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.

 

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An Outstanding Assessment

A very insightful piece from Simon Black.  I cannot add to this but to say, Mr. Black is spot on with his assessment of Americans today.

https://www.sovereignman.com/trends/new-poll-record-number-of-americans-want-more-government-in-their-lives-21388/?inf_contact_key=bca43013ae3658dd22297fe0e5837999bd3b2e4d6f6b2a81a9955af064c21ad9

April 24, 2017
Sovereign Valley Farm, Chile

In a poll conducted a few days ago by NBC News / Wall Street Journal, a record 57% of Americans responded that they want MORE government in their lives, and that the government should be doing more to solve people’s problems.

That’s the highest percentage since they started asking this question in 1995.

In fact, 57% is nearly double what people responded in the mid-90s.

Furthermore, the number of Americans who feel the opposite, i.e. responded that the government is doing too many things that should be left to private businesses and individuals, fell to a near record-low 39%.  

Bottom line: people want more government.

It’s hard to even know where to begin with this.

First- more government is nearly an impossibility.

As I’ve written several times in the past, the US federal government already spends almost all of its tax revenue on mandatory entitlements like Social Security, and interest on the debt.

They could literally cut nearly everything we think of as government– national parks, Homeland Security, even the IRS– and still not make a dent in paying down the national debt.

According to the US government’s own financial statements, their net operating loss in 2016 was an unbelievable $1.05 TRILLION.

Think about that– they lost more than a trillion dollars in a completely unremarkable year.

They weren’t waging world war, funding a major infrastructure project, or dealing with an economic crisis.

It was just business as usual. And they STILL lost over a trillion dollars.

More government is going to cost even more money that they don’t have… which means even more debt and even more pain in the future.

The usual refrain is to pay for more government programs by raising taxes on the rich, or big corporations, or whoever the evil villain du jour is.

Anyone who thinks this actually works needs to study history.

Simply put, RAISING TAXES DOES NOT RAISE TAX REVENUE.

I wish every Bernie Sanders voter could understand this very simple fact:

Since the end of World War II, US federal government tax revenue as a percentage of GDP has been nearly constant at 17%.

In other words, while the actual dollar amount of tax revenue goes up every year due to inflation and economic expansion, the government’s slice of the total economic pie is 17%.

Yet during the previous eight decades, actual -tax rates- have been all over the board– sometimes rates were higher, sometimes rates were lower.

Back in 1963, for example, the highest marginal tax rate on individuals exceeded an unbelievable 90%.

I’m sure there are plenty of Americans who would love to see the wealthiest citizens paying 90% again.

Yet in 1963, even with rates that high, the total amount of tax revenue that the US government collected was 16.7% of GDP.

In 1988 when the highest tax rate was slashed to just 28% under Ronald Reagan, total tax revenue 17.3% of GDP.
 
It doesn’t matter if tax rates were high or low– the actual tax revenue that the government collects stays constant at around 17% of GDP.

This raises a point that these socialists never seem to understand:

If the government’s slice of the pie never seems to change no matter how high or how low tax rates are, shouldn’t they focus on making the pie bigger?

Duh.

And it seems intuitive that higher taxes obstruct economic growth (i.e. make the pie smaller) because there’s less money in people’s pockets to spend and invest.

Then, of course, we have to touch on the issue of competence.

It’s absurd to want a government that has a nearly interminable track record of overreach, waste, and failure, to be even MORE involved in people’s lives.

We’re talking about the same institution that wastes taxpayer money to study monkeys on treadmills…

… or spent $1 billion to destroy $16 billion worth of perfectly good ammunition…

… or $2 billion to build a website.
 
It’s extraordinary that these people are already in charge of educating our children, regulating our savings, and now our medical care.

It’s even more appalling that given such dismal performance people want more.

As the old saying goes, the classic definition of insanity is trying the same thing over and over again and expecting a different result.

A final point I’ll mention is that it’s concerning to see people in the Land of the Free and Home of the Brave expect the government to solve their problems.

What ever happened to self-reliance? The pioneering spirit? Good ole’ American can-do ingenuity?

In truth there are countless ways for a motivated person to solve problems. Or at least to make forward progress.

For example, to all these kids that have their hands out demanding free university education, I always ask the same questions:

How many books did you read in the last twelve months?

How many FREE online courses from Harvard and MIT did you take?

Are you actually doing anything to help yourself? Or are you just whining on social media about how no one is giving you anything for free?

America was founded as a place where people take responsibility for themselves.

But this now seems to be an outdated, minority view.

The Land of the Free is truly becoming the Land of Getting Free Stuff.

 

Until tomorrow,

Simon Black

Founder, SovereignMan.com

No voter fraud?

There is something fundamental to ask regarding the individual action of  voting within our republic. Is the act of voting somehow inoculated from the fraud which infiltrates many other government sponsored endeavors?  Has the human condition elevated to the point that the acts of lying and cheating have been left out of our highly evolved DNA?

There is currently an uproar among the left and some on the right over the fidelity of our nation’s election system. This non-issue or controversy, depending on how you see it, has been covered by the MSM and many alternatives news sources. The defending or questioning of election results by either political side has significant consequences to the support or lack of support of our elected officials.

Suffrage is a state ‘supervised’ activity back by the US Constitution (the 15th, 19th, 24th, and 26th Amedments) as well as additional federal back-up supplied by the Voting Rights Act of 1965 but is the act of voting and the tally of results in today’s America above reproach?

The questions being currently raised by both sides in this controversy leads to questions as to:

  1. Is the act of voting somehow different than other actions and interfaces between the individual and the state (general term for government)?
  2. Does the human condition of seeking its self-interests not apply to the act of voting?
  3. Are the individual states’ voting systems (casting and counting) fool-proof such that fraud is impossible?

As a libertarian, I like those on the left and right view voting as essential to our republic’s continuance. Notwithstanding, the state  has a very poor record when it comes to being a victim of fraud perpetrated by individuals and organizations seeking to further their self-interests.

To examine the track record of the state in resisting fraud, listed below are a few examples of actual payment fraud being perpetrated upon the state as reported by the Federal government.  Billions of dollars are being taken by fraud from the state.

A warning, this list is not even close to complete in describing the state’s unwilling being duped. There is no inclusion of fraud by Wall Street, DoD contractors and suppliers, special interest groups, corporate entities, individual taxpayers, military commanders, academic researchers, etc.. These and other offenders are not on the list below but their actions are well known to add support to the need to answer the question below.

Could there also be problems with suffrage in America?

fraud

Table from https://paymentaccuracy.gov/high-priority-programs/

 

 

I am in awe

While reading quotes of our nation’s founders, I am in complete awe of their wisdom prescience. Let me highlight a few I like.

The source is: http://econfaculty.gmu.edu/wew/quotes/govt.html

My comment: This quote could speak to the last few people occupying the Oval Office

“As democracy is perfected, the office of the President represents, more and more closely, the inner soul of the people. On some great and glorious day, the plain folks of the land will reach their heart’s desire at last and the White House will be occupied by a downright fool and complete narcissistic moron.”
–H.L. Mencken, the Baltimore Evening Sun, July 26, 1920

My Comment: Madison is foretelling the welfare state which has been a destructive force in America since the days of FDR.

“The government of the United States is a definite government, confined to specified objects. It is not like state governments, whose powers are more general. Charity is no part of the legislative duty of the government.”
— James Madison, speech in the House of Representatives, January 10, 1794

My Comment: Jefferson is spot on regarding the current situation. 

“The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite.”
— Thomas Jefferson

My Comment: Jefferson is predicting the problem of Judicial Activism.

“…the opinion which gives to the judges the right to decide what laws are constitutional and what not, not only for themselves in their own sphere of action but for the Legislature and Executive also in their spheres, would make the Judiciary a despotic branch.”
— Thomas Jefferson

My Comment: Franklin told us about the Welfare State years ago and yet, here we are today with millions on the public dole.

“I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”
— Benjamin Franklin

My Comment: Webster highlights the need for the Second Amendment to the US Constitution.

“The supreme power in America cannot enforce unjust laws by the sword; because the whole body of the people are armed, and constitute a force superior to any band of regular troops that can be, on any pretence, raised in the United States.” .”
— Noah Webster

My Comment: Madison warns of the creeping behemoth of the Federal Government.

“There are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations.”
— James Madison, speech to the Virginia Ratifying Convention, June 16, 1788

My Comment: A prediction of the power grab (production of others) to fund the elites’ power.

“We still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping at the spoil of the multitude. Invention is continually exercised to furnish new pretenses for revenue and taxation. It watches prosperity as its prey and permits none to escape without a tribute.”
— Thomas Paine

When will the American voter wake up?

The reality is, the average  American’s economic well being has been dropping for the past 7 years and still, I hear those who want more of the same despite the facts clearly showing failure of this administration. The numbers of informed voters are not yet large enough to make a difference.

One cause of our economic malaise is our rapidly growing debt. By any measure, it is threatening to overcome us and will one day unless it is reduced. It is now time American voters look to a new way, limited government which will in turn lead to less debt and more economic activity taking place in the more efficient private sector instead of the highly inefficient and wasteful public sector.

However, there is some cause for hope. In my latest readings on the economy, I am starting to see facts being clearly communicated which show our leaders’ being called to account for their economic malfeasance.

Please voter, learn the facts and wake up!

Ike’s words were a warning

Ike’s 1961 warning of the Military Industrial Complex have not been fully heeded. Here is a recent example of our nation’s willingness to unquestionably believe and fund this behemoth.

A test of America’s homeland missile defense system found a problem. Why didn’t the Pentagon say so?

Santayana is popularly known for aphorisms, such as “Those who cannot remember the past are condemned to repeat it,”[3]

We are paying the price in dollars but even worse is, we could be lulled into a belief we are safe from the existential threat of nuclear warfare for not following Ike’s advice. We must continually question government and hold their feet to the fire.