Archive for the ‘economics’ Category

I recently heard it said that liberals base their arguments on emotion while conservatives rely on reason. While I think it is true that modern liberals often appeal to emotion in order to advance their agenda (welfare, radical environmentalism, and such), they by no means hold a monopoly on the played-up emotional appeal. As with almost all examples of the liberal/conservative dichotomy, the two philosophies are remarkably similar in their use of this technique; they are the two sides of the same coin. A glaring use of emotion over reason is currently on display in the curious case of the Ground Zero Mosque.

It seems that Imam Feisal Abdul Rauf, founder of the American Society for Muslim Advancement, has purchased the Burlington Coat Factory building near the 9/11 Ground Zero site for $4.85 million, and intends to turn the property into a new 13 story mosque and Islamic center. The New York City Landmarks Preservation Commission has approved the project.

Outrage over the Ground Zero Mosque has poured forth from the conservative movement. The main points of their argument can be summed up in the online petition located at stopthemosquenow.com. The petition originated with the editors of the conservative organizations Human Events and Redstate.com. As you read the petition, notice the strong negative emotional language:

…the building, with its towering design, “triumphantly” peering down on the hallowed ground…

…constructed with questionable funding on a deliberately insensitive location…

…not an issue of religious tolerance but of common decency…

…to build a mosque at Ground Zero is to stab at the hearts of those who lost loved ones…

…we sincerely request that you do everything in your power to put a halt to this outrage…

Notably missing from this petition and almost all conversations about the Ground Zero Mosque is the fundamental issue of property rights. A secure system of property rights is what has allowed the United States to become the most wealthy and prosperous nation on Earth. The simple fact that American citizens are allowed to earn, possess, and improve their personal property is the cornerstone of our economic prosperity. Conservatives currently claim to champion the cause of liberty, specifically economic liberty, yet, in this case, they allow their strong emotions of hatred and fear for Muslims to handcuff their reason.

There may be other factors involved, including where Imam Rauf obtained the funding to purchase and build his project, but the fundamental issue in the case of the Ground Zero Mosque is simple: the owner of the property, operating within the law, can build what he pleases, be it mosque, mall, or monument. That’s property rights; that’s liberty; that’s America.


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As the House of Representatives and the Senate debate how to governmentalize our health care system, voices of private experts are arguing for a move in the opposite direction. The following 4 videos were put together by the Campaign for Liberty and feature Peter Schiff, Dr. Rand Paul, and Judge Andrew Napolitano.

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HamEarlier this week I wrote a silly little story poking fun at the federal government’s taxpayer funded website Recovery.gov. The point I was attempting to make was that anything the government tries to do, the private free-market can accomplish more quickly, at higher quality, and at far less cost to society. I didn’t really go into what information can actually be found at Recovery.gov, but now I think I will. Yes indeed, the following real report is just a little, er, taste of President Obama’s idea of “accountability and transparency”. By the way, do you like ham?

Take a good hard look at this contract report from Recovery.gov. Pay special attention to the parts I have highlighted in red.

Contracts – Recipient Summary
Clarification of Codes

Award Overview
Agency Name- Department of Agriculture, Project Location- LOS ANGELES
Contract Number- AG3J14120297196, Project Location – State CA

Funding Amount- $1,191,200, Project Location – Zip Code 90058-1800
Completion Date- 2009-06-30, Congressional District- CA-34

Recipient Information (Award)
Recipient Name- CLOUGHERTY PACKING, LLC, Recipient Address- 3049 E VERNON AVE
Recipient City- LOS ANGELES, Recipient State- CALIFORNIA
Recipient Zip Code- 90058-1800, Congressional District- CALIFORNIA-34

Description of Work/Service performed-

That’s right, this is a real report from Recovery.gov. An extremely large amount of money from the American Recovery and Reinvestment Act of 2009, $1,191,200 to be exact, was used by our government to purchase two pounds of sliced frozen ham.

I don’t even know what to say. I wonder how long it will be before this report mysteriously disappears?

Kudos to American Thinker.

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A ¬ A

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scifiA long time ago in a galaxy far, far away there spun a blue planet populated by a species called Zorgs. A particularly lucky group of Zorgs, eventually around 300 million of them, got together to form a nation they named Freeland. The Freelanders enjoyed a relatively peaceful and prosperous 233 years, interrupted only occasionally by wars, famines, and natural disasters. The prosperity of Freeland, as every Zorg kindergartner knew, was directly attributable to the Freelandish free enterprise economy. Zorgs of every stripe, regardless of their place of birth, were allowed to come and go and buy and sell as they saw fit. This system led the Freelandish way of life to be the envy of the entire Zorg planet.

As time went on, many Freelanders forgot what had made their nation grow and prosper. They stopped trading freely amongst themselves and began to depend more and more on the Freeland government officials to give them food, clothing, and huts to live in. Some Zorgs even forgot how to think for themselves and depended on the Freeland government and media to do their thinking for them. Each group of Freelanders attempted to convince their government officials that their small disadvantaged sub-race of Zorg was superior to all others and deserved special treatment. As a result of this downturn in personal initiative and intellect, the economy of Freeland, after many prosperous if over-leveraged years, began to slide into disarray. Many Freelanders found themselves out of work and even more dependent on the government to sustain them. The Freeland economic crash was so severe that it sent the entire economy of the Zorg planet into a tailspin.

Many Freelanders who remembered the old way of doing things hoped that the other Zorgs would come to their senses and stop their ridiculous dependence on the government. Unfortunately this was not to be. The Freelanders elected a group of government officials who immediately began to steal money from them and recklessly attempt to use it to “revive the economy”. The new government promised that it would tell the Zorgs how the money was being spent, so it used a great deal of the stolen money to launch the website www.recovery.gov, where any Zorg could look at how their stolen money was being wasted.eagle-nebula Unfortunately, the website didn’t show very much other than flashy nonsense and outdated information. A group of enterprising Zorgs called the Onvia Corporation launched a similar website, www.recovery.org, to track what the government was doing without using any stolen money and employing only ancient Freelandish free enterprise principles. Not surprisingly, the free-market website was vastly superior in the informativeness, timeliness, and usefulness of the data it provided to the Zorgs who used it. In fact, the recovery.org site revealed just how inefficient and ridiculous the Freeland government actually was. Zorgs who loved freedom cheered and celebrated. Private free market ingenuity had once again demonstrated its superiority over government bureaucracy. Unfortunately the Freelanders who had grown dependent on the government were too busy feeling sad and powerful to notice.

And so the economies of Freeland and the Zorg planet continued to decline into chaos, proving once and for all that the Zorgs were actually too lazy and stupid to make a go of it.

The End

[By the by, if you don’t care for science fiction, please make the following substitutions:

Zorg = human
Freeland = United States of America

These minor changes make the story 100% non-fictitious.]

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audit-the-fedHere is a letter I wrote my Congressman, Vic Snyder, back on April 2:


Dear Congressman Snyder:

I notice that HR 1207, the Federal Reserve Transparency Act of 2009, has been growing in co-sponsors and is now up to 55. This includes both Republicans and Democrats, indicating the wide, bi-partisan appeal of such a basic thing as auditing the privately-owned banking system that was granted power to issue our currency.

One thing that is disheartening me at the moment is your failure to join in as a co-sponsor for this basic common sense piece of legislation. At a time of trillions of dollars of present and future taxpayer money being thrown around like confetti, it would behoove those charged with the Constitutional task of overseeing our money system (the legislative branch, the U.S. Congress) to perform their basic oversight function. It goes without saying that any sensible representative of the people would see the wisdom in understanding what types of assets are being used to back our currency, as we have already unconstitutionally left the gold and silver backed tender in debt payments as explicitly laid out in Article 1, Section 10 of the United States Constitution.

I will continue to follow this legislation online and I expect that, given the above mentioned basic facts of the matter, you will see the sensibility in adding your name, as a representative of the people of our district, as a co-sponsor in this long overdue bit of oversight of the heavily secretive Federal Reserve System.

Failure to act in this regard will indicate a breach of your responsibility under the Constitution and will force me and others who understand the facts of the matter to campaign heavily against you in the upcoming 2010 congressional election.

Thank you for doing the proper thing and supporting this common sense legislation. Again, HR 1207: The Federal Reserve Transparency Act of 2009.

Garret Myhan

Well, it seems that the Congressman finally got around to reading my letter, because he signed on to H.R. 1207 today. Or maybe he just waited until a majority of his cronies in the House had sponsored it (the total number of co-sponsors is up to 242 now); apparently it is suddenly in fashion to audit the Federal Reserve, and I know how Dr. Snyder likes to be in fashion. Anyway, I’m quite sure that now I’ve seen everything, will wonders never cease, etc.

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HealthcareAlignment01I am a professional healthcare provider. It is natural, therefore, that I be interested in the big changes that will soon be coming to my profession. Barack Obama is proposing a complete overhaul of the U.S. healthcare system, ushering in a new level of government involvement. In response, the irrelevant Republicans offered their own plan to overhaul healthcare, apparently just so they could hear themselves talk, since no one else appears to be listening. Of course, both parties seem to think the way to improve healthcare in this country is to get the federal government more involved in the private medical and insurance markets. As usual, both parties are wrong.

The following article is one of the best I have read about the boneheaded attempts by the Republocrats to overhaul healthcare. It was written by Tom Mullen, author of the book A Return to Common Sense.

Politicians Talking Gibberish About Health Care

Every minute of every day, Americans are subjected to politicians and media pundits talking gibberish. There really is no other word for it, whether the particular subject is economics, foreign policy, or even climatology. However, the gibberish that is getting the most attention right now concerns health care “reform.” President Obama is leading the Democrats with the familiar socialist model that has failed in every industrialized nation in which it has been tried. The Republicans are answering with gibberish of their own. You have to especially admire the Republicans, because they are not only fomenting nonsense from a discredited, minority position, but are actually trying to suck up to voters by selling their version of government-run, loot-funded health care as a “free market solution.” Only the party of George W. Bush could be capable of gibberish like this.

To truly appreciate how bizarre the arguments are, let’s break down what our ruling class is really saying. Sometimes the music bed, the interruptions by the self-absorbed interviewer, or even the graphics leading into next segment can obscure the gibberishness of some of their assertions.

Let us start by examining the position of the Democrats. They assert that every human being has a right to health care, and that it is the government’s job to provide for those who cannot afford it. There are three key terms here: right, health care, and provide. Let’s define the first two.

Right: that which an individual is entitled to without the consent of or compensation to anyone else. For example, people have a right to life. That is, they do not need anyone’s permission, nor are they obligated to compensate anyone in order to live. It is appropriate for an individual to demand, rather than ask for, their right to life to be respected.

Health care: a service which primarily consists of the labor of health care providers. For example, a physician exerts his mind and body, utilizing his education and experience, to attempt to diagnose and treat a patient’s illness or injury. That physician’s labor is “health care.”

Let us now restate the argument made by the Democrats, using these definitions in place of the terms themselves.

“Every individual is entitled to the labor of health care providers without compensating them or obtaining their consent. It is appropriate for individuals to demand, rather than ask, that health care providers treat them for free.”


To be fair, although the Democrats repeat their slogan about the “right to healthcare” ad infinitum, they do not actually propose that the government defend this “right” directly. Instead, they use their own peculiar definition of the third term previously cited, “provide.” Americans continue to be bewildered by this parlor trick, whether because they are easily confused or because it is more convenient to be fooled than not. In any case, “provide” to the government means that they will employ the method described by William Graham Sumner where A & B get together to pass a law requiring C to do something for X. So as not to miss the opportunity to describe this plainly, this really means that they are going to use the brute force of government to force some people to pay for health care for others. That is all it is, when you peel away the doubletalk, jingoism, and spin.

Moreover, it is not just your property that the government will take in order to run its program. It will also require another huge portion of your liberty as well. In a recent speech about his health care reform plans, President Obama suggested that “we” must begin encouraging healthier lifestyles, including getting our children away from computer games and back to playing outside. “We” means “the government.” Of course, when it is the government’s responsibility to pay for the health care of other people, the government now claims a right on behalf of taxpayers to see that those people keep themselves as healthy as they can in order to limit the cost. There are already government-imposed exercise programs in Japan. Americans should be aware that the same rules will apply here. One can almost hear the government “instructress” from Orwell’s 1984 screaming from the telescreen.

“Smith W.! Yes, you! Bend lower, please! You can do better than that. You’re not trying. Lower, please! That’s better, comrade.”[1]

Political gibberish often conceals rather horrifying ideas. Thankfully, we have an opposition party that is opposing these heinous proposals, correct? As the people from Hertz say, “Not exactly.”

It is true that Republicans oppose a government-run health care plan. As reported in the Wall Street Journal, the Republican summary of their “Patient’s Choice Act” argues that “ The government would run a health plan “with the compassion of the IRS, the efficiency of the post office, and the incompetence of Katrina.”[2] All true, but of course the so-called party of individual liberty and free markets fails to argue the main point: the government – we the people – do not have the right to forcibly take money from one person and give it to another, not even for the purposes of paying for their health care. Nowhere in any report made public nor in any interview with a spokesperson for this “opposition party” will you hear this argument. There is a good reason for that.

Of course, the Republicans will argue that their plan works through the tax system and actually let’s families “keep more of their own money” to spend on health care, but a careful read of the WSJ article reveals that the same redistribution scheme is hidden within the stale “free market” rhetoric. First, the Republican plan would eliminate the tax exemption for employers when they provide health insurance benefits to their employees. This amounts to a tax increase on employers, whether they continue to provide the benefits or whether they eliminate them and merely pay taxes on the extra net income. What would the government do with this new revenue?

“Instead, it would give an annual tax credit of $2,300 to each individual and $5,700 to each family that they could use to offset the cost of their health insurance. Low-income families would get extra money to buy into private insurance plans.” [emphasis added]

So, in an effort to appear to be protecting the property rights of their more affluent base but at the same time buy the votes of those who cannot afford health care, the Republicans will simply tax those whom they think they can get away with taxing and call their own version of wealth redistribution a “tax cut,” much like George Bush’s “tax refunds” of the past decade. Of course, there is only one word for the suggestion that you can “cut” or “refund” taxes for people who are not paying taxes.


As usual, the American public is served up a carefully framed debate that attempts to appear to have two sides but doesn’t. In either case, we are getting “reform” of the health care system in the only way that any government can “provide” anything. They are going to forcibly take away the property (taxes) of one group of people and use it to provide property (health care) to another group. Lest anyone mistakes this brutal practice as “the wrong means to a compassionate end,” let us remember the only reason that politicians from either party suggest this: to buy the votes of those who believe that they will benefit from it. Since there are more who would receive benefits in the voting base of the Democratic Party, they are more open about what they are really doing. Since there are more of those who will be forced to pay in the base of the Republican Party, they try to spin their redistribution scheme as a “free market solution.” However, it is dressed up, it amounts to one thing; stealing.

In addition to ignoring the fundamental violation of rights that is part and parcel of any government provided service, both the Republicans and Democrats seem completely unaware of the root cause of the problem: health care is only so expensive because government already provides so much of it. This is the other elephant sitting in the corner whenever politicians from either party start talking about health care reform.

Last year, total health care spending in the United States amounted to roughly $2.4 trillion dollars. Medicare and Medicaid alone accounted for over $800 billion, or 33% of that. Add the Veteran’s Administration and other smaller government health care programs, and government is directly providing almost half of all health care delivered in this country. What does this have to do with the price? Any first-year economics student can tell you.

Price is determined by the intersection of supply and demand. Demand has two components: the desire to buy a good or service and the ability to buy that good or service. Let us assume that the desire for health care services is unlimited, as it is for many other goods or services. In that case, the only factor that can limit demand for health care services is ability to pay. This is the factor that most influences the price of every other good or service provided in the marketplace, including food, clothing, and shelter, which are even more vital to human life than health care. It is the finite amount of money that the buyers have to spend which keeps the price down and makes most goods affordable to those on limited budgets.

However, when government makes something an entitlement, demand suddenly becomes unlimited. Since the government now must provide the benefit and they have the option of taxing or printing what money they need to provide it, there is no longer anything holding down the price. This is the reason that we have seen health care prices skyrocket in recent decades. They will continue to rise until all resources are consumed trying to provide them.

State and local governments have already been experiencing this for years because of the exploding cost of their shares of the Medicaid programs (half of Medicaid benefits are paid by the states, some of which require their local governments to pay a percentage as well). They cannot print their own money, so they have instead cut their police forces and other legitimate functions of government in order to divert money to the insatiable Medicaid beast. In one local county in upstate New York, 100% of the property taxes collected in that county and $40 million dollars of sales tax revenue – the county’s only other revenue source – went to pay that county’s share of the Medicaid bill for their recipients. Now, it has been reported that the majority of the TARP funds that were supposed to go to “shovel-ready infrastructure projects” are instead being earmarked for “existing state social programs.” An audit of these payments would undoubtedly reveal that the bulk will go to Medicaid.

Economic laws are like the forces of nature. They can be held off, as a levy holds off a flood, but they will eventually overwhelm any attempt to violate them. The most fundamental economic law is this: you cannot consume more than you produce without taking the difference from someone else. Government produces nothing. Therefore, any health care benefit that government provides must be funded with money taken by force from someone else. There is no political theory, mathematical equation, or black magic incantation that can change this.

However, even if we are able to put aside the moral repugnancy of this practice, we cannot do so forever. Once voluntary exchange is abolished, market forces are suspended and the price of providing health care will rise until the government is no longer able even to steal enough to pay for it. That day was only a few decades away for the existing government health care programs before the economic crisis we find ourselves in now (which was similarly caused by government for all of the same reasons). If government attempts to provide everyone with health care, the end will come much sooner.

This sheds light on a fundamental misconception that underlies all of the societal problems that American society faces today: the belief that there is a conflict between individual rights and the “needs of society.” This conflict doesn’t exist. Protecting the rights of every individual serves the needs of society. Violating those rights, for whatever purpose, destroys society. In fact, it is by violating the individual rights of its constituents that government causes nearly every societal problem we face. The high price of health care is just one example.

There is only one moral and practical answer to the high cost of health care: we must get government out of the health care business entirely. That includes rejecting new programs proposed by either major party and figuring out a humane way to get our children out of the existing entitlement system without cutting off those presently dependent upon the benefits. The only lucid argument I’ve heard so far has been put forth by former presidential candidate, Congressman Ron Paul. He suggests that we dismantle our $1 trillion per year overseas military empire and use that money to pay Medicare and Social Security benefits while our children are allowed to enter the workforce without enrolling in the system themselves.

What do you know? A politician moved his lips and something besides gibberish came out.

Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!

[1] Orwell, George 1984 Part I Ch. 3
[2] Adamy, Janet “Republicans Offer Health-Care Plan” The Wall Street Journal May 21, 2009

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