Tariffs

Posted by PITHOCRATES - September 9th, 2013

Economics 101

The Proponents of Tariffs say they will Protect Infant Industries and Domestic Jobs

Tariffs.  What are they?  And what are they for?  A tariff is a tax.  Or a duty.  The government applies tariffs to imported goods.  Making them more expensive.  So people have to spend more money for them.  Leaving them less money to spend on other things.  Which seems counterintuitive to trying to increase economic activity.  Increasing prices the consumers pay, leaving them less money to buy other stuff.  So why do they do it?

The argument for tariffs is typically to protect ‘infant’ industries.  To give them a chance to get off the ground and establish themselves.  So they can later compete with this more developed and less costly foreign competition.  Which they couldn’t do if those foreign competitors can sell goods just as good if not better at lower prices.

Another argument is that tariffs protect domestic jobs.  A lot of imported goods are less costly than the same domestically produced goods.  Because of less costly labor in these other countries.  Often developing economies.  Unlike the developed economies who pay their people more.  And give them more benefits.  All paid for with the higher prices the people pay for their goods.  Tariffs raise the prices of foreign goods so they are not less costly than the domestically produced goods.  To get people to buy domestic goods.  Thereby saving domestic jobs.

Americans have to Pay about $1.25 more for a Bag of Sugar than the Rest of the World

These arguments make tariffs sound noble and good.  For they’re helping the little guy.  And protecting middle class jobs from cheap labor in foreign countries.  But they also hurt the little guy.  And poor families.  Because tariffs raise the price of the things they have to buy.  For example, tariffs on sugar imports raise the price Americans pay for sugar higher than people can buy sugar outside of the United States.  So the sugar they buy, and anything that contains sugar as an ingredient that they buy, is higher than it would be if the sugar tariffs weren’t there.

The US population in 2012 was 313,914,040.  Let’s assume the adult population is approximately 250 million.  And that half of them buy sugar.  How many sugar producers are there in the United States?  Far, far fewer than 125 million.  The Washington Post noted in 2007 that there were only about 6,000 sugar farmers.  About 0.002% of the population.  While the sugar buyers are closer to 40% of the population.  Or more if you include the things we buy that have sugar in them.  The numbers are approximate but the point is clear.  The people helped by tariffs are an infinitesimally small number while the people hurt by tariffs are a much, much larger number.

Let’s crunch some numbers.  While people outside of the United States can buy a bag a sugar for $1 Americans have to pay $2.25.  Or $1.25 more.  To protect American jobs in the sugar industry.  The 6,000 sugar farmers.  Let’s triple this number for the corn farmers (for high fructose corn syrup) and the sugar companies.  Rounding it out to an even 20,000 jobs that sugar tariffs protect.  If half of all adults buy a bag of sugar that’s $156 million pulled out of the economy that goes to, for lack of a better term, Big Sugar.  Let’s say these adults buy two bags a year.  Bringing the transfer from the 125 million (sugar consumers) to the 20,000 (Big Sugar) to $312.5 million.  Let’s double that number to include everything we buy that includes sugar as an ingredient.  And then double that number to account for all the sugar and corn subsidies.  Bringing the total annual wealth transfer from consumers to Big Sugar to approximately $1.25 billion.

Tariffs transfer Wealth from the Many to the Few and Reduce Economic Activity

That’s an enormous amount of wealth transferred from less rich people to richer people.  From consumers to Big Sugar.  But is it accurate?  Well, according to an article published in the Washington Post, yes.  The article states:

The Government Accountability Office has estimated that the sugar program costs consumers and food processors between $1 billion and $2 billion annually in higher prices for sugar and a vast array of products that contain it. Meanwhile, the new sugar subsidy would cost taxpayers tens of millions of dollars a year, according to economists and U.S. officials.

So our crude calculation may be on the light side.  This is a lot of money taken out of the pockets of hundreds of millions of consumers to protect 20,000 or so well-paying jobs.  Nearly half of the US population supporting less than 0.02% of the population.  And those tariffs paid that 0.02% very well.  Because Big Sugar is very profitable.  And can pay their people very well.  As they have tariffs to increase their selling prices and subsidies to lower their costs.  Which greatly fattens the bottom line.

In the United States the price of sugar is so high that businesses have turned to high fructose corn syrup for their sweetener.  Which our tax dollars also subsidize.  Making it a very profitable industry.  And as an added bonus for Big Sugar, some studies have indicated that high fructose corn syrup doesn’t satiate your appetite like regular sugar.  Causing us to overeat.  Which lets the soda pop industry sell more soda pop.  The (sweetened) food industry sell more food.  And, of course, Big Sugar sell more sweetener.  Making them richer.  And the people poorer.  As well as obese.  All of this to protect a very few jobs in some very old industries.  Transferring wealth from the many to the few.  And reducing economic activity.  Pretty much the exact opposite of what the proponents of tariffs say tariffs will do.  But what they in fact do.  Help the few.  At the expense of the many.

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Death Panels in/out of Medicare, Obamacare still Betting on Death to Cut Costs

Posted by PITHOCRATES - January 5th, 2011

Death is more Cost Efficient than Life

First they denied it.  Then they backtracked when everyone could see they were included.  Then they pulled them.  Then they tried to sneak them back (see Administration reverses on end-of-life counseling by Ricardo Alonso-Zaldivar, The Associated Press, posted 1/5/2011 on The Washington Post).

Medicare coverage for voluntary end-of-life planning was part of the original House version of the overhaul legislation in 2009, but it was dropped after Sarah Palin and other Republicans raised the specter of “death panels” deciding the fate of vulnerable seniors. Those charges were later debunked by several non-partisan fact-checking groups.

I keep hearing this.  That they’re not death panels.  They’re actually good things that people want.  But I have to ask this.  Why are they constantly trying to sneak this legislation in?  I mean, Obamacare itself is controversial and unpopular.  The people already hate it.  So why are they hiding these so called death panels that aren’t death panels?

I can think of only one reason.  Cost control.  With Social Security, Medicare and Medicaid all projected to go bankrupt in the not so distant future, there’s no way that Obamacare can escape that same fate.  Unless sick people die quicker.  Before the government spends a fortune trying to extend their lives. 

Yes, it’s a grim prospect.  But that’s the only way you can save cash-strapped programs that incur costs from sick and dying people.  You stop spending money on sick and dying people.  That way you can take in more money than you pay out.  Do that and these programs (Obamacare, Social Security, Medicare and Medicaid) can stay solvent.  And there is only one way to do this.  You have to ‘let’ people die.  You get them to choose death.  By persuading them that it’s for the best.  For them.  Their family.  And for the country.  In other words, death panels.  Because death is more cost efficient than life.

Obamacare Welfare:  Wealth Transfer from the Responsible to the Irresponsible

This is what they want to hide from the people.  Because it’s just too ghoulish.  It’s something the Nazis did.  Getting rid of undesirables.  Or the stuff of science fiction like Soylent Green.  Only without the cannibalism.  So far, that is. 

I joke, of course.  Then again, no one knows what’s in the Obamacare legislation.  No one read it.  At least, no one that voted for it.  After all, it was the now deposed Speaker of the House, Nancy Pelosi, who said we’d have to pass Obamacare to learn what was in it.  So anything can be in it.  We just don’t know.  But we’re learning.

The new regulations have already exploded private health care costs.  Even though they said it wouldn’t.  In fact, everything was supposed to get cheaper.  But when you force private insurers to cover preexisting conditions, they have to act accordingly. 

With preexisting coverage, no one will buy insurance.  They’ll save their money for car payments.  New entertainment centers.  Jet skis.  You know, fun stuff.  Then, if a kid gets leukemia or some other catastrophic diagnosis, then they’ll buy insurance.  Get the picture?  The only people buying insurance will be those with catastrophic medical expenses.  People who will be consuming millions in benefits but only pay a pittance in premiums.  And that ain’t insurance.  That’s pure welfare wealth transfer.  From the responsible.  To the irresponsible.

The House Rules Enabled Corruption and Backroom Deals

And this is just asinine.  So how did they pass something this stupid into law?  Well, have you seen the House rules (see New rules in the House of Representatives by Felicia Sonmez posted 1/5/2011 on The Washington Post)?  Here’re some of the rules back then.  When Congress slipped Obamacare into law.

  1. 1.  No “Constitutional Authority Statement” was required.  A similar statement was required only for bills reported out of committee and was included in the committee report.
  2. 2.  Only bills reported out of committee were required to be “made available” three days before a vote, and they were not required to be posted online.
  3. 3.  Spending increases could be paid for by spending cuts or tax increases.
  4. 4.  Committee chairmen did not have term limits.
  5. 5.  Legislation was not required to be posted online before it was marked up.
  6. 6.  The “Gephardt Rule” allowed the House to automatically raise the debt limit when a joint budget resolution was adopted.
  7. 7.  The Constitution has never been read in full on the House floor.

This is not what the framers of the Constitution had in mind.  Not even Alexander Hamilton (the biggest of the ‘big government’ Founding Fathers).  In fact, he would be as shocked as his arch nemesis, Thomas Jefferson (who thought any central government was too much central government).  (Just to prevent any confusion, Jefferson was in France during the Constitutional Convention and did not participate.  His assault against the Constitution escalated after ratification.)

The Constitution means something.  It’s the Rule of Law for the central government.  The Constitution has to authorize everything the central government does.  Why?  Because that’s the law.  And we’re a nation of laws.  At least, we used to be.

The fact that Congress has never read the Constitution in full on the House floor is worrisome.  Why haven’t they?  Are they trying to bury the restrictions it places on Congress?  It would appear so.  And that lawmakers look at it as more of a nuisance than as the foundation of our nation.  Something that checks their power and spending sprees.  Which tax and spend Big Government types just don’t like.

The other rules just invite corruption and backroom deals.  The very thing Jefferson warned about.  And he was right.  Because that’s what it took to pass Obamacare.  They bribed Congress people to vote for it.  The Cornhusker Kickback bribed Nebraska Senator Ben Nelson.  The Louisiana Purchase bribed Louisiana Senator Mary Landrieu.  And a laundry list of bribes to other people and organizations.  Hidden in the bowels of the health care reform bill.  Which was fast-tracked into law before anyone read it.  Thanks to the rules of the House.

The New 112th Congress to Revise House Rules to Stop the Corruption and Backroom Deals

But all is not lost.  The new 112th Congress is proposing to change the rules.  They even plan to read the Constitution in full on the House floor.  It may be the first time some will learn what’s in it.  And that’s good.  Here are some of the other changes (these numbers correlate to the numbers above):

  1. 1.  All proposed bills must be accompanied by a “Constitutional Authority Statement” that notes the specific section of the Constitution that empowers Congress to enact the legislation.
  2. 2.  All bills must be posted online for three days before they are put up for a vote.
  3. 3.  Spending increases have to be offset by cuts of an equal or greater amount elsewhere and cannot be paid for by tax increases.
  4. 4.  Committee chairmen have a six-year term limit.
  5. 5.  The text of legislation must be posted online 24 hours before it is due to be marked up in committee; the House Rules Committee is exempt from this rule.
  6. 6.  A new rule eliminates automatic debt-limit increase upon passage of joint budget resolutions.
  7. 7.  A full reading of the Constitution will take place on Thursday, the second day of the 112th Congress.

It’s a start.  It might stop some of the Founding Fathers from spinning in their graves.  Probably not Jefferson, though.  It’s going to take a whole lot more to soothe his distraught spirit.

Revised House Rules a Good First Step.  Repealing Obamacare a Good Second Step.

So maybe with the new Congress and the new House rules (if adopted) will prevent another corrupt bill like Obamacare from sneaking through backrooms and into law.  Good.  But that’s just a start.  Now we have to address Obamacare itself.  We need to repeal it.  For a plethora of reasons (see New Congress Begins Fight to Repeal Obamacare and Get Health Care Reform Right by Kathryn Nix posted 1/4/2011 on Heritage’s The Foundry).  Many already know some of these reasons.  But it’s good to keep talking about them.

The negative effects of Obamacare will be felt by all Americans. The new law includes several new taxes and penalties for businesses that threaten to kill job growth and further damage the economy. Budget gimmicks and double counting of savings mean Obamacare will increase federal deficit spending significantly.

Obamacare does nothing to reform the systemic problems and unfunded liabilities represented by Medicare and Medicaid. Instead, the new law uses savings in Medicare to fund a new entitlement that experts expect to greatly exceed its projected cost. Obamacare does not fix Medicaid, which already performs poorly, but adds more to its ranks as a means to reduce the uninsured.

Obamacare increases premiums and overall health spending in the U.S. Instead of allowing insured Americans to keep their current coverage, the new law will cause millions to change or lose their health plans. Last but not least, Obamacare will increase federal control of every aspect of the health sector, increasing the role of bureaucracy in the practice of medicine and interfering in the doctor–patient relationship.

If you want more detail, you can find them in Impact of ObamaCare at The Heritage Foundation.   

If we repeal Obamacare, the death panels become a moot point.  And our deficit and debt crises become that much easier to manage.  As will the Social Security, Medicare and Medicaid crises.  So let’s do it.  Repeal Obamacare.

Give Grandma a Chance

Obamacare is bad.  We should repeal it.  Death panels and all.  Instead of putting all our eggs into the ‘death’ basket, we should give living a chance.  But we need to get away from welfare.  And move into insurance.  Pay our own way for expected, routine costs.  And buy insurance to protect our finances from unexpected, extraordinary costs.  And allow insurers to compete across state lines, tort reform, etc.  You know, the usual, sensible stuff.

Come on.  Give Grandma a chance.  Repeal Obamacare.

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FUNDAMENTAL TRUTH #21: “The reason why health insurance is so expensive is because it is not insurance.” -Old Pithy

Posted by PITHOCRATES - July 6th, 2010

YOU CAME IN with a grand ‘to lose’ but have been riding a hot streak.  You’re up 5 grand.  And feeling luckier still.  You came in with a grand, you think, so you can just as well leave with a grand.  So you bet 5 grand.  Cause those cards have been so good to you tonight.  And there it is.  Blackjack!  And just as you’re about to shout to the heavens you see the dealer throw an ace on his down card.  The dealer asks, “Insurance?”   

You don’t want to but you just KNOW what’s under that ace.  All of a sudden you’re not so cavalier about losing 5 grand.  Too many friends have told you the same story.  “I was up 5 grand until that last hand.”   You could cry.  You don’t buy insurance.  Only suckers buy insurance.  That’s what you’ve always said.  But when you’ve got 5 grand on the table, the dealer can’t have anything but blackjack.  You know it.  He knows it.  And your wife knows it even though she’s off playing the slots somewhere.  You pull out $2,500 from your ‘do not touch’ money and buy the insurance.  (Let’s end this on a happy note.  The down card was a queen.  You walk away as if that last hand never happened, $5,000 richer.  Less taxes, of course.)

LIFE’S BEEN GOOD.  You’re making good money.  You have a beautiful wife and 3 great kids.  You just sold that small house and moved into that big house you always wanted for the holidays.  Cost a pretty penny.  But you had $75,000 in equity in the old home.  And cashed in a CD to furnish the new one with some nice new toys.  After all, life has been good.

The mortgage stings a little, but not too much.  You’ll get by.  You got all the big things you’ve wanted.  Now you can settle in and live modestly in your new home.  And you bought insurance up the wazoo.  If there is fire, flood, theft or death, no worries.  Well, there’ll be some worry, but you won’t financially ruin your family.  They’ll keep the house.  And there will be college for the kids.  Because you were responsible.  You protected the greatest investment of your life.  Yes, things have been good.  But not good enough to pay for everything twice.

TRADE EXPLODED IN the 17th century as little wooden ships crossed the oceans.  Storms and rough seas, though, toss around little wooden ships.  A lot of them sank.  With their cargoes.  But they didn’t all sink.  So owners insured their ships and cargoes.  For a nominal fee, they protected their investment.  For those that didn’t sink, the insurance wasn’t much of an added expense.  For those that did sink, it paid to replace the lost ship and cargo. 

YOU’VE ALWAYS WANTED to open a restaurant.  And your dream finally came true.  You saved for years.  You scrimped on vacations.  Didn’t by a new car.  Expensive toys.  No.  Your years of denying yourself the little pleasures in life saved up enough money to buy that restaurant.  To put enough money down to borrow to fit out the kitchen and dining area.  To stock your fridge, freezer and pantry.  You maxed out your credit and sunk your life savings into your dream.  And you’re loving it.  But you don’t want to lose it.  So you have all the insurances.  Fire.  Property.  Workers’ comp.  Liability.  So in case of fire, celebrating students (who trash the town after winning the championship), a strained employee back or an E. coli outbreak (because an employee didn’t wash his hands after using the toilet), you’re protected.  Your business may suffer, as they are wont to do after an E. coli outbreak, but the lawsuits won’t leave you destitute.

BEING IN THE NFL is a dream come true to many athletes.  But it can be a brutal occupation.  Compared to other professional sports, it has a short season.  Why?  Attrition.  Concussions, broken bones, torn ligaments and contusions take their toll.  The short season allows a longer healing period.  And time for surgeries.

Players can make obscene amounts of money.  But they can also suffer a career-ending injury in the first year of a multi-year contract. Great playing potential means great earning potential.  If you stay healthy and play.  Of course, if injured, all gone.  Some players insure against a career-ending injury.  Lloyd’s of London will insure an athlete.  For a price.  It ain’t cheap.  But if it keeps you from losing, say, 20 million in earnings, it could turn out to be quite the bargain.  If you’ve got huge potential.

THE MOST PRECIOUS gift we all have is our life.  So we take care of it.  We watch what we eat, don’t drink, don’t smoke, don’t take drugs, don’t speed in our cars or while on our motorcycles, don’t drink and drive, don’t drive around flashing railroad crossing barriers, don’t binge drink, don’t have unprotected sex, don’t play with matches or run with scissors and don’t do that thing where you jump up on a railing with a skateboard and fall, crushing your testicles on the railing and hitting your head on the concrete step.  No, we exercise, go to bed early and eat a lot of bran. 

All right, we probably don’t eat as much bran as we should.  And maybe we do a risky thing or two.  But we understand that those risky things we DO do can cost us.  Could wipe us out financially.  So we buy insurance to protect our life savings in the event of a catastrophic event that could be medically very expensive.

Or do we?

EVERYONE THAT HAS ever bought blackjack insurance didn’t get a winning blackjack hand.  Everyone that has ever bought homeowner’s insurance didn’t get a new home with their policy.  Everyone that has ever bought mariner’s insurance didn’t get a ship and a cargo of goodies with their premium payment.  Everyone that has ever bought business insurance didn’t get a business with their payment.  And an NFL player doesn’t get a dime from Lloyd’s of London until something pretty horrible happens first.  No.  These purchases were ‘just in case’.  Most people will never get anything for their payments (other than peace of mind).  Only those who suffer a loss will.  And those that do will have mitigated their financial losses with the insurance they so wisely purchased.  And they will get on with their lives.

This is insurance.   We use it to protect our wealth.  It takes a lot of time to accrue it.  So when we have it, we tend to protect it.  We do risky things.  And insurance manages that risk.  So we don’t lose everything we have because of a catastrophic event. 

We don’t think like this when it comes to health insurance, though.  We don’t think of health insurance as a way to manage our risk.  We look at it as a free ride.  If we have it, we expect free health care.  We want everything.  But we don’t want to pay for anything.  Free mammograms.  Those blue pills for the old johnson.  Heart valves.  Prenatal care.  Child vaccination.  Etc.

The problem is, these things cost.  A lot.  And if anybody can have them, those who actually pay for insurance have to pay for them.  And they’ll be paying for things they aren’t using.  All those things listed above mean nothing to a young single male.  But he’s helping to pay for that stuff.  Either by his premium contribution.  Or in lost wages.  Because an employer can’t afford such quality health insurance AND high wages.

Health insurance has become nothing more than a wealth transfer.  It’s like a Ponzi scheme.  A large and ‘growing’ group of healthy young people pay into the system and collect few benefits.  The ‘fewer’, older, sicker people pay little into the system but consume the lion’s share of the benefits.  At least in theory.  But like social security, and all Ponzi schemes, the theory doesn’t work in practice.

AMERICA HAS THE best health care in the world.  If you judge by where the affluent go for their health care.  They go to America.  And the best is never cheap.  You get what you pay for.  And if you want the best, expect to pay.  A lot.

All right, we have the best and some of the most expensive health care in the world.  Add to that an aging population.  What do you get?  A shrinking group of people (the young and healthy) paying for a growing group of people (the old and sick).  That means the burden on those paying into the system has to what?  It has to keep getting bigger.

But it can’t.  The young and healthy will just opt out.  Eventually.  When it gets to the point that it’s a car payment or a health insurance payment, what do you think they’ll choose?  Their annual health care expenses for an entire year may not equal one premium payment.  So they’ll say screw that.  And do.  A lot of young do not have health insurance because they choose not.  It’s just too fricking expensive.  And this just shrinks the shrinking group more.  Which increases the amount those with insurance pay.  And so it goes.

AND YOU DON’T fix this problem by nationalizing health care.  That doesn’t address the problem.  You have to tie the cost to the benefit.  People only chose to pay for things they get.  Those receiving the benefit, then, need to pay its cost.  Like we do with every other thing in our lives.  You want a TV you pay for a TV.  You don’t pay for one so your neighbor can have one.  TV prices are very reasonable, too.  They keep coming down.  The quality is fantastic.  And so it would be in health care.

Single payer health care insurance ain’t the answer either.  Because it’s not insurance.  It’s a wealth transfer.  That means it’s political.  It will serve political ends.  Not make good health care.  First of all, they’ll force the young and healthy to pay for insurance under penalty of law.  Or they’ll raise taxes until it hurts.  Then they’ll cut costs.  First by limiting what doctors can earn.  Then they’ll limit the profits the pharmaceuticals can make.  Then the medical device makers will have their turn.  Soon, people won’t want to be doctors any more.  Or make new and life saving drugs.  Or make medical devices.  So when the supply of these things falls, rationing must follow.  And if you really want to cut costs, there’s really only one place to do it.  The really sick and the really old.  These people, after all, consume the lion’s share of health care services. 

We don’t have a health care problem.  People are living longer than ever.  We have a dependency problem.  The current system has made us dependent on others for our health care.  And dependency kills.  It cowers a people.  Takes away their dignity.  Makes them subservient.  People live in fear.  Of what they may lose.  Nationalizing health care will only make us more dependent.  It’s not the answer.  Unless you want to conquer and subjugate a people.  I mean, how many of you have stayed at job you absolutely hated because of the health insurance?  If that ain’t subjugated, I don’t know what is.  As bad as that was, at least you got something for it.  Good health care.  If you think you’re going to get that under a national system, think again.  Or ask those people with a national system that come to this country for better care.

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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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FUNDAMENTAL TRUTH #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 17th, 2010

THE ONE THING that puzzles me about stereotypes is that when it comes to legislating, the Left (liberals) and the Right (conservatives) always break character.  The Right is a bunch of gun-toting redneck war hawks looking for a fight.  The Left is a bunch of over-sensitive girly-men that want to disband the military and ask our enemies to be nice to us.  At least, so go the stereotypes. 

But give the Left a majority in Congress and this cowardly lion finds its courage.  They stop reaching across the aisle.  They become belligerent.  Mean.  The Right tries to placate them.  They cave on principle.  Apologize for being conservative.  And they ask the Left if it’s okay for them to participate in the nation’s business.  ‘No?  Okay.  Then I’ll just vote along with you.  Just please like me.’  It’s like the proverbial joke about a man who gets married and soon after deposits his testicles in a box and gives them to his wife saying, “I guess I won’t be needing these any more” to which she replies, “damn skippy.”

Those in Congress think they’re part of an aristocratic nobility.  Though the very thought of an American aristocracy is repugnant there have always been, throughout history, people who feel that they are better than others.  And so it is in America.  It’s the old boys’ club of Congress.  It’s a unisex club now (feminists should be happy that this glass ceiling has been shattered).  Liberal Democrats and RINO Republicans make up the core membership.   In time, though, the sweet temptress of rank seduces most everyone in Congress.

The first rule of getting accepted into this club it to kiss the boots of those already in it.  And other bodily parts.  These are people who never had a real job.  They advance in life through political favor.  Haughty and condescending, the further they advance without honest work the greater their feelings of grandeur and their contempt for the middle class (who have those real jobs).  Work is beneath them.  Aristocrats don’t work.  Fools work.  It’s good to be king but life’s not so shabby in the aristocracy.  You just need to ascend to the ranks of this upper class.  And there’s no better way than through court appointment.  I mean, winning election to federal office. 

This aristocracy is a parasite that feeds off of the government.  For the parasite to flourish, though, it needs a healthy host.  It needs Big Government.  The bigger the better.  The bigger it is the more taxes it must collect.  The more tax collected the greater the wealth transferred from the private to the public sector.  The richer the public sector gets the more it can spend on the federal bureaucracy.  This swells the federal payroll.  And this is the ultimate goal.  This is why politicians can commit political suicide by voting against the wishes of their constituents.  If they lose an election there will always be a federal job waiting for them.  Somewhere.  And a federal pension.  Thus their lifestyle continues uninterrupted and they live happily ever after.  Even during times of record unemployment.

COURT LIFE IS enchanting.  It’s five-star and it’s free.  And it’s so seductive.  So corrupting.  Once let in it is hard not to give in completely.  Anything you want is there for the taking.  Using your position to enjoy some naughty behavior?   No problem.  We’ll accept your apology with a wink.  Want a cheap ‘mortgage’ on a fabulous new home?  Done.  Want to fly your friends and family to Europe?  Why, here’s an intercontinental jet.  It’s better than winning the lotto; winning the lotto doesn’t place you above the law.

They like this lifestyle.  But they don’t want to pay for it.  And they don’t like it when a new crop of uppity conservatives come into the Congress and want to change the status quo.  When they decry the lack of bipartisanship, they’re just crying like a child that can’t have his or her own way.  They don’t want compromise.  They just want to put things back like they used to be when the Right was the Left’s bitch.

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