An Ivy League Professor says their Ivy League Government Policies have killed the American Dream

Posted by PITHOCRATES - June 10th, 2012

Week in Review

The Ivy League has long had an influence over government policy.  Administrations have been filled with Ivy League graduates.  Where they have been advising lawmakers and writing policy.  Much of the economic mess we suffer from these days goes back to the progressive views of the Ivy League.  Where they think the private economy will work better when smart and enlightened thinkers like themselves tweak it. 

And over the years our capitalist free market has been slowly morphing into crony capitalism.  Where those businesses with like minded ideas as those in government (as advised by their Ivy League intelligentsia) get preferential treatment by the government.  And those who don’t think right are hit with excessive regulations and taxes.  Or as they would say in Columbia, being fair.  Because fair is whatever they say is fair (see The ‘American Dream’ Is a Myth: Joseph Stiglitz on ‘The Price of Inequality’ by Aaron Task, Daily Ticker, posted 6/8/2012 on Yahoo! Finance).

In his latest book, The Price of Inequality, Columbia Professor and Nobel laureate Joseph Stiglitz examines the causes of income inequality and offers some remedies. In between, he reaches some startling conclusions, including that America is “no longer the land of opportunity” and “the ‘American dream’ is a myth…”

For example, just 8% of students at America’s elite universities come from households in the bottom 50% of income, Stiglitz says, even as those universities are “needs blind” — meaning admission isn’t predicated on your ability to pay…

“What I want is a more dynamic economy and a fairer society,” he says, suggesting income inequality is ultimately detrimental to those at the top, too. “My point is we’ve created an economy that is not in accord with the principles of the free market.”

The only thing preventing the American Dream today is progressive government policies.  Immigrants used to come to this country with nothing but loose change in their pockets and went on to start a business.  Today there are so many taxes and fees and regulations that require a lawyer to understand.  This is what’s killing the American Dream.  Government.

More millionaires are self-made middle class people with a good idea.  They became entrepreneurs.  And succeeded despite the obstacles government put in place.  For no one ever heard an entrepreneur say he or she wished there was more government involvement in their industry.

The only people stuck in their class are the elite rich who own the Ivy League institutions and restrict admissions to their friends and family.  And the poor who are the victims of government programs that are supposed to help them.  Implemented by government on the advice of those Ivy League graduates who fill the ranks of policy makers in Washington.  Which perpetuates a permanent underclass for government to take care of with ever expanding government programs.

He is right, though, about the economy not in accord with free market principles.  President Obama hates capitalism and has taken active measures to oppose it.  Shut down oil exploration on federal lands and in international waters within our exclusive economic zone.  Not approving the Keystone XL pipeline.  Strong-arming Obamacare through Congress with backroom deals to pass a bill the American people didn’t want.  Subsidizing green energy companies like Solyndra that fail.  Attacking private equity.  And so on.  Helping like-minded people.  And hurting those who think differently.  This administration has become the model of crony capitalism. 

The land of opportunity and the American Dream will return this November.  It will take a while to undo some of the damage done these past 3 years or so.  But opportunity is still there.  If government would only get out of the way.

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LESSONS LEARNED #76: “You know they’re governing against the will of the people when they play with the meaning of words to fool the people.” -Old Pithy

Posted by PITHOCRATES - July 28th, 2011

When is a Spending Cut an Increase in Spending? 

I have a riddle for you.  When is a spending cut an increase in spending?  “Well, that’s when…, hey, wait minute,” you say.  “That’s not a riddle.  That’s a paradox.  It’s like saying draw a square circle.  Or a name an objective journalist.  You just can’t do these things.  Just as a ‘cut’ can’t be an ‘increase’.  They are the very opposite of each other.”

Yeah, you would think.  Not that much of a riddle, then, is it?  For a true riddle is solvable.  Or should be.  Like, say, I have two coins that add up to thirty cents.  One of them isn’t a nickel.  What are they?  You’re a bit stymied, aren’t you.  Because a quarter and a nickel are the only two coins that add up to thirty cents.  So what’s the answer?  A quarter and a nickel.  “But you said one of them wasn’t a nickel,” you say.  “Right,” I say.  “One of them isn’t a nickel.  But the other one is.”

Now that’s a riddle.  Clever.  But solvable.  So now back to my first riddle.  When is a spending cut an increase in spending?  The answer is when you use baseline budgeting.

The Power of Baseline Budgeting

Politicians lie.  And they love to spend our money.  Put the two together and what do you get?  Baseline budgeting.   Which in a nutshell is government spending on autopilot.  Next year’s spending is this year’s spending plus a little extra.  That ‘little extra’ is the amount in all budget negotiations. 

For example, let’s say there is an item in the budget with a billion dollar budget amount this year.  That’s the baseline.  That’s where we start budgeting for next year.  Next year’s budget will be one billion dollars plus or minus that ‘extra amount’.

Typically they set this ‘extra amount’ to be equal to or greater than the rate of inflation.  And/or changes in legislation for that budgetary item.  Let’s say there is no change in the program legislation.  And they set the program’s budget so that next year’s budget equals this year’s budget plus 10%.  So this budget item will be $1 billion this year.  And $1.1 billion next year.  Projecting this out for 10 years, this will automatically add $1.36 billion to this budgetary item.

In Baseline Budgeting a Spending Cut is an Increase in Spending

A couple of things should jump out at you.  For one you see why government programs never die.  Once they add them to the budget they stay in the budget.  And grow.  Always.  Forever.  And the bigger the starting budget amount the bigger the program will grow over time.  Again, automatically.  So you can see why baseline budgeting has been a godsend to Big Government.  It guarantees the growth of government.  Now.  And forever.

Now let’s look at a spending cut.  Let’s say spending is getting out of control.  Deficits are growing.  (As hard as that is to imagine.)  So there’s a budget deal to ‘cut’ the budget by 2%.  But this is a 2% cut in baseline budgeting.  So we’re not reducing the budget amount.  We’re only reducing the amount above the baseline.  Spending was going to increase 10% the following year.  But with this 2% cut, that 10% increase becomes only an 8% increase. 

This is where the language play comes in.  The budget is increased by 8%.  But in baseline budgeting it is a 2% decrease.  Instead of increasing the budget by $100 million, they only increase it by $80 million.  The budget is increased by $80 million but they count it as a $20 million cut.  Because future spending was cut $20 million.  So it’s a cut even though no spending was actually cut.  Spending still increases.  Just not as much as previously budgeted.  And that’s the wonderful world of baseline budgeting.  Where a spending cut increases spending.

The Government Shutdown of 1995 and 1996 

When CBO takes these projections out to 10 years it makes these spending ‘cuts’ look draconian.  As originally budgeted, this item would have been increased by $1.36 billion over 10 years.  Because of the reduction in the size of future spending, it will only increase $1 billion over 10 years.  But instead of calling this a $1 billion increase (which it is), they will call it a draconian cut of $359 million (which it isn’t).  Instead of saying this budget item will increase by 99.9% (which it will), they say it will be cut by 26.4% (which it obviously won’t).  Now politicians understand this baseline doublespeak.  But the average American doesn’t.  They hear ‘26.4%’ cut in some program for single mothers or hungry children and think what vicious, heartless bastards Republicans are.

And this was the stage for the government shutdown of 1995 and 1996Bill Clinton campaigned as a moderate in the 1992 presidential election.  After winning, though, he governed as a tax and spend liberal.  The people expressed their disapproval and gave both houses of Congress to the Republicans in the 1994 midterm electionsNewt Gingrich became Speaker of the House.  Gingrich and the Republicans saw their election as a mandate to stop the out of control government spending.  And that’s what they were trying to do in the budget battles beginning in 1995.

The Republicans were trying to reduce the rate of growth of government spending per the will of the people.  Spending would still increase.  But at a slower rate.  Clinton, though, fought against the will of the people.  Using baseline budgeting newspeak to mislead the people.  Clinton called these reductions in growth rates draconian spending cuts.  Even though there were no real cuts in spending.  But being a tax and spend liberal, he wasn’t about to cut the rate of growth.  So they squared off in budget battle.  It all came to a head when the government hit its borrowing limit.  The Republicans tried to get some spending cuts in exchange for increasing the debt ceiling.  Clinton refused.  Unable to pay its bills, the government shutdown.  And the United States collapsed.

Baseline Budgeting helps you Govern against the Will of the People

Not really.  Few people even noticed the shutdown.  Everyone still went to work.  Collected their pay (unless you worked in a national park).  And life went on.  Social Security checks went out.  Interest on the national debt was paid.  The credit rating on U.S. sovereign debt remained AAA.  So there was little damage.  Clinton came out okay from the crisis.  Newt Gingrich not so well.  Many believe that this helped Clinton’s reelection in 1996.  Of course a lot of that had to do with Dick Morris.  Who pulled Clinton to the center.  And became the moderate the people thought they elected.

Clinton may have won reelection, but he paid a price.   Republicans still held both houses of Congress.  Who ultimately won in the long-run.  Their Balanced Budget Act of 1997 did cut the growth rate of government spending.  And then the dot-com boom of the late Nineties produced a windfall of tax revenue that, with the ‘spending cuts’ of the Balanced Budget Act, actually balanced the budget.  For a few years.  But it turned out that the dot-com boom was actually a dot-com bubble.  Thanks to a lot of irrational exuberance.  And the bubble popped.  With the resulting recession tax revenue fell.  And those balanced budgets were no more.

Unwilling to concede to the will of the people, Clinton played with the meaning of words.  Called a spending increase a spending cut.  Because he knew the average American didn’t understand baseline budgeting.  And politicians continue to this day scaring people about draconian spending cuts where there are no spending cuts.  Not in the world of baseline budgeting.  Which makes it easy for them to continue to govern against the will of the people.  As they continue to do.  As they always have done.  Because nothing is more important than growing government.  And spending as much of our money as possible before we get a chance to spend it ourselves.

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The Space Shuttle versus the Airbus A380, an Economics Lesson

Posted by PITHOCRATES - June 29th, 2011

The Space Shuttle, a Public Sector Failure

People like to point to the Apollo Program as the ultimate example of the American ‘can do’ attitude.  Apollo put men on the moon and retuned them safely.  If we can do that we should be able to do anything.  Even cure the common cold.  If only we attacked our greatest problems today the same way we solved the moon problem.  With a great big government program.  That marshaled a vast network of private contractors.  Where cost was no object.

But that was the problem with Apollo.  Cost.  It cost in excess of $20 billion dollars in the late 1960s and early 1970s.  Today that would exceed $130 billion.  At the peak of the program spending consumed nearly 5% of all federal spending.  We’ve come close to shutting down government over lesser amounts in budget disputes.  The numbers are huge.  In comparison, the big three of federal outlays are Social Security, Medicare/Medicaid and Defense, each consuming about 20% of all federal spending.  Imagine the fireworks if any of these were reduced to 15% (a 25% reduction in spending) to pay for another Apollo Program.  Suffice it to say it’s not going to happen.

This is why we don’t have more ‘Apollo’ programs to solve our problems.  We simply can’t afford to.  And in case you hadn’t noticed, NASA discontinued the Apollo Program, cancelling three moon landings.  Because of costs.  These cost savings help fund Skylab and the next big project.  The Space Shuttle.  Which was going to fix the cost problem.  By paying for itself.  Based on the private sector model.  The reusable vehicle was going to shuttle payload to space for paying customers and earn a profit.  The program, then, would pay for itself once launched.  And consume no tax dollars.  That was the plan, at least. 

But the Space Shuttle had its problems.  For one it was very dangerous.  And it turns out that the first manned mission was likely to be a disaster (see Shuttle Debuted Amid Unknown Dangers by Irene Klotz posted 6/29/2011 on Discovery News).

What NASA didn’t know at the time was that there was only a 1-in-9 chance the astronauts would make it back alive. Managers put the odds of losing the shuttle and its crew at 1-in-100,000.

Safety upgrades, including those initiated after two fatal accidents, have made the shuttle 10 times safer than it was in its early years, but the odds of a catastrophic accident are still high — about 1 in 90.

That is the largely unspoken part about why NASA is retiring its shuttle fleet after a final cargo run to the space station next month.

The Space Shuttle was just too complex a machine to meet any of its original goals.  Two shuttles were lost.  And the Space Shuttle Program never turned a profit.  The program that was going to pay for itself along the private sector model didn’t.  It required tax dollars.  A lot of them.

… preparing the shuttles for flight is extremely labor-intensive, which drives its $4 billion-a-year operating expense.

This is why we shouldn’t ask for any more great big government programs.  Because they’re typically abject failures.  Few companies in the private sector can fail as grandly.  Missing their profitability goal in excess of $4 billion dollars?  Year after year?  Only government can do this.  For only in government can a failed business model survive.  Because only government can tax, borrow and print money.

The Airbus A380, a Private Sector Success Story

This doesn’t happen in the private sector.  Where such gross mismanagement would put companies out of business.  Because they can’t tax, borrow or print.  Well, they can borrow.  But not at the low rates the government can.  Such failure would force them into junk territory.  And with a proven track record of losing billions year after year, even that wouldn’t be an option.  No, the private sector has to do it the old fashioned way.  They have to earn it.  You don’t have to be perfect.  You just have to be profitable (see Damaged Qantas A380 Refurbishment Underway by Guy Norris posted 6/29/2011 on Aviation Week).

Work to return to service the Qantas Airbus A380 damaged in last November’s uncontained engine failure is underway in Singapore.

The aircraft, which was substantially damaged when the number two Rolls-Royce Trent 900 shed a turbine disc, is about to be placed on stress jacks for major repairs to the wing and fuselage. Work will likely include replacement or repairs to the number one engine nacelle adjacent to the number two engine which was destroyed. The number two engine and nacelle is also being replaced…

The start of repair work, covered under an Aus $135 million insurance claim, puts a final end to speculation that the A380 would be written off. Airbus meanwhile declines to comment on the implications for possible longer term redesign as a result of lessons learned from the incident.

The Airbus A380 is a complex machine.  It’s expensive to build.  And to operate.  But it packs in a lot of people.  So the airlines can recover their costs through normal passenger service.  By offering passengers tickets at affordable prices.  With a little left over.  So Airbus can afford to sell these expensive airplanes at affordable prices, covering their costs with a little left over.  So their suppliers can sell components at affordable prices, covering their costs with a little left over.  Companies make profits everywhere in the process.  To return to their investors.  To reinvest in their operations.  Or to cover large, unexpected cost hits.  Like Airbus and Rolls Royce did to keep Qantas a satisfied customer.

A380 product marketing director Richard Carcaillet says “the two preliminary reports so far have focused on the engine event. However if there are any lessons for systems and procedures then we will take action. But with the co-operation of Rolls-Royce we have put a line of defense into the Fadec (full authority digital engine control), so that in the event of detecting a similar condition it will shut down quickly,” he adds.

Rolls has “now inspected and modified the whole fleet,” says Carcallet. For the moment the fix is the revised Fadec software, though longer term design changes are also underway to the engine, he adds.

The updated software commands an engine shut down if it detects the threat of an intermediate high pressure turbine overspeed occurring. Rolls is meanwhile working on a longer-term redesign of the Trent 900 oil system, a fire in which triggered the event.

Rolls-Royce has also agreed to pay (US) $100.5 million compensation to Qantas.

This is how the private sector works.  The profit incentive makes everyone do what is necessary to please and retain customers.  And improve safety.  Because airplanes falling apart in flight do not encourage anyone to buy a ticket.

Bigger Programs only mean Bigger Failures

There’s a reason that the Shuttle Program is no more but there are A380s flying and making money.  The difference between the Shuttle Program and the A380 is that one was in the public sector and the other is in the private sector.  And guess which one is the success story?  The one in the private sector.  Of course.  This despite the A380 having far more competition in Boeing (in particular the Boeing 747-400 and 747-8) than the Space Shuttle ever had.

Moral of the story?  Keep government programs small.  Because bigger programs only mean bigger failures.  And more tax dollars pulled from the private sector to pay for these failures.

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LESSONS LEARNED #28: “Politicians love failure because no one ever asked government to fix something that was working.” -Old Pithy

Posted by PITHOCRATES - August 26th, 2010

THE TELEVISION SHOW Gomer Pyle, U.S.M.C. aired from 1964-1969.  It was a spinoff from the Andy Griffith Show.  Gomer, a naive country bumpkin who worked at Wally’s filling station, joined the Marines Corps.  And there was much mirth and merriment.  To the chagrin of Sergeant Carter, Pyle’s drill instructor (DI).  Think of Gunny Sergeant R. Lee Ermey’s Sergeant Hartman in the movie Full Metal Jacket only with no profanity or mature subject matter.  Sergeant Carter was a tough DI like Sergeant Hartman.  But more suitable for the family hour on prime time television.

Gunny sergeants are tough as nails.  And good leaders.  They take pride in this.  But sometimes a gunny starts to feel that he’s not himself anymore.  This was the subject of an episode.  And Gomer, seeing that Sergeant Carter was feeling down, wanted to help.  So he stuffed Sergeant Carter’s backpack with hay before a long march.  While the platoon was worn and tired, Sergeant Carter was not.  He was feeling good.  Like his old self.  Until he found out he was not carrying the same load his men were.  He asked Pyle, “why hay?”  He could understand rocks, but hay?  Because if he outlasted his men while carrying a heavier load, he would feel strong.  But knowing he had carried a lighter load only made him feel weak.

This is human nature.  People take pride in their achievements.  They don’t take pride in any achievement attained by an unfair advantage.  Self-esteem matters.  And you can’t feel good about yourself if you need help to do what others can do without help. 

AN OLD CHINESE proverb goes, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”  Let’s say I am a fisherman in a small village.  I catch fish to feed my family and sell/trade for other family needs.  There’s a man in my village who asks me for a fish each day so he can eat.  I’m a caring person.  So I give him a fish each day.  So a pattern develops.  Each day he shows up when I come in from my fishing.  He takes the fish and goes away.  It works out well for him.  He doesn’t have to work.  He can live off of my kind charity.  Then I move.  Without me being there to give him a fish each day, he no longer can eat.  And dies.  If I only had taught that man to fish. 

Kindness can lead to dependency.  And once dependent, you become lazy.  Why develop marketable skills to provide for yourself when someone else will provide for you?  The problem is, of course, what happens when that charity ends?  If you’re unable to provide for yourself and there is no longer someone providing for you, what do you do?  Steal?

Dependency and a lack of self-esteem are a dangerous combination.  And they feed off of each other.  This combination can lead to depression.  Behavioral problems.  Resentment.  Bitterness.  Envy.  Or a defeatist attitude.

These are often unintended consequences of government programs.  A failed program, then, has far reaching consequences beyond the initial economic costs of a program.

LIQUIDITY CRISES CAUSE a lot of economic damage.  If capital is not available for businesses to borrow, businesses can’t grow.  Or create jobs.  And we need jobs.  People have to work.  To support themselves.  And to pay taxes to fund the government.  So everyone is in favor of businesses growing to create jobs.  We all would like to see money being easy and cheap to borrow if it creates jobs.

But there is a downside to easy money.  Inflation.  Too much borrowing can create inflation.  By increasing the money supply (via fractional reserve banking).  More money means higher prices.  Because each additional dollar is worth a little less. This can lead to overvalued assets as prices are ‘bid’ up with less valuable dollars.  And higher prices can inflate business profits.  Looks good on paper.  But too much of this creates a bubble.  Because those high asset values and business profits are not real.  They’re inflated.  Like a bubble.  And just as fragile.  When bubbles burst, asset values and business profits drop.  To real values.  People are no longer ‘bidding’ up prices.  They stop buying until they think prices have sunk to their lowest.  We call this deflation.  A little bit of inflation or deflation is normal.  Too much can be painful economically.  Like in the Panic of 1907.

Without going into details, there was a speculative bubble that burst in 1907.  This led to a liquidity crisis as banks failed.  Defaults on loans left banks owing more money than they had (i.e., they became illiquid).  They tried to borrow money and recall loans to restore their liquidity.  Borrowers grew concerned that their bank may fail.  So they withdrew their money.  This compounded the banks problems.  This caused deflation.  Money was unavailable.  Causing bank runs.  And bank failures.  Business failures.  And unemployment grew. So government passed the Federal Reserve Act of 1913 to prevent a crisis like this from ever happening again.  The government gave the Federal Reserve System (the Fed) great powers to tweak the monetary system.  The smartest people at the time had figured out what had gone wrong in 1907.  And they created a system that made it impossible for it to happen again.

The worst liquidity crisis of all time happened from 1929-1933.  It’s part of what we call the Great Depression.  The 1920s had a booming economy.  Real income was rising.  Until the Fed took action.  Concerned that people were borrowing money for speculative purposes (in paper investments instead of labor, plant and material), they put on the brakes.  Made it harder and more expensive to borrow money.  Then a whole series of things happened along the way that turned a recession into a depression.  When people needed money, they made it harder to get it, causing a deflationary spiral.  The Great Depression was the result of bad decisions made by too few men with too much power.  It made a crisis far worse than the one in 1907.  And the Roosevelt administration made good use of this new crisis.  FDR exploded the size of government to respond to the unprecedented crisis they found themselves in.  The New Deal changed America from a nation of limited government to a country where Big Government reigns supreme.

ONE PROGRAM OF the New Deal was Social Security.  Unemployment in the 1930s ran at or above 14%.  This is for one whole decade.  Never before nor since has this happened.  Older workers generally earn more than younger ones.  Their experience commands a higher pay rate.  Which allows them to buy more things.  Resulting in more bills.  Therefore, the Great Depression hit older workers especially hard.  A decade of unemployment would have eaten through any life savings of even the most prudent savers.  And what does this get you?  A great crisis.

The government took a very atypical moment of history and changed the life of every American.  The government forced people to save for retirement.  In a very poor savings plan.  That paid poorly by comparison to private pensions or annuities.  And gave the government control over vast amounts of money.  It was a pervasive program.  They say FDR quipped, “Let them try to undo this.” 

With government taking care of you in retirement, more people stopped providing for themselves.  When they retired, they scrimped by on their ‘fixed’ incomes.  And because Social Security became law before widespread use of birth control and abortion, the actuaries of the day were very optimistic.  They used the birth rate then throughout their projections.  But with birth control and abortion came a huge baby bust.  The bottom fell out of the birth rate.  A baby bust generation followed a baby boom generation.  Actually, all succeeding generations were of the bust kind.  The trend is growing where fewer and fewer people pay for more and more people collecting benefits.  And these people were living longer.  To stay solvent, the system has to raise taxes on those working and reduce benefits on those who are not.  Or raise the retirement age.  All these factors have made it more difficult on our aged population.  Making them working longer than they planned.  Or by making that fixed income grow smaller.

FDR used a crisis to create Social Security.  Now our elderly people are dependent on that system.  It may suck when they compare it to private pensions or annuities, but it may be all they have.  If so, they’ll quake in their shoes anytime anyone mentions reforming Social Security.  Because of this it has become the 3rd rail of politics.  A politician does not touch it lest he or she wishes to die politically.  But it’s not all bad.  For the politician.  Because government forced the elderly to rely on them for their retirement, it has made the Social Security recipient dependent on government.  In particular, the party of government who favors Big Government.  The Democrats.  And with a declining birth rate and growing aged population, this has turned into a large and loyal voting bloc indeed.  Out of fear.

A PROGRAM THAT straddled the New Deal and LBJ’s Great Society was Aid to Families with Dependent Children (AFDC).  Its original New Deal purpose was to help widows take care of their children.  When program outlays peaked in the 1970s, the majority of recipients were unmarried women and divorced women.  Because this was a program based on need, the more need you had the more you got.  Hence more children meant more money.  It also reduced the importance of marriage as the government could replace the support typically provided by a husband/father.  Noted economist Dr. Thomas Sowell blames AFDC as greatly contributing to the breakdown of the black family (which has the highest incidence of single-parent households).

With the women’s liberation movement, women have come to depend less on men.  Some affluent women conceive and raise children without a husband.  Or they adopt.  And the affluent no doubt can provide all the material needs their children will ever need.  Without a husband.  Or a father for their children.  But is that enough?

The existence of ‘big brother’ programs would appear to prove otherwise.  Troubled children are often the products of broken families.  Mothers search for big brothers to mentor these fatherless sons.  To be role models.  To show an interest in these children’s lives.  To care.  When no such role models are available, some of these troubled children turn to other sources of acceptance and guidance.  Like gangs.

AFDC has compounded this problem by providing the environment that fosters fatherless children.  And another government program compounds that problem.  Public housing.

POOR HOUSING CONDITIONS hurt families.  They especially hurt broken families.  Without a working husband, these families are destined to live in the cheapest housing available.  These are often in the worst of neighborhoods.  This is an unfair advantage to the children raised in those families.  For it wasn’t their fault they were born into those conditions.  So, to solve that problem, government would build good public housing for these poorest of the poor to move into.  Problem solved.

Well, not exactly.  Public housing concentrates these broken families together.  Usually in large apartment buildings.  This, then, concentrates large numbers of troubled children together.  So, instead of having these children dispersed in a community, public housing gathers them together.  Where bad behavior reinforces bad behavior.  It becomes the rule, not the exception.  Making a mother’s job that much more difficult.  And because these children live together, they also go to school together.  And this extends the bad behavior problem to the school.  Is it any wonder that public housing (i.e., the projects) have the worst living conditions?  And some of the highest gang activity? 

Government didn’t plan it this way.  It’s just the unintended consequences of their actions.  And those consequences are devastating.  To the poor in general.  To the black family in particular.  AFDC and public housing enabled irresponsible/bad behavior.  That behavior destroyed families.  As well as a generation or two.  But it wasn’t all bad.  For the politicians.  It made a very large constituency dependent on government.

THERE ARE SO many more examples.  But the story is almost always the same.  Dependency and a lack of self-esteem will beat down a person’s will.  Like an addict, it will make the dependent accept poorer and poorer living standards in exchange for their fix of dependency.  Eventually, the dependency will reach the point where they will not know how to provide for themselves.  The dependency will become permanent.  As will the lack of self-esteem.  Conscious or not of their actions, Big Government benefits from the wretched state they give these constituencies.  With no choice but continued dependence, they vote for the party that promises to give the most.  Which is typically the Democrat Party.

But how can you fault these politicians?  They acted with the best of intentions.  And they can fix these new problems.  They’ll gather the brightest minds.  They’ll study these problems.  And they will produce the best programs to solve these problems.  All it will take is more government spending.  And how can you refuse?  When people are hungry.  Or homeless.  Or have children that they can’t care for.  How can anyone not want to help the children?  How can anyone not have compassion?

Well, compassion is one thing.  When the innocent suffer.  But when government manufactures that suffering, it’s a different story.  Planned or not the result is the same whenever government tries to fix things.  The cost is high.  The solution is typically worse than the original problem.  And the poorest of the poor are pawns.  To be used by Big Government in the name of compassion. 

Of course, if Big Government were successful in fixing these problems, they would fix themselves right out of existence.  So as long as they want to run Big Government programs, they’ll need a stock of wretched, suffering masses that need their help.  And, of course, lots of crises.

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FUNDAMENTAL TRUTH #28: “Politicians love failure because no one ever asked government to fix something that was working.” -Old Pithy

Posted by PITHOCRATES - August 24th, 2010

GOVERNMENT FIXES PROBLEMS.  Or so they say.  And the people think.  When something isn’t right in the country, the people demand that government do something about it.  And politicians are more than happy to oblige.  It strokes their egos.  Increases their budgets.  Their staffs.  And they get to do what they like best.  Tell others what to do.  Well, that, and spend money.

Politicians are happiest when government grows.  Because when it does, there’s more stuff to do.  More people to manage.  Bigger offices to move into.  More people to hire.  And the more they hire, the more people are indebted to them.  Who love them.  Respect them.  Are in awe of them.  Which inflates their egos even more.  As if that was even possible.  And, of course, there’s more money to spend. 

As government grows, so does their job security.  I mean, there may come the day that the good people may not reelect them.  As devastating as that may be, they can be comforted in the fact that they will leave Washington far richer than they were upon entering Washington.  And there’ll always be a place for them in an ever expanding government.  A cabinet position.  An agency position.  Or, perhaps, they’ll be named a czar.  Of something.  In charge of a policy issue.  Away from the oversight powers of Congress.  Anything is possible.  As long as government grows.  And there is more money to spend.

And just why is that?  Why does government continue to grow?  Simple.  They don’t fix problems.  They’re always ‘fixing’ problems.  But they’re never fixed.  They’re always a work in progress.  Because a fixed problem doesn’t require their services any longer.

DON’T THINK SO?  Suppose the government gives you a federal job.  An important one.  You’re in charge of the Office of Getting People to Happily Accept the Banning of Smoking in Public Places.  They give you a big office.  A staff.  A budget.  And a title.  You feel pretty good.  Important.  You diligently go about your work.  You take polls.  You analyze data.  You place public service announcements.  You intensify your polling before and after local laws are implemented banning smoking in public places. 

You analyze your data.  You correlate satisfaction with dissatisfaction.  Pacification with irritability.  Your numbers look good.  As more and more localities ban smoking from most public spaces the more your numbers show that the satisfaction/dissatisfaction ratio is trending favorably.  The trending is flatter with pacification/irritability but the trending is still favorable.  You conclude that these new laws come in, on average, at 9.875.  And that’s very good on the scale you created to measure overall effectiveness and acceptance of new laws to influence social behavior.   You happily report your findings to your superior.

“What are you,” your superior asks, “stupid?  Trying to put yourself out of a job?  Are you trying to cut my budget?  Because that’s exactly what’s going to happen if you turn in a report like this.  Now here’s what you’re going to do.  You’re going to report that your findings indicate some improvements in some select demographics.  But overall there is still much work to do.  Then write up a proposal for additional work required and throw in a budget that increases your current budget by 12%.  For starters.  Then I’ll critique your findings and find your funding request insufficient because of a mistake you made in your analysis.  Have it on my desk by the end of the week.”

Sound ridiculous?  That’s probably because it is.  And probably all too true.  I mean, how many federal programs do politicians shut down because they were successful in achieving their objective?  I think few.  If any.  Because no one wants to put themselves out of a job.  Especially a federal job.  Because there’s no job like a federal job.  At least, not in the private sector.

IN THE PRIVATE sector, your work has to have value.  When people are voluntarily paying for goods or services, you can’t have fat payrolls and fat budgets to produce goods and services no one wants.  You can only do that when government pays.  And by government I mean you and me.  With our taxes.  Which we have little choice but to pay.  For we are forced to under penalty of law.  Which can be pretty persuasive in making you pay for stuff you don’t want.  For we wouldn’t normally give away our hard-earned pay for the ridiculous wastes of resources known as government work.  To make the lives of federal workers better than ours.  And speaking of federal workers, what’s that joke?  Question:  What is federal work?  Answer:  Work for the unemployable.  There’s a lot of truth in that.  For a lot of these people couldn’t make it in the private sector.  And if they had to, they would only do so with the utmost bitter resentment.  They’d resent the longer hours.  The huge cut in pay.  The huge cut in benefits.  And the accountability.

You see, in the private sector, failure has consequences.  People get fired.  If a business is losing money because of silly projects they’re pursuing, the board of directors will fire the corporate officers.  If it’s a small business, the owner may lose his or her life savings.  And their house (which is often mortgaged up to the hilt to support their business).  There will be change after failure.  And it will be painful to many.  Unfeeling.  Cold.  But necessary.  But it’s different in government. 

When politicians fail, they reward themselves.  When their policies fail, the politicians simply say they need more time to make those policies work.  And more money.  That’s always the answer.  And they get away with it.  More money.  Keep throwing money at the problem.  No matter what a train wreck their programs turn out to be.  Or what the unintended consequences are.

POLITICIANS LIKE TO tinker.  Often in things they shouldn’t.  Because when they do, bad things often happen.  Those unintended consequences.  For when it comes down to it, they’re not very smart.  They could have graduated from their Ivy League schools at the top of their class, but they often know squat about the things they’re meddling in.  Most of them are lawyers.  And what does a lawyer know about economics?  Foreign policy?  National security?  Bupkis.  But it never stops them. 

And it doesn’t even matter.  Because their motives were honorable.  They acted with the best of intentions.  At least, that’s what they say.  As do their supporters.  And when everything goes to hell in a handbasket, they don’t mind.  Just more problems for government to fix.  More programs.  More staff.  And more money to spend.

Of course, we ultimately pay the price for their actions.  Whether it’s recession, depression or a more dangerous world to live in.  Which is often the case.  More times than not.

EVER WONDER WHY everything is a crisis?  Because a crisis needs urgent action.  By politicians in Washington.  And that urgent action is typically vast new government programs with an exploding federal bureaucracy.  Along with explosive federal spending.  And because it’s a crisis, there’s no time to lose.  If we don’t take immediate action the consequences could be dire.  There’s no time for debate.  For opposition.  To read a bill.  No.  We have to act and we have to act NOW.  Before this crisis gets any worse.

And when things do get worse after we take all that urgent action, you know what they’ll say?  That they were wrong?  Yeah, right.  In some fantasy world maybe.  No.  Instead, they’ll say just imagine how bad things would have been if they didn’t act like they did.  That we should be thankful things are only as bad as they are, for they could have been a whole lot worse if government didn’t act.  Why, they’ll be patting themselves on the back.  While you suffer more.

Hard to fight that logic.  I mean, they can say anything.  If their action takes unemployment to record levels, they can say unemployment would have been twice as high if they didn’t do what they did.  Twice as high would be worse.  But how do they know it would have been twice as high?  How can they prove it?  Well, they don’t have to.  Because you can’t disprove it.  And those who gamble know that a tie goes to the house.  So they’re right.  Because you can’t prove otherwise.  So they act accordingly.  And their supporters go along.  And the answer to the new problems that are worse than the original problems?  You guessed it.  More of the same.  More government programs.  More government spending.  At least, that’s what the historical record shows.

POLITICIANS LOVE FAILURE.  They thrive on it.  It gives them life.  Success, on the other hand, destroys them.  Removes their raison d’être.  Their reason for being.  A prospering nation, after all, doesn’t need government to fix anything.  And that’s no good.  Especially if that’s the business you’re in.  Fixing things.  Fixers need to fix.  But it needs to remain a work in progress.  So there’s still fixing to do.  Always.  And forever.   

And they’ll never let a good crisis go to waste.

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