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?

Published in: on February 18, 2011 at 9:20 pm  Comments (2)  
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Dr. Ron Paul: No Longer the Lone Ranger

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In 1983, largely due to the policies of the Fed Chairman Paul Volcker and President Ronald Reagan, the American people were finally rid of the burden of astronomical inflation. The policy of the Carter Administration attempting to offset unemployment with having the Federal Reserve print money was at last at an end.

At the same time, a fresh-faced congressman named Ron Paul (R-TX) decided that because of this, it was a good opportunity to investigate the very institution that had helped wreak havoc on the economy with runaway inflation. That same year, he proposed H.R. 877 a bill that would allow the General Accounting Office (GAO) to audit the Federal Reserve Board, the Federal Advisory Council, the Federal Open Market Committee, and the Fed banks and branches themselves.

Dr. Paul was able to garner only 18 co-sponsors on that bill, which died with little to no support. Like many of his bills, supporting liberty and transparency, it was sent to committee were it ultimately met its slow and unheralded death.

But, that was then and this is now. With the Federal Reserve, loose monetary policy, and impending inflation making headlines in the mainstream media, more attention is finally being paid to a near identical bill—H.R. 1207—that Congressman Paul reintroduced in February of this year.

Already, just four months later, H.R. 1207 has a staggering 237 co-sponsors. And now a full-blown audit of the shadowy, secretive, bureaucracy Wall Street Journal writer Steve Moore, in an interview with the Washington News Observer (WNO) calls, “a threat to representative government,” appears imminent.

The fact is, the history of the Federal Reserve is one that can be easily summarized with a foggy picture of Soviet-style central planning causing major booms and busts since the entity’s inception in 1913. For example in a recent WNO interview, Dr. Paul characterizes the Federal Reserve as being the creator of “the inflation of World War I, the depression of 1921, the inflation of the 1920s, and the Depression of the 1930 and on and on.”

Paul compares these events—each caused at least in part by the Fed’s loose money policies—to the current situation with the credit and housing crises, which have put the nation into a deep recession.

The purpose of the Paul bill, now gathering support, is to help Congress and the American people prevent another financial disaster due to the Fed’s constant policy of offering loose credit and encouraging bad lending practices. Plus, it will enable Congress to keep an eye on the current bailout money in order to prevent abuse and fraud.

One issue the bill’s sponsors on either side of the aisle seem to be in lockstep agreement on: the government-granted monopoly over one of the most important units of currency is way too much power to leave to an unelected body that, in one swift action with the printing press, could destroy a nation.

Now the former 2008 Presidential candidate, who was characterized in the media as being insane for bringing up reform in the area of monetary policy, is finding plenty of support. Or as Dr. Paul said in his interview, all of a sudden more than a quarter century after he first proposed it, “…now it is popular to get transparency of the Fed.”

It is as if “everything old is new again”—only this time, with teeth in it.

Justin Williams is a Contributing Editor of ALG News Bureau.

Published in: on June 24, 2009 at 3:48 pm  Comments (1)  
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Unemployment: Who is really to blame?

As soon as newly elected Democratic majority took over Congress in 2007, they aimed their scope at setting a new minimum wage. Unfortunately, while the Senators and Representatives were patting each other on the backs for passing the first bill that raised the minimum wage in nearly a decade, they forgot to consult any economics textbook.

Now with the United States deep in a lengthy recession and high unemployment continuing to rise, the latest installment of $7.25 an hour (from the original $5.15) that is on the horizon will undoubtedly put an enormous pressure upon already struggling businesses everywhere. And the result could be the most devastating round of “stagflation” since the presidency of Jimmy Carter.

On July 24th the government will force the business community to pay their employees for more than the market rate. But those businesses, already struggling just to keep their doors open, will not magically receive new revenue to pay those employees.

Instead, they will keep only their best employees and lay the others off. So while, the American people were told that the minimum wage bill was passed to help the low-skilled workers, it is in actually those very workers who would be hurt.

Now instead of more workers receiving higher wages, there will be more workers receiving no wages at all.  So much for government planning.

As unemployment rises, of course, more pressures are put upon the government to extend unemployment benefits. And more unemployment benefits add more government debt to an already bankrupt country.

And it is not just the federal minimum wage that Americans have to worry about, but also the state minimum wage laws. Many states raised their own minimum wage laws with the passing of this federal bill, exacerbating an already dire situation.

For example, states with more than a two-dollar increase in their minimum wage from 2006 to today had higher unemployment than those who had less than a one-dollar increase.

Over that time, states like California, Colorado, Michigan and Ohio, which have had a more than two-dollar an hour increase from their minimum wages, had their unemployment rates increase 6.1, 3, 6, and 4.8 per cent respectively.

On the other hand during this time, states like Alaska, Arkansas, Connecticut, and Maine, which had a less than one-dollar increase in their minimum wage, saw their unemployment rates increase only 1.5, 1.3, 3.5, and 3.3 percent.

Admittedly since the United States fell into a recession over that time, it is understandable to see higher than normal levels of unemployment. But it is clear that new restrictive minimum wage laws additionally fueled higher unemployment.

Simply put, minimum wage law causes a shortage of jobs and a surplus of labor. Both of which spell disaster for individual workers, as well as the economy as a whole.

So once the latest installment of minimum wage is fully in place, Americans will see more unemployment, a deepening recession, and a massive increase in unemployment benefits in coming months. This policy will make the economic recovery more difficult and the opportunity for the average Joe much smaller.

Luckily, for the Congressional Democrats and many state legislators who passed this law in 2007, the recession has taken the rap for the current rates of unemployment. This smoke and mirror has allowed the Democrats on the hill to shirk responsibility for the current crisis.

But once the American people see another spike in unemployment after the July minimum wage increase, these politicians who hurt the business community will have nowhere to hide, which seems only fair since so many of their victims will have nowhere to work.

Justin Williams is a Contributing Editor of ALG News Bureau

Published in: on June 17, 2009 at 12:03 pm  Leave a Comment  
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Anti-tax crusade to storm Capitol by David Lambro

Today’s article of the day is from the Washington Times:

The grass-roots “tea party” movement that swept across the country April 15 to protest federal tax and spending hikes will hold demonstrations in Washington and elsewhere this summer and fall when Congress will be battling over President Obama’s biggest budget proposals.

Leaders of the Tax Day rallies that drew an estimated 600,000 people in nearly 600 cities and towns say the seemingly spontaneous local protests have grown into a more muscular movement concerned that the escalating growth and cost of government threatens to undermine economic freedom.

Organizers say rallies are planned here and around the nation on the Fourth of July to tie the movement’s goals to the nation’s founding principles; on Sept. 12, when Congress is expected to be in the midst of debate over Mr. Obama’s plans on health care, energy and global warming; and on Oct. 2, when supporters expect that debate to be continuing.

“There is no central governing body behind this,” said Tim Phillips, president of Americans for Prosperity and one of the movement’s many informal leaders.

“It’s a genuine grass-roots movement, so I think you will continue to see an array of grass-roots protests giving voice to their concern that they have of losing their freedom, specifically their economic freedom.”

There appears to be no unanimity among the disparate groups around the country about the various rally dates.

“Some will say July 4, or Sept. 12, while others will have a rolling series of events in their localities,” said Mr. Phillips, who has been speaking at numerous gatherings since the tea party protests and has chosen Oct. 2 for his organization’s focus in Washington.

Since the protests made headlines around the country, the thousands of little-known, first-time protesters who organized and promoted the events appeared to have faded back into obscurity. But leaders monitoring these anti-tax-and-spend groups say they actually have been busy organizing themselves through a spurt of new Web sites and local meetings. Many have become involved in local politics.

“In some areas we’ve noticed tea party activists are getting involved in local government in school boards, town councils, and a lot of national Web sites are popping up to organize for another massive tea party day push,” said Adam Bitely, director of new media at Americans for Limited Government.

The Web sites have names like “” and “” Mr. Bitely runs, which aggregates all of the Web sites and reports on the movement’s progress. “It’s kind of a general post on what everyone’s doing,” he said.

Nearly a month after the protests stunned the traditional conservative community by their sheer size and spontaneity, veteran organizers here are still taking stock.

“I was surprised by the number of people willing to go out and demonstrate in public against spending too much [and] the spark of tax increases. It’s a much more sophisticated, philosophical electorate than I had believed existed,” said Grover Norquist, the veteran tax-cut crusader who runs Americans for Tax Reform.

“Nobody issues orders to this group, no one institution, no one person. This is the future of parallel organizing, person-to-person organizing, everything the Internet allows you to do,” he said. “This is a ‘leave me alone’ coalition.”

Early signals suggest that a large political head of steam is building under the upcoming demonstrations.

“I am amazed by the energy created by all of this and I think that is what you are going to see in Washington, D.C., on Sept. 12,” said Brendan Steinhauser, a coordinator for the free market advocacy group Freedom Works, chaired by former House Republican leader Dick Armey of Texas.

“Congress will be back in session after its August recess, talking about budgets. We’ve got 3,000 people signed up so far on our Web site, but it’s early and the energy level is high,” Mr. Steinhauser said.

The April 15 tea parties have already had an influence on Washington officials. Just days after the rallies, President Obama asked his Cabinet to find $100 million in spending cuts in their department budgets – a hastily-crafted initiative that Republicans ridiculed as a minuscule fraction of his $3.5 trillion budget.

Republicans, however, have been just as unsuccessful in tapping into this group of voters Mr. Steinhauser describes as “sort of a mixture of libertarians, independent-minded people who lean conservative and even Democrats who are leery of all this spending in Congress.”

“I’m not sure Republicans have learned how to tap into this group yet,” said James Sibold, the former DeKalb County Republican chairman in Georgia.

Ron Paul’s Economic Theories Winning GOP Converts by David Weigal

Today’s article of the day comes from the Washington Independent:

From time to time, a few members of Congress—as many as 10, sometimes fewer—gather with Rep. Ron Paul (R-Texas) to eat lunch and hear from an author or expert whose opinion he thinks is worth promoting. They grab something to eat off of a deli plate. They take notes. They loosen up and ask questions.

“It’s not all that easy for the other members to get here,” Paul said in an interview with TWI, sitting just outside of his office before heading back to Texas for a few days. “It’s just that there’s so much competition. Once they get here and they get going, they all seem to enjoy it.”

A funny thing has started happening to Paul since his long-shot presidential campaign ended quietly in the summer of 2008. More Republicans have started listening to him. There are the media requests from Fox Business Channel and talk radio, where he’s given airtime to inveigh on sound money and macroeconomics. There is HR 1207 , the Federal Reserve Transparency Act of 2009, a bill that would launch an audit of the Federal Reserve System, and which has attracted 112 co-sponsors. When Paul introduced the Federal Reserve Board Abolition Act just two years ago, no other members of Congress signed on.

And then there are the luncheons. The off-the-record talks have brought in speakers such as ex-CIA counterterrorism expert Michael Scheuer, libertarian investigative reporter James Bovard, iconoclastic terrorism scholar Robert Pape, and George Washington University law professor Jonathan Turley. Perhaps the most influential guest has been Thomas Woods, a conservative scholar whose previous books include “The Politically Incorrect Guide to American History” and “Who Killed the Constitution?: The Fate of American Liberty from World War I to George W. Bush,” and whose current book “Meltdown” has inspired Rep. Michele Bachmann (R-Minn.) to question Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner about economic fundamentals.

Paul’s unexpected and sudden clout with his fellow Republicans — even some of Paul’s staff have been surprised with the momentum of his “Audit the Fed” bill — come as the GOP engages in a tortured internal dialogue about its future. Since January, no small number of new coalitions have formed between current members of Congress, former advisors to President George W. Bush, and perennial party leaders such as former Gov. Mitt Romney (R-Mass.) and former Gov. Jeb Bush (R-Fla.). Few of those conservatives, however, have spent much time criticizing the very foundations of America’s modern economic system and worrying about a 1929-style crash. Few of them had a drawer stuffed with off-brand economic ideas and forgotten libertarian texts, ready to explain what needed to be done. Ron Paul did, and as a result the ideas that made the Republican establishment irate enough to bounce him from a few primary debates are more popular than ever. (more…)

Should the GOP give up it’s Corporate Affairs?

GOP Senator Jim DeMint wrote and article for the Washington Times saying that the Republican party should end it’s affairs with corporate elites. Here are a few portions from this piece:

“Earlier this month, the United States Chamber of Commerce handed out its annual “Spirit of Enterprise” awards to those members of Congress who voted with the Chamber 70 percent of the time on its most important legislative initiatives of 2008. The only four Republican senators who did not receive the award were Jon Kyl, Jeff Sessions, Jim Inhofe and me – four of the most conservative members of the Senate.

What were the conservative offenses? We opposed the failed bailouts and stimulus. Which explains why many liberal Democrats scored higher, including Barack Obama and Hillary Rodham Clinton.

The Republican who scored lowest of all – that is, the Republican lawmaker supposedly least aligned with the nation’s business community – was Ron Paul, a strong constitutionalist famous for his strict adherence to a free- enterprise libertarian philosophy.”

Which brings us to the title of this post. Should the Republican Party give up it’s Corporate Affairs? Ethically, this would be yes. It is obvious that DeMint is right and that the politicians are being rewarded for handing out taxpayer money. This is known in Public Choice Economics as rent-seeking, defined as when a politician hands out benefits to a small group while dispersing the costs upon the whole.

As this sounds like a good idea, is it practical? No. Politicians get elected by maximizing votes. They maximize votes by handing out favors to special interests. Corporations are special interest. The politicians will not get elected if they continually hold back from receiving legalized bribes and handing out favors. This may seem nuts to most people but it is not. These politicians and corporations are simply reacting to the incentives that they are faced with.

What politician doesn’t want to get elected? I haven’t met one. They are simply using the most efficient way to get elected in a political market. What special interest does not want to recieve money? I do not know of any. They are simply using the most efficient way to get money. As DeMint’s rhetoric sounds nice and he is rousing people like us, he will not beable to gain a large amount of followers who’s seats will not be put in jeopardy by such a move.

The rest is here.


Congress Complaining about a Monopoly they created?

This from Politico:

“[Rep. Mark Kirk] has written a letter — which within the last week has drawn 47 co-signers — to be sent to the architect of the Capitol, decrying the CVC’s new stance that only the Red Coats are allowed to offer Capitol tours. Before, congressional staffers were allowed to offer tours, as well. Not anymore.

This has created a huge problem in that there’s a backlog of people waiting for tours, as the online schedule fills up quickly, which means constituents have been going without. And that means MoCs are ticked. They don’t need to look unnecessarily bad because they can’t offer their voters a tour of the Capitol. “We’re headed for a spring break and summer train wreck,” Kirk rants, adding that the $600M CVC was paid for by the very people who are being denied tours.

“What’s happening is the Red Coats have aggregated a power to themselves never before granted, saying we are the exclusive provider of access for the people’s Capitol, and then they turn around and say, ‘There’s no room for you.’” Also, Kirk adds in disgust, “they only work six hours a day!”

Finally, the government is getting a taste of their own medicine. It used to be that every Congressman and woman could allow their interns to give tours of the Capitol building. It seems with the new Capitol Visitor Center only the red coated workers are allowed to. The problems with government monopoly are usually lower work hours, less work, and huge consumer dissatisfaction.


Published in: on March 9, 2009 at 6:44 pm  Leave a Comment  
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Seriously Congress, Do nothing…

This is a great article from the Christian Science Monitor:

“As we wait to see how the politicians in Washington will alter the stimulus package the Obama administration is pushing, many questions are being raised about the measure’s contents and efficacy. Should it include money for the National Endowment for the Arts, Amtrak, and child care? Is it big enough to get the economy moving again? Does it spend money fast enough? Hardly anyone, however, is asking the most important question: Should the federal government be doing any of this?

In raising this question, one risks immediate dismissal as someone hopelessly out of touch with the modern realities of economics and government. Yet the United States managed to navigate the first century and a half of its past – a time of phenomenal growth – without any substantial federal intervention to moderate economic booms and busts. Indeed, when the government did intervene actively, under Herbert Hoover and Franklin D. Roosevelt, the result was the Great Depression.

Until the 1930s, the Constitution served as a major constraint on federal economic interventionism. The government’s powers were understood to be just as the framers intended: few and explicitly enumerated in our founding document and its amendments. Search the Constitution as long as you like, and you will find no specific authority conveyed for the government to spend money on global-warming research, urban mass transit, food stamps, unemployment insurance, Medicaid, or countless other items in the stimulus package and, even without it, in the regular federal budget.”

I couldn’t say this enough.

The rest is here.


Dick Armey on Keynes and Hayek

This is a great piece in The Wall Street Journal written by Dick Armey. He shows great understanding of the field of Economics and how to apply it to the real world. Below I will put some of my favorite excerpts and you should read the rest:

“A father of public choice economics, Nobel laureate James Buchanan, argues that the great flaw in Keynesianism is that it ignores the obvious, self-interested incentives of government actors implementing fiscal policy and creates intellectual cover for what would otherwise be viewed as self-serving and irresponsible behavior by politicians. It is also very difficult to turn off the spigot in better economic times, and Keynes blithely ignored the long-term effects of financing an expanded deficit.

It’s clear why Keynes’s popularity endures in Congress. Intellectual cover for a spending spree will always be appreciated there. But it’s harder to see any justification for the perverse form of fiscal child abuse that heaps massive debts on future generations.


What everyone should agree on is that the money has to come from somewhere, either through higher taxes, borrowing or printing.

If the government borrows the money for the stimulus, then it will either have to print money later or raise taxes to pay it back. If the government raises taxes to pay for the stimulus, it will, in effect, be robbing Peter to pay Paul. If the government prints the money, it will increase inflation, which will decrease the value of the dollar. That would, in effect, rob Paul to pay Paul back with devalued currency.”

I couldn’t have said it any better. These are the exact things I have been saying all along. Of course, one person saying them a few times isn’t enough. We need people to continue and carry this message. A fiscal stimulus will always be popular for politicians so what we need is to educate the populous of all of this.

The rest is here.


The Case of Doing Nothing and Why it will never happen…

This was inspired by an article in Politico:

“Most of Washington has reached quick consensus: Government must do something big to shock the economy, and it should cost between $800 billion and $900 billion.

But dissident economists and investment professionals offer a much different take: Most of Washington is dead wrong.

Instead of fighting over what should go in the economic stimulus bill, pitting infrastructure spending against tax cuts and contractors against contraceptives, they say lawmakers should be fighting against the very idea of any economic stimulus at all. Call them the Do-Nothing Crowd.

“The economy was too big. It was all phantom wealth borrowed from abroad,” says Andrew Schiff, an investment consultant at Euro Pacific Capital and a card-carrying member of the stand-tall-against-the-stimulus lobby. “All this stimulus money is geared toward getting consumers spending and borrowing again. But spending and borrowing were the problem in the first place.”

This is the best course of action, or as I have highlighted before in the post where I explain macroeconomics and the business cycle, there are a few things that the government could do. Why is this considered to be unpopular or that it isn’t pushed more?

One possible explanation is that it is lack of education. People as Rubin point out in “Folk Economics” have a preconceived notion of how an economy works. The problem is their notion is wrong. Many people cannot wrap their heads around the two worlds. One is the micro-family world while the other is the macro-market. These two have very different methods of interaction. When you come down in the morning to get cereal, your mother doesn’t charge you for it. This is completely different when you go to a McDonald’s.

The other education issue is one that Hayek raises: as we seem to make progress in society, people seem to believe that they are not responsible for their actions. The problem is this is how a free society works. So what does this have to do with the stimulus? This is the part of the view on government that they are always the savior, that the problem wasn’t caused by me or by them and now they must protect us. Even Conservatives who are weary of the bailout will say “I do not know what has to be done, but something has to be done.” They are often taken aback when someone says “No, there isn’t.”

Congress, it is not your job to fix business cycles. You do not have all the possible information to fix it. This would require you to be god-like. I will leave you this Hayek quote:

“Liberty not only means that the individual has both the opportunity and the burden of choice; it also means that he must bear the consequences of his actions and will receive praise or blame for them.”


Published in: on February 4, 2009 at 12:42 pm  Leave a Comment  
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