The Politics of Liberal Economic Policies

Posted by PITHOCRATES - November 18th, 2013

Economics 101

What doesn’t Kill You Makes you Stronger

They say what doesn’t kill you makes you stronger.  And you can see that in military basic training.  There have been some good movies showing what military basic training is like.  Perhaps one of the best is Full Metal Jacket.  Where Gunnery Sergeant Hartman played by R. Lee Ermey wasn’t acting as much as reliving his days as a Marine Corps drill instructor.  Watching it you may come to hate Sergeant Hartman for he was pretty sadistic.  But they didn’t design basic training to be a pleasant experience.  They designed it to prepare recruits for the worst thing in the world.  War.

In the miniseries Band of Brothers we follow Easy Company, 2nd Battalion, 506th Parachute Infantry Regiment, 101st Airborne Division, from basic training through D-Day and to the end of the war.  Airborne training followed basic training.  And was harder.  Fewer people make it through airborne training than they do basic training.  Ranger training is even harder.  And fewer people make it through Ranger training.  But airborne units and Rangers get the more difficult missions in combat.  Because they can do more.  For their training is more difficult.  But it didn’t kill them.  So it made them stronger.

Perhaps the most difficult military training is the Navy’s SEAL program.  Where if they get a good class of recruits they may have 1 in 10 complete training.  For it is that hard.  In fact, some have died in training because they refused to give up.  That’s why you will find few tougher than a Navy SEAL.  They are tough.  And they never quit.  Which is why we give them the most difficult missions to complete.  Missions that others would find impossible.  Proving that the more brutal and difficult training is the stronger and more able we get.

During the 20th Century the American Left has tried to replace Rugged Individualism with the Nanny State

Those who founded this nation were tough people who worked hard and never gave up.  They provided their own housing, food, clothing, etc.  If they needed something they figured out how to provide it for themselves.  They worked long hours.  Survived brutal winters and hostile environments.  But they never gave up.  In fact, they raised families while doing all of this.  With no help from government.  As there were no government benefits.  Yet they survived.  Even prospered.  For what didn’t kill them only made them stronger.  These rugged individuals could do anything.  And did.  Which is why the United States is the leader of the free world.  And the world’s number one economy.  Because of that rugged individualism.

This is the way America was before the progressives came and softened us.  And made rugged individualism somehow a bad thing.  Beginning with Woodrow Wilson.  Then FDR.  LBJ.  And then President Obama.  A long line of American presidents who eschewed individualism.  And thought in collective terms.  When the Americans rejected socialism they gave us progressivism.  When we rejected communism they gave us liberalism.  The 20th century has been a tireless attempt for those on the left to replace rugged individualism with the nanny state.  With their brilliant selves in power.  Managing the economy.  And making life fair.  To undo the unfairness of laissez-faire capitalism.  To make the United States better.  And more according to their vision.  Just like the socialists did.  And the communists did.  Yet no socialist or communist state became the leader of the free world.  Or the world’s number one economy.

Those who lived in those socialist and communist utopias learned one thing.  It was better to live someplace else.  And their ultimate destination?  The United States.  Yet those on the left refused to believe that life was worse in those states where they put people first instead of profits.  Like that unfeeling and cruel laissez-faire capitalism did.  Which is why Wilson, FDR, LBJ and Obama worked tirelessly to move the United States in the direction of socialism and communism.  Because they cared for the people.  Or the power they got by making so many people dependent on government.

Someone receiving a Comfortable Level of Benefits will not be pushed to Leave their Comfort Zone

So is it about the power or that thing about helping people?  What is it exactly that progressives/liberals really want?  Well, we can look at the historical record to determine that.  By looking at a point in time when America really changed.  With the assassination of JFK.  JFK’s chances of reelection weren’t great.  Which is why he went to Texas.  As he needed LBJ to deliver Texas to the Democrats.  Instead of electoral victory, though, he fell to an assassin’s bullet.  The great outpouring of grief and love for their fallen president exceeded the love he got before the assassination.  The heightened emotions allowed LBJ to pass the many programs of the Great Society into law.  In the memory of JFK.  The greatest expansion of the federal government since FDR’s New Deal.  Making the welfare state the largest yet.  In an attempt to put people first.  Not profits.  In fact, LBJ declared a war on poverty.  By providing government assistance to lift everyone out of poverty.  And he championed civil rights.  LBJ was going to make the United States that utopia socialists and communists always dreamt about.  For everyone.  Blacks.  And whites.  Especially blacks.  Who were suffering great discrimination then.  But things would be different for them.  Starting in the Sixties everything was going to get better.  And how are blacks doing today?  Well, if you use employment as a measure, not good (see Table A-2. Employment status of the civilian population by race, sex, and age by the Bureau of Labor Statistics)

Unemplyment Rates by Race Age Sex Rev 2

The federal government has done a lot for blacks.  More than any other minority group.  Affirmative Action was to correct all past wrongs.  By making it easier to get into college.  And to get a job.  Yet we don’t see that when looking at the unemployment numbers.  In fact, the group the government does the least for—white men—is doing the best.  They don’t need any help because they won life’s lottery.  By being born white.  According to liberals.  So there’s no Affirmative Action for them.  Yet they have half the unemployment rate black men have.  While white women have half the unemployment rate black women have.  And white 16-19 year olds have half the unemployment rate black 16-19 year olds have.  Brilliant progressives/liberals have been trying to make life better for blacks for 50 some years now and have failed.  Despite this blacks have never been more loyal to them.  Which answers the question what the Democrats care more for.  The people?  Or the power the people give them.  By getting them dependent on government.  Who they tell over and over again that they would have nothing if it weren’t for them.  The Democrats.  For blacks just can’t make it on their own without help.  Even though after receiving all of that help blacks are suffering the greatest levels of unemployment.  Clearly something isn’t right here.  And it goes back to that thing that made America great.  Rugged individualism.

You know what the difference is between a white SEAL and a black SEAL?  Nothing.  Blacks have equality of opportunity in SEAL training.  And that’s all they need.  They don’t need special treatment.  And the Navy doesn’t tell them that they do.  All they need is the strength.  And the will.  Which will be there if you don’t keep telling people that they can’t succeed without the government’s help.  Because if you keep doing that they will come to believe that.  And they will keep voting Democrat.  Looking for help.  Whereas those who face adversity and overcome it grow stronger.  Because what doesn’t kill them makes them stronger.

Handing out government benefits will make people like you.  But it won’t get them a job.  For someone receiving a comfortable level of benefits will not be pushed to leave their comfort zone.  And while they languish in their comfort zone they will not gain work experience.  Allowing others to gain experience and move up in their careers.  Making them more employable.  While those with less experience and less education are less employable.  And that’s what Democrats do when they buy votes with government benefits.  Make people less employable.  And blacks have been especially useful to them.  As they can stoke the fires of racism to drive blacks even further to the Democrat Party.  By calling Republicans racists.  Because they want to take away their benefits.  Just because they hate black people.  Or so goes the Democrat line.  So they keep voting Democrat.  While losing their rugged individualism.  And suffering higher levels of unemployment than everyone else.

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FUNDAMENTAL TRUTH #13: “If you were to live under the socialist maxim ‘from each according to his ability to each according to his need’ you would find yourself surrounded by needy people with no ability.” -Old Pithy

Posted by PITHOCRATES - May 11th, 2010

“WHO IS JOHN GALT?”  If you can’t answer that I’m guessing you don’t like reading 1,000-page novels.  Or that you went to public school and had no conservative friends or family.

The book is Atlas Shrugged by Ayn Rand.  John Galt worked at the Twentieth Century Motor Company.  An engineer.  A pretty brilliant one at that.  He’s the hero of the novel.  The plot is the eternal struggle of individualism versus statism.  Private entrepreneurship versus state economic planning and control.  ‘Leave me the hell alone’ versus the all encompassing nanny state.  Good versus evil.  You know, the usual stuff.

Dagny Taggart is the heroine.  She’s the vice president of operations of Taggart Transcontinental Railroad.   If you like your women intelligent, strong, independent, feminine and sexual, then Dagny’s for you because she’s all that and a bag of Skittles.  She doesn’t take sh*t from anyone.

Anyway, Galt and Taggart do some brilliant things separately.  They have some mutual acquaintances.  They later meet.  Yadda yadda yadda, big climax and that’s the story.  I could tell you more but I wouldn’t want to spoil it for you when you do read it.  And you should read it.  When people put together lists of books that have influenced lives, the Bible often lands in the #1 spot.  Atlas Shrugged often lands in the #2 spot.  A must read.  And when you make it through the 50+ page speech near the end, why, you’ll have some bragging rights.  Those of you who have read it are probably nodding your heads as you recall your own perseverance in reading that speech and your will to finish it.  But fret not, casual readers.  The other 950 or so pages are a breeze.

FROM EACH ACCORDING to his ability to each according to his need.  Great philosophy.  If you’re one of the needy.  Kinda sucks if you’re one of the able, though.  Big time.  Here’s how.

Let’s say there’s a husband and wife who are both brilliant doctors.  He’s a neural surgeon.  She works in the field of infectious diseases.  They are among the best of the best in their respective fields.  They are literally saving lives where people once had no hope.  They worked long and hard to reach this point in their careers.  And they continue to work and study.  They contribute greatly in research.  Workaholics both.  Being so dedicated in their careers they chose not to have children.  They felt the work they were doing was that important.  As did others.  Between the two, they earn in excess of $500,000 annually.  Talent like theirs is just so rare and oh so valuable.

Now let’s consider a 19 year old high school dropout.  He works as a bouncer at a strip club and sells a little weed on the side.  Lives in his mother’s basement.  Parties all night and sleeps in till 4 PM.  And he has 10 children by 9 different women.

Now, in the normal world, the doctors would have a nice home and drive Mercedes Benzes.  The bouncer would not.  But in the world where we take from those according to ability and give to those according to need, things would be different.  You see, the doctors don’t have very many needs.  They have no children and work most of the time.  The bouncer, though, has a lot of need.  Ten kids to support.  So can you guess how things would work in this Socialist Utopia?  That’s right.  We take from the doctors and give to the bouncer.  Fair, right?

It depends on your definition of fair.  If you’re just a leech that wants to suck on the teat of society, you have no complaints.  You find the whole thing pretty sweet.  Why, anyone running on that platform, they got your vote.

But what about the ones who spend 8 years in med school, struggle through sleep-deprived internships, residency, continuing education, who work long and stress-filled days and give up a lot of personal pursuits in the process?  What about them?  Shouldn’t we reward that incredible effort and self-sacrifice?  I mean, if we don’t, why do it?  For the good of the people?  Yeah, right.  If it’s all the same, why can’t the bouncer sacrifice for the good of the people?  Why is it always the ones who work hard that have to do all of the sacrificing?  And do.

So there it is, the Socialist Utopia.  Work hard and succeed and get…less.  Don’t work hard and be irresponsible and get…more.  This is the essence of Marxism/Socialism.  In economics, we call this a disincentive to succeed.  Anyone with half a brain will strive to show as much need as possible while showing as little ability at the same time.  Because if you don’t you can see where this ends, can’t you?  You get stuck doing all the hard work.  And if you don’t have a lot of need, you get bupkis for all your sweat and ulcers. 

But it gets worse.  If no one chooses to do those incredibly difficult and stressful jobs, what happens then?  Simple.  If you choose to say ‘no’ someone will simply says ‘yes’ for you.  And what do we call forced labor against one’s will?  We call it slavery.  Or servitude, if you prefer.  As in F.A. Hayek’s The Road to Serfdom which shows the progression from socialism to servitude when someone ultimately has to be the final decision maker in determining what’s best for the common good.

INTERESTING THING ABOUT socialism.  It has a track record.  Not a good one.  Everywhere it’s been tried it has failed.  Why?  It goes against human nature.  Ponder this, if you will.  Let’s say you’re going to dine at a fine restaurant.  There are two ways in.  One through the main entrance where the maître d’ greets you.  The other is through the kitchen.  If you come in through the kitchen, though, you’ll have to do some basic food prep for table 3 and wash the dishes from table 5 before you eat.  Now, which path do you choose?

Yes, it’s a silly example.  But it makes a point.  Only an idiot would enter through the kitchen in this example.  Why?  Because we choose the path of least resistance.  Always.  Even though helping with some food prep and washing some dishes is best for the common good we’re just not going to do it.  At least, not voluntarily.  And that’s why socialism has failed and always will fail.  The natural state for people is NOT slavery.  We don’t volunteer to do more for the same outcome.  People do that only when forced, for the state of slavery can only exist by force.  As Hayek so aptly shows in The Road to Serfdom with the rise of the Nazi and the Italian fascist dictatorships.

THIS IS WHY Atlas Shrugged is so enduring.  It is THIS story.  The eternal tug of war between individualism and statism.  The escalation of force.  Submission.  And breaking points.  Both Hayek and Rand warned of the same dangers and the ultimate consequences of our ‘altruist’ actions.  He by philosophical treatise.  She by narrative.  And one of her characters, Francisco d’Anconia, summed it up well in an exchange with Henry Rearden when he said:

“…if you saw Atlas, the giant who holds the world on his shoulders, if you saw that he stood, blood running down his chest, his knees buckling, his arms trembling but still trying to hold the world aloft with the last of his strength, and the greater his effort the heavier the world bore down upon his shoulders-what would you tell him?”

Rearden didn’t have an answer.  D’Anconia did.  He’d tell him, “to shrug.”  To let go his burden.

And, of course, Atlas is a metaphor for those people with rugged individualism, the entrepreneurial spirit.  And the day they do shrug, we’re screwed.

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LESSONS LEARNED #1 “The meaning of bipartisan depends on your point of view; on the Right it means compromise whereas on the Left it means unconditional surrender.” -Old Pithy

Posted by PITHOCRATES - February 18th, 2010

IN THE THIRD century, the Roman Empire had a large bureaucracy and a large army.  Both were costly to maintain.  They raised taxes and debased their silver coins (i.e., their ‘silver’ coins had less and less silver in them) to pay their costs.  They debased the coins so much that, in time, no one accepted them as legal tender.  Even the Romans.  To pay Roman taxes you needed gold.  Or you paid ‘in kind’ (if you grew wheat you gave a portion of your wheat to pay your tax obligation). 

Rome paid her soldiers and her civil servants with gold.  The emperor needed them to maintain his power.  The people, though, suffered runaway inflation with the debased coinage.  As they inflated the money supply (by debasing coins or simply making new coins out of base metals instead of precious metals), prices soared.  As did taxes.  Unable to work the land without losing money, people walked away from the land.  Then Rome passed laws that bound these people to the land.  Serfdom was born.  If you were born on the land you would die on the land.  And in between you would work the land.

They forced artisans to stay in their jobs, too.  And their sons.  Jobs became hereditary as people wouldn’t work them voluntarily.  If a father made shoes his son would make shoes.  The son had no choice.  The economic oppression was so bad that when the Western Empire finally fell, the Roman citizens looked at the Germanic tribes not as conquerors but as liberators.

GREAT BRITAIN BUILT a global empire.  She built it with sea power and overseas colonies.  She fed her domestic manufacturers with raw materials from these colonies.  She then sold her manufactured goods overseas.  On British ships.  Through British ports.  Raw materials in.  Finished goods out.  Hoard bullion. 

This is mercantilism.  Encourage exports with subsidies.  Discourage imports with tariffs.  Maintain a favorable balance of trade.  Colonies help.  They can provide the material you would otherwise have to buy.  You can then build stuff with all that raw material.  Then sell it overseas for gold and silver.  If these protectionist economic policies work you become a wealthy nation.  However, the reason why we use gold and silver for legal tender is because it is scarce.  There isn’t a lot of it around.  Hence mercantilism can be a zero-sum game; if you gain bullion someone must lose bullion.  And Great Britain wasn’t the only mercantile empire.

It is rather ironic that nations pursuing economic policies to enrich themselves plunged themselves into wars that bankrupted them.  To help pay down her debt Great Britain taxed her North American colonies.  Opposition to the taxes resulted with punishing ‘coercive/intolerable’ acts against the colonies.  These acts resulted with the declaration of American independence.   Not quite the goal of the ‘coercive/intolerable’ acts. 

France, another monarchy, was heavily in debt from war, too.  Despite this she helped finance America’s war for independence from monarchy.  In the battle for empire, the enemy of my enemy is my friend.  Even if your new friend is not a friend of monarchy.  Not a wise thing to do when poverty and hunger rage through your lands.  The next thing you know is that your subjects will be talking all that liberty nonsense.  And, well, we know what happened next.  They did.  The French Revolution saw the beheading of King Louis XVI, the rise of Napoleon and plunged Europe back into war.  Painful can be the lessons of history.

GOVERNEMNT FOR THE sake of government ultimately pits the government against the governed.  Mercantilist economic policies lead to war.  And bankruptcy.  These policies brought down the Roman Empire.  They plunged France into The Terror and chaos.  They saw the first resignation of a prime minister, Lord North, after a vote of no confidence.  Great Britain would come out better than France, though.  With a change in her relationships with her remaining colonies (similar to what her former American colonies had proposed before their break), and a move from mercantilism to capitalism, the British Empire prospered and led the Industrial Revolution.  Her empire would rule the world for another hundred years, give or take.

The Roman and British Empires flourished when based on the rule of law and economic liberty.  They foundered when they did not.  Bad government begat bad fiscal and monetary policy.  Excessive government spending brought one down and forced change on the other.

The Founding Fathers built America upon the rule of law and economic liberty.  It was once the flower of capitalism.  But that flower has faded.  The amount of wealth transferred from the private to the public sector continues to grow.  We replaced specie (such as gold or silver, or paper backed by gold, silver, etc.) with fiat money (paper not backed by specie).  We continue to inflate our currency.  We are moving from capitalism back to mercantilism (subsidies for politically connected domestic industries to help them export, tariffs to restrict imports to protect politically connected domestic industries, excessive government regulation to protect politically connected domestic industries, the merging of financial markets with government to provide the money for the politically connected, etc.).  But it’s not to build an empire.  No, it’s not our military spending that’s crushing us (it’s less than 25% of the federal budget); it’s the cost of non-military spending that is.  This once great land of fierce, rugged, individualism has become a nanny state.  And, like Rome, the American government is taking care of her civil servants at the expense of her taxpayers.  An American aristocracy lives well while her citizens suffer high taxation and the consequences of inflationary spending. 

We have a lot in common with Rome.  Pity it isn’t only her grandeur.

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