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8 April 2010

Today’s Tabbloid
PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

Hot Time in the Old Town Atomic Dreams [Cato at


Tonight [Cato at Liberty] Liberty]
APR 07, 2010 08:38P.M. APR 07, 2010 08:36P.M.

By Thomas Firey By Jerry Taylor

A record-setting heat wave has settled on the Beltway this week, Last week I was on John Stossel’s (most excellent) new show on Fox
resulting in my thermometer topping the 85°F mark by the time I came Business News to discuss energy policy — in particular, popular myths
into work today. that Republicans have about energy markets. One of the topics I touched
upon was nuclear power. My argument was the same that I have offered
Did I mention my thermometer is inside my apartment? in print: Nuclear power is a swell technology but, given the high
construction costs associated with building nuclear reactors, it’s a
“Oh Thomas, that’s awful,” you’re probably thinking. “You should get a technology that cannot compete in free markets without a massive
place with an air conditioner.” amount of government support. If one believes in free markets, then one
should look askance at such policies.
But you see, my unit has air conditioning. The problem is that, under
Virginia law, it can’t be turned on until May 1. As expected, the atomic cult has taken offense.

My apartment is in an older building (1958) with a centralized HVAC Now, it is reasonable to argue that excessive regulatory oversight has
system. As a result, the whole building must either be in heating mode or driven up the cost of nuclear power and that a “better” regulatory regime
cooling mode. One of the quirks of this system is that it takes a couple of would reduce costs. Perhaps. But I have yet to see any concrete
days for it to be converted from one mode to the other. accounting of exactly which regulations are “bad” along with associated
price tags for the same. If anyone out there in Internet-land has access to
Unfortunately, that physical reality doesn’t jibe well with Virginia law, a good, credible accounting like that, please, send it my way. But until I
which requires (in the words of an Arlington County government see something tangible, what we have here is assertion masquerading as
brochure): fact.

Every dwelling unit is required to have heating facilities that Most of those who consider themselves “pro-nuke” are unaware of the
are properly maintained and keep all habitable rooms at a fact that the current federal regulatory regime was thoroughly reformed
temperature of at least 65° during the day and 60° at night in the late 1990s to comport with the industry’s model of what a “good”
during ordinary winter conditions from October 15 – May 1. federal regulatory regime would look like. As Oliver Kingsley Jr., the
President of Exelon Nuclear, put it in Senate testimony back in 2001:
The result is that, unless the building superintendent knows for certain
that cold-weather conditions have ended for the year, a building with a The current regulatory environment has become more stable,
system like mine (which aren’t uncommon), they can only be in timely, and predictable, and is an important contributor to
compliance with Virginia law if they keep the air conditioning off until improved performance of nuclear plants in the United States.
May 1. Hence the 85°F apartment. This means that operators can focus more on achieving
operational efficiencies and regulators can focus more on
No doubt, Virginia regulators will tell us that such rules are necessary to issues of safety significance. It is important to note that safety
protect the health and safety of tenants. But I wonder what they would is being maintained and, in fact enhanced, as these benefits of
say to the small children who live in my building, especially the 2- and 3- regulatory reform are being realized. The Nuclear Regulatory
year-olds who live down the hall from me? Commission — and this Subcommittee — can claim a number
of successes in their efforts to improve the nuclear regulatory
environment. These include successful implementation of the
NRC Reactor Oversight Process, the timely extension of

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 8 April 2010

operating licenses at Calvert Cliffs and Oconee, the energy markets does indeed distort gas-fired electricity prices. It makes
establishment of a one-step licensing process for advanced those prices higher than they otherwise would be!
reactors, the streamlining of the license transfer process, and
the increased efficiency in processing licensing actions. The Energy Information Administration (EIA) identified five natural gas
subsidies in 2007 that were relevant to the electricity sector (table 5).
It’s certainly possible that the industry left some desirable reforms Only two are of particular consequence. They are:
undone, but it seems relevant to me that the Nuclear Energy Institute —
the trade association for the nuclear energy industry and a fervent • Expensing of Exploration and Development Costs – Gas producers
supporter of all these government assistance programs — does not are allowed to expense exploration and development expenditures
complain that they’re being unfairly hammered by costly red-tape. rather than capitalize and depreciate those costs over time. Oil and
gas producers (combined) took advantage of this tax break to the
For the most part, however, the push-back against the arguments I tune of $860 million per year. How much goes to gas production
offered last week has little to do with this. It has to do with bias. rather than to oil production is unclear.
According to a post by Rod Adams over at “Atomic Insights Blog,” I am
guilty of ignoring subsidies doled-out to nuclear’s biggest competitor — • Excess of Percentage over Cost Depletion Deferral – Under cost
natural gas — and because Cato gets money from Koch Industries, it’s depletion, producers are allowed to make an annual deduction
clear that my convenient neglect of that matter is part of a corporate- equal to the non-recovered cost of acquisition and development of
funded attack on nuclear power. Indeed, Mr. Adams claims that he has the resource times the proportion of the resource removed that
unearthed a “smoking gun” with this observation. year. Under percentage depletion, producers deduct a percentage
of gross income from resource production. Oil and gas producers
Normally, I would ignore attacks like this. This particular post, however, (combined) take advantage of this tax break to the tune of $790
offers the proverbial “teachable moment” that should not be allowed to million per year. How much goes to gas production rather than to
go to waste. oil production is unclear.

First, let’s look at the substance of the argument. Did I “give natural gas a Even if we put aside the fact that these subsidies don’t impact final
pass” as Mr. Adams contends? Well, yes and no; the show was about the consumer prices in any significant manner, it’s useful to keep in mind
cost of nuclear power, not the cost of natural gas. I did note that natural the fact that the subsidy per unit of gas-fired electricity production — as
gas-fired electricity was more attractive in this economic environment calculated by EIA — works out to 25 cents per megawatt hour (table 35).
than nuclear power, something that happens to be true. Had John Subsidy per unit of nuclear-fired electricity production works out to
Stossel asked me about whether gas’ economic advantage was due to $1.59 per megawatt hour. Hence, the argument that nuclear subsidies
subsidy, I would have told him that I am against natural gas subsidies as are relatively small in comparison with natural gas subsidies is simply
well — a position I have staked-out time and time again in other venues incorrect.
(while there are plenty of examples, this piece I co-authored with Daniel
Becker — then of the Sierra Club — for The Los Angeles Times represents Some would argue that the Foreign Tax Credit — a generally applicable
my thinking on energy subsidies across the board. A blog post a while credit available to corporations doing business overseas that allows firms
back about the Democratic assault on oil and gas subsidies found me to treat royalty payments to foreign governments as a tax that can be
arguing that the D’s should actually go further! Dozens of other similar deducted from domestic corporate income taxes — should likewise be on
arguments against fossil fuel subsidies can be found on my publications the subsidy list. The Environmental Law Institute calculates that this
page). So let’s dispose of Mr. Adams’ implicit suggestion that I am some credit saves the fossil fuel industry an additional $15.3 billion. There is
sort of tool for the oil and gas industry, arguing against subsidies here room for debate about the wisdom of that credit, but regardless, it
but not against subsidies there. doesn’t appear as if the Foreign Tax Credit affects domestic U.S. prices
for gas-fired electricity.
Second, let’s consider the implicit assertion that Mr. Adams makes —
that natural gas-fired electricity is more attractive than nuclear power The bigger point is that without government help, few doubt that the
primarily because of subsidy. The most recent and thorough assessment natural gas industry would still be humming and electricity would still be
of this matter comes from Prof. Gilbert Metcalf, an economist at Tufts produced in large quantities from gas-fired generators. But without
University. Prof. Metcalf agrees with a 2004 report from the Energy government production subsidies, without loan guarantees, and without
Information Administration which contended that preferences for liability protection via the Price-Anderson Act, even the nuclear power
natural gas production in the tax code do little to increase natural gas industry concedes that they would disappear.
production and thus do little to make natural gas less expensive than it
might otherwise be. They are wealth transfers for sure, but they do not Now, to be fair, Prof. Metcalf reports that nuclear power is cheaper than
do much to change natural gas supply or demand curves and thus do not gas-fired power under both current law and under a no-subsidy, no-tax
effect consumer prices. Prof. Metcalf argues that if we had truly level regime. His calculations, however, were made at a time when natural gas
regulatory playing field without any tax distortions, natural gas-fired prices were at near historic highs that were thought to be the new norm
electricity would actually go down, not up! Government intervention in in energy markets and were governed by fairly optimistic assumptions

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about nuclear power plant construction costs. Those assumptions have compete without government help, I would be as happy as Mr. Adams or
not held-up well with time. For a more recent assessment, see my review the next MIT nuclear engineer. But I am no more “pro” nuclear power
of this issue in Reasonalong with this study from MIT, which warns that than I am “pro” any power. It is not for me to pick winners in the market
if more government help isn’t forthcoming, “nuclear power will diminish place. That’s the invisible hand’s job. If there is bad regulation out there
as a practical and timely option for deployment at a scale that would harming the industry, then by all means, let’s see a list of said bad
constitute a material contribution to climate change risk mitigation.” regulations and amend them accordingly. But once those regulations are
amended (if there are indeed any that need amending), nuclear power
Third, Mr. Adams argues that federal nuclear loan guarantee program is should still be subject to an unbiased market test. Unlike Mr. Adams, I
a self-evidently good deal and implies that only an anti-industry agitprop don’t want to see that test rigged.
specialist (like me) could possibly refuse to see that. “That program, with
its carefully designed and implemented due diligence requirements for
project viability, should actually produce revenue for the government.”
Funny, but when private investors perform those due diligence exercises, FISCALLY CONSERVATIVE BLOG FEEDS
they come to a very different conclusion … which is why we have a
federal loan guarantee program in the first place. Sick of ‘Cyber’ [Cato at
Who do you trust to watch over your money — investment bankers or Liberty‘Cyber’]
Uncle Sam? The former don’t have the best track record in the world APR 07, 2010 05:33P.M.
these days, but note that the popular indictment of that crowd is that
investment banks weren’t tight fisted enough when it came to lending. If By Jim Harper
even these guys were saying no to nuclear power — and at a time when
money was flowing free and easy — what makes Mr. Adams think that a NPR is running a series of stories on “cybersecurity,” prompting some to
bunch of politicians are right about the glorious promise of nuclear express their exasperation with cybertouting of cyberthreats.
power, particularly given the “too cheap to meter” rhetoric we’ve heard
from the political world now for the better part of five decades? Some of my cyberefforts on that cyberscore are cyberhere, cyberhere,
and cyberhere. CyberBen CyberFriedman has written cyberthis and
Anyway, for what it’s worth, the Congressional Budget Office has taken a cyberthis.
close look at this alleged bonanza for the taxpayer and judged the risk of
default on these loan guarantees to be around 50 percent. They may be Sick of “cyber” yet? Good.
wrong of course, but the risks are there, something Moody’s
acknowledged last year in a published analysis warning that they were Securing computers, networks, and data is important. But there’s no
likely to downgrade the credit-worthiness of nuclear power plant such thing as cyberterrorism, “cyberwar” is what might occur in
construction loans. computing and communications during an actual war, and the bulk of
the work is, as Bruce Schneier puts it, boring:
Fourth and finally, Mr. Adams cites Cato’s skepticism about “end-is-
near” climate alarmism as yet more evidence that we are on the take Securing our networks doesn’t require some secret advanced
from the fossil fuels industry. I don’t know if Mr. Adams has been NSA technology. It’s the boring network security
following current events lately, but I would think that we’re looking administration stuff we already know how to do: keep your
pretty good right now on that front. Der Spiegel — no hot-bed of “Big patches up to date, install good anti-malware software,
Oil” agitprop — sums up the state of the debate rather nicely in the wake correctly configure your firewalls and intrusion-detection
of the ongoing collapse of IPCC credibility. Matt Ridley — another systems, monitor your networks.
former devotee of climate alarmism — likewise sifts through the rubble
that is now the infamous Michael Mann “hockey stick” analysis (which
allegedly demonstrated an unprecedented degree of warming in the 20th
Century) and finds thorough and total rot at the heart of the alarmist
argument. Mr. Adams is perhaps unaware that our own Pat Michaels has
been making these arguments for years and Cato has no apologies to
make on that score.

Regardless, ad hominem is the sign of a man running out of arguments.


There aren’t many here to rebut, but the form of the complaints offered
by Mr. Adams speaks volumes about how little the pro-nuclear camp has
to offer right now in defense of nuclear power subsidies.

I have no animus towards nuclear power per se. If nuclear power could

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FISCALLY CONSERVATIVE BLOG FEEDS Likewise, do not respond that this power will only be used against very
bad people. Again, doing so just admits that we now depend on an
Tax Hikers Getting Clever in unreviewable judgment of character, not on a legal system with formal
procedures and safeguards. Even in the dark days of the Cold War —
Florida [Americans for Tax even during the Revolution itself — we never ceded so much power to so
few.
Reform]
APR 07, 2010 04:36P.M. To those who think our leaders’ prudence is a sufficient check on their
own power, consider this. Let’s both grant that Barack Obama is
Less than a year after Gov. Crist’s $3 billion in statewide tax increases, basically a decent, well-meaning guy (apart from the fact that a decent,
the appetite for big government is small in Florida. Rather than curb out well-meaning guy would never want a power like this). If he’s a decent
of control spending, however, the tax-loving crowd ... guy, then perhaps he’ll use his newly claimed power wisely, insofar as
such an atrocious power can be used wisely. But on the other hand, if I
were truly evil, and if I wanted to assassinate with impunity all the
people I hated… Suddenly now I’d be very interested in running for
FISCALLY CONSERVATIVE BLOG FEEDS president.

A Government of Laws, Not Glenn Greenwald has a lot more on the issue, including evidence that
Barack Obama was apparently against this power… before he was for it.
Men [Cato at Liberty]
APR 07, 2010 02:02P.M.

By Jason Kuznicki FISCALLY CONSERVATIVE BLOG FEEDS

In the government of this commonwealth… the executive On Tonight’s Kudlow Report


shall never exercise the legislative [or] judicial powers… to
the end it may be a government of laws and not of men. — [Larry Kudlow’s Money
The Constitution of Massachusetts, 1780, drafted by John
Adams, Samuel Adams, and James Bowdoin Politic$]
APR 07, 2010 01:33P.M.
In contrast, consider today’s news:

The Obama administration has taken the extraordinary step


of authorizing the targeted killing of an American citizen, the
radical Muslim cleric Anwar al-Awlaki, who is believed to
have shifted from encouraging attacks on the United States to
directly participating in them, intelligence and
counterterrorism officials said Tuesday.

Americans, this is what arbitrary government looks like. As a simple


matter of fact, even George III was never this arbitrary. Even he didn’t
make individual colonists’ lives depend merely on an act of his own will.

Indeed, if I wanted a perfect example of what a government of men, not


laws, looked like, I could just glance at the newspapers today and see
what our government is doing right at this moment.

Do not respond that this power will only be used wisely and sparingly. This evening at 7pm ET:
Doing so just admits my basic point, namely that we now depend purely
on the wisdom and restraint of our individual leaders. We depend on TAX ATTACK:
their wisdom and restraint — to check their own worst impulses. All VOLCKER VAT TAX & BUSH TAX CUTS ROLLED BACK FOR RICH
power, both for and against, is contained in one individual. No legal
processes, and no guarantees, separate us from them. And the stakes are - Steve Moore, Senior Economics Writer for the Wall Street Journal
life or death. Editorial Board; “Return to Prosperity” co-author
- Leonard Burman, Prof. Of Public Affairs Maxwell School at Syracuse;

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Fmr. Co-director, Tax Policy Center prevents them from writing big checks to the government and
voluntarily paying more, so what they’re really lobbying for is higher
HOW TO CUT GOV’T PAY taxes on the vast majority of investors and entrepreneurs who don’t want
more of their income confiscated by the clowns in Washington and
- Alex Pollock, AEI Resident fellow squandered on corrupt and inefficient programs:
- Steve Moore, Senior Economics Writer for the Wall Street Journal
Editorial Board; “Return to Prosperity” co-author A group of liberals got together Tuesday and proved that
they, too, can have a tax rebellion. But theirs is a little bit
HAVE TEA PARTIES GONE MAINSTREAM? different: They want to pay more taxes. “I’m in favor of higher
IS TEA PARTY THE ANTI-SPENDING COALITION? taxes on people like me,” declared Eric Schoenberg, who is
sitting on an investment banking fortune. He complained
- James Taranto, WSJ Editorial Board Member about “my absurdly low tax rates.” “We’re calling on other
- David Frum, NewMajority.com Editor; American Enterprise Institute wealthy taxpayers to join us,” said paper-mill heir Mike
Fellow Lapham, “to send the message to Congress and President
Obama that it’s time to roll back the tax cuts on upper-
ALAN GREENSPAN TESTIFIES ON THE CRISIS income taxpayers.” …They are among 50 families with net
- CNBC’S Mary Thompson reports. assets of more than $1 million to take a “tax fairness” pledge
— donating the amount they saved from Bush tax cuts to
GEITHNER/CHINA & BERNANKE organizations fighting for the repeal of the Bush tax cuts.
According to a study by Spectrem Group, 7.8 million
- John Rutledge, Rutledge Capital Chairman; Fmr. Reagan Economic households in the United States have assets of more than $1
Advisor million — so that leaves 7,799,950 millionaire households yet
to take the pledge. …Of course, if millionaires really want to
IS LARRY SUMMERS LEAVING? pay higher taxes, there’s nothing stopping them. The
A NEW DIRECTION FOR OBAMA’S ECONOMIC TEAM? Treasury Department Web site even accepts contributions by
credit card to pay the public debt. …His donation will,
- Jon Ward, The Daily Caller Sr Political & White House reporter however, ease the sense of guilt that comes with great wealth,
described poignantly by the millionaires: “In 1865, my great-
Please join us. The Kudlow Report. 7pm ET. CNBC. great-grandfather Samuel Pruyn founded a paper mill on the
banks of the Hudson River in Glens Falls, New York,”
Lapham explained. Judy Pigott, an industrial heiress on the
call, added her wish that her income, “mostly unearned
FISCALLY CONSERVATIVE BLOG FEEDS income, be taxed at a rate that returns to the common good
that I have received by a privilege.” Confessed Hollender, who
Ultra-Rich Leftists Want to now runs the Seventh Generation natural products company:
“I grew up in Manhattan on Park Avenue in a 10-room
Atone for their Guilt by Paying apartment.”

Higher Taxes…And They Want P.S. It’s also rather revealing that Massachusetts had (and maybe still
has) a portion of the state tax form allowing people to pay extra tax, yet
to Impose their Neurotic Views very rich statists like John Kerry decided not to pay that tax while urging
higher taxes for mere peasants like you and me.
on the Rest of Us [Cato at
Liberty…And They Want to
Impose their Neurotic Views on
the Rest of Us]
APR 07, 2010 01:01P.M.

By Daniel J. Mitchell

A Washington Post columnist reports on a group of limousine liberals


who are lobbying to pay more taxes. Of course, there’s no law that

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FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

Consumers in the Driver’s Regulatory Overreach in the


Seat—Oh, the Humanity! [Cato Making [Americans for Tax
at Liberty—Oh, the Humanity!] Reform]
APR 07, 2010 12:33P.M. APR 07, 2010 12:08P.M.

By Jim Harper In what could be the latest example of regulatory overreach, the
U.S. Senate seems set to vote next week on a bill sponsored by Sen.
Yesterday the D.C. Circuit ruled that Congress hadn’t given the Federal Dianne Feinstein (D-CA) that would effectively ban the use...
Communications Commission power to regulate the Internet and the
FCC couldn’t bootstrap that power from other authority. It was a rare but
welcome affirmation that the rule of law might actually pertain in the
regulatory area. FISCALLY CONSERVATIVE BLOG FEEDS

But the Open Internet Coalition put out a release containing threat If You Think Taxes are Too Low,
exaggeration to make Dick Cheney blush:
Send in More and Leave Me
“Today’s DC Circuit decision . . . creates a dangerous situation, one
where the health and openness of broadband Internet is being held Alone [The Club for Growth]
hostage by the behavior of the major telco and cable providers.” APR 07, 2010 10:53A.M.

That’s right. It’s a hostage-taking when consumers and businesses—and This piece by Dana Milbank in today If you want to pay more, send it in
not government—hammer out the terms and conditions of Internet and leave the rest of us alone.
access. Inferentially, the organization representing Google, Facebook,
eBay, and Twitter believes that Internet users are too stupid and supine
to choose the Internet service they want.
FISCALLY CONSERVATIVE BLOG FEEDS
What these content companies are really after, of course, is government
support in their tug-of-war with the companies that transport Internet Stupak to Retire? [The Club for
content. It’s hard to know which produces the value of the Internet and
which should gain the lion’s share of the rewards. Let the market—not Growth]
lobbying—decide what reward content and transport deserve for their APR 07, 2010 10:24A.M.
roles in the Internet ecosystem.
Obama won this district with only 50% in 2008. s politics are skeptical
As I said of the Open Internet Coalition’s membership on a saltier, but anyone other than Stupak can hold that district in this political climate.
still relentlessly charming, day: “[T]hese companies are losing their way.
The leadership of these companies should fire their government relations
staffs, disband their contrived advocacy organization, and get back to
innovating and competing.”

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FISCALLY CONSERVATIVE BLOG FEEDS Postscript: In late-breaking news after the Reason article was written,
Gov. Robert McDonnell (R-VA) has issued a proclamation declaring
Can We Be Both Up from April “Confederate History Month.” As politicians often do with news
they’re not really publicizing, McDonnell posted the proclamation on his
Slavery and on the Road to website Friday, but no one noticed until Tuesday. The proclamation
urges Virginians to “understand the sacrifices of the Confederate leaders,
Serfdom? [Cato at Liberty] soldiers and citizens during the period of the Civil War” but does not
APR 07, 2010 08:32A.M. mention slavery. Virginia’s last Republican governor, in issuing a
proclamation remembering the Civil War, had at least acknowledged
By David Boaz reality: ”The practice of slavery was an affront to man’s natural dignity,
deprived African-Americans of their God given inalienable rights,
At Reason.com I argue that libertarians are wrong to look back at some degraded the human spirit and is abhorred and condemned by
point in the past for a golden age of liberty, and especially wrong to write Virginians . . . Had there been no slavery, there would have been no war.”
paeans to the gloriously free 19th century without mentioning the little Amazingly, he was criticized for that simple and obvious statement, as
matter of 19 percent of Americans being held in chains. was I when I quoted it a few years back.

For many libertarians, “the road to serfdom” is not just the


title of a great book but also the window through which they
see the world. We’re losing our freedom, year after year, they
think….

Has there ever been a golden age of liberty? No, and there
never will be. There will always be people who want to live
their lives in peace, and there will always be people who want
to exploit them or impose their own ideas on others. If we
look at the long term—from a past that includes despotism,
feudalism, absolutism, fascism, and communism—we’re
clearly better off. When we look at our own country’s
history—contrasting 2010 with 1776 or 1910 or 1950 or
whatever—the story is less clear. We suffer under a lot of
regulations and restrictions that our ancestors didn’t face.

But in 1776 black Americans were held in chattel slavery, and


married women had no legal existence except as agents of
their husbands. In 1910 and even 1950, blacks still suffered
under the legal bonds of Jim Crow—and we all faced
confiscatory tax rates throughout the postwar period.

I note that “I am particularly struck by libertarians and conservatives


who celebrate the freedom of early America, and deplore our decline
from those halcyon days, without bothering to mention the existence of
slavery,” and I name a couple of examples. When we talk about how free
Americans were in the 19th century, we should remember that
many millions of Americans look back on those years and say

“My ancestors didn’t have the right to worship in their own


way. My ancestors didn’t have the right to keep and bear
arms. My ancestors didn’t have the protection of centuries-
old legal procedures. My ancestors sure as heck didn’t have
the right to keep what they produced, or to pursue an
occupation of their choice, or to enter into mutually beneficial
trades. In fact, my ancestors didn’t even have the minimal
right of ‘the absence of physical constraint.’”

Read the whole thing.

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