Category: too much government

Categories
free trade & free markets too much government

Multiplication and Division

John Maynard Keynes’s most popular notion was his infamous “multiplier” effect. Spend some government (taxpayer) money, and the effects “multiply” in the economy, as if the Invisible Hand were on speed.

The truth is the reverse: “the divider” effect. Create government jobs and progress in the marketplace “divides” as a result of the increased taxes needed to support the jobs.

Our orator-in-chief also says he’s in the business of “saving jobs.” Like most politicians, he loves “multiplier” talk, because it gives him the green light to spend.

But, like the bank bailouts, what’s really happening with stimulus spending is that some people are getting raises and bonuses while the unemployment rate goes double-digit.

The actual multiplier effect regards talk. For every dollar government spends, politicians claim umpteen more jobs “saved.” It’s not reality. The multiplication effect occurs entirely in rhetoric and in PowerPoint presentations.

The New York Times tells us how “the federal government spent $1,047 in stimulus money to buy a rider mower” for a cemetery in Arkansas. Then, “a report on the government’s stimulus Web site improbably claims that that single lawn mower sale helped save or create 50 jobs.”

The magic of this sort of job creation doesn’t rest upon the logic of markets. Here the magic lies simply in the lying. The “multiplier” multiplies because politicians tell multiple lies.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies responsibility too much government

$800 Billion Gorilla

It somehow didn’t come up.

Last week, when President Barack Obama met with Chinese premier Wen Jiabao, there was reportedly no discussion of the fact that our country owes China over $800 billion.

Just suppose you owed someone $800 bucks . . . or $800,000. Do you think it could affect the relationship?

What about nearly a trillion dollars?

The Obama Administration just announced that American-Chinese relations are “at an all-time high.” But a story in the Washington Post compared our relationship with China to the nuclear stalemate of the Cold War, known as “mutually assured destruction,” or MAD. We’re dependent on them for future loans; they’re dependent on us to pay back old loans and new.

Kenneth Lieberthal of the Brookings Institution explained that “the Chinese can pull the rug out from under our economy only if they want to pull the rug out from under themselves.”

Reassuring? Not very.

Why have we allowed a foreign power to gain such leverage over us?

Because our politicians cannot — will not — limit their yearly spending to the trillion-plus dollars in revenue from American taxpayers.

When it comes to debt, China’s tyrants  have taken better care of their country than our politicians have of ours. But we needn’t cede them control. Far better simply to stop borrowing billions from Beijing.

How? Slash spending. If our politicians can’t do it for us, maybe they can do it for their Chinese allies.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Gross Jobs

The president says he’s creating jobs. I’m skeptical. I guess there are some things government can do to ensure that jobs get created, out there in the bill-paying, profit-making world. But these do not include spending trillions of borrowed money.

And neither do they include simply giving more money to state and local governments.

The truth about Obama’s much-ballyhooed job creation is that more than half of his alleged new jobs turn out to be government jobs.

Government jobs don’t count, Mr. President.

Remember, many things governments do actually drain us. Jobs in the marketplace, on the other hand, serve real consumer demand, make us all better off. They also help pay the taxes for those government jobs. Employing more people in government means needing more real jobs to pay for the government ones.

And how much work do politicians cause us to engage in just to unbury ourselves from their silly, wealth-extracting regulations? I know, I know: Every time they add on some new complication to the tax code, jobs emerge in the accounting and tax-consulting industry. But this doesn’t exactly make us better off, does it? Not on net.

This lesson applies generally. Here’s the bottom line. Government can borrow and tax to spend to create “gross jobs.” Sure. But on net, after balancing the collective books, we’re not better off.

This is Common Sense. I’m Paul Jacob.

Categories
local leaders national politics & policies too much government

Tea Parties Still Going Strong

The U.S. House of Representatives just passed a hulking health care bill bulging with burdensome new taxes and mandates. We can probably thank many well-attended Tea Party protests around the country that the vote was as narrow as it was, 220-215, mostly along party lines. Now it goes, weakly, to the Senate.

The New York Times says the legislation “would require most Americans to obtain health insurance or face penalties — an approach Republicans compared to government oppression.” Gee, I hope Republicans said such laws would be an example of oppression, not merely sorta like oppression.

All but one Republican and 39 Democrats voted No to the monstrosity. Maybe a few Democrats get the message that taxpayers are mad as heck and aren’t going to take it any more.

I like how the Cincinnati Tea Party activists are delivering this message. According to a participant’s report at InstaPundit, the group recently “organized an unprecedented four-day ‘We Surround Him’ demonstration” to show one Ohio congressman their commitment to liberty. For the first few days, the protestors strategically surrounded Congressman Steve Driehaus’s district to convey their message to voters.

Then they surrounded the congressman himself, stationing themselves around his office building. The protesters invited Driehaus to address them on the health care question, but he couldn’t be bothered. Perhaps he can be compared to a dead duck.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Derailed

You gotta love trains. You gotta, you might say, since we all pay for them.

In taxes, subsidies.

The federal government’s Amtrak system loses $32 for every passenger — averaging all the routes. According to a recent Pew study, most lines of the system ran at a loss last year, many at a huge loss.

The Acela line, in the Washington, DC/Boston corridor, makes a profit of $40.50 per passenger, when depreciation costs are figured in. But most lines aren’t so solvent.

On the other end of the country, the Cascades line loses over $32 per passenger and the Coast Starlight squanders $100 more.

But these losses pale besides the Sunset Limited, from L.A. to New Orleans, which loses a whopping $462.11 per passenger.

Many of these routes should just be closed. People pay the full costs of car rides and plane rides, in droves, right now. There’s no reason to throw more money on “the problem” of routes that already suck up big bucks.

Were all routes sold off, line by line, private enterprise would abandon some — and make the rest profitable. Or go broke trying. But it wouldn’t be your dime going for the losses, unless you choose to invest in a post-Amtrak rail line.

Instead of this, the Obama administration threw a dozen billion bucks at high-speed rail.

That way we can go faster — go broke faster.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Bernanke’s Pseudo-Semi-Solution

I’m not convinced. I’m not persuaded by Federal Reserve Chairman Ben Bernanke’s recent comments about how we must start trimming the nose hairs of the federal government’s runaway deficit spending.

Bernanke has been a great enabler of economic disaster. By pumping so much easy credit into the economy after the Great Internet Bubble popped early in the decade, Bernanke and his predecessor made it easy as pie to pile up all the bad housing loans that produced the Great Housing Bubble late in the decade.

His new solution? Massive new multi-billion bailouts of bad economic actors. More and faster pumping of the money supply. More and faster enabling of bad investments and bad debt by working to keep federal-fund interest rates vanishingly low.

Now Bernanke wants America to reduce its sky-high deficits — $1.42 trillion for fiscal year 2009. He says we need a “clear commitment to reduce federal deficits over time.” Sure Ben, sure. I don’t disagree. But talk is cheap. Especially vague, general talk that your own actions persistently belie.

Bernanke seems to have some inkling that the fantasy economy can’t persist forever. He has, alas, no real idea of how to return to reality. He’s the guy who blows up a dam and then wants to lay down some twigs to stop the flood.

Stop blowing up the economy, Ben.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies too much government

Will Politicians Ever Learn?

We don’t have time to research everything. That’s why, in theory, citizens have political representatives. They are supposed to research the issues for us, learn from past mistakes, and make improvements. Better laws. Better programs.

Welcome to reality. Instead of doing their job, politicians tempt us over and over with the same old, disproven get-rich-quick, get-healthy-quick schemes.

Peter Suderman, writing in the Wall Street Journal, looked at “The Lessons of State Health-Care Reforms.” He did what our federal politicians should have. “Like participants in a national science fair,” Suderman writes, “state governments have tested variants on most of the major components of the health-care reform plans currently being considered in Congress. The results…?” Suderman puts it bluntly: “[D]ramatically increased premiums in the individual market, spiraling public health-care costs, and reduced access to care.… The reforms have failed.”

He discusses Maine’s public plan, “Dirigo Choice,” which I’ve talked about before. He traces the cause of Massachusetts’s individual mandate to its horrible effects: higher prices pushing businesses and individuals to bankruptcy. Tennessee’s 1990 reforms proved even more destructive.

One of the reasons we’re even talking about reform, now, is because of past reform failures. By our careless representatives.

This is Common Sense. I’m Paul Jacob.

Categories
general freedom too much government

Wait Until Next Year

Enjoy the Major League Baseball playoffs. Me? I’ll be crying in my beer. Except that I don’t even drink beer . . . it messes with my sinuses.

I had very high hopes that the Detroit Tigers would make it to the playoffs, perchance to the World Series. In first place in the Central Division throughout June, July, August and September, the Tigers tied for first at season’s end with the Minnesota Twins. So after 162 games, it took one more to anoint the division champion. That 163rd game went back and forth for twelve innings. But we lost.

Boo and hoo. Not everyone can be a winner. Except, maybe, in another sense.

The corporate-government complex that has taken over baseball and most of professional sports has milked billions from taxpayers. Everyone pays for stadiums even as players and owners rake in extraordinary rewards.

We could all win if this subsidy system were stopped. The fans, especially, could rejoice, savoring in good conscience the game’s important lessons: The ethic of always working your very hardest, doing your best, never giving up.

It’s entertainment and solid lessons about life that I can share, even now, with my kids. This summer we had the opportunity to travel to Detroit to see one game. And then, sitting on our couch, we watched on TV until the final pitch, hooping and hollering enough to make my wife shake her head.

After the game, we complained about missed calls and blind umpires, reminding ourselves that there’s always next year.

This is Common Sense. I’m Paul Jacob.

Categories
initiative, referendum, and recall too much government

Pension Tsunami

A humungous national debt. Growing state federal government budget deficits. Social Security and Medicare, running out of funds. All very frightening. But look out: The costs of public employee pensions are walloping city and state budgets — pushing a number of California cities into bankruptcy.

Though the stock market tumble hasn’t helped, the basic problem lies squarely with politicians. They like to increase future benefits to gain political support from public employee unions; they then underfund their lavish promises, the better to hide the fiscal reality from today’s taxpayers.

Politicians keep running from the problem, but a website called PensionTsunami.com won’t let them hide. The site, run by Californian Jack Dean, offers a steady stream of horror stories:

  • A new report calls the Kansas Public Employee Retirement System “bankrupt.”
  • A Rye, New York, city manager makes $198,000 a year while still collecting a pension for the same job.
  • The chief actuary for the California Public Employees Retirement System admits that current pension costs are “unsustainable.”

All across the country, politicians consistently fail to act. Californians are lucky: They have the voter initiative. The California Foundation for Fiscal Responsibility, a group whose board includes Mr. Dean, is planning a statewide initiative to prevent their approaching tsunami.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies too much government

Expensive Solutions

I’m skeptical of the notion that climate change is being driven by human activity . . . and thoroughly unconvinced that the planet will continue to warm causing catastrophic results.

But what if? If the globe is warming, what to do about it?

For starters, sell your beach house in Florida. Global warming means ice sheets melting, oceans rising, shoreline lost.

But for those of us without the beach house, what is the cost of global warming compared to the cost of fixing the problem?

Bjorn Lomborg, author of the book, Cool It: The Skeptical Environmentalist’s Guide to Global Warming, looked at this question and concluded that solving the problem of climate change is not cost-effective.

Lomborg is indeed concerned about warming and says that in an ideal world we’d “solve it.” But he says we have to set priorities, and that “[w]hat we can do about [global warming] is very little at a very high cost.”

In a Washington Post column, Lomborg warned that the damage done — especially to the world’s poor — by cutting carbon emissions will far outweigh the benefits. The estimated cost from projected climate damage is $1.1 trillion dollars. The projected expense of cutting enough emissions to avoid that damage is $46 trillion.

I’m skeptical about global warming. But spending $46 for every buck saved takes me well beyond skepticism. I’m against any such idiotic plan. If we must have catastrophe, I prefer the cheaper one.

This is Common Sense. I’m Paul Jacob.