People often point to Canada as a poster child of socialized health care. So why is it then that the government head in charge of health care in Canada, is coming to the United States for heart surgery? Nobody is talking right now, so it's anyone's guess.
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It used to be that in the United States, individuals ran the economy. If I want something, I would look for and decide to buy it - or not buy it. If it didn't exist, someone else might see the need, create it, and sell it. Does this kind of free market economy exist today? How much control do we have over our own lives?
According to usgovernmentspending.com, 2009 government spending (Federal, State and Local) accounted for a whopping 42.46% of our economy. Do we really need our government to provide for us to such an extent? Are we so incompetent we can't make our own decisions about what we need? Do companies need guidance in the form of tax incentives and government backed loans to help decide what consumers need?
Adam Smith used the analogy of chess match to explain why central planning doesn't work. The government assumes it can plan the economy like it moves pieces on a chess board. But it doesn't consider that pieces on the chess board have no other way to move except by its hand. In human society, every single piece has its own ability to move whichever direction it wants, which may be in direct opposition to what government wants. The result, "If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder."
How often does the government manage to do what everyone wants? Are things right now easy and harmonious? Or miserable and in the highest degree of disorder? Less government equals a happier, more prosperous society.
BTW, this is my next letter to the editor, we'll see if it gets published.
Another good article from Cafe Hayek today, Adults Are Responsible.
Adults' conversations about financial matters are mature and responsible because adults typically earn and spend their own money. Children's conversations about financial matters are childish and irresponsible largely because children live off of wealth earned by adults. "Buy me this toy!" "Get me that dress!" "Take me to DisneyWorld!" - children too frequently issue selfish demands such as these precisely because children have little to lose by doing so. If these demands are met, other people foot the bills.
Sound like any politicians you know?
This is an especially insightful post into the minds of politicians. Written by Russ Roberts of Cafe Hayek. Why do they feel nothing will work without their guidance? It's their guidance that screws everything up!
Ever since I posted that rap video about Hayek and Keynes, I've been reading the author's website, Cafe Hayek. It's written by Don Boudreaux and Russ Roberts, professors at George Mason University. I highly recommend it.
In economics, there are several schools of thought. The prevailing school of thought right now is Keynesian, which basically advocates consumption as the driving force of the economy. An opposing viewpoint to this theory is the Austrian school of thought, for which Friedrich Hayek is largely responsible. That should give you an idea of what they talk about.
Friedrich August von Hayek was an Austrian-born economist and philosopher known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought.
"The government's response to the financial meltdown has made it more likely the United States will face a deeper crisis in the future, an independent watchdog at the Treasury Department warned." - TARP Watchdog Neil Barofsky: Government Bailout Has Increased Risk Of Economic Crisis
Ok, so maybe the Treasury itself isn't admitting failure, but the person in charge of watching over the TARP program is. He sites multiple instances of corruption, and says the Treasury should "enact clearer walls" to try and stop it.
Treasury said it welcomed Barofsky's oversight but resisted the call to erect new barriers against conflicts of interest. The new rules "would be detrimental to the program," Treasury spokeswoman Meg Reilly said in a statement. The existing compliance rules "are a rigorous and effective method of protecting taxpayers," she said.
So the system can't work without there being corruption? Spoken like someone taking advantage of the system. Obviously they aren't rigorous enough. This is typical of government programs though.
Barofsky goes on to say,
"Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," Barofsky wrote.
He also makes the same argument that is indicative of any bailout, be it banks, the auto industry, or any business. Most call it a "moral hazard"...
Since Congress passed $700 billion financial bailout, the remaining institutions considered "too big to fail" have grown larger and failed to restrain the lavish pay for their executives, Barofsky wrote. He said the banks still have an incentive to take on risk because they know the government will save them (emphasis mine) rather than bring down the financial system.
We need to let these companies fail, no matter what the consequence to our economy. If we don't, the consequences will become worse and worse until at some point - like all economies that inflate their currency - the entire economy will collapse.
Today the Federal Reserve created $12 billion dollars, giving it to an unknown individual, bank, or country in exchange for mortgage-backed securities. This happens all the time in various amounts.
The real kicker however, is when that money gets deposited into a bank, the bank can then lend $120 billion dollars because of our system of Fractional Reserve Banking, thus increasing the total money supply by $120 billion. Fractional Reserve Banking is an inflation multiplier.
In the State of the Union address, one of the things President Obama touched on was a recent decision by the Supreme Court that expanded Freedom of Speech in the Election Process. He said:
"Last week, the Supreme Court reversed a century of law to open the floodgates for special interests-including foreign corporations-to spend without limit in our elections. Well I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities. They should be decided by the American people, and that's why I'm urging Democrats and Republicans to pass a bill that helps to right this wrong."
An article in today's Wall Street Journal points out that not only was this a gross overreaction, but he didn't even know what the facts were.
Then there is the substance of the remark itself. It was factually wrong. The Court's ruling in Citizens United concerned the right of labor unions and domestic corporations, including nonprofits, to express their views about candidates in media such as books, films and TV within 60 days of an election. In short, it concerned freedom of speech; in particular, an independent film critical of Hillary Clinton funded by a nonprofit corporation.While the Court reversed a 1990 decision allowing such a ban, it left standing current restrictions on foreign nationals and "entities." Also untouched was a 100-year-old ban on domestic corporate contributions to political campaigns to which the president was presumably referring erroneously.
What this decision does allow is ordinary citizens to better participate in politics. John Stossel reports:
When Russ Howard and Steve Cicero launched a grassroots recall campaign against an incumbent politician, they received fines for campaign violations that were eight times the amount of money they had actually raised. Last year when I was still at ABC, I reported on six neighbors in Colorado who protested their city council's proposal to merge with a neighboring suburb. Their protest? They handed out lawn signs. Their opponents used campaign finance laws to sue them, because they hadn't registered as an "issue committee" and hadn't filed reports on every single expense.
A Word About Campaign Finance Laws
The majority of laws are designed to protect certain people or companies from competition. In the case of Campaign Finance Law, the laws help incumbents stay in power. This is why President Obama had such an adverse reaction to the Supreme Court's decision. It threatens his power. In fact, he saw it as such a threat, he didn't even bother to check his facts.
Wages and benefits rise a weak 1.5 percent in 2009, the lowest in 27 years. The Consumer Price Index (inflation) rose 2.7% in 2009. Collectively, we are all worse off because of inflation. The fact that wages rose at all with unemployment so high suggests to me that inflation, if the economy manages to get to another boom period before the dollar crisis happens, will be extreme.
I just sent this letter to Senator Nelson. I called him too.
There is a vote in the Senate tomorrow to re-confirmed Ben Bernanke as head of the Federal Reserve.Until S. 604, the Audit the Fed Bill, is given an up or down vote on the Senate floor, Senator Nelson should vote against his confirmation.
I called your office, and the person who answered the phone said Nelson already supports a different "audit the fed" bill. Last time I checked, he was the only co-sponsor.
Nebraskans' are not stupid. Supporting this bill (a bill that has no chance) simply allows him to tell people he supports an audit of the Federal Reserve, even though he has no desire for a real audit. Politics as usual - seems to be a trend with Senator Nelson.
The fact is, the Federal Reserve can buy anything from anyone, using money they create to pay for it, and NOBODY - not even Congress - knows who that money is going to or what it is buying. Currency is the foundation of any economy. Destroy its value and you destroy the wealth and prosperity of the country.
For every dollar that the Federal Reserve creates, the purchasing power of MY savings and retirement is reduced. I'm sick if it.
If Nelson cares at all about Nebraskans, he will vote for a REAL audit and vote against Bernenke's confirmation.
Thank You.
Nelson is in real trouble in Nebraska. His policies and politics align more with Washington D.C. then with Nebraska. He could potentially redeem himself somewhat in my mind if he put up a real fight against the Federal Reserve. I highly encourage everyone out there call him (and Sen. Johanns) and tell him to vote against Ben Bernenke's confirmation.
Senator Mike Johanns: 202-224-4224
Senator Ben Nelson: 202-224-6551
No Audit, No Bernenke.