Hayek’s Revenge

The European ruling elites are struggling to hold the whole project together...

But the real problems emerge from the technocratic mind-set, from the arrogant gray men who believe they can engineer society, oblivious to history, language, culture, values and place. (NY Times - Brooks)

Nobody has all the answers. And no single person or body needs all the answers. That’s the fallacy: That government must be omnipotent and omniscient. It is neither, and vesting it with power and control as if it were is crazy.

The more concentrated power and decision-making becomes, the more information is needed to feed into the power center. Free markets make decisions and evolve solutions organically; static control centers cannot.

One Size Does Not Fit All

Also, as you make one-size-fits-all decisions for larger and larger groups of people, discontent can only grow among those you are trying to help.  We argue over everything because government has pushed everything in to the collective, making your rights negotiable and subject to snotty bickering.

For example, imagine a Friday night alone. You’re going to settle in for a night of movie watching and you decide to order pizza. Easy. Now imagine you’re snuggled in with your loved one. The decision on movie-night fare is now a shared one. Take it a step further and imagine a houseful of people. They cannot decide on the toppings, or even which takeout place to order from. Worse, some are on a gluten-free diet and want BBQ, while other clamor for Chinese food. The bigger the crowd, the harder it is to reach a decision.

So we are better off making our individual decisions for ourselves and allowing the spontaneous economy to bloom. It works. Don’t believe me? There are literally billions of people in this world who know nothing of growing crops or killing animals, yet they do not want for food.

People and nations can capitalize on specialization, making things that others want, while not worrying about making necessities they know they can buy from others.  And governments' involvement is limited to providing some infrastructure and mediating trade agreements.

How We Got Here

Every emergency has been used by the federal government as an opportunity to take another bite out of our liberties, with expediency as the excuse.  As Hayek predicted, "our freedom" has been "destroyed by piecemeal encroachments."

Hayek was a big proponent of governing from broad principles where possible rather than from narrow, specific laws.

"The argument for liberty, in the last resort, is indeed an argument for principles and against expediency in collective action..."

He foresaw the "fatal weakness" of government leaving free people alone with their liberties:  Uncertain outcomes and glaring inequalities would scare us off our freedoms and into the arms of big daddy government.  Liberty cannot compare to concrete promises and "definite gifts offered to particular individuals" in exchange for some "curtailment of freedom."

That is the fatal seduction.  Not treating freedom as the "supreme principle..."

"...would inevitably prove a fatal weakness and lead to its slow erosion." 

Meanwhile, here in America, where Obama ignored the rule of law and saved GM from a richly-deserved bankruptcy...

The Treasury Department yesterday revised its loss estimate for the Government Motors bailout from $14.33 billion to $23.6 billion, thanks to the company’s sinking stock price.

 Add in the special tax breaks, and...

This means that the total hit to taxpayers, who still own about a quarter of the company, could add up to $38.6 billion. (Reason)

Europe is playing a shell game, and they're running out of suckers.  Here in the US, we're rearranging the deck chairs on the Titanic.

The elites have stolen our freedoms in the name of expediency and progress, but their promises of equality and prosperity are just chaff in the wind.  They've led us to the brink of collapse.  As Peter, Paul and Mary used to sing, "When will they ever learn?  When will they ever learn?"

Or, to Paraphrase Ben Franklin, "Those who trade liberty for security end up with neither."

Quotes Taken from Hayek's "The Constitution of Liberty," pp 129-130.

Progressivism is Collapsing in on Itself, and it ain't Pretty

Why the irresponsible, angry and hateful rhetoric from the left? Because we are winning! 

Why is the poisonous progressive vituperation aimed primarily at the tea party? Because it is The Threat, the biggest gun in the pro-liberty arsenal, steadily pounding away at the walls of the statist citadels.

Gallup confirms that conservatives are consolidating gains, with an incredible 41% of Americans now self-identifying as conservative, and even greater number than the 36% who call themselves moderate. The ragged, saggy ranks of liberals continues to droop, now at 21%.

We're Killing The Beast

I still can’t believe it, but I think we are actually killing the progressive beast. It’s a long way from its final death throes, but we are slowly choking it, and it is now writhing violently, horned head, spiky tail and taloned limbs flailing mindlessly, lashing out at its tormenters. A wounded animal is dangerous. These are perilous times.

The Washington Examiner reports that as a result of the debt ceiling deal, real discretionary spending will decrease for the first time since the Korean War:

There are many reasons for conservatives to be unhappy with the increase in the debt ceiling, but they ought not overlook the very real possibility that it is a milestone in the recognition of the liberal welfare state's unsustainability. (Washington Examiner)

The editors go on to point out that entitlement programs are the real problem, and more and more Americans are waking up to the fact:

The American people understand that these welfare programs are unaffordable. According to Gallup, two out of three Americans believe Social Security and Medicare costs are either already creating a crisis for the federal government (34 percent) or will do so within 10 years (33 percent) (Washington Examiner)

Liberal Blogger Kevin Drum laments that progressive are losing, badly:

But no matter how many times we try to kid ourselves with one poll result or another, liberals just don't have that advantage.

The public is mostly in favor of raising taxes on the rich — though I suspect its support is pretty soft — but on the bigger issues they mostly aren't on our side. They think deficits are bad, they don't trust Keynesian economics, they don't want a higher IRS bill (who does, after all?), and they believe the federal government is spending too much on stuff they don't really understand.

Conservatives have just flat out won this debate in recent decades, and until that changes we're not going to be able to make much progress. (Kevin Drum – Mother Jones)

Liberal WaPo columnist Greg Sargent agrees, and provides as evidence this polling factoid about the agreed-upon cuts in the debt ceiling deal:

only 15 percent think the cuts go too far. (Greg Sargent-The Plumb Line)

He goes on to cite a fellow liberal blogger:

“We will only find success when a majority of Americans agrees with us that government is something worth fighting for,” wrote Jared Bernstein.

These smart and honest liberals have identified the crux of the progressives' problem:

A majority of Americans now agree that government is Not something worth fighting for, but rather something worth fighting Against. 

Keynesian welfare states worldwide are now exposed as wealth-sucking failures teetering on the brink of collapse. We’re not going to support more debt to pay for them. Instead we demand a move away from the dark clouds of soviet-style centrally-planned economies, and towards the light of personal liberty and free market capitalism. Here’s a crumb for the anti-war left: We’re done funding costly wars and global community organizing as well.

We Are Busted

“We are living through a tremendous bust. It isn’t simply a housing bust. It’s a fizzling of the great consumer bubble that was decades in the making.” (NY Times)

This is the new normal

Reenflating the bubble will only guarantee that we go through all this again. The massive use of credit created money out of thin air and pumped up an artificial economy that was sure to come crashing down. We were all irresponsible for spending money we didn’t have, and the bankers were irresponsible for keeping the liquor flowing even after the noisy debauch has swung wildly out of control.

Big banks win, everybody else loses

Follow the money. Everybody is selling something. International banking gets fat on sovereign debt, buying and selling it and making money on the exchange. International banks want governments to be in debt, but not dangerously so, which explains why they are for the US abolishing the debt ceiling, cheering on more government bailouts, and cautioning against austerity. They want to milk the cow, not slaughter it. Every new bailout of Greece or other irresponsible entities safeguards their investments and creates a new moneymaking opportunity for the bankers, at the expense of taxpayers.

What if everybody in the world just stood up and gave the banks a big FU? 

We are struggling to repay money that was never there in the first place. The banks did not literally give these broke nations money from their own personal stash, the banks created it out of thin air, with the help of central banks and their fictional funny money factories.

Of course, the markets shudder at such talk. Here’s the party line solution:

“What is required is a grand bargain on private, corporate and national debt, beginning with a general restructuring of debt. Short-term debt at extortionate interest rates needs to be converted into longer-term maturity with affordable interest payments. Default doesn't pay, as it causes losses to already under-capitalised banks and shuts governments out of international money markets. It also exacerbates the falling value of assets on which investment and consumption depend.” (The National)

No. Debt restructuring safeguards the rent streams for the banks by a long-term bleeding of the borrower, extracting even more interest over a longer period of time.

What’s required is a big reset where the entire world tells the banks to go screw themselves, we’re zeroing the accounts and starting over. Would international banking collapse? Probably, but a new system would emerge from the ashes. As for the threat that banks would never again loan to government, puhleeez! Does any sane person really think international finance houses would forgo the billions in annual interest payments?

I know I sound like I’m defending big government, but I’m not. I’m defending the ordinary folks who must bear these government-incurred burdens. It is we the people who ultimately must pay these grossly irresponsible debts, since government has no money of its own.

The Ravenous Beast Will Demand More Taxes Until We're Bled Dry

Even when this debt ceiling "crisis" is over, we're still in crisis. Spending will continue to be a blazing rocket, driving us all further in debt.

Scattered estimates of how much revenue the federal government "loses" allowing money to frivolously remain in the pockets of those that earned it are insufficient.

Even then, why be satisfied with mere hundreds of billions when the President is calling for bold action? Bring out the big guns and calculate the cost of not adopting the greatest tax ever invented, the Value Added Tax (VAT)! Wise Eurocrats know that the goose can be plucked naked with nary a squawk by slathering a tax on every stage of a product's life. VAT-less Washington is annually "losing" trillions!

And while we're thinking big enough to cover a fourteen trillion dollar hole, why limit calculations of "lost" tax revenue to income and transaction taxes? How much revenue is the government "losing" by not collecting a wealth tax? (Bill Frezza)

Those are just a few snippets of Bill Frezza's excellent article.  Go read the whole thing and you'll find yourself nodding your head in violent agreement.  His conclusion is brilliant, explaining what really scares the socialists of all parties in the District of Criminals:

If the chaos in Washington continues people might desperately return to the outmoded belief that our country functions best when we all think for ourselves, have the liberty to dispense our own money, and enjoy the freedom to pursue our own happiness. And we know what happened last time that radical idea caught on.

At some point we’ve got to stand up and declare that government is not worth more than 18 cents out of every dollar we earn.

The King's Speech

No, not the Hollywood movie, I'm talking about our philosopher king, Barack Obama.  Although his Alinskyite Marx-channeling did make me want to scream the F-word more than once.

His central theme? 

"From each according to their ability, to each according to their need"

Like almost everything out of this man's mouth, his speech was pure excreta.  He took bricks of leftist dogma, mortared them together with BS, and built a house of lies.

President Obama has racked up more publicly-held debt that all previous presidents combined, and he has the temerity to lecture us about fiscal responsibility, shaking his finger at Bush and Reagan.

Progressive America:  Brought to You by Lies & Propaganda
Obama repeated the lie that tax cuts increased the national debt.  As always, he is wrong.  Every time we cut taxes, the economy grew and actual taxes collected by the federal government increased.  Revenue is defined as the money the federal government takes in from taxes.

To refute the shameless lefty lies told to us by our president, here are the facts on taxes, revenues and economic growth

Tax Cuts Resulted in More Revenue
Contrary to the unhinged liberal propaganda, the data show that revenue did increase after the Reagan tax cuts and the Bush II tax cuts. The chart below is for the Reagan years and it shows the growth in constant 2005 dollars.  The same happened after the Bush tax cuts.   You can go here and run the numbers yourself.

The data plainly show that revenue increased after each tax cut, and GDP also kept climbing. So clearly, the culprit in all of this is the spending.

So Reagan and Bush tax cuts resulted in more tax money pouring into the government coffers.   Unfortunately, this goaded politicians on to even wilder spending orgies, resulting in the growth of the national debt.

The Liberal Lie
This is where the mischief comes in.  Liberals scream and point to the debt chart, ignoring the first chart showing the increase in revenue.  To them, this "proves" that tax cuts cause debt.  They have to leave out the fact that revenue increased and the economy grew in order to "prove" their lie.  That tax cuts caused the debt is patently and provably false.  Too much spending is what exploded the debt.

I defended John Boehner a few days ago, and I retract not one word.  I think he's a good man.  However, I now stand with the torches and pitchfork brigade. We need to cut trillions, not billions from the federal budget and the money needs to be returned to the people who earned it.  If the progressives insist on buying votes, they can do it with their own damned money.

Cool picture yoinked from IntelBook

Hundreds of Ways to Screw the Taxpayer

Our federal government is a clanking, soulless monster completely out of control. Good people like Senator Tom Coburn are looking to tame the beast.

Duplication of effort alone accounts for hundreds of billions in waste annually, according to the WSJ article, Billions in Bloat Uncovered in Beltway.

"The U.S. government has 15 different agencies overseeing food-safety laws, more than 20 separate programs to help the homeless and 80 programs for economic development."

OK, I can see food safety laws. I could even perhaps understand the government fostering economic development...  If I saw any evidence anyone in the federal government understood basic economics!  Given the current state of things, I’d say letting the federal government do “economic development” is kinda like allowing Freddie Kruger to perform heart surgery. The Homeless? The federal government has no mandate whatsoever to address that. It’s not in the constitution. Defund it.

The report says there are 18 federal programs that spent a combined $62.5 billion in 2008 on food and nutrition assistance, but little is known about the effectiveness of 11 of these programs because they haven't been well studied.

There is also nothing in the US Constitution that authorizes the federal government to take money from taxpayers and use it to hand out food to people. This is a function more rightly done at the local level, and better and more efficiently done by private charities. What does a DC apparatchik know about poverty in Denver or Detroit? Do they even care about the people they hand this stuff out to? Do they care if bums and welfare cheats are receiving benefits?

This is why faceless, mechanistic charity does not work, and in fact is not charity. There is no connection and no feedback loop.  The givers become callous cogs in a self-serving machine, turning the the entitled recipients into faceless, thankless wards of the state.


Here's More Wasteful Duplication...

"The agency found 82 federal programs to improve teacher quality…"

That clearly has failed—End it!

"80 to help disadvantaged people with transportation…"

Could you imagine President Washington and Congressman Adams handing out horses to those who have none?

"47 for job training and employment…"

That’s what schools and community colleges are for

"… and 56 to help people understand finances"

Government obviously does not understand finances. How in the hell does it expect others to do so? This is madness!

Many of my blogger buddies are probably tired of my Air Force budget cut stories from the Clinton 90’s, but they are apropos. He slashed the DoD budget, and to be fair to him, Bush the Elder started it. DoD ended up being the only department that took real, no kidding cuts, as opposed to others who just had their rate of increase slashed. Bottom line: It forced us to get rid of the dead wood and drop inefficient practices. We came out a leaner, meaner fighting force in the end.

Every corner of federal, state and municipal budgets should be slashed so they can experience the same beneficial process.

The Next Bubble

Detroit:  The city liberalism destroyed

Are Cities and States Too Big to Fail?  We're about to find out

The socialists of all parties in the federal government created the housing bubble and the ensuing, inevitable crash, by encouraging lenders to abandon prudent, time testing lending practices. Low interest rates ushered in an era of easy money, and Freddie and Fannie backed everything mortgage companies could shovel their way, regardless of the stench.

Wall Street gambled and the taxpayer lost
Dirty Hank and his gang of pirates blew a hole in the side of the US Treasury and made it all good. Wall Street is back to record profits and bonuses, while working people despair of ever again finding a job, and the big banks are still too big to fail. 

Muni-Bombs
Blissfully ignorant and unencumbered by any capacity to learn from experience, the federal government has turned on the money spigot to our fiscally incontinent states and cities. It’s stimulus, dontcha know. See how stimulated everybody is and how the job market is booming?

Since 2000 the total outstanding state and municipal bond debt, adjusted for inflation, has soared from $1.5 trillion to $2.8 trillion (see chart). The recession didn’t slow the spending. (Reason)

So the drunks are teetering on the brink of the train platform with a high speed locomotive bearing down, and good ol' Uncle Sam hands them another bottle of hooch...

The Build America Bonds program, part of the American Recovery and Reinvestment Act of 2009, was aimed at subsidizing bonds for infrastructure projects. Under this program, the Treasury Department pays 35 percent of bond interest to the issuing government. 

If a state or local government issued a bond at a high rate to make it appealing to investors—10 percent, say—the Treasury would make a 3.5 percent direct payment to the issuer. [...] It’s no surprise that, starting in 2008, states and cities increased their debt dramatically, while investors enabled this overspending. (Reason)

Our federal government encouraged irresponsible state and local government to be even more irresponsible by backing their bonds and even paying part of the interest collected by investors.  All funded by We The Taxpayer, and money borrowed from China.

This wouldn't be so bad if cities were using this federal largess to pay down debt and put themselves on sound fiscal footing, but they are doing just the opposite.  In his informative article, State Budget Bunk, Steven Malanga catalogs the cheap tricks that are putting cities and states deeper in hock.

Write your elected officials and preemptively tell them "NO" to any state or city bailouts.  Tell them these failed states and cities must file for bankruptcy like other financially irresponsible people are forced to do.
 
Further Reading:

Muni bond Prices Drop

State Budget Bunk

Progressives of All Parties are Destroying America

The progressives of all parties who hijacked the federal bureaucracy have just about destroyed us. Sure, they started with good intentions, but we’re now morally, intellectually and financially bankrupt.

WASHINGTON—The federal budget deficit will reach a record of nearly $1.5 trillion in 2011 due to the weak economy, higher spending and fresh tax cuts, congressional budget analysts said, in a stark warning that will drive the growing battle over government spending and taxation.

As a percentage of the nation's economic output, the 9.8% deficit would be the second-largest since World War II, behind only the 10% level in 2009.

"This report is a reflection of the gross mismanagement of our nation's finances," said Rep. Tom Price (R., Ga.). "It should make every American think twice about the latest calls by the president to increase spending at a time when Washington can clearly not afford to pay its bills." . (WSJ – Deficit)

We’ve spent ourselves to the brink of bankruptcy, but most sickening of all is that we have nothing to show for it.

Social Security is going broke…

New congressional projections show Social Security running deficits every year until its trust funds are eventually drained in about 2037.

This year alone, Social Security is projected to collect $45 billion less in payroll taxes than it pays out in retirement, disability and survivor benefits, the nonpartisan Congressional Budget Office said Wednesday. (El Lay Times)

Obamacare will not save any money, and no, you can’t keep your coverage…

WASHINGTON (AP) — Two of the central promises of President Barack Obama's health care overhaul law are unlikely to be fulfilled, Medicare's independent economic expert told Congress on Wednesday.

The landmark legislation probably won't hold costs down, and it won't let everybody keep their current health insurance if they like it, Chief Actuary Richard Foster told the House Budget Committee. (AP – Medicare Official Doubts)

Meanwhile, HHS is handing out Obamacare waivers, 733 and counting …

Over at HUD, they’re having a party with our money and creating failure, which justifies requests for even more taxpayer funds…

Even by Washington standards, $26 billion is a lot of money.

That’s the amount spent by taxpayers annually to provide housing for needy Americans. But there’s significant evidence that some of the monies have been poorly spent for years.

A joint investigation by ABC News and the Center for Public Integrity found that the Department of Housing and Urban Development has struggled to combat theft, corruption, and mismanagement in the more than 3,000 public housing agencies nationwide it funds, and particularly inside the172 that HUD considers the most troubled. (Public Housing – Private Frustration)

Now who want to stand up and deny that the progressive house of cards is collapsing?

Good Reads for a Saturday

I'm working overtime when I should be up in the mountains skiing or out on the plains hunting. Can't complain, beats the heck out of being unemployed...

Here are some good reads for a Saturday:

Victor Davis Hanson really slams sheriff Dupnik, asking why he blames everyone but himself, since evidence now shows his office had various run-ins with the killer but apparently had a standing catch and release policy.

More disturbing still, if Dupnik were right that a pre-existing conservative climate of hate-engendered politics was not only pervasive in Tucson, but also might prompt an unstable person to kill, why had he not dispatched at least one of his 500 officers to patrol the open-air public event sponsored by Congresswoman Gabrielle Giffords?

Hard to argue with that logic. Here’s more…

Dupnik is a good example of an increasingly common bad habit of local politicians to resort to cosmic sermonizing when more mundane challenges go unaddressed.

New York City Mayor Michael Bloomberg was a past master of lecturing about the cosmic while sometimes ignoring the more concrete. Governing the boroughs of an often-chaotic New York City is nearly impossible. Pontificating on the evils of smoking, fatty foods and supposed anti-Muslim bigotry was not only far easier but had established the mayor as a national figure of sensitivity and caring, praised for his progressive declarations by supporters of everything from global warming to abortion.

But Bloomberg's carefully constructed philosopher's image was finally shattered by the December 2010 blizzard and his own asleep-at-the-wheel reaction. An incompetent municipal response to record snowfalls barricaded millions in their borough houses and apartments, amid lurid rumors of deliberate union-sponsored slowdowns by Bloomberg's city crews. (VDH - Global Sermonizing)

Hanson moves on to California in much the same vein. Elected officials should stop “cosmic sermonizing,” shut up and do what the taxpayers are paying them to do.

John Hood has written piece in National Affairs entitled, The States in Crisis, in which he presents the cold hard facts, complete with charts. It is the best presentation I’ve seen so far that explains what’s going on with state budgets.

He starts off with the scary tidbit that state government employed various budget tricks back in the good times, and the recession has now hastened the calamitous reckoning that inevitably follows such chicanery.

Could bankruptcy be in some states' futures?  Sounds scary, but not nearly as scary as them picking our pockets and carrying on as if nothing needs to change.