Forbes has published a great article recently written by Brian S. Wesbury and Robert Stein. In this article, they make the case that our recent problems are not the result of capitalism run a muck, but rather the crowding out of the private sector by a government that is growing ever larger. I could not agree more.
I really like the point they make that the world's standard of living began to accelerate about the time when the US Constitution was established. This amazing achievement set forth a limited set of rules that unleashed the potential of free men.
So how far have we regressed? The Constitution is essentially just a few pages legislation. In these few pages, there is everything present to run a Federal Government. Now we have a bill that is in excess of 2000 pages, and all it deals with is Health Care. Do you think that might have something to do with fact that entrepreneurs have trouble navigating today?
Going back to the Forbes article, the comments amaze me. There are so many people out there that think bigger government will save the day. They give government the credit for a better life. One poster said most of the life expectancy gains come from better sewers, paid for by government. But you have to ask, where did government get the means to build those sewers? It came from a free society that produced wealth, that could in turn be taxed.
I don't dismiss that government can't provide necessary and valuable service to society. But I am confident that is does not need to spend $3 Trillion to provide that service. Government has to create the environment that inspires wealth creation. That's providing safety through a sufficiently strong military, establishing rule of law with a fair and just legal system, protecting private property rights with unwavering commitment, and keeping the confiscation of wealth low by keeping taxes low regardless of any person's accumulation, and protecting the free speech of all.
Government should be easy. Our elected officials have made it unreasonably complicated by imposing their will on the citizens of this country. Capitalism and small government have contributed more to the rising standard of living than any other force in the last 2000 years. Yet so many people want to sack capitalism and grow government? I doesn't make sense.
Showing posts with label Big Government. Show all posts
Showing posts with label Big Government. Show all posts
Sunday, October 10, 2010
Monday, November 17, 2008
Union of Socialist Americans (USA)?
From George Will today in the Washington Post:
The distribution of a trillion dollars by a political institution -- the federal government -- will be nonpolitical? How could it be? Either markets allocate resources, or government -- meaning politics -- allocates them. Now that distrust of markets is high, Americans are supposed to believe that the institution they trust least -- Congress -- will pony up $1 trillion and then passively recede, never putting its 10 thumbs, like a manic Jack Horner, into the pie? Surely Congress will direct the executive branch to show compassion for this, that and the other industry. And it will mandate "socially responsible" spending -- an infinitely elastic term -- by the favored companies.
The distribution of a trillion dollars by a political institution -- the federal government -- will be nonpolitical? How could it be? Either markets allocate resources, or government -- meaning politics -- allocates them. Now that distrust of markets is high, Americans are supposed to believe that the institution they trust least -- Congress -- will pony up $1 trillion and then passively recede, never putting its 10 thumbs, like a manic Jack Horner, into the pie? Surely Congress will direct the executive branch to show compassion for this, that and the other industry. And it will mandate "socially responsible" spending -- an infinitely elastic term -- by the favored companies.
McCain and Palin, plucky foes of spreading the wealth, must have known that such spreading is most of what Washington does. Here, the Constitution is an afterthought; the supreme law of the land is the principle of concentrated benefits and dispersed costs. Sugar import quotas cost the American people approximately $2 billion a year, but that sum is siphoned from 300 million consumers in small, hidden increments that are not noticed. The few thousand sugar producers on whom billions are thereby conferred do notice and are grateful to the government that bilks the many for the enrichment of the few.
Conservatives rightly think, or once did, that much, indeed most, government spreading of wealth is economically destructive and morally dubious -- destructive because, by directing capital to suboptimum uses, it slows wealth creation; morally dubious because the wealth being spread belongs to those who created it, not government. But if conservatives call all such spreading by government "socialism," that becomes a classification that no longer classifies: It includes almost everything, including the refundable tax credit on which McCain's health-care plan depended.
There entire column here.
Tuesday, August 19, 2008
What is Seen Vs What is Not Seen
Good blog entry today at Mises.org on how the State's spending on roads creates jobs. Here are a couple snippets:
State projects may create jobs, but the proper question is, do they create wealth? The state could easily reduce Michigan's unemployment to 0% by mandating that every unemployed citizen shovel dirt on some state project without pay. Employment alone is not a good indicator of economic success; overall wealth is. Even if state spending can "create jobs," creating jobs alone does nothing for our state's overall prosperity or standard of living.
Let's say the state spends $1 billion on road projects. It is easy to see all the laborers and machinery employed to complete the $1 billion worth of projects. It seems all those laborers and the manufacture of all that machinery signify new growth in the economy. But where did that $1 billion come from?
It came from taxpayers. What use would that $1 billion have been put to had it not been taken by the state and spent on roads?
One billion dollars divided by the state's population of 10 million people equals $100 per citizen. What would all of those citizens have done with an extra $100? Perhaps some would spend it at the movies, some at the hardware store, some on food, some on clothing, and some may have saved or invested the money. If every citizen had that money to save or spend, then every movie theatre, retailer, grocer, or investment portfolio would have received more revenue and produced more goods — and hired more people to make and sell them. How much more? $1 billion.
Too many times people, especially politicians, forget the money that government spends is the people's money. If they were not seeing a significant piece of the paycheck forfeited to the government, they could spend that surplus on other things (maybe even save some of it). What most of us see are the workers and new roads. What we fail to see is all the things that money could have been spent on to actually create wealth instead of just move it around.
State projects may create jobs, but the proper question is, do they create wealth? The state could easily reduce Michigan's unemployment to 0% by mandating that every unemployed citizen shovel dirt on some state project without pay. Employment alone is not a good indicator of economic success; overall wealth is. Even if state spending can "create jobs," creating jobs alone does nothing for our state's overall prosperity or standard of living.
Let's say the state spends $1 billion on road projects. It is easy to see all the laborers and machinery employed to complete the $1 billion worth of projects. It seems all those laborers and the manufacture of all that machinery signify new growth in the economy. But where did that $1 billion come from?
It came from taxpayers. What use would that $1 billion have been put to had it not been taken by the state and spent on roads?
One billion dollars divided by the state's population of 10 million people equals $100 per citizen. What would all of those citizens have done with an extra $100? Perhaps some would spend it at the movies, some at the hardware store, some on food, some on clothing, and some may have saved or invested the money. If every citizen had that money to save or spend, then every movie theatre, retailer, grocer, or investment portfolio would have received more revenue and produced more goods — and hired more people to make and sell them. How much more? $1 billion.
Too many times people, especially politicians, forget the money that government spends is the people's money. If they were not seeing a significant piece of the paycheck forfeited to the government, they could spend that surplus on other things (maybe even save some of it). What most of us see are the workers and new roads. What we fail to see is all the things that money could have been spent on to actually create wealth instead of just move it around.
Tuesday, July 8, 2008
When The Bills Come Due
There is a good editorial today in the NYT about New Jersey's struggle to pay off the $32B debt that reckless prior governors and legislators ran up in order to appease voters. Ultimately, the challenge is now one where the debt has grown so large that interest payments are becoming a problem to pay. In fact, the State of New Jersey now has to come up with over $2B annually to cover interest alone.
Fortunately Gov. Corzine has said enough is enough. He actually pushed a budget that is less this year than last year. Not a decrease in growth (as is normally a politician's way of saying he cut spending), but a real decrease in money for 2009 vs. 2008. The Governor's good work is going to produce a $650M windfall to pay down the debt. This sounds great, but it only reduces the cost of debt by $130M (interest). At this rate, New Jersey will never get out of debt.
This is certainly a lesson for other government entities, including the Federal Government. Eventually you take on so much debt that the debt service cost becomes very hard to pay. New Jersey has reached this point and the Feds are getting closer to this same point every year. In 2007, the Feds spent $430B on interest on the national debt. This was the third largest budget item in 2007.
In 2008, the national debt will exceed $10T! This is not what is promised in future benefits (that number is closer to $60T), but the actual federal debt, money that has already been borrowed. This figure represents over $33,000 in debt for every citizen in the country. For a family of four it is a debt over $133,000. Most families do not even have a mortgage this large, but they are being force to cover the interest expense on this debt.
It is time to get this spending under control before we mortgage the future of our children and put the Federal Government in the same position as New Jersey. Vote for fiscal restraint and smaller government and save our children's future.
Fortunately Gov. Corzine has said enough is enough. He actually pushed a budget that is less this year than last year. Not a decrease in growth (as is normally a politician's way of saying he cut spending), but a real decrease in money for 2009 vs. 2008. The Governor's good work is going to produce a $650M windfall to pay down the debt. This sounds great, but it only reduces the cost of debt by $130M (interest). At this rate, New Jersey will never get out of debt.
This is certainly a lesson for other government entities, including the Federal Government. Eventually you take on so much debt that the debt service cost becomes very hard to pay. New Jersey has reached this point and the Feds are getting closer to this same point every year. In 2007, the Feds spent $430B on interest on the national debt. This was the third largest budget item in 2007.
In 2008, the national debt will exceed $10T! This is not what is promised in future benefits (that number is closer to $60T), but the actual federal debt, money that has already been borrowed. This figure represents over $33,000 in debt for every citizen in the country. For a family of four it is a debt over $133,000. Most families do not even have a mortgage this large, but they are being force to cover the interest expense on this debt.
It is time to get this spending under control before we mortgage the future of our children and put the Federal Government in the same position as New Jersey. Vote for fiscal restraint and smaller government and save our children's future.
Tuesday, May 27, 2008
Monday, May 19, 2008
The Disaster Our Politicians Created.
According to the USA Today article this morning, the US now has obligations in excess of $57.3 Trillion, up $2.5 Trillion from last year. This is $531,000 for every man, woman and child in the USA. These obligations include Social Security, Medicare, Veterans benefits, Government pensions, and government debt.
This is not a Republican or Democrat issue. Both parties are equally culpable in this disaster. Unfortunately it might be too late to do anything about it. One thing is for certain though, the payments people were expecting in the future will have to be cut if we are to be saved. This means lower social security payments, less care with Medicare, cuts in Veterans programs, and lower government pensions. Congress will have to cap the budget and spend much more frugally if future generations are to enjoy prosperity. There is absolutely no way we can tax future generations enough to cover this short fall. We should all be very alarmed and hold our existing politicians accountable.
Bill for taxpayers swells by billions
This is not a Republican or Democrat issue. Both parties are equally culpable in this disaster. Unfortunately it might be too late to do anything about it. One thing is for certain though, the payments people were expecting in the future will have to be cut if we are to be saved. This means lower social security payments, less care with Medicare, cuts in Veterans programs, and lower government pensions. Congress will have to cap the budget and spend much more frugally if future generations are to enjoy prosperity. There is absolutely no way we can tax future generations enough to cover this short fall. We should all be very alarmed and hold our existing politicians accountable.
Bill for taxpayers swells by billions
Thursday, May 15, 2008
House Bill H.R. 2419 Fail Americans
Here is a brief outline of the short comings from the new 2008 Farm Bill that just passed the House and is now on its way to the Senate:
This legislation is a joke and it hurts not only Americans, but people all over the world. I am actually pleasantly surprised that Rep. Tiahart voted AGAINST this bill. However, I feel less confident about my two Senators. So here is my letter to the two Kansas Senators:
Dear Senator:
I am writing today to ask that you take some political risk and reject the new Farm Bill. This Bill has less to do with Agriculture and more to do with special interest and wasteful big government.
Farm income will be at an all-time high in 2008. There is absolutely no reason for over $20B of taxpayer money to fund farming families that have incomes in excess of $1.5M/year. It is tough to explain how someone qualifies for government aid when their income is 150 times the poverty level in the US.
This Bill also drives the cost of food higher for all people as there are incentives to produce less food. There are provisions which drive the price of some commodities, like sugar, to levels that are 2-3 times the world price. While this is good for a few families in Florida that actually grow and process sugar, it is bad for consumers who have to pay the price in lost jobs (think the candy industry) and higher prices for basic food staples.
The Farm Bill has become a toxic mess of legislation. This is politics at its worst and the effects on the economy go well beyond the $20B price tag every year. Please stop this senseless piece of legislation and support President Bush.
Respectfully yours,
Feel free to copy it and send it on to your Senators.
1. It provides little improvement to means testing or payment limits.
Married couples with an adjusted gross income of $1.5 million will still receive
subsidies. The payment limit level of $360,000 was not reduced.
2. It continues to dole out $5.2 billion annually in direct payments to individuals
(many of whom are no longer farming) without any regard to prices or income. These direct payments, 60 percent of which go to the wealthiest 10 percent of recipients, were created in 1996 and were supposed to phase out by 2002.
3. It creates a new “permanent disaster fund” worth $3.8 billion - a disaster for taxpayers, most farmers, and the environment. This will encourage planting on disaster-prone land, plus most payments will go to the same producers already receiving the bulk of the direct payments.
4. It increases the support price for sugar, reserves 85 percent of the U.S. market
for domestic producers and creates a new sugar ethanol program. The Congressional Budget Office estimates that this new program will cost taxpayers $1.3 billion over ten years, although the real cost is likely to exceed $4 billion. The consumer costs of the sugar program will exceed $2 billion annually.
5. It adds earmarks such as $5 million for grants to broadcasting systems inserted by Sen. Kent Conrad (D-N.D.), $3 million for Delta Health Alliance Grants inserted by Sen. Thad Cochran (R-Miss.), and $1 million for the National Sheep and Goat Industry Improvement Center inserted by Sen. Max Baucus (D-Mont.).
This legislation is a joke and it hurts not only Americans, but people all over the world. I am actually pleasantly surprised that Rep. Tiahart voted AGAINST this bill. However, I feel less confident about my two Senators. So here is my letter to the two Kansas Senators:
Dear Senator:
I am writing today to ask that you take some political risk and reject the new Farm Bill. This Bill has less to do with Agriculture and more to do with special interest and wasteful big government.
Farm income will be at an all-time high in 2008. There is absolutely no reason for over $20B of taxpayer money to fund farming families that have incomes in excess of $1.5M/year. It is tough to explain how someone qualifies for government aid when their income is 150 times the poverty level in the US.
This Bill also drives the cost of food higher for all people as there are incentives to produce less food. There are provisions which drive the price of some commodities, like sugar, to levels that are 2-3 times the world price. While this is good for a few families in Florida that actually grow and process sugar, it is bad for consumers who have to pay the price in lost jobs (think the candy industry) and higher prices for basic food staples.
The Farm Bill has become a toxic mess of legislation. This is politics at its worst and the effects on the economy go well beyond the $20B price tag every year. Please stop this senseless piece of legislation and support President Bush.
Respectfully yours,
Feel free to copy it and send it on to your Senators.
Sunday, May 11, 2008
If you thought gas was expensive....
Monday the price of stamps is again on the rise. While this may not sound too bad, just compare the way the price of stamps has moved compared to gas. While the government might want to pursue the BIG OIL companies and claim anti-trust, maybe they should look into a government sponsored monopoly called the US Postal Service. If the BIG OIL companies treated customers like the USPS (for the same prices), then there really would be outrage. Instead, the BIG OIL companies have always found ways to bring more oil and thus brought Americans cheap fuel for their transportation needs.
Thursday, May 1, 2008
How the Government Will Solve the Housing Crisis
With the Fed action yesterday of drooping the Fed Funds Rate 25 basis points, expect inflation to creep up. Does the government want this? I believe it does.
If we get inflation flamed up, it will cause the price of everything to rise, including housing. After all, it is the fall in housing prices that caused this recent "crisis" in the first place. Who cares that is was the Fed's cheap money policies that created the false boom in housing.
If people begin to realize that their cash is losing value every day, they will begin to put it in hard assets like real estate. This will support housing prices (and borrowing) and get them rising again. Appreciate will keep people from walking on their mortgages and get speculators back in the market to buy up the excess units. Unfortunately this will create false boom II.
During this entire affair, the savings of everyday Americans will now be devalued. This is most certainly a tax, but most people will never realize they are paying it.
If we get inflation flamed up, it will cause the price of everything to rise, including housing. After all, it is the fall in housing prices that caused this recent "crisis" in the first place. Who cares that is was the Fed's cheap money policies that created the false boom in housing.
If people begin to realize that their cash is losing value every day, they will begin to put it in hard assets like real estate. This will support housing prices (and borrowing) and get them rising again. Appreciate will keep people from walking on their mortgages and get speculators back in the market to buy up the excess units. Unfortunately this will create false boom II.
During this entire affair, the savings of everyday Americans will now be devalued. This is most certainly a tax, but most people will never realize they are paying it.
Sunday, April 27, 2008
When Government Gets Big, This Crap Happens.
When government gets too big, this happens....
Bureaucrats look for things to do to justify what they do. It usually means trampling on individual liberties. Do we really want these people in charge of our health care?
Bureaucrats look for things to do to justify what they do. It usually means trampling on individual liberties. Do we really want these people in charge of our health care?
Sometimes Politicians Fail to Look at History
If the two remaining Democrats happen to get elected and push their economic policies on the Citizens of America, here is what will happen:
1. More taxes. Everyone will pay more, but the top 10% of income tax payers will pay an even greater portion of the total.
2. More protectionism. This means more tariffs and subsidies for industries that are not as competitive as they need to be.
3. Bigger Government. Government, the same function that makes for long lines at the airport and spends $600 for a hammer, will now be in charge of your health care and almost all other parts of your life.
4. Control of gas prices. Most people are too young to remember the early 1970's, but get ready for long lines at the gas pump.
Now this all sounds good on the surface. However, it has been tried before and it failed. The time was 1929-1936. Hoover passed to Smoot-Hawley tariffs that made imports more expensive (can you say inflation), and then other countries retaliated so we did not export anything either. This just hurt everyone and brought economies around the world to a halt.
FDR increased the size of government dramatically. Spending went from 3% of GDP to 13% before the war. The Federal Government has been growing ever since and is now over 40% of GDP. Bigger government results in a less productive economy where consumers get to decide how to spend.
So while the rhetoric might sound great on the surface, these ideas have all been tried before and resulted in prolonging the greatest economic disaster in the history of modern man. We need smaller government that spend less, a lot less.
1. More taxes. Everyone will pay more, but the top 10% of income tax payers will pay an even greater portion of the total.
2. More protectionism. This means more tariffs and subsidies for industries that are not as competitive as they need to be.
3. Bigger Government. Government, the same function that makes for long lines at the airport and spends $600 for a hammer, will now be in charge of your health care and almost all other parts of your life.
4. Control of gas prices. Most people are too young to remember the early 1970's, but get ready for long lines at the gas pump.
Now this all sounds good on the surface. However, it has been tried before and it failed. The time was 1929-1936. Hoover passed to Smoot-Hawley tariffs that made imports more expensive (can you say inflation), and then other countries retaliated so we did not export anything either. This just hurt everyone and brought economies around the world to a halt.
FDR increased the size of government dramatically. Spending went from 3% of GDP to 13% before the war. The Federal Government has been growing ever since and is now over 40% of GDP. Bigger government results in a less productive economy where consumers get to decide how to spend.
So while the rhetoric might sound great on the surface, these ideas have all been tried before and resulted in prolonging the greatest economic disaster in the history of modern man. We need smaller government that spend less, a lot less.
Tuesday, April 22, 2008
The Cost of College
Thomas Sowell does a great job of explaining the issues of college costs in a new three part column. Of course the very entity that claims to help is actually most of the problem, the Federal Government.
Part I
Part II
Part III
The Government is getting in the way of market signals and distorting prices. Everything that Sowell explains in Basic Economics is essentially in chaos when it comes to college education. Even college education is about choices. There are choices that need to be made when it comes to education and the resources to proved that education are still scarce. However, the government tries to eliminate the effects of scarcity by subsidizing college education. This just costs all of us more tax dollars and creates tremendous waste.
Part I
Part II
Part III
The Government is getting in the way of market signals and distorting prices. Everything that Sowell explains in Basic Economics is essentially in chaos when it comes to college education. Even college education is about choices. There are choices that need to be made when it comes to education and the resources to proved that education are still scarce. However, the government tries to eliminate the effects of scarcity by subsidizing college education. This just costs all of us more tax dollars and creates tremendous waste.
Sunday, April 13, 2008
The Entitlement Culture
Americans are moving closer and closer to a socialist society with our compulsive need for government to get involved in our lives. Government is now involved in our daily lives through entitlements and subsidies in retirement, education, health, housing, food supply and energy to name just a few.
I doubt the founders had this in mind when they were writing the Constitution. George Will makes some good commentary with his article today in Townhall.com.
Maybe we could take some lessons from New Zealand. Here is a great summary of what has happened in New Zealand from Maurice P. McTigue. Wouldn't it be great if we could eliminate 66% of the Federal Government and get more employment, better markets, lower taxes and better education? If we are not careful the US will far even farther in the world rankings of economic freedom. The world is getting better and learning what truly makes society more prosperous. The US on the other hand, is moving more and more toward a society of big government.
I doubt the founders had this in mind when they were writing the Constitution. George Will makes some good commentary with his article today in Townhall.com.
Maybe we could take some lessons from New Zealand. Here is a great summary of what has happened in New Zealand from Maurice P. McTigue. Wouldn't it be great if we could eliminate 66% of the Federal Government and get more employment, better markets, lower taxes and better education? If we are not careful the US will far even farther in the world rankings of economic freedom. The world is getting better and learning what truly makes society more prosperous. The US on the other hand, is moving more and more toward a society of big government.
Sunday, March 23, 2008
Government to the Rescue Again?
With all the problems on Wall Street these days, it was only a matter of time before big government advocates (AKA Democrats) started clamoring for more and better oversight. After all, the 4 agencies the Feds have already created to manage mortgages were not enough to prevent all the problems. So more agencies and more regulation will make it better?
No matter how much regulation you put over the financial system, the government can never stop all market fluctuation and downturns. The Soviets could not even do that with a communist government. More regulation and government bureaucracy will just make doing business more expensive.
The truly wonderful thing about capitalism free of government interference is that it kills off the wasteful producers. Companies like Bear Stearns should not be allowed to survive as are all the other business that can not be profitable. Profit is what shows society your firm is benefiting people. It means that businesses are taking inputs (raw materials, labor, etc.) and turning those inputs into consumable products that people value more. On the other hand, firms losing money show they are really wasting resource by taking inputs and turning them into products that are less valuable to society.
More government will not make things better, just more expensive and time consuming. We have to understand that there will be turmoil some times as markets correct. The patience to wait this turmoil out is imperative. But as usual, politicians show no propensity for patience.
Washington Split Over More Regulation- NY Times
No matter how much regulation you put over the financial system, the government can never stop all market fluctuation and downturns. The Soviets could not even do that with a communist government. More regulation and government bureaucracy will just make doing business more expensive.
The truly wonderful thing about capitalism free of government interference is that it kills off the wasteful producers. Companies like Bear Stearns should not be allowed to survive as are all the other business that can not be profitable. Profit is what shows society your firm is benefiting people. It means that businesses are taking inputs (raw materials, labor, etc.) and turning those inputs into consumable products that people value more. On the other hand, firms losing money show they are really wasting resource by taking inputs and turning them into products that are less valuable to society.
More government will not make things better, just more expensive and time consuming. We have to understand that there will be turmoil some times as markets correct. The patience to wait this turmoil out is imperative. But as usual, politicians show no propensity for patience.
Washington Split Over More Regulation- NY Times
Tuesday, March 11, 2008
Spitzer Is Not the Anomaly
I am sure at one point in their careers, politicians really did believe they were in office to help people. However, over time most begin to gorge themselves on the power they acquire. This power then corrupts them to the point they begin to feel they are above the law. Case in point, Elliot Spitzer.
Now the Governor (or Love Governor) is/was no doubt at the top of his game. He had prosecuted some of the biggest names on Wall Street and found his way to Albany and the Governor's office. The future prospects were bright for Spitzer and there was even talk of a future in DC. Then the quick 2-day fall from grace.
Now this sounds like an isolated, sad tragedy. Unfortunately it is not. It is all to common and has already affected at least one US President (Clinton #1) and maybe even more (JFK to name just one more). Power corrupts to the point that people no longer act in the interest of their constituency, but rather their own self-interest. They see themselves as all powerful and knowing. So much so that they believe they are the ones to best choose how the rest of use get to live our lives even if that means hypocrisy.
This is why the Founders wanted to limit the power and influence of the Federal Government. Those limits have been exceeded so many times that people have failed to realize just how much control the government has on everything we do. In short Americans are losing their liberty bit by bit to people that cannot hold themselves to the moral character they are forcing on everyone else.
So the question that must be answered then are politicians really the people you want in charge of health care, education, public safety and all the other areas where government gets involved in our daily lives? Remember there is a little bit of Elliot in all politicians.
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