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Jan 07 2012
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Government, Politics, Rational Thinking, Taxes, USA, Voting

Misdirected Arrows

Having just seen last year all of the occupy demonstrations, my wish for the new year is that more people worldwide, and especially in the USA, will realize that the economic problems we are seeing in the world stem not from Capitalism but from Government and government intervention in what should be free markets.

While I get the beef the occupiers have, I have it too (anger at crony business for example), but so many people have their anger focused on the wrong place.  It is ignorance in the most caring sense of the word.

The occupy crowd (and the population in general) should not be upset at Capitalism or at the too easily contrived “fat cats”, they should go to the source of the problem which is Government.

Markets naturally self-regulate.  Why?  Because Buyers and Suppliers of anything have to both agree before any product or service can be bought or sold.  If one or the other cheats, lies, or otherwise doesn’t offer value they will naturally be eliminated or otherwise ignored.   The good and the bad word gets out.

The minute an outside party to the transaction gets involved and alters the relationship (screws with the free market) it is no longer a free market but a manipulated market.  Look around – do you not see Government intervention and manipulation in markets almost everywhere?  Housing, Health Care, Food, Labor, Stocks, Banking and on and on.

Look at the United States – we have a Constitution, a founding document of the nation that sets forth not what the Federal Government can do but rather what it cannot do.  This is somewhat unique to the USA and what has up until now set the USA apart from the rest of the world by levels of degrees when it comes to economic productivity.  The first job of the government is to protect your liberty, life, and property rights, and the first job of the President is to defend the Constitution.  We have a Congress that passes laws that regularly interfere  with your liberty and property rights and a current President that routinely tramples on the Constitution.

The problems we’re seeing in the USA and in many parts of the world are not stemming from Capitalism – on the contrary – its the lack of Capitalism that is pushing everything down.  When Capitalism flows freely the markets would take care of themselves.  If Government would get out of the way of interfering in markets so many of the nations economic issues would naturally resolve themselves.  Resolving economic issues leads to resolving many social issues.

Do you really need a far-away Federal bureaucrat deciding for you what you should buy, when, and for how much?  If you support this sort of a world, maybe there are a few countries for you where you could relocate, but the Constitution in the United States lays out the terms and conditions of the country.  It is clear that many people also confuse the role of the Federal government with the role of the States (ex. Dept of Education).  So many people lose their minds when you say we should get rid of the Federal Dept of Education – but think about it, what business does the government have being in the business of educating children?  That is not a role of the Federal government.  (As a side note, if you think about it again, you’ll realize why the Federal government like to have a hand in education.)

So while nobody like crony capitalism (hardly a free marketplace either), the occupy Wall Street Crowd and most Liberal Democrat voters have their arrows and frustrations pointed in the wrong place.  They should really take a clearer look at from where these problems stem and if they want to occupy something they ought to direct their energy at voting out people in the Federal government that are creating the policies.   The Federal government is the entity creating the problems then coming forth with “solutions” for the problems they create.  Enough – just vote out the wrong people and do your best to vote in the right people.  When you elect people like Barney Frank, Chris Dodd, Chuck Schumer, Harry Reid, Dick Durbin, Barack Obama, and the like, you get what we have now.  I’ll even throw in George W. Bush because he too abandoned free market principle as she said “to save the free market“.

So in this theme, spend 15 minutes checking out the above insightful video from Peter Schiff who went down to one of the occupy protests to see if he could have a dialogue with the people there.  You can see in the video that the crowd wants to just spout out quick slogans or blame zillionaires for making too much money, but Schiff sympathizes with them, calmly shoots straight with them, and shows them that their anger really needs to be put squarely on Washington DC and the politicians who create policies that do not let markets self regulate.  He is fair in his analysis and I hope here in 2012, in what is easily the most critical election year of your lifetime, more people everywhere understand that free Capitalism is the solution, not more Government.

Remember that at least in the USA the government governs at the consent of the governed.  How many Americans no longer consent to the current state of the Federal government and will vote out the wrong people this year?

Video from Reason.tv

Dec 22 2011
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Current Affairs, Government, Thought, USA, Voting

Grateful for Entrepreneurs

Going into 2012 and looking back on the past few years, I have to say that I am grateful that we still have entrepreneurs in the USA, and more of us (especially the occupy crowd) should also reconsider just how lucky this country is that so many people start businesses.  The funny thing about starting a business (I too have done this and it is NOT easy), is that when you’re starting up you have to struggle and fight for every inch, every client, every deal but when you make it somehow “everyone” thinks it was overnight and that life is then so easy.  The whiners don’t see the years of toil, sweat, worry, sleeplessness, risk, and tuna sandwiches – they only see the “today” and think somehow it’s not fair.

Entrepreneurship is hard and it’s not for everyone, but at least be thankful for those who trail blaze instead of vilifying them.  The occupy crowd whines about how things aren’t fair while they drink lattes and make cell phone calls.  They don’t have a clue about fairness.  You know a place where everything’s fair?  North Korea.

The President (and many other leaders) so often preach about the honor of public service, even to the point where they propose special school loans that an be forgiven if you choose to go into public service.   Why not flip this around and offer loan forgiveness for those that start businesses and employ others?  That’s public service.  People that start companies are pillars of public service – not the guy at the DMV.

In the next round of Congressional and Presidential elections I hope we get back to electing into office representatives that understand  that this country can be stronger and more stable through entrepreneurship, and we put in place a general attitude that thanks those that start companies and employee others rather than punish them with over the top regulation and taxes.   Imagine a country with no entrepreneurs.  What would you have?  How would you grow – hell how would you eat!   

I am grateful for those among us that took the chance to start companies that ultimately went on to employ so many.  That is what we should be encouraging in this country.  So this holiday season and into the New Year, let’s hold entrepreneurs up with reverence and put gratitude where it belongs – in the hands of those that make lifestyle possible for so many others.  If you ever start a company you’d want the same treatment.

 

Sep 01 2011
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Current Affairs, Europe, Government, Greece, Immigration, Interviews, Personalities, Politics, Rational Thinking, Thought, UK, USA

An Interview with Daniel Hannan

Q. I’ve seen your speeches and have heard you presenting facts and sounding the alarms.  However it seems to me Europeans (politicians and citizens alike) just trod along as if the house is not actually on fire.  Is anybody listening to you over there in Europe where it counts?

A. No one is listening at all – except the majority of the electorate. A rift has opened up between politicians and people on the issue of the EU. Almost every time there is a referendum on closer integration, in pretty well any country, people vote ‘No’; yet their parliaments are usually in favour by around 80 per cent. Britain is typical. According to most opinion polls, roughly 60 per cent of voters want to leave the EU, but that position is shared by only 3 per cent of MPs. Why the division? Because politicians make the mistake of believing that, since the Brussels system has been kind to them personally, it must be good for their constituents. As Upton Sinclair once observed:’It is difficult to get a man to understand something when his job depends upon not understanding it’.

Q.  Why do the Eurocrats insist on bailing out Greece?  Do they really think that the Greeks are going to change their view of the world or their behavior simply because some Eurocrat in Frankfurt or Belgium demands they do so? (or the Italians, the Spanish and so forth) or is something else going on here?

A. The priority here is not to bail out Greece, but to bail out the euro. The people in Greece don’t believe that they’re being rescued. They understand perfectly well that the bailout money will go to European bankers and bondholders, but the repayment will come from ordinary Greek taxpayers. No wonder they are protesting. They – and the Irish, and the Portuguese – are being sacrificed in order to keep the euro going.

Q.  What’s the worst that could happen if we simply dissolved the Euro and went back to Francs, Drachmas, Lire, Guilders, and Marks ? – They were more romantic anyway.

A. More romantic and more efficient, since they allowed each country to set its interest rates and exchange rates according to its own needs. There are some technical difficulties in returning to national currencies – people would rush to put their savings in whatever money they thought less likely to devalue – but a partial and orderly unbundling of the euro is clearly a lesser evil than the generational poverty which keeping it going implies.

Q. What’s so good about Socialism?  Why is it that proponents of Socialism refuse to see its inherent problems?

A. Socialism has always struck me as being more about intention than outcome, about showing what a nice person you are rather than affecting real change. The survey that said it all was the one that showed that people who wear awareness ribbons and wristbands are less likely to give to charity than people who don’t. There’s always been an element of that in socialism. ‘Whaddaya mean, why don’t I give to charity? I’m already calling for higher taxes!’

Q.  Two of the best things to come out of the ascent (and failure) of Barack Obama is that more and more Americans are seeing (many for the first time) what it really means to have a man like this as President and many are now revisiting the question of exactly what is government supposed to do and what is it not supposed to do.  It reminds me a little of what happened in Spain with the Socialist Jose Luis Zapatero and his Socialists getting hammered in elections.  Is this a sign of hope for all of us?  Are the voters of the world finally realizing that Socialism simply doesn’t work or are we doomed to fight this charade forever?

A. I’m afraid it’s cyclical. Right-of-Centre governments generally win office when the other lot have left the treasury empty. They then patiently rebuild the nation’s credit, whereupon the electorate says: ‘Great – crisis over. Let’s have those nice, caring Lefties back again’.

Q.  Speaking of Obama, in 2008 Barack Obama won the American Presidency with millions of followers thinking he would deliver utopia.  Europeans swooned over him even thinking America had finally come to its senses and placed a “reasonable” man into the White House.   Not that is matters at all in our elections, but out of curiosity how do you think Europeans see Obama today now that he’s actually been in the White House for almost three years?

A. All American presidents end up being unpopular with the European Left. The same charges are thrown at Obama that were thrown at all his predecessors: the US is still in Afghanistan, Guantanamo is still open, the climate change treaties still unratified etc etc. The truth is that no country wins popularity by emulating its critics. You win respect by outperforming them. Or, at least, you did until your present leaders decided to spend, tax and borrow the US to ruin.

Q.  An England question.  England used to be a polite, mannered place with proud people.  Is it just my impression or does England seem rougher, more cynical, more tabloid.  What has changed in British culture over the past 25 years?

A. We’ve never been as polite as Americans think. We’re an earthy, violent, Hogarthian people, whose manners are simply a way of keeping our native bellicosity in check. One thing that has changed, though, is the expansion of welfare dependency. It has made us less independent, more whiney, less responsible. I hope, though, that that’s a remediable problem, and the current government is doing some useful things to free people from the squalor of reliance on benefits.

Q.  What open advice would you offer to American voters that think the European model of social welfare is the way to go?

A. It’s fine in the short term: long vacations, maternity and paternity leave, generous welfare entitlements. What’s not to like? The trouble is that, after a couple of decades, the money runs out. That’s the point we’ve reached now. In 1974, Western Europe accounted for 36 per cent of the world’s GDP. Today it’s 25 per cent. In 2020 it’ll be 15 per cent.

Q.  It seems to me Europe is cannibalizing itself.  With birthrates across Europe in decline, what kind of Europe are we looking at one or two generations from now?

A. We face a choice between massive depopulation and massive immigration. The former option needn’t be as calamitous as people think. Yes, the ratio of pensioners to working people will become harder to manage, but it’s much easier for a 70-year-old to carry on sitting in front of a computer screen than it was a hundred years ago for a 70-year-old to carry on mining coal. And, once that demographic bulge has passed, I can see advantages in Europe drifting back to the population level it enjoyed in the early twentieth century. My own constituency in South East England has become very crowded. Property prices are ridiculously high, people are having to commute for longer and longer, there is massive demand for schools and hospitals, the green spaces are disappearing under concrete. I could live with a slight easing of the population pressure!

Thank you Mr. Hannan for taking the time to sit for the Anthidote.com interview.  Poignant comments and please keep pushing.

Daniel Hannan is a writer and journalist, and has been Conservative Member of European Parliment for South East England since 1999. He speaks French and Spanish and loves Europe, but believes that the European Union is making its constituent nations poorer, less democratic and less free.  His latest book is “The New Road to Serfdom – A Letter of Warning to America“

Aug 20 2011
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Current Affairs, Economics, Government, Liberty, Politics, Rational Thinking, Thought, USA, Voting

A Rebuttal to “How Rich is Too Rich” by Sam Harris

Sam Harris wrote a piece on August 17 on his blog entitled “How Rich is Too Rich?“.  It was a genuinely thoughtful piece with some great points but he lost my hope when he used the line “how much wealth can one person be allowed to keep“.  Allowed?  By whom?

And what about the other side of the “How Rich is Too Rich” coin such as “How Much Stealing is the Right Amount?” or maybe “How Much Waste is There in Government” or even “How Lazy Can You Be?

When it comes to private individuals generating wealth (even one dime) by performing a legal service or selling a legal product, the profit generated after belongs not to society but to the individuals and stakeholders that took the initiative to make it happen.

If we want to start throwing around the “allowed” word the very first place we should put that word is with the federal government.  We should not be asking how much Steve Jobs should be allowed too keep, but rather how much should the government be allowed to have from the taxpayers generating the wealth.

The US Government holds its position at the consent of the governed, and people are mad because government is using billions of dollars in taxpayer money to go way beyond the core purposes of government.  By and large Americans don’t have a problem with the concept of paying taxes, they have a problem with paying taxes when the tax revenue gets squandered.

Taxpayers who have trouble making ends meet are not thinking about Steve Jobs, Bill Gates, or anyone else like that, they’re thinking about their mortgage, their gas bill, groceries, medical bills, and other items that they could purchase if they only were “allowed” to keep more of their income.

They get mad because of the sheer waste all around them, such as this $600,000 gurgling toad sculpture.  How many tax paying households had to chip in to pay for this?  Don’t you think whatever monies were taxed and redistributed to purchase this commissioned work could have been put to better use by the people that earned that money?  There is an almost limitless supply of examples of government waste we could discuss – here’s 50.  It’s government that is “allowed” to keep too much money not individuals.

Sam posits a question and gives his answer.

“How many Republicans who have vowed not to raise taxes on billionaires would want to live in a country with a trillionaire and 30 percent unemployment? If the answer is “none”—and it really must be—then everyone is in favor of “wealth redistribution.” They just haven’t been forced to admit it.”

What about framing the argument this way?

How many Democrats who have vowed to raise taxes on anyone making over $250,000 would want to live in a country where employment goes to 30% because business owners limited to $250,000 in income have no incentive to grow past that – because anything over that amount would simply be confiscated?

Which do you think is a more likely scenario?  Clearly the second because nobody is close to an individual wealth of a triilion bucks, but we have all kinds of Democrats wanting to raise taxes on people who generate over $250,000 in income.

In Mr. Harris’ blog post, he brings up the news about Warren Buffett’s op-ed wherein he mentions he’s taxed at a lower rate than his secretary (and that many Conservatives pretend not to find this embarrassing).

This is comparing apples and oranges.  One is capital gains taxation and the other is ordinary income taxation. Mr. Buffett could always choose to pay himself ordinary income.  Why doesn’t he?  Mr. Buffett instead of pledging his billions to the Gates Foundation could choose to disperse with his wealth in some other way that’s not maybe as tax efficient.

Moreover, as this article points out, even if you flat out took all the money the super wealthy had you wouldn’t even put a dent in the problem. The root issue is not how much private people earn, it is the amount government spends.  This tired argument of taxing the hell out of rich people simply because they have it does not solve the problem.  Government must shrink.

And anyway, does anyone need a trillion dollars?  Of course not, but that’s not the point.  The point is does a need on my part create an automatic obligation on everyone elses?  If the answer is “yes”, then those people answering that way are in favor of stealing, they just haven’t been forced to admit it.

The problem we’re facing in the USA (and indeed the world) is that for many people the answer is “to hell with property rights, I want my stuff”.  They call this “social justice”.  But what is “just” about taking from your neighbor simply because you deem him to be more than satiated?

We’re all looking down the barrel of ugly arguments and scenarios these days not because of productive, job-giving, wealth creating entrepreneurs, but because of government fools who get in the way of free markets efficiently delivering solutions to people.  The very people government claims to help and champion are the very people that get wiped out by government.

Are free markets perfectly efficient?  No but they are far more efficient and “fair” than centrally planned economies where a few people pick winners and losers and there are only but a few winners. Remember fairness is a two lane highway.

In the USA we do have “crisis of inequality” and on a global level it’s even worse, but government interference, corruption, and waste only exacerbates the problem.  Americans (and likely most people in rich countries) do not want to live in a society with huge “inequalities” in wealth but the difference between Conservatives and Liberals is how we achieve that.  One could also easily point out that we have a crises of inequality in effort put forth by many people.

Offering 99 weeks unemployment checks or incremental welfare subsidies for every baby you have while on welfare only keeps people down when they might otherwise get up on their own.

The brutal truth is some politicians would have it no other way.  Until we elect people that limit government to what it is supposed to do instead of all of these superflous programs it won’t change too much.

If there is one place we should be pointing the “how rich is rich” question it is not at private individuals, it is at government.

Photo by Stuck in Customs

Jul 31 2011
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Current Affairs, Government, Ridiculous, Thought, USA

Buyer’s Market or Appraiser’s Market?

Anyone selling a property right now in the USA is dealing with such a dysfunctional real estate market that it’s almost impossible to see how it’s going to break free.  The government has got the real estate industry so messed up it’s sad.

In any marketplace, buyers set the price.  You can ask whatever you want for a product or service but in the end it is always buyers that determine the price.  No buyers, no sale.  But currently in the USA, buyers by and large are not setting the pricing of real estate, appraisers are – and this is not working.

Because of the fiasco of Fannie Mae and Freddie Mac, TARP, and financial institutions lending money to people who had no ability to repay it, the US real estate market took a severe blow over the past few years wiping out enormous amounts of wealth and equity.

Since then the government has put in place a mind-boggling array of new rules and regulations for lenders that almost nobody can understand and which are doing nothing to help break loose the stagnant values of homes.  The people who established the first round of rules that got the market into this mess have put in place even more rules that are keeping the market in shambles.

What do I mean?

A family wants to sell their home for $525,000.  A buyer comes to the home, likes it, puts in an offer for $500,000 and Buyer and Seller agree.  Buyer goes to lender for a a mortgage.  Lender sends in the appraiser who comes in at $375,000.  The lender tells the Buyer that they’ll do a mortgage but not for more than $375,000, and more likely not for more that $300,000 (80% appraised value), so if the Buyer wants to purchase the home he has to come up with $200,000 cash.  Not going to happen.

So what does happen?  The deal dies, the seller doesn’t sell, the buyer doesn’t buy, the agent makes no commission, the bank lends no money and makes no interest, the family is stuck, and everything just stagnates.

Where’s the problem.  Due to the bailout deals in the past few years, one of the new rules is that lenders now must send out the appraisers when buyers want to purchase property.  Almost nobody is allowed to deal direct with the appraisers, least of which the real estate agent trying to close a deal.

Very often the appraisers are coming from 50, 60, or 100 miles away to evaluate some property in a part of town they barely know.  On top of that, the appraisers income has been cut in half because while he used to be able to earn maybe $400 for an appraisal, now he only earns about $200 because some clearing house that ordered the appraisal for the lender takes a big cut.  All new government rules.

Now the appraiser comes to the property, takes some photos, looks around, measures things and looks at comps.  The comps stink.  What’s the appaiser do?  He mostly goes with the comps.  Why?

1. It’s safe

2. He can’t be blamed for coming in to high or too low.

3. He doesn’t really care, he’s not making the kind of money he used to anyway.

4. He truly has no idea right now how to properly justify the value of a property anymore outside of the comps….so appraisers just continue to mostly go with the comps.

Well if we now have a country full of homes that used to be worth something (and intrinsically still are) but are near other properties that had owner issues, we are never going to break out of the real estate funk unless buyers, and not appraisers, start making the market.

If a Buyer wants to buy your home at the price you want to sell it, you’d think there’d be a deal.  No way, not in 2011.  The bank sends in the appraiser and kills the deal.

Of course there is a place for appraisers, but ultimately Buyers have to determine the price of property otherwise there simply is no free marketplace.  With appraisers only or mostly going with comps, everything simply remains stuck when it doesn’t have to be that way.

 

 

Jul 27 2011
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Current Affairs, Government, Politics, USA

Choices

 

With all of the talk in the USA about the debt ceiling and pending devastation if we don’t lift it, let us remember a few things.  The Congress makes the laws and the President decides what he wants to sign or not.  Yes the USA has raised the debt ceiling before, but the problem this time is that in the past 18 months Presdient Obama has spent trillions of dollars and has pushed the country to the extremes of what it can handle. He says Bush spent to much (which he did) and then proceeds to quadruple down on Bush’s spending.

President Obama caused all sorts of additional debts and damage (his spending) then comes to the citizens of the country lecturing us on how we have to get our fiscal house in order – all the while he continues to spend and resist cuts (real cuts). 

As I write this, the US House of Representatives has passed a measure to cut and cap spending and balance the budget.  If that Bill makes it to the President, the choice is his and his alone to sign it or to not sign it.

If nothing happens and the USA does in fact hit the debt ceiling, it is not the beginning of the problem – it’s actually the beginning of the end of the problem because it will be at that point that the USA has no choice but to start actually cutting spending.  The law of tha land will be the debt ceiling level and if Obama chooses to exceed it on his own or otherwise, he bears the responsiblity.  When Obama comes out and says that seniors won’t get their checks, or that military people won’t get paid, this is a.) his choice and b.) blantant pandering.

The President can CHOOSE to start cutting useless spending and keep critical spending in place.  He can easily make sure the interest on the debt gets serviced first, that medicare and the like get covered, and that military families are covered – but unfortunately the programs for Cowboy Poetry that Harry Reid thinks are so critical (see above video) are just going to have to go.  That and the literally tens of thousands of other wasteful programs that government has no business being in.

As far as I’m concerned, the House has done it’s job and has passed a bill that cuts spending.  If we go to the brink, it will be because the President of the USA wants to.  He comes to the American people everyday telling us about the looming catastrophe, but when he is presented with a solution to avoid it he refuses it.

 






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