ThrutchBlog
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I think this is an effective form of activism, particularly since it is also tied into the activist's job:
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Alex Epstein has a good two part post up at MasterResource.org. From part 1:
Consider the plight of the modern industrialist. Whether he wishes to construct a new apartment complex, open a coal mine, site a nuclear power plant, build a new factory, drill for oil, he cannot count on clear, objective laws to protect his right to develop. Instead, he must deal with open-ended environmental laws and near-omnipotent regulatory agencies that can forbid any project that is regarded as insufficiently “green.”[...]Industrial progress is not “green.” “Going industrial” requires a commitment to impacting nature as much as necessary to make it more hospitable to human life. And it is no accident that in generations past, Americans viewed industrial progress, not industrial abstention, as an ideal to strive for. Earlier generations took pride in transforming nature—in being a people that “tamed a continent,” that built new factories, that paved new roads, that drilled new wells, that mined the earth for resources. Whole towns would celebrate when a new bridge was built, when a factory was erected. They would proudly drive their automobiles, fly in planes, support new railroads, build new roads—without a shred of guilt over the fate of the two-toed sloth.From Part 2:
The idea of “environmental impact” is what philosopher Ayn Rand called an “intellectual package-deal.” Such a concept dishonestly packages together two very different things—the impact of development on the human environment and the impact of development on the non-human environment. Industrial development will certainly often harm various non-human environments—but it is a godsend to the human environment. By lumping together concern with the non-human environment (e.g., displacing some caribou to get billions of barrels of the lifeblood of civilization) and the human environment (e.g., air quality), anti-industrialists are able to dupe Americans into thinking that sacrificing to caribou somehow benefits them. -
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A good article summarizing some of the regulatory costs on businesses.
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Beth Haynes has a good column out at townhall.com. I particularly like this explanation, but read the whole thing:
The same people who say the ACA will not ration will also tell you that markets ration through prices. This is an erroneous portrayal of the role of prices in a free market. Free market prices are simply a signal. Prices do not ration any more than a bathroom scale makes you fat or thin. Free market prices reflect the relative scarcity of resources and then allowyouto decide how to allocate your own private resources. Free market prices are what people voluntarily pay; government rationing is an act of force. It's a fundamentally different kind of interaction when the government forcibly determines how your resources must be allocated—either by expropriating them first, as in the case of Medicare, or by mandating how you must spend them, as in the case of the individual mandate to purchase health insurance. -
John Allison and John Chapman provide a good overview of the merits of a gold standard.
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From Forbes:
"California is like France," he said. "I try not to hire here, and I certainly would not launch a company here. But the wine is good."[...]Now when Vector invests in a California company, the firm methodically asks: Which jobsmustremain here? Most go elsewhere.When Vector recently acquired a 140-employee technology outfit based in Sunnyvale, Calif., it sent nearly all jobs out of state. Developers, including some Ph.D.s went to St. Louis, where income taxes and living expenses are lower. Vector is hiring actively there from Washington University's graduate pools. Back-office jobs went to Asia. Only 10 people from the firm stayed in California."California is facing French-like entitlement systems that will only become more expensive," says Mehta. He's worried about ever increasing tax burdens on high-earners (like his engineers) and businesses. This is a clear factor when hiring senior talent. "These people are trying hard not to be based out of California. They hope to get seriously rich on equity, and are concerned about what will happen to California's tax code in the future," says Mehta. -
Remember when President Obama and his team promised that if only we passed an emergency “stimulus” bill allowing them to wantonly spend $787 billion, unemployment would be capped at 8%? Two years later, having soared as high as 9.8%, July’s unemployment rate stands at a dismal 9.1% overall, and at a staggering 25% for those aged 16 to 19! Throw in so-called “discouraged” and “underemployed” workers, and these rates increase by half again.
Simultaneously, the costs of the government’s massive redistribution efforts have torpedoed our once pristine credit rating, shell-shocked private business owners, disillusioned the few employed taxpayers who still remain, and sent consumer confidence to a new 30 year low.
Mercifully, however, there is a silver lining. It appears that the utter failing of all of Obama’s programs and predictions has him tinkering with something new. Rather than reflexively using more government force to further redistribute wealth and impede commerce, he’s actually considering restoring a modicum of freedom to the labor markets. In various speeches around the country, the President now says he’ll propose an extension to the temporary 2% reduction in payroll taxes that was instituted for 2011.
Recall that payroll taxes are imposed on both employees and employers allegedly to pay for future Social Security and Medicare benefits. In reality, the funds aren’t segregated and are effectively spent as they’re collected. As a result, payroll taxes constitute another form by which the government redistributes wealth.
Moreover these taxes are by no means trivial. Prior to the temporary 2% reduction, most employees had to surrender 15.3% of their earnings directly to Washington. This is a significant percentage, particularly when expressed as a fraction of an employee’s discretionary income. Indeed, many lower income earners have no discretionary income at all in large part due to the payroll tax.
Obama’s proposal then is a tacit acknowledgement that payroll taxes represent a hefty punishment for working and a powerful disincentive to hire. And while these taxes are damaging to every potential worker — they’re perhaps most harmful to those who don’t yet have the experience or skills to justify higher wages, i.e. to the young. No wonder a quarter of our youths can’t find a job.
So, possibly for the first time ever, I find myself agreeing with the President. Reducing the payroll tax is a good idea. But if a temporary 2% reduction is good, wouldn’t a permanent end to the entire 15.3% tax be much better?
Consider that under the President’s proposal, wages are still taxed at 13.3%, and would jump back to 15.3% in a year. That’s not exactly conducive to hiring. Why not fully apply the logic behind the reduction? Eliminate the tax entirely, so that anyone who’s willing, can once again be productively employed. And make the cut permanent so that private business owners — the people who create real jobs — can do so in a stable and predictable environment (something which would be a welcome novelty from this administration).
Now of course for anyone who’s fiscally responsible (which likely leaves out the President), a cut in taxes must also entail a counterbalancing cut in spending. Consistent with an end to payroll taxes would be an end to the programs they’re earmarked for. That means phasing out the immoral, Ponzi-like schemes of impossible promises which are our entitlement programs. (Elsewhere I’ve suggested a starting point on how to go about this. The basic idea would be to return the dollar amounts that people have contributed to the programs, but to stop accruing any more money towards them.)
Ending entitlement programs means that instead of treating workers as helpless wards of the State, they’d be recognized as the adults they are; fully capable of planning for their own retirements and healthcare. Put more broadly, it means abandoning government paternalism by empowering those who earn the money to save, spend, and invest it according to their own personal needs, values and priorities.
Understood this way, eliminating payroll taxes — and the paternalistic programs they’re associated with — is a win-win proposition whose time has come.
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I guess it's time to move the HUD up on the list of government programs to eliminate sooner rather than later. From an interesting WSJ article:
In the 1990s, the feds were embarrassed by skyrocketing crime rates in public housing—up to 10 times the national average, according to HUD studies and many newspaper reports. The government's response was to hand out vouchers to residents of the projects (authorized under Section 8 of the Housing and Community Development Act of 1974), dispersing them to safer and more upscale locales.[...]After a four-year investigation, the Indianapolis Housing Authority (IHA) in 2006 linked 80% of criminal homicides in Marion County, Ind., to individuals fraudulently obtaining federal assistance "in either the public housing program or the Section 8 program administered by the agency." The IHA released an update last month citing recent crackdowns on a "nationwide criminal motorcycle gang operating out of a Section 8 home." It also noted one "attorney who allegedly operated a law practice from a Section 8 home for eight years, providing shelter to unauthorized occupants who were linked to 10 homicides, 431 police calls and 394 criminal arrests during that time period."Read the whole thing.
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James Valliant has a well done article on the paucity of actual arguments put forth by the best of Ayn Rand's critics.
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Robert LeChevalier points out the perfectly appropriate logo for the Smithsonian's new "Department of Innovation": three gears that can't turn! How about we leave science and technology to the private sector?
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This 1 1/2 hour lecture is well worth listening to. I think that many of Dr. Kors' points illustrate the crucial importance of morality: if one treats the morality of altruism as unquestionable -- as the West (and indeed the world) currently does -- then no real lessons can be drawn from the horrors of communism, nor from its contrast to freer societies.
It's one of her many feats of intellectual genius that Ayn Rand could in effect stand outside of the ubiquitous moral climate and carefully question and analyze it (to spectacular effect). Armed with her analyses, the facts that Dr. Kors cites can't help but drive home the fact that altruism really is a form of zero worship (= death worship).
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This is a good chronology of the expansion of our entitlement programs. I think it illustrates clearly why the argument to disband the welfare state has to be taken to the moral level, i.e. if something is good but expensive, people will tend to advocate for it. The real issue is whether it's good (and what does judging the good entail).
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America’s financial situation is precarious. Over the past 8 years our national debt has doubled to $14.5 trillion and our total unfunded liabilities now exceed an astonishing $114 trillion. That’s $1,115,000 per federal income tax payer.
Even the most unrepentant spendthrift understands that these debts and liabilities are unsupportable, nor can they be solved by immorally targeting the rich. Instead, we must enact immediate, across-the-board spending cuts, with special emphasis on the biggest components of our financial wreck: Social Security, Medicare and Medicaid. These entitlement programs constitute the majority of our unfunded liabilities, because, despite being labeled “trusts”, they’re not actually savings plans.
Rather, the programs are essentially pay-as-you-go schemes. (What little surplus the trusts did accumulate was used to fund other government programs such that nothing’s been saved[1].) Operating this way has two terrible consequences. First, because funds aren’t saved and invested, they don’t generate returns. Thus there’s no compounding effect for any of the money that’s been withheld. Second, for every year that the programs are in existence, their total future liabilities increase.
Moreover, the programs have grown inexorably over time, partly because they were deemed good in principle, and partly because it takes nothing but a vote to increase benefits.
When Social Security was first rolled out in 1936, the promise was that the program would be very limited, both in terms of contributions and of payout. The most anyone would contribute was $360 per year including the employer’s contribution. By 2010 entitlement programs cost employees up to $12,648 for Social Security and an unlimited amount for Medicare (at a rate of 2.9% of salaried income). Promised — but unfunded — benefits grew even faster, with payouts exceeding inflation and the years of retirement coverage continuously increasing. By some estimates, a typical 66 year old couple today will get back double what they paid in. It’s no wonder that our entitlement programs are often compared to criminal Ponzi schemes.
A myopic focus on the short term may previously have allowed some to gloss over the long term insolvency of the programs, but that’s no longer possible. For we’re now rapidly approaching the time when the money deducted from employees’ paychecks is much less than payouts promised to program participants. Already today, approximately half of Medicare’s funding comes from general tax revenues.
Clearly then, our entitlement programs are an unmitigated financial disaster. But if we’re to properly deal with them, we mustn’t limit our analysis to economics alone. For after all, the deepest arguments underlying the programs aren’t financial — they’re moral. Indeed, much of the reason that there’s never been any reform of the programs is that, until recently, few would question the moral views of man’s nature upon which they’re justified.
What are some of these questions?
As recently discussed here and at length here, one fundamental question pertains to whether men are ends in themselves or means to others’ ends. I won’t recap the arguments, but suffice it to say that when the Founders created this land of opportunity (not of entitlements), they clearly enunciated a new — American — ideal in which each of us pursues our own happiness. This put them squarely in the camp of treating individuals as ends in themselves. It’s a camp to which more and more of us are proud to belong.
Another crucial question is whether, in general, men are capable of thinking and fending for themselves?
This question is best answered by observing people throughout history. Compare the success and can-do attitude of citizens living under freedom to those living under any form of statism and one has to conclude that — when left alone — men are eminently capable of thinking and fending for themselves. It’s only when the state removes and restricts incentives and choices that men become dependent.
For nearly two centuries, Americans — including millions of penniless immigrants — eloquently proved the point. The world marveled at the typical American’s self-reliance, be it his ability to earn a living, build his house, fix his car, or move up the social ladder. In every domain — when left free to think, act and enjoy the rewards of hard work — Americans surpassed themselves and the rest of the world.
But advocates of entitlement programs deny this. They view man (except perhaps that special breed which constitutes the governing class) as feeble and incapable. He can’t think or plan for himself. He must be forced to act for his own “good”. Indeed, as we saw with the passage of Obamacare, there’s no longer even a pretense of persuasion; we childlike peons are to find out what’s in store for us when the laws have been passed. Ever since the New Deal, it’s this paternalistic view that’s guided government policy.
Tragically, however, the paternalists have the causation backwards. In actuality, it’s their myriad of forced redistribution programs which has fostered a mentality of dependence among the populace. With each new program they implement, they further sever the link between personal action and personal outcomes. Slowly people lose the idea of individual responsibility and begin to believe that somehow they’re “entitled to”, or have a “right to”, the products of other people’s efforts. As a result, America’s independent spirit is waning.
A final key moral question is whether people should be treated primarily as independent individuals or as interchangeable parts of a larger collective?
Here again history provides ample evidence. Wherever and whenever they’ve been free to do so, people have exhibited differing values, plans and priorities. Societies succeed by respecting and catering to these individual choices and preferences; they fail when individuals aren’t even recognized. Take, for example, the contrast between the Free World’s outpouring of diverse and imaginative consumer products with the Soviets’ monotonously drab and barren output during the Cold War. Or the Maoists’ brutal mainland uniformity versus the flourishing trade and production of free Hong Kong. Or, for history buffs, the contrast between ancient Athenian and Spartan cultures.
But the evidence isn’t only historical, it’s also intimately personal. We each have unique dreams and aspirations which require differing paths and choices. No one else, much less the government, can know what’s best for us (despite what might be “good” for a fictional “average person”). College may be generally worthwhile, but the next Bill Gates might be completely justified in dropping out to start a business. Following a safe and steady career path may be good for most, but for the aspiring actor or musician, success may mean taking a very unorthodox route to that one big break.
Yet those pushing entitlement programs see it otherwise. They have a collectivized, one-size-fits-all approach to man. To whatever extent possible, the government should create and impose uniformity: All children should go to public schools until they’re 16. Patients should only be allowed to take drugs approved by some government board. Everyone should contribute 15% of their income to their future retirement and medical needs each and every year. Everyone should retire at 65. Etc.
Part and parcel of this collectivized view is the refusal to see individuals at all. Thus there’s no recognition that it’s particular people, engaged in particular processes and efforts, who earn and produce wealth. By dropping the individual from their world view, collectivists don’t have to confront the moral question of why they find it proper to take from some to give to others.
The result of these collectivist and paternalistic views is a continuous assault on individuals and their rights. This is borne out in the implementation of our entitlement programs.
For example, consider all those who haven’t yet acquired sufficient skills and experience for a potential employer to justify both their salary and the additional burden of a 15.3% FICA tax. Entitlement programs price these people out of the labor market and thereby contribute to our stubbornly high rates of unemployment — particularly among the young.
The same type of analysis applies to those employees trying to save enough to start a family or a business of their own. For many starting out, the 15.3% withholding tax represents a huge percentage of their discretionary income. Forcing them to prioritize retirement over other genuine values is inimical to their personal success and happiness. Contrary to the one-size-fits-all mentality, people’s circumstances vary widely, and there are often times in a person’s life when withholding for retirement is not a good thing.
Next, consider every responsible person who could have — and would have — saved and invested the equivalent of his mandatory FICA withholdings had he simply been allowed to. Over the years many wanted to opt out of the entitlement programs to build their own nest eggs, but they were prohibited from doing so in the name of protecting them from themselves. Now, thanks to our paternalistic caretakers, all that money is gone.
But it doesn’t end there, for not only is inclusion in these Ponzi schemes mandatory to employees, but when FICA contributions are inadequate, as they already are for Medicare, every taxpayer is forced to contribute to the deficiency via the general revenues.
As bad as all this is, perhaps the most egregious violation of rights comes in the treatment of future generations. Thanks to a complicit majority, those of voting age have for years now sought to burden (some might say indenture) the next generation with their retirement and medical bills. It’s a classic case of trying to have one’s cake and eat it too. Voters approve and enjoy all the current year spending to which their withholding taxes go, but still expect someone else — indeed a whole generation — to provide them with the very goods they refuse to set aside.
Redistributing wealth in any form is bad enough, but there’s a certain audacity to forcing the young and not-yet-born to become the primary victims. (This type of conflict is far from an anomaly; collectivist schemes to redistribute wealth always pit one group against another, here the strife they cause is intergenerational.)
Having now established the moral and economic bankruptcy of our entitlement programs, the question becomes: what do we do with them? Given how long the programs have run and how many people have been forced to participate, there can be no easy answer. But to get us started, why not look at an analogous situation? There are obvious differences between Madoff’s and FDR’s Ponzi schemes, but reviewing how Madoff’s is being handled does provide two valuable insights.
First, as soon as Madoff’s scam was discovered, it was shut down. Second, a trustee was appointed to return what funds remained, and then to reclaim money from anyone who’d knowingly or unknowingly profited from the scheme. In justifying this, the trustee appropriately decided that no one had a right to “fictitious profits” or “other people’s money”. Since there was no investment to generate returns, the most anyone could get back was the dollar amount they’d contributed.
With this in mind, here are some initial ideas on how to tackle our entitlement mess:
1) Stop the programs immediately. No one would accrue another cent towards Social Security, Medicare or Medicaid.
2) Continue to make Social Security payments on the existing schedule, but cap the lifetime payouts to the nominal value of past contributions. For younger people this would be an easy transition as they could plan their retirements accordingly. For some older people this would be more difficult, and in those cases of real hardship, they could be added to the welfare rolls. (Indeed, it’s been argued that entitlement programs are already a form of welfare.)
3) Convert Medicare and Medicaid to a monthly payment similar to Social Security and cap these to lifetime contributions as well.
4) Fund the remaining liabilities through the general revenues. This is already how SMI and Part D of Medicare are funded, but the difference here is that over time expenditures would taper to zero rather than growing exponentially as they do now.
Ending a fantasy is never welcome for those who want the impossible and who think that all they have to do is cast a vote to make it happen. Nor can there be any easy or completely just solutions to a colossal, multi-decade, Ponzi scheme. But the solution outlined above has several merits:
-- It ends the program.
-- No one is cut-off “cold turkey”.
-- Anyone who lives long enough gets back what they put in (less inflation).
-- Unemployment is reduced by the elimination of the FICA payroll tax.
-- People are once again able to prioritize their values and plan for their own retirements and medical care.
Finally, and most importantly, future generations can once again enjoy the freedoms and opportunities that were — and should be — this nation’s hallmark.
[1] President Obama recently admitted as much when he declared that Social Security checks might not go out absent a debt ceiling increase. In other words: we must incur new debt to pay for the programs since the “trusts” are empty.
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An interesting account of one coal miner deciding it's not worth opening another mine. (The comments contain more similar stories.)
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This is a pretty well done, short video explaining various aspects of capitalism's working, including how rich first adopters are necessary for technological advancements, and how even the poor in America today are much better off than the rich in previous times. The latter always reminds me of the time I went through Versailles and saw the gold pick that was used to get the lice out of Louis the XIVth's hair...
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I think this short post over at Marginal Revolution makes some important points.
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I thought this was a good way to present the numbers:
U.S. state and local governments will need to raise taxes by $1,398 per household every year for the next 30 years if they are to fully fund their pension systems, a study released on Wednesday said. -
Tom Bowden's blog post "The Constitution of Ayn Rand" is well worth reading.
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The Washington Examiner has a good column lamenting -- and warning against -- the further erosion of the rule of law in our nation. It's a very scary trend, which if not stopped soon (and on principle) may be impossible to recover from. The whole article is well worth reading, but here's an excerpt to whet your appetite:
One basic principle of the rule of law is that laws apply to everybody. If the sign says "No Parking," you're not supposed to park there even if you're a pal of the alderman.Another principle of the rule of law is that government can't make up new rules to help its cronies and hurt its adversaries except through due process, such as getting a legislature to pass a new law.The Obamacare waiver process appears to violate that first rule. Two other recent Obama administration actions appear to violate the second.One example is the National Labor Relations Board general counsel's action to prevent Boeing from building a $2 billion assembly plant for the 787 Dreamliner in South Carolina, which has a right-to-work law barring compulsory union membership. The NLRB says Boeing has to assemble the planes in non-right-to-work Washington state."I don't agree," says William Gould IV, NLRB chairman during the Clinton years. "The Boeing case is unprecedented."The other example is the Internal Revenue Service's attempt to levy a gift tax on donors to certain 501©(4) organizations that just happen to have spent money to elect Republicans. -
In an earlier post I'd wondered why we have debt limit laws if, every time we approach the limit, we "automatically" raise it (with claims of imminent financial crisis if we don't)? In researching the social security and medicare debacles, I realized we do the same type of thing with respect to those schemes:
The Medicare Modernization Act (2003) requires that the Board of Trustees determine each year whether the annual difference between program outlays and dedicated revenues (the bottom four layers of Chart C) exceeds 45 percent of total Medicare outlays in any of the first seven fiscal years of the 75-year projection period. In effect, the law sets a threshold condition that signals that a trust fund’s general revenue financing of Medicare is becoming excessive. In that case, the annual Trustees Report includes a determination of "excess general revenue Medicare funding." When that determination is made in two consecutive reports, a "Medicare funding warning" is triggered. The warning directs the President to submit proposed legislation within 15 days of the next budget submission to respond to the warning and requires Congress to consider the proposal on an expedited basis.This year’s report projects the difference between outlays and dedicated financing revenues to exceed 45 percent of total Medicare outlays during fiscal year 2011, prompting a determination of "excess general revenue Medicare funding" for the sixth consecutive report, triggering another "Medicare funding warning."It's as if just having the warning system makes people feel like they did something about the problem.
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Legendary hedge fund manager Stanly Druckenmiller was recently interviewed in the WSJ on the impact of a technical treasury default arising from our debt ceiling law. I agree with his main point and recommend reading the entire story:
"Here are your two options: piece of paper number one—let's just call it a 10-year Treasury. So I own this piece of paper. I get an income stream obviously over 10 years . . . and one of my interest payments is going to be delayed, I don't know, six days, eight days, 15 days, but I know I'm going to get it. There's not a doubt in my mind that it's not going to pay, but it's going to be delayed. But in exchange for that, let's suppose I know I'm going to get massive cuts in entitlements and the government is going to get their house in order so my payments seven, eight, nine, 10 years out are much more assured," he says.Then there's "piece of paper number two," he says, under a scenario in which the debt limit is quickly raised to avoid any possible disruption in payments. "I don't have to wait six, eight, or 10 days for one of my many payments over 10 years. I get it on time. But we're going to continue to pile up trillions of dollars of debt and I may have a Greek situation on my hands in six or seven years. Now as an owner, which piece of paper do I want to own? To me it's a no-brainer. It's piece of paper number one."(I'm also at a loss for why we even bother having a debt ceiling limit if everyone "knows" we just "have to" raise it any time we approach it?)
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I may be suffering from confirmation bias, but this report showing that "the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs" rings very true to me. Of course I doubt anyone could ever determine precisely what would happen in the absence of any particular government intervention in the economy, but we definitely know what it means in broad principle. This study fits that knowledge.
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From Bastiat to Hazlitt, the better economic writers have endeavored to draw our attention to the unseen, to that-which-could-have-been. It's a difficult task, which is why I very much appreciated a recent column in the WSJ comparing public education to private grocery markets. I found it an excellent device to make the point. Here's the opener, but be sure to read the editorial in its entirety:
Suppose that groceries were supplied in the same way as K-12 education. Residents of each county would pay taxes on their properties. Nearly half of those tax revenues would then be spent by government officials to build and operate supermarkets. Each family would be assigned to a particular supermarket according to its home address. And each family would get its weekly allotment of groceries—"for free"—from its neighborhood public supermarket.
Occupiers' First Taste of (Ultra Minimal) Responsibilities
in The Objectivism Meta-Blog Discussion
Posted
You couldn't make this up:
Read the whole story.
Automatic cross-posted from the ThruthBlog