Category Archives: Currency and Monetary Policy

More Than One Class of Parasite

The welfare state is a problem in America, there’s no question about it. When you have a country were nearly 49 million people are dependent on food stamps as of this writing, that is a problem. We libertarians as well as conservatives lament the growing welfare state because of what it is doing to the economic health of this country and the negative incentives (i.e. the moral hazard) to discourage people from working when it’s easier to get a check from the government. That being said, I think we libertarians could do a better job with the messaging on this particular issue.

Today’s episode of the Neal Boortz show is a perfect example of what I’m referring to. Boortz’s personality is that of a curmudgeon. Over the years he has referred to himself as the “High Priest of the Church of the Painful Truth.” I usually enjoy his blunt, non-P.C. style but sometimes I think he goes a little overboard when he calls people who are on one type of welfare or another “parasites” regardless of their individual circumstances. I missed the first part of his show (which is normal) but I tuned in about the time a caller who said the only government assistance he was receiving was food stamps called in. He went on to explain that he worked 3 minimum wage jobs at about 120 hours a week to support his 5 kids (I think that was the right number). After explaining his circumstances, he asked Boortz: “Do you think that I am a parasite?” Boortz responded “yes.” Boortz went on to criticize the man for having children he couldn’t afford to support and told him that perhaps since he still couldn’t support his children on his three jobs that perhaps he should give them up.

Taking the caller’s word at face value that he works 120 hours a week, I have to disagree somewhat on Boortz’s characterization that the man is a parasite. I also think that telling someone who really is trying to support his children but still coming up short and supplementing his income with food stamps to give up his kids is an unreasonable suggestion. How much would it cost taxpayers if every person who struggled with supporting their children put their children in the foster care system or an orphanage? We hear all the time from conservatives – especially social conservatives* that the ideal situation for raising children is a household with a mother and a father. I have heard some social conservatives say that the reason the state shouldn’t recognize gay marriage or civil unions is that the purpose of marriage is procreation. They also argue for the child tax credit and favorable tax treatment for married couples to encourage more people to have families**.

I don’t know to what extent Boortz agrees with these notions as he doesn’t seem to talk about these issues much. I do think there is something to say about children growing up in a stable environment, however. I haven’t done much research at all about the foster care system but from what I understand, it’s far from ideal. How many children in the foster care system find themselves in the criminal justice system whether on probation or incarceration versus those who are raised by at least one loving biological parent? I don’t happen to know the answer but I suspect that there are more of the former than the latter. Again I ask, how much would this man giving up his children possibly cost the taxpayers? I suspect it would be more than whatever he is getting in food stamps.

To some degree***, this man is a parasite but certainly not to the extent some people I have met are. There are the single dads who have too many children to too many baby mamas who don’t take responsibility for their children and have no shame about going on the dole. There are also far too many single moms out there who have made some very bad choices who basically marry the government. If anything, the caller is probably receiving less government support because he is working so many hours. Slacking is rewarded while trying to better oneself is punished – this in of itself is a major part of the problem, I think.

While I agree with Boortz in principle that one man’s need does not mean he has a claim on another’s money, there are more classes of parasites I think are even more offensive than poor people on welfare. I am much more offended by the corporate welfare and the welfare for the rich. I’m not talking about tax cuts or anything like that but subsidies. I’m talking about billionaire sports franchise owners who have their stadiums built by taxpayer dollars so they can pay millions more to their millionaire athletes. I’m talking about TARP, the auto bailouts, QE 1, QE2, QE 3 and other policies the Federal Reserve has used to make our dollars worth less and less every day. I’m talking about corporate lobbyists who write regulations in their favor to make it difficult for competitors to enter the market place. I’m talking about lawyers.

Yes there are more than one class of parasite bringing our economy down. When it comes to going after those who are using taxpayer money for their benefit, I think it’s high time we libertarians say women and children last.

Point of Clarification: It wasn’t fair to lump all lawyers together as parasites. Lawyers are necessary in our system to take out some of the parasites I mentioned above (the white blood cells, if you will). Like any profession, there are bad apples. When I think of parasitic lawyers, I think of the likes of John Edwards and the ambulance chasers on late night TV. There are plenty of heroic lawyers who truly fight for liberty and justice such as those at the Institute for Justice and The Innocence Project. I’m sure we can count fellow Liberty Papers contributor Doug Mataconis among them as well (though I know nothing about his work as an attorney, he’s a good person and I’m sure that’s reflected in his profession as well).

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Your Incredibly Stupid Progressive Economic Propaganda for the Day

There is so much economic ignorance/stupidity in this video (below), I wouldn’t even know where to begin. John Maynard Keynes himself would probably be embarrassed by this video courtesy of the California* Federation of Teachers and narrated by the great economist of our time Ed Asner.

I don’t have much else to say about this video right now, it’s too easy (though feel free to rip it apart here…or defend it). Actually, I am in the planning stages of writing a book that challenges this sort of mentality (I’m shooting for a release date about May 2013). I’m hoping Liberty Papers readers will buy it; I will have discounts for Liberty Papers readers.

And now for your, um…enjoyment[?]: Tax the Rich: An animated fairy tale**

WARNING: This is 7 minutes and 50 seconds of your life you will never get back.

*Oh yes, the state of California which is being run by people with this kind of mentality! Yeah, their economic policies have been working great, haven’t they?

**Fairy tale is actually a very good description.

Atlas Shrugged Part II in Theaters This Weekend

Atlas Shrugged Part II is opening this weekend. Want to check it out? Follow this link to find a theater near you.

And now, the official Atlas Shrugged Part II trailer:

Ron Paul Will Never Be President But He HAS Made a Difference

Those who support the establishment of the Republican Party tend to be irritated that Ron Paul’s supporters kept trying to put his name up for nomination against Mitt Romney at the convention in Tampa even though Paul had no realistic chance of winning. Even very early in the campaign, establishment whores such as Hugh Hewitt were arguing that Ron Paul along with Herman Cain and Gary Johnson should be “exiled” from the debates because they didn’t have “a prayer of winning” the nomination. But are political campaigns, especially presidential campaigns, only about winning the nomination and ultimately, the presidency?

As someone who supported Ron Paul in the primary, I believed his winning the nomination would be the greatest upset in political history to say nothing about becoming the next president. When Terry Moran asked Paul the question: “When you lay your head on your pillow at night, do you see yourself in the Oval Office?” Paul replied “not really.” This is not a typical response of someone who is making a serious run for president.

This isn’t to say in any way that Ron Paul was not making a serious run for president, I think he was. Paul made three unsuccessful runs for the presidency but has succeeded in changing the political conversation. He advanced the ball in ways that he otherwise would not have had he not made these runs for the White House.

The most obvious example of how Paul has changed the political debate would be his call for a full audit of the Federal Reserve. As recently as 2006, the following was written about the Federal Reserve in a book by Richard Brookhiser entitled What Would the Founders Do (Our Questions, Their Answers)*

Everyone likes the Federal Reserve System these days, partly because it seems to work so well. (Not one person in a thousand ever thinks of it, a rough definition of working well.) But suspicion of public banks could revive at any time, for the same reasons that many of the founders were suspicious of them — most people (the founders included) do not understand banks or banking, and some bankers are in fact crooks. (p.92)

Back when this paragraph was written, I don’t think the Federal Reserve was even on my radar and I don’t think I was alone. Maybe the Fed isn’t the top issue for the average voter even now but I do think it’s safe to say more people are skeptical of the Fed especially in the era of bailouts and quantitative easing (i.e. printing money out of thin air). The mere mention of Ben Bernake or the Fed, especially at Ron Paul or liberty oriented rallies bring about boos and chants of “End the Fed!” “End the Fed!” This in of itself isn’t that big of a deal; these are true believers. What is a big deal, however; is that language to audit the Fed has made its way into the 2012 Republican Party Platform. Even more importantly, Paul’s Audit the Fed bill passed the House by an overwhelming 327-98 vote margin. Every single Republican but one supported the legislation along with 89 Democrats.

The bill wasn’t brought to a vote in the Senate but pressure will mount on Harry Reid if the Democrats maintain control to schedule a vote. If the Republicans take the Senate, a vote is even more likely to happen and Audit the Fed would be more likely to pass. If it gets to the president’s desk, the president – be it Obama or Romney will sign the bill, I believe.

A bipartisan bill authored by Ron Paul – who would have thought?

Ron Paul, one man who prior to the 2008 campaign wasn’t a household name, has changed the conversation within the G.O.P. concerning the Fed, spending, constitutional government, taxation, and civil liberties. Though his delegates were mistreated in Tampa, the RNC saw fit to at least try to mollify them with this tribute to the congressman’s career.

Missing from the tribute video was Paul’s anti-war/anti-interventionist views that he has espoused throughout his political career. Paul challenged people to do their own research concerning American foreign policy, particularly in the Middle East. He openly challenged the notion that policing the world trying to “make the world safe for democracy” and nation building was in America’s national security interest. Though the Neocons and war hawks are still firmly in control of the G.O.P., more voices in the party are challenging the prevailing view and cautioning Americans about blowback – a term invented by the C.I.A. but popularized by the Texas congressman.

Most important of all, Ron Paul is leaving a legacy behind him as he retires from congress. What will become of the rEVOLution in his absence? A small but growing number of individuals are being elected to the House and the Senate who share many of Paul’s small government/pro-liberty views. Ron Paul’s son Sen. Rand Paul along with Sen. Mike Lee, Sen. Mark Kirk, Rep. Justin Amash among others will lead the movement into the future. If the Paul activists continue to fight the establishment from inside** the G.O.P., there is at least a chance that the party will actually live up to its more small government ideals it purports to stand for.

*Basic Books, New York.

**While I understand why some Paul supporters might be tempted to leave the party due to how they have been treated by the party establishment, I would advise against this. The G.O.P. is ripe for a hostile takeover BUT the establishment isn’t going to give up control so easy. If you drop out, you are allowing them to win; this is precisely what they want you to do. Don’t give them the satisfaction. Focus on the Senate, House, and races at the state and local levels and vote your conscience for president (the wonderful thing about voting is that you don’t have to tell anyone who you voted for). After this election, regroup and continue to fight for liberty.

Walking Dead Economics

My wife and kids got me hooked on a series some of you may have heard of called The Walking Dead (and like the rest of the Walking Dead fans out there, I have to wait until October for the next season to begin as the characters have been left in quite a precarious situation) For those who haven’t heard of this series, basically Atlanta, GA (and as far as we know, the rest of the world) has been taken over by zombies (called “walkers” by most people who inhabit this world). While the series does have many of the elements of the zombie genre, the story and the characters in the story are quite a bit more complex.The story isn’t so much about the walkers as it is about the characters who not only have to survive this zombie apocalypse, but also manage to survive the other survivors and live with very limited resources.

One thing that becomes very clear at the beginning of this series is that many of the societal rules quickly go out the window when under constant threat of flesh eating walkers. Paper money is of no practical use (other than to start a fire perhaps). Debit cards and credit cards are even less valuable as there is no way to access your worthless money.

One other thing I noticed is that gold isn’t even a commodity that is of much use in this world.

It so happens that I have been reading Dave Ramsey’s book The Total Money Makeover as my wife and I are trying to apply his system to get our financial house in order (I highly recommend this book to anyone who wants to get out of debt). In the book I ran across the following passage in which Ramsey explains why he does not believe gold is a good investment, even as a hedge against a total economic collapse:

It is important to remember that gold is not used when economies fail. History shows that when an economy completely collapses, the first thing that appears is a black-market barter system in which people trade items for other items or services. In a primitive culture, items of utility often become the medium of exchange, and the same is temporarily true in a failed economy. A skill, a pair of blue jeans, or a tank of gas becomes very valuable, but not gold coins or nuggets. Usually a new government rises from the ashes, and new paper money or coinage is established. Gold will, at best, play a minor role, and the gold investor will be left with the sick feeling that real estate, canned soup, or knowledge would have been a better hedge against a failing economy. – The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey (Thomas Nelson, 2003, 2007) p. 55.

I don’t know that I fully agree with Ramsey here though I’m by no means an expert on the history of gold or monetary policy. It seems to me that as a new civilization emerges from economic collapse, gold (and other commodities) would play a much greater role before people would accept any new fiat money. He seems to have a legitimate point, however; with regard to a collapsing or fully collapsed economy.

This is certainly the case in The Walking Dead. The resources most necessary to survive in this world are water, food, shelter, firearms, ammunition, medicine, fuel, spare parts, etc. Without these items, you aren’t going to survive for very long. Under these circumstances, who would trade a shotgun and ammunition for a bar of gold? I sure wouldn’t. I might trade a shotgun, assuming I already have enough firearms to hold the flesh eaters at bay, for some food and water. Better yet, I might offer to provide security for a few nights in exchange for food, water, and a temporary place to stay. This arrangement would continue as long as both parties agree.

In the course of the series, these are the kinds of arrangements that are worked out. Security is a major concern because, despite apparent efforts by the federal government to impose martial law, the government failed* and the law of the jungle is now in full effect. Many resources such as firearms, water, auto parts, food, fuel, etc. are scavenged from those who were either killed or simply abandoned their property (finders’ keepers).

Earlier in this season, the main characters find themselves at a dead end on the interstate as thousands of abandoned cars litter the road. Though on one hand this is very bad news, on the other, it’s an opportunity to scavenge whatever resources were left behind. At another point, a couple of the survivors make their way into an abandoned small town where they hit the jackpot in finding an abandoned pharmacy with a decent supply of prescription drugs. At the very end of this last season, the camera pans out to a prison near where the remaining surviving characters are camped out. What, if anything, can these refugees benefit from the prison? (I’m very interested to see where the story goes from here with the prison).

“What about silver bullets, do they have any value?” you ask. Silver bullets are needed to kill ware wolves, not walkers. Ware wolves? Seriously, ware wolves? Now that would be ridiculous.

*Or did it? Perhaps all the “important” people have been relocated to a secret and secure location while the citizens are left to fend for themselves.

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