Minnesota Free Market Institute Weekly Update
Friday, March 27, 2009

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1. Upcoming Events: The Tea Party and The Tax Rally
2. The Constitutionality (or not)  of the Treasury Department’s bailout plan
3. Lessons in Economics from the North Shore
4. Must Reads
5. Budget Hawks event at Trocaderos on April 2nd
6. Lawrence McQuillan Luncheon on April 14

1.  Upcoming Events: The Tea Party and The Tax Rally

The Tax Day Tea Party rally will be held April 15th between 5 pm and 8 pm at the Minnesota State Capitol as part of the Nationwide Tea Party movement.  The movement took shape after CNBC’s Rick Santelli gave a stirring speech in front of cameras during his usual report from the Chicago Mercantile Exchange.  He called for “a Chicago tea party” recalling the Boston Tea Party, where protesters threw tea into Boston Harbor to protest a new tax on tea to the British government.  Since Santelli’s “rant of the year,” a grassroots movement has sprung up to organize protests in favor of free markets and against government intervention and excessive taxes. Other groups and well known conservative leaders like Newt Gingrich and Michelle Malkin have thrown their support behind the movement.  Blogs and social networking sites like Twitter and Facebook are abuzz with people making plans to attend events in different cities.  A large number of events all around the country are planned to coincide with tax day, April 15.  The Minnesota plans are being posted on the website The Minnesota Free Market Institute is participating in this event and is helping to coordinate it. You can download a flyer here.

On May 2, we will also be at the annual “2009 Tax Rally and Conservative Issues Fair” which has traditionally been held on a Saturday near Tax Day at the Capitol. (If you were with us last year, you you’ll recall it was held on a very cold April 12!) This year the Rally is being held on the first Saturday in May and in keeping with last year, there won’t just be speeches,  the event now has an associated “Issues Fair” to enable Conservatives around the state to not only make their voices heard but also to learn about legislation and public policy debates and to get together with other conservatives and groups to learn about their efforts.

The Minnesota Free Market Institute also has two other events in April, on the 2nd, we have our second Budget Hawks event and on the 14th we have our 2009 Spring Policy Luncheon with Lawrence McQuillan (See the bottom of the update for details).

Pat Anderson is President of the Minnesota Free Market Institute
2.  The Constitutionality (or not)  of the Treasury Department’s bailout plan
It’s interesting when critics of Rep. Michele Bachman suddenly discover Article I, section 8 of the U.S. Constitution. Even more interesting is when Treasury Secretary Timothy Geithner and Federal Reserve chairman Ben Bernanke incoherently make oblique references to Article I “Enumerated Powers” clause in defense of the massive extension of federal power that is the TARP and EESA programs.

Bachman’s challenge to each man  — “What in the Constitution could you point to, to give authority to the Treasury’s extraordinary actions that have been taken?” — made in Tuesday’s hearing before the House Financial Services Committee has been criticized as if she were asking the two men sitting behind a table if they were wearing pants. In this land of the free and home of the brave, some find it “inappropriate” to point out the emperor has no clothes.

When Geithner responds to Bachmann’s question with the constitutional justification, “Oh well, the Congress legislated in the Emergency Economic Stabilization Act a range of very important new authorities,” he is, as post-hearing analysis of Bachmann critics claim, essentially citing congressional authority enumerated in Article I, section 8 of the U.S. Constitution. How ironic.

Article I, section 8 is tagged the “Enumerated Powers” clause. Article I, section 8 is the clause conservatives and constitutional scholars point to as evidence that the Constitution limits the power of government to those actions specifically listed therein. To use the Enumerated Powers clause to justify a range of “important new authorities” for the Treasury Department is ludicrous on its face, not to mention it’s the wrong section of the Constitution to be looking at.

Article I, section 1 of the Constitution — the first clause after the Preamble — states, “All legislative Powers … shall be vested in a Congress” — not a Treasury Department or a Federal Reserve System. The words “all” and “shall” are significant. In a legal sense, those words preclude Congress selectively discriminating among legislative powers, retaining some for itself and delegating others to the executive branch. But as Geithner makes clear creating new authorities for the Treasury Department is precisely what the TARP and EESA legislation does.

The constitutionality issue has to do with the Congressional authority to delegate legislative power, and Geithner and Bernanke’s defense that their actions are constitutional because they were granted by Congress are as valid as a claim to keep stolen property received from a thief.

As have many bastardizions of Constitution, the demise of the legislative exclusivity of Congress was spawned in the New Deal Era when the Supreme Court created the notion that Congress could constitutionally delegate powers if it legislated “an intelligible principle” that defined the extent of legislative authority delegated. Since that action, not a single statutory program has been invalidated for lack of a “intelligible principle,” which demonstrates the dangers and consequences of misinterpreting the Constitution as a “living document”.

The “intelligible principle” given to the Treasury Department under TARP was “to purchase … troubled assets for the purpose of providing stability to and preventing disruption in the economy and the financial system” — a pretty vague “intelligible principle” that even so has been pretty much ignored by the Treasury Department as TARP money has so far been allocated for anything but purchasing troubled assets. The EESA “intelligible principle” is even more dubious: Asset purchases can be made “on such terms and conditions determined by the Secretary.”

By any criteria of rational judgment, even considering the thread of Supreme Court cases that have steadily eroded the exclusive legislative authority of Congress, the bundle of bailout legislation is a questionable constitutional delegation of legislative authority. Bachmann pressing that point was prudent, not audacious; the incoherent responses and misapplication of the Constitution by Geithner and Bernanke would be audacious were they not so pathetic.

Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute
3.  Lessons in Economics from the North Shore
Can you learn a lesson in economics by going on vacation? I did.

On March 18 through 22, I spent some time at a convention on the North Shore, held for people who write about skiing, snowboarding and winter generally to talk about their work, swap stories, and ski and snowboard at Lutsen Mountains.

Over the next few weeks I’ll be offering up some observations I gleaned about economics and public policy from the conference.

Today, the hat.

Though winter is on its way out, I’m still wearing a knit cap I received in the conference goodie bag.

This beanie hat works just fine. It keeps my head warm, it (almost) fits, and it looks good.

The hat is produced by Wintergreen Northernwear

, of Ely, Minnesota. And that latter fact, I guess, is
supposed to make me feel good.

After all, the company web site says “We take great pride in being one of the largest private employers in a small remote town where jobs are scarce but garment-making talents and pride in workmanship are in
abundance. We’re one of the last full-line outdoor clothing makers in the U.S.”

That may explain why the beanie on my head sells for $40.00, while REI sells what appears to be a comparable one for $30.00, and sells it for $20.00. This cheaper model is, in the words of REI,
“imported,” which probably means that it was made in Bangladesh or the Dominican Republic, or some other country where wages are a fraction of those in Ely.

Is this bad? Some people say yes. But does it make any sense for Americans to try to outhustle people working on third-world wages? Buying Ely-made clothing may make you feel an authentic patriot, a supporter of the Iron Range, someone who strikes a blow for “community” and against the global economy and impersonal

But it also means that you’ve given up the opportunity to buy a hat AND spend the $10 or $20 on another business. We might say that you’ve paid a locality premium for a single product.

I suppose that’s fine. People pay for more than the utilitarian value of products all the time. (With baseball season coming up, think of those Minnesota Twins jerseys you’ll start seeing around the office.)

But it’s not without costs, which I’ll discuss next week.

John LaPlante is a Policy Fellow at the Minnesota Free Market Institute

4. Must Reads
Jake DiSantis. Dear AIG, I Quit! New York Times Op Ed.  This resignation letter from an AIG executive vice president explains why the proposed 90% tax on AIG employee bonuses was more hype than sound fiscal policy and establishes a very bad precedent if the financial sector is to regain its footing. It was the talk of watercoolers all over America this week. See King Banaian’s commentary “Someone…” below.
Mary Anastasia O’Grady. Now Is No Time to Give Up on Markets Wall Street Journal.  O’Grady interviews Nobel Prize winning economist Gary Becker.

Citizens against Government Waste takes a whack at Congressman Barney Frank (D-MA)  by making him their “porker of the month” for March.  CAGW cites Frank’s hypocrisy over making sure that  OneUnited Bank in Boston ( for which the Boston Herald had documented waste and excessive executive perks) got it’s TARP funding without scrutiny while pointing a finger at AIG executive bonuses.  Even worse is Rep. Frank’s involvement in creating the financial crisis in the first place as Chairman of the House Financial services committee he oversaw waste fraud and abuse at Fannie Mae and Freddie Mac.

A few weeks ago we featured the Heartland Institute’s recent international conference on climate change, Global Warming: Was it ever really a crisis? More than 75 papers and keynote addresses were presented by some of the worlds leading climatologists, economists, policy makers, and opinion leaders. The proceedings and panels are available on-line as pdfs and there is audio and video available. Be sure to check it out for the latest research on this important issue.
In Case you missed it from the Minnesota Free Market Institute
King Banaian (SCSU Scholars)
5. Budget Hawks Event at Trocaderos on April 2
400 People showed up for our last Budget Hawks event at Trocaderos in Minneapolis earlier this month.  Join us for our next event on Thursday, April 2 from 5-8 PM at Trocaderos. See the flyer here for details on free parking and for more information about the event. Although it’s not required, you can RSVP on facebook here.
6. 2009 Spring Policy Luncheon with Lawrence McQuillan Luncheon on April 14
Join us on April 14 at the Minneapolis Hilton for “The Sizzle of Economic Freedom” with Lawrence J. McQuillan Ph.D., of the Pacific Research Institute. Tuesday, April 14, 12:00 PM at the Hilton Minneapolis. (See the top item for a discussion of his ebook). Cost is $35. Please send checks to the Minnesota Free Market Institute, P.O. Box 120449, St. Paul, MN 55112.  RSVP by April 10. You may RSVP by calling Sara Linert at 651-294-3593 x207; email at or on facebook.

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The Minnesota Free Market Institute conducts research and advocates for policy that limits government involvement in individual affairs and promotes competition and consumer choice. By analyzing the actions of the past and applying the enduring lessons of the free market, the Minnesota Free Market Institute creates policy options for the future. To donate click here.