I saw an article today entitled, "Who Will be the Winners Under Obama's Jobs Plan?" Apparently, the winners are going to be teachers, union labourers and other political friends of the President's. At least according to the article anyway. This started me thinking. Does the fact that only some citizens are going to be winners under this plan mean that others will be losers? I suspect that the answer is yes. After all, if some people are winners it follows that others must be losers. That's really the only other category that exists if you start classifying some people as winners and others as not.
I'm sure that if you asked Obama he would say that the intent of the Jobs Bill is to benefit everyone by creating a stronger economy. I have no reason to believe that he would be lying if he did. It probably really is his intention to improve the economy. However, we all know what paves the road to Hell. It is the actual effects of economic policy that are what really matter.
Given that the language used to promote the Jobs Bill is pretty much the same as the language that was used to promote every other round of economic stimulus recently, is it unfair to suspect that this bill is really just another stimulus bill except with a different name? The word 'stimulus' has become a rather dirty one in public circles of late. Perhaps, this bill is being marketed differently to avoid that stigma. The bill also has the same objectives as the previous rounds of stimulus; to improve unemployment, rebuild our infrastructure and improve education. If this really is just more of the same thing that has already failed, why are we doing it again? Are we really stupid enough to keep banging our heads against the same brick wall?
The mere fact that an article that was obviously slanted in favour of the bill could find winners under the bill goes a long way toward proving that the bill does favour some people over others. If the bill helps some and just as much as it harms others, what good is it? If it merely takes money out of one person's pocket and puts it in the pocket of another, how is it helping? Presumably the person who was taxed so another person can spend would have spent the money on something. Odds are it would've been something that they felt would improve the quality of their own lives. Instead they are forced to pay someone to build some public works project that might or might not be useful. There has been more than one project that turned out to be as useful as Alaska's famous 'bridge to nowhere.' Sure after the project is done everyone can see the new structure, but no one sees all of the things that the people who were originally taxed would've done with the money. If they had been able to keep their own money they would've bought myriad other products and services that are much more likely to be beneficial to them personally. But, since this is spread over millions of people all across the country, it is much harder to see the impact than it is with something that is large and easily located like a bridge or a road. At best, this bill is playing a zero sum game. Some must lose so that others might gain and there is no net improvement in the economy. This is why none of the other stimulus bills worked and it is why this one will also fail.
Friday, September 16, 2011
Sunday, September 11, 2011
Offshoring of Jobs
I've read a lot lately about how the off shoring of jobs to China and other countries is hurting America. Most seem to feel that the corporations are greedy and unpatriotic for leaving. They feel that the issue can be addressed by passing laws that tax imports or otherwise punish such companies are the way to solve the problem. It seems they blame the free trade agreements that have been enacted in the last 20 years or so for the problem. I suspected that, as usual, the problem is more complex and the solutions are less obvious than the general populous thinks. So, I decided to examine the issues involved.
First, are corporations greedy? The answer is obviously that they are for the most part. After all, No one founds a corporation to lose money. In fact, the kind of people that start corporations are usually out to make as much money as they can. To stay in business they must achieve a number of goals. They must provide a product that people want. The price and quality of the product must be as good as or superior to those of its competitors. And, perhaps most important, they must be able to make money. Money is the life blood of any business and the business will not survive without it. Thus the desire to maximize profit is as fundamental to the nature of any business as self preservation is to the survival of any animal.
Are corporations unpatriotic? I think that the answer is that they are at least somewhat patriotic. After all, a company founded in a country is going to be composed of employees and stock holders that are mostly citizens of that country. They are therefore not likely to make decisions that they feel are likely to be a danger to their home or to their own jobs. However, patriotism is not necessary to a company for its survival. If a company cannot make a profit in one country it only has two choices, either move to another country or go out of business. Moving to another country is the only choice that allows the company to survive by fulfilling its fundamental purpose of making money. Likewise, if a company cannot compete with a foreign company that for whatever reason has advantages it may have no choice if it is to survive but to relocate to an area where it can pick up either the same advantages or others that are just as effective.
Given that corporations are greedy and at least somewhat unpatriotic, what are we to do? We can either accept them as they are or try to change them.
A powerful way to change them would be by changing their fundamental goal. We could put a cap on greed. We could say that you can only go into business if you agree to make a certain percentage profit and nothing more. Everything over the cap could be paid as tax. However, this option is fraught with dangers. It is not uncommon for a company to lose money for several years in a row. If potential profits are capped it may take much longer to recover from the losses. There may be extended periods of low or no hiring during the recovery. Some companies will shy away from innovations that would endanger whatever profits they are allowed to make further damping hiring. Once a company is making all of the money that it is allowed to make it will be unlikely to hire new people as there will be no benefit from it. Many people might even decide that they don't want to start a business at all because of the extra risk created by the profit cap. Capping business profit would thus most likely cap both business growth and new hiring. This may be perfectly acceptable price to pay for removing the greediness of corporations, but we must ask ourselves if the risks are worth the rewards. Capping business growth may result in as much or more unemployment as off shoring. Also, capping profit still doesn't address the fact that business will be free to leave. Few businesses will stay around after the cap goes into effect.
Maybe we should recognize that the goal of business is to make money and try to use that goal to bring business back home. We could put high tariffs on imports. In this way companies might be artificially forced to move back to the U.S. in order to optimize their profits. What are the results of high tariffs likely to be? First, the price of every item that we import now will immediately go up. The items won't be any cheaper to make in their native land and someone will have to pay the tariffs. This will also mean that unemployment will increase among our trading partners around the world. This will mean that less money is available to buy U.S. exports. U.S. companies will have to fire workers. Second, most countries will immediately raise tariffs on goods from the U.S. This will quickly result in an additional drop in U.S. exports. Fewer exports will mean even more unemployment. One also must bare in mind that other countries are perfectly free to trade amongst themselves. The U.S. is not the only market on Earth and for many items it is not even the largest market. Companies that relocated manufacturing outside the U.S. are therefore not likely to relocate all of their foreign manufacturing back to the U.S. precisely because of the high tariffs that are likely to be placed on U.S. exports. The result will almost certainly be a world wide decline in the standard of living and the tariffs may destroy more U.S. jobs than they create. Furthermore, it is widely (though not universally) recognized among economists that tariffs do result in lower living standards and higher unemployment. See Henry Hazlet's "Economics in One Lesson," Chapter 11. Given all of this, are the risks of this course of action worth the potentially non-existent rewards?
Perhaps the solution is to recognize that companies are leaving for a reason. We should also recognize that the reason has to do with the fundamental goal of business to make money. Money cannot be made in the U.S. as easily today as it was in the past. We must re-examine the changes that we have made since the hay day of American economic might with an eye toward removing the ones that have made doing business here less profitable. Not all of the changes need to be eliminated. Some, such as clean air laws, may still be necessary. When it becomes possible for an American businessman to make a good profit staying in the country he grew up in you can bet that he will.
First, are corporations greedy? The answer is obviously that they are for the most part. After all, No one founds a corporation to lose money. In fact, the kind of people that start corporations are usually out to make as much money as they can. To stay in business they must achieve a number of goals. They must provide a product that people want. The price and quality of the product must be as good as or superior to those of its competitors. And, perhaps most important, they must be able to make money. Money is the life blood of any business and the business will not survive without it. Thus the desire to maximize profit is as fundamental to the nature of any business as self preservation is to the survival of any animal.
Are corporations unpatriotic? I think that the answer is that they are at least somewhat patriotic. After all, a company founded in a country is going to be composed of employees and stock holders that are mostly citizens of that country. They are therefore not likely to make decisions that they feel are likely to be a danger to their home or to their own jobs. However, patriotism is not necessary to a company for its survival. If a company cannot make a profit in one country it only has two choices, either move to another country or go out of business. Moving to another country is the only choice that allows the company to survive by fulfilling its fundamental purpose of making money. Likewise, if a company cannot compete with a foreign company that for whatever reason has advantages it may have no choice if it is to survive but to relocate to an area where it can pick up either the same advantages or others that are just as effective.
Given that corporations are greedy and at least somewhat unpatriotic, what are we to do? We can either accept them as they are or try to change them.
A powerful way to change them would be by changing their fundamental goal. We could put a cap on greed. We could say that you can only go into business if you agree to make a certain percentage profit and nothing more. Everything over the cap could be paid as tax. However, this option is fraught with dangers. It is not uncommon for a company to lose money for several years in a row. If potential profits are capped it may take much longer to recover from the losses. There may be extended periods of low or no hiring during the recovery. Some companies will shy away from innovations that would endanger whatever profits they are allowed to make further damping hiring. Once a company is making all of the money that it is allowed to make it will be unlikely to hire new people as there will be no benefit from it. Many people might even decide that they don't want to start a business at all because of the extra risk created by the profit cap. Capping business profit would thus most likely cap both business growth and new hiring. This may be perfectly acceptable price to pay for removing the greediness of corporations, but we must ask ourselves if the risks are worth the rewards. Capping business growth may result in as much or more unemployment as off shoring. Also, capping profit still doesn't address the fact that business will be free to leave. Few businesses will stay around after the cap goes into effect.
Maybe we should recognize that the goal of business is to make money and try to use that goal to bring business back home. We could put high tariffs on imports. In this way companies might be artificially forced to move back to the U.S. in order to optimize their profits. What are the results of high tariffs likely to be? First, the price of every item that we import now will immediately go up. The items won't be any cheaper to make in their native land and someone will have to pay the tariffs. This will also mean that unemployment will increase among our trading partners around the world. This will mean that less money is available to buy U.S. exports. U.S. companies will have to fire workers. Second, most countries will immediately raise tariffs on goods from the U.S. This will quickly result in an additional drop in U.S. exports. Fewer exports will mean even more unemployment. One also must bare in mind that other countries are perfectly free to trade amongst themselves. The U.S. is not the only market on Earth and for many items it is not even the largest market. Companies that relocated manufacturing outside the U.S. are therefore not likely to relocate all of their foreign manufacturing back to the U.S. precisely because of the high tariffs that are likely to be placed on U.S. exports. The result will almost certainly be a world wide decline in the standard of living and the tariffs may destroy more U.S. jobs than they create. Furthermore, it is widely (though not universally) recognized among economists that tariffs do result in lower living standards and higher unemployment. See Henry Hazlet's "Economics in One Lesson," Chapter 11. Given all of this, are the risks of this course of action worth the potentially non-existent rewards?
Perhaps the solution is to recognize that companies are leaving for a reason. We should also recognize that the reason has to do with the fundamental goal of business to make money. Money cannot be made in the U.S. as easily today as it was in the past. We must re-examine the changes that we have made since the hay day of American economic might with an eye toward removing the ones that have made doing business here less profitable. Not all of the changes need to be eliminated. Some, such as clean air laws, may still be necessary. When it becomes possible for an American businessman to make a good profit staying in the country he grew up in you can bet that he will.
Wednesday, August 4, 2010
Stop Government Support for the Arts
I am going to open with an analogy that hopefully drive home an important point.
If you were to walk by a beggar leaning against a 10 story building with a sign that said "hungry, needs food" how would you address the problem?
In one approach, you would go into a store, buy him a meal, and bring it to him. Every last penny you spent went to feed that man. Nothing was wasted. The man did not take your $10 and go into the liquor store and buy wine, or down the corner for a rock of crack, or whatever drug he wanted. This approach is efficient and effective.
Another approach would be to publically sanction a criminal gang to go out and mug citizens of the city. Those gang members at gunpoint would rob people of their earnings, taking more from people with more, and taking less from people who had less, to avoid taking all that they had. In exchange for this service, the gang keeps some of the money then transfers the rest to a politician who makes some wonderful speech about how HE PERSONALLY is addressing the problem of hunger. The politician then gives a fraction of the money, say $10,000 to his staffer who pockets $1,000, and goes to the top of that 10 story building and shakes the money bag out. A stream of dollars falls down the long way to the ground, and our intended hungry man grabs a $10 dollar bill which he then beelines for the liquor store to buy as many bottles of cheap wine as he can. Our wonderfully unbiased TV crews and reporters from the Washington Post go in and do a human interest story about how greatly this man has prospered from the centralized hunger program instituted by the politician, and voters go pull the plug in November for him, sanctioning the entire process.
This second approach is corrupt, ineffective, and inefficient.
Yet the standard liberal argument against those who openly reject the second approach is that they are inhumane, uncaring, hateful people who wish the poor to die in hunger.
Lost is the relevant discussion about what is the most efficient and effective means of charity. The false choice between (hunger) and (federal anti hunger programs) is pandered off to the media, and many within the public swallow this notion whole that the only solution to this problem is the federal one.
As you centralize charity, you increase waste fraud and abuse.
This arts funding question by the government falls right in this same box. The false choice here is between (no funding and starving artists) and (wasteful, corrupt, and ineffective federal funding of the arts). Sorry, I am not buying it. If you think an artist does good work, you can personally go buy that artist's work and directly support them. This is the most effective way of supporting the arts, with zero waste. Those who do not like that artist are free to not support them.
But when you have federal programs to support the arts, you have people being robbed of their tax dollars against their will, to support artists they may hate, and money loss at each and every step of the way of the dollars going uphill to the distribution point, and downhill to the artist. You also have the corruption and political waste of redirecting those dollars to whatever purpose will most likely re-elect that politician.
I am so tired of a world in which some sob story is used to rationalize this theft of the fruits of my labor to be redistributed to things I oppose regardless of my say. Our constitution spells out and limits the power of our government to specific enumerated areas, and imposed centralized charity is not one of those areas.
As we see in the UK and Greece where this notion of centralized charity is taken to its logical extreme and those nations fail finacially. Can we not use this as a wake up call to examine the base premise of federalized charity?
If you were to walk by a beggar leaning against a 10 story building with a sign that said "hungry, needs food" how would you address the problem?
In one approach, you would go into a store, buy him a meal, and bring it to him. Every last penny you spent went to feed that man. Nothing was wasted. The man did not take your $10 and go into the liquor store and buy wine, or down the corner for a rock of crack, or whatever drug he wanted. This approach is efficient and effective.
Another approach would be to publically sanction a criminal gang to go out and mug citizens of the city. Those gang members at gunpoint would rob people of their earnings, taking more from people with more, and taking less from people who had less, to avoid taking all that they had. In exchange for this service, the gang keeps some of the money then transfers the rest to a politician who makes some wonderful speech about how HE PERSONALLY is addressing the problem of hunger. The politician then gives a fraction of the money, say $10,000 to his staffer who pockets $1,000, and goes to the top of that 10 story building and shakes the money bag out. A stream of dollars falls down the long way to the ground, and our intended hungry man grabs a $10 dollar bill which he then beelines for the liquor store to buy as many bottles of cheap wine as he can. Our wonderfully unbiased TV crews and reporters from the Washington Post go in and do a human interest story about how greatly this man has prospered from the centralized hunger program instituted by the politician, and voters go pull the plug in November for him, sanctioning the entire process.
This second approach is corrupt, ineffective, and inefficient.
Yet the standard liberal argument against those who openly reject the second approach is that they are inhumane, uncaring, hateful people who wish the poor to die in hunger.
Lost is the relevant discussion about what is the most efficient and effective means of charity. The false choice between (hunger) and (federal anti hunger programs) is pandered off to the media, and many within the public swallow this notion whole that the only solution to this problem is the federal one.
As you centralize charity, you increase waste fraud and abuse.
This arts funding question by the government falls right in this same box. The false choice here is between (no funding and starving artists) and (wasteful, corrupt, and ineffective federal funding of the arts). Sorry, I am not buying it. If you think an artist does good work, you can personally go buy that artist's work and directly support them. This is the most effective way of supporting the arts, with zero waste. Those who do not like that artist are free to not support them.
But when you have federal programs to support the arts, you have people being robbed of their tax dollars against their will, to support artists they may hate, and money loss at each and every step of the way of the dollars going uphill to the distribution point, and downhill to the artist. You also have the corruption and political waste of redirecting those dollars to whatever purpose will most likely re-elect that politician.
I am so tired of a world in which some sob story is used to rationalize this theft of the fruits of my labor to be redistributed to things I oppose regardless of my say. Our constitution spells out and limits the power of our government to specific enumerated areas, and imposed centralized charity is not one of those areas.
As we see in the UK and Greece where this notion of centralized charity is taken to its logical extreme and those nations fail finacially. Can we not use this as a wake up call to examine the base premise of federalized charity?
Friday, February 26, 2010
Shouldn't Laws be Easy to Understand?
I was watching some discussion of why congressman don't read the bills they vote on the other day. One thing that dumbfounded me was that they said that many of the bills they consider are written in legalese and thus are not only very boring but are very difficult for anyone to understand, apparently including themselves.
How are we to be expected to obey the law if we can't even understand it? Ignorance of the law is supposed to be no excuse. But if the lawmakers themselves don't know what the law means, how can we reasonably be expected to know? Are we supposed to just let them pass whatever they want then take their word for what it means? Apparently, the people who actually write the laws can slip anything they want in and no one will know the difference.
I'd like to see some prank additions. Maybe "It is here by resolved that Obama is a putz" could be added somewhere for example or maybe "It is hereby declared that all lawyers are studs and shall be called such from this day forth."
How are we to be expected to obey the law if we can't even understand it? Ignorance of the law is supposed to be no excuse. But if the lawmakers themselves don't know what the law means, how can we reasonably be expected to know? Are we supposed to just let them pass whatever they want then take their word for what it means? Apparently, the people who actually write the laws can slip anything they want in and no one will know the difference.
I'd like to see some prank additions. Maybe "It is here by resolved that Obama is a putz" could be added somewhere for example or maybe "It is hereby declared that all lawyers are studs and shall be called such from this day forth."
Sunday, January 31, 2010
Bipartisonship Sucks
Why are people always complaining about all the arguing that goes on in Washington? I thought that one of the purposes of our political system was to allow conflicting viewpoints to be expressed. When people are entitled to argue and seek compromises that suit them aren't we free? Aren't we slaves when everyone must agree with a single party line? Isn't it true that on occasion we cannot compromise with those who hold opposing views? A good way to get seriously injured is to compromise with someone who wants you dead.
Saturday, January 30, 2010
Why Do Politicians Always Want To Increase Taxes To Fix Problems?
It happens all the time. A perceived problem arises and we get a new tax to fix it. There are too many people smoking in America. So, let's tax tobacco. Drinking is an undesirable activity. So, let's tax alcohol. There's a problem with global warming. Let's tax energy. We don't like the way banks are doing business. Let's tax them too. I could go on, but an exhaustive list would take way too long.
Leaving aside the question of whether any individual one of these items is actually a problem or not and whether the governement has the Right to try to fix them. Are more taxes really the way to fix them all? If you listen to our governement it seems that taxes are the way to fix everything. Perhaps we are going about the fight against AIDS the wrong way. Maybe we should tax anyone who got AIDS while engaging in risky behavior. After all, with the large majority of the victims it was their risky behavior that got them the disease in the first place. The revenue could be used to help find a cure.
All these taxes do is make the government dependent on the sins of it's constituancy for revenue. Just think how much bigger the deficit would be if people really did quit. The governement would probably collapse. If an activity really is causing harm to society, then the right and honorable thing to do is make it illegal. He who makes money off morally wrong activities is nothing more than a pimp.
Leaving aside the question of whether any individual one of these items is actually a problem or not and whether the governement has the Right to try to fix them. Are more taxes really the way to fix them all? If you listen to our governement it seems that taxes are the way to fix everything. Perhaps we are going about the fight against AIDS the wrong way. Maybe we should tax anyone who got AIDS while engaging in risky behavior. After all, with the large majority of the victims it was their risky behavior that got them the disease in the first place. The revenue could be used to help find a cure.
All these taxes do is make the government dependent on the sins of it's constituancy for revenue. Just think how much bigger the deficit would be if people really did quit. The governement would probably collapse. If an activity really is causing harm to society, then the right and honorable thing to do is make it illegal. He who makes money off morally wrong activities is nothing more than a pimp.
Wednesday, December 2, 2009
Socialists are also Greedy
Socialists often try to demean the people that oppose them by saying anyone who is on the Right is greedy. They are so successful with this argument that everyone is familiar with the details. So, I won't rehash them here. They seem to feel that the only way anyone can be wealthy is by lieing, cheating and stealing and then using the money to bribe politicians. Socialists use this reasoning to justify using the power of government to take wealth from the people on the Right and redistribute it to those they feel need it more. The Left wins many converts to its side in this way from among those who benefit from this way of thinking. It is very hard to resist free money. Most just think of it as coming from the government and not any one individual. Those who do think of where the money is coming from think that it is coming from rich people who don't work for it in the first place. In some way that I don't understand, this is supposed to make it OK. After all, leaving aside the issue of whether the rich work for their money or not, the people who are taking the hand out certainly didn't work for it.
What these people don't realize is that the government doesn't just tax the rich to get the money. They also borrow hundreds of billions of dollars from other countries each year. Chief among them is China. The Chinese government, like most governments, gets its money from its people. Now, add to this the fact that there is no way in Hell that we are ever going to be able to pay the money back without devaluing our currency and you will see that the leftists of this country are also stealing from the much, much poorer people in foreign lands to buy the loyalty of the poor in this country. I contend that, as a direct result, the poor in this country are far better off than the poor in any other country on Earth. In fact, they are even better off than the middle class in many third world nations. We have poor people that are far fatter than even the wealthy in many foreign countries. I have seen them myself. How's that for Greed?
What these people don't realize is that the government doesn't just tax the rich to get the money. They also borrow hundreds of billions of dollars from other countries each year. Chief among them is China. The Chinese government, like most governments, gets its money from its people. Now, add to this the fact that there is no way in Hell that we are ever going to be able to pay the money back without devaluing our currency and you will see that the leftists of this country are also stealing from the much, much poorer people in foreign lands to buy the loyalty of the poor in this country. I contend that, as a direct result, the poor in this country are far better off than the poor in any other country on Earth. In fact, they are even better off than the middle class in many third world nations. We have poor people that are far fatter than even the wealthy in many foreign countries. I have seen them myself. How's that for Greed?
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