Losing Ground, The Bell Curve and Coming Apart – Commentary on Commentary

Source: http://econlog.econlib.org/archives/2012/03/losing_ground_t.html

 

Very interesting insights on Charles Murray’s  work on poverty and the underclass.  (1) Seemingly a simple premise; intelligence is required for most high-paying occupations ergo the people with lower intelligence will likely suffer a greater incidence of poverty as they have less access to high-paying jobs. (2) Economic incentives have been proven time and time again to drive behavior and decisions. It then follows if you tax income you get less wealth generation and if you subsidize poverty with welfare payments, you encourage more.

The last point (3) regarding cultural differences between America’s economic classes could be more difficult to understand.  However, one item Murray speaks of in his tomes but Mr. Caplan does not specifically point out is, raising children in single parent families has been shown to enable worse life outcomes when compared to a two parent household.  Data has also highlighted there are more single parents in less affluent communities.

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Stop energy subsidies – corporate welfare

In examining the involvement of the state in national energy markets one can become easily overwhelmed and dismayed by the scope and complexity of the state’s reach into the energy industry.  While the brute force power of the state influences much of the industry’s compliance (US Code) there is also the factor of the money, forcibly taken from tax payers, doled out to the energy sector — this is pure corporate welfare. Big-Government-Jefferson-Quote[1] At a minimum, this corporate welfare encourages corruption and market inefficiencies.

One could write in depth about energy, and state involvement within the energy sector but that would become pedantic. Instead,  a section from a complex government report from the US Energy Information Administration (EAI) summarizes the labyrinth of programs and rules representing the state’s reach into the U.S. energy sector.

EIA identified over 70 federal domestic assistance programs, many of which have multiple subprograms, as part of direct or research and development expenditures displayed in this report. 1

It should be obvious this situation is unhealthy; over 70 government programs each being a fiefdom on to the selves is not a ideal way to deal with the intricacies of energy production and consumption.  The complexity and waste of most government programs of this size is well understood – Medicaid, Medicare, Veterans Administration, Department of Defense, etc..There are news stories almost daily of the waste and fraud within these programs but few documenting the costs of subsidized energy.

However, there is a fundamental flaw beyond the administrative bloat these programs induce, there contradicting interests being simultaneously subsided – renewable vs. fossil vs. nuclear. While most libertarians are aghast at the state picking winners and losers in the market, it is completely lacking congruence of investing in competing sources of energy and expecting increased development and innovation within the industry.

A table in the aforementioned report, Table ES2 highlights taxpayers are subsidizing fossil, nuclear, and renewable sources of energy on a yearly basis to the tune of roughly $30B.  The older energy industry sees these investments as an incentive for the status quo and the newer burgeoning energy businesses use their subsides as a crutch and do not innovate as they would if they were competing for their company’s lives in the free market.

It is time to remove the state from energy production and let the free markets deliver the most economical and sustainable energy possible.

 

 

  1. “Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2013.” EIA, U.S. Energy Information Administration , Mar. 2015, https://www.eia.gov/analysis/requests/subsidy/pdf/subsidy.pdf.

 

Redistribution may not be needed

Redistribution is a statist method of taking from one individual (under the threat of violence) and giving what was taken to another individual who is supposedly in poverty. The practice is antithesis to everything libertarian.redistribution_is_not_fairness_its_theft

Poverty can be avoided in many cases by following these steps:

  1. Complete high school and if possible, obtain further career training
  2. Do not have a child out of wedlock
  3. After completing your education or career training, work full-time at your career
  4. Obey all statist laws even if you disagree with them to remain non-incarcerated

Following these simple tenets will help keep most individuals out of poverty thus lessen  the need for the unjust practice of income redistribution.

 

How to Really Fix America

There are several simple modifications to American policy and to our US Constitution that would quickly set America on a path to prosperity and happiness.  They include:

  1. End America’s role as the world’s policeman  – follow the current Constitution’s prescriptions on the use of our military
  2. Abolish the IRS and replace it with a fee based system of funding for only Constitutionally defined activities the federal government can participate in
  3. Abolish all non-Constitutionally defined government activities with an all encompassing amendment to the US Constitution i.e. disbands cabinet roles such as HHS and Department of Education and governmental agencies such as as the EPA. This action will force the end of federal programs like Medicare, Medicaid, Social Security, etc
  4. Rollback all federal laws for victimless crime
  5. Strengthen federal laws on property rights, citizen on citizen violence, and fraud and coercion
  6. Provide each student under the age of 18 in America with uniform financial stipend that can be used for education and training at the institution of their parents’ choice
  7. Add an amendment to the US Constitution forbidding an income tax or ending the fiscal year without a balanced budget
  8. Stop all federal surveillance unless sanctioned by the terms in the 4th amendment to the US Constitution
  9. Reform immigration to include work permits, simple path to permanent residence,  and add an amendment to the US Constitution forbidding of federal aid to new arrivals
  10. Abolish the Federal Reserve and have legislative control over the current which would be backed by gold and other non-perishable assets

 

The results of these policies would be:

  1. Reduction in cost of national defense and a more popular America throughout the world
  2. Reduction in the cost of collecting funds for the federal government and elimination of corruption caused by the current tax code
  3. Reduction in the cost of government and the ability of citizenry to chose to localize services and the state and municipal level. There would now be a separation of government and business and government and healthcare, etc..
  4. Reduction in incarceration rates and the cost of administering justice with America
  5. Would offer American’s a more equitable and constitutionally sanctioned justice system
  6. Education is critical to a free society so a free parental choice based primary and secondary education would be provided to all students at a baseline level. The funding would come at the federal level from fees collected from selling, renting federal assets
  7. Keeps economic prosperity and assures continued economic justice
  8. Eliminates “Big Brother” for our lives
  9. Stops illegal immigration and assures America access to the world’s best and brightest
  10. Allows a sound money policy and uses market forces to guide interest rates and subsequent investments

 

Beware

Beware of the impact of state provided services.

Americans have been slowly losing control of various segments of their lives since the progressive era of the early twentieth century made it OK to federalize previously private activities. The Great Depression of the Roosevelt era codified this federal control over private business and personal behavior. U.S. Presidential PortraitsThis statist power grab has only accelerated since the nineteen sixties.  For example, Medicare and Medicaid have replaced the doctor patient relationship with regulations and a unaffordable bureaucracy.

The Department of Education has in many instances redefined previously locally determined protocol for educating American youth.  This same group has insidiously become more involved in post-secondary education and has created a $1.4 trillion student loan debt burden.

The state’s reach goes beyond these areas and is now involved in almost all activities American citizens participate.  Evidence of this fact can be found at:

https://www.usa.gov/federal-agencies/a

As the debate over Obamacare continues, please beware that if America adopts social medicine one day the state may McDonalds-Big-Mac-Mealoutlaw Big Macs in the name of keeping America healthy.

 

 

Why we lose our property

One of the most sacrosanct beliefs in a libertarian society is the free right to own property. In the most fundamental sense, this property includes personal possessions such as land, homes, automobiles, and other sundry valuables accumulated over time by an individual or family unit.  In almost in all cases, this private property is obtained from the fruits of ones’ labor; from participation in free market transactions whether from traditional manufacturing – selling of products, by delivering services and expert advice to someone willing to freely purchase them, or even by speculatively investing where one’s original investment is smaller than the final price obtained when the investment is sold.

How much fruit one obtains in a free society is often distributed unequally within the society and is dependent on a multitude of factors including hard work, skill, education, knowledge, experience, and even plain luck.

For some reason, statists despise the inequality of free markets and the fact that someone can be very successful and accumulate significant wealth by conducting free market commence.  To combat this undesirable feature of a capitalist society,  statists have created two large classes of the populace who can be ‘fed’ via the taxation or theft from all wage earners, even those who work within the statist system.  (Very strange, they give money to someone who works for the state and then tax them to pay for their and other government employees’ wages)

The first class to receive the benefits of redistribution of wealth are government employees. Now mind you, many of these employees provide value to society but given their relegation to being employed by the state instead of the private sector they become a protected class that must be supported by the forcible confiscation of wealth (fruits of one’s labor) from workers.

According to the census bureau’s Government Employment and Payroll measure, the number of federal, state, and local civilian government employees and their gross monthly payroll for March of the survey year can be found at. Survey of Public Employment and Payroll website >>

The number within this class is large and as of March of 2015, there are 14,425,359 people drawing wages via the forced taxation of private property.

The other class of people are those who are made dependent on the state for some portion of their existence.  These people receive the fruits of someone’s labor via programs like:

  • Medicaid
  • Supplemental Nutrition Assistance Program (SNAP)
  • Housing Assistance
  • Supplemental Security Income (SSI)
  • Temporary Assistance for Needy Families (TANF)
  • General Assistance (GA)

“Approximately 52.2 million (or 21.3 percent) people in the U.S. participated in major means-tested government assistance programs each month in 2012, according to a U.S. Census Bureau report. “

One final thought to ponder. Do you think these two protected classes (Government employees and people receiving means tested benefits) will ever support changes to our statist system?

 

 

Statism Does Not Work

This morning’s headlines are further proof that the state is strangling economic growth.  A modern economic system will not grow when there are high rates of taxation (federal, state, and local) coupled with burdensome regulations on business. We have seen this phenomena quite visibly in our nation’s lack of economic growth for the past eight plus years.  Some of the problem with our nation’s blindness or unwillingness to see this is the fourth estate’s coverage of facts but the sin also rests at the foot of those Americans who do not take the time to be educated on what is happening at a macro level with our economy.

U.S. Economy Expands at Slowest Pace in Three Years

This situation bodes the question, when will Americans say enough is enough?