Tobacco, Smoking, Cigarettes, Sin Taxes, Obesity, Health Care Costs, Lost Tax Revenue, Abortion, Deficit and Debt

Posted by PITHOCRATES - June 5th, 2012

History 101

The Government saves Money in the Long Run when People Smoke because they Die Earlier than Nonsmokers 

A lot of people like to smoke.  Before we knew any of the adverse health effects of smoking it was as wholesome as apple pie in America.  American tobacco was one of the first cash crops of the United States.  Because it was in such high demand throughout the world.  During the American Civil War many officers chain-smoked cigars.  We put cigarettes in our soldiers’ C-rations in World War II.  Some of the most iconic photographs of battle-weary soldiers, seamen and airmen have a cigarette dangling from their mouths.  Our favorite parents from the Fifties’ sitcoms smoked cigarettes in their homes with their children playing on the floor at their feet.  If you watch AMC’s Mad Men everyone smoked cigarettes.  All of the time.  At work and at home.  In restaurants and in hospitals.  Even while pregnant.  Then the attacks against Big Tobacco began.

First they started with the sin taxes.  Greatly increasing the cost of cigarettes.  Which increased their opportunity costs.  People had to give up other things to continue to enjoy their cigarettes.  Especially the poor.  The rich still could enjoy their cigarettes without making sacrifices in their life.  And kept on smoking.  Movie stars and rock stars always have a cigarette hanging out of their mouths.  To look cool.  Which is why teenagers started to smoke.  Not because of Joe Camel.  But to look cool like their favorite movie stars and rock stars.  So people kept smoking their cigarettes.  While the government bureaucrats started tallying the health care cost of smokers.  To recover the health care cost of smoking government bureaucrats sued Big Tobacco.

According to ‘health care experts’ in the government smoking costs the health care industry some $100 billion annually.  Which is why they’re constantly raising taxes on cigarettes.  Why they sued Big Tobacco.  And why they’re ostracizing smokers everywhere by making almost every area a nonsmoking area.  But they still haven’t made smoking illegal.  Why?  High sin taxes and lawsuits.  Smoking is a cash cow for government.  And the dirty little secret about smoking is that the government saves money in the long run when people smoke.  Because of those sin taxes.  And because smokers die earlier than nonsmokers.  Up to a decade or more.  And it is in that last decade of life that seniors cost government the most.  Another decade of Social Security benefits.  And Medicare and Medicaid benefits.  Those benefits smokers paid into all of their lives.  Who forfeit them when they die early (and they don’t get passed on to their heirs).  Unlike the nonsmokers who don’t have the decency to die before collecting all of their Social Security and Medicare benefits.  Adding another decade or so for a whole sort of health ailments to inflict their fragile bodies.  Requiring more hospitalization.  Medication.  And nursing home care.  Expenses smokers help cut short by dying earlier.  Such as from an early heart attack before they even get a chance to have a lengthy and expensive hospital stay.

The Loss Tax Revenue from Abortions in the Eighties over Three Decades is Approximately $4.98 Trillion 

So government is increasing the opportunity costs of something people enjoy.  Smoking.  When in the long run smokers’ early deaths save the government money.   Not to mention those sin taxes fattening the tax pot when they’re alive.  So it’s a specious argument that the government is spending more on them in health care costs than nonsmokers who live another 10-20 years.  So why do they do it?  To boost tax revenues.  And smokers are just a convenient scapegoat.  Like the obese.  Where those on the Left make the same arguments.  Where according to ‘health care experts’ in the government obesity costs the health care industry some $150 billion annually.  Even though these people like smokers live shorter lives.  So while they’re consuming that $150 million the government is keeping about 10-20 years of their contributions to Social Security and Medicare.  So it is again a specious argument that the government is spending more on obese people than thinner, healthier people who live 10-20 years longer.  Who could, say, fall and break their pelvis requiring an extensive and expensive hospital stay.  As well as rehabilitation and possibly nursing home care.  And yet those on the left have campaigned to remove toys from Happy Meals.  And made it illegal in New York to buy a big cup of soda pop.  Why?  Again, to boost tax revenue.

All right, let’s go to the source of that tax revenue problem.  Let’s look at a decade of lost tax revenue.  From 1980 to 1983 there were about 1,300,000 abortions each year.  In 1984 there were 1,333,521 abortions.  In 1985 there were 1,328,570 abortions.  In 1986 there were 1,328,112 abortions.  In 1987 there were 1,353,671 abortions.  In 1988 there were 1,371,285 abortions.  In 1989 there were 1,396,658 abortions.  In 1990 there were 1,429,577 abortions. 

Had these abortions not happen in 2006 there would have been an additional 1,300,000 taxpayers aged 26.  In 2007 there would have been an additional 1,300,000 taxpayers aged 27 and an additional 1,300,000 taxpayers aged 26.  And so on.  If you crunch the numbers over a 30-year period by decades you get an additional 72,006,665 people paying taxes at all levels of government in the first decade (2006-2015).  An additional 146,913, 940 tax-paying people in the second decade (2016-2025).  And an additional 88,169,092 tax-paying people in the third decade (2026-2035).  The average age in the first decade is 29.  It’s 32 in the second decade.  And 42 in the third decade.  Assuming those age 29 earn on average $30,000 annually, those age 32 earn on average $40,000 annually and those age 42 earn on average $50,000 we get the following incomes per decade: $2.16 trillion, $5.88 trillion and $4.41 trillion, respectively.  Assuming that we pay approximately 40% of all our earnings in taxes at the city, state and federal level the lost tax revenue (at all levels of government) for those same decades equals $864.1 billion, $2.35 trillion and $1.76 trillion, respectively.  For a grand total of loss tax revenue for those three decades of approximately $4.98 trillion.  Or on average $165.9 billion per year.  These numbers are conservative.  Yes, some of these people may not survive to become taxpayers.  But some of these could become millionaires and billionaires, paying more in taxes.  There could have been another Lady Gaga, Madonna, Oprah Winfrey, Warren Buffet, Bill Gates, Barbara Streisand, George Clooney, Steve Jobs, etc.  A few of these added to the calculations would make the lost tax revenue numbers larger.

From the Government’s Perspective Abortion has a Far Greater Opportunity Cost than Smoking and Obesity 

This is the opportunity cost of the abortions in the Eighties.  So much loss tax revenue that the government has attacked smokers and the obese.  Whose health care costs are not adding much if anything to the federal budget.  Thanks to their early deaths compared to nonsmokers and thin people.  (If the government starts refunding remaining Social Security and Medicare benefits to the surviving family that may change.)  Yes they are costing the health care system.  But their costs are just brought up earlier in their lives as opposed to someone living 10-20 years longer making the nursing home to hospital to nursing home roundtrip a few times in the last 10 years or so of their life.  Because they have lived so long.  And had a chance to suffer every disease and trauma those smokers and obese can’t due to their early deaths.

It is interesting to note that the federal deficit in 2006 was $282.14 billion.  The lost tax revenue from the Eighties’ abortions was on average $165.9 billion per year in those three decades.  Granted not all of that money would have been federal taxes.  But with the conservative estimate of that loss tax revenue it is safe to say it would have come close to balancing the federal budget.  And if you factor in the abortions of the Seventies (there were fewer than in the Eighties but they would have been higher earners in the 2000s) the federal deficit may have become a surplus.  At least holding the federal debt to the $9.34 trillion it was in 2006.  Perhaps even reducing it.

Smoking and eating an unhealthy diet may be bad for you.  But it probably doesn’t cost the government anymore in tax dollars.  But they increase the opportunity costs of these things we enjoy to dissuade us from enjoying them.  So those who enjoy smoking and eating and drinking ‘bad’ things enjoy life less.  By not choosing what they want to choose.  Why? To pay for the lost revenue from another choice that government doesn’t try to dissuade people from.  Abortion.  Which from the government’s perspective has a far greater opportunity cost than smoking and obesity.  And yet government paints a bulls-eye on the back of smokers and the obese.  Why?  Because they’ve so demonized and oppressed them they can.  While the abortion issue too much of a sacred cow to those on the Left.

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State Capitalism in China earns a lot of Tax Revenue from Big State Tobacco

Posted by PITHOCRATES - February 4th, 2012

Week in Review

Big corporations are evil.  That’s all you hear from those on the Left.  These people hate corporations.  Capitalism.  And the private sector in general.  Where people pursue profits.  Instead of the wellbeing of our fellow citizens.  Like they do in China.  Where state capitalism rules supreme.  And the government puts people ahead of profits (see Poisonous gift posted 1/28/2012 on The Economist).

China’s tobacco industry is both owned and regulated by the government. It makes and sells more than two-fifths of the world’s cigarettes—2.4 trillion in 2011, 3% more than in 2010. The government says the industry took in profits and tax receipts of 753 billion yuan ($119 billion) in 2011, an annual increase of over a fifth. Production, sales and tax receipts are likely to increase for years to come.

Yes, the economic model that those on the Left want us to adopt is worse than Big Tobacco.  For the tobacco companies in China not only kill people in pursuit of big profits.  They’re owned by the government.  So it’s the government killing people in pursuit of profits.  Funny.  Because state capitalism isn’t supposed to work that way.  At least, that’s what those on the Left would tell us.  Government is good.  Corporations are bad.  Yet here is government being worse than the corporations.

Perhaps state capitalism is not all it’s cracked up to be.  Perhaps government can be just as bad as corporations.  Or even worse.  For corporations clearly state that they protect the interests of their stockholders.  Government is supposed to protect the interests of the people.  So who is worse when people get hurt by smoking?  The government, of course.

So why do they do it?  For the same reason the U.S. government won’t criminalize cigarettes.  They want people to smoke for the same reason the Chinese government wants their people to smoke.  The tax receipts.  Addiction is good.  It fills the government coffers.  And as long as it does people will be smoking.  Governments everywhere will make sure of it.

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Government’s Insatiable Greed will always Keep Smoking Legal

Posted by PITHOCRATES - March 18th, 2011

The FDA may Ban Menthol Cigarettes

Everyone knows that smoking is bad for you.  When you go to the hospital part of your diagnoses includes “Do you smoke?”  And your answer to this question will determine your treatment.  It’s that bad.  And we all know it.  Have known it for the longest of time.  The only thing keeping smoking alive in this country appears to be cool celebrities who smoke.  And kids who want to be cool emulating cool celebrities who smoke. 

Well, it looks like things may be changing.  Cigarettes now fall under the jurisdiction of the FDA.  And they may be doing something to put an end to this filthy habit (see FDA panel says ban on menthol cigarettes would benefit public health by Andrew Zajac, Washington Bureau, posted 3/18/2011 on The Los Angeles Times).

A Food and Drug Administration advisory panel Friday said that “removal of menthol cigarettes from the marketplace would benefit public health in the United States…”

Antismoking groups hailed the panel’s advice and urged the FDA to follow through with a ban.

Yeah, well, don’t get your hopes up.  It is unlikely that the government will ever ban menthol cigarettes let alone tobacco products in general.  Why?  They’re addictive.  Well, yeah, you say, that’s why the FDA wants to ban them, yes?  They’re bad for you AND they’re addictive.  I mean, what government that cares for its people wouldn’t want to ban these horrible, nasty things?  I’ll answer that with one word.  Taxes.

Tobacco companies also warned that a menthol ban would lead to a large black market, loss of tax revenue and make it easier for underage kids to smoke.

The 12-member advisory committee acknowledged that development of a black market was a possibility, but left it to the FDA to determine the seriousness of the threat.

A black market is serious.  Because it would only compound the loss of tax revenue problem.  And that’s what the government sees when they look at cigarettes.  A very lucrative stream of tax revenue.  And they will never turn off that spigot.

Big Government Loves Big Tobacco

For the non-smokers out there, have you noticed the price of a pack of cigarettes?  They’re pretty expensive.  But it’s not the tobacco companies making them expensive.  It’s government.  There’s federal and state taxes.  And some cities even add their own tax.  They’re all jumping onto the gravy train.  They thank God for the tobacco companies and their addictive products.  They’re great for taxing.  And even suing.  Government just loves them.  And the last thing anyone in government wants (at any level) is for anyone to quit smoking.

Let’s start at the top and work backwards.  The federal excise tax currently on cigarettes is $1.01 per pack.  State taxes vary.  Virginia, where they grow tobacco, adds $0.30 per pack.  The lowest tax is Missouri which adds only $0.17 per pack.  New York tops the states and adds $4.35 per pack.  All the other states fall somewhere in between, averaging $1.45 per pack.  (All cigarette tax data pulled from Campaign for Tobacco-Free Kids).

Some cities and counties add their own tax.  New York City adds $1.50 per pack.  Chicago adds $0.68 on top of the $2.00 Cook County adds.  As you can see, cigarettes can be very lucrative to government.  As long as no one quits smoking.  So you can be pretty sure that government won’t ever kill this golden goose.

Balancing Budgets on the Backs of Addicted Smokers

But governments can get greedy.  That dirty, sexy money can do this to you.  It’s intoxicating.  And there’s just so much of it.  So they keep raising their taxes.  But sometimes they go too far.  Because it’s a small world after all.  And there’s another state just a short drive away.  Across the border (see Chicago Cigarette Tax: Study Shows 75% Of Chicagoans Buy Cigarettes Out Of City by Will Guzzardi posted 5/20/2010 on The Huffington Post).

According to the University of Illinois at Chicago, 75 percent of sampled cigarette packs found on the streets of Chicago come from out of the city, costing roughly $120 million a year in revenues…

When the packs were collected in July 2007, state and local taxes on a pack of cigarettes in Chicago totaled $4.05. They were only $1.37 outside of Cook County. This made Chicagoans 60 percent more likely than their collar-county counterparts to shirk cigarette taxes.

Increase taxes and sales drop.  And ‘black market’ activity increases (smuggling out-of-state cigarettes across the border).  A very profound lesson that so few in government ever learn.  Because of their greed, of course.

The fear of sending business to Indiana may poke a hole in the ambitions of state lawmakers hoping to create a budget for the coming fiscal year. With Gov. Pat Quinn’s controversial plan to increase income taxes unlikely to come to fruition, the state is at a loss for new revenues. And cuts to public services like education have been met with vocal opposition.

Legislators have repeatedly argued that a new cigarette tax would help stave off some of those education cuts. But with the General Assembly already on recess and no resolution in sight to the budget mess, this new report may only serve to impede consensus in an increasingly fractious legislature.

Hmmm….  Using cigarette taxes to pay for education?  Funny.  Those law suits against Big Tobacco and the high taxes on cigarettes were always to counter the ill effects of smoking.  Or so said government.  Could Scott Walker be right in Wisconsin?  Could the salary and benefits of public sector workers be so great that they have to take money from health care to pay for them?  Perhaps.

New England/New Jersey Adopt Reaganomics

Of course, one state’s financial woes are another state’s gift.  Especially for those businesses near the border (see NH, RI, NJ buck trend, propose cigarette tax cut by The Associated Press posted 3/18/2011 on Yahoo! Finance).

Bucking a national trend of raising cigarette taxes, New Hampshire, New Jersey and Rhode Island have considered reducing theirs, hoping to draw smokers from other states and increase revenue…

It’s very unusual for states to lower the tax, University of Illinois at Chicago economics professor Frank Chaloupka says. The increase in sales isn’t enough to offset the drop in state tax revenue, he says.

Instead of lowering the tax, states have enacted 100 increases over the past decade, he says.

Of course, they’re applying the opposite lessons of Chicago.  Cut taxes, increase sales.  And decrease black market activity.  At the expense of their high-tax neighbors.  Chicago would love to hate these states.

Smoker Aaron Evans stopped Thursday at a convenience store in Haverhill, Mass., for a sandwich and a pack of Marlboro cigarettes. The pack cost him $7.13. A couple of miles away, a bigger pack of the same smokes would cost him $5.99 at a market in New Hampshire, which already has significantly lower taxes than Massachusetts.

That’s the funny thing about people.  They just don’t shop for the best price when shopping for a plasma TV.  They ALWAYS shop for the best price.  And if lower taxes are only 15 minutes away, guess what?  People will save money and drive the extra distance.  Even if they have to buy in bulk to offset the added cost of driving.

Danny McGoldrick, research director for the Campaign for Tobacco-Free Kids, said other states aren’t cutting their tax rates in these tough fiscal times because they need the money. Raising the tax, he said, produces revenue despite resulting in a desired decrease in the number of smokers.

But state Rep. Christine Hamm, a Hopkinton Democrat, called the move “fiscally stupid.”

“No state has cut their tobacco tax and seen a revenue increase,” she said.

I can think of a state that cut taxes and increased revenue.  The United States.  When Ronald Reagan cut the tax rates, federal receipts nearly doubled by the time he left office.  Cutting taxes works.  For a very simple reason.  People have more money to buy more things.  If they spend all of their disposable income on cigarettes, they may not eat out as often.  And a waitress may lose her job.  Who then has to cut back on her spending.  And so on.  The more money you keep in the private sector, the more economic activity there is.  And the more economic activity there is the more taxes government can collect.  But this is another profound lesson that so few in government ever learn.

Cigarette Taxes Pay for Public Sector Workers

For all their talk government doesn’t want smokers to quit smoking.  That’s why they will NEVER ban cigarettes.  They make far too much tax revenue on smokers.  And cigarettes are better than alcohol.  Because you can smoke and drive.  Smoke at breakfast.  Stand outside and smoke at work.  Smoke at dinner.  At the bar.  After sex.  Hell, to government, smoking is sex.  Nothing is better.  They can tax the bejesus out of it.  And because everyone knows smoking is bad for you people accept these outrageous taxes.  Even smokers.  Because we so demonize them that they think, well, yes, I guess I deserve it.

And the ill health effects of smoking?  It’s a pretty specious argument when municipalities are raising cigarette taxes to pay for their public sector workers.  When you raise cigarette taxes to pay for teachers you’ve lost that argument.  Which leaves nothing but greed.  And this is why cigarettes will always be legal.  And taxes will be high.  Because of government’s insatiable greed.

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LESSONS LEARNED # 50: “What do the great entrepreneurs have in common with politicians? Not a whole hell of a lot.” -Old Pithy

Posted by PITHOCRATES - January 27th, 2011

Cigarettes may be Bad for You, but they’re Good for Government

Government services cost money.  A lot of money.  And there are only a few ways government can get money.  They can tax their citizens.  Borrow money.  Or print money (if they’re the federal government).  When the government provides only the bare essentials for its populace, they can usually pay for those services with the taxes they collect.  This is the best way to pay for things.  It has the least adverse affect on our money.  And our credit rating.  But you have to be careful not to dampen economic activity.  Because taxes are a function of that activity.  And that activity can be a function of taxes.  There is a general inverse relationship between the two.  High taxes often gets you low economic activity.  Low taxes tend to give you high activity.  Other things being equal, of course.

But government spending tends to grow.  For various reasons.  And sometimes when it does, the spending is greater than the amount collected in taxes.  Especially during recessionary times.  So, to cover the deficit between revenue and spending they borrow money.  Or print it.  Lots of governments do this.  You can see record debt levels and record deficit spending throughout the world.  Greece was in the news recently.  Argentina suffered some bad times a few decades ago.  And now the United States is reeling a bit from their crushing deficits and debt.  And there are more.  Few nations are immune from this problem.

As this progresses, governments begin looking for additional tax revenue.  Such as sin taxes.  Cigarettes may be bad for your health.  But they’re still legal.  Why?  Taxes.  Few things do we tax so heavily.  And they’re one of the few things that we can heavily tax.  Because they’re addictive.  Cigarettes are a windfall for the government coffers.  But it doesn’t stop with taxes.  The government even sued Big  Tobacco.  To help pay for the medical costs the government incurs treating people (via Medicare and Medicaid) with smoking related diseases.

Which came First?  The Politician or the Entrepreneur?

Cigarettes may be bad for you.  But this country owes a lot to tobacco.  Back before it was bad for us (well, at least before we knew it was bad for us.  Then again, it wasn’t really all that bad for us back then.  For few were living long enough for it to become a health problem.  But I digress) it was a pretty big cash crop.  Even used for money because it was so valuable.  So an industry grew.  And that industry became a very lucrative one.  With deep pockets.  Producing an addictive product.  A veritable gold mine for a high-spending government.

Now, the government didn’t do a thing to make a single cigarette.  But it profited handsomely off of cigarettes.  It’s sort of like that chicken and egg riddle.  Which came first?  Well, speaking about business and government, it’s not much of a riddle.  Business came first.  For without business, there would be no government.  Because someone has to create wealth first before they could tax it away.  Or sue it away.

You see, that’s the difference between entrepreneurs and politicians.  Government needs entrepreneurs.  But entrepreneurs don’t need government.  Because entrepreneurs create things.  While government takes from people that create things.

Dirty, Sexy Energy is Destroying the Planet

Entrepreneurs have invented some pretty impressive things.  James Watt gave us a pretty efficient steam engine.  Henry Ford gave us a pretty affordable car.  Watt helped to launch the Industrial Revolution.  Ford just took it to new heights.  With his mass production.

The steam engine was the big first motor of the world.  It pulled us forward.  In steam locomotives.  And coal-fired power plants.  It was a giant leap forward for mankind.  Then came the internal combustion engine.  More compact.  And more powerful.  The first diesel-electric locomotive outclassed the state of the art steam locomotive in every way.  This little power plant was smaller.  More powerful.  And cleaner.  (Steam locomotives belched huge plumes of smoke and ash wherever they went.)

It may have been cleaner.  But it was still dirty.  For both the steam engine and the internal combustion engine produced carbon dioxide.  And the environmentalists were saying that this carbon dioxide was warming the world.  They called it global warming.  And it was bad.  Mostly theory.  But the theory pointed to nothing less than apocalypse.  Someone had to do something.  To save the planet.  And, guess what?  Someone was ready.  And willing.

Just give me something to Tax, Entrepreneur

A high-spending government just embraced these environmentalists with wet, slobbering kisses.  Because they knew what to do.  Not about cleaner energy sources.  But about taxing the dirty ones.  And they needed more taxes.  For their high spending.  So the environmentalists and government were rather simpatico.  To say the least.

Their idea?  Carbon taxes.  And carbon trading (i.e., Cap and Trade).  Let’s face it, modern civilization is addicted to energy.  We can’t do without it.  So we’ll never stop using it.  Sort of like cigarettes.  So they would tax carbon.  Or make polluters buy permits to pollute.  Either way they make big money.  All in the name of saving the planet.

Sure, it all sounds nice.  In a touchy feely way.  But taxing energy will kill economic activity.  With the cost of doing business going up, there will be less business.  The carbon taxes/polluting permits may not even offset the loss of tax revenue resulting from this decline in economic activity.  But when times are desperate, they often will try desperate measures.  And when you have deficits and debt at record levels, these are desperate times.  So they’ll try to push carbon taxes.  And pollution permits.  Not to save the planet.  But for the revenue.  And they will thank God for the entrepreneur who was able to make something that people wanted.  That they couldn’t do without.  Because without the entrepreneur, there would be nothing to tax.

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LESSONS LEARNED #19: “Philosophical debates can be effective but character assassination is more expedient, especially when no one agrees with your philosophy.” -Old Pithy

Posted by PITHOCRATES - June 24th, 2010

THOMAS JEFFERSON HATED Alexander Hamilton.  So much so he hired Philip Freneau as a translator in his State Department in George Washington’s administration.  You see, Jefferson did not like confrontation.  So he needed a way to slander Hamilton, his policies and the Washington administration without getting his own hands dirty.  And that was what Freneau was supposed to do with the money he earned while working in the State Department.  Publish a newspaper (National Gazette) and attack Hamilton, his policies and the Washington administration.  Papers then were partisan.  More so than today.  Then, lies and libel were tools of the trade.  And they knew how to dig up the dirt.  Or make it up. 

Another scandalmonger, James Callender, was slinging dirt for Jefferson.  And he hit pay dirt.  Mr. and Mrs. Reynolds of Philadelphia had a lucrative business.  They were blackmailing Alexander Hamilton.  Mr. Reynolds had his wife seduce Hamilton.  Which she did.  And did well.  They had an affair.  And Mr. Reynolds then blackmailed him.  Jefferson pounced.  Or, rather, Callender did.  To keep Jefferson’s hands clean.  Hamilton, Callender said, was using his position at the Treasury Department for personal gain.  He was using public funds to pay the blackmailer.  They found no proof of this.  And they did look for it.  Hard.  But when they came up empty, Jefferson said that it just proved what a good thief Hamilton was.  He was so good that he didn’t leave any traces of his treachery behind.

Of course, when you lie down with dogs, you get up with fleas.  And Jefferson’s association with Callender would come back and bite him in the ass.  In a big way.  Upset because Jefferson didn’t appropriately compensate him for all his loyal dirt slinging (he wanted the postmaster’s job in Richmond), he publicized the Sally Hemings rumors.  And after breaking the true story of the Hamilton affair, many would believe this scoop.  That Jefferson was having an affair with one of his slaves.  It was a dark cloud that would forever hang over Jefferson.  And his legacy.

Hamilton admitted to his affair.  Jefferson admitted to no affair.  Hamilton would never hold public office again and would later die in a duel with Jefferson’s one-time toady, Aaron Burr.  This duel resulted because Hamilton was doing whatever he could to keep the amoral and unscrupulous Burr from public office (in this case, it was the governorship of New York).  When the election of 1800 resulted in a tie between Jefferson and Burr, Hamilton urged the House to vote for Jefferson, his archenemy.   Despite what had appeared in the press, Hamilton did have morals and scruples.  Unlike some.  Speaking of which, Jefferson would go on to serve 2 terms as president.  And all of that angst about Hamiltonian policies?  They all went out the window with the Louisiana Purchase (which was unconstitutional, Big Government and Big Finance).

RONALD REAGAN WAS routinely called old, senile and out of touch by the entertainment community, the media and his political foes.  But he bested Mikhail Gorbachev and the Soviet Union, something Jimmy Carter never did.  He said ‘no’ at Reykjavik because he told the American people that he wouldn’t give up the Strategic Defense Initiative (SDI).  He knew the Soviet Union was bleeding.  Communism was a farce.  It inhibited human capital.  And impoverished her people.  SDI may have been science fiction in the 1980s, but capitalism wasn’t.  It could do it all.  Including SDI.  The Soviet Union was on the ropes and Reagan would give no quarter.  The days of living in fear of the mushroom cloud were over.  And capitalism would deliver the knockout punch.

Reaganomics, of course, made this all possible.  Supply-side economics.  Which follows the Austrian school.  Say’s Law.  ‘Supply creates demand’.  You don’t stimulate the economy by taxing one group of people so another group can spend.  You stimulate it by creating incentives for risk takers to take risks.  And when they do, they create jobs.  And wealth.

Tax and spend is a failed Keynesian, zero-sum economic policy.  When you take from the earners and give to the non-earners, we just transfer purchasing power.  We don’t create it.  For some to spend more, others must spend less.  Hence, zero-sum.  The net some of goods and services people are purchasing remains the same.  Different people are just doing the purchasing.

When Apple invented the Macintosh personal computer (PC), few were demanding a PC with a graphical user interface (GUI).  But Apple was innovative.  They created something they thought the people would want.  And they did.  They took a risk.  And the Macintosh with its mouse and GUI took off.  Apple manufacturing increased and added jobs.  Retail outlets for the Macintosh expanded and created jobs.  Software firms hired more engineers to write code.  And other firms hired more people to engineer and manufacture PC accessories.  There was a net increase in jobs and wealth.  Just as Say’s Law predicts.  Supply-side economics works.

Of course, the Left hates Reagan and attacked Reaganomics with a vengeance.  They attacked Reagan for being pro-rich.  For not caring about the poor.  And they revised history.  They say the only thing the Reagan tax cuts gave us were record deficits.  Of course, what those tax cuts gave us were record tax receipts.  The government never collected more money.  The House of Representatives (who spends the money), awash in cash, just spent that money faster than the treasury collected it.  The record shows Reaganomics worked.  Lower tax rates spurred economic activity.  More activity generated more jobs and more personal wealth.  Which resulted in more people paying more taxes.  More people paying taxes at a lower rate equaled more tax revenue in the aggregate.  It works.  And it works every time people try it. 

Because Reaganomics worked and showed the Left’s policies were failures, they had to attack Reagan.  To discredit him.  They had to destroy the man.  Except when they’re running for elected office.  Then they strive to show how much more Reagan-like they are than their conservative opponents.  Because they know Reaganomics worked.  And they know that we know Reaganomics worked.

GEORGE W. BUSH was routinely called an ‘idiot’ by the entertainment community, the media and his political foes.  Yet this ‘idiot’ seems to have outwitted the elite of the liberal Left time and time again.  I mean, if their policies were winning, they would be no reason to have attacked Bush in the first place.  The Left hated him with such vitriol that they said he blew up the Twin Towers on 9/11 as a justification for invading Iraq for her oil.  It was Big Oil’s lust for profit, after all, that was driving this Texan’s Big Oil policies.  And taking Iraq’s oil would increase Big Oil’s sales and give her even more obscene profits.

If Bush was an idiot, he must have been an idiot genius to come up with a plan like that.  Then again, gasoline prices crept to $4/gallon following the Iraq War.  Had all that oil gone on the market according to plan, that wouldn’t have happened.  Unless the plan was to keep that oil OFF of the market, thus, by rules of supply and demand, the price of oil (and the gasoline we make from it) would go up thus enriching Big Oil through higher prices resulting from a lower sales volume.  My god, what evil genius.  For an idiot.  Of course, gas taxes, numerous summer gas blends (required by the government’s environmental policies), an aging and over-taxed pipeline infrastructure and insufficient refinery capacity (the government’s environmental policies make it too punishing even to consider building a new refinery) to meet increasing demand (soaring in India and China) had nothing to do with the rise in gas prices.

IS THE POLITICAL Left evil?  Probably not.  Just amoral.  They have an agenda.  They survive on political spoils and patronage.  Old time politics.  Enrich themselves through cronyism.  If tribute is paid they’ll extend favorable treatment.  If tribute is not paid, they will release their wrath via hostile regulation, litigation, Congressional investigation and punitive taxation.  Just like they did to Big Tobacco (and, no, it wasn’t about our health.  They could have just made tobacco illegal.  But they didn’t.  Why?  It just brings in way too much money to the government.  Via sin taxes.  And federal lawsuits.  And with it being addictive, it’s a frickin cash piñata for them.)

They know few agree with their philosophy.  But they don’t care.  It’s not about national prosperity.  It’s about power.  And they want it.  That’s why they can’t debate the issues.  They know they can’t win.  So they attack the messenger.  Not the message.  If you don’t believe that, you can ask Abraham Lincoln, Ronald Reagan, George W. Bush, Sarah Palin and just about any other Republican.  Well, you can’t ask Lincoln or Reagan.  But you can guess what they would say.

www.PITHOCRATES.com

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