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Unforgivable Dishonesty

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One of the best columns of the year was written by a columnist for The Telegraph.  Janet Daley’s column is titled:  The truth is that politicians are telling lies.  She writes truth about big lies that will effect your future and it is worth reading in its entirety.  Excerpts:

Was 2012 the year when the democratic world lost its grip on reality? Must we
assume now that no party that speaks the truth about the economic future has a chance of winning power in a national election? With the results of presidential contests in the United States and France as evidence, this would seem to be the only possible conclusion. Any political leader prepared to deceive the
electorate into believing that government spending, and the vast system of
services that it provides, can go on as before – or that they will be able to
resume as soon as this momentary emergency is over – was propelled into office
virtually by acclamation.

So universal has this rule turned out to be that parties and leaders who know
better – whose economic literacy is beyond question – are now afraid even to
hint at the fact which must eventually be faced. The promises that governments
are making to their electorates are not just misleading: they are unforgivably
dishonest. …

…This is not an ideological argument about the moral advantages of a smaller
state: it is simple economic necessity. As the man said, there’s no money left.
And the only ways that anybody can think of for the state to get more of it are
either futile (taxing the “rich”) or destructive of any possibility of recovery
(more borrowing). What began as a banking collapse has turned into a crisis of
democratic politics. Is this what we have to look forward to? The process of
campaigning and voting will be an irrelevance: all parties will tell pretty much
the same lies. Whichever one is marginally more credible than the others will
gain power (probably in coalition with another bunch of liars), and then have to
do what needs to be done in whatever desperate, underhand ways it can devise.
Nobody will feel that he got what he voted for, because what he voted for was
impossible.

 Time Magazine claimed that one of the primary reasons that President Obama deserved to be their “Man of the Year” was because he was able to capture the votes of the large segment of the population who don’t know anything about politics and don’t normally pay any attention to it.  He mobilized the “Political Fools for Obama” demographic.  Impressive achievement.

The people who vote for a living now outnumber the people who work for a living.

People warned us that our democracy would fail when citizens realized that they could vote themselves benefits from the public treasury.  We’re there.  Economist Northrup Beuchner writes:

We may be seeing the beginning of the end of the model for civilized governance that has dominated Western civilization since WWII. That model has been provision by the state of all or most of the needs of its people combined with the popular election of the government. Or, in other words, the welfare state plus democracy.

What we are seeing in Europe is that that model is inherently unsustainable. The concept of individual rights is the only standard for government action that puts an objective limit on what the government can do. The post-war leaders of Europe were completely ignorant of that standard. They adopted instead the principle that the primary function of government is to assure its citizens’ welfare. Since there is no limit in principle to the free benefits people would like to get from their government, politicians competed for their citizens’ votes by promising and providing more and more welfare. The political parties that promised the most benefits won the elections.

As for the winner of the last big election, President Obama, is increasingly comfortable in his lies.  They seem to be working well for him.  Few in the media even question his absurd claims, so the politician with the worst record of debt creation in history, the one who has not advanced a single credible plan to deal with this disaster, can still stand before a microphone and tell us how very concerned he is about the debt, and calmly assure us that he is working very hard to deal with it.  Those are the lies.  Here is the truth about his plan from Daniel Halper:

Spending will increase 55 percent over the next decade, if President Barack Obama’s budget plan goes into effect. The finding comes from the Republican-side of the Senate Budget Committee, which notes that Obama’s “Proposal Would Spend $880 Billion Over Already Projected Increases.”

Here’s a chart, detailing how Obama’s plan would bring spending from $3.62 trillion in 2013 to $5.63 trillion in 2022:

“The President’s last fiscal cliff offer once again increased spending rather than reducing it,” writes the minority-side of the Senate Budget Committee. “His plan does claim $800 billion in spending reductions over ten years, but these claims are more than offset by new spending increases: increasing spending above BCA limits ($1,200 billion); paying for the doc fix ($400 billion); new transportation stimulus spending ($50 billion), and; a one-year extension of unemployment insurance ($30 billion).  After subtracting the president’s savings from his spending increases, over the next 10 years the President’s proposal actually spends $880 billion more – $44.368 trillion versus $43.488 trillion – than currently projected spending levels.  In the next two years alone, the President’s plan would spend $255 billion over current projected spending levels ($156 billion higher in FY13 and $99 billion higher in FY14). Overall, spending would increase 55% under the President’s plan, from $3.6 trillion in FY13 to $ 5.6 trillion in FY22.”

 

Good Intentions…

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GunFreeZone

 

 

Killing a roomful of children is a crime so hideous that all civilized people react with shock and horror.  All of us wish there was something we could do to stop crazy or evil people from ever doing such a thing again.  But not all of us think that more laws represent a real-world solution.  As with many other social problems, the problem solvers fall into two groups:

1. those who reflexively assume that government action can fix the problem and call for immediate government action, and,

2. those who are not sure the problem can be solved with legislation and who fear that politicians may make things worse.

Those in the first group always think they “care” more than those in the second group.  After all, they want the problem fixed right now by politicians.  The second group wants to carefully evaluate the pros and cons of government action.  They want to see evidence that the proposed plan can work and they want to consider the side effects.

Look at a few examples of government ‘solutions’ and their side effects.  Alcohol is a very large problem in society.  Legislation to eliminate the problem not only failed, but created some large additional  problems.  A similar case can be made for other drug prohibitions in our huge War on Drugs.  Drugs are still readily available, just as alcohol was during prohibition, so well-intentioned drug laws have failed miserably, and the side effects of increased crime, from both users and suppliers is enormous.  Portugal tried a different approach and the results are impressive.

The War on Poverty has not decreased the percentage of people in poverty.  But the side effects of dependency and social disintegration are very destructive.  Good intentions are not enough to make a law successful.  Good intentions do not change reality.

Washington DC passed strict gun laws starting in 1975, but they remain one of the most dangerous places in the country for murder with guns.  Chicago has some of the strictest gun laws in the country and has a very high rate of gun violence, with 438 people killed so far this year.  Australia banned guns in 1997 and has spent half a billion dollars buying guns from law-abiding citizens.  But, what about those Australians who don’t obey the laws?  Assaults involving guns rose 25%.  There was a 20% increase in gun murders.  Armed robberies and home invasions rose as well.  It works out very well for criminals when law-abiding citizens are disarmed.

At Sandy Hook, at the recent mall shooting in Oregon, and at many similar disasters, the disaster ends when the good guys with guns show up.  At that point, the deranged individuals shoot themselves or are shot.  The thing that stops a person with a gun is another person with a gun.  In the two cases mentioned, it appears that the killers were planning an extended killing spree.  Perhaps they were planning to be the most famous killer of all.  They know the grotesque extravaganza that the media makes out of these tragedies.

In the Sandy Hook case, it would have been infinitely better if the school Principal, who bravely lunged at the shooter, had been able to shoot him instead.  She may have saved herself and many children.  But the school was a “gun-free zone”.  That makes it a ”helpless victim zone” for shooters until a good guy with a gun arrives.

The bumper sticker, “If guns are outlawed, only outlaws will have guns” is not a trivial statement.  It is a concise bit of wisdom.  But the second amendment to our constitution was not written primarily to allow protection from common criminals, nor is it about duck hunting.  When George Washington said, “free people …ought to be armed”, he was thinking about what it takes for a free people to remain free.

An armed populace is one of the greatest deterrents to state tyranny.  It is not an accident that tyrants always seek to disarm those they are abusing.  And in the big picture, mass murder on this planet is the province of governments.  Death from common criminals and lunatics pales in comparison.   If you do not fear government tyranny, you do not know history.

There are many reasons to believe that the Fast and Furious gunrunning scandal was a devious two stage attempt to attack the second amendment.  The goal of step 1 was to create death and destruction with American guns.  Step 2 was to publicize the death and destruction and then create a movement to ban guns.  This plan was exposed and so it failed.  (It didn’t fail with the murder part, just with the fake outrage part.)  But in keeping with the Rahm Emanuel policy of never letting a crisis go to waste, we will be seeing a concerted attempt to subvert the second amendment.

A related story from Helen O’Neill at AP is worth mentioning. You will be hearing about the huge increase in mass shootings, just like you hear about the big increase in major storms as a result of “climate change”.  Both claims are false.  O’Neill’s findings include:

  • While the perception in the wake of this year’s mass shootings has been that such acts are on the rise, the Associated Press found that it’s actually the exact opposite when you look at the data on a macro level.
  • “There is no pattern, there is no increase,” says criminologist James Allen Fox of Boston’s Northeastern University.
  • He adds that the random mass shootings that get the most media attention are the rarest.
  • While mass shootings rose between the 1960s and the 1990s, they actually dropped in the 2000s. And mass killings actually  reached their peak in 1929, Grant Duwe, a criminologist with the Minnesota  Department of Corrections who has written a history of mass murders in America, says.

My guess is that the best way to ‘do something’ about mentally ill people behaving badly is to concentrate on how we treat mentally ill people.  Those who think that we can put a stop to the problem of bad people doing bad things like this, if we just have the right laws, , are not really thinking clearly.  They are much like those in the 1920′s who thought they could end war by making a law against it.  No, really. The Kellog-Briand Pact, signed on August 27, 1928, by the U.S. and many other countries made war illegal.

The law passed by wide margins everywhere.  Who could be against ending all war?  The people who fought for this legislation were good people.  And amazingly naive.

 lawlessness

Update:  Take the time to read John Fund’s excellent column here.  It’s worth a look.

“Brilliant” Modern Economists: More Idiot Than Savant…

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The Model For Today's Economist

The Model For Today’s Economist

Bernanke is a case study for the shortcomings of modern economists.  Over four years, he has single-handedly disproven the supremacy of monetary theory as the overriding law of the economy.  0% fed interest rates and heavy rounds of quantitate easing have been the law of the land for four years and the economy continues to grind to a halt.  Despite sitting on $1.6 Trillion of cash reserves, the banks aren’t lending money.  Inflation has remained extremely low, defying all of the models of monetary economists everywhere.  How could they have been this wrong?

To figure out this economic caper of the ages, all Bernanke has to do is go to his local bank and ask for a loan.  His experience would probably be similar to that of a relative of mine who recently tried to procure a loan.  This relative, armed with perfect credit and a deep ledger of collateral, recently went to his bank (one of the five biggest) to pull out a loan against a house he owns to buy a condo.  He was rejected, for any amount of money against any amount of collateral.  Having spent the last forty years of his life in the real estate market, my exasperated relative asked, “So what do you guys do here all day?”.  The banker gave an ironic chuckle and said, “I honestly don’t know”.

The local loan officer would be able to tell Bernanke that there is little incentive to give out small business and real estate loans at such a low interest rate, because the return would largely be gobbled up by future inflation.  He would say that despite the high reserves relative to historical averages, Dodd-Frank regulation requires that they give out fewer loans against those reserves.  Even if Bernanke somehow convinced the bank to give him a loan, no one there would really even know how to lend under rapidly evolving (and expanding) rules that no one has had the time to learn how to navigate.  The only loans happening are the federally mandated and subsidized loans to sub-prime recipients…   Loans that the bank can then turn around and sell to the government.  The impotence of Bernanke’s policies isn’t the grand mystery of the 21st century, it can be explained by any loan officer in the country.

So, you might ask, what then what about the improving home values and increased consumer confidence since Bernanke stared the third round of quantitative easing, or “Operation Twist”?  The nature of the latest round is an over $40 Billion a month purchase of debt that includes sub-prime mortgages.  When the government is buying $40 Billion a month (about half a Trillion a year) of a thing, it isn’t surprising that the price of that thing will go up… So what happens when they stop buying it?

Monetary economists aren’t the only ones who can’t seem to figure out how the economy actually works. Most economists suffer from looking at the economy as a single-variable system.  Monetary theorists believe that the fortunes of the US economy rise and fall at the whims of the Fed Chairman.   Keynesian economists believe that the economy is governed by demand, regardless of where that demand comes from. Right-wing tax theorists believe that the elixir of economic growth is a simple low tax rate.  Though they all have important contributions to the overall equation, it is impossible for any one of them to predict an outcome without a unified multi-variable economic approach.  Monetary policy, regulations, taxes, tariffs, and resources all play into the system, but no single one dominates consistently.

Much of the problem stems from the insulated nature of the economist’s world.  Academia fiercely protects its subjects from the real life experiences.  Though complicated models and comprehensive inputs are available for the creation of economic theory, they have no exposure to common sense that comes from hands-on experience.  In the case of Bernanke, if he actually worked in the loan granting division of any bank he would have been able to see how ridiculous, and even counterproductive, his monetary policies were in the context of the Dodd-Frank regulation.

The same goes for any demand-side Keynesian economist.  Put Paul Krugman in any company as the CFO for a year and he would discover the simple fact that there are a few more lines on an income statement underneath the “revenue” line.  In an isolated system, increasing revenues would stimulate businesses to grow and hire new workers.  However, in the multivariable real world, he would discover that revenue increases are filtered through the increased labor expenses associated with unions, increased medical costs of Obamacare, increased regulatory expenses, and the dramatically increased taxes (especially for over 50% of companies that file as a sub-chapter S corporation).  It would become clear to him why, in spite of increased top-line growth, these companies are firing employees.  He would also see a group of managers making investment decisions.  He would quickly discover companies plan for future growth, and that they don’t act as mindless drones that only react to a temporary “stimulus bill” increase of the revenue line.

The right-wing tax economist would see that regulation and global influences can also have dramatic effects on the economy, even in the face of a tax hike.  Clinton increased taxes, but the economy was able to grow with a retreating Japan, free trade agreements like NAFTA, and a new technological revolution.  They also come up short when trying to explain the robust growth of the economy from 1950 to 1970, when the top marginal rates was as high as 90%.  Though they strive to explain the loop holes that kept the real paid rates closer to 35% in the top brackets, the tax economist misses the growth story of the global economy at the time, and the technological and manufacturing advantages the US had over the rest of the world following WWII.

We are long overdue for a wave of practical economists.  Six trillion dollars of elevated government spending and trillions more of monetary easing have yielded no results in the face of an onerous burden new regulations and tax hikes unseen since FDR’s reign of economic terror.  It is only surprising that the results are much the same as what we experienced back then to economists stuck in single-variable economic models contrived in academic bubbles.  Bernanke’s perception of the economy was created far away from the practical influences and simple lessons of the real world.

Unfortunately, the real world has to bear the consequences of his ignorance.

Of Sharks and Men

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I have been away from the world of politics for a couple of weeks.  We had an extended Thanksgiving vacation in Maui that included children, grandchildren and in-laws.  It was a very good trip except for the part where a large tiger shark attacked a member of the family.  The shark sunk his teeth into the left leg of Tom Kennedy, my daughter Courtney’s father-in-law.

Tom, my other daughter Holly, and I were snorkeling at one of my favorite uncrowded reefs.  We had paddled there on our stand-up-surfboards and anchored the boards while we snorkeled.  Though we had intended to stay close together, Tom was separated from Holly and I when he was attacked.

Tom is a calm and rational man and remained so even after he had looked the shark right in the eye as the beast held his leg in its large mouth.  Tom said he had two goals at that moment:  1. To swim to his board (a considerable distance) without being eaten, and 2. To warn Holly and I to get out of the water.  He accomplished both goals.

Tom is recovering well and, though his leg was cut quite badly, we expect no permanent disability from the attack.

I have two observations about the aftermath of the attack.  First is the overwhelming interest that the world has in shark attacks.  This was a serious injury, but not so different from more common injuries like dog attacks or even bicycle accidents.  But this shark story spread far and fast …across America and into Europe.   The appetite for shark stories is huge.

When we are young, the idea of a monster that can eat you captures our imagination.  It is a powerfully terrifying idea and I don’t think we really ever grow out of it.  Stories of shark attacks and grizzly bear attacks are in this special category which lights up a deeply emotional part of our brains.

The other observation came soon after the ambulance took Tom to the hospital.  By this time, there were large numbers of ‘officials’ at the point where we brought Tom to shore.  Some had come to help and some had come out of personal interest.  There were many policemen, firemen and lifeguards who had come to see what was happening.  A few of the firemen actually helped get Tom up the rocky shoreline to await the ambulance, but mostly they were just standing around.

They watched me gather up our big surfboards and snorkel gear.  They watched me clean each piece and carry it, with some difficulty, up the rocks.  Not one of a dozen or so ‘public servants’ offered to help.  They just watched me do what needed to be done.

The beaches were closed for a mile in each direction.  Helicopters flew over instructing people to stay out of the water.  Many officials were doing official things for two days.  People were called in to ride around on jet skis trying to see a shark.   The next day was quite windy and there was no visibility into the water, but that did not stop the helicopters and jet skiers from giving the appearance of doing something useful.  Later the second day they opened all the beaches on the apparent assumption that sharks were no longer around.

So I guess there are people who believe that a helicopter flying over a windswept ocean can confirm that a big chunk of ocean has no sharks.  These are probably the same people who think that frisking grandmothers in airports makes us safer  …or that Washington bureaucrats telling local schools how to educate children is vital  … or that Feds telling farmers how to milk cows is an important government function.

But to me, the fact that the government helicopter pilot did not see a shark has no meaning at all.  The pilot, the TSA frisker, the federal educator, the busybody rules and regulation makers all think they are doing important work.  I disagree.  The growing hordes of bureaucrats are a monster that can eat us.

Did you know that 544,000 government jobs have been added since July?  73% of the jobs created in the last 5 months are in government.  Unemployment is now 3.8% for government workers.  On the private side of the ledger, the side that pays for everything, the November employment report showed that another 350,000 people dropped from the labor force. They are no longer even trying to help pull the wagon.  They are jumping into the wagon along with the 544,000.

And don’t be fooled by the Obama-media reporting these changes positively as a drop in unemployment.  Giving up on looking for work is quite a different thing from finding a job.

Government workers make much more money than similarly skilled people in the private sector.  They retire earlier with better retirement.  It is nearly impossible to fire them for poor job performance.  Many states are on the verge of bankruptcy from the exploding cost of bureaucrats.  Bloomberg has some shocking statistics here.

There are large parts of the government that are useless; even destructive.   And it is immoral to fund the bloated bureaucracy by borrowing money from our grandchildren.  There are entire agencies that you would not miss if they disappeared tomorrow.

Be afraid.  This monster can devour us and our grandchildren.  It’s a long way back to our board.

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Two recent news stories reinforce the point about the useless overgrowth of government.  Mark Steyn reports on the tragic comedy of FEMA’s response to Hurricane Sandy in “The Department of Leaflets”.   If you are a hurricane victim and you need forms and leaflets and more forms to get more leaflets, then they have you covered.  And they are passing out useful advice, like the fact that placing things higher than the water level helps keep them dry.

Kevin Williamson reports that there is really nothing too trivial for the bureaucracy to micro-manage.  See his “Against the Eggnog Gestapo”.

Medical Care and Expensive Hotels

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As noted in earlier posts, we believe that common sense is often a much better guide to  economic policy than the schemes that our “leaders” come up with.  Consider this example.  Imagine what would happen to the price of hotel rooms if:

 

  • The guest does not have to pay for the room.  Someone else pays.
  • No matter what room you pick, fancy or not, someone else gets the bill.
  • The prices for the rooms and all of the guest services are hidden. The price doesn’t really matter, though, because someone else pays.
  • People can enjoy the rooms and guest services whenever they feel the need.
  • If you use a room and don’t have someone else pre-arranged to pay, that’s no problem, the hotel operator can hide your bill inside the bill of those who do pay.

If customers don’t know or care how much rooms cost, what will happen to prices?  The customers have no incentive at all to be careful with money.  Quite the opposite.  They will demand their fair share of this service and they will want the best that someone else’s money can buy.

The provision of medical care is very much like that.  If you ask a provider how much a medical service will cost, you are likely to be met with a surprised look.  Asking how much a procedure costs is the exception, not the norm.  Since cost does not matter to the individual consumer, costs are rising rapidly.

In parts of medical care where the consumer is more likely to pay directly, like cosmetic services or laser eye surgery, costs are directly controlled by the consumer.  Prices must remain at a level acceptable to cost-conscious consumers.

A group of Doctors in Oklahoma who realized the insanity of the current system decided to do something about it.  They have successfully attacked the high cost of medical care in a way that should be a model for the nation.  Take a look:

As you evaluate their approach, remember that all it does is dramatically reduce the cost of medical care.  It does not give politicians or unions more power.  So it’s not an option they would want to consider.  For them, it’s all about power.

Common Sense Economics: Spain

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The Real Madrid vs Barcelona rivalry is about to heat up…

One of the most ambitious, and successful, efforts of the academic Left has been a war on common sense.  True economics is a science governed by very intuitive rules.  Extremely complicated monetary theories have arisen to confuse the subject and contradict common sense conclusions any high school graduate can come to with minimal effort.  The confusion puts up a veil behind which leftist social engineers can operate with reduced risk that someone empowered with simple intuition can identify that the King, in fact, has no clothes…

On of the most intuitive rules is the following: The more you punish success and take the fruit of people’s labor, the less productive they will be.  Spain has ignored this rule for many decades.  Years of anemic growth and re-distribution of capital from productive hands to the lazy regions of the country have created a fragile economy unable to weather the global downturn.  More importantly (here comes one of those intuitive laws economics/human nature), the productive parts of the country are starting to resent supporting the dead weight. The Catalan region of eastern Spain has long been the industrious part of the country.  As per a recent article in Reuters, a significant part of the economic output of the region (8% or $21 billion) is redistributed from Catalonia to the remainder of the country every year…

Which brings us to our second super-simple economic lesson:  People grow entitled to charity quickly.  Give someone a dollar one day and they say “thank you”.  Give that same person a dollar for seven days and then try to walk by on the eighth day.  He will angrily ask where ”his” dollar is.  Appreciation turns quickly to entitlement.  When I lived in Spain eighteen years ago, I don’t recall a “Catalonia appreciation day” for supporting the rest of the country.   I am guessing that it hasn’t started since.

Liberals will argue that there has always been a separatist movement in Catalonia, and they would be right.  However, it didn’t gain any political power until the economy tanked and the country raised taxes to meet the bills.  Since tax burdens weigh disproportionately on the most productive parts of society, Catalonia was hit especially hard.  Rather than continue to support an entitled country incapable of balancing the checkbook, the people of Catalonia are looking to shrug off the oppressive weight.  Just recently, the local government gained a majority capable and willing to vote for separation.  Who can blame them?

How much worse does it have to get before we see the same thing in the US?  Secession petitions have been submitted by people in more than 30 sates in the US, but there is no real political will behind them.  However, what happens when the people of Texas and Florida see their taxes going to bail out the entitlement groups of California and Illinois.  Like in Spain, England, and France the increased taxes in those states will not bring in nearly as much revenue as their predictions and certainly not enough to meet their debt obligations.  Eventually, like with Greece and Spain, the other states will have to come to their rescue, but the constituencies of the bailed out states will not allow any fiscal restraint. We will see riots and paralyzed liberal politicians who, like a child whose gambling debt comes due, will be backed into a very uncomfortable corner.  At some point Texas and other productive states will not want to pick up the tab for California.  Secession risk will become real.

The road we are on and where it leads has never been so clear. You don’t need a crystal ball to figure it out, just pick up the paper.  Only a nation that has lost its ability to exercise common sense will be caught by surprise.

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Charles Martel really slaps you in the face with some straight talk about Republicans and ethnic minorities.  The Big Tent is Empty.

Mark Hendrickson explains the partisan divide between big city folks and those who live closer to reality in the countryside.

Mark Steyn adds to the subject of race-obsessed politics with his column, Tribal America

Jill Kelly apparently seduces generals for both fun and profit.  She is horribly in debt and was allegedly peddling her imaginary influence to businessmen.  She would be a classic candidate for selling secrets and is the reason why people in positions of power need to avoid compromising relationships.

Here is a truly sick and disgusting government program.  In this time of exploding deficits, the Obama administration is working with the Mexican government to increase the use of food stamps by illegal aliens.  Think of it as a Democrat voter registration drive with the cost passed on to your grandchildren:

In honor of Jess’s post on the demise of Twinkies:

From my daughter, Holly:

1)Only in America, could politicians talk about the greed of the rich at a $35,000.00 a plate campaign fund-raising event.

2) Only in America, could people claim that the government still discriminates against black Americans when they have a black President, a black Attorney General, and roughly 18% of the federal workforce is black while only 12% of the population is black.

3) Only in America, could they have had the two people most responsible for our tax code, Timothy Geithner, the head of the Treasury Department and Charles Rangel who once ran the Ways and Means Committee, BOTH turn out to be tax cheats who are in favor of higher taxes.

4) Only in America, can they have terrorists kill people in the name of Allah and have the media primarily react by fretting that Muslims might be harmed by the backlash.

5) Only in America, would they make people who want to legally become American citizens wait for years in their home countries and pay tens of thousands of dollars for the privilege while we discuss letting anyone who sneaks into the country illegally just ‘magically’ become American citizens.

6) Only in America, could the people who believe in balancing the budget and sticking by the country’s Constitution be thought of as”extremists.”

7) Only in America, could you need to present a driver’s license to cash a check or buy alcohol, but not to vote.

8) Only in America, could people demand the government investigate whether oil companies are gouging the public because the price of gas went up when the return on equity invested in a major U.S. oil company (Marathon Oil) is less than half of a company making tennis shoes (Nike).

9) Only in America, could the government collect more tax dollars from the people than any nation in recorded history, still spend a Trillion dollars more than it has per year – for total spending of $7-Million PER MINUTE, and complain that it doesn’t have nearly enough money.

10) Only in America, could the rich people – who pay 86% of all income taxes – be accused of not paying their “fair share” by people who don’t pay any income taxes at all.

 

 

The Broken Window Fallacy

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Economic illiteracy may be the primary cause of two problems:

  •  bad legislation by politicians and,
  • the willing acceptance of the bad legislation by the citizens.

An understanding of basic economic concepts by the voters would stop many foolish politicians from successfully selling their harmful plans.

Maybe the reason that public education fails to teach basic economic principles is because politicians prefer malleable voters.  Whatever the reason, one of our goals here at realitybatslast.com is to contribute to  the economic literacy of voters.

The bad news is that most people view economics as a dry and boring and very complicated subject.  The good news is that basic economics, the kind that will make us smarter voters, is readily accessible to any thinking person.  And it’s our responsiblity as voters to make the effort to educate ourselves.

One economic fallacy that is everywhere in politics is the Broken Window Fallacy.  See the brief explanation here:

It doesn’t take a genius to realize that property destruction does not increase the wealth of a society.  Property destruction constitutes a net loss of wealth.   It may take a real “expert”, like a Harvard Professor or Nobel Laureate to be foolish enough to think otherwise.

You saw in the video that Paul Krugman said this after the 9/11 attack on New York:

“Ghastly as it may seem to say this, the terror attack — like the original day of infamy, which brought an end to the Great Depression — could do some economic good.”

Harvard Professor and former Obama economic adviser Larry Summers said that the terrible destruction of the recent Japanese earthquake and tsunami, “may lead to some temporary increments, ironically, to GDP as a process of rebuilding takes place. In the wake of the earlier Kobe earthquake, Japan actually gained some economic strength.”

It’s too bad the earthquake didn’t destroy Tokyo, too.  Think of how much that would have helped.

19th century French economist Frederic Bastiat explained that there are two types of economists:

 ”There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”

We are surrounded by bad economists who tout the visible effects of their actions and think nothing about the less visible consequences.  So called stimulus spending and government job creation schemes fit this pattern.  There is much hoopla about the wonderful spending and little concern about what those dollars would have accomplished if they had not been taken by the government.

Think of it this way.  Imagine a boastful doctor who is giving a man a blood transfusion.  You can see the blood going into the patient and you can hear the Dr. explaining how he is helping.  What a great guy.  What you can’t see is that the blood tube is coming out of the patients other arm, and half the blood is being spilled and wasted in the process.  A patient could die from that kind of help.

Twinkie Tribute

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Our perception of the insidious slide from freedom to tyranny powered by a democratic system which ignores constitutional limits can best be described as that of a slowly boiling frog.  It is important for DC to chip away at our institutions rather than bring in the demolition team.  Proud Americans, like a frog thrown into boiling water, would revolt if we saw politicians take all our freedoms at once…

So, it will be interesting to see how America reacts now that the temperature in our pot shot up from simmer to boil this week.  I am not talking about the realization that our government has taken over the health care system with Obamacare, or that it controls our credit markets with Frank Dodd… I speak of the loss of our collective Twinkie.

Literally, Big Labor just took our Twinkies away from us.  It is not surprising that socialists would target the Twinkie. To our secular society, Twinkies were the closest thing we had to the “opiate of the masses”.   As a society that frowns on heroin usage, the opioid receptors of our brains depended on that creamy filling surrounded by moist cake and yellow #5 for a daily rush.  In a society with BMI’s high enough to make walruses heading north green with envy, letting our Twinkie industry go down was a serious miscalculation.  Where were you in this Chapter 11 Obama!!!  My fellow Americans complain all the time about the not-so-mysterious rattling sound in their Chevy, but I have NEVER heard a disparaging word about the Twinkie…

There really isn’t a generation in my lifetime that hasn’t celebrated the Twinkie as an iconic symbol.  Who doesn’t remember this scene from the 80′s:

Over 20 years later, Twinkies would serve as a motivating influence for life itself in a post-apocalyptic zombie world:

Don’t get me wrong, I don’t want to give the impression that Twinkies are perfect.  If they were, people wouldn’t have to deep-fry them to get the full daily recommended allowance of calories in one cake:

Needless to say, Big Labor and the Democratic party should be expecting a ton of outrage from Americans. Granted, that could just be three people, but they will be really really angry…

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As a side note, 18,500 people lost their jobs in an economy that probably won’t be quick to pick up ex-Hostess factory workers…

California’s Road To Hell

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Those Golden Bears aren’t doing so well these days:

Not only are the businesses in the Golden State facing the federal fiscal cliff tax hikes next year, but they also get a swift retroactive-tax-hike-kick-to-the-shorts for anything earned this year as well.  When you know a certain number of people are going to leave your state after yet another tax hike, it is good to make it retroactive since people can’t leave retroactively…

There was a great article in the San Francisco Chronicle the other day describing how much the state genuinely despises private sector job creators. Unless, of course, those job creators start “supporting” some of the “business friendly” legislators in congress…

The game of tyranny was described in explicit detail by Ayn Rand over 50 years ago in her novel Atlas Shrugged: In a free society, people can start businesses and succeed without ever knowing their local legislator.  The only barrier to success would be their own ability to create something people want better than a competitor.  Power-hungry rulers recognize that the free system doesn’t allow them to gain power.  The same people who created products that make people’s lives easier, produce jobs, and a create a social ladder for society must be made to look evil so that politicians can lever themselves into the system. The rulers use the tragic human character flaws of jealousy and greed to malign the successful.  The accomplishments of the entrepreneurs are discredited (“you didn’t build that”) and their intentions are painted as exploitive rather than constructive.

Once the democratic (or revolutionary) mandate is achieved with popular consent, the legislators use two powerful tools to gain power: business-crushing regulations and heavy tax structures.  The taxes allow the legislators to look “charitable” by funding a redistribution of wealth and creating an entitled class of reliable voters.  The taxes can also be used to subsidize favored groups like unions and large banks that will then support those in power.  The heavy regulations are used as a gun to the head of business.  Legislators create laws that make it difficult/impossible to do business.  If companies want to survive the taxes and regulations imposed by the government, they must “support” the legislators to gain subsidies and loop-holes.  Anyone not willing to play the game are publicly denounced by the politicians as evil exploiters (Wal-Mart, med tech companies, surgeons, etc) and special taxes/regulations are applied to their livelihoods until they submit.  Once everyone is under the thumb or supported by the government, the rulers have ultimate power.

Am I exaggerating?  In addition to the link above, Joel Kotkin describes how business owners feel about political expression in the following article, “For A Preview Of Obama’s America In 2016, Look At The Crack-Up Of California”. The article describes the consequences of “free speech” for California business. The exact same thing is happening on a national scale in DC.  The system is rigged in favor of the tyrant.  Who is a better bet to give money to:  The politician extolling the virtues of liberty and fighting for your right to pursue it, or the politician saying that he is going to crush you when he gains power so you better pony up to the table? We saw what happened to each side when Obamacare passed.  The med tech companies fought for freedom and now have a special tax just for them.  The pharma companies paid tribute to the master and got branded pharmaceuticals on the formularies of the expanded coverage.  Welcome to the ‘Nanner Republic of America…

The scenario has played over and over and over again throughout history.  Democracy is the most insidious mechanism for tyrants, because it needs/uses the sanction of the very frogs being boiled to work.  Forced or fooled, at least 50% of the frogs have to vote for their own demise. If you feel a little sick to your stomach these days, it is because we can see the “cooks” applying butter and salt to the frogs in California and Europe.  A system we thought only existed in banana republics and “those other countries” is suddenly revealing its true colors much closer to home than we had suspected.

It is getting harder and harder to hide the dire consequences of political tyranny… Especially now that Europe and California are laying it out for us in explicit detail.  California, like the US, was once governed by Ronald Reagan.  That fact makes his foreboding quote all the more powerful: