Thursday, December 10, 2009

Do Older Americans still believe in liberty?

Recently, Orlando Sentinel columnist Mike Thomas made committed one of the greatest acts of political incorrectness by arguing that older Americans should not be receiving extra taxpayer dollars from the Obama Administration in an era where our mounting budget deficits threaten the long-term economic liberty of our children. Mr. Thomas should be more careful with his words. After all, today’s senior citizens and near seniors has become one of the greatest classes of plunderers in our nation’s history.
It did not used to be this way. From the founding of our nation until 1932 the government’s relationship with us was pretty simple as it applied to retirement and health care. Article One, Section Eight of the Constitution says nothing about helping us have a nicer retirement or good medicines. The agreement used to be that if you were young and had a job you needed to understand that someday you were going to be old and not want to have a job. Therefore from your young days until your old days you needed to assume personal responsibility for your impending retirement years by saving, investing and spending in a wise and frugal manner. You were also expected, in a nation founded on liberty, not security, to grasp the concept of illness, surgeries, the birth of children and so forth – and financially plan for that to.
Of course, our long experiment with socialistic economic policies began with Franklin D. Roosevelt and has accelerated under Republican rule (see George Bush’s budgets for social welfare programs) and Democratic rule (see today’s President).
For fiscal year 2009 the federal government will spend $3.998 trillion. Of that, $675 billion will be spent on Social Security and $386 billion on Medicare. That means that $ 1.073 trillion or 27 percent of the entire budget will be allocated to senior citizens. As Mr. Thomas bravely pointed out, the federal government is going to have to either raise taxes, or cut spending (you can start laughing now) by $101 trillion over the next 75 years to pay for the mandated future spending on older Americans.
Given our current birth rate and spending levels in other areas where the federal government is in charge, the average 21-year old American will, by the time they are in their mid-40’s, have to pay 50-60% of their total income in taxes in order to meet this obligation. That is up from an average of 33% today.
Many current senior citizens and baby-boomers claim that they are simply getting back what they paid in while they were working. Others argue that current federal spending is some sort of payback for winning World War II. Both arguments are nonsense.
First, during the first several decades that social security existed, people did not live very long, payroll taxes were small and the nation’s population of senior citizens was tiny compared to today. That means that the average American did not pay in much to the system that they are now enjoying. In fact, adjusted for inflation, it takes the average senior about two years to get back everything they paid in. After the two year mark they are simply living off of their children and grandchildren.
As for the World War II argument – or any other argument involving saving the nation – where does the G.I. Bill enter into the payback? Where does the idea that wars are won to preserve liberty rather than gain future political clout to take from your fellow man enter into the equation?
Winning wars is an act of self-interest – you don’t want the bad guys to win and take your stuff. Winning means you get to have your pursuit of happiness back.
If senior citizens really value the things that they fought for – and if the baby boomers really care about the liberty this nation is supposed to enjoy – the last thing any older American should be doing is filing a claim – through the voting process – on the private property of younger Americans.

Saturday, October 10, 2009

The Nobel Idiots

From January 20, 1977 to January 19, 1981 James Earl Carter - our 39th President - managed to allow the Soviet Union to run rampant in Latin and Central America; much of Africa; Afghanistan and remain dominant in Eastern Europe and Southeast Asia while simultaneously allowing thugs in Iran to take - and keep - 52 American hostages for 444 days.

His great response? Boycotting the 1980 Summer Olympic games and barring Iranian oil from flowing into the U.S.

By the time he left office 40% of America's military personnel was living on foodstamps while our position as a world leader was diluted into a world joke.

Carter left office as one of our least-popular and weakest presidents.

For his accomplishments, he managed to win the Nobel Peace Prize in 2002.

Seven years later, Barack Obama has won the Nobel Peace Prize after only 37 weeks on the job. His great accomplishment towards world peace has been a speech to the Muslim world, a willingess to engage Iran in nuclear talks and the decision to remove missle protection defenses from Europe.

Meanwhile, Ronald Reagan has still not won the Nobel Peace Prize.

All he did - by the admission of his enemies in the Soviet Union - was end the Cold War and save millions from the ravages of nuclear war without firing a shot. During his eight years he accomplished more to save the planet from tyranny without war than every president in our nation's history. The record on this is clear. Go read about it for yourself.

Tell me please - how can two liberals - one who endangered the world with his weakness, and another who has done nothing to make the world a more peaceful place in his 200 plus days in office, win this award when a real savior of our earthly lives does not share in this honor?

I suppose the next award will be the Nobel Memorial Economics prize to Karl Marx.

Friday, September 11, 2009

A Summary of how Government Serves Us

The following was sent by a former student who understands the case for limited government. Enjoy...
The U.S. Postal Service was established in 1775 - they've had 234 years to get it right; it is broke, and even though heavily subsidized, it is not able to compete with private sector FedEx and UPS services.

Social Security was established in 1935 - they've had 74 years to get it right; it is broke.

Fannie Mae was established in 1938 - they've had 71years to get it right; it is broke.

Freddie Mac was established in 1970 - they've had 39 years to get it right; it is broke. Together Fannie and Freddie have now led the entire world into the worst economic collapse in 80 years.

The War on Poverty was started in 1964 - they've had 45 years to get it right; $1 trillion of our hard earned money is confiscated each year and transferred to "the poor"; it hasn't worked.

Medicare and Medicaid were established in 1965 - they've had 44 years to get it right;
they are both broke; and now our government dares to mention them as models for all US health care.
AMTRAK was established in 1970 - they've had 39 years to get it right; last year they bailed it out as it continues to run at a loss!

This year, a trillion dollars was committed in the massive political payoff called the Stimulus Bill of 2009; it shows NO sign of working; it's been used to increase the size of governments across America , and raise government salaries while the rest of us suffer from economic hardships. It has yet to create a single new private sector job.

Our national debt projections (approaching $10 trillion) have increased 400% in the last six months.

Cash for Clunkers" was established in 2009 and went broke in 2009 - - after 80% of the cars purchased turned out to be produced by foreign companies, and dealers nationwide are buried under bureaucratic paperwork demanded by a government that is not yet paying them what was promised.

So with a perfect 100% failure rate and a record that proves that each and every "service" shoved down our throats by an over-reaching government turns into disaster, how could any informed American trust our government to run or even set policies for America's health care system - - 17% of our economy?

Maybe each of us has a personal responsibility to let others in on this brilliant record before 2010, and then help remove from office those who are voting to destroy capitalism and destroy our grandchildren's future.

"I predict future happiness for Americans if they can prevent the government from wasting the labours of the people under the pretence of taking care of them." Thomas Jefferson

Tuesday, September 8, 2009

There is no "Health Care Crisis"

Lost in the debate on what government should do about health care in America is the question no one seems to want to ask. That is, "Why fix a crisis when there is no crisis?"
According to the Obama Administration somewhere in the neighborhood of 50 million people do not have health insurance in America. So what? That is only about 15% of the entire population.
Why do we need to have the federal government - the same government that invades countries that do not invade us first; fail to deliver mail better than our phones or FedEx; provides lousy housing for the poor; lousy education for children; lousy roads, bridges, food inspection services and more - in charge of the biggest industry in America? Who are these functional morons who actually believe that government can do a better job at health care then they can at anything else? The American-Indians on reservations have been getting government care for decades. You would not want to go to one of the clinics these Americans are compelled to use.
I wonder how many of the 50 million people who do not have insurance could afford it but choose to spend their money on other things?
How many of the 50 million could afford some insurance if they altered their lifestyles and allocated their funds in a more rational manner?
How many of the 50 million could have some insurance if they would improve their stock of human capital by learning a trade or getting an education that would make them valuable enough to an employer to gain a job and employer-provided health care?
In a nation with rampant obesity, sexually-transmitted diseases, dangerous drivers, high crime and a "you owe me something" mentality, providing health care through the nose of the taxpayer is going to be very, very expensive. Nations like Canada, Sweden, Norway and other quasi-Socialistic places that have low populations and people who do not look as bad, or act as bad as we do, already have tax burdens that are hard for the average worker to manage.
In a nation of 307 million people with all of our problems, reforming health care to save 15% of us is simply idiotic.
In a week or so, the posting on this site will provide some economically sensible solutions to problems in our health care market.
Stay tuned...

Saturday, August 1, 2009

Cash for Clunkers = Horrible Economic Policy

In my 20 - plus years as an economist I have witnessed many taxpayer-financed programs that have have little or no merit - economically, morally or Constitutionally.
However, I think I may now be witnessing a program that confirms my deep belief that Americans are almost completely economically ignorant.
Recently the Obama Administration announced plans to steal $1 billion (plus interest) from future taxpayers to help current Americans buy a new car. The "Cash for Clunkers" program, as of today, has used up all $1 billion and now the socialists running our country are preparing to add upwards of $2 billion to this "successful" stimulus to our moribund automobile sector.
This program is steeped in economic stupidity for a variety of reasons. Here's why:
1. If you are a car buyer who thinks of this program as $4,500 of your money at work you are wrong. This is not a tax credit where the government tells you to deduct $4,500 from your 2009 tax bill (assuming your tax bill is at least $4,500). This is government telling you that it will take almost $4,500 from your fellow taxpayers and give it to you. If you take it, over 99% of this figure will constitute theft on your part. Legalized theft, but theft nonetheless.
To calculate how much of the $4,500 is "your money" all you have to do is look at what you typically pay in federal income taxes each year. The federal government collects about $2.5 trillion in taxes annually. You need to figure what percentage of $2.5 trillion you paid. Then, take that percentage out of $1 billion (the cost of the program so far). THAT is how much of the $4,500 that is your money, rather than your neighbors money. When you do the math you will probably see that out of $4,500, your "tax credit" is probably 7 or 8 cents and the rest is government plundering on your behalf.
2. If you think the program will stimulate the automobile sector, think again. Yes, over 220,000 new cars have been purchased so far. But that means 220,000 cars that were still running have also been taken off the market. In this program you have to trade in a car that is operable then the dealer destroys the engine and it leaves the supply part of the market for cars. 220,000 new cars driven away, 220,000 used cars, with value to someone (the poor, teenagers, parents looking for a car for a kid, etc.) leave. That is called a zero-sum event. With used cars now becoming more scarce - especially if the program continues - we will see a tighter supply for these cars and higher prices for poorer Americans who could have used an $800 car to get around in for a couple of years.
The 22,000 new ones also are a false stimulus. Many of these would have been bought anyway but the lucky people who were already in the market simply get to save money at our expense.
Of those who would not have bought a new one, now the government has encouraged them to buy. This looks like a good thing for our auto industry but what happens when this false stimulus ends? Do you think the car industry is going to add more workers for a temporary program? What happens to the people who went into debt - during a recession caused by too much debt - to buy a new car? The law of opportunity cost means they took money away from some other purpose to buy this car. That means less money for other sectors of the economy and debt incurred at a time when less debt would be a better idea.
3. The planet will not cool off as a result of this program, but more people will die from it. The Obama Administration launched this program in part to get pollution-belching cars off the road and help lower the temperature of Earth. Give me a break. Let's say I trade in my truck - that gets a polar bear harming 13 miles per gallon - for a new truck that gets 19 miles per gallon. Better yet, I trade it in for a car that gets 29 miles per gallon. So, I get an improvement of 16 miles per gallon by driving my new tin can. Will I drive more now that I get better mileage? Will I be less safe on the roads? Yes and yes.
It is a rational reaction to enjoy the better mileage by going to the beach, taking more frequent trips to the grocer and other trips - long and short - that I would not take in my current gas-guzzling truck.
One brief stop on Google will also help you uncover the hard data on the number of people who get killed by driving smaller cars.
These accidents have to be paid for by insurance, health care professionals and by consumers who have to spend more to fix small cars than bigger, safer ones. This is a real cost that few in government are talking about.
Finally, and perhaps most sadly, is the cost of raising our kids to think of government as Santa or the tooth fairy. For every adult who buys a new car under this program they are unwittingly sending a message to their kids that there is "free money" out there for the taking and that we should just go get it.
That, my friends, simply adds to the ranks of future voters who line up to steal other people's money on election day.
Enjoy your new car.

Monday, July 13, 2009

Mandating Unemployment - July 13 Wall St. Journal

Here's some economic logic to ponder. The unemployment rate in June for American teenagers was 24%, for black teens it was 38%, and even White House economists are predicting more job losses. So how about raising the cost of that teenage labor?
Sorry to say, but that's precisely what will happen on July 24, when the minimum wage will increase to $7.25 an hour from $6.55. The national wage floor will have increased 41% since the three-step hike was approved by the Democratic Congress in May 2007. Then the economy was humming, with an overall jobless rate of 4.5% and many entry-level jobs paying more than the minimum. That's a hard case to make now, with a 9.5% national jobless rate and thousands of employers facing razor-thin profit margins.
There's been a long and spirited debate among economists about who gets hurt and who benefits when the minimum wage rises. But in a 2006 National Bureau of Economic Research paper, economists David Neumark of the University of California, Irvine, and William Wascher of the Federal Reserve Bank reviewed the voluminous literature over the past 30 years and came to two almost universally acknowledged conclusions.
First, "a sizable majority of the studies give a relatively consistent (though not always statistically significant) indication of negative employment effects." Second, "studies that focus on the least-skilled groups [i.e., teens, and welfare moms] provide relatively overwhelming evidence of stronger disemployment effects."
Proponents argue that millions of workers will benefit from the bigger paychecks. But about two of every three full-time minimum-wage workers get a pay raise anyway within a year on the job. Meanwhile, those who lose their jobs or who never get a job in the first place get a minimum wage of $0.
Mr. Neumark calculates that the 70-cent per-hour minimum wage hike this month would kill "about 300,000 jobs for those between the ages of 16-24." Single working mothers would also be among those most hurt.
Keep in mind the Earned Income Tax Credit already exists to help low-wage workers and has been greatly expanded in recent years. The EITC also spreads the cost of the wage supplement to all Americans, not merely to employers, so it doesn't raise the cost of hiring low-wage workers.
For example, consider a single mom with two kids who earns the current $6.55 minimum at a full-time, year-round job. In 2009 she receives a $5,028 EITC cash payment from Uncle Sam -- or about an extra $2.50 per hour worked. Other federal income supplements, such as the refundable child tax credit, add another $1,900 or so. Thus at a wage of $6.55 an hour, her actual pay becomes $10.02 an hour -- more than a 50% increase from the current minimum. (See nearby table.)
But that single mom can't collect those checks if she doesn't have a job, and the tragedy of a higher minimum wage is that it will prevent thousands of working moms striving to pull their families out of poverty from being hired in the first place.
If Congress were wise and compassionate, it would at least suspend the wage hike for one or two years until the job market recovers. We know this Congress won't do that, but someone has to speak up for the poorest, least skilled Americans.

Sunday, July 5, 2009

July 4th is no day to celebrate

From the July 4, 2009 Orlando Sentinel

In 1794, Congress appropriated $15,000 for relief of French refugees who fled from insurrection in San Domingo to Baltimore and Philadelphia. James Madison, the principal author of the U.S. Constitution, stood on the floor of the House to object."I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents," he said.A few decades later, while serving in the same capacity as a member of the House of Representatives, David Crockett, upon listening to pleas from his fellow congressmen to give tax dollars to the widow of a deceased naval officer, said, "We have the right, as individuals, to give away as much of our own money as we please in charity; but as members of Congress, we have no right so as to appropriate a dollar of the public money."Madison and Crockett would not recognize the United States of America as we approach our nation's 233rd birthday. In fact, these gentlemen, along with the others who created our great nation, might suggest that the July Fourth festivities be canceled and replaced with a national day of mourning for what we have lost the past several years.When our republic was founded, the framers of our Constitution formed a rule book that established our government as the protector of our life, liberty and private property. Article 1, Section 8 of the Constitution states that along with national defense, Congress can allocate our earnings to provide for the general welfare of the citizenry.Thomas Jefferson, James Madison and others argued that "general welfare" was confined to only those functions that secure our rights. These three natural rights were to be the only rights we would enjoy. Everything else — a car, access to education, decent health care, concert tickets — would be part of our interests, things we would have to obtain by serving our fellow man effectively enough so as to earn the income necessary to enjoy them. Where our earning capabilities were stunted by disabilities, illness or bad luck, charity from secular and religious sources was to fill the gaps.During the Constitutional Convention in 1787, Alexander Hamilton argued that the general welfare clause should not be confined to the specific spending clauses in our Constitution. Hamilton argued that the government should be able to spend money on anything so long as the argument could be made that it was for the general welfare of the nation. Not one of the Founding Fathers agreed with Hamilton during the convention.The Supreme Court agreed with Hamilton in 1935. Fearing that the Roosevelt administration would pack the Supreme Court with justices sensitive to his big-government agenda, the court specifically mentioned Hamilton as the Founding Father who best understood what the role of government should be in our lives. Consequently, since the 1930s, the cost of government has risen from about $20 per person annually to more than $10,000.Today, our quasi-socialistic nation has moved so far from the intent of the Founding Fathers that it is laughable to hear politicians swear an oath that even mentions the Constitution.Consider the past few years alone. Trillions of tax dollars have been allocated to pre-emptive wars, domestic spying on innocent citizens and bank, automotive and insurance bailouts. We have seen huge increases in social-welfare spending for the elderly, people facing foreclosure and farmers who were supposed to know that sometimes it rains and sometimes it does not.We are witnessing the nationalization of General Motors, the banking sector and the health-care industry, all while higher taxes are imposed on America's most productive citizens to pay for the well-being of the less productive. Moreover, we now have the highest corporate income-tax burden in the developed world, while India, much of Eastern Europe and China moves in the opposite direction.If you believe in liberty and small government, July Fourth is no day to celebrate. We cannot, in good conscience, celebrate our independence when we have become so dependent on the government.It is a day to think about how much longer a nation can survive when the citizenry forms a longer and longer line at the trough of public tax dollars.

Friday, May 29, 2009

The Wall Street Journal
MAY 29, 2009
The 'Unseen' Deserve Empathy, Too

While announcing Sonia Sotomayor as his nominee to the Supreme Court, President Barack Obama praised her as a judge who combined a mastery of the law with "a common touch, a sense of compassion, and an understanding of how the world works and how ordinary people live." This is in keeping with his earlier statement that he wanted to appoint a justice who possessed the "quality of empathy, of understanding and identifying with people's hopes and struggles."

Without casting aspersions on Judge Sotomayor, we may ask whether these are really the characteristics we want in a judge.

Clearly, a good judge must have "an understanding of how the world works and how ordinary people live." Judicial decision-making involves the application of abstract rules to concrete facts; it is impossible to render a proper judicial decision without understanding its practical effect on both the litigants and the wider community.

But what about compassion and empathy? Compassion is defined as a feeling of deep sympathy for those stricken by misfortune, accompanied by a strong desire to alleviate the suffering; empathy is the ability to share in another's emotions, thoughts and feelings. Hence, a compassionate judge would tend to base his or her decisions on sympathy for the unfortunate; an empathetic judge on how the people directly affected by the decision would think and feel. What could be wrong with that?

Frederic Bastiat answered that question in his famous 1850 essay, "What is Seen and What is Not Seen." There the economist and member of the French parliament pointed out that law "produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them." Bastiat further noted that "[t]here 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."

This observation is just as true for judges as it is for economists. As important as compassion and empathy are, one can have these feelings only for people that exist and that one knows about -- that is, for those who are "seen."

One can have compassion for workers who lose their jobs when a plant closes. They can be seen. One cannot have compassion for unknown persons in other industries who do not receive job offers when a compassionate government subsidizes an unprofitable plant. The potential employees not hired are unseen.

One can empathize with innocent children born with birth defects. Such children and the adversity they face can be seen. One cannot empathize with as-yet-unborn children in rural communities who may not have access to pediatricians if a judicial decision based on compassion raises the cost of medical malpractice insurance. These children are unseen.

One can feel for unfortunate homeowners about to lose their homes through foreclosure. One cannot feel for unknown individuals who may not be able to afford a home in the future if the compassionate and empathetic protection of current homeowners increases the cost of a mortgage.

In general, one can feel compassion for and empathize with individual plaintiffs in a lawsuit who are facing hardship. They are visible. One cannot feel compassion for or empathize with impersonal corporate defendants, who, should they incur liability, will pass the costs on to consumers, reduce their output, or cut employment. Those who must pay more for products, or are unable to obtain needed goods or services, or cannot find a job are invisible.

The law consists of abstract rules because we know that, as human beings, judges are unable to foresee all of the long-term consequences of their decisions and may be unduly influenced by the immediate, visible effects of these decisions. The rules of law are designed in part to strike the proper balance between the interests of those who are seen and those who are not seen. The purpose of the rules is to enable judges to resist the emotionally engaging temptation to relieve the plight of those they can see and empathize with, even when doing so would be unfair to those they cannot see.

Calling on judges to be compassionate or empathetic is in effect to ask them to undo this balance and favor the seen over the unseen. Paraphrasing Bastiat, if the difference between the bad judge and the good judge is that the bad judge focuses on the visible effects of his or her decisions while the good judge takes into account both the effects that can be seen and those that are unseen, then the compassionate, empathetic judge is very likely to be a bad judge. For this reason, let us hope that Judge Sotomayor proves to be a disappointment to her sponsor.

Mr. Hasnas is a visiting professor at Duke University School of Law.

Wednesday, May 27, 2009

Some thoughts on homeschooling..

5/27: Letters to the Editor
May 27, 2009
Home-schooled children are smart, considerateIn Monday's Sentinel ("Home-schoolers, don't quit system"), Amy Platon argued that parents who home-school their children are creating citizens who will have less compassion for their community, avoid improving the lives of our fellow man and only look out for their own interests.As a professor in Orlando for the past 18 years and father of two home-schooled boys, I think I can respond to her concerns.The home-schooled students who come to my economics classes are, along with their counterparts from India, Russia and China, my best students. They earn the highest grades, have wonderful communication skills and are willing to help their fellow students. In fact, many of our nation's best universities seek out home-schooled students because of their unique life experiences and high SAT scores.In areas where my wife and I are not experts, the free market of ideas has provided experts. We use private-school clubs and programs, free-market educational resources and cooperatives with parents who are specialists in everything from electricity to pottery to provide our sons with an enriched learning experience. Moreover, through music and sports programs, we help our boys function in a society of non-home-schooled children.
Platon should be concerned that America's public schools rank at or near the bottom of international comparisons. If concerned parents want their kids to emerge from this epic recession as viable competitors with Chinese and Indian children, then looking into the home-school option would be a good place to start.Jack Chambless Oakland

Tuesday, May 19, 2009

Government as car maker...

The moment we have all been waiting for has finally arrived. The United States government is officially in the car business. The same government that has given us the wildly successful post office; public education; American-Indian reservations; the War on Poverty, drugs and terrorism; public housing; forest management and many other highlights in the history of things that don't work, is now poised to give us our future automobiles.
Let's take a moment to review how we got here.
First, the 'Big Three' American companies failed miserably to compete with Japaneses car companies from the early 70's on. With the help of the economically illiterate United Autoworkers union, American companies saw declining market shares, rising costs and inferior quality come home to roost.
Facing bankruptcy, two of the three run to Washington, D.C. to beg for the plundered tax dollars of people who drive Toyotas, Hondas, Hyundais and other cars that are not made by GM or Chrysler. Our government proceeds to hand them billions of dollars and a threat to come up with a better model in a couple of months (to replace what took decades to doom them) or face the pressure of federal intrusions into how to get us from point A to B on the highway.
Of course the beggars from Detroit failed to deliver on this impossible task and the Obama Administration, a.k.a, the "Superior Ones" ostensibly nationalized GM by taking a 50% ownership stake and condemned Chrysler be the certain death of being largely run by that world-class company, Fiat.
Now that the federal government has huge ownership stakes in both companies, the feds get to tell the companies what to do. Naturally, this means the companies will be forced to do things that have not even one remote connection to anything that the laws of supply and demand would insist they do.
In a free market, absent bailouts and takeovers by government, GM and Chrysler would be wise to file for bankruptcy, close every plant in unproductive, union states and move to places like Texas, Florida and other places where you can hire workers for far less than the absurd amounts the UAW workers get. Then, as smaller, leaner companies, GM and Chrysler could go about competing with Toyota and Honda on a playing field that Adam Smith would love.
Instead, on May 18th, GM CEO, Barack Obama announced that he will be determining what course of action the car companies will now face. HE has decided that all cars should get 30% better fuel economy than they do now by the year 2016. HE has demanded that this take place so that we can all fight global warming in smaller, lighter, less roomy death traps on wheels.
Take a look at the data for yourself. When government forces our cars to get better mileage, highway deaths increase.
These cars will cost more (Obama predicts $600 more) and will not have the same power or capacity that our vehicles do at this time.
Our marketplace used to tell car companies very clearly that size and power is what we want most. Now tree huggers and "Save the Polar Bears" activists will tell us what to drive.
With any luck we will get to drive cars like the East German Trabant (see photo) This is the car that gave Communism a bad name. Powered by a two-stroke pollution generator that maxed out at an ear-splitting 18 hp, the Trabant was a hollow lie of a car constructed of recycled worthlessness (actually, the body was made of a fiberglass-like Duroplast, reinforced with recycled fibers like cotton and wood). A virtual antique when it was designed in the 1950s, the Trabant was East Germany's answer to the VW Beetle — a "people's car," as if the people didn't have enough to worry about. Trabants smoked like an Iraqi oil fire, when they ran at all, and often lacked even the most basic of amenities, like brake lights or turn signals.
Road trip anyone???

Tuesday, April 28, 2009

An Economist's Solution to Bad Election Choices...

President Obama's first 100 days are almost over and, as usual, we have evidence that we are a nation that is rapidly devolving over time. From Messrs. Jefferson, Madison, Franklin to Messrs. Obama, Mrs. Clinton and Barney Frank is not what our liberty-loving Founders would have had in mind, but given the existence of universal suffrage it is to be expected that the quality of our "leaders" would deteriorate - and sometimes rapidly - over time.

The problem with our political system is simple. Every person 18 and up - even if they are idiots - get to vote. That makes no sense on numerous levels.

First, how many people from our government schools know anything about our Constitution? How many of them can tell you how long our nation went without an income tax, or what eminent domain is, or what the 'general welfare' clause means?

Without a firm undestanding of our nation's rule book - starting with the fact that we are a republic, not a majority-rule, heavy-handed democracy - how can any one claim that that they are adding value to the electoral process?

Second, under universal suffrage, we have a large segment of the population that uses thier vote to simply plunder the voter next to them. Voting for a living may seem, to our current socialist leaders, to be a perfectly acceptable proposition, but if one looks at the facts our Founders specifically said that no where in the Constitution lies a provision to take the private property of someone who is more productive than you. If I do that as an individual acting on my own I go to jail. If I do it on a Tuesday in November I am considered a good citizen for voting for the thief of my choice.

Third, why should someone who is at home at this moment smoking crack and watching 'American Idol' re-runs get one vote when Bill Gates gets one vote? Gates is far more important to our nation than the crack smoker and yet we have a system where unproductive people can, over time, out number productive people; get organized into voting blocs and push for candidates who pander to their desire to live off of the fruits of other people's labor.

To fix this we need to move away from the 'one person, one vote' nonsense and towards a system that weights your vote on how much you serve your fellow man. Of course, in our somewhat free market economy the way we measure your service is on how much money you create (earn) every year. Thus, a superior voting system would have a person bring a copy of their tax returns to the polling place on election day with a bar code that can be scanned. What would be scanned? The person's gross income (since net is simply a function of government's ability to steal property).

If you have a gross income of $33,529, that is how many times your vote for President, Senator, whatever, would count. If you served your fellow man to the tune of $23 million, you would get 23 million votes.

To make this system more efficient, any income you earned from government subsidies, bailouts, welfare, etc. would be excluded.

Yes, I am aware of the fact that people like Sean Penn, Ben Affleck and other rich, but Consitutionally ignorant people would get a lot of votes. But so would a lot more business men and women who don't vote for liberal socialists like Harry Reid, Nancy Pelosi and Barack Obama. They also don't vote for people like liberal-Republican John McCain.

They do vote for people like Ron Paul, Ronald Reagan and Lady Thatcher.

In other words, they vote for people who respect their right to earn and keep private property.

That, my friends, is what all of us who work need in Washington, D.C.

Monday, March 30, 2009

Daniel Hannan and our reality

I wonder who would have the courage to say this to George W. Bush or Barack H. Obama?

I look forward to your comments.

Jack Chambless

Tuesday, March 24, 2009

Rights vs. Wishes - some thoughts from Professor Walter Williams

We hear so much about "rights" -- a right to this and a right to that. People say they have a right to decent housing, a right to adequate health care, food and a decent job, and more recently, senior citizens have a right to prescription drugs. In a free society, do people have these rights? Let's look at it.

At least in the standard historical usage of the term, a right is something that exists simultaneously among people. A right confers no obligation on another. For example, the right to free speech is something we all possess. My right to free speech imposes no obligation upon another except that of non-interference. Similarly, I have a right to travel freely. That right imposes no obligation upon another except that of non-interference.

Contrast those rights to the supposed right to decent housing or medical care. Those supposed rights do confer obligations upon others. There is no Santa Claus or Tooth Fairy. If you don't have money to pay for decent housing or medical services, and the government gives you a right to those services, where do you think the money comes from?

If you said "From some other American," go to the head of the class. Your right to decent housing and medical care requires that some other American have less of something else, namely diminished rights to his earnings.

Let's apply this bogus concept of rights to free speech and the right to travel freely. If we were to apply it to my right to free speech, my free speech rights would confer financial obligations on others to supply me with an auditorium, microphone and audience. My right to travel freely would require that others provide me with airplane tickets and hotel accommodations. Most Americans, I would imagine, would tell me, "Williams, yes you have rights to free speech and travel rights, but I'm not obligated to pay for them!"

As human beings, we all have certain unalienable rights. Of the rights we possess, we have a right to delegate to government. For example, we all have a right to defend ourselves against predators. Since we possess that right, we can delegate it to government. In other words, we can say to government, "We have the right to defend ourselves, but for a more orderly society, we give you the authority to defend us."

By contrast, I don't possess the right to take your earnings for any reason. Since I have no such right, I cannot delegate it to government. If I did take your earnings for housing and medical services, it would rightfully be described as an act of theft. When government does it, it's still theft -- the only difference is that it's legalized theft sanctioned by a majority vote.

Decent housing, good medical care and decent jobs are not rights at all, at least not in a free society -- they're wishes. As such, I'd agree with most Americans because I also wish that everyone had decent housing, a high paying job and good medical care.

Monday, March 9, 2009

Adam Smith, Chris Gardner and the Rest of Us...

Monday, March 9, 2009

On March 9, 1776 the first of two earth-shaking documents on liberty were published. Of course we all know (with the exception of some of you who spent your youth in government schools) which document was published on July 4th of that year. Not as well known was the book by a Scottish professor of moral philosophy entitled, "An Inquiry into the Nature and Causes of the Wealth of Nations". This book by Adam Smith laid the groundwork for economic liberty all over the world. If you have ever eaten food, enjoyed shelter from inclimate weather or been able to avoid being naked in public you are the direct beneficiary of the infrastructure that was put in place by Mr. Smith when he argued that self-interested behavior, when pursued within the context of our "natural liberties" leads to society gaining goods and services far more quickly and effectively than when government planners set out to do the same thing.

Which brings me to my favorite economics movie - and a modern day hero in the world Adam Smith envisioned.A couple of years ago I had the opportunity to watch The Pursuit of Happyness with my teenage daughter. If you have not yet seen this film it is ostensibly about a man who attempts – over and over again – to overcome economic obstacles as he pursues his version of happiness. The lead character in the movie (played brilliantly by Will Smith), even mentions Thomas Jefferson and our constitutional right to pursue happiness.About half way through the film my daughter leaned over and whispered, “So daddy, do you still think the government shouldn’t help people like him?”

This was an extremely profound question inasmuch as my daughter has heard me in and out of the classroom discussing the economics, morality and Constitutionality of using tax dollars in the name of benevolence.John F. Kennedy once said, “I do not believe that Washington should do for the people what they can do for themselves through local and private effort.” As it turns out, JFK’s opinion is actually an important Constitutional fact, as well. If one takes a look at Article One, Section Eight, Clause One of our nations’ rulebook we can see that the Founders allow Congress to spend tax dollars on national defense, debts incurred in the protection of our rights and on expenditures for the ‘general welfare’ of our nation. Clauses 2-18 then enunciate what general welfare means. Any reading of the works of Messrs. Madison, Jefferson, etc. clearly indicates that the use of tax dollars to financially prop up any individual member of our society is prohibited.

The Founders felt that private initiative, family and charity – both secular and religious – were better tools to drive people out of poverty and into more productive, and ultimately more profitable pursuits.But what about people who are really trying to follow Adam Smith's lead but continue to bump up against the random walk of life that often knocks them down over and over again? Would it hurt anything if the arm of government, financed with the tax dollars of others, reached out just to those people with temporary aid?

This question came to my mind over and over again during this movie and I found myself slightly bending towards the more socialistic conclusion that a proper function of government is to help those who are really trying to help themselves. After all, even JFK yielded to the movement to create a social welfare state.Yet, by the time the movie had ended and I was walking in the parking lot with my daughter I was able to tell her that not only were the Founders still correct, but that the man depicted in that film had proven that without any government assistance people can triumph over enumerable odds. In fact, the astute observer cannot miss the fact that government turned out to be his largest enemy. The big issue to consider is this:If government could identify those who are trying (a monumental task), would those people keep trying once taxpayer aid arrived? Franklin Roosevelt once called welfare the “subtle destroyer of the human spirit.”

Not only has he been proven to be correct (and he was the first to sign off on welfare), but we are now faced with a growing perception by the elderly, the baby boomers, people facing foreclosure, GM, the banks and virtually every supporter of our new president that government should always assist us first before we dig down and find the fortitude to assist ourselves.As it turns out, Adam Smith, Thomas Jefferson and Chris Gardner had the right idea. If we can just get our fellow Americans to realize that the more government assumes our responsibilities the more power government gains to take away our liberty and private property, then we will be one day closer to turning the corner on this current walk towards socialism.

Tuesday, March 3, 2009

What "Trickle-Up" Economics will look like

When President Obama released the summary of his first budget for fiscal year 2010 he stated that the past eight years had "once and for all" refuted the notion that the economy can grow by letting wealthier Americans keep more of their earnings, or as Thomas Jefferson called it, "the fruits of their labor."
Of course while Mr. Obama was running for president he repeatedly claimed that we need to grow the economy "from the bottom up" rather than from the top down.

His budget is a fulfillment of his campaign promise to go after those who run our businesses and supply us with the things we want and need by raising the top two income tax brackets while expanding income tax credits to millions of Americans who - hang on to your seats - currently pay no income taxes.
How, you might ask, can you cut taxes for people who pay zero taxes? It is simple. If you are a poorer American who has a job you qualify for what the government calls the Earned Income Tax Credit. After taking your legal tax deductions to bring your income tax obligation to zero you then get a check - from the earnings of other taxpayers - on top of that. In effect you receive a welfare payment for getting up and going off to serve your fellow man.

Under the Obama budget he will give even more people a tax credit which will, according to estimates, lead to almost 48% of all Americans owing no federal income taxes at all. 52% of us would shoulder the burden for the more than $3.5 trillion budget he has envisioned for our nation.

Under his "trickle up" economics theory, by creating even fewer taxpayers at the bottom rung of the income scale we will get more people buying the things businesses offer for sale. More buying means more demand. More demand means more jobs, in theory, for those who will be needed to supply low-wage earners with goods and services.

The next several years will be a lot of fun for economists who study the relationship between income tax rates and economic performance. The "theory" of trickle-down economics has been studied for decades. The data from the U.S. in the 1920s, 1960s, 1980s and 1990s, along with data from China, Eastern Europe, Chile, Sweden, Ireland and other parts of the world is quite clear. When tax rates fall - especially rates paid by the most productive members of the economy - the jobs and wealth created from the top all the way down to the bottom is significant. In effect, poor people become relatively wealthy poor people in places that reward risk takers.

We have not yet seen what happens under the "trickle-up" theory. However, if hammering richer people during a horrible recession while cutting taxes for people who work at McDonald's leads us to the prosperity Mr. Obama claims we will see, I will be the first to argue that Mr. Obama should win the Nobel Prize in Economics.

Stay tuned....

Thursday, February 26, 2009

The Folly of "Community Service"

During his address to Congress this week, President Obama indicated that in exchange for a year of community service he would have the federal government provide financial assistance to people struggling to pay for college or other educational choices.

What nonsense.

First, this form of social engineering - government picking winners and losers based on government's judgment on what is good for America - is economically inefficient and morally lacking in legitimacy.

Let's say you are a student majoring in chemical engineering with a desire to leave school in four years and then pursue a paying job making environmentally-friendly fertilizers for some large corporation. You have decided - pursuant to your self-interest - that you would be able to best serve your fellowman in this fashion. Yet, to President Obama, this service - that might ultimately lead to less pollution from farm runoff - is not a form of "community service" because you got paid and your company is a profit-seeker.

To Mr. Obama, you would only qualify for greater tuition tax credits or direct taxpayer aid if you took your degree and then "volunteered" to help farmers in Alabama or Africa learn more about low-impact agriculture. By volunteering you have stepped into a morally superior (to the socialist) form of community service. One untouched by Adam Smith's treatise on self-love.

Since when did government officials become the final arbiters of what is moral or good? Why is your love of self - and money for your services - that leads to improving the lives of your fellow man a less noble pursuit than doing something for no money? Why does Mr. Obama get to say who deserves a tax break and who does not? When did government become the best judge of where engineers or accountants or hairdressers spend their time?

Community service is a wonderful thing, if pursued without the arm of government using the tax code to reward or punish. Community service can also come with a paycheck and profits.

Perhaps President Obama would serve our communities best by allocating his time to things that government is supposed to do rather than lecturing us on what we should be doing.

Tuesday, February 24, 2009

When Journalists are bad for the economy...

Earlier this week, NBC News political reporter, Chuck Todd appeared to discuss President Obama's budget - and his plans to raise the top income tax rate from 35% to 39.6%. Mr. Todd stated that - as a matter of fact - that this tax increase would lead to greater revenue and help reduce the deficit.

There are very few major universities that require or even encourage journalism majors to take an economics class. This is a shameful oversight that has helped spawn an entire wave of economic illiteracy that keeps viewers and readers in the dark when it comes to what economic policies work.

Mr. Todd would be well served to examine the long history of cuts - and increases - in marginal income tax rates before he states that tax hikes will lead to greater tax revenues. With a bare minimum of research he would be able to see that individuals react in a dynamic fashion to changes in taxes. That is to say that we will not see the most productive Americans say, "Oh, dear, I must now send the IRS 39.6% of my earnings."

We will see those Americans respond to the negative incentives of higher marginal tax rates by altering their behavior in ways that either lead to less revenue or a slowdown in the growth of income tax collections.
This week, Orlando Sentinel business columnist, Jim Stratton claimed that the U.S. economy was suffering the worst downturn since the Great Depression. Mr. Stratton is doing a great disservice to the readers of the Sentinel by ignoring, or being ingnorant of the fact that in 1980 the U.S. endured an unemployment rate of over 10% while the rate of inflation was over 13%. This "misery index" of over 23% is far greater than today where we have an unemployment rate of 7.6% and an inflation rate that is near 0% due to the decline in the demand for most goods and services.
Our nation relies heavily on "experts" in print and on television to inform us. Some, like ABC's John Stossel do a wonderful job explaining economics. It would behoove most of the other "experts" to avoid contributing to the disease of economic illiteracy.