Limited Government, Government Workers

I thought I would share my comments on a current debate that I am having with friends over whether limited government supporters are hypocrites for taking government handouts. Here is what I had to say:

“The issue at hand on whether or not taking government benefits is hypocritical, while criticizing government to me can be explained through public choice economics.  Gordon Tullock from George Mason (University), who should have won the Nobel Prize in Economics with James Buchanan, wrote a very interesting article that relates to this subject. It is entitled “The Paradox of Revolution.” He uses an interesting example…

“Ruritania is governed by a vicious, corrupt, oppressive, and inefficient government. A group of pure-hearted revolutionaries are currently attempting to overthrow the government, and we know with absolute certainty that if they are successful they will establish a good, clean, beneficial, and efficient government. What should an individual Ruritanian do about this matter? He has three alternatives: He can join the revolutionaries, he can join the forces of the repression, or he can remain inactive.”

He then comes to the conclusion that the benefit of revolution is public good, while an individual joining would have a near-zero chance of changing the outcome. But also, if the revolutionary forces win, he will benefit from the public good even if he does nothing. And doing nothing decreases his chance of jail, injury, or death if he joins and the government wins or puts up a good fight.

Therefore, economically, his incentive is not to join the revolution as the low probability of success combined with the large punishment for failure is much higher then the public good that he himself cannot influence but in the .00001 percentage.

A comparable example would be what if in a presidential popular vote election your chance of dying was 1 out of 10 and your chance of changing the election is 1 in a million. The individual would not vote even though he knows if his candidate wins the country will be better off.

So how does this relate?

Any individual who benefits from the government whether its a politician, a farmer who gets subsidies, or an government bureaucrat has no individual incentive to quit his job even if his believes are that his job shouldn’t exist say for example. The government bureaucrat knows that even though the public good would be better off without the existence of his job, does not mean that him quitting would change anything at all. More than likely the government would hire someone else and would spend more money doing so.

One government bureaucrat quitting their job, or in the case above one Congresswoman refusing her government health care is not going to change the outcome of government health care. All it does is impose costs on the individual and benefits to no one.

So folks, this is exactly why big government exists.

We assumed in the example above that we knew with 100% certainty that the new government would be the best government the world had ever seen. And that is a big assumption. Most revolutions that occur in the world are merely trading one dictator for another. One could argue that, in fact, the American revolution is one of the only examples in history (maybe the Roman revolution from kings to republic) is the only non-example of this.

Limited government is filled with public goods, while big government is filled with individual handouts and this is why every limited government in the history of the world has turned into big government.”

Book Review: Lincoln Unmasked by Thomas J. DiLorenzo

Imagine that one day everything that you were taught as a child comes out to be a mirage of the truth. What would you do? American children in public schools, including myself, are taught that honest Abe was a great man. He freed the slaves and united a nation, right? But what if it wasn’t so black and white? What if history overlooks a lot of the ills of Abraham Lincoln?

That is what Thomas J. DiLorenzo, professor of economics at Loyola College, tries (and does) answer in his book “Lincoln Unmasked: What You’re Not Supposed To Know About Dishonest Abe.” DiLorenzo does an excellent job of taking Lincoln piece by piece and dismantling the myths of Lincoln with chapters titled “The Great Railroad Lobbyist, The Great Protectionist, & The Great Inflationist.” When most people think of Lincoln they don’t think of his monetary and trade policies. But they should.

For example, most people do not know that pre-Civil War, there was no clear central monetary system in the United States. Andrew Jackson had just finished dismantling it and Lincoln was an strong supporter of a central bank and a national currency. This, of course, would hardly interest a 3rd grader learning about honest Abe, but is it very important in thinking about the way the country as a whole raises funds. With an unlimited central bank with a national currency that was backed in nothing, government spending could go hog-wild and it did.

Another interesting tidbit about the book was the state of slavery at the start of the war and how much wheeling and dealing the so-called “Great Emancipator” did to not free slaves. DiLorenzo points out that early in the Civil War Lincoln made it clear that he did not want to ban slavery he just wanted to centralize the government and keep the states together. This is shown with evidence through his agreement to allow border states to keep slavery as long as they stayed in the Union. Along with the fact that Lincoln actually was more supportive of a deportation of former slaves then to keep them here.

The last major point to take away from this book is the destruction of states rights and federalism. When looking back one might think that it was a slow demise but DiLorenzo suggests that Lincoln murders it outright. This is an important point to debate because federalism and decentralized government is good for the nation and at some point demised. And the reader must ask themselves, is it okay for a state to leave the union peacefully? And what role does that play in keeping the federal government in check? Though this might be one of the hardest concepts for an average American reader to grasp because with the sense of patriotism that has been indoctrinated it would be hard for them to imagine the United States without 50 states.

The only negative that this book has is that it is so short and a quick read. I am sure that this was Dr. DiLorenzo’s intention to have an easy read to spread the ideas to the masses but it left the reader wanting more. It also does such an efficient job at telling the story and illustrating the point that an average American reader may reject it thinking that they found the answer too easily and will not take the time to do the research themselves.

Overall, I highly recommend this book to all who want the other side of the story and love history.

5/5

 

Lincoln #1, FDR #2,… Why not George W. Bush #3?

Most of the time when historians rank President’s I ignore it. Like back in 2009 when U.S. News reported:

“President George W. Bush is near the bottom of the heap in the latest survey of historians on presidential leadership.

Bush received an overall ranking of 36 out of 42 former presidents—in the bottom 10.

…

The five best presidents, according to the historians, were Abraham Lincoln, George Washington, Franklin D. Roosevelt, Theodore Roosevelt, and Harry Truman, in that order. Rounding out the top 10 were John F. Kennedy at six, Thomas Jefferson, Dwight Eisenhower, Woodrow Wilson, and Reagan.

The worst presidents, according to the survey, were James Buchanan at 42, Andrew Johnson at 41, Franklin Pierce, William Henry Harrison, Warren Harding, Millard Fillmore, George W. Bush, John Tyler, Herbert Hoover, and Rutherford B. Hayes.”

So all “its too recent for history to tell” aside, let’s look at the rankings a little closer. So some of the top picks are Abraham Lincoln and FDR, which unlike Franklin Pierce, Warren Harding, and some of the lower ranked Presidents, governed over very traumatic periods of American History.

Abraham Lincoln faced the Civil War and the south trying to leave the union. FDR faced the Great Depression and World War II. President George W. Bush also faced these types of experiences with September 11th and the ongoing wars in the middle east. So when it comes to ranking Presidents by historians they must take more into account then just their “difficulties” they faced in office.

Maybe its how they handled them. Lincoln suspends habeas corpus and jailed thousands of southern sympathizers. FDR creates massive government bureaucracies and sends thousands of italian, japanese, and german immigrants for basically being from countries in which the United States was at war with. Bush instead used Congress to help enact the Patriot Act which allowed law enforcement to bend the rule of law to “suspend suspected terrorists” indefinitely.

So why is it that Bush does not rank up there with Lincoln and FDR?

I would suggest that he wasn’t enough of a tyrant. Who are the most remembered and liked individuals? Brutus, Cato or Caesar? Napoleon or the people that exiled him? Everyone, of course, always remembers the tyrant and rewrites history to make them seem more like a saint.

If George W. Bush really wanted to become a top ranked President by historians, he should have made the Patriot Act and executive order and suspended more of American’s rights.

This is by no means a defense of George W. Bush, nor is it an attempt to say that it is unjust or unfair that he isn’t ranked higher. The point here is that historians enjoy the dictators and tyrants of society and they look down on the Presidents that did little or nothing. When, in fact, it was the founders’ intent for the federal government to be restrained. And yet, we reward the very men who begin its downfall from limited government to massive controlling government with the finest statues and monuments to be remembered forever.

So do I think George W. Bush should be ranked #3 as one of the greatest President’s? Absolutely not. Should historians? Absolutely and there is no reason for them to not to. My personal list is almost a complete reversal with FDR and Lincoln on the bottom as being two of the worst. Now if they would only let me decide who’s faces would be on our currency. Oh wait…

Successful Businessmen Cannot Hide, Politicians Can…

An interesting find is brought up over at a blog called Bacon’s Rebellion:

“Eric “Young Gun” Cantor, the Republican House Majority Leader from Henrico County, seemed older and out-gunned Wednesday when new Republican members in the GOP-controlled House voted 233-198 to kill an alternative engine for the new F-35 strike fighter that even the Pentagon didn’t want.

More than half of the new Congressmen voted against the engine that the House’s older leadership, represented by Cantor and House Speaker John Boehner of Ohio, worked desperately to keep in the federal budget.

Their reason? Pure pork. The alternative engines would be built jointly by Rolls Royce, which has its North American headquarters in Virginia, and in Ohio where partner General Electric has big manufacturing plants. The House decided to drop the alternative and go with the main supplier, Pratt & Whitney, thus saving $450 million.”

So obviously Republicans like Bacon’s Rebellion look at this as an instance when the old harden Republican politicians vote for pork and the new saviors vote against it. Whether these new Congressmen continue their votes against pork is still to be seen. What the important lesson here to take away is how a politician like Eric Cantor can vote for pork and write a book about deficit reduction at the same time.

The best fake limited government politician will convince the general populous that they are for limited government, while voting for bills that will give money out to special interests that will continue to help fund their campaigns. This may be a hard concept for the reader of this blog to grasp because the very fact that you are reading this does not make you apart of the general populous.

So how does this differ on the free market with businessmen? First, think about the places you visit on a weekly basis and do you know what policies the business owner gives speeches on in his free time? No. Would you want to know? Maybe. But the truth is it doesn’t matter.

When you go and visit a place of business, you go to purchase something. You are only satisfied if the business owner meets your demands. For example, if you go to the grocery store looking for the best cut of steak then you will only be satisfied if you find what you are looking for. In Economic terms, if the producer supplies the demands of the consumer.

So how can a politician as a producer of policies satisfy the demands of the consumer? If a business man says “come to my grocery store and you will find the best filet cut in town” and upon arrival you realize it is chuck roast at best you will stop going there. But for some reason in politics Eric Cantor can say “I am a deficit reducer” and vote for an increase at the same time with little to no repercussion.

So I ask the reader this question. Free market or government coercion? Which of the two satisfy the demands of the consumer the best? If it is the free market then how can we apply that to government?

Stimulus Goals: What are the true causes and effects?

This from RealClearPolitics:

“White House press secretary Jay Carney says the Recovery Act added several million jobs and lowered the unemployment rate. According to Carney, the “goals” of the stimulus package “have been met.”

A reporter asked Carney why unemployment is at 9% and not 7%, the percentage projected if the stimulus worked. Carney dismissed the question. “We’ve said repeatedly that we don’t want to relitigate the battles of the past,” Carney told the reporter.”

But was it the act that added the jobs and lowered the unemployment rate? And if it was is it sustainable?

In order for the politicians in Washington to keep being elected, they have to convince the majority of Americans that they are “doing something”. What exactly they are doing doesn’t matter as long as the results happen. Now some may say that this is good because the results that are all that matter. But would we say the same thing about President George W. Bush running his 2004 campaign on the highest home ownership rate in the history of the United States?

Of course, now we see that it was a bubble that ended up making many Americans bankrupt. So how do we know, again assuming the government stimulus did work, that it too did not also create a bubble that will burst in the face of Barack Obama and Mr. Carney?

The arrogance of politics is that anything a President or Congress does while it is in office makes for whatever the best results in the economy are. Imagine that the boost in GDP and the lowering of unemployment was because of new technological innovation or that the country’s rich saved more money for investment and invested in new business, how would that have anything to do with building new roads by the stimulus?

It wouldn’t.

The American people must wake up first to the fact that politicians cannot create jobs. All they can do is shift valuable labor and materials to a different sector of the economy. That means that more labor and materials are being put in an industry that it would’t be in if it wasn’t for the government entering the market and bidding up the price.

So what are we losing for those falsely allocated materials and labor?

Ron Paul Winning CPAC: Real vs. Ideal

Almost everyone who follows politics knows that at the annual Conservative Political Action Conference libertarian-republican (if you can put those two words together) Representative from Texas, Ron Paul, won the straw poll. CNN has it here:

“The results of the Washington Times CPAC straw poll of presidential candidates are in, and the winner is Texas Rep. Ron Paul, with 30 percent of the vote. Former Massachusetts Gov. Mitt Romney was the runner-up with 23 percent.

There were 3,742 ballots cast in the annual survey, which is a chance for devotees to name their pick for president in 2012. Fifty-six percent of those surveyed said they were generally satisfied with the field of potential candidates and 43 percent said they wished the GOP had a better field of potential candidates. For those surveyed, the size of the federal government was the most important issue to them.”

In a lot of ways the above straw poll shows the state of the Republican party. The debate between the ideal and the real.

The Mitt Romney’s of the Republican party are going to argue that the Ron Paul’s of the party even with their good ideas are not electable, we should settle on someone like Mitt Romney, which they consider the real. The Ron Paul’s of the party will say that we should not settle for the ideal. So who wins?

Neither of them will ever win. This is what “Republicans” have such a hard time accepting. The system, which is our laws and policies, will never elect anyone who is for limited government. It just simply can’t happen. The current system rewards those that dole out to special interests and punishes those that stand for ideals. It doesn’t matter whether your limited government candidate is a Ken doll from a liberal state or a squirrelly off the cuff texan, he who will be elected will have to have friends in high places to do so.

Why is it the Republican party cannot accept this? Think about the majority of Republican party members. They usually hold one, if not all of these characteristics:

• Loves the Constitution
• Loves the American Flag
• Loves the Founding Fathers

Now, there is nothing wrong with loving these three things. But like a good love, they will break your heart. And the Republican party refuses to get over it. The founding fathers were great visionaries and they created a government that they would hope would stay limited. They did the best they could do and they should be honored for that. But that does not help us sustain a limited government.

Next is the Constitution and this is the real big one for conservatives. How many times have we heard “only if they followed the Constitution”? I know I have heard it a million times myself. But for some reason conservatives and the Republican party are okay with saying that. It’s as meaningless as a police chief throwing up his hands and saying “only if they followed the law.”

What we need to look at is why is it that the Constitution is not followed? And under what system would we have a more effective society? Is there an alternative?

Is Education A Waste?

…Mostly.

Take this excerpt from the book Human Action by Ludwig von Mises:

“In order to succeed in business a man does not need a degree from a school of business administration. These schools train the subalterns for routine jobs. They certainly do not train entrepreneurs. An entrepreneur cannot be trained…. No special education is required for such a display of keen judgement, foresight, and energy. The most unsuccessful businessmen were often uneducated when measured by the scholastic standards of the teaching profession. But they were equal to their social functions of adjusting production to the most urgent demand. Because of these merits the consumers chose them for business leadership.”

Think of all the successful businessmen in the United States. We often laugh at the stories of famous billionaires who do not have a college degree. Bill Gates, Henry Ford, and John D. Rockefeller to name a few. So then why is it that, as a society, we continue to send children to school after school after school if the true success stories are born from those who have no formal education?

Well, the debate would be that the above men are just outliers. But the truth is they are not. Take for example, my mother and father, they never achieved anything past a high school diploma and now they are more successful than many of their peers with college degrees.

The truth is that the only place you can spend your money, in the United States, tax-free is on education. At the same time, millions of dollars in aid, loans, and scholarships are also being pumped into the system. And for what? So that the future entrepreneurs can be droned into mid-management?

The only advantage that an education can gain you after high school is getting you into an area of profession where the degree is mandatory. No degree is mandatory in most start-up businesses, so I would urge those to reconsider. Careers with some of the most unlikely places like fast food or retail sales can actually lead to very fruitful careers. Imagine putting in 4-5 years in with one of those companies versus a university that you are paying. Something tells me that in those 4-5 years you will be making more than you would with a general liberal arts degree.

And one thing to keep in mind as you roam the halls with the thousands of others who just like you are searching in a university for your career that just like with the housing bubble the government will continuing to subsidize education until the values hit rock bottom…

Almost Two Years…

It has been almost two years since I have updated this website. As someone would say the opportunity costs have gone up, so the productivity of this blog has gone down. I am here now with a new resolution to revive this blog and make it back to the resource it once was. The opportunity costs are still high but I will try post at least once a day. Beginning today…

 

Book Review: An Inconvenient Book by Glenn Beck

“An Inconvenient Book” by Glenn Beck in a lot of ways sums up what is wrong with the Conservative moment. It is filled with claims that use zero economics, when in fact economics should be their friend. Glenn Beck, who has become very popular among both Conservatives and Libertarians, has done a good job on his show in supporting the free-market and bashing Obama. But after reading this book I wonder what the Glenn Beck show would look like with a Republican held White House and/or Congress.

The book is written very well in that it reaches out to all types of readers and in a lot of ways makes you laugh. It has some of the best info graphics I have ever seen in a mass market book. So as far as the words and pictures, it is a great book. But the content fall short.

A few parts of Mr. Beck book has caused me to write two separate posts on tipping and on running out of oil. I will not dwell on these subjects but I urge you to read them if you think that this review fall short on criticizing content.

The very first chapter on Global Warming was very good and uses good non crazy arguments against the Global Warming advocates. But soon after that he goes into topics in which most people who buy his book. Chapters on Marriage, Porn, Body Image, Renting Movies (not kidding) and Blind Dating are pointless and useless. I know that often time we pretend that pundits are experts on politics, but that does not stretch into other areas that are more personal.

His chapters on the Minimum Wage, Opinion Polls, and Poverty are much more productive and provocative. But many of the time his solutions fell short. Take illegal immigration, which is the chapter he decides to end his book on. This probably means that he thinks very highly on the subject and that he wanted to leaving a lasting impression so it should be the best written.

First, he plays in this paranoia of a super corporate group has control over the United States government and keeps the border from being secure. And his solutions are to build two fences and hit the employers hard. Besides the fact that a Conservative is making an argument FOR government, the two ideas are just moronic.

The fence is very expensive as he wants “double layers of fencing with road in between for patrols, concrete vehicle barriers, surveillance cameras, and tunneling sensors.” He says it would be $20 billion. First, if this is a government estimate you can trust it is wrong. Also what about the maintainance of this. And really if people really want to get into America, is this going to be effective?

Sidenote: Glenn, when you want to compare figures for people do not use “how much 9/11 cost the City of New York.” First, it wasn’t on purpose. Second, it was a terrorist attack.

Next, he wants to hit the employers. I guess he is already assuming that his fences will not work and he is a Conservative against small businesses. All small business are trying to do one thing: survive. Glenn Beck must not think that there is going to be any red-tape involved on already small struggling business.

And let’s think about the reason why businesses hire illegals, part could be minimum wage but mainly it is because they are hard works and can outwork some of us “non-mexicans.” And consider the costs. The business owner is choosing someone who they have a hard time communicating with over “non-mexicans.” That means we Americans are very inefficient workers. So wake up, you cannot be pro-free trade and anti-illegal labor force.

So overall this book is not worth reading or buying. It was a huge let down and it made me think a lot less of Mr. Beck.

Rating: 1/5

Words as Signals and Nothing Else

The old saying goes “A man is only as good as his word.” Wrong, the correct saying is “A man is only as good as his actions.”

Words are simply signals for action. If someone acted like your mortal enemy but said I love you, which side would you err on?

If someone said they were sorry and they did it to you all over again, which side would you err on?

Think of this in a different context: Man asks cute girl on a date. Cute girl says that she will be at coffee shop ‘A’ at 11 am. Man shows up and hours upon hours tick away. The man can see the whole store, so when the girl says later “Oh, I was there. Where were you?” It would’t hold.

Saying that you are somewhere doesn’t make you there and the same goes for love and apologies.

When thinking about politics the key is to say the right things. “Hope, Change, Political Correctness, etc.” But this is completely backwards compared to the rest of society. The whole problem with everything else in the world is getting people to live up to what they say. Or in other words, make people follow their words through with action.

Why is it that human society has based their politics based upon what people said and not what they do? And do not go off yet, it is on both sides.

If someone stated that Congressman Joe Wilson who shouted “you lie” when President Barack Obama stated that his health care plan wouldn’t cover illegal immigrants had in fact supported a previous bill that did, would many of Wilson’s supporters know the real answer?

And I understand that people are rational ignorant when it comes to politics. But why is the equlibrium at what they say? Why isn’t it at zero? Could it be possible that no listening to a politician at all would give people a better chance at guessing what policies they promote? For example, if you ran the experiment, two citizens in 2001. George W. Bush is elected and now we are in 2002. By the end of his administration, who has a better chance of predicting if George W. Bush will support Medicare expansions? The guy who watched the news and listened to the speeches or someone who paid no attention at all?

The obvious answer here is the person who paid no attention at all. Why? Well, Bush expanded Medicare with part D while claiming to be a fiscal conservative.

There you have it, I support rational absolutely ignorance over rational speech listening only ignorance.

I mean how else are we going to stop the Barack Obamas and the Nancy Pelosis of the world from talking about a bill that hasn’t been finalized… I mean you wouldn’t trust a car salesman who had never seen the car, would you?

~PCCapitalist