Basic economic laws should not be thwarted

In the United States of America, the state continues to deploy failed policies that violate basic economic principles to the detriment of the entire society it seeks to control.   This failure can be seen in America’s Welfare State and progressive income tax program. The former subsidizes individual actions and life styles that can contribute to poverty and the later discourages income and wealth generation. Simply put, basic praxeology shows us when you subsidize something you will get more of it. Tax and regulate something you get less of it.

Since the amalgamation of the Revenue Act of 1916 and FDR’s New Deal, (in which the state used taxation, targeted subsidization, and regulation in an attempt to alleviate and or mitigate its definition of poverty among its citizens), the state began to extremely violate the aforementioned basic principles of human behavior.

In FDR’s “First New Deal” (1933–34), many programs were instituted using state subsidies to pay people who did not work and create new regulations for the banking and industrial sector which increased their moral hazard in an attempt to combat the impact and causes of the Great Depression.

FDR’s “Second New Deal” (1935–38) went further and fully institutionalized state involvement in the nation’s personal behavior in an attempt to address the effects of the ongoing economic crisis.  Programs such as Social Security and the Fair Labor Standards Act would change America forever.

The state, in its infinite wisdom, seeing less than satisfactory results from FDR’s New Deal, thirty years later further increased its involvement in Americans’ personal lives with new programs, subsidies, and taxes during LBJ’s Great Society.

Our aim is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it. No single piece of legislation, however, is going to suffice.”
– President Lyndon Johnson, 1964 State of the Union Address

Recently, according to the 2014 House Budget Committee Report, The War on Poverty: 50 Years Later the state’s return on investment has been less than satisfactory.  Below are some conclusions from the report showing failure of the state to eliminate poverty by not understanding basic human behavior:

The War on Poverty at a Glance
Despite trillions of dollars in spending, poverty is widespread:
• In 1965, the poverty rate was 17.3 percent. In 2012, it was 15 percent.
• Over the past three years, “deep poverty” has reached its highest level on record.
• About 21.8 percent of children live below the poverty line.1
In can be no surprise the state has failed to eliminate poverty if one understands the basics tenets of human behavior and the fundamental principles of economics.   The state’s policy violates them. Government programs targeted at poverty reduction/elimination encourage more poverty by encouraging a person to continue their current situation of being in poverty — receive payments and subsidies for having lower income, receive payments and subsidies for not working, receive payments and subsidies for having more dependents, receive payments and subsides for not completing high school, receive payments and subsides for not living a healthy lifestyle, etcetera.
The state also discourages work and thus wealth generation with its onerous job killing regulations which make it more costly for employers and entrepreneurs to create jobs and thus new wealth.
Additionally, the progressive tax system reduces the incentive to generate new wealth as its marginal income tax rates and capital gains taxes punish those who generate more earned income and investment generated wealth.
The state could easily rectify the current situation by eliminating all subsidies to individuals and corporations and stop taxing income and wealth.
1. “War on Poverty.” Http://budget.house.gov/uploadedfiles/war_on_poverty.pdf. United States House of Representatives , 3 Mar. 2014. Web. 8 Apr. 2017.

Government and food

The following graphic clearly shows how entrenched the state is in everyday life.1  They currently provide some level of sustenance to over 43 million people. How much more can the state become involved in Americans’ life; this is food, an essential for the maintenance of human life, that is being doled out by the Federal Government to its subjects.

The growth of the number of Americans participating in SNAP has risen significantly since the ‘so-called end’ of the Great Recession. This is preposterous and violates common economic principles.

A few simple questions come to mind as one tries to understand the need for growth in this behemoth, $70B, state sponsored program in non-recessionary times.2

Question 1: If the Great Recession has ended, why did the SNAP program continue to grow?

Question 2: If the answer to question number one is that the Great Recession is not over is the Federal Government lying to the American people about the condition of the economy?

Question 3: If the Great Recession has ended as the Federal Government has stipulated, is the growth in SNAP due to the statists’ desire to create dependence and thus control over its citizens?

As in the case of most issues, the truth is likely found in the middle ground.  The Federal Government’s economic numbers are often fraudulent or at a minimum, do not reflect reality. Additionally, the state must force dependency upon its citizens to continue to survive.  Simply put, the economic conditions in American are not all that great as they are purported to be and the state, in order to grow its control over its citizens, wants more people dependent upon the state such that they will be forced to choose the state over economic freedom and personal liberty.

Sources

  1. “Food-Stamp Recipients Can Now Order From Amazon, Other Online Retailers.” Zero Hedge. Judicial Watch, 16 Jan. 2017. Web. 16 Jan. 2017.
  2. United States Department of Agriculture Office of Inspector General. “3.10. Administrative Costs.” (n.d.): n. page. US Department of Agriculture. United States Government, Sept. 2016. Web. 16 Jan. 2017.