Many Republicans of today triumph the "Fair Tax," which would attempt to tax some form of consumption, rather than income. The logic behind this is that it would be easier to administrate, be less intrusive of privacy, and able to tax those who illegally earn their income. Also, it would encourage savings over consumption, which appears to be something society needs.
Democrats seem to revile a "Fair Tax," as it would be less progressive. Thus, to be revenue neutral, the poor would pay higher taxes, which many of them simply can't afford.
Libertarians on the other hand don't really care. They generally dislike all taxes and realize that no matter what form the tax, the general result is a negative impact upon production.
Problem 1 - It is not up-front about its true costs and ability to truly replace income taxes
My first gripe is that the Fair Tax is evasive of its true rate. Sales tax is normally computed as a % of the product's initial cost, before including the tax itself. Measured this way, the Fair Tax would have to be at least 30% to be revenue neutral, which it would have to do to replace the income tax. Yet, we measure income taxes as a % of our total income, which includes the portion we pay as taxes. Thus, measuring the Fair Tax as a % of the sale after adding the tax, it is about 23%, which is what its advocates constantly quote. This allows it to be compared better to the income tax, but only when people use their average rate, not the marginal rate. Please note, Warren Buffet, one of the world's wealthiest men, paid about 17% of his income to taxes not too recently. Also note, that your highest income tax bracket is not your actual rate. The average rate on all income is only ~15%. For most people, the Fair Tax is a tax hike.
Gripe 2: to attempt to retain the progressive nature of our current tax structure (which isn't actually correct - only the income tax is progressive, thus, overall taxation may in fact be regressive), the Fair Tax plan involves a "pre-bate," which is essentially a monthly welfare check from the government. Everyone is eligible, and the estimated cost is astronomical. The true rub, however, is that the Fair Tax plan does not include this amount in its figures for revenue-neutrality. In practice this means that the Fair Tax would actually have to be closer to 40% to truly replace the income tax without a huge funding shortfall (in addition to the shortfall we already have, given our government's concern for budget deficits).
Problem 2: Does it really lessen administration?
Just as many individuals are able to successfully and legally avoid paying their "fair share" of taxes, business owners will find means of successfully and legally avoiding consumption taxes, using coupons, vouchers, and other circular business expenses that drive up profit while making less in official sales. Depending upon the complexity of the schemes, more administration than the income tax may be required. It is very important to note that even with the giant administration apparatus of the IRS, a large number of individuals still successfully cheat their taxes.
Problem 3: Is it truly less intrusive, or does it simply push this burden onto a smaller group?
A "Fair Tax" may be less intrusive to most individuals, but it may become extremely intrusive to retailers. This means less retailers and higher prices, which may not turn out to be worth the increased privacy for most individuals. The largest gripe of privacy against the IRS usually comes from small business owners. The Fair Tax doesn't seem to change anything for these individuals.
Problem 4: Can it really prevent criminals from evading taxes?
As far as criminals go, as long as they are consuming legal goods, they are contributing to the income of others, who are then taxed upon that income. Indirectly they still pay taxes; however, by passing them onto others, they pay less taxes than they should. A "Fair Tax" doesn't necessarily change this, however. As criminals' quality of life suffers from the higher cost of consumption, their disregard for lawful behavior will encourage them to seek cheaper black market goods or even resort to theivery. In many cases, this may encourage them, or formerly-lawful retailers who are earning less, to provide black market goods. Furthermore, criminals are often large-scale purchasers of black market goods, including weapons and drugs. A Fair Tax does not change this.
On the same note, a Fair Tax effectively makes drugs cheaper compared to other goods. It may make black market firearms more competitively priced with legally-acquired ones.
Problem 5: Influencing behavior through government is an endless folly of government growth.
Savings needs to be realized that it is eventual consumption. In fact, all income is dedicated to consumption at some point. Saving, in and of itself, is pointless. Thus, a consumption tax does indeed tax savings eventually, with the general outcome similar to an income tax. People may be more inclined to save and invest, but this does not guarantee them a greater quality of life. Investment is a risk and a burden that many people don't want to take. This is still an attempt to use tax codes to influence people's lifestyles, despite their actual preferences. Nearly all of such policies create a market distortion that accumulates in a huge problem as people attempt to avoid its effects. If government does not admit that it is the source of the problem, it will only create larger problems in its "solutions". Remember that the Fair Tax is only proposed because the income tax is problematic. Would a more appropriate solution be to reduce government and thus reduce the burden of the income tax?
Ironically, a huge motive for the massive consumption of today's society is the federal government's largely inflationary monetary practices, used to fund big government. As the money supply increases, purchasing power per dollar decreases. This causes prices and wages to rise, making debt easier to pay off later down the road, when quantity of dollars are more available. Thus, rather than earning and consuming, many people simply take on debt to consume. Additionally, rising prices tend to make things look less affordable down the road, encouraging consumption today. Thus, rather than implementing a "Fair Tax" as a means to encourage saving, a better idea may be to end the inflationary monetary policy.
Problem 6: If the Fair Tax is made politically-acceptable to the Democrats, will it further fuel the economic problems of class division and the welfare state they espouse?
The Democrats tend to rebel against class division in society, yet its policies seek to cement such divisions, by legally separating people into classes and governing them differently. They believe that increasing the progressive nature of tax helps the poor and doing the opposite hurts them. This is a matter of opinion. It depends upon the spending/saving preferences of the poor, whether they are net tax-recipients or tax-payers, and how much they value the manner in which government spends money. In a revenue-neutral "Fair Tax," the non-working poor surviving on the government's dole would end up paying consumption taxes. This ironically highlights the faults of the welfare state, as a simple solution is for government welfare payouts to simply increase by their increased financial burden due to the consumption tax. The spending and income increases would theoretically cancel each other out; however, in reality, the tax must cover not only the end recipient but the enormous cost of welfare administration (about 3/4 of total expenditures), requiring a much larger payout. Thus, there is no means for the non-working poor to have the same purchasing power without raising much greater tax revenue from somewhere else. Double ironically, a larger pay-out would give the non-working poor greater purchasing power of untaxed black market goods, such as drugs. I doubt this is the argument the Democrats use to debate the benefits of a consumption tax. We could exempt food and other essential items from consumption tax to fix this, keeping payouts the same. In many states' sales tax codes this is already done; however, this distorts the entire market, resulting in more food purchases and thus less tax revenue than expected (expanding into other industries possibly due to 2nd-market bartering or other schemes). We can pay out in food stamps and other government vouchers, but even these are illegally sold for cash. In the end, the welfare system will still reward non-production and be abused. Its recipients will see little change in their lifestyles. A Fair Tax that doesn't reduce the poor's purchasing power simply makes the problems of the welfare state that much larger, increasing the burden on those who are forced to pay for it.
For the working poor, they will generally be taxed more; however, they will likely be able to receive some sort of welfare-like aid, such as tax-free food and housing. Additional consumption can be avoided, by saving and investing, which may ultimately move the poor more toward the middle class. If a consumption tax moves more poor out of poverty, many will argue that it is a good thing; however, this is only possible from preventing them from consuming as much as they would naturally choose to do. This could be considered bad. It is of greater importance to look at the underlying cause of the problem - taxation. It is not the lack of taxation that keep the poor from saving or investing. It is either their own personal choices or the large burdens of current taxation.
A pre-bate is the worst of both worlds. It essentially is welfare not just for the non-working poor and the working poor, but for everyone. This imposes a tremendous cost that requires ever higher taxation.
Problem 7: Would we not be better off with reducing taxation rather than changing the collection system?
Democrats usually associate high levels of quite progressive taxation as a good thing; however, past attempts to do so didn't fare well for the nation, being either bypassed through loop-holes or hurting economic productivity for the entire social spectrum.
In general, lower taxation generally sees more productivity and greater purchasing power. Unfortunately, it denies state power. Government gets around this by borrowing or printing money, which are equally harmful to the economy, although it may take time for these methods to have full impact. These methods, it should be noted, are not really different from taxation. They are indirect taxes and will have negative economic effects even before they are truly "paid for".
In general, a revenue-neutral consumption tax would produce little difference in society than the income tax, unless coldly applied in full force upon those who must consume their entire incomes, which is politically unlikely.
Rather, the Libertarian position realizes that changing the form of taxation does not really mean a general change in quality of life. The only means to do so is by reducing taxation and government spending simultaneously, allowing greater focus of resources to satisfy consumer demands. Unfortunately, this position is unpopular to the war hawk, big government Republicans and the tax-and-spend Democrats who are fond of forcefully redistributing wealth.
Wednesday, July 23, 2008
best defense of a gold standard i've ever heard
You know your money is fucked when barter begins to replace monetary exchange.
"Furthermore, gold, or some other commodity, is vital for providing an international money—a basic money in which all nations can trade and settle their accounts. The philosophical absurdity of the Friedmanite plan of each government providing its own fiat money, cut loose from all others, can be seen clearly if we consider what would happen if every region, every province, every state, nay every borough, county, town, village, block, house, or individual would issue its own money, and we then had, as Friedman envisions, freely fluctuating exchange rates between all these millions of currencies. The ensuing chaos would stem from the destruction of the very concept of money— the entity that serves as a general medium for all exchanges on the market. Philosophically, Friedmanism would destroy money itself, and reduce us to the chaos and primitivism of the barter system."
-Murray Rothbard
"Furthermore, gold, or some other commodity, is vital for providing an international money—a basic money in which all nations can trade and settle their accounts. The philosophical absurdity of the Friedmanite plan of each government providing its own fiat money, cut loose from all others, can be seen clearly if we consider what would happen if every region, every province, every state, nay every borough, county, town, village, block, house, or individual would issue its own money, and we then had, as Friedman envisions, freely fluctuating exchange rates between all these millions of currencies. The ensuing chaos would stem from the destruction of the very concept of money— the entity that serves as a general medium for all exchanges on the market. Philosophically, Friedmanism would destroy money itself, and reduce us to the chaos and primitivism of the barter system."
-Murray Rothbard
Economic Destruction Package
Usually, we reserve wealth redistribution for emergency measures, in providing health care, education, and unemployment insurance for those who can't afford such. Never have we generally taxed one class of people and redistributed their money in the form of checks to another class of people. This is exactly what the "economic stimulus" is.
Clearly, many people have issues with this. It represents a slippery slope. If the economy gets worse, does that mean the checks will be larger next year? Are we on our way to the reverse income tax, where producers must provide non-producers with a standard of living? How far can that go? What is the lowest acceptable standard of living? Isn't this a clear path to outright socialism, where all industry is nationalized, and all income is equal...except for those in power? Doesn't this diminish the incentives to work, harming the economy rather than aiding it? Hasn't socialism failed miserably? There should be a lot of pissed off people, who don't enjoy being forced to pay for someone else's gain.
But there are two other ways the government can raise money besides taxes. It can borrow from American individuals, or it can borrow from other sources. By borrowing from Americans, this would mean that money that could otherwise be spent is instead invested in bonds. The gov't says this is no good, because it doesn't stimulate the economy. Thus, it will rather borrow from foreign sources or from the Federal Reserve Bank. Both of these options increase the money supply domestically.
By keeping the money supply steady and experiencing economic growth, we see a general rise in quality of life for everyone, as prices decrease in relation to general wages. This is what happened during most of American history, before WWI.
Now, simply expanding the money supply does NOTHING to help the economy. Many people believe this is a good way to wipe out the middle class. Why is this? Because money, in and of itself, (at least our fiat paper money) is worthless. It is only valuable in relation to the goods it can be exchanged for. Thus, if you increase the amount of money without increasing the efficiency of producing or overall production levels of real goods and services, what have you really accomplished? Nothing, except serving to confuse businessmen, who rely on supply and demand to price their goods at equilibrium, so that they can prevent surpluses AND empty shelves. Increasing the money supply means people will have more money to spend, which appears to mean greater demand for products. Thus, to maximize profit (and prevent shortages/surpluses) businessmen either raise prices or invest in larger supply.
In the case that prices are raised, this hurts those whose income is not raised, such as people on social security, pensions, and fixed income...and minimum wage laborers and others whose wage rate increases do not equal price inflation rates. Because the new money does not distribute itself simultaneously and equally to all people, cost of living will increase faster than income for many. These are the people who are paying to give that new money value (value cannot be created out of thin air). Their quality of life is sacrificed so that the federal government has more money to spend. This is another form of taxation, and it turns out to be the most regressive, harming both the middle and lower classes much more than the upper class. In cases of mass inflation, this process wipes out the middle class. In fact, such cases most clearly resemble outright Fascism, with the middle class joining the lower class as laborers, the upper class becoming the business class (through gov't privilege), and the government becoming the new upper class.
But if businesses decide to instead invest in greater productivity, by increasing shelf space, or opening a new mine, or building a new factory, they also lose. Some businesses can expand with few problems, but others face obviously limited resources that make expansion impossible.
For example, if the money supply doubles, everyone can eat twice as many steaks. This causes huge lines and shortages of meat. So, we buy more trucks to ship meat in. We build new restaurants to buy from. But how do we increase the amounts of meat we can produce? We cannot simply offer cows more money to breed and grow faster. Here, prices will increase. The same with store labor. How do we increase the amount of workers available? We can't. To compete for labor, businesses will have to raise wage prices. The additional costs for the supply-limited factors means that prices will have to increase for the cost of steaks. And those new trucks and buildings are now worthless, as they will not turn out to be profitable. Once prices re-establish themselves to balance goods to goods efficiently, we find that people have stopped eating twice as much steak and gone back to hamburgers, although both hamburger and steak are now twice as expensive, but only in price.
The real cost is what you produce for such. If wages double as prices double, everything is exactly as expensive as it was before, in your own terms. This is why money is valuable - it allows us to communicate exactly how valuable our services are in relation to each other. Allowing one entity to create money distorts these relations, hurting the ability of money to do its job. If
For a business that invests due to expansion of money supply, a significant amount of resources are wasted, and the businesses must sell off assets (trucks, buildings) to liquidate their debt they assumed to buy them. But now that society has revealed the poor worth of these assets, they won't find a favorable selling price, with few willing to buy. These asset write-downs cause businesses' net worth to fall. Investors become upset as stock prices fall. Some businesses can't pay their debt off and go under, as the banks lose money. There is a general decrease in the economy.
This is the business cycle. Increased demand for goods from new money appears to signal a boom. As businesses invest, this stretches the boom into other areas of the economy. Eventually, however, reality sets in. Certain resources cannot simply be expanded and productivity cannot increase. Thus, prices increase instead, harming some people's quality of life. Investments reveal themselves to be unprofitable and debt attempts to be liquidated. Certain assets drop in value. Banks see losses. This is the bust.
The federal government encourages this. Why? Because power begets power. Have you ever heard of the federal government getting rid of a department or program? Have you ever heard of it decreasing its overall spending from the prior year? Politicians, in having the ability to make or break players in the economy, receive a fair amount of attention from businessmen. Thus, they receive perks. No matter how bad the politicians are at improving the overall economy, even if it gets worse as they gain more and more control over it, they will be more largely rewarded for privileges that they hand out. Do you think we really needed a Korean, Vietnam, Persian Gulf, or Iraq War? Do you think we really need to send hundreds of billions of dollars to foreign governments as "aid"? Do we need a federal highway program, a department of Energy, or federal education? Do we need federally managed health care? All of these areas have special interests that can make billions of dollars with government privileges.
Before the crash of 1929, government policy for recessions and depressions was to get out the way. Very few lasted more than one year. However, since 1929, government has done the opposite, trying to figure out ridiculous means of "stimulating the economy". In its first attempt, we got a depression that lasted over 10 years. Since we have employed such methods, we have become less and less competitive in world markets.
So what is this "economic stimulus" going to do? It's going to cause a business cycle. Either people will spend it, causing a short-lived boom, or they will put it in the bank. Banks loan out your deposits, while owing you your money, thus further increasing the money supply through bank credit. This will also cause increased spending relative to production, causing a short-lived boom.
Why are we in an economic slump to begin with? TRYING TO INCREASE THE MONEY SUPPLY TO BOOM OUT OF BUSINESS CYCLE BUSTS. We did it in the 90's and created the dot com bubble. When that busted, we created a housing bubble. And now it's busted and to cope we're creating a ____ bubble. This process can repeat only so many times. We could eventually end up with hyperinflation, where so much new money is being created that it is no longer used as money by society, reduced to bartering and using alternative currency. Or we could end up with a crash. In the meantime, we will be paying more taxes than we should, as the government inflates the money supply.
What is a better way to stimulate the economy? Get the government out of it! No more privileges, no more new money, no new regulations (and get rid of half the old ones), no price fixing, no more welfare programs, no wealth redistribution, less spending (esp foreign aid and war), and less taxes. Easy, simple, but unfavorable because it means less fancy lunches, dinners, vacations, fame, pride, and influence for politicians.
Clearly, many people have issues with this. It represents a slippery slope. If the economy gets worse, does that mean the checks will be larger next year? Are we on our way to the reverse income tax, where producers must provide non-producers with a standard of living? How far can that go? What is the lowest acceptable standard of living? Isn't this a clear path to outright socialism, where all industry is nationalized, and all income is equal...except for those in power? Doesn't this diminish the incentives to work, harming the economy rather than aiding it? Hasn't socialism failed miserably? There should be a lot of pissed off people, who don't enjoy being forced to pay for someone else's gain.
But there are two other ways the government can raise money besides taxes. It can borrow from American individuals, or it can borrow from other sources. By borrowing from Americans, this would mean that money that could otherwise be spent is instead invested in bonds. The gov't says this is no good, because it doesn't stimulate the economy. Thus, it will rather borrow from foreign sources or from the Federal Reserve Bank. Both of these options increase the money supply domestically.
By keeping the money supply steady and experiencing economic growth, we see a general rise in quality of life for everyone, as prices decrease in relation to general wages. This is what happened during most of American history, before WWI.
Now, simply expanding the money supply does NOTHING to help the economy. Many people believe this is a good way to wipe out the middle class. Why is this? Because money, in and of itself, (at least our fiat paper money) is worthless. It is only valuable in relation to the goods it can be exchanged for. Thus, if you increase the amount of money without increasing the efficiency of producing or overall production levels of real goods and services, what have you really accomplished? Nothing, except serving to confuse businessmen, who rely on supply and demand to price their goods at equilibrium, so that they can prevent surpluses AND empty shelves. Increasing the money supply means people will have more money to spend, which appears to mean greater demand for products. Thus, to maximize profit (and prevent shortages/surpluses) businessmen either raise prices or invest in larger supply.
In the case that prices are raised, this hurts those whose income is not raised, such as people on social security, pensions, and fixed income...and minimum wage laborers and others whose wage rate increases do not equal price inflation rates. Because the new money does not distribute itself simultaneously and equally to all people, cost of living will increase faster than income for many. These are the people who are paying to give that new money value (value cannot be created out of thin air). Their quality of life is sacrificed so that the federal government has more money to spend. This is another form of taxation, and it turns out to be the most regressive, harming both the middle and lower classes much more than the upper class. In cases of mass inflation, this process wipes out the middle class. In fact, such cases most clearly resemble outright Fascism, with the middle class joining the lower class as laborers, the upper class becoming the business class (through gov't privilege), and the government becoming the new upper class.
But if businesses decide to instead invest in greater productivity, by increasing shelf space, or opening a new mine, or building a new factory, they also lose. Some businesses can expand with few problems, but others face obviously limited resources that make expansion impossible.
For example, if the money supply doubles, everyone can eat twice as many steaks. This causes huge lines and shortages of meat. So, we buy more trucks to ship meat in. We build new restaurants to buy from. But how do we increase the amounts of meat we can produce? We cannot simply offer cows more money to breed and grow faster. Here, prices will increase. The same with store labor. How do we increase the amount of workers available? We can't. To compete for labor, businesses will have to raise wage prices. The additional costs for the supply-limited factors means that prices will have to increase for the cost of steaks. And those new trucks and buildings are now worthless, as they will not turn out to be profitable. Once prices re-establish themselves to balance goods to goods efficiently, we find that people have stopped eating twice as much steak and gone back to hamburgers, although both hamburger and steak are now twice as expensive, but only in price.
The real cost is what you produce for such. If wages double as prices double, everything is exactly as expensive as it was before, in your own terms. This is why money is valuable - it allows us to communicate exactly how valuable our services are in relation to each other. Allowing one entity to create money distorts these relations, hurting the ability of money to do its job. If
For a business that invests due to expansion of money supply, a significant amount of resources are wasted, and the businesses must sell off assets (trucks, buildings) to liquidate their debt they assumed to buy them. But now that society has revealed the poor worth of these assets, they won't find a favorable selling price, with few willing to buy. These asset write-downs cause businesses' net worth to fall. Investors become upset as stock prices fall. Some businesses can't pay their debt off and go under, as the banks lose money. There is a general decrease in the economy.
This is the business cycle. Increased demand for goods from new money appears to signal a boom. As businesses invest, this stretches the boom into other areas of the economy. Eventually, however, reality sets in. Certain resources cannot simply be expanded and productivity cannot increase. Thus, prices increase instead, harming some people's quality of life. Investments reveal themselves to be unprofitable and debt attempts to be liquidated. Certain assets drop in value. Banks see losses. This is the bust.
The federal government encourages this. Why? Because power begets power. Have you ever heard of the federal government getting rid of a department or program? Have you ever heard of it decreasing its overall spending from the prior year? Politicians, in having the ability to make or break players in the economy, receive a fair amount of attention from businessmen. Thus, they receive perks. No matter how bad the politicians are at improving the overall economy, even if it gets worse as they gain more and more control over it, they will be more largely rewarded for privileges that they hand out. Do you think we really needed a Korean, Vietnam, Persian Gulf, or Iraq War? Do you think we really need to send hundreds of billions of dollars to foreign governments as "aid"? Do we need a federal highway program, a department of Energy, or federal education? Do we need federally managed health care? All of these areas have special interests that can make billions of dollars with government privileges.
Before the crash of 1929, government policy for recessions and depressions was to get out the way. Very few lasted more than one year. However, since 1929, government has done the opposite, trying to figure out ridiculous means of "stimulating the economy". In its first attempt, we got a depression that lasted over 10 years. Since we have employed such methods, we have become less and less competitive in world markets.
So what is this "economic stimulus" going to do? It's going to cause a business cycle. Either people will spend it, causing a short-lived boom, or they will put it in the bank. Banks loan out your deposits, while owing you your money, thus further increasing the money supply through bank credit. This will also cause increased spending relative to production, causing a short-lived boom.
Why are we in an economic slump to begin with? TRYING TO INCREASE THE MONEY SUPPLY TO BOOM OUT OF BUSINESS CYCLE BUSTS. We did it in the 90's and created the dot com bubble. When that busted, we created a housing bubble. And now it's busted and to cope we're creating a ____ bubble. This process can repeat only so many times. We could eventually end up with hyperinflation, where so much new money is being created that it is no longer used as money by society, reduced to bartering and using alternative currency. Or we could end up with a crash. In the meantime, we will be paying more taxes than we should, as the government inflates the money supply.
What is a better way to stimulate the economy? Get the government out of it! No more privileges, no more new money, no new regulations (and get rid of half the old ones), no price fixing, no more welfare programs, no wealth redistribution, less spending (esp foreign aid and war), and less taxes. Easy, simple, but unfavorable because it means less fancy lunches, dinners, vacations, fame, pride, and influence for politicians.
Hate oil co's for their HIGH GAS PRICES? You're a moron.
Main point - government is more to blame than oil execs:
Taxes on gas = 20% of the price
(used to build all those roads so we never have traffic...:-/... Also, I believe the government now uses some of this to pay for disastrous policies like subsidies for ethanol, which is worse for the environment than conventional oil, less efficient, and causes food prices in general to skyrocket)
Restrictions on supply = 1-30% of the price
We don't exactly know, but I would safely assume we can have up to 30% more oil by allowing domestic drilling and deregulating the refining industry
Inflation = ?% of the price
Our current dollar only affords $.02 worth of what the 1913 dollar afforded. Our money supply increases by about 6-8% a year, meaning prices rise roughly 6-8% a year without economic growth (greater specialization of trade, technology, efficiency). Since we do have economic growth, it's always less than 6-8%, but that just means we'd see DECREASING prices if we didn't allow the government to create new money at will. Prices have increased 778% since 1950, in general, not just for oil. PLEASE NOTE: IF YOU ARE NOT RECEIVING AN ANNUAL 6-8% RAISE, YOU'RE ACTUALLY RECEIVING A 6-8% PAY CUT EVERY YEAR.
**Also, think about this - at 6% monetary inflation, the amount of money in circulation doubles in 12 years, at 8% in 9 years. If you kept $100 in a safe and it was lost for 30 years, that money would lose 87.5% of its value, being equivalent to $12.50...this is why treasure hunters seek gold, which retains its value, rather than paper money. If they found $1,000,000 in paper money 200 years old, it'd only be worth ~$.95, or .000095% of its original value.**
Profit = 9.5% of the price
This is less than magazines, software, tabacco, and even water utilities. Still too large for you? Don't buy gas.
Let's be realistic. Considering the risk involved in the oil business (wells can go dry before expected, heavy capital investment before seeing a single dollar), profits could be much larger. In any case, there would be no oil business if there were no profit. Let's say 3% profit is the minimum. Then, we could only cheapen gas prices by 6.5% max, whereas we could easily get rid of all gas taxes and get 20% cheaper gas. If we get rid of taxes and allowed domestic production, then we could see 50% cheaper gas. And if we got rid of our inflationary currency, we would see much more stable prices, like we did before 1971, when the dollar could be exchanged for gold at a fixed rate.
http://mises.org/story/2940
Taxes on gas = 20% of the price
(used to build all those roads so we never have traffic...:-/... Also, I believe the government now uses some of this to pay for disastrous policies like subsidies for ethanol, which is worse for the environment than conventional oil, less efficient, and causes food prices in general to skyrocket)
Restrictions on supply = 1-30% of the price
We don't exactly know, but I would safely assume we can have up to 30% more oil by allowing domestic drilling and deregulating the refining industry
Inflation = ?% of the price
Our current dollar only affords $.02 worth of what the 1913 dollar afforded. Our money supply increases by about 6-8% a year, meaning prices rise roughly 6-8% a year without economic growth (greater specialization of trade, technology, efficiency). Since we do have economic growth, it's always less than 6-8%, but that just means we'd see DECREASING prices if we didn't allow the government to create new money at will. Prices have increased 778% since 1950, in general, not just for oil. PLEASE NOTE: IF YOU ARE NOT RECEIVING AN ANNUAL 6-8% RAISE, YOU'RE ACTUALLY RECEIVING A 6-8% PAY CUT EVERY YEAR.
**Also, think about this - at 6% monetary inflation, the amount of money in circulation doubles in 12 years, at 8% in 9 years. If you kept $100 in a safe and it was lost for 30 years, that money would lose 87.5% of its value, being equivalent to $12.50...this is why treasure hunters seek gold, which retains its value, rather than paper money. If they found $1,000,000 in paper money 200 years old, it'd only be worth ~$.95, or .000095% of its original value.**
Profit = 9.5% of the price
This is less than magazines, software, tabacco, and even water utilities. Still too large for you? Don't buy gas.
Let's be realistic. Considering the risk involved in the oil business (wells can go dry before expected, heavy capital investment before seeing a single dollar), profits could be much larger. In any case, there would be no oil business if there were no profit. Let's say 3% profit is the minimum. Then, we could only cheapen gas prices by 6.5% max, whereas we could easily get rid of all gas taxes and get 20% cheaper gas. If we get rid of taxes and allowed domestic production, then we could see 50% cheaper gas. And if we got rid of our inflationary currency, we would see much more stable prices, like we did before 1971, when the dollar could be exchanged for gold at a fixed rate.
http://mises.org/story/294
Screw the Gipper - Reasons why Reagan sucked
Many people love Ronnie Reagan and his presidency. They believe he personified conservativism, restored American capitalism, and defeated the evil empire.
THIS IS SAD.
Back before Reagan became President, he said all the things Republicans love to hear. Too bad his 2 terms were run completely opposite.
The biggest lie is that Reagan drastically cut taxes. HA! Tax revenues INCREASED. Yeah, he cut the rates...yet he simultaneously presided over the largest deficit spending during peacetime in the nation's history. This caused unprecedented price inflation, leading to higher wages. Basically, after 4 years of Reagan, earning the exact same REAL wage would likely have a higher rate of taxation. Furthermore, "closing the tax loopholes" were little more than arbitrarily-imposed back taxes. What were these "loopholes"? To the naive, ways for the elite rich to avoid income taxes. To Reagan and co, a politically-acceptable means to arbitrarily steal people's wealth - that's all a tax is.
Reagan also stressed smaller government. So, did the government become less expensive and intrusive under Reagan? Hell no! He escalated the drug war and its large-scale contribution to organized crime, police corruption, and destroying the right to privacy. He cut no government programs, even after campaigning on the abolishment of the federal dept of education. He was eerily complacent with the status-quo of violating the Constitution, despite campaigning against such, even when a congressional committee investigated this very issue 2 years before his presidency, concluding that the constitution has not been valid since FDR's declaration of emergency under the War Powers Act of the early 1900's.
Third, he always stressed peace. Such irony. While he was flapping his mouth about how militancy and authoritarianism were wrong, he was busy spreading a world empire in Central America and the middle-east. He was involved in the Iran Contra scandal (whose only conviction was of a reporter who spilled something classified - the actual perps were slapped on the wrist or pardoned). In fact, one of them is now associated with a "right-leaning" news network with no public disgrace.
Of course, some bum will post about how the arms race bankrupted the soviet union. This is shameful. First of all, it isn't true. We didn't bankrupt them. The Soviet government "bankrupted" themselves through their militaristic foreign expenditures and faulty system of trade. An arms race sped-up the inevitable, but at our expense. Plus, there was no definitive victory. The Russian power structure didn't fall apart. The KGB is still the highest "class" in Russian society. They didn't sell off all their 35,000+ nukes during their "bankruptcy"; they are still controlled by the KGB and Putin. And they are a poor example of capitalism. This is just another example of how the people will so easily put faith in shallow victories, like the tearing down of the Berlin Wall. Communism, the economic system, was never a threat, but Russia's nuclear arsenal was and still is.
Moreover, we should never want to bankrupt a nation and its people. That is not peace. Embargo is not peace. Attempting to overthrow every socialist nation on the face of the planet besides the ones who can actually fight back is not peaceful. CIA actions to militarize Muslims are not peaceful. Building thousands of nuclear bombs is not peaceful. Preparing for war is not peaceful. War itself is not peaceful. That's why it should only be used in self-defense. Using it to defend "capitalism" worldwide is aggressive and counter-productive. This practice has only made us imperialistic, mercantilistic, and corporatist. In other words, Reagan basically paved the way for the notion that capitalism creates value by using violent power to influence others. I happen to believe that wealth is created through free production and trade.
And people say Reagan was a hard-core capitalist, who saved our economy. Well, if borrowing or printing money to stimulate the economy through government spending is your flavor of capitalism...maybe so. But if you believe that true capitalism requires free markets and sound money, with little to no government interference, Reagan was better-termed as a fascist or a corporatist. Reagan was the first neo-conservative, whether he wanted to be or not. His complacency for Keynesian policies makes him little different from FDR. In fact, FDR was better in this regard, because at least FDR's central planning planned to make things that were useful to society, unlike Reagan's arms race, leaving us with many thousands of nuclear bombs, which we spend billions today on cleaning up (not get rid of, simply maintain!).
If you want a taste of what I'm talking about, compare the official Republican Party platforms of the 1960's to the late 80's or to today's. Reagan was the real Bush, a war-hawk, deficit-spending, power-increasing tyrant, who had no intention of following his own rhetoric he sold to the people. This is why modern Republicans simply look to new ground to expand state power, like persecuting gays, trying to solve the abortion debate, and expanding government largess. They have given up on reducing government spending, a non-interventionist foreign policy, and following the limitations of the constitution.
If you'd like to read more about the congressional investigation into the validity of the constitution and the war powers act, start here: http://www.sourcewatch.org/index.php?title=War_Powers_Act
THIS IS SAD.
Back before Reagan became President, he said all the things Republicans love to hear. Too bad his 2 terms were run completely opposite.
The biggest lie is that Reagan drastically cut taxes. HA! Tax revenues INCREASED. Yeah, he cut the rates...yet he simultaneously presided over the largest deficit spending during peacetime in the nation's history. This caused unprecedented price inflation, leading to higher wages. Basically, after 4 years of Reagan, earning the exact same REAL wage would likely have a higher rate of taxation. Furthermore, "closing the tax loopholes" were little more than arbitrarily-imposed back taxes. What were these "loopholes"? To the naive, ways for the elite rich to avoid income taxes. To Reagan and co, a politically-acceptable means to arbitrarily steal people's wealth - that's all a tax is.
Reagan also stressed smaller government. So, did the government become less expensive and intrusive under Reagan? Hell no! He escalated the drug war and its large-scale contribution to organized crime, police corruption, and destroying the right to privacy. He cut no government programs, even after campaigning on the abolishment of the federal dept of education. He was eerily complacent with the status-quo of violating the Constitution, despite campaigning against such, even when a congressional committee investigated this very issue 2 years before his presidency, concluding that the constitution has not been valid since FDR's declaration of emergency under the War Powers Act of the early 1900's.
Third, he always stressed peace. Such irony. While he was flapping his mouth about how militancy and authoritarianism were wrong, he was busy spreading a world empire in Central America and the middle-east. He was involved in the Iran Contra scandal (whose only conviction was of a reporter who spilled something classified - the actual perps were slapped on the wrist or pardoned). In fact, one of them is now associated with a "right-leaning" news network with no public disgrace.
Of course, some bum will post about how the arms race bankrupted the soviet union. This is shameful. First of all, it isn't true. We didn't bankrupt them. The Soviet government "bankrupted" themselves through their militaristic foreign expenditures and faulty system of trade. An arms race sped-up the inevitable, but at our expense. Plus, there was no definitive victory. The Russian power structure didn't fall apart. The KGB is still the highest "class" in Russian society. They didn't sell off all their 35,000+ nukes during their "bankruptcy"; they are still controlled by the KGB and Putin. And they are a poor example of capitalism. This is just another example of how the people will so easily put faith in shallow victories, like the tearing down of the Berlin Wall. Communism, the economic system, was never a threat, but Russia's nuclear arsenal was and still is.
Moreover, we should never want to bankrupt a nation and its people. That is not peace. Embargo is not peace. Attempting to overthrow every socialist nation on the face of the planet besides the ones who can actually fight back is not peaceful. CIA actions to militarize Muslims are not peaceful. Building thousands of nuclear bombs is not peaceful. Preparing for war is not peaceful. War itself is not peaceful. That's why it should only be used in self-defense. Using it to defend "capitalism" worldwide is aggressive and counter-productive. This practice has only made us imperialistic, mercantilistic, and corporatist. In other words, Reagan basically paved the way for the notion that capitalism creates value by using violent power to influence others. I happen to believe that wealth is created through free production and trade.
And people say Reagan was a hard-core capitalist, who saved our economy. Well, if borrowing or printing money to stimulate the economy through government spending is your flavor of capitalism...maybe so. But if you believe that true capitalism requires free markets and sound money, with little to no government interference, Reagan was better-termed as a fascist or a corporatist. Reagan was the first neo-conservative, whether he wanted to be or not. His complacency for Keynesian policies makes him little different from FDR. In fact, FDR was better in this regard, because at least FDR's central planning planned to make things that were useful to society, unlike Reagan's arms race, leaving us with many thousands of nuclear bombs, which we spend billions today on cleaning up (not get rid of, simply maintain!).
If you want a taste of what I'm talking about, compare the official Republican Party platforms of the 1960's to the late 80's or to today's. Reagan was the real Bush, a war-hawk, deficit-spending, power-increasing tyrant, who had no intention of following his own rhetoric he sold to the people. This is why modern Republicans simply look to new ground to expand state power, like persecuting gays, trying to solve the abortion debate, and expanding government largess. They have given up on reducing government spending, a non-interventionist foreign policy, and following the limitations of the constitution.
If you'd like to read more about the congressional investigation into the validity of the constitution and the war powers act, start here: http://www.sourcewatch.org
What is the Obama/Hillary Change?
These two have been arguing about who can "most effectively" bring change to America, with quite vocal supporters on each side. Yet...after looking through the candidates' websites and comparing exit polls to see what groups identify with which candidate, I'm feeling pretty clueless.
Take the economy.
Both advocate tax cuts for the middle class and call Bush's tax cuts as "tax cuts for the rich," despite the largest rate cuts being upon the lowest income. What are they really saying? What defines the middle class, and what % of a rate cut can they expect? This seems like empty rhetoric for increasing taxes, especially upon the rich, while implementing new tax plans like health savings accounts, which only save taxes by expending more effort. Neither are clear on this policy, providing no estimates of how much money the middle class will save, or even who constitutes the middle class. This seems to clearly say to me: no to little change.
Moreover, nearly all of their other plans for the economy require either increased spending or decreased American income. For example, they both want more publicly-funded research, and health care plans, while wanting to cap carbon-based fuel emissions. They both want to protect American jobs through trade policy, while forcing other nations who want to trade with us to increase their government regulation. This all means higher consumer prices, less trade and economic growth, and larger government spending, in plain English.
Finally, they both call for a balanced budget, which is impossible in keeping with their prior suggestions.
As far as Iraq goes, where they are most strongly advocating a change in policy, both advocate nothing. They advocate withdrawing from Iraq...except to curtail terrorists and protecting our interests. Both maintain they can create peace in Iraq through diplomacy and financial aid efforts. Yet neither truly attempted to end the war while in Congress. Hillary even supported it and her husband's use of force in dealing with Iraq.
This is NO change in policy. This is the traditional foreign policy of both the Democratic and Republican Parties, which attempt to convince us that only the President can start or end wars, that we must police the world to avoid terrorist or rogue dictator threats, and that we have an obligation to broker peace by buying off both sides of any other conflict. It is plain and simple an interventionist policy, with no clearly defined barriers on the use of our military or our tax dollars.
In a nutshell, both advocate increasing the size and scope of government without regard to constitutional limitations on power. Both seek to tinker with the tax system with no clear goals, except to bolster a false confidence that the rich are paying their "fair" share (always arbitrarily determined). Both seek to draw distance from the unpopular Iraq War without any real change in overall policy.
Where is this change I am missing? Is it just me, or have we forgotten every previous political campaign in history? Do candidates usually NOT call for a dis-continuation of policies the public doesn't like? Do candidates usually NOT call for more wealth to all and no cost to anyone? Do candidates usually NOT call for a less corrupt government? Rhetoric and pandering on the campaign trail are NOT change; they are the standard practice of politicians, deceiving people while advancing the tyranny they claim to fight.
The only change I see is in having a woman or a black as President, and the exit polls agree with me.
Take the economy.
Both advocate tax cuts for the middle class and call Bush's tax cuts as "tax cuts for the rich," despite the largest rate cuts being upon the lowest income. What are they really saying? What defines the middle class, and what % of a rate cut can they expect? This seems like empty rhetoric for increasing taxes, especially upon the rich, while implementing new tax plans like health savings accounts, which only save taxes by expending more effort. Neither are clear on this policy, providing no estimates of how much money the middle class will save, or even who constitutes the middle class. This seems to clearly say to me: no to little change.
Moreover, nearly all of their other plans for the economy require either increased spending or decreased American income. For example, they both want more publicly-funded research, and health care plans, while wanting to cap carbon-based fuel emissions. They both want to protect American jobs through trade policy, while forcing other nations who want to trade with us to increase their government regulation. This all means higher consumer prices, less trade and economic growth, and larger government spending, in plain English.
Finally, they both call for a balanced budget, which is impossible in keeping with their prior suggestions.
As far as Iraq goes, where they are most strongly advocating a change in policy, both advocate nothing. They advocate withdrawing from Iraq...except to curtail terrorists and protecting our interests. Both maintain they can create peace in Iraq through diplomacy and financial aid efforts. Yet neither truly attempted to end the war while in Congress. Hillary even supported it and her husband's use of force in dealing with Iraq.
This is NO change in policy. This is the traditional foreign policy of both the Democratic and Republican Parties, which attempt to convince us that only the President can start or end wars, that we must police the world to avoid terrorist or rogue dictator threats, and that we have an obligation to broker peace by buying off both sides of any other conflict. It is plain and simple an interventionist policy, with no clearly defined barriers on the use of our military or our tax dollars.
In a nutshell, both advocate increasing the size and scope of government without regard to constitutional limitations on power. Both seek to tinker with the tax system with no clear goals, except to bolster a false confidence that the rich are paying their "fair" share (always arbitrarily determined). Both seek to draw distance from the unpopular Iraq War without any real change in overall policy.
Where is this change I am missing? Is it just me, or have we forgotten every previous political campaign in history? Do candidates usually NOT call for a dis-continuation of policies the public doesn't like? Do candidates usually NOT call for more wealth to all and no cost to anyone? Do candidates usually NOT call for a less corrupt government? Rhetoric and pandering on the campaign trail are NOT change; they are the standard practice of politicians, deceiving people while advancing the tyranny they claim to fight.
The only change I see is in having a woman or a black as President, and the exit polls agree with me.
The Fundamental Difference between WHAT IS and WHAT SHOULD BE
A good analogy of our financial system is that "a crowded arena is on fire and everyone is attempting to exit at the same time". Those who first saw the fire coming and got out will be saved. In fact, they may be able to better their situation by first noticing. Others will die, being burned before they can make it through the impossibly-congested exit ways. Others still will be forced into a situation where they must attempt to put the fire out; once the exit doors are burned down, there is no way out. Despite this, many people do believe that the show should go on or simply have faith in the illusion that fires don't happen.
America, and most of the world, is in such a situation, only it won't be a fire in the arena. It will be more like a napalm bomb. And rather than noticing that there is a devastating fire bomb at the center of the whole show, most people are simply distracted by a circus - it is the center of the show. It is the consumerist system of entertainment, advertising, ignorance, and artificial money. Most mainstream news media is firmly supportive of our financial system. They are mostly owned by conglomerate corporations, not dedicated solely to news, but to a wide variety of industries including big entertainment (Disney) and big industry (General Electric). There are a variety of reasons big business enjoys our current system. Big government definitely enjoys it. And big business enjoys big government privileges. Thus, this media circus chooses to offer us our financial news as a series of opinions about the future, not the facts on the ground about what has already happened. The sheer distraction of the circus causes most people to fail to see the bomb while elephants dance around it. The circus knows it's there, but it can't tell the people. If it does, it won't have an audience.
Thus, we are told "we are safe" and "growth is good" when we worry over how the negative financial news will effect us. We are assured there are people working around the clock to look out for us, and that these people have optimistic views of the future. We are told that the collapse and buyout of Bear Stearns, one of the five largest banks in America, with hundreds of billions in assets, is equivalent to the news of President Bush blaming 500,000 layoffs on teens working during the summer. We don't hear things like how Bear Stearns's office building cost more than what it was bought for. Shouldn't we be a little more concerned when a bank this size sells for less than the cost of its $1.1 billion office? No bank would even buy Bear Stearns, even at $2/share, unless $30 billion of its loans were "insured" (*cough*...bought) by the federal government...by you through taxation.
Even more distressing is that Bear Stearns didn't simply suffer from extremely horrible mismanagement from January 2007, when its stock price was $120/share, until March 2008, when its stock hit a low of $2/share. In fact, it turned a profit in its last quarter. It was playing the same game that most to all of the banks were. What happened to Bear Stearns is the same thing that will soon happen to the average American: in the arena, they will be at the back of the line on their way out the exit door when the fire reaches and consumes them.
What is this mysterious fire/bomb? This is the difference between WHAT IS and WHAT SHOULD BE.
WHAT IS, what we currently have, is a financial system that depends upon our ignorant confidence. When economic outlooks are grim, we are encouraged to save less and spend more. We are told to invest without worry. We are told to believe in the system, and everything will be fine by the time you wake up tomorrow. The difference between JP Morgan buying out Bear Stearns (and assuming its debts) and allowing Bear Stears to declare bankruptcy is that its debts, and what it owed is liquidated. All that credit in both directions disappears. Credit can disappear, but tangible wealth cannot. Most of our tangible wealth today is based upon greater promises tomorrow. This system depends on everyone being willing to put what they perceive to be their wealth on the line to protect this system. It is a structurally unsound skyscraper that will topple if a significant amount of people decide to leave. Everyone is on the line, even for decisions they never made or were forced to take.
WHAT SHOULD BE is a financial system that generates confidence. In other words, the government shouldn't be forcing us to pay for other people's bad loans, claiming that our lives will be hurt if the system collapses. If this kind of financial system is what we want, we will choose it freely. It will benefit us. The fact that DC is forcing everyone to accept this system that generates tremendous private profits for some small groups clearly points to one conclusion: the financial and banking system we have is a special interest, better served by coordinating with the force and privileges of government than offering the people a good deal.
All institutions that take risk must anticipate the future. Insurance companies, hedge funds, stock brokers, and banks must generate confidence that they are correctly anticipating the future for individuals to purchase or invest in their services. The best way for them to grow market trust is by offering a good deal to those who have already given them their trust. If a company mismanages the money already trusted to it, it is doubtful that people will continue to have trust in it.
Thus, we have a strange system when our government proclaims some risk-taking institutions as "too big to fail" and puts our money on the line to "save" them. Aren't these the exact conditions that should destroy confidence in an institution, making them unfavorable to consumers? Should we invest in companies that have a reputation of wasting our money or buy goods from a store with high prices? Would we let the federal government manage our stock portfolios when it has only managed staying within $100 billion over its budget once in the past twenty years?
Even more important than any of those questions is why we have banks that are "too large to fail"? What does that mean?
First we must understand the basic reason why banking requires trust. When a bank appears to be making shaky loans, there is a chance the loans won't be repaid. The customers' deposits have been used to make those loans, and there is a chance they will be unable to get their money out the bank. IE, The bank owes $100 in deposits but only has the cash to cover $15. If everyone tries to get out at the same time, the bank will not be able to meet its debts, and default on them. Some will withdraw their deposited money; they will make it safely unlike many of those behind them.
This is the nature of artificial credit. The banks are loaning out money that has a double claim. You are owed the money, but the bank has given to someone else. Your prior wealth depends on whether someone else produces the wealth to repay the bank. Rather than loaning something already created (such as the bank's past profits), creditors loan you something that might be created. In limiting credit to existing wealth, credit cannot exceed that which has already been produced. Artificial credit, on the other hand, is unlimited.
The most confident system of banking would be to simply safeguard money, for a small fee, against which you could write checks. The money the bank makes it may use for its own investments.
The means by which artificial credit comes to dominate the market is simple. It is called counterfeit. Rather than loan out the money in the bank, banks loan claims to money; and when these claims outnumber the money that it actually has, this is counterfeit, a specific form of fraud. Our financial system has merged counterfeit and artificial credit into one. This "money" does one of two things. It either destroys the purpose and value of money, or it allows some group to benefit at the expense of others.
Just as banks require confidence, so does money. Let's look at how both these tasks were accomplished back before our central bank. Then let's see how it worked with the central bank, and then we'll take a look at it today.
Money was simply a form of indirect exchange - a common good that everyone would desire for its ability to exchange with all other goods. Its desirable qualities: portability, durability, divisibility, and inability to be counterfeited.
Gold, and other precious metals, have a unique property in relation to most other forms of money. Only the supernova of a dying star can create them; no human can counterfeit them. This simple fact, combined with their intrinsic value were the reason the market chose them as the most trustworthy forms of money.
Last century, individual banks and money often were merged: banks issued their own money (bank notes), redeemable in a more common money (precious metals - gold and silver). If they issue more notes than they hold in general money, they are committing counterfeit; when they loan these out, they are creating artificial credit.
While artificial credit put some depositors at risk, people generally understood the bank could enjoy a little flexibility in using it. Using too much, however, would increase the money supply and cause prices to rise and confidence to fall.
If it is revealed that just one depositor was unable to redeem his claim, all remaining depositors will instantly lose confidence; the bank cannot redeem the notes and they are no longer usable in place of the actual money. Thus, the money supply will rapidly shrink. This is often called a credit crunch. This causes price fluctuations downward in all goods, and as producers struggle to accurately price, they will be stuck with either shortages or unsold surpluses, which signify inefficient use of resources. The economy will survive and even prosper later on, but there is a period of extreme pain as the economy adjusts. Money is the life-blood of an exchange economy. Any shocks in this one area effect all other areas, and not necessarily equally.
The situation I just described may sound nasty, but it was arguably the best way to balance artificial and natural credit. Banks weren't con-men who could leave town in the middle of the night. Banks knew the risks they were taking when issuing artificial credit. The credit they issued had their name on it. Customers could withdraw at any time. Their competitors could notice and create mistrust and panic...or simply offer better services. And those who withdrew withdrew into gold, which couldn't be manipulated by any banker.
Thus, the old system of "wildcat banking" (allowing individual banks to manage their own risk in issuing artificial credit), policed itself. Reserve ratios (gold to bank notes) adapted to the confidence of the bank's customers. Should a bank run happened, it could borrow from another bank to survive the bank run, which would generate consumer confidence. If both the customers and other banks lost confidence in that bank, it would fail. The careers of its managers are permanently stained. Depositors, even those who didn't lose their money, would lack confidence in such men. This is a good thing. What we get is a system that is required to generate trust. When it does not, bad things happen, not only to some depositors, but to the bankers. When it is trusted by many, many usually benefit, as the trust is a result of past mutual gain.
Extravagant speculation using artificial credit grew as the stock market became profitable. Yet, instead of allowing bad debts and their issuing institutions simply be wiped out, they were loaned money to meet bank runs and re-establish confidence. Those performing the bail-outs suggested having a central bank to instead perform this function. It could finance such with artificial credit. Thus, the problem became the solution.
In the central bank system, the individual banks partially back up deposits with the central bank's bank notes. Thus, if an individual bank is in trouble, it can borrow from the central bank, or other banks, in a common form of bank note, which the central bank can create nearly at will. The central bank will exchange its bank notes for gold; however, not all the notes are backed by gold. They can also be "backed" by government debt, which is backed by the ability to tax. Thus, government debt becomes the original artificial credit, created as claims on wealth not yet produced.
This system had the same inherent problem - it was required to generate trust while being based on artificial credit. Furthermore, it was a monopoly. During the Great Depression, the people tried to get their gold out; yet there was far more Federal Reserve Notes than corresponding gold. So, FDR, by executive order, not congressional law, prevented Americans from doing so. He not only allowed the central bank to fail to redeem notes for gold, but forbade the ownership of gold. Yet, foreign governments were still allowed to trade notes for gold. This created another run during the Vietnam War, as we tried to finance the war by counterfeit. Here, Nixon allowed the central bank to completely sever the link between its notes and gold.
Now, the system has been turned upside down. There is a monopoly provider of counterfeit, none of which has a fixed exchange rate with something of real value. The money supply can increase indefinitely. For every new piece of credit that is created and used as money, all existing money becomes less valuable. For every addition to government debt, the stock of circulating federal reserve notes, or total outstanding bank loans that is created, the system becomes that less trustworthy.
When people lose faith in an individual bank, the central bank and government prevent it from suffering a bank run in many ways. First, the FDIC insures all deposits under $100,000, so in the case of failure, it doesn't matter if you got the money out before it fails or not. Second, the banks are all operating cooperatively to preserve their artificial credit policies, so another bank is more likely to loan such a troubled bank the required funds to meet any bank run. Third, the central bank can loan money directly to troubled banks. Finally, the central bank can buy government debt with its own counterfeit, thereby increasing the money supply and lowering interest rates, from member banks and itself.
But what can we do if we lose faith in the entire system? We cash out. The equivalent of a bank run can occur against the central bank. The public cannot demand another form of money for its Federal Reserve Notes or bank account balances from the Federal Reserve; however, it can exchange them for alternate forms of money on the market. As such, as confidence is lost in central bank money, it will become less and less valuable. Ultimately, it's value will crash like a stock price, quickly and sharply, until it is nothing more than decorated paper.
This is not far from happening. When individual banks fail, their corresponding credit collapses. When big banks collapse, there are credit crunches. Artificial credit disappears and prices fall. People get worried about the economy. They start to consider bank deposits less secure than cash on hand, withdrawing deposits. Banks cannot keep up, requiring more and more counterfeit from the central bank. This situation can lead to hyperinflation, when counterfeit is occurring so fast that it can no longer be reliably used as money. If the central bank lets a few banks fail, the FDIC will start having to cover depositors. It only has enough money to cover about 1% of them, so once the FDIC busts, a massive banking panic will happen. Again, the central bank can counterfeit a bailout, risking the rejection of the system entirely, or it can allow massive banking collapses, bringing the greatest credit contraction of all time to occur.
There will be many who didn't see the situation, and didn't head for the exit door. They listened to the media, full of confidence in a system they never understood, and they bore the brunt of the pain. By the time they attempted to sell their counterfeit for actual money, they'll find their life savings are worth mere pennies. Some may wise up. Others will still put confidence in government, who will characteristically blame the wise among us who abandoned faith in a system of forced counterfeit. They will accept the mantra of WHAT IS: do as you're told, by the media and by the law, and place your faith in a system that goes unexplained and is purposefully confusing. They will listen to people on TV's that they've never met, not their neighbors who understood the situation and avoided economic ruin.
When the napalm bomb that is our artificial credit system eventually explodes, and most to all people feel the pain and start running to the exit, it is then we'll notice WHAT IS: our government waiting outside, sipping champagne, sympathetically telling us they feel our pain, while barricading us in. If only the people would stand up to the politicians and fight for WHAT SHOULD BE...
America, and most of the world, is in such a situation, only it won't be a fire in the arena. It will be more like a napalm bomb. And rather than noticing that there is a devastating fire bomb at the center of the whole show, most people are simply distracted by a circus - it is the center of the show. It is the consumerist system of entertainment, advertising, ignorance, and artificial money. Most mainstream news media is firmly supportive of our financial system. They are mostly owned by conglomerate corporations, not dedicated solely to news, but to a wide variety of industries including big entertainment (Disney) and big industry (General Electric). There are a variety of reasons big business enjoys our current system. Big government definitely enjoys it. And big business enjoys big government privileges. Thus, this media circus chooses to offer us our financial news as a series of opinions about the future, not the facts on the ground about what has already happened. The sheer distraction of the circus causes most people to fail to see the bomb while elephants dance around it. The circus knows it's there, but it can't tell the people. If it does, it won't have an audience.
Thus, we are told "we are safe" and "growth is good" when we worry over how the negative financial news will effect us. We are assured there are people working around the clock to look out for us, and that these people have optimistic views of the future. We are told that the collapse and buyout of Bear Stearns, one of the five largest banks in America, with hundreds of billions in assets, is equivalent to the news of President Bush blaming 500,000 layoffs on teens working during the summer. We don't hear things like how Bear Stearns's office building cost more than what it was bought for. Shouldn't we be a little more concerned when a bank this size sells for less than the cost of its $1.1 billion office? No bank would even buy Bear Stearns, even at $2/share, unless $30 billion of its loans were "insured" (*cough*...bought) by the federal government...by you through taxation.
Even more distressing is that Bear Stearns didn't simply suffer from extremely horrible mismanagement from January 2007, when its stock price was $120/share, until March 2008, when its stock hit a low of $2/share. In fact, it turned a profit in its last quarter. It was playing the same game that most to all of the banks were. What happened to Bear Stearns is the same thing that will soon happen to the average American: in the arena, they will be at the back of the line on their way out the exit door when the fire reaches and consumes them.
What is this mysterious fire/bomb? This is the difference between WHAT IS and WHAT SHOULD BE.
WHAT IS, what we currently have, is a financial system that depends upon our ignorant confidence. When economic outlooks are grim, we are encouraged to save less and spend more. We are told to invest without worry. We are told to believe in the system, and everything will be fine by the time you wake up tomorrow. The difference between JP Morgan buying out Bear Stearns (and assuming its debts) and allowing Bear Stears to declare bankruptcy is that its debts, and what it owed is liquidated. All that credit in both directions disappears. Credit can disappear, but tangible wealth cannot. Most of our tangible wealth today is based upon greater promises tomorrow. This system depends on everyone being willing to put what they perceive to be their wealth on the line to protect this system. It is a structurally unsound skyscraper that will topple if a significant amount of people decide to leave. Everyone is on the line, even for decisions they never made or were forced to take.
WHAT SHOULD BE is a financial system that generates confidence. In other words, the government shouldn't be forcing us to pay for other people's bad loans, claiming that our lives will be hurt if the system collapses. If this kind of financial system is what we want, we will choose it freely. It will benefit us. The fact that DC is forcing everyone to accept this system that generates tremendous private profits for some small groups clearly points to one conclusion: the financial and banking system we have is a special interest, better served by coordinating with the force and privileges of government than offering the people a good deal.
All institutions that take risk must anticipate the future. Insurance companies, hedge funds, stock brokers, and banks must generate confidence that they are correctly anticipating the future for individuals to purchase or invest in their services. The best way for them to grow market trust is by offering a good deal to those who have already given them their trust. If a company mismanages the money already trusted to it, it is doubtful that people will continue to have trust in it.
Thus, we have a strange system when our government proclaims some risk-taking institutions as "too big to fail" and puts our money on the line to "save" them. Aren't these the exact conditions that should destroy confidence in an institution, making them unfavorable to consumers? Should we invest in companies that have a reputation of wasting our money or buy goods from a store with high prices? Would we let the federal government manage our stock portfolios when it has only managed staying within $100 billion over its budget once in the past twenty years?
Even more important than any of those questions is why we have banks that are "too large to fail"? What does that mean?
First we must understand the basic reason why banking requires trust. When a bank appears to be making shaky loans, there is a chance the loans won't be repaid. The customers' deposits have been used to make those loans, and there is a chance they will be unable to get their money out the bank. IE, The bank owes $100 in deposits but only has the cash to cover $15. If everyone tries to get out at the same time, the bank will not be able to meet its debts, and default on them. Some will withdraw their deposited money; they will make it safely unlike many of those behind them.
This is the nature of artificial credit. The banks are loaning out money that has a double claim. You are owed the money, but the bank has given to someone else. Your prior wealth depends on whether someone else produces the wealth to repay the bank. Rather than loaning something already created (such as the bank's past profits), creditors loan you something that might be created. In limiting credit to existing wealth, credit cannot exceed that which has already been produced. Artificial credit, on the other hand, is unlimited.
The most confident system of banking would be to simply safeguard money, for a small fee, against which you could write checks. The money the bank makes it may use for its own investments.
The means by which artificial credit comes to dominate the market is simple. It is called counterfeit. Rather than loan out the money in the bank, banks loan claims to money; and when these claims outnumber the money that it actually has, this is counterfeit, a specific form of fraud. Our financial system has merged counterfeit and artificial credit into one. This "money" does one of two things. It either destroys the purpose and value of money, or it allows some group to benefit at the expense of others.
Just as banks require confidence, so does money. Let's look at how both these tasks were accomplished back before our central bank. Then let's see how it worked with the central bank, and then we'll take a look at it today.
Money was simply a form of indirect exchange - a common good that everyone would desire for its ability to exchange with all other goods. Its desirable qualities: portability, durability, divisibility, and inability to be counterfeited.
Gold, and other precious metals, have a unique property in relation to most other forms of money. Only the supernova of a dying star can create them; no human can counterfeit them. This simple fact, combined with their intrinsic value were the reason the market chose them as the most trustworthy forms of money.
Last century, individual banks and money often were merged: banks issued their own money (bank notes), redeemable in a more common money (precious metals - gold and silver). If they issue more notes than they hold in general money, they are committing counterfeit; when they loan these out, they are creating artificial credit.
While artificial credit put some depositors at risk, people generally understood the bank could enjoy a little flexibility in using it. Using too much, however, would increase the money supply and cause prices to rise and confidence to fall.
If it is revealed that just one depositor was unable to redeem his claim, all remaining depositors will instantly lose confidence; the bank cannot redeem the notes and they are no longer usable in place of the actual money. Thus, the money supply will rapidly shrink. This is often called a credit crunch. This causes price fluctuations downward in all goods, and as producers struggle to accurately price, they will be stuck with either shortages or unsold surpluses, which signify inefficient use of resources. The economy will survive and even prosper later on, but there is a period of extreme pain as the economy adjusts. Money is the life-blood of an exchange economy. Any shocks in this one area effect all other areas, and not necessarily equally.
The situation I just described may sound nasty, but it was arguably the best way to balance artificial and natural credit. Banks weren't con-men who could leave town in the middle of the night. Banks knew the risks they were taking when issuing artificial credit. The credit they issued had their name on it. Customers could withdraw at any time. Their competitors could notice and create mistrust and panic...or simply offer better services. And those who withdrew withdrew into gold, which couldn't be manipulated by any banker.
Thus, the old system of "wildcat banking" (allowing individual banks to manage their own risk in issuing artificial credit), policed itself. Reserve ratios (gold to bank notes) adapted to the confidence of the bank's customers. Should a bank run happened, it could borrow from another bank to survive the bank run, which would generate consumer confidence. If both the customers and other banks lost confidence in that bank, it would fail. The careers of its managers are permanently stained. Depositors, even those who didn't lose their money, would lack confidence in such men. This is a good thing. What we get is a system that is required to generate trust. When it does not, bad things happen, not only to some depositors, but to the bankers. When it is trusted by many, many usually benefit, as the trust is a result of past mutual gain.
Extravagant speculation using artificial credit grew as the stock market became profitable. Yet, instead of allowing bad debts and their issuing institutions simply be wiped out, they were loaned money to meet bank runs and re-establish confidence. Those performing the bail-outs suggested having a central bank to instead perform this function. It could finance such with artificial credit. Thus, the problem became the solution.
In the central bank system, the individual banks partially back up deposits with the central bank's bank notes. Thus, if an individual bank is in trouble, it can borrow from the central bank, or other banks, in a common form of bank note, which the central bank can create nearly at will. The central bank will exchange its bank notes for gold; however, not all the notes are backed by gold. They can also be "backed" by government debt, which is backed by the ability to tax. Thus, government debt becomes the original artificial credit, created as claims on wealth not yet produced.
This system had the same inherent problem - it was required to generate trust while being based on artificial credit. Furthermore, it was a monopoly. During the Great Depression, the people tried to get their gold out; yet there was far more Federal Reserve Notes than corresponding gold. So, FDR, by executive order, not congressional law, prevented Americans from doing so. He not only allowed the central bank to fail to redeem notes for gold, but forbade the ownership of gold. Yet, foreign governments were still allowed to trade notes for gold. This created another run during the Vietnam War, as we tried to finance the war by counterfeit. Here, Nixon allowed the central bank to completely sever the link between its notes and gold.
Now, the system has been turned upside down. There is a monopoly provider of counterfeit, none of which has a fixed exchange rate with something of real value. The money supply can increase indefinitely. For every new piece of credit that is created and used as money, all existing money becomes less valuable. For every addition to government debt, the stock of circulating federal reserve notes, or total outstanding bank loans that is created, the system becomes that less trustworthy.
When people lose faith in an individual bank, the central bank and government prevent it from suffering a bank run in many ways. First, the FDIC insures all deposits under $100,000, so in the case of failure, it doesn't matter if you got the money out before it fails or not. Second, the banks are all operating cooperatively to preserve their artificial credit policies, so another bank is more likely to loan such a troubled bank the required funds to meet any bank run. Third, the central bank can loan money directly to troubled banks. Finally, the central bank can buy government debt with its own counterfeit, thereby increasing the money supply and lowering interest rates, from member banks and itself.
But what can we do if we lose faith in the entire system? We cash out. The equivalent of a bank run can occur against the central bank. The public cannot demand another form of money for its Federal Reserve Notes or bank account balances from the Federal Reserve; however, it can exchange them for alternate forms of money on the market. As such, as confidence is lost in central bank money, it will become less and less valuable. Ultimately, it's value will crash like a stock price, quickly and sharply, until it is nothing more than decorated paper.
This is not far from happening. When individual banks fail, their corresponding credit collapses. When big banks collapse, there are credit crunches. Artificial credit disappears and prices fall. People get worried about the economy. They start to consider bank deposits less secure than cash on hand, withdrawing deposits. Banks cannot keep up, requiring more and more counterfeit from the central bank. This situation can lead to hyperinflation, when counterfeit is occurring so fast that it can no longer be reliably used as money. If the central bank lets a few banks fail, the FDIC will start having to cover depositors. It only has enough money to cover about 1% of them, so once the FDIC busts, a massive banking panic will happen. Again, the central bank can counterfeit a bailout, risking the rejection of the system entirely, or it can allow massive banking collapses, bringing the greatest credit contraction of all time to occur.
There will be many who didn't see the situation, and didn't head for the exit door. They listened to the media, full of confidence in a system they never understood, and they bore the brunt of the pain. By the time they attempted to sell their counterfeit for actual money, they'll find their life savings are worth mere pennies. Some may wise up. Others will still put confidence in government, who will characteristically blame the wise among us who abandoned faith in a system of forced counterfeit. They will accept the mantra of WHAT IS: do as you're told, by the media and by the law, and place your faith in a system that goes unexplained and is purposefully confusing. They will listen to people on TV's that they've never met, not their neighbors who understood the situation and avoided economic ruin.
When the napalm bomb that is our artificial credit system eventually explodes, and most to all people feel the pain and start running to the exit, it is then we'll notice WHAT IS: our government waiting outside, sipping champagne, sympathetically telling us they feel our pain, while barricading us in. If only the people would stand up to the politicians and fight for WHAT SHOULD BE...
my rebuttal of www.imvotingrepublican.com
"We don't like shopping at small neighborhood stores...We don't like consumer choice...We love cheap Chinese shit."
Regulatory costs serving as barriers to entry and corporate tax structures are mostly responsible for corporate growth and consolidation. Typically coercive monopoly brings higher prices, not lower ones.
Fiscal policy, relying on spending more money than we have, is responsible for our continued trade deficit with China. Also to blame are labor laws and other industrial regulations, which don't allow us to directly compete. It seems like the liberal answer is to call for an embargo or protective tariff. This doesn't make us better off. It simply means we have to produce such stuff ourselves at greater cost. What would life be like if trade were completely eliminated, and you had to produce your own clothes, house, and food (and all the machines that you would use to help produce such)? It would suck. Division of labor happens for a reason - it brings economic efficiency. Why should this not apply across national borders? In real terms, imports must equal exports. The only way around this is constantly expanding debt or charity. Our government has taken on the debt required for us to continue buying Chinese stuff at cheap cost. This is much more than a Republican policy.
And the last time I went to Wal-Mart, it didn't look like Republicans that were eating up the cheap Chinese shit.
"I don't want a cure for AIDS or breast cancer"
This implies that all medical research is and can only be conducted by the government. Why? And name one cure that government research delivered.
It seems cures for AIDS and cancer would be largely demanded by the public. A free enterprise system would best provide such products, as it allows ANY individual to profit handsomely for creating one. However, we don't have a true free enterprise system, especially in medical care, and you can blame the democrats for that.
"I think new drugs should be made available immediately, whether they have been properly tested or not."
So...liberals hate the big pharmeceutical corporations that only care about "the bottom line"...then they love the regulations that are responsible for creating them? Does the FDA's costly 10-year testing period on all new drugs have anything to do with reduced market competition? Does this testing period ensure all drugs entering the market are safe? What liberals need to understand is that drug companies should be (and often are) held liable for unsafe products. Tort law, rather than bureaucratic regulatory agencies, ensures that drugs are both safe and make it to market most quickly. It is silly to think preventing terminally ill patients who will be dead long before a drug is available on the market create safety. Even sillier is the notion that regulatory safety tests only turn out safe drugs, as recently seen by the class-action lawsuits against Bextra and Merck for their arthritis drugs that caused heart attacks, which were only withdrawn from the market due to private studies by Merck, who wished to avoid such liabilities. The only reason such companies can survive such multi-billion dollar lawsuits is due to their competitive advantage through government regulations and tax codes, and democrats are as much to blame for these as republicans, if not more.
"I want my kid to be in a class room with 30+ children."
I assume this means that Republicans want less federal education spending (even after "no child left behind"...which liberals criticize in name without bothering to find out what it means). The implication is that costs will be cut by reducing teachers. This is silliness. Washington DC spends the most per child for their public schools. Does DC offer the best education? If federal spending were reduced, you should want a corresponding drop in federal taxes. This means more money for state taxes, or more money to privately use for schooling. Given that the federal Department of Education has shown declining education standards since its inception, while having an ever-growing budget, people should welcome its abolition. It's humorous to bad-mouth Republicans on this, however, considering Pres. Bush widely expanded federal education.
This another argument that relies on government being the sole provider of a service, then expecting resourceful allocation of funds within government bureaucracy, two things that are almost never true. Further it argues that a reduction in federal education spending would not reduce taxation, but simply divert the difference in funds into things nobody wants, like more nuclear missiles.
"Women just can't be trusted to make decisions about their own bodies."
I guess he's talking about abortion...which is a fucked up way to put it. By this logic, I guess a woman should be allowed to birth a baby, then torture it with an icepick, simply because the umbilical cord is still attached...or simply torture it in the womb.
Abortion is a fucked up issue that I can't side either way upon; however, to try to put the issue in a single blanket statement about bodily freedom is simply an attempt at a straw man argument.
A better argument about bodily freedom is the drug war, which neither democrats or republicans will oppose, because it vastly expands the government's power.
"Because using fossil fuels are more important than preserving nature."
I keep forgetting that liberals don't drive cars or buy plastic products...but regardless, how is using fossil fuels destroying our woodlands? Last time I checked, plants liked carbon dioxide. And I don't understand how we are experiencing global warming when our most accurate data shows the planet cooling for the past 10 years. Somehow economic freedom is blamed for destroying nature. Well, show me an ACTUAL example, and I'll show you a practical solution.
"We like a conservative majority on the supreme court. We like knowing that even if we're separate, we'll still be called equal."
Not sure WTF this is about, but given that it's the only segment to be said by black Americans, I am assuming they are saying a Republican Supreme Court would reimplement segregation. Not sure where this sentiment comes from.
"I need to be told who I can love."
This is conflation of love and legal status. I personally don't think the government should define what a marriage contract should be; only that they should enforce its terms. Polygamy, as well as homosexuality, is fine with me; it's not my business. However, the point here is that Republicans aren't stopping love; state laws are preventing gay marriage. Many of these states are not run by Republicans. Liberals like to make a federal case out of everything, because in many regards they are fascists and do not understand the concept of limited self-governance. Despite liberals hatred of large corporations and monopolies, they tend to advocate an all-powerful, monopolistic federal, or even world, government.
"Corporations should not have to pay to clean up environmental damage. The EPA is an outmoded idea. If people want clean water, buy it in a bottle."
How does the EPA force the government to stop damaging the environment? It doesn't, and the federal government, especially the military, is the largest polluter in the nation, bigger than any single corporation. Has the EPA even been able to force GE, a regularly subsidized business who also produces nuclear weapons for the government, to clean up its environmental damage? It seems like the more connected a polluter is to government, the more likely he will be above the law. Liberal ideals of growing the government, especially by nationalizing industries, will do more to exacerbate the problem than solve it. The EPA and other bureaucratic regulatory agencies will continue to soak up tax-payer dollars while failing to prevent environmental damage. Only a government that is more connected to its people's well-being than big business, who allows tort law and protection of private property to function unhampered, can stop pollution. Liberals need to look at the government as the biggest corporation there is, rather than the anti-corporation solution. When not acting AS a corporation, government acts FOR the corporations, who spend billions lobbying Congressmen.
And for a little humor, tap water is often cleaner than bottled water because the EPA does better work than the FDA.
"I don't want to know if the food I'm eating has been genetically modified or exposed to radiation."
Everyone wants to know if the food they are eating is unsafe. Liberals will often jump on fear bandwagons, exclaiming that corporations are increasing profits by downplaying safety standards. Phrases like "genetically-modified" or "exposed to radiation" are simple means to exacerbate such fears without any knowledge of their effect on safety. Again, liberals act like producers have no fear of liability for potentially unsafe products. The bottom line is no producer or vendor wants to be held liable for selling unsafe products, or even have the market prejudiced against them for such. All the FDA and other regulatory schemes can hope to do is restrict the market, especially against smaller businesses. We have seen failure after failure of the FDA to prevent unsafe products from reaching consumers. Ultimately, it is consumer choice and tort law that truly police the market. The FDA only restricts competition, which leads to higher prices and lower quality, including safety standards. Whether food is genetically modified, radiated, or laced with bits of sharp metal should not matter. If it causes bodily harm, it is not performing its intended use and is liable for damages.
It should be noted that the biggest pushers for such "product advisory" labels are not consumer advocacy groups, but business competitors.
"I really enjoy being screwed by the utility companies."
I assume this means less energy regulation would mean more monopolistic practices, yet this is precisely the opposite of what actually happens in an unregulated competitive environment.
"We need more minorities in prison."
Not sure how this is attached to Republicans or how Democrats aim to fix such. The best means to do so would be to end the war on drugs, which neither party advocates.
"Because hybrid cars really suck."
Probably true, but how is this tied to Republicans? Are Republicans making laws that raise the cost of hybrid vehicles? No; more likely, liberals are whining that hybrids should be subsidized by government, making them cheaper, by the means of taxes on those who choose not to buy them. Why should any product be subsidized by taxes? Why should the federal government decide if hybrid cars are good or bad, and why should they force consumers to buy such over cheaper, more favorable options?
If they claim it's to fight global warming (ahem...climate change), why not force consumers to buy other things more important to safety? Climate change has thus far killed no to few people at most, while cardio-vascular disease has killed millions just in this year. Should we apply a tax to red meat? Moreover, why should we be trying to distort the market to accept solutions the government has chosen? If we want to reduce carbon emmissions, we should apply a carbon tax, just like if we wanted to regulate diet, we should apply a fat tax. Using government force to tax and subsidize things like ethanol and hybrid cars will probably be revealed to cause larger problems, wasting vasts amounts of energy and resources along the way.
The main thing here is that there is little proof showing damages related to carbon emmissions. If there were actual, direct damages from carbon emmissions, we wouldn't require any tax or subsidy scheme for developing alternative energy. There would be private liability on using property that output carbon emmissions - essentially similar to a carbon tax. Eventually, alternative energy would be cheaper than gasoline. Liberals don't want the responsibility of relating actual damages to the global warming mantra they believe, thus they hand the problem over to government to deal with.
"I don't feel I deserve health insurance."
First, few Americans are getting health insurance. They are getting health care. The differnce is that insurance is for unforeseen circumstances, with medical costs higher than one is able to make, while health care covers any and all medical procedures, including regular check-ups. Big government has pushed for health care, rather than insurance, even mandating its provision from larger employers. This third-party payment system is incapable of limiting costs. Patients always seek to spend the maximum amount, as they aren't directly responsible to pay. This, along with the similar systems of medicare and medicaid have made the medical sector's costs rise faster than almost all other goods and services.
Regulations and licensing have prevented supply from increasing along with demand. Hospitals operate at around one to two percent profit, meaning that few are willing to invest in expanding the medical sector.
The culmination of these policies is the unfortunate circumstance when prices increase until working men cannot afford health services. Ultimately, we would like to think we all "deserve" health insurance; but this is not true. We may need it, but we cannot force medical professionals to perform work for us. We must pay them what they ask or go without. There are measures to make health care cheaper, however. Reducing medicare and medicaid over time will reduce demand paid by taxes, dropping prices. Removing restrictions to direct payment, such as removing constraints on employers to provide 3rd-party payer systems and allowing individuals to keep untaxed health savings accounts are starts. Removing licensing restrictions to allow nurses to perform more work and putting more doctors in the field are also smart moves. And as costs and care are re-aligned, profits can increase, which means that investment and expansion will follow, which will further drop prices.
Nationalizing health care, often touted by liberals as the solution, simply makes the entire industry more unsound. It further institutionalizes and bureaucracizes it, resulting in greater costs with less output and further separating consumer payment from producer service. It creates a monopoly. Liberals often over-emphasize the profit motive in the private medical industry, yet profits are low while regulatory costs are high. Nationalization will increase costs, not lessen them. These costs will be passed onto producers, in the form of taxes. This hurts the overall economy, restricting investment and making goods cost more in all other industries. Additionally, there are still medical shortages. Rather than being "priced-out", patients will be "waited-out". Everyone will have "access," if they are willing to wait for weeks to months for simple appointments and procedures. For major surgeries, you may wait years. This is how nationalized care deals with the shortage of professionals it has to deal with the limitless demand at a "free" price; it uses another price system not in terms of dollars but in terms of wait times. This works well when everyone is unemployed. Then you can see who is truly needy by how long they are willing to wait in discomfort. Yet, when people could be better spending their time working, the system breaks down. Those who can pay the most should have nearly immediate access to care. This is simply the most efficient way to do things, which promotes expansion and lowers prices until nearly everyone can afford them. Automobiles and computers are two examples of this actually happening.
"Because Texas needs more billionaires."
WTF
"Because the constitution is one big, inconvenient headache."
I don't think the Democrats have ever read the Constitution or the opinions of its framers and ratifiers. Neither major political party is keen on following this document, which was designed to limit the power of the federal government. Liberals often tout the bill of rights as the prohibited powers of the federal government, but it is rather Article I Section VIII that does this, which specifies the ONLY powers of Congress, the only branch granted authority to make law. Liberals touting constitutional restraint can't whine about breaches of privacy when they seek to regulate the entire economy from a federal level. Federal welfare programs, drug prohibition, and commerce regulation are all unconstitutional (despite what a liberal supreme court may have said in the past). Will liberals trade these powers to protect privacy? No, but they will still whine.
"The whole world should be run by one big corporation."
Again, the biggest corporation of them all is the federal government. It employs more people than any private company. It pollutes more than any private company. It simply dismisses cases of fraud or crime leveled against it. When it is successfully sued, it pays its debts with your tax money. It consistently misses its budgets by hundreds of billions of dollars. And it is a monopoly. Liberals crying for bigger government and nationalized industries are simply naive to think the problems of large corporations will be solved by one even larger corporation.
Nevertheless, the liberal mantra against corporations rages on, without any understanding of economics and why large corporations can dominate a marketplace. They will cry about things like private ownership of the means of production and free trade, but they won't suggest adopting the Soviets' or North Koreans' economic model.
They should be crying about regulatory barriers to entry, artificial credit, corporate tax structures, and limited liability. All of these government-created entities have not simply allowed but suggested that corporations expand and consolidate. For example, buying a company who had a loss in its last year can offset a corporation's own profit, so it pays no corporate income tax. Dividends are double taxed, so few companies pay them - this leads most companies to reinvest their profits rather than distribute them. These aren't monopolistic practices attempting to exploit the market; they are simply attempts to retain the most income, which was earned through the market.
Another factor is variations in laws between nations. Multi-national corporations have come about to "exploit" differences in homesteading, labor laws, etc. between nations. For companies to be multi-national requires that they have a huge size to operate as such. Why couldn't a bunch of companies, each operating from a different nation, operate together in a similar manner? Because the laws favor one business, who can bracket all its costs into the nation with the lowest taxes or similarly avoid tariffs and other government-imposed costs. We can either fight this through huge tariffs or similar instruments to make such activities unprofitable, sustaining greater economic inefficiency, or we can get rid of our restrictive laws here, allowing smaller local businesses to have similar competitive advantage.
In short, liberals are silly to think a one-world corporation should be replaced with a one-world government.
"All other nations are inferior to us. We should start as many wars as needed to keep it that way."
Democrats started American involvement in WWI, WWII, Korea, and Vietnam. The most popular Democrat spokesmen do not speak out against our occupation of 130+ nations. Even Barack Obama wants to send more troops to Afghanistan. Democrat-controlled congress has done nothing to end the Iraq War. American militarism is far greater than the neo-conservative Republican Party. This is not a defense of Republican militarism, only an exposition of Democrat hypocrisy on the subject.
"So I can stay in Iraq. So I can go to Iran."
Have the Democrats given any hint that they will actually leave Iraq or avoid a conflict with Iran? No. They simply want to move our Iraqi troops to Pakistan and Afghanistan. I don't know if liberals have a map, but that's the other border of Iran...
Regulatory costs serving as barriers to entry and corporate tax structures are mostly responsible for corporate growth and consolidation. Typically coercive monopoly brings higher prices, not lower ones.
Fiscal policy, relying on spending more money than we have, is responsible for our continued trade deficit with China. Also to blame are labor laws and other industrial regulations, which don't allow us to directly compete. It seems like the liberal answer is to call for an embargo or protective tariff. This doesn't make us better off. It simply means we have to produce such stuff ourselves at greater cost. What would life be like if trade were completely eliminated, and you had to produce your own clothes, house, and food (and all the machines that you would use to help produce such)? It would suck. Division of labor happens for a reason - it brings economic efficiency. Why should this not apply across national borders? In real terms, imports must equal exports. The only way around this is constantly expanding debt or charity. Our government has taken on the debt required for us to continue buying Chinese stuff at cheap cost. This is much more than a Republican policy.
And the last time I went to Wal-Mart, it didn't look like Republicans that were eating up the cheap Chinese shit.
"I don't want a cure for AIDS or breast cancer"
This implies that all medical research is and can only be conducted by the government. Why? And name one cure that government research delivered.
It seems cures for AIDS and cancer would be largely demanded by the public. A free enterprise system would best provide such products, as it allows ANY individual to profit handsomely for creating one. However, we don't have a true free enterprise system, especially in medical care, and you can blame the democrats for that.
"I think new drugs should be made available immediately, whether they have been properly tested or not."
So...liberals hate the big pharmeceutical corporations that only care about "the bottom line"...then they love the regulations that are responsible for creating them? Does the FDA's costly 10-year testing period on all new drugs have anything to do with reduced market competition? Does this testing period ensure all drugs entering the market are safe? What liberals need to understand is that drug companies should be (and often are) held liable for unsafe products. Tort law, rather than bureaucratic regulatory agencies, ensures that drugs are both safe and make it to market most quickly. It is silly to think preventing terminally ill patients who will be dead long before a drug is available on the market create safety. Even sillier is the notion that regulatory safety tests only turn out safe drugs, as recently seen by the class-action lawsuits against Bextra and Merck for their arthritis drugs that caused heart attacks, which were only withdrawn from the market due to private studies by Merck, who wished to avoid such liabilities. The only reason such companies can survive such multi-billion dollar lawsuits is due to their competitive advantage through government regulations and tax codes, and democrats are as much to blame for these as republicans, if not more.
"I want my kid to be in a class room with 30+ children."
I assume this means that Republicans want less federal education spending (even after "no child left behind"...which liberals criticize in name without bothering to find out what it means). The implication is that costs will be cut by reducing teachers. This is silliness. Washington DC spends the most per child for their public schools. Does DC offer the best education? If federal spending were reduced, you should want a corresponding drop in federal taxes. This means more money for state taxes, or more money to privately use for schooling. Given that the federal Department of Education has shown declining education standards since its inception, while having an ever-growing budget, people should welcome its abolition. It's humorous to bad-mouth Republicans on this, however, considering Pres. Bush widely expanded federal education.
This another argument that relies on government being the sole provider of a service, then expecting resourceful allocation of funds within government bureaucracy, two things that are almost never true. Further it argues that a reduction in federal education spending would not reduce taxation, but simply divert the difference in funds into things nobody wants, like more nuclear missiles.
"Women just can't be trusted to make decisions about their own bodies."
I guess he's talking about abortion...which is a fucked up way to put it. By this logic, I guess a woman should be allowed to birth a baby, then torture it with an icepick, simply because the umbilical cord is still attached...or simply torture it in the womb.
Abortion is a fucked up issue that I can't side either way upon; however, to try to put the issue in a single blanket statement about bodily freedom is simply an attempt at a straw man argument.
A better argument about bodily freedom is the drug war, which neither democrats or republicans will oppose, because it vastly expands the government's power.
"Because using fossil fuels are more important than preserving nature."
I keep forgetting that liberals don't drive cars or buy plastic products...but regardless, how is using fossil fuels destroying our woodlands? Last time I checked, plants liked carbon dioxide. And I don't understand how we are experiencing global warming when our most accurate data shows the planet cooling for the past 10 years. Somehow economic freedom is blamed for destroying nature. Well, show me an ACTUAL example, and I'll show you a practical solution.
"We like a conservative majority on the supreme court. We like knowing that even if we're separate, we'll still be called equal."
Not sure WTF this is about, but given that it's the only segment to be said by black Americans, I am assuming they are saying a Republican Supreme Court would reimplement segregation. Not sure where this sentiment comes from.
"I need to be told who I can love."
This is conflation of love and legal status. I personally don't think the government should define what a marriage contract should be; only that they should enforce its terms. Polygamy, as well as homosexuality, is fine with me; it's not my business. However, the point here is that Republicans aren't stopping love; state laws are preventing gay marriage. Many of these states are not run by Republicans. Liberals like to make a federal case out of everything, because in many regards they are fascists and do not understand the concept of limited self-governance. Despite liberals hatred of large corporations and monopolies, they tend to advocate an all-powerful, monopolistic federal, or even world, government.
"Corporations should not have to pay to clean up environmental damage. The EPA is an outmoded idea. If people want clean water, buy it in a bottle."
How does the EPA force the government to stop damaging the environment? It doesn't, and the federal government, especially the military, is the largest polluter in the nation, bigger than any single corporation. Has the EPA even been able to force GE, a regularly subsidized business who also produces nuclear weapons for the government, to clean up its environmental damage? It seems like the more connected a polluter is to government, the more likely he will be above the law. Liberal ideals of growing the government, especially by nationalizing industries, will do more to exacerbate the problem than solve it. The EPA and other bureaucratic regulatory agencies will continue to soak up tax-payer dollars while failing to prevent environmental damage. Only a government that is more connected to its people's well-being than big business, who allows tort law and protection of private property to function unhampered, can stop pollution. Liberals need to look at the government as the biggest corporation there is, rather than the anti-corporation solution. When not acting AS a corporation, government acts FOR the corporations, who spend billions lobbying Congressmen.
And for a little humor, tap water is often cleaner than bottled water because the EPA does better work than the FDA.
"I don't want to know if the food I'm eating has been genetically modified or exposed to radiation."
Everyone wants to know if the food they are eating is unsafe. Liberals will often jump on fear bandwagons, exclaiming that corporations are increasing profits by downplaying safety standards. Phrases like "genetically-modified" or "exposed to radiation" are simple means to exacerbate such fears without any knowledge of their effect on safety. Again, liberals act like producers have no fear of liability for potentially unsafe products. The bottom line is no producer or vendor wants to be held liable for selling unsafe products, or even have the market prejudiced against them for such. All the FDA and other regulatory schemes can hope to do is restrict the market, especially against smaller businesses. We have seen failure after failure of the FDA to prevent unsafe products from reaching consumers. Ultimately, it is consumer choice and tort law that truly police the market. The FDA only restricts competition, which leads to higher prices and lower quality, including safety standards. Whether food is genetically modified, radiated, or laced with bits of sharp metal should not matter. If it causes bodily harm, it is not performing its intended use and is liable for damages.
It should be noted that the biggest pushers for such "product advisory" labels are not consumer advocacy groups, but business competitors.
"I really enjoy being screwed by the utility companies."
I assume this means less energy regulation would mean more monopolistic practices, yet this is precisely the opposite of what actually happens in an unregulated competitive environment.
"We need more minorities in prison."
Not sure how this is attached to Republicans or how Democrats aim to fix such. The best means to do so would be to end the war on drugs, which neither party advocates.
"Because hybrid cars really suck."
Probably true, but how is this tied to Republicans? Are Republicans making laws that raise the cost of hybrid vehicles? No; more likely, liberals are whining that hybrids should be subsidized by government, making them cheaper, by the means of taxes on those who choose not to buy them. Why should any product be subsidized by taxes? Why should the federal government decide if hybrid cars are good or bad, and why should they force consumers to buy such over cheaper, more favorable options?
If they claim it's to fight global warming (ahem...climate change), why not force consumers to buy other things more important to safety? Climate change has thus far killed no to few people at most, while cardio-vascular disease has killed millions just in this year. Should we apply a tax to red meat? Moreover, why should we be trying to distort the market to accept solutions the government has chosen? If we want to reduce carbon emmissions, we should apply a carbon tax, just like if we wanted to regulate diet, we should apply a fat tax. Using government force to tax and subsidize things like ethanol and hybrid cars will probably be revealed to cause larger problems, wasting vasts amounts of energy and resources along the way.
The main thing here is that there is little proof showing damages related to carbon emmissions. If there were actual, direct damages from carbon emmissions, we wouldn't require any tax or subsidy scheme for developing alternative energy. There would be private liability on using property that output carbon emmissions - essentially similar to a carbon tax. Eventually, alternative energy would be cheaper than gasoline. Liberals don't want the responsibility of relating actual damages to the global warming mantra they believe, thus they hand the problem over to government to deal with.
"I don't feel I deserve health insurance."
First, few Americans are getting health insurance. They are getting health care. The differnce is that insurance is for unforeseen circumstances, with medical costs higher than one is able to make, while health care covers any and all medical procedures, including regular check-ups. Big government has pushed for health care, rather than insurance, even mandating its provision from larger employers. This third-party payment system is incapable of limiting costs. Patients always seek to spend the maximum amount, as they aren't directly responsible to pay. This, along with the similar systems of medicare and medicaid have made the medical sector's costs rise faster than almost all other goods and services.
Regulations and licensing have prevented supply from increasing along with demand. Hospitals operate at around one to two percent profit, meaning that few are willing to invest in expanding the medical sector.
The culmination of these policies is the unfortunate circumstance when prices increase until working men cannot afford health services. Ultimately, we would like to think we all "deserve" health insurance; but this is not true. We may need it, but we cannot force medical professionals to perform work for us. We must pay them what they ask or go without. There are measures to make health care cheaper, however. Reducing medicare and medicaid over time will reduce demand paid by taxes, dropping prices. Removing restrictions to direct payment, such as removing constraints on employers to provide 3rd-party payer systems and allowing individuals to keep untaxed health savings accounts are starts. Removing licensing restrictions to allow nurses to perform more work and putting more doctors in the field are also smart moves. And as costs and care are re-aligned, profits can increase, which means that investment and expansion will follow, which will further drop prices.
Nationalizing health care, often touted by liberals as the solution, simply makes the entire industry more unsound. It further institutionalizes and bureaucracizes it, resulting in greater costs with less output and further separating consumer payment from producer service. It creates a monopoly. Liberals often over-emphasize the profit motive in the private medical industry, yet profits are low while regulatory costs are high. Nationalization will increase costs, not lessen them. These costs will be passed onto producers, in the form of taxes. This hurts the overall economy, restricting investment and making goods cost more in all other industries. Additionally, there are still medical shortages. Rather than being "priced-out", patients will be "waited-out". Everyone will have "access," if they are willing to wait for weeks to months for simple appointments and procedures. For major surgeries, you may wait years. This is how nationalized care deals with the shortage of professionals it has to deal with the limitless demand at a "free" price; it uses another price system not in terms of dollars but in terms of wait times. This works well when everyone is unemployed. Then you can see who is truly needy by how long they are willing to wait in discomfort. Yet, when people could be better spending their time working, the system breaks down. Those who can pay the most should have nearly immediate access to care. This is simply the most efficient way to do things, which promotes expansion and lowers prices until nearly everyone can afford them. Automobiles and computers are two examples of this actually happening.
"Because Texas needs more billionaires."
WTF
"Because the constitution is one big, inconvenient headache."
I don't think the Democrats have ever read the Constitution or the opinions of its framers and ratifiers. Neither major political party is keen on following this document, which was designed to limit the power of the federal government. Liberals often tout the bill of rights as the prohibited powers of the federal government, but it is rather Article I Section VIII that does this, which specifies the ONLY powers of Congress, the only branch granted authority to make law. Liberals touting constitutional restraint can't whine about breaches of privacy when they seek to regulate the entire economy from a federal level. Federal welfare programs, drug prohibition, and commerce regulation are all unconstitutional (despite what a liberal supreme court may have said in the past). Will liberals trade these powers to protect privacy? No, but they will still whine.
"The whole world should be run by one big corporation."
Again, the biggest corporation of them all is the federal government. It employs more people than any private company. It pollutes more than any private company. It simply dismisses cases of fraud or crime leveled against it. When it is successfully sued, it pays its debts with your tax money. It consistently misses its budgets by hundreds of billions of dollars. And it is a monopoly. Liberals crying for bigger government and nationalized industries are simply naive to think the problems of large corporations will be solved by one even larger corporation.
Nevertheless, the liberal mantra against corporations rages on, without any understanding of economics and why large corporations can dominate a marketplace. They will cry about things like private ownership of the means of production and free trade, but they won't suggest adopting the Soviets' or North Koreans' economic model.
They should be crying about regulatory barriers to entry, artificial credit, corporate tax structures, and limited liability. All of these government-created entities have not simply allowed but suggested that corporations expand and consolidate. For example, buying a company who had a loss in its last year can offset a corporation's own profit, so it pays no corporate income tax. Dividends are double taxed, so few companies pay them - this leads most companies to reinvest their profits rather than distribute them. These aren't monopolistic practices attempting to exploit the market; they are simply attempts to retain the most income, which was earned through the market.
Another factor is variations in laws between nations. Multi-national corporations have come about to "exploit" differences in homesteading, labor laws, etc. between nations. For companies to be multi-national requires that they have a huge size to operate as such. Why couldn't a bunch of companies, each operating from a different nation, operate together in a similar manner? Because the laws favor one business, who can bracket all its costs into the nation with the lowest taxes or similarly avoid tariffs and other government-imposed costs. We can either fight this through huge tariffs or similar instruments to make such activities unprofitable, sustaining greater economic inefficiency, or we can get rid of our restrictive laws here, allowing smaller local businesses to have similar competitive advantage.
In short, liberals are silly to think a one-world corporation should be replaced with a one-world government.
"All other nations are inferior to us. We should start as many wars as needed to keep it that way."
Democrats started American involvement in WWI, WWII, Korea, and Vietnam. The most popular Democrat spokesmen do not speak out against our occupation of 130+ nations. Even Barack Obama wants to send more troops to Afghanistan. Democrat-controlled congress has done nothing to end the Iraq War. American militarism is far greater than the neo-conservative Republican Party. This is not a defense of Republican militarism, only an exposition of Democrat hypocrisy on the subject.
"So I can stay in Iraq. So I can go to Iran."
Have the Democrats given any hint that they will actually leave Iraq or avoid a conflict with Iran? No. They simply want to move our Iraqi troops to Pakistan and Afghanistan. I don't know if liberals have a map, but that's the other border of Iran...
The best description of our problematic economy
This is a quite dense read, but I implore everyone to give it a try. This was written in 1998 and is perfectly describing our current situation, with the major corporate bail-outs, extended regulation, increased money supply, business cycles, and eventual destruction of our currency.
I would love to help anyone understand exactly what the hell this guy is talking about, but please read it and ask questions. I really cannot word it any better than he explains, especially once you get past the critiques of the prior approach to the Austrian Theory of the Business Cycle.
http://mises.org/journals/qjae/pdf/qjae1_4_1.pdf
I would love to help anyone understand exactly what the hell this guy is talking about, but please read it and ask questions. I really cannot word it any better than he explains, especially once you get past the critiques of the prior approach to the Austrian Theory of the Business Cycle.
http://mises.org/journals/
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