Politics: Showtime

Don Boudreaux pulled back the curtains that hide the "wizard." When things are given proper perspective it becomes obvious how shallow the politicians of Washington are. The example here is Obama's call to cut $100 million from the budget. See the original post here.

...President Obama today "challenged" his cabinet to "cut the budget by $100 million" ... What courage. A President who proclaims the importance of making "hard choices" calls upon his government to trim away a whopping one thirty-six-thousandth of its projected expeditures for the year - or, alternatively reckoned, one twelve-thousandth of its projected budget deficit.

To put this budget "cut" in perspective, suppose that the typical American family, earning $50,000 annually, plans this year to run a budget deficit proportionate to the deficit that Uncle Sam will run. Such a family would plan to spend $75,000. Now suppose that this family, seeking to signal its faux-commitment to financial prudence, promises spending cuts equal, in proportion to its budget, to the cuts announced by Mr. Obama.

This family would declare - surely with much fanfare - that it will reduce its planned expenditures for the year by $2.08! Perhaps it might promise to survive the year with one less gallon of gasoline or with one less cup of coffee.

Who would take such a gesture to be anything other than audaciously insulting sarcasm by the chronically irresponsible?

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Economy: Russ Roberts says "Let Them Fail"

Russ Roberts writing over at Cafe Hayek, had this to say (see it here):

We're going to run out of money.

We can't keep GM and AIG and Fannie and Freddie and every insolvent bank and every mortgage afloat. It can't be done. It's not a strategy. It's just desperation to avoid pain.

We're going to have to start letting them fail.

Sooner is better than later. Otherwise, we continue to throw good money after bad.

Let them fail.

When you're in a hole, the first lesson is to stop digging. Let's start by putting down the shovel and admitting we are heading in the wrong direction.

Let's taste some bankruptcy. Let's let some resources and capital get out of the hands of the people who are misusing it and into the hands of people who can use it more productively, wisely, and prudently.

I agree completely. If some state government wants to get involved, then there might be an argument for it. But I doubt that I would buy it.

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Government: Financing Through Deficits

There's a question of what a budget deficit is. One website defines it this way:

The amount by which a government, company, or individual's spending exceeds its income over a particular period of time. also called deficit or deficit spending. opposite of budget surplus.

Another site agrees:

The amount by which government spending exceeds government revenues.

Nobody seems to say that deficits are good, only necessary at times (say war, or during economic downturns like now). Arguments are made over which way will bring in more revenue, like making the rich pay more, or reducing taxes generally to encourage commerce (thereby producing more in income and business taxes). But rather than tax cuts, I want to see the government spend less. The fiscal troubles of government will never end until the funding is cut off. The government has to take the money from people before it can give it back to us. This reminds me of a quote by Edwin Feulner: "The best way to put more money in people's wallets is to leave it there in the first place."

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Politics: Bennett Makes a Campaign Stop in Southern Utah

On Saturday, February 14, 2009 Senator Bob Bennett stopped by Cedar City. He is starting his reelection campaign. The elections are still about 21 months away, but the political race seems to never stop.

Politicians nowadays must have tremendous pressures; they deal with massive amounts of legislation, must respond to their constituents, deal somehow with special interests, and the media is always watching, waiting for the slightest slip to use as garnish for the news reports. I don't envy them at all.

In fact I have a great deal of respect to anyone who wants to take on that much responsibility. Whether I agree with them politically or not they deserve some approbation.

If I do, in fact, disagree with any politician then it is my responsibility to take the time to lay out my reasons in a letter or email, and, if possible, offer an alternative for them consider. And it is important to understand that any politician may, after considering everything, choose something other than what I might have. I still am responsible for treating them with courtesy and kindness. And a free society demands that people treat each other in that manner.

Comments, suggestions, and questions can be directed to test.veeschay@gmail.com

Congress: The Inmates and the Asylum

MoveOn.org sends me an occasional email. Fair enough, I'll be open minded. In a recent one they were asking me to "sign [a] petition to Congress, urging them to act now to rein in Wall Street greed." Here's the problem with that: It is like asking the inmates to take care of the asylum. What evidence could I put forward to support my view? I point to the 27th Amendment to the Constitution. This amendment states:

No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.

This was ratified in the month of May 1992. Apparently in 1989 an automatic "cost of living adjustment" law was passed (here) and "in nine of the last 10 years, Congress has given itself a raise, totaling more than $30,000." (here). While $30K is much smaller than the millions of dollars that go to executives, the executives get it legally. Congress is doing an end run around the very document that gives them the authority to legislate in this nation.

All this reminds me of the quip from Cullen Hightower (here): "Talk is cheap -- except when Congress does it."

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Government: Bailouts Justify Government Meddling

Another post at Cafe Hayek leads me to another great article by Donald Boudreaux; see it here. He is writing about the bailouts, or, more specifically, the limits put on executive salaries at companies that accept the government's money. (Or rather the taxpayers' money that the politicians spend as if it were their own.) Early in the article Don lays down this point: "[T]he most egregious problem ... with all ... restrictions and requirements that are attached to bailout funds, is that it sets a frightening precedent." That precedent, as I see it, is that the government now has the responsibility to manage these companies that it keeps alive.

That precedent is very dangerous. If it is justifiable, then the consequences are far reaching. If the government can manage any company that benefits from bailout money then look at your own business or place of employment. Boudreaux points to how far it might go:

... Which ... firms ... feasted on Washington's bailout bounty? This question is not as easy to answer as you might think. Sure, it's clear that, say, Chrysler got bailout funds. But what about Chrysler's suppliers that, while none received any direct handout of taxpayer funds, enjoyed higher profits as a result of Chrysler remaining in operation?

Indeed, what about every firm in America? After all, the financial and auto-producer bailouts, and the more general "stimulus" packages, are meant to assist the entire economy. Funds spent on the bailouts and on the stimuli eventually wend their way throughout the whole economy, benefiting everyone. That's government's stated goal.

Because (the presumption is) without these bailouts and stimuli the U.S. economy would have collapsed into ruins, it stands to reason that every firm -- every American, even -- received government largess. And because this largess was bestowed, either directly or indirectly, upon every firm, no firm deserves to be excused from having to follow detailed marching orders from Washington.

I hope I'm wrong. But I genuinely fear that the extensive and massive "economic rescue" spending pouring today from Washington will combine with the newfound enthusiasm for hyperactive government to quickly create a culture of government direction of the economy as this country has never before known.

The correct answer is to never allow the federal government to get into the bailout business. If any reader would suggest that a state government should, then there could be a discussion. But that is not the role for the federal government.

Comments, suggestions, and questions can be directed to test.veeschay@gmail.com

Society: Some Questions on Abortion

I first saw this video on the blog "On Life and Lybberty," see the post here.

Also, an article on the subject can be found here. It is found at LDS.org.

Comments, suggestions, and questions can be directed to test.veeschay@gmail.com

Economy: Russ Asks If the Stimulus Will Help

Russ Roberts over at Cafe Hayek posted this.

I have started asking people I encounter whether they think government spending a trillion or so extra dollars is going to be good for the economy. The front desk clerk at my hotel—a marketing major—gave me a very honest, "I don't know." The other four people I asked, all under the ago of 30, said they thought it wouldn't help. My favorite response: They wasted the other money [me: a reference to the TARP, I think]. Why will this be any different."

I encourage you to start asking people. Do you think the stimulus will help? Ask without malice. Without sarcasm. Without an edge. Pure curiosity. See what they say. I think most people are very skeptical. The people in favor of this plan are some economists (calling Bryan Caplan), governors in states that are broke, and the politicians who will spend the money.

Maybe it can be stopped if enough people think it's a waste.

I have an idea on how to proceed. In the meanwhile, start asking and educating.

I am curious what he is up to. Anyway, what do you think? Will the "stimulus" help the economy? Tell me what you think.

Comments, suggestions, and questions can be directed to test.veeschay@gmail.com

Economy: Boudreaux on Deficit Spending

Don Boudreaux had this to say in a letter to the Chicago Tribune (see it here):

President-elect Obama prescribes fiscal stimulus as the cure for America's ailing economy ... Well let's see.

With the exception of a few years during the Clinton administration, the U.S. has run annual budget deficits continuously for the past four decades. And from 2002 through 2008, Uncle Sam ran budget deficits each year, totaling $2.13 TRILLION dollars. That's a frightful amount of fiscal stimulus, and yet the economy today is struggling.

Now with the bailout, the budget deficit for 2009 alone is projected to be close to $1 trillion - nearly seven percent of GDP, a figure much higher than at anytime since WWII. If deficit spending were good for the economy, Americans would now be, not on shaky ground, but in Shangri-la.

Comments, suggestions, and questions can be directed to test.veeschay@gmail.com

Economy: Job Creation

Here's a line clipped from a Cafe Hayek post by Russ Roberts; read the rest here.

...it's easy to create jobs. The hard part is creating productive jobs. Jobs alone do not create prosperity. Creating wasteful jobs reduces our standard of living.

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Economy: Kling on the Stimulus

Okay, I'm back. Having survived the holidays, even trying to shed some of the fat I gained from the sugary holiday diet by playing a little basketball this morning I think that I am ready to start posting again. Here's one that jumped out as I scanned the internet; it is by Arnold Kling, and you can find it here.

Kling's two points, as I see them, are this: first, if a solution doesn't work, the same solution in greater amounts won't likely work either. Second, why do we think that any one of the "experts" would have the wits to handle spending the billions of dollars that is being called for.

On his first point he says:

I was reminded of the Battle of the Somme, one of the worst policy blunders of all time. Having experienced nothing but failure using offensive tactics up to that point, the Allies decided that what they needed to try was....a really big offensive. Just as Feldstein and Stiglitz [the "experts" in his article] pay no attention to the on-the-ground the housing market, the British generals ignored the impact of machine guns on men advancing over open fields.

As I see it this has been brewing and bubbling for years. The "free market" gets blamed every time something goes wrong, but it was government meddling that creates many of the problems. So the calls for more government spending to stimulate the economy is wrongheaded. Let those who make the financial mistakes pay for them. Let the people help that want to, and leave the rest alone.

On his second point he says:

How many people will have meaningful input in determining the overall allocation of the billion stimulus? 10? 20? It won't be more than 1000. These people--let's say that in the end 500 technocrats will play a meaningful role in writing the bill--will have unimaginable power. Remember that what they are doing is taking our money and deciding for us how to spend it. Presumably, that is because they are wiser at spending our money than we are at spending it ourselves.

The arithmetic is mind-boggling. If 500 people have meaningful input, and the stimulus is almost $800 billion, then on average each person is responsible for taking more than $1.5 billion of our money and trying to spend it more wisely than we would spend it ourselves. I can imagine a wise technocrat taking $100,000 or perhaps even $1 million from American households and spending it more wisely than they would. But $1.5 billion? I do not believe that any human being knows so much that he or she can quickly and wisely allocate $1.5 billion.

I will only add one of my favorite quotes from Hayek: "All political theories assume, of course, that most individuals are very ignorant. Those who plead for liberty differ from the rest in that they include among the ignorant themselves as well as the wisest."

Comments, suggestions, and questions can be directed to test.veeschay@gmail.com