What positive steps can we take? The energy that is now expended by well intentioned, freedom-seeking individuals on the destructive course of politics can be turned into powerful steps that will have a positive effect on the future. All are moral, right and just. None require aggressing. Consider the following...
The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
“It is difficult to make predictions, especially about the future,” says a proverb often attributed to Yogi Berra. Imagine the world of freedom, or lack of it. Who could foresee the technologies that make our lives so rewarding and convenient? The same technologies have us all under the government’s giant microscope. Thankfully, the brave have turned the microscope around.
In the months since Edward Snowden revealed the nature and extent of the spying that the National Security Agency (NSA) has been perpetrating upon Americans and foreigners, some of the NSA's most troublesome behavior has not been a part of the public debate.
National Treasury Union President Colleen M. Kelly recently described the 2014 IRS budget allocation as “woefully inadequate.” But the agency has not proven itself to be an efficient steward of taxpayer dollars. Here are ten ways the IRS lost the trust of the American people.
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Given how poorly states like California and Illinois have funded the pension funds for their own employees, one would think that this would stop dead in its tracks any plan to have the government assist in managing private sector funds too. The spate of recent activity, however, suggests otherwise.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The problem for NSA apologist is that when guys like Snowden disclose that the government conducts comprehensive surveillance in ways that would have made 1984’s O’Brien drool, it puts the entire progressive agenda in jeopardy.
The east coast and parts of the southern U.S. were to varying degrees paralyzed by blizzards a few weeks ago. The snow as expected rendered the roads treacherous, and in anticipation of slick streets, shoppers flocked to the grocery stores in advance.The rush into grocery stores, and its aftermath, offers worthwhile lessons in economics.First up, […]
The financial world is plodding along like a drunken sailor avoiding debt collectors by keeping no cash in his wallet. It’s not the kind of calm that’s going to last or end well. But the storm will have to wait until after the Olympics.What a game! We’ve never watched ice hockey closely before. But watching […]
“When they come for my gun, they will have to pry it out of my cold, dead hands,” is a common refrain I often hear from the Neo-Cons when there is a threat, credible or otherwise, that the U.S. government is going to take their firearms.And, when I hear this crazy talk, I agree with […]
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
In times of war and national emergency, it’s sometimes necessary to sacrifice civil liberties to secure vital gains in public safety. In those cases, we may have to accept a loss of privacy or freedom rather than invite mass slaughter of Americans.The National Security Agency’s domestic phone records collection is not one of those.Never have […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
Amidst all the revelations about how the American people, many of whom are absolutely convinced they live in a free society, have their telephone calls, emails, website visits, and who knows what else under surveillance by their own government, let’s not forget the massive infringements on financial privacy that have gone on for decades.Consider, for […]
Image: ShutterstockBitInstant CEO Charlie Shrem, along with alleged co-conspirator Robert Faiella, was arrested by federal authorities last week for allegedly laundering more than $1 million worth of Bitcoins. This is a tiny amount compared to the largest drug-and-terrorism money laundering case ever. Yet when British bank HSBC was found guilty in 2012 of laundering billions, […]
Do you trust your doctor? Most patients assume their doctor is working in their best medical interests whenever he or she orders a diagnostic test or recommends a particular treatment. Customers might wonder whether an unscrupulous auto mechanic is being truthful when he recommends a brake job or a new transmission. But most patients trust […]
The exercise had an awesome name, inspired by the movies: “Quantum Dawn 2.”On July 18, scads of U.S. banks, stock exchanges and government agencies took part in a digital fire drill — a practice run in the event all of Wall Street came under massive cyberattack.This isn’t the first time banks have come under an […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
So you’ve maneuvered the Obamacare website, plugged in your top-secret information and found out how much you are forced to pay to avoid a fine.And for some of you, it turns out you qualify for a government subsidy — making the premium sound like a bargain. But signing on that line to accept the government’s […]
“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”As the inequality gap grows, there is an ideological battle unfolding in the West.On the one hand, there are those who think government can fix things. It must do more, tax more, […]
On Feb. 7 the United States will once again reach its statutory debt limit, meaning it cannot legally borrow any more money. Since the obvious option of cutting spending to match the amount of revenue that the government collects is off the table for some inexplicable reason, Congress will have to pass a new, higher […]
The New York Times published an interminable article on health care recently. Plenty of facts — how scrupulous are these journalists! — but the article displayed absolutely no comprehension of the basics of cause and effect. I was left wondering about the whole point.The article details how the health care system rewards specialists to an […]
Robert Reich who was secretary of labour under Bill Clinton wrote an article that he called “The Seven Biggest Economic Lies”. I intend to show the reader how deeply flawed this article is in the hopes that sound economic principles may get the attention that they deserve. I will not take his statements out of context but rather quote them in their entirety.
Robert Reich’s writes: 1. Tax cuts for the rich trickle down to everyone else. Baloney. Ronald Reagan and George W. Bush both sliced taxes on the rich and what happened? Most Americans’ wages (measured by the real median wage) began flattening under Reagan and have dropped since George W. Bush. Trickle-down economics is a cruel joke.
If you cut taxes and keep spending like a drunken sailor like G.W. Bush and Reagan did, you need to make up the difference by either printing money or borrowing, which are forms of taxation as well. So in fact, using those two presidents as examples of why low taxes don’t work is inaccurate. Money printing and borrowing are less visible than outright taxation so politicians can claim that they cut taxes while taxing us through the back door.
On the other hand if you really cut or eliminate taxes, and at the same time reduce or eliminate government spending, there will be more accumulation of capital which leads to higher real wages.
About 100 years ago, about 98% of the population worked the land in food production. Today, farmers in advanced economies have all kinds of machinery and technology which has made them more productive. This has a twofold effect of improving the earnings of farmers and lowering food costs for the entire population. People will object by saying that farmers today do not earn much, but if you compare the standard of living of a farmer today with that of a farmer 100 years ago, you will understand what I mean.
This whole process of wealth creation is made possible through the accumulation of capital which is what farmers in poor countries do not have. Today only 2% of our population is engaged in farming thereby allowing the rest of the population to produce goods and services that were not available or were too costly for widespread consumption back when we were all farmers. This higher productivity leads to a better standard of living for everyone and government taxation impairs this process.
Robert Reich’s writes: 2. Higher taxes on the rich would hurt the economy and slow job growth. False. From the end of World War II until 1981, the richest Americans faced a top marginal tax rate of 70 percent or above. Under Dwight Eisenhower it was 91 percent. Even after all deductions and credits, the top taxes on the very rich were far higher than they’ve been since. Yet the economy grew faster during those years than it has since. (Don’t believe small businesses would be hurt by a higher marginal tax; fewer than 2 percent of small business owners are in the highest tax bracket.)
Ask yourself: Would you put your capital at risk and work hard only to retain as little as 9% of what you produced? When people are faced with such punitive tax rates they take their capital elsewhere, avoid taxes, or stop working altogether.
Reich believes that the rich stood idle while the government took 70 to 91% of their income, which is very naive. Not only were there endless loopholes in the tax code, but each time taxes are raised the rich put their money into tax free investments. Let us not forget also that those were the golden days of bank secrecy and offshore money heavens, and taking money out of the country was very easy.
Robert Reich’s writes: 3. Shrinking government generates more jobs. Wrong again. It means fewer government workers – everyone from teachers, fire fighters, police officers, and social workers at the state and local levels to safety inspectors and military personnel at the federal. And fewer government contractors, who would employ fewer private-sector workers. According to Moody’s economist Mark Zandi (a campaign advisor to John McCain), the $61 billion in spending cuts proposed by the House GOP will cost the economy 700,000 jobs this year and next.
If this were true then why not employ everyone in the government.
Mr. Reich talks as if the government paid for all those jobs with resources dropped from heaven. The truth is that every dollar spent by government is a dollar that has to be taken from somewhere. If I spend my money on a suit, or if I invest it, I also generate jobs, and they will be productive jobs. I don’t need the government to spend the money for me.
Governmental employees and contractors piggyback their jobs on the rest of us.
Robert Reich’s writes: 4. Cutting the budget deficit now is more important than boosting the economy. Untrue. With so many Americans out of work, budget cuts now will shrink the economy. They’ll increase unemployment and reduce tax revenues. That will worsen the ratio of the debt to the total economy. The first priority must be getting jobs and growth back by boosting the economy. Only then, when jobs and growth are returning vigorously, should we turn to cutting the deficit.
There are so many economic fallacies concentrated in that short paragraph! I will simplify my answer by asking you to ask yourself some simple questions: When you have personal economic troubles, do you spend more? Do you borrow to spend more?
Remember, economics works in exactly the same way for one individual, a family, a company or a country. What is true for one individual is true for a country. To claim the opposite is like to claim that there is no gravity in government offices.
Robert Reich’s writes: 5. Medicare and Medicaid are the major drivers of budget deficits. Wrong. Medicare and Medicaid spending is rising quickly, to be sure. But that’s because the nation’s health-care costs are rising so fast. One of the best ways of slowing these costs is to use Medicare and Medicaid’s bargaining power over drug companies and hospitals to reduce costs, and to move from a fee-for-service system to a fee-for-healthy outcomes system. And since Medicare has far lower administrative costs than private health insurers, we should make Medicare available to everyone.
Mr. Reich talks about “bargaining power” but why doesn’t this great bargaining power work with the military industrial complex? Or with the post office which the government could never run profitably in spite of having a monopoly?
The reality is that government never does anything efficiently and always uses its leverage to benefit special interest groups which is why healthcare is so expensive. Why do you think insurance companies supported Obamacare?
When the government restricts the number of medical schools we can have, the number of doctors we can have, or if it restricts supply of services with licensing hurdles, it benefits corporations and professional groups at the expense of the rest of the population, at your expense.
If we want lower costs and better service, we need more competition, not less.
Robert Reich’s writes: 6. Social Security is a Ponzi scheme. Don’t believe it. Social Security is solvent for the next 26 years. It could be solvent for the next century if we raised the ceiling on income subject to the Social Security payroll tax. That ceiling is now $106,800.
Well, actually, Social Security fits the definition of a Ponzi scheme to the letter, which is “an investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation”.
Mr Reich claims that Social Security “is still solvent” for another 26 years, but this is a feature of all Ponzi schemes: they are solvent for a while until their new incoming money is less than the payouts. Bernie Madoff was “solvent” until he no longer was able to pay. Raising the ceiling on income merely postpones the inevitable end of all Ponzi schemes.
Robert Reich’s writes: 7. It’s unfair that lower-income Americans don’t pay income tax. Wrong. There’s nothing unfair about it. Lower-income Americans pay out a larger share of their paychecks in payroll taxes, sales taxes, user fees, and tolls than everyone else.
For once I agree with Reich. It is not unfair that the lower-income classes don’t have part of their income taken from them by force, this is a great thing.
What is unfair is that the rest of the population is subject to this theft. Remember that slaves did receive part of what they produced in the form of food and shelter. The difference between taking 90% of someone’s income as in the case of slavery, and taking 30% in taxation is only a difference in degree.
Most of the failures in Mr Reich’s reasoning have to do with not looking at the unseen consequences of the policies he advocates. The reader may be interested in Bastiat’s famous essay “That which is seen and that which is not seen” which is a wonderful explanation of this common fallacy.