and called for the currency to be increased in comparison to the Dollar by 25%.

Pushing this ideological folly is fear in the White House and in Congress that the Dollar cannot be devalued any longer simply by Federal Reserve manipulation. Why would politicians in Washington want to devalue the Dollar any more? It goes back to the early months of 2002, when the Dollar was strong, despite the terror of September 11, 2001. With a strong Dollar, American consumers were able to purchase more foreign goods, and foreigners were buying fewer American-made goods. Our Dollar could buy more because it was worth relatively more on the market, and that was a good thing. US productivity was high, and more products made for fewer Dollars means your Dollar can buy more. But American manufacturers with political connections were not happy with the fact that consumers could buy foreign goods for less than they used to. This harmed the bottom line of some American businesses that competed with foreign products. Thus, they lobbied the Bush Administration, and Congress. The Bush Administration actually stated that it was afraid that the high value of the Dollar was a sign of “deflation”. (Note: deflation cannot be brought about by increased productivity, it can only be caused by artificially high interest rates created by bad Federal Reserve policy. These rates retard the amount of useable capital in the system, making the Dollar more precious on the market.) Shortly thereafter, Alan Greenspan began to pursue a regime of decreasing interest rates, dropping the rate by a quarter basis point, calendar quarter after quarter, until the Short-term Fed Funds Rate (the rate at which banks get money from the Federal Reserve and at which they lend to one another at the close of business to balance their accounts) hovered near 1%.

People with fluctuating mortgages were ecstatic! However, with more “easy money”/cheap loans spreading more money into the system, the value of the Dollar began to drop. With more money chasing the goods on the market, the prices of those goods began to increase, and slowly but surely, while the Dollar bought less on foreign markets, it also bought less in the US. While some domestic manufacturers were pleased that they no longer had to worry about American consumers using their strong Dollars to buy foreign goods in such vast quantities, politicians and people at the Fed began to worry that their artificial decreases in interest rates that were brought about to help US manufacturers were beginning to cause inflation. Thus, Alan Greenspan began to try to undo what he had done, and to raise interest rates to stave off “inflation”.

The trouble was that Greenspan could only go so far before US investors, consumers and home buyers would begin to worry about those increasing interest rates. So, how to protect US manufacturers while not decreasing the interest rates at home? How to slip it past the average American that they were still getting ripped off, even while increasing interest rates to supposedly fight inflation? Of course! Devalue the Dollar in relation to the Chinese currency! Make Chinese products more expensive, keep US interest rates higher than the past, and still decrease the value of the Dollar abroad!

Thus, as NY Senator Charles Schumer threatened at the opening of 2005 to work to impose trade sanctions against China if it did not de-couple the value of the Yuan from the Dollar, and thus the Chinese capitulated, even while cutting their own export taxes to ease some of the burden on their companies.

Now, the US seems unsatisfied. Despite the fact that the Yuan has been allowed to rise in relation to the Dollar, to some US politicians, it isn’t rising fast enough.

The lesson to be learned here comes in two parts. The first is that one should never entrust the value of his currency to the power of the state. The second lesson will be explained in a subsequent post, entitled, “The Trade Deficit: Half the Story isn’t Enough”.