Tag Archives: politics

Politically Incorrect Guide to Capitalism by Robert P. Murphy

Share/Bookmark

John Lennon on socialism

Income and expenditures

The federal budget is a hot and devicive debate recently. Battle lines have been clearly drawn between conservatives and liberals but I wonder if both sides really understand the battle each is fighting against the other. So in an effort to help both sides understand one another better, and hopefully have more productive conversations, here are a few things we need to keep in mind.

Income

The only income the government can collect are taxes from productive citizens. This is what conservative groups like the Tea party are mostly focused on. I wonder how many liberals remember that the tea in Tea Party stood for “Taxed Enough Already”. Their major point of contention is the amount of income the government takes in at the expense of the productive citizens.

Expenditures

Expenditures is what a money is spent on. Its tempting to say that expenditures are what income is spent on, and I think this is what many people are assuming, but the reality is that our financial system makes it possible, indeed encourages, the use of non-earned income. For the federal government this means printing money while attempting to “manage” the resulting inflation.

Why are they different?

There are thousands of different businesses in existence. It is not uncommon to find two businesses with the same amount of income but with vastly different expenditures. It all depends on what they are in business for.

Conversely, it is also possible to find two different businesses with the same expenditures, but without the same income as one could be relying on credit. Generally we don’t see businesses with expenses that outstrip their income lasting very long, except if they are banks. Or the government. Or if they qualify for the magic label of “too big to fail”.

The liberal point of view

When a liberal complains that the rich aren’t paying their “fair share” what they are focused on the expenditures. They assume the expenditures are a given and that the only variable is the income.

The conservative point of view

When a conservative says that taxes should be lower they are assuming that both the income and expenditures are variable.

Conflict of ideals

The failure in communication between both groups is the assumed, but unstated, output goal of the government. Both liberals and conservatives (and yes, even libertarians) understand that there are some things the government must spend money on. Only an anarchist would argue that the government shouldn’t produce a functioning court system and means of enforcing laws. But what about other things?

Liberals generally tend to see anything that can be construed as a “indispensable public good” to be an expenditure the government should have on it’s books. Thus welfare, medicaid, fire departments, healthcare, etc. all get lumped into what liberals see as nessiciary items the government should have in it’s shopping cart.

Conservatives, on the other hand, don’t think that just because something can be construed as an indispensable public good it logically follows that government should be the one in charge of it.

So in discussions about the upcoming budget, it may be helpful to divide the issue into inputs and outputs. What many liberals may be startled to know is that many conservatives actually agree with them about the outputs (ie. public education) but disagree on the best way to pay for it. Or, in some cases, whether to care about paying for it at all as in the case with Medicare.

Likewise, many liberals may share the same concern for lower government income, but because they are hung up on an ideal which demands high outputs they see taxes as a necessary evil in order to pay for (or appear to anyway) the things they see as necessary expenditures.

What both camps would do well to do is ask themselves what limits there are on both income and expenditures. With income we know there is a clear maximum of taxing all citizens at 100% (ie communism). However finding the limit to expenditures can be difficult since our monetary system is not independent of government manipulation. But that is the subject for another post.

Would legalizing same-sex marriage save us money?

In a recent CATO podcast regarding marriage, Jason Kuznicki made the comment that a CBO study showed that legalizing same sex marriage would save the state lots of money. After some digging I found the CBO study Jason referred to. After examining it, however, I believe there are a few key flaws with the assertion that the legalization of same sex marriage would save the public money.

  1. As the report points out, the estimation of the homosexual population is problematic. It is actually uncertain how we could even get an accurate count of the numbers of homosexuals in the US today given the trouble inherent in defining homosexuality.
  2. Another issue related to the previous point is how we define monogamy. Believe it or not, these are two fluid terms in the homosexual community.
  3. The report assumes additional tax revenue will come from income tax returns, from couples filing jointly. This both exposes the much loathed marriage tax and it calls into question why a community of people who, themselves, denounce the institution of marriage would voluntarily submit themselves to such an additional tax. Hard data from countries where homosexuality is legal shows that they won’t. And why should they? The only gain homosexuals can get from the legalization of marriage, and this is from their own writings, is cultural acceptance. And that is through the enforcement of laws and new regulations.
  4. The analysis fails to take into account the added costs that would be involved with enforcement and proper regulation. In Canada, shortly after the legalization of same sex marriage, birth certificates were changed to “Parent A” and “Parent B” instead of “Mother” and “Father”. As trivial as this sounds, it does incur a cost. And these costs add up. So why aren’t they counted and factored in?
  5. The report does not take into account the fact that the legalization of same sex marriage has a profound impact on traditional marriage. That Jason doesn’t deal with this fact surprises me since libertarians are often known for closely scrutinizing the unintended consequences of policies.

The truth is that the legalization of same sex marriage carries with it a price tag that few are willing to acknowledge. That price tag includes social costs in terms of further weakening the already stumbling institution of marriage, the building block of society. Costs in terms of health care resources spent in an effort to alleviate the effects of promoting a lifestyle that runs afoul of our biological design. And a price tag in terms of decreased liberties and increased public scrutiny enacted in an effort to make same sex marriage publicly acceptable.

Judge not, lest ye abdicate your civic responsibility

I recently got called to serve jury duty in Fulton County, Atlanta. During the voir dire process where the jury panel is asked a bunch of general questions, the defendant’s lawyers asked if anyone held any religious, philosophical, spiritual, etc. Beliefs which would prevent them from sitting on a jury if selected.

Two of the women on the panel raised their cards and said their religious beliefs taught them not to judge anyone.

When pressed, the women cited Nubian and “Baptist” as their respective belief systems. The baptist couldn’t, when pressed, cite the specific reason why or where her belief on non-judgement was grounded.

I’ve written about the errant belief that the bible teaches that “thou shalt not judge” before. But this is the first time I’ve seen that belief interfere with someone doing their civic duty.

Beliefs matter, and false beliefs have wide reaching ramifications. I certainly hope that if I am ever in need of a jury of my peers, my peers will see it as a moral imperative to follow the words of Jesus and “make a right judgement”.

Stop judging by mere appearances, and make a right judgment. -John 7:24

Was there really a healthcare mandate over 200 years ago?

A liberal friend of mine sent me this article from Forbes which attempts to argue that “Congress Passes Socialized Medicine and Mandates Health Insurance -In 1798”

From the article:

In July of 1798, Congress passed – and President John Adams signed –“An Act for the Relief of Sick and Disabled Seamen.” The law authorized the creation of a government operated marine hospital service and mandated that privately employed sailors be required to purchase health care insurance.

There’s a few problems with comparing this 2 page law with the 2,000 monstrosity that is Obamacare. Here’s a short list:

  • Not everyone was employed AS a seamen, so off the bat this bill was worlds away from the mandate levied by Obamacare on every US citizen just for breathing.
  • The mandate was applied per ship, not per sailor. The only things recorded were the counts of seamen aboard. The fine of $100 was to be levied against the ship, not the individual crew members. This was really more of a payroll tax than anything else.
  • The seamen had the free choice of which port to go to, meaning there was interstate competition among ports with regard to this service.
  • The care was not open-ended and not lifetime. When your money ran out, you were kicked out. Oh, and pre-existing condition were not treated. This bill was specifically designed to alleviate the arduous effects of long-term sea voyage for the purpose of international trade. It was effectively an insurance plan for sailors, not much different than seafaring insurance plans that were already in place at the time to make intercontinental commerce less of a financially risky endeavor.
  • Doctors were not mandated to work at ports. In fact, this plan says nothing about the coverage provided. Its amazing to think that anyone would compare this with Obamacare when the medical care provided is not listed. The only thing the bill does stipulate with regard to the service is how the overseers of the port hospitals will be appointed by the president.
  • The money collected never left the port it was collected in. That’s what they used to call “states’ rights”.
  • The wording of the bill focuses on accounting. It actually expects there to be a surplus left over!

This bill was also far from uncontested as many posts that want to use this as ammunition to support Obamacare seem to imply.

For an extended review of this topic, I highly recommend this blog post at Wandering Reveleries.

Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide. –John Adams

Why Words Won’t Defeat Thug Culture

Is the government takeover of healthcare a lie?

Contra to Politifact, the government takeover of healthcare, characterized by the existence of strict government oversight as to who gets what treatment when and where (aka, “death panels”), or none at all, is very real.

Its also increasingly hard to sustain the notion that the government takeover of healthcare is not an established fact when it has already lead to an increase in premiums, a loss in care (so much for the whole “if you like your existing plan, keep it”, we’ve experienced this one as well), and reduced coverage of the very people it was supposed to help (children and the poor).

In fact, hundreds of businesses and unions have already files to be exempted from Obamacare (or else they would have to drop coverage altogether, thanks to the crushing price-tag of this “non-takeover”).

If you are providing health insurance only with the permission of the federal government, government has taken over your health insurance.

Actually, if its such a lie that Obamacare is not a takeover of the healthcare industry, why has it already been ruled unconstitutional, specifically for its provision regulating economic inactivity? Not buying healthcare now carries with it the possible penalty of jail time.

On top of all of this is the great big whopper that Obamacare won’t fund abortions.

What is truly amazing is that in spite of all of these facts, liberal organizations like Polifact feel no shame in attempting to sweep it all under the rug by calling it a great big lie. As if we had made all of the preceding facts up and were merely out “to scare people”.

Hope and change is only worthwhile if whats hoped for is clearly defined and real and what is changed is well-vetted (remember that whole 5-day public disclosure, “we’ll televise the ‘debate’ on C-SPAN” mess?) and avoids as best as possible unintended consequences like those mentioned above.

Why should Christians in particular care about all of this? Because Obamacare funds lifestyles and choices (thereby encouraging them) that are in direct opposition to our faith. Sure, free market capitalism makes such things possible, but it does not force others to fund something they fundamentally disagree with. Also, Obamacare costs money, a lot of it. More money in the government’s pockets means less money in our pockets (because the government cannot create, only take, wealth). So even the weakest churches should be up in arms about Obamacare because more money going to the government means less money in the offering plate.

Dispelling liberal myths: Tax cuts have to be paid for

A popular liberal refrain is that tax cuts have to “be paid for”. Tax cuts for the rich are often construed as handouts for millionaires, and people who advocate for less taxes all around are treated as fiscal miscreants who want something for nothing. Tea partiers are routinely chided as not paying their fair share.

Stories like this one are meant to convey the idea that tax cuts are the same as the government writing a check. They are also meant to portray those in favor of tax cuts as economically ignorant about the ramifications of their actions.

Facing a huge budget deficit when he took office in January, Nassau County Executive Edward P. Mangano did not impose a hiring freeze. He did not stop borrowing to subsidize some of the richest school districts in the country. He did not eliminate the Police Department’s beloved mounted unit.

Instead, Mr. Mangano, a Republican who won one of the first upsets of the Tea Party era, did what he had promised: He cut taxes, adding $40 million to the county’s deficit, which has since reached nearly $350 million.

Now, with its bonds suddenly downgraded and a state oversight agency preparing to seize its checkbook and credit cards, Nassau is on the verge of a full-fledged fiscal crisis.

However stories like this one neglect to mention the fact that while executive orders do, in fact, lower taxes and thus reduce the pool of available money that government agencies can pull from. These government agencies, like the local school board, have flatly refused to revise their budgets based on the revised numbers. This is what the press is calling a “deficit”. It is not so much a unilateral problem that the city is continuing to spend like mad, it is. The problem is that even cutting off the taxpayer spigot, government officials want to pretend like their budgets determine reality rather than the other way around where reality (money coming in) determines the budget.

Again, this is like my wife and I setting an imaginary budget of $5,000, walking into a store and spending up to that amount, and then getting mad at my employer for not covering the debt I’ve incurred. What I would have in such a case would not be a deficit, but a receipt for a cartload of stupidity.

So liberals like the reporters in this case can call it a deficit all they want. But that doesn’t change the fact that what this really is is poor planning by those who want to ignore reality.

Another article on the same subject paints quite a different, and more full, story

According to a county spokesperson, if business or homeowners believe that the county has assessed their taxes incorrectly, they have the right to file a tax grievance, which is then reviewed by a special commission. Property taxes are reduced and refunds potentially issued if the grievance, known as a tax certiorari, is won.

We had a similar situation in Augusta, GA before I moved to Atlanta.1

Home values were plummeting but rather than lower the tax assessed value to match market value, the county wanted to keep them artificially high just because they had gotten used to the cash flow. In fact, they said that even if they reassessed the values to be lower, they would raise the millage rate so they ended up receiving the same amount of money in the end.

This is essentially government agencies acting like they are not subject to market forces like everyone else. That is, if the taxpayers are not making as much as they used to, if their homes are devalued, then they cannot pay as much as they used to and therefore the government will take in less money as a result. Sure, the government can ignore these market forces, but not for very long until reality catches up with them and they end up filing for bankruptcy.

The moral of the story is that a stupid fiscal plan for a family does not stop being stupid just because we scale it up to encompass multiple families.

  1. They have since then apparently come to their senses. []

Why crony capitalism is not capitalism

Piatt Castle Mac-O-Chee in Liberty, Ohio

Piatt Castle Mac-O-Chee in Liberty, Ohio

From “the sage of Mac-O-Chee“, Donn Piatt:

When [civil] war broke upon us the brave men went to the front to fight and the thieves to the rear to plunder. …The war ended and the thieves held Washington. They were contractors, carpetbaggers, railroad plunderers and monopolists of all sorts and they sought to use the government to further their greed.

Elections no longer turn on a diversity of opinions or a difference of policy as to how the government may be controlled, but upon the fraudulent use of money at the polls. Of course the capitalists thus investing in politics, seek to recoup themselves through a use of the government they control as official agents.

I think Donn should have done a better job differentiating between crony capitalism and true, free market, capitalism. However I believe his insight as to the corruptible nature of politics and its unholy union with large businesses warrants just as much attention today as it did over 100 years ago.

Here are some more lessons in crony capitalism from the Cato Institute.

And here is an excellent report by John Stossel on crony capitalism: