Tag Archives: Government

Risk, Reward, and Drug Wars

Posted by Tim on

Did you ever hear the story of some kid who traveled to Singapore, sprayed some graffiti, and was then arrested and caned for it? That’s right. Graffiti can get you a caneing in Singapore. And littering can get you a $1,000 fine. But you know what? Their streets are clean, and their buildings don’t have graffiti all over them. They also don’t have drug problems. Why? Because importing drugs into the country can land the offender on death row. Drug dealers get the death penalty.

deaAt the complete other end of the spectrum (at least on the drug issue) is the Netherlands. Unlike almost all other countries in Europe, and even the world, the Netherlands has legalized drug use. As a result, drug use has decreased, as has related crime. Roughly 10% of Americans have used marijuana in the last year, while only 5% of Dutch have. Heroine use is about 1/3 as prevalent in the Netherlands as it is in America. There are also 1/7 as many prisoners (per 100,000), and 1/5 as many homicides (per 100,000).

How can both nations have low drug use rates, both less than America, but have such wildly different policies? It is because of the risk/reward ratio. Whatever the action, to reduce it, the risk must be great OR the reward must be little. In Singapore, the risk of importing drugs is as high as it can be. No one would be stupid enough to try to import drugs; the risk is too great.

The Netherlands, by legalizing drugs, have made it far less profitable. Competition has brought prices down, and drug-gang monopolies don’t exist. By legalizing drugs, the reward has been diminished. The result is not only that there is less crime, but also that there is less drug use.

In America, on the other hand, our risk/reward ratio is completely reversed. Drugs are illegal, so dealers can make a lot of money selling them. Its a profitable business because drug cartels have a monopoly on the supply of drugs. Our criminal justice system is also pretty lax. Many drug dealers get multiple slaps on the wrist before they are ever sent to prison. And once they get to prison, chances are that they won’t serve their full time and will get out early on probation.

The way to fix this is obvious. To get rid of drug crime we either have to lower the reward by legalizing drugs, or increase the risk by having a stricter justice system. America has done neither, and the results are painfully clear. Considering the fact that we can’t manage to close our borders, and can’t even keep drugs out of our prisons, the only option is the pro-liberty option of legalizing the use and sale of drugs. This would end the cartel monopoly on drugs, increase competition, decrease profitability, and decrease the reward.

A One Party System

Posted by Tim on

The tyranny of political correctness is perhaps one of the biggest contributing factors to the lack of real progress for anything being done in Washington with regards to touchy issues. Not only are politicians afraid to use language that would actually describe our current situation, but by doing so they deprive low information voters (a Limbaugh term, I know) of the knowledge of just how bad things are. That same political correctness is what prevents the American people from calling our their government for what they really are – frauds.

Just recently, it has been reported that Congress, both democrats and republicans, have been working on getting themselves exempted from the rules of Obamacare. Not just members of Congress themselves, but also high ranking officials, as well as Congressional assistants. While these actions seem to prove that not only were opponents of the bill right from the beginning, that Obamacare is a train wreck, and that even democrat politicians who voted for it now agree; these actions should leave you with a bitter taste in your mouth.

When the government exempts itself from a law that most Americans still hate (and that number is growing), it says to the American people, “There are different laws for you than there are for us.” These actions show that politicians are not looking out for you, your tax dollar, or the economy. Their main objective is keeping themselves safe, regardless of whether it is morally right, or best for the country. The politicians serving in Washington DC today are not statesmen.

sowellEconomist Thomas Sowell once said, “No one will really understand politics until they understand that politicians are not trying to solve our problems. They are trying to solve their own problems – of which getting elected and re-elected are number one and number two. Whatever is number three is far behind.” It is time to recognize this and throw crummy politicians our of office, and especially out of powerful positions – Speaker of the House, for instance.

While John Boehner has been trying to exempt himself from Obamacare, he still signed a budget that provided funding for it. The way to destroy Obamacare is simple – Congress has the power to defund it. John Boehner, however, is a spineless wimp, who is not concerned with doing that. He is the classic example of a Washington establishment politician, looking out for his own re-election, making sure his friends get what they want, screwing the country to get what he wants. Who could blame him. The Speaker’s salary is $223,500 a year.

I’m not into class warfare, but I feel like there is something truly wrong when a Congressman makes $174,000 a year, but the median income is $52,000, meanwhile there are completely different sets of rules for government and private citizens. What is illegal for one is perfectly fine for the other. Take for instance, pollution. While democrats have been screaming about the negative effects of an iron mine in northern Wisconsin, recently the city of Milwaukee dumped 2.1 billion gallons of untreated sewage into Lake Michigan. That is more than the BP oil spill! One thing, pollution, would be illegal for a citizen to do (yes, you can get a ticket for urinating in a lake), but its perfectly fine for the government to do. Double standard?

I really wish people would take the time to read and understand the Constitution. The Constitution was set in place for be rules for the government, not rules for the people. The Bill of Rights said to the government, “These are things you can’t touch!”. The Constitition laid out the jobs for various parts of government and said, “This is you job! Do it!”. But every year government ignores the rules we have for them, and what do we do about it? While the Congressional approval rating is at 10%, America re-elects 90% of Congress.

Politcal correctness and the insider rules for DC have crippled the voice of the American people. “Never attack your own party.” What is that garbage? No matter the party, if a politician does something wrong, we need to call them out for it. And if we need to replace them, we shouldn’t be afraid to do so. If that means removing John Boehner from office, so be it. And yes – if that means removing Paul Ryan from office, so be it. I hate to break it to you Wisconsinites, but Paul Ryan is a big government, big tax, big spending fraud. Look at his voting record – it tells a very different story than his rhetoric.

The Republican party does not stand in the way of government tyranny. Either the party must drastically change or we are left with a de facto one party system. The American people have two options – vote for more government, or vote for more government. I for one, will vote to change the Republican party, eliminating RINOs who raise taxes and grow their own power, and replacing them with people who actually share the values I have as a voter; smaller government, more liberty, less spending, lower taxes. And if my options are limited to either more government or more government, then I’ll either sit out or…. (wait for it…) go third party.

Is There Hope For Conservatism?

Posted by Tim on

I love Thomas Sowell’s story about how he went from being a devout Marxist to a conservative. It didn’t happen during his economic studies, even after studying under Milton Friedman and George Stigler at the University of Chicago. Rather, it happened years later when Sowell landed a job in government and he realized that government just wasn’t capable of doing all of the things he wanted it to do. The level of incompetence, the amount of red tape, the incredible waste of tax payer dollars; all of this adds up and it just makes you shake your head and really think twice about letting the government get anywhere near your healthcare.

C33301-23But Sowell isn’t alone. There are countless great conservative, libertarian, and classical liberal minds that have gone from one end of the spectrum to the other – John Locke, Friedrich Hayek, and (if I’m not mistaken) even Adam Smith, just to name a few. The transformation these men went through can be inspirational. A man who once thought the only way to achieve prosperity was through authoritarian rule (Locke) is now considered the father of classical liberalism.

Sowell’s story might offer a clue on how to get the message across to those who deem themselves liberal and consistently vote democrat, but occasionally, even if only by accident, agree with conservatives that government is just plain screwed up. If there was only a way to make them realize it! If we could just have them work in government for a month, maybe then they’d realize how messed up it is.

In times past, it was best selling books like Ayn Rand’s Atlas Shrugged that got young people interested in the idea of liberty. Most recently it has been Texas Representative and Presidential Candidate, Ron Paul, who struck a chord with young voters, starting the “Ron Paul Revolution”. Even Milton Friedman’s Free to Choose 10 episode special that ran on PBS in 1980 gave uninformed Americans a basic overview of how the free market works.

Are there new up and coming people that can deliver the message of limited government, individual sovereignty, property rights, and personal liberty? As technology changes, so does the way people accept information. Long interview shows like William Buckley’s Firing Line, just aren’t what its about any more. Unfortunately, the yelling heads on Hannity or O’Reilly are what passes for conservative media. (Not that I have anything personal against Sean Hannity, but he’s no William Buckley or Russel Kirk. Just saying.)

There are other media outlets that are available. Talk radio, often seen as a safe-haven for conservative hosts like Rush Limbaugh and Michael Savage, is a growing medium for information. At a time when FM stations are rebranding, going online, or closing all together, AM radio, “news & talk”, is doing perfectly fine. This is simply because there is a demand for the product. People want to hear what Rush Limbaugh thinks. Not only is talk radio informative and entertaining, but it also offers listeners a chance for their own views and beliefs to be validated. “There are other people out there who feel the same way I do!”

Just as democrats have been trotting out celebrities to make their cause, conservatives should be doing the same. Penn Jillette (of Penn & Teller) is an outspoken libertarian. Other libertarian celebrities include Howard Stern, Drew Carrey, and Denis Leary. Not exactly what young people would think of when they hear “republican”. But this is also part of the problem. Too many people associate the GOP with Bush, McCain, and Romney. (It’s been said before – W Bush has done an enormous amount of harm to the republican party with his wild deficit spending. There’s no excuse for it.) It is up to conservatives to spread the word that the Republican party is the party of small government, lower taxes, and more freedom. This is a message the resonates.

Atlas Shrugged was turned into a 2 part movie. Ron Paul still sells best selling books. Even NBC’s Parks and Recreation pokes fun at the failures of government with the libertarian character, Ron Swanson. Is there hope for the future of liberty minded politics? One can only hope. On one hand, nothing is inevitable until it happens. Any law passed can be repealed. On the other hand, there is such a thing as a point of no return. Some already think we are past that point (Sowell, for instance), while others hold a more optimistic view.

I tend to think that an out of control central banking system, a fiat currency, a growing dependency class, schools ditching American history for “social studies”, and trillion dollar deficits will all lead us down a bad road. Even if things turn around, it will be painful, and it is at those times when politicians vote for the path of least resistance and kick the can down the road. If Americans continue to put their faith in politicians and government, there is no hope.

Political Lessons From 1 Samuel

Posted by Tim on

religion-politicsThey say that you should never discuss politics or religion in polite company. I’m not sure who said this, or exactly what they meant by it. (I know there’s an old Peanuts special that said something along those lines, though. The Great Pumpkin, I believe it was.) Why even have religion or politics if not to discuss? I love learning about politics and religion, but spreading the message is the true joy in these areas. I know when to hold my tongue and when to let loose, and it can occur in polite or less-than-polite company.

I’ll go ahead and break that rule, and also break another – don’t mix religion and politics. That would make sense if the two weren’t already amazingly intertwined. Although I’m no expert on theology, I do try to read the Bible regularly, and I do truly believe that the answers to all of life’s most difficult questions can be found in the Good Book. Not just what is right and wrong, but advice on the best ways to deal with people, and how to address different situations. Perhaps the biggest thing I’ve taken away from the Bible is that there is always more to learn, and some things will forever remain a mystery. There is a plan, but much of this plan is given to us on a “need-to-know” basis.

One pillar of conservatism that separates it from liberalism is how it views government. While liberals tend to welcome government, anticipating relief from problems of the world of scarcity in which we live, conservatives believe otherwise. Our view of the world is the tragic view – there are no solutions; only trade offs. Because no solutions exist, giving anyone power is a bad idea. As Lord Acton said over 100 years ago, “Power tends to corrupt, and absolute power corrupts absolutely.”

But warnings against government power have been around for ages, long before Acton spoke his famous line. Around 1100 BC, Samuel was judge over Israel, but when Samuel retires the people do not want another judge. Instead, they want a King – a ruler.

So all the elders of Israel gathered together and came to Samuel at Ramah. They said to him, “You are old, and your sons do not follow your ways; now appoint a king to lead us, such as all the other nations have.” (1 Samuel 8:4)

Samuel came to God with the request of Israel – to have a king. God, although unhappy with the request, granted it. But it came with a warning.

Now listen to them; but warn them solemnly and let them know what the king who will reign over them will claim as his rights. (1 Samuel 8:9)

Samuel told all the words of the Lord to the people who were asking him for a king. He said, “This is what the king who will reign over you will claim as his rights: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots. He will take your daughters to be perfumers and cooks and bakers. He will take the best of your fields and vineyards and olive groves and give them to his attendants. He will take a tenth of your grain and of your vintage and give it to his officials and attendants. Your male and female servants and the best of your cattle and donkeys he will take for his own use. He will take a tenth of your flocks, and you yourselves will become his slaves.” (1 Samuel 8:10-17)

These verses are a direct parallel to what happens in tyrannical countries around the world. Kings take children and use them for war. Notice that these children are put on chariots in front of the king’s chariots. The king doesn’t fight the battle – the soldiers do. Presidents and Congress don’t fight wars; instead they send young Americans around the world.

The king will take the fruits of your labor, the best of your fields, vineyards, and groves, and give them to his attendants. Sound like crony-capitalism at all? Sound like a president taxing some, and then giving it others – perhaps his own friends?

This post wouldn’t be complete without the most important line regarding kings.

But when they said, “Give us a king to lead us,” this displeased Samuel; so he prayed to the Lord. And the Lord told him: “Listen to all that the people are saying to you; it is not you they have rejected, but they have rejected me as their king. (1 Samuel 8:6-7)

The reason people always want a king, a dictator, a leader, a ruler, is because they are lacking a king in another part of their lives. People need something to have faith in, something to tell them that everything will be okay, something to save them. When there is a lack of God, people turn to something else – government. As Americans reject God, they will cry out for a King.

Revisiting the Minimum Wage

Posted by Tim on

In case you couldn’t stomach watching this year’s State of the Union address by President Obama, let it be known that you didn’t miss much. The speech laid out some new proposals for new government programs such as nationalized pre-school, and sounded a lot like a campaign speech. Who would have guessed it? This guy has been campaigning for five years! Leading, on the other hand, is another issue entirely. In fact, near the end of the SOTU address, the President mentioned that he’ll soon be starting on his next tour to drum up public support for his new agenda.

obamaOne proposal he made has people talking once again about the minimum wage. Obama urged Congress to officially raise the federal minimum wage to $9/hour. As I’ve discussed before, the minimum wage law is really only a political tool. It does nothing to help, and much to hurt, those who work at the minimum wage. Before we get into why the law hurts the poor, perhaps we should revisit why the law exists in the first place.

The first “minimum wage” was passed during the Great Depression. Although it was touted by politicians as a way to help the poor, the real advocates behind the program were union bosses. Not just union bosses, but racist union bosses, who wished to keep blacks from undercutting their own workers. Here’s how it works -

  • An employer has a preference for white employees, but in the end will employ whoever works for the cheapest.
  • Black workers worked for the cheapest, and therefore, were hired over white union workers.
  • The minimum wage law made it illegal to hire a black worker for less than a white one.
  • Upon realizing that all workers cost the same, employers were allowed to go with their preferences, and hire white union workers.

The origins of the minimum wage law are as simple as that – unions looking to hurt their competition. But the law is always passed as if it was meant to help the poor. The problem is that wage laws are just another version of a price control. As supply and demand change, prices change accordingly. This allows the resource, whether it is wheat, housing, or labor, to be use most efficiently, and avoid shortages and surpluses – “economic equilibrium”. When supply and demand determine the price, it is referred to as the “competitive price”.

A price control sets the price either above or below the competitive price. Now, the competitive price doesn’t change; there is just a difference between the set price, and the competitive price. If the government price of a resource is set above the competitive price, this results in a surplus. If it is set below the competitive price, the result is a shortage. In the case of minimum wage laws, the price of labor is artificially raised, and therefore creates a surplus of labor. What do we call a surplus of labor? Unemployment.

The raising of the minimum wage will see an increase in unemployment. (Let’s not forget, that the real minimum wage is $0/hour.) It seems that people making these laws have little experience making budgets as well. (Congress hasn’t passed a budget in four years!) Businesses, on the other hand, need to make budgets, or they go out of business. Because wages are merely another cost to a business, they will respond accordingly in their budgets.

Let’s say a restaurant owner has a labor budget of $30/hour. With that $30 he is able to hire 4 workers, each at $7.25/hour. When the minimum wage is increased to $9/hour, and the owner is now over budget, and must make some adjustments. No longer will he employ 4 workers; instead he will employ 3, and just work them a little harder. The wages for 3 of those workers were increased, but one of those workers is out of a job.

The people who will be laid off as a result of the minimum wage laws are not people making $20/hour. The people who are laid off are people who worked for the prior minimum wage, but whose labor is not worth the new minimum wage. These are usually people with little education, little experience, and few options in the job market. The poor, the undereducated, the unexperienced – these are the people who have effectively been priced out of a job. Instead of working for a year, gaining experience and skills, and getting a raise later, they are now denied the opportunity to even acquire experience and skills.

Democrats and proponents of raising the minimum wage will speak of a “living wage” and of what people “deserve”. The problem with these kinds of phrases is that a “living wage” is different for different people. A “living wage” for me may be more than a “living wage” for someone else. Rent prices change, food prices change, gas prices change. The word “deserve” is equally deceptive. I think I deserve $100/hour – that doesn’t mean that my boss will pay me that. More than likely he’d laugh in my face if I demanded $100/hour. The market decides what people “deserve”, and this has no relation to what an arbitrary authority deems is a “living wage”.

At a time when unemployment is still high, (7.9% in January. Real unemployment is somewhere around 15%.) and at a time when our economy actually shrank last quarter, raising the minimum wage is a way to hurt the poor, and push people onto welfare, unemployment, and other government programs. There they will reside, and the gap between “rich” and “poor” will grow wider. Ever wonder why the “middle-class is disappearing”. Think big – think government.

The Gun Battle is Over

Posted by Tim on

Feinstein came out with her assault weapons ban this week. There isn’t a whole lot to go over (since I’ve already written about the meat of it) but I do find it somewhat interesting that people are already doubting whether the bill will even be able to pass the Senate. Even after Obama’s bland speech regarding “gun violence”, during which he urged Congress to ban assault weapons and high capacity magazines, there are still democrat senators that are feeling uneasy about the whole thing.

What’s the reason? Simply put – we are. Politicians know that across the country, people are very upset about potential bans on their weapons. Somewhere around 4 million AR-15s are in the hands of legal owners, hurting no one. For a government official to suddenly ban these – that’ll lose at least 4 million votes. The issue hits home with a lot of responsible law abiding gun owners who feel that they are being attacked for doing nothing wrong. (Click HERE to see a list of specific guns to be banned.)

feinsteinBecause these Americans have something at stake (their guns) they tend to be more informed about the issue, and they tend to be more involved with the issue. The NRA, America’s largest gun-rights organization, has gained hundreds of thousands of members in the last couple of months. These members are both young and old, rich and poor, black and white; but they all have one thing in common – the value they place in the 2nd amendment. Just last weekend, pro-gun rallies were held at every state capital in the US. If this doesn’t send a signal to politicians, nothing will.

But surprisingly, these rallies even sent a signal to democrats, who, at least in recent history, have a habit of not listening to their constituents. Because of this, at least 6 democrat Senators seem unwilling to vote for Feinstein’s AWB. 6 down doesn’t leave enough room for a majority vote, let alone a super-majority which could over-ride a filibuster from someone like Kentucky Senator Rand Paul. If the bill doesn’t get through the Senate, the bill won’t get to the House, and won’t be signed into law by el Presidente. Even if the bill were to pass the Senate, it would be “dead on arrival” in the House.

The fact that it is unlikely to pass the Senate is a big sign that the America people just aren’t against “assault weapons”. People are informed, and they know that assault weapons are no more dangerous than other firearms. They know that the problem is not with guns, but with criminals. They understand why our founders gave us the 2nd amendment; to fight a tyrannical government. And they see through the cheesy propaganda put forth by Feinstein and her goon-squad. Feinstein’s AWB isn’t popular, and that is the reason it won’t pass.

The life of politicians can be long, and many of those currently in office remember the 1994 elections. Earlier that year, President Clinton signed the ’94 assault weapons ban (put forth by – you guessed it – Dianne Feinstein). The result was a massive surge in NRA memberships, a surge in gun sales, and a landslide election for Republicans in November. Politicians are not about to risk their careers over the bill. They saw what happened last time.

I was at a gun store earlier this week, and I must say, that I was happy to see so few people in there. This is probably in part because the store had sold out of almost everything on the ban list, but it is also because people are settling down. For a couple months things were crazy. Packed parking lots, long lines, and shortages of guns and ammo. If the stores are seeing sales drop off, that means that people aren’t worried about the ban. The media has started to talk about other things, the story has moved on. The war isn’t over (Feinstein will be back eventually), but it seems this battle is.

This has been a true testament to the power of the American people. The free press has allowed us to hear the news, free speech has allowed us to say what we think, and the right to assemble has allowed us to take our message to the doorsteps of politicians. Pat yourselves on the back. Good job.

But the real reasoning behind the AWB wasn’t ever about guns. It was about distracting the American people from the debt ceiling debate. Republicans have already vowed NOT to make the ceiling an issue (at least Boehner has), which means that America’s debt will continue to rise. Last time we did this our credit rating was downgraded. It wasn’t downgraded because we fought over the ceiling, but rather because we showed no interest in finding solutions as to how to pay all this money back. So far, Washington has done the same thing again, and as we tee-up another debt ceiling increase, a credit rating downgrade may be right around the corner.

Political Distractions

Posted by Tim on

Bronco Bama’s speech on gun control is over. Well… that was… unexciting. The event was hyped up by both liberals and conservatives. Over the past month, Joe Biden was set on a mission to come up with ideas on how to prevent mass shootings in the future. At the end of that month, he came up with 23 executive orders; ways Obama himself could make a difference. Its not exactly clear how any of these orders will do anything, but let’s be honest – that wasn’t the point.

obamashhThere are two main objectives in the gun control debate. The first is pretty straight forward – more gun control laws. Dianne Feinstein is salivating over reimplementing her “assault weapons” ban; a take-off of the 1994 legislation with a few new tweaks. The ban would of course ban weapons that have dangerous features such as carrying handles and telescoping stocks (because carrying handles kill people every day!), but would go further than the 1994 law. The ’94 ban applied to firearms with 2 or more of a list of features; the new ban applies to firearms with only one of these features.

The law is unlikely to pass, but there are a number of reasons for conservatives to be nervous. The biggest reason is because the leader of the opposition party (ie: the Republican party) is led by a moderate spineless wimp, John Boehner. Although Republicans hold a majority in the House, Boehner could very easily pull some of his colleagues into the back room, twist some arms, make some deals, and come out with something that liberals are happy with and conservatives hate; a gun control “compromise” that virtually forfeits the game to the Democrats.

I personally love how Obama dragged a few kids onto the stage with him. Just shows the lack of shame that this man feels – using children as political props. I laughed as he read those letters – thinking, “Oh God! This is what slimy politicians are made of! This man has it down to a science!” Of course, the letters from the kids are so vague that they’re completely meaningless. The president of the United States isn’t taking his cues from these “smart kids”; he’s using them to pull on a few people’s heart strings. Lucky for me – I’m a conservative, and therefore, I have no heart (or so I’m told).

The second objective of the gun control debate is this: to keep people’s eyes off the ball. While politicians, the media, and the American people are paying attention to a debate about “assault weapons”, and “gun violence”, (have you noticed that they’ve changed the wording from “gun control” to “gun violence”? Same thing they did by changing “global warming” to “climate control”) we’re edging nearer and nearer to the debt ceiling, and soon enough, it’ll be time to raise it.

Obama loves to push bills through quickly so that people don’t have time to debate them and not even elected officials have time to read them. If the debt ceiling debate started 3 months ago, then there would be no urgency; people would have time to talk about the pros and cons of such legislation. To make the issue more urgent, Obama is pushing off talking about the debt ceiling until the second before we hit it. This will create plenty of commotion, panic, and cries from the media to “do something”.

I love Rand Paul’s suggestion to pass a law stating that for every 20 pages in a bill, one day is allowed to read it. Imagine how much time that would have given the public to learn about Obamacare before it passed, or how much time we’d have to learn about the monstrous Dodd-Frank bill before it passed, or the new gun control bill that is soon to be brought forth. Could there be a way to ensure that politicians read the bills they vote on? Would that be too much to ask?

The whole charade today was nothing more than a political stunt meant to give the American people the impression that the President “cares” and that he’s “doing something”. His objectives have little to do with saving lives, and much to do with advancing his own political agenda. Anyone who knows anything about DC politics saw right through this phony press event; nothing more than a distraction, taking eyes off the elephant in the room – the government is out of money!

The Road to Serfdom

Posted by Tim on

Have you seen your latest paycheck yet? Most people see a check once every two weeks, some people once a week, and some people once a month. By this time, however, most Americans (working Americans, I should say) have noticed something different about their income. Even after the “fiscal cliff” was averted, the taxes of just about everybody went up. You don’t make $450,000, or even $250,000? What? You thought that raising “taxes on the rich” didn’t mean you?

taxesThe fact is, that while many of the tax rates were extended, everybody’s payroll taxes increased. This means that the “FICA” deduction has gone up – for most people about a 50% increase. Now, that increase may only be from roughly 4% to 6%, but that can be $50 that a family needs to buy groceries or fill up their minivan’s gas tank. These aren’t taxes “on the rich”; these are taxes on the middle class – the working class. While I myself am paying higher taxes, I do take pleasure in seeing how many people are shocked that their taxes went up too.

It is a common economic fallacy that government can tax individuals or groups. Government sets different rates for different income levels, different deductions for different organizations, and various loopholes for “crony-capitalists”, just to give the impression that they can tax different people at different rates. This allows smug politicians of both parties to use tax rates as a political weapon in the ever going battle we call “class warfare”.

By promising to raise taxes on the “rich”, politicians win votes from envious constituents. By promising to lower taxes on “businesses” they invite votes (and money) from the corporate elites around the country. A flat-tax would hurt both parties because they would need to focus less on tax-rates as a means to political gains, and more on actual policy. Policy is what both parties lack, and they are dead afraid of the American people realizing it. As long as the “progressive” tax rates are in place, however, the American people will remain distracted by class warfare.

Its too bad, really, because the tax rates Americans should be paying attention to are not just their own individual rates, but the rate that the economy as a whole is paying. For instance, up until the 1930s, the federal government spent roughly 3% of GDP. Today, the Feds consume 25% of GDP. Having this giant, bloated, inefficient government certainly isn’t going to help get our economy going! Whoever that 25% comes from, it ultimately comes from YOU.

Economics is a social science, studying the economic interactions between individuals. Taxing one person will always have an effect on someone else. If a rich person is taxed at a higher rate, that means not only the he writes a bigger check to the government, but also that he doesn’t write a check to a car dealer. This is turn means that the car dealer is taxed, the car salesman is taxed, the car manufacturer is taxed, and countless other people are taxed – the people in the steel mill who produce the materials to build the car, the people who make the tires for the new car, and on and on.

Therefore, even if only one person is taxed directly, everyone is taxed in the end. The point is not to look at who writes the check to the government, but who pays for it. Because wealth is very liquid, there are plenty of ways for the rich to avoid paying taxes – they can send their money to a Swiss bank account, for instance. In the meantime, however, plenty of people will be hurt because that money is in Switzerland, not America. These are the people that pay the taxes in the end.

Maybe it is all worth it, though. The government has bills to pay, and someone needs to pay up. Let it be YOU, the American people. Let’s be honest – you voted for it. You voted for Medicare, for Medicaid, for Social Security, and for Obamacare. These massive entitlement programs will wreck the American economy by saddling us with more debt than is imaginable. The unfunded liabilities of these programs (not even including Obamacare) run up to $86.8 trillion. That’s right – $86.8 trillion. Try to think of how much that is… try.

hayekContinuous trillion dollar deficits will bankrupt America, continuous class warfare spewed from mouths of the political elite will distract enough of us in the meantime, and all the while our President is seizing power not given to him in the Constitution; threatening to use executive power to raise the debt ceiling, as well as sidestep the 2nd amendment. Does anyone realize that these are not the actions of a President, but rather of a dictator?

Nah, Democratic California Representitive Jackie Speier says, “I urged him to do as much by executive order as possible. Frankly, I don’t have a lot of confidence that this Congress is going to do anything significant.” Right, so since that whole “separation of powers” thing really gets in the way of “progress”, let’s just forget about it and hand over more power to a single authority. This reminds me of one of my favorite excerpts from F.A. Hayek’s Road to Serfdom:

Yet agreement that planning is necessary, together with the inability of democratic assemblies to produce a plan, will evoke stronger and stronger demands that the government or some single individual should be given powers to act on their own responsibility. The belief is becoming more and more widespread that, if things are to get done, the responsible authorities must be freed from the fetters of democratic procedure.

People are getting tired of the stalemate in Washington, and they are beginning to believe that “if things are to get done” (ie: gun control, raising the debt ceiling, immigration reform, etc) then the authorities (Obama) should be “freed from the fetters of democratic procedure” (ie: the legislative process). It is happening right before our eyes. We are on the road to serfdom.

Skin in the Game

Posted by Tim on

dairyThere’s a common misconception that somehow if the free market is left alone there will be monopolies popping up left and right. Therefore, it is the government’s job to “fix” this by using the “Anti-Trust” laws to break up these monopolies. It may come as a surprise to some, but really, it is the government who enables most monopolies to exist in the first place. By creating an environment that is unfriendly to start-ups and small businesses, government puts big corporations at an advantage.

Big businesses have the resources available to fight lawsuits, to get into politicians’ pockets and get a special “loophole” in various laws, and to avoid paying taxes. Small businesses don’t have these advantages. In fact, many small businesses don’t even file their taxes as corporations, but rather as individuals; in tern paying the regular income tax that the rest of us pay. Monopolies exist rarely, and when they do exist, it is often because the market has been twisted and manipulated by government.

The government uses these various anti-trust lawsuits to play god with the market, pick winners and losers, and try to decide what is “fair”. In 2011, the Department of Justice filed a lawsuit against Dean Foods, claiming that the dairy company owned “too much of the market” in a particular geographical area. So Attorney General Eric Holder, along with Wisconsin Attorney General JB van Hollen, ordered Dean Foods to sell off one of its subsidiaries – Golden Guernsey Dairy.

Unfortunately, the only buyer of Golden Guernsey was a Los Angeles company that closed the dairy over the weekend, laying off over 100 men and women. Was there an actual complaint against Dean foods? Did Dean foods have a monopoly on the milk market?

“The proposed settlements restore competition so that school children and consumers in Illinois, Wisconsin and Michigan, will pay lower prices for their milk,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The divestiture of a significant milk processing plant and the provision that requires Dean to notify the department of future milk plant acquisitions will ensure that competition remains in this important industry.”

Right now, however, schools are scrambling to find out who can provide them with the milk for their lunch programs. Instead of having enough milk, the schools are faced with a shortage, which will in turn lead to higher prices, not lower prices. This is basic economics. Perhaps Christine Varney could learn a thing or two from Economics in One Lesson by Henry Hazlitt.

“… There is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.”

Christine Varney - Government hack

Christine Varney – Government hack

It always astonishes me how little economic understanding people in government have, especially when their job title is “screwer of the market”. But really, lets remember why these people have the jobs they have, and what their incentives and constraints are. There is no reason to believe that Christine Varney, Eric Holder, or JB van Hollen have any interest in keeping businesses happy. Profits to a business are its lifeblood. But government doesn’t turn a profit, it just does things and never has to pay the consequences.

Government officials, especially unelected bureaucrats, do not have to live with the effects of their actions. The people who feel the pain are the workers who are laid off. When was the last time the Department of Justice laid off any employees? Hell, when was the last time any federal agency laid off any employees? Instead, the government kills jobs in the private sector, and then demands that the private sector kick up more money to fund the further growth of government. It is foolishness to assume that the government acts in “the people’s interest”, especially when the people making the rules were never elected by the people in the first place.

A small number of people will notice this dairy going out of business, but these kinds of events happen all over the country constantly. I’ll give the government the benefit of the doubt (I really don’t) and assume that they are trying to do what is right; but they pay no price for being wrong. When Barack Obama calls for people to have some “skin in the game” perhaps he should look at the various government agencies who answer to no one, and force the rest of us to deal with the fallout from bad policy. Does government have any “skin in the game”? I think not.

Government Fails

Posted by Tim on

Plenty going on in politics today, but first  - the good folks over at T-Nation and Biotest sent me some of their new “Brain Candy” energy shots. Seems like its about twice the size of the typical energy shots (5 Hour Power, etc) and has about twice the vitamin B12 – 15,000%. It’ll be good stuff if I ever decide to stay up for more than 24 hours again, or if I just need an extra boost to power through my day. Thanks T-Nation!

On a less serious note (“less” is not a typo), John Boehner failed to convince enough Republicans in the House to vote for his “Plan B”. Thank God! Even after all of the arm twisting, back-room deals, and kicking conservatives off committees, Boehner still wasn’t able to get enough support for his bill from his own party. If it wasn’t clear before, this is a strong sign that the current Speaker of the House is a weak leader.

johnboehnerAs Rush Limbaugh pointed out on his show today (as he has been for the past few weeks), Republicans must stand on principle and not cave to Democrat demands of raising taxes. Sometimes that means that they will need to actually battle it out with Democrats, but these politicians were not sent to Washington to be an “Approved” stamp on anything the other party wants. If Republicans abandon their principles – one of which is to NOT RAISE TAXES – then they will lose credibility and have nothing else to run on.

Can John Boehner actually stand up to Obama? He doesn’t have a majority in the Senate, and not a huge one in the House. Whatever he passes will have to pass the Senate before it can be signed by the President. We all know this. Republicans are stuck in an interesting spot, but there is something they can do. Pass a bill that lowers the bottom 3 tax brackets and keeps the top 2 brackets the same. This shows that Republicans want to lower taxes (particularly those paid by the “middle class”). If Democrats don’t vote for it; then its on them.

John Boehner and the Republicans should take this idealogical battle to the people of America. The public is hardly involved in the discussion. What did Boehner do after he was unable to rally support for Plan B his proposal? He left. He’s on break until after Christmas. Funny. I know a lot of people who are working Saturday, Sunday, and Monday – and they actually get their job done! No vacations for these bums in Congress. You can clock out once the work is finished. If you aren’t able to finish it, then let’s get someone who can!

These are the same people who recently passed the National Defense Authorization Act that severely weakens the 6th amendment of the Constitution. All Americans are entitled to a fair trial by a jury of their peers, but the NDAA give the federal government the power to detain citizens indefinitely without a trial. Someone can literally arrest you, and keep you in a federal prison without even informing you of the charges brought against you. What happened to a criminal’s right to confront his accuser? Well, if the accuser is the federal government apparently those rights don’t exist.

In regards to gun control, Bronco Bama has given Joe Biden the task of developing new government solutions to the supposed crime problem in America. Biden was given a month to come up with some great ideas. In the meantime, the NRA already established the National School Shield Program which will enable schools across the country to participate in actively protecting their students with retired police and security personel. It took the NRA a week to figure out a real solution, put someone in charge of it, and begin implementation of it, with the goal of having schools protected by the time kids return to class from Christmas break. Leave it to a private organization (the NRA) to do something better and faster than the government (Joe Biden).

That’s not the only example of private organizations performing better than the government. Since August, the Federal government has been trying to figure out what to do with former Marine, Jon Hammar, who has been unjustly held in a Mexican prison. Only within the last week or so has the story gone public, thanks largely to Fox News raising awarenes. People around the country made the demand that Hammar be released by Christmas to his family. He was released today. A private organization (Fox News) does a better job than the government (US Secretary of State, Hillary Clinton).

Its just so easy to pick apart the government. Washington in particular is filled with people who really have no idea what they are doing. And these are the people that will be in change of your healthcare!!! AHHH!!!