Friday, June 3, 2011

ADAM SMITH ON GOVERNMENT AND TAXES

Writing in the mid- to late-1700's, Adam Smith penned the following:

“The agents of [government] regard the wealth of their master {i.e., we the people} as inexhaustible; are careless at what price they buy; are careless at what price they sell.”

“Those unproductive hands...may consume so great a share...that all the frugality and good conduct of individuals may not be able to compensate...this violent and forced encroachment.”

“After all the proper subjects of taxation have been exhausted, if the exigencies of the state still continue to require new taxes, they must be imposed on improper ones.”

“The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would...assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.”

Thursday, May 26, 2011

GOVERNMENT AND JOBS

As I have argued before, government cannot create jobs (on net). Government actions are much more likely to destroy jobs (see editorial "Government Cannot Create Jobs" in right margin of this page). The following is a real world example of how government is a systematic destroyer of jobs, as described by an annomous business executive. I would argue that this is not an isolated case but is a common circumstance.

"In fact, I have witnessed the loss of jobs as a direct result of regulations by unnamed and unelected bureaucrats, who are backed up by threats of prosecution from the government. Our government is stifling job creation.

Although I am not a conspiracy theorist, I am certain that if I wrote about my experience with specifics, the company for which I work would suffer retribution by our government. I do not have the right to put them in jeopardy. And if the legal department of my employer knew I was writing this, they would "lose it." For these reasons, I feel it necessary to write anonymously and with some imprecision.

This fear of retribution, in and of itself, is a powerful statement about the sad conditions in which we live and do business in the United States. So, here is the sanitized version of my story:
My employer makes very expensive pieces of equipment for use in an industry that has itself sustained undeserved attacks by our government and by unscrupulous so-called environmentalists.[1]

In any case, our pieces of equipment (let's call them tractors) use expensive components (let's call them engines) made and sold by Americans. The engines are used by American workers in multiple states and they make more energy available for Americans. That fact alone attracts the ire of some. But the fact that our service is very valuable and produces large profits makes the industry and the service an irresistible target.

This year, I learned that one agency of the federal government has created and is enforcing rules that strictly limit the types and numbers of engines we can buy to make our tractors. They limit how many of each type of engine we can buy in a year, and they limit the grand total we can buy. This is offensive for many reasons — not the least of which is that we would hire more people if we were allowed to make more tractors.

I could make an endless list of the unseen and damaging effects of their nonsense. But here is a short list:

1.     Without these rules, we would hire more welders, assemblers, and accountants. This would result in the improvement of our local economy, because the new employees and their families would all need food, clothing, housing, entertainment, etc.

2.     To keep up with our increased demand for the tractor engines we need, the engine manufacturers, their employees, and their families would benefit.

3.     The companies to which we sell tractors would hire more operators. Their families and the places they shop at would benefit.

4.     The companies who request our product would become more profitable, resulting in expansions, bonuses, etc.

5.     And, last (and totally forgotten) are the American citizens. Each and every citizen would benefit from the larger supply of energy and the resultant lower prices.

Some people might say that it is good to limit the numbers of these engines in order to protect the environment. But that argument only holds water long enough for a ten-second sound bite. The reality is that this destructive government agency also has rules that permit smaller versions of the same engines. What that means is that we would be permitted to create 50 tractors using the (approved) smaller engines instead of 20 using the larger ones. It is true that the larger engine pollutes more than the smaller one. But using the smaller engines would require more tractors to be built and more fuel to bring them to the job sites. In other words, using fewer tractors with the larger (evil) engines produces fewer net emissions than more tractors with the smaller (approved) engines would.

So, who is causing all this, and why are they doing it? You can answer that question for yourself by discovering who benefits from the regulations. The list includes the politicians who use these issues to their advantage regardless of the truth. It includes the government bureaucrats who want more power to justify their own salaries and positions. It also includes reporters who can't wait for the next "breaking news" about an "environmental threat," or "dire emergency." And it includes university professors and other academic elites who come in to petition for huge government grants and to get paid to speak as "experts." The dark irony is that all these supposed protectors are really engaging in a self-serving round robin of deceit.

The truth is they are horrifically destructive to the prosperity and well-being of all Americans. But because their public faces hide the despicable truth, they have been able to get away with it. Our only hope is to get these people out of business — literally and figuratively. I've got to be honest, though. It won't be easy. They are fighting for their livelihoods, too."

Monday, May 9, 2011

GOVERNMENT TO THE RESCUE

After spending trillions of tax payer dollars to "stimulate" the economy, this is how Obama's economic plan panned out compared to what he said would happen. Maybe he and his experts aren't as smart as they claim. (The blue line shows Obama's projections--the dots are what actually happened.)


Thursday, April 28, 2011

THE GAS PRICE CONUMDRUM

Recently, we have experienced another jump in gasoline prices causing outcries among consumers and prompting debates as to what ought to be done about the situation. These outcries and debates beg two questions: How “high” are gas prices? What, if anything, can be done about it?

To read further, check out my editorial with this title found on the right margin of the screen.

           

Tuesday, April 26, 2011

THE VIRTUES OF SCHOOL CHOISE

Besides the obvious one--freedom of choise--not to mention lower cost, the virtues of increasing educational choise by enabling private schools to compete for students on a fair basis with public schools are many. This from the Cato Institute:

Call me old fashioned, but I prefer to reach policy conclusions based on empirical research. So after comparing the performance of alternative school systems over the past 2,000 years, I surveyed the modern econometric literature on the subject for the Journal of School Choice. What I found is that the freest, most market-like education systems consistently outperform the sorts of state monopolies preferred by Ms. Weingarten and her fellow travelers. Appended below is the chart counting up how many studies favored education markets over state school monopolies, and vice-versa, in each of six outcome areas.
If Ms. Weingarten is aware of a similar weight of scientific evidence favoring her position, she should present it. Otherwise, why would anyone bother to heed her? More puzzling still, what was it about her alleged-dog-allegedly-bites-man op-ed that the WSJ thought worth publishing?


Monday, April 25, 2011

OUR PREMIER UNIVERSITIES AND ACADEMIC FREEDOM

UCLA fired a professor of 34 years for publishing a scientific report that they disagreed with--not based on the science but on the politics. The professor's report disputed a major finding of the California Air Resources Board (CARB) about air polution. After submitting his report to CARB, the professor (James Enstrom) was fired. Turns out two of the people associated with CARB were powerful UCLA professors and his report was in opposition to regulations that they were tying to get implimented. CARB had based their actions on a "scientific" report by someone who it turns out had purchased a PHD from a bogus university.

Thursday, April 21, 2011

TAXES AND THE DEFICIT

If government had to raise taxes to cover all spending for 2011 it would need to more than double income tax collections (144% incr. needed).
If government only raised taxes on those making more than $250,000 their rates would have to be raised to over 100 percent. But even that wouldn’t do it because government would still need 30+% more from other tax payers than they are already paying. -- Curtis S. Dubay (Heritage Foundation)

“The American Republic will endure until the day congress discovers that it can bribe the public with the public’s own money.” -- Alexis de Tocqueville (philosopher)

"After that point the system will collapse under its own weight." -- David W. Dickey (economist/writer)

Tuesday, April 19, 2011

GOV REGULATIONS COST JOBS

'Hidden Tax': Govt Rules Cost Economy Nearly $2 Trillion

Tuesday, 19 Apr 2011 09:20 AM
By Mike Tighe
That staggering figure comes courtesy of Wayne Crews, policy vice president at the Competitive Enterprise Institute, who scrutinized the 81,405 pages of the Federal Registry. That catalog chronicles the nation’s regulations on businesses and state and local governments.
Crews' report, titled Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State, contends that government regulations cost the economy $1.75 trillion in 2008.

Amid all the debates about the nation's economy, hardly anyone pays attention to the cost of the rules, which Crews describes as the "hidden tax." After all, such costs don't end up on people's pay stubs or tax bills from state and local governments.

Crews' report notes: “Because such regulatory costs are not budgeted and lack the formal public disclosure of federal spending, they may generate comparatively little public outcry." That off-the-radar aspect of regulations makes them an inviting way for governments to raise Money, Crews contends.

“If regulatory costs remain largely hidden from public view, regulating will become increasingly attractive compared with increasingly unpopular taxing and spending,” Crews writes. “Rather than pay directly and book expenses for new initiatives, the federal government can require the private sector — as well as state and local governments — to pay for federal initiatives through compliance costs.”

Although Crews' report acknowledges that getting a precise tally of government regulation is impossible, he stresses that every new rule costs business owners and consumers more money.

The Daily Caller lists just some of the report's significant points, including the following:
·                       In 2010, federal agencies issued 3,573 final rules.
·                       Although agencies issued 3,573 final rules, Congress passed and the president signed into law a comparatively “few” 217 bills. Considerable lawmaking power is delegated to unelected bureaucrats at agencies, an abuse addressed recently in proposals such as the REINS Act.
·                       Proposed rules in the Federal Register have surged from 2,044 in 2009 to 2,439 in 2010, a jump of 19.3 percent.
·                       Almost 225 of the 4,225 rules now in the regulatory pipeline are “economically significant” meaning they wield at least $100 million in economic impact, an increase of 22 percent over 2009’s 184 rules.
·                       Given 2010’s government spending of $3.456 trillion, the regulatory “hidden tax” of $1.75 trillion stands at an unprecedented 50.7 percent of the level of federal spending itself.
·                       Regulatory costs exceed all 2008 corporate pretax profits of $1.463 trillion.
·                       Regulatory costs dwarf corporate income taxes of $157 billion.
© Newsmax. All rights reserved.

FUN WITH TAXES

This from the Cato Instutute:

According to tax publisher CCH, there are now 72,536 pages of federal tax code rules, regulations, and IRS rulings.

Thursday, April 14, 2011

THE U.S. BUDGET

IF the Federal budget is cut by the proposed $38 billion, then Federal government outlays will RISE by $177 billion in FY 2011. See below. We're in a very, very bad and sad situation.


Source: Congressional Budget Office, Cato Institute

INCOME TAXES

Letter submitted to the Orange County Register:

Apr. 14, 2011

Dear Editor,
You recently published an article from The Associated Press that stated that “54 percent of Americans believe their tax bills are either somewhat fair or very fair, compared with 46 percent who say they are unfair.” What the article did not say was that 47 percent of Americans do not pay any income tax. So it should be no surprise to anyone that these people plus a few others are quite happy that most taxes are being paid by someone other than themselves. 

David W. Dickey
Mission Viejo

Tuesday, April 5, 2011

U.S.: A NATION OF DEPENDENTS

The chart below shows how dependent Americans have become on government money. The chart tells a very sad story and the situation is only getting worse. What the chart doesn't show is that it is largely government policies that are creating this pattern of rising dependence. Our government confiscates 40 percent of private resources, primary out of peoples incomes. Then it gives that money to someone else. These policies dictate that dependence on government MUST NECESSARILY rise. Money that is taken from wages and given to the government obviously cannot also be received by individuals as wages. (Further description of the graph and what it shows is provided below)


transfer payments as a share of personal income
Source: Bureau of Economic Analysis, Credit Suisse


The graph was created by Credit Suisse’s chief economist, Neal Soss. The red line shows what share of personal income comes from wages — that is, what Americans earn from working. The blue line shows what share comes from transfer payments, which are made to individuals, usually by the federal government, through social benefit programs like unemployment insurance, disability insurance and Social Security. As you can see, the share of income that Americans earn by working has been falling, from more than two-thirds of their income in the mid-1950s to just over half of their income today. Meanwhile, they have been growing more and more dependent on money from social benefits programs, growing from about 4 percent in the mid-’50s to about 18 percent in February 2011.

Thursday, March 10, 2011

ECONOMIC MYOPIA

We are mortgaging our children's future, no doubt about it. To learn more, click on "ECONOMIC MYOPIA" under PAGES on the right margin of the screen.

Thursday, March 3, 2011

ABC NEWS REPORT ON "BUY AMERICAN" IS MISGUIDED

Most economists are of the opinion that free trade is good for everybody, and that it's good for jobs in America. There is nothing wrong with buying US-made products, but neither is there any wrong in buying foreign products. The reason so many of us buy foreign products is because we choose the product that offers the best quality-price value. The world economy is amazingly intertwined. We benefit from doing business with China (or whoever) just as they benefit from us. Moreover, there are social benefits with trade among countries--doing a lot of business with another nation is possibly the most beneficial way of promoting world peace, and it raises the living standards of poorer nations (NOT at the expense of our own standard of living). "Buy American" is a compelling social slogan, but it offers no benefit toward promoting the US economy or jobs.