Category Archives: The State

The Real Porker Programs (Yes To A State Shut-Down)

Debt, Democrats, Economy, Healthcare, John McCain, Military, Republicans, The State, Welfare

If the Republicans’ ideas on budget slashing is anything like McMoron’s, then, the months ahead will be filled with threats to cut National Public Radio loose, and to do away with earmarks—minuscule amounts which don’t cover a day’s interest payment on the national debt.

Even the Harvard Political Review, which now departs from the King of Keynesians, Paul Krugman, knows as much. The editors of the HPR-produced “Annual Report of the USA” include a Democrat and a Republican. The one writes:

“Despite public criticism of ‘pork barrel’ spending and foreign aid, these items constitute a minuscule portion of the federal budget. Instead, the area of greatest concern is spending on the major entitlements: Social Security, Medicare, and Medicaid. Spending on these programs is expected to skyrocket in the coming decades due to an aging population and the increasing cost of medical care. The long-term Social Security solvency problem can be avoided if Congress can muster the political will, but there is no obvious solution as to how to limit the growth of public health care spending. One of the major goals of the recent health care reform legislation was to reduce health spending over the long term, but achieving this will require a discerning and disciplined Congress in the years to come.”

“While the military budget is not growing nearly as rapidly as spending on entitlements, it represents nearly a fifth of total federal spending and is a perennial target of deficit hawks. While there is some waste in defense spending that could be eliminated without much consequence, more fundamental cuts will entail a sacrifice of military capabilities.”

[SNIP]

The deceptive issue of earmarks was raised by Rep. Eric Cantor, of Virginia. From Chris Wallace’s interview with Cantor, the “Presumptive House majority leader,” it transpires, moreover, that Republicans intend to demand “sizable” spending cuts (presumably other than earmarks or NPR) from Obama in return for agreeing to raise the debt-ceiling.

The debt ceiling should not be raised. Better that the government be forced into default. In that case, a government shut-down, as in 1995, would be most welcome.

To his credit, Cantor did not rule out such eventualities. Should they occur, he contended, Obama would be the one to blame for the fiscal crisis that brought about a default on the debt and a subsequent government shut-down.

If government shuts-down for long enough, we may find ourselves thanking Obama for delivering us from evil, indirectly, at least.

Obama's "Spendership" (Vs. British Stewardship?)

Barack Obama, Britain, Bush, Debt, The State

“Obama spending stimulates the national debt by $3,039,000,000,000,” blares Andrew Malcolm’s headline in the Los Angeles Times.

The information comes courtesy of “Mark Knoller of CBS News, who is the White House press corps’ chief cruncher of all things numbers.”

“national debt has increased by $3,039,000,000,000, as in, that much more than it was when he took the oath on Jan. 20, 2009, in front of millions of excited witnesses and Aretha Franklin’s huge hat.

“Obama prefers to lay the blame or credit for this gargantuan spending increase at the cowboy-booted feet of his Lone Star Republican predecessor,” writes Malcolm. “During George W. Bush’s Oval Office tenure, the national debt increased more — by $4.9 trillion, in fact.”

“However, Bush took 96 months to do that.”

“Obama has accomplished his spending feat in less than 21 months. Under his spendership the national debt has grown about $4.8 billion every day since he took the oath of office twice, just to be safe.”

[SNIP]

The problem is that no one who follows him will be able to reverse this. How do you turn this around? You can’t, given that the interest alone on such stratospheric debt is insurmountable. There is no returning America to a place of financial safety.

Putting up a pretense means, at the very least, doing what David Cameron is attempting in the UK.

Incidentally, can you imagine how apoplectic National Review (with the exception of the two non-neocons on staff) would become if BHO “announced plans to cut its military personnel by 10 percent, scrap 40 percent of the army’s artillery and tanks, withdraw all of its troops from Germany within 10 years, and cut 25,000 civilian jobs in its Defense Ministry”?

UPDATE (Oct. 20): British Stewardship? To listen to Daniel Hannan—English politician, commentator on all things American—the US is not as deep in trouble as the UK. Understandably, a rabid rah-rah for America comes with being a Fox News expert.

Yes we have fabulous founding documents and principles, but these have been flouted for at least a century. According to the facts mentioned in “Statism Starts With YOU!”, most Americans adore “Social Security, Medicare and Medicaid — which combined, account for close to half of the federal government’s budget.” And “only 7 percent of the country will consider slashing the first two welfare programs; a mere eleven percent of those living in the ‘Land of the Free’ are prepared to pare down Medicaid.” (One Tea Party slogan read: “Keep the government out of my Medicare!”)

I cannot comment with any degree of authority whether there are differences in attitudes to entitlements between us and our cousins across the pond.

One thing is indisputable: Unlike in the UK, successive American governments—and the governing class—have been unique in working against the economic interests of their countrymen and their country. (Treason?)

BBC News: “Chancellor George Osborne has unveiled the biggest UK spending cuts for decades, with welfare, councils and police budgets all hit.”

A “19% average cuts to departmental budgets,” as well cutting “higher education spending by 40%, flood defences by 15% and sport England and UK Sport by 30%”—this is better than increasing spending as we are. Of course, price controls, such as on rail fares, are being tinkered with, namely “allowed to increase by 3% above RPI inflation from 2012.”

No doubt, certain cuts are an illusion, to be replaced by other, slightly modified programs. But again: better to fire 500,000 state workers than to hire 1.4 million census stalkers.

UPDATED: Economic Indices Ignore ‘Century of the State’

Economy, Free Markets, Individual Rights, Liberty, The State, The West

Australia, New Zealand, Ireland, Canada and Chile have leapfrogged over the United States on the Fraser Institute’s index of economic freedom.

“In this year’s index, Hong Kong retains the highest rating for economic freedom, 9.05 out of 10. The other top 10 nations are: Singapore (8.70), New Zealand (8.27), Switzerland (8.08), Chile (8.03), United
States (7.96), Canada (7.95), Australia (7.90), Mauritius (7.82), and the United Kingdom (7.81).”

Forty-two data points are used to construct a summary index and to measure the degree of economic freedom in five broad areas:
1 Size of Government: Expenditures, Taxes, and Enterprises;
2 Legal Structure and Security of Property Rights;
3 Access to Sound Money;
4 Freedom to Trade Internationally;
5 Regulation of Credit, Labor, and Business.

With some variation, The Heritage/WSJ’s economically freest countries are these:

1- Hong Kong
2- Singapore
3- Australia
4- New Zealand
5- Ireland
6- Switzerland
7- Canada
8- United States
9- Denmark
10- Chile

Lest you forget, these indices provide important but woefully incomplete data. Long ago, Pierre Lemieux, a libertarian Canadian economist (a friend too) explained:

“If ‘economic freedom’ is inseparable from the rest of human liberty in a social context (using one’s property to express dissenting opinions, travel, have sex, grow marijuana, store one’s firearms, raise funds from “public” investors, etc.), the freedom indexes are off the mark.

“This explains why some countries ruled by hard tyrannies (as opposed to the soft, Tocquevillian brand we know in the West), where nobody in his right mind would want live except to make a buck as a privileged foreigner or a member the local nomenklatura, make it to the top of the list. Who would want to live in Hong Kong (ranked 1st of 151 countries in the HF/WSJ index), that is, under one of the worst tyrannies on earth, and so much so for its very efficiency? Who would want to be a peasant under other Asian tyrannies like Singapore (ranked 2nd)?”

“The selective definition of economic freedom also explains why the indexes show growing economic freedom while everybody who lives in the real world must know that the 20th century, rightly described by Mussolini as ‘the century of the state,’ is continuing in the 21st with a vengeance. During the 12 years of the HF/WSJ index, economic freedom is supposed to have increased. For example, over that period, both the U.S. (now ranked 9th) and Canada (ranked 12th) have improved their scores by 11%, while in both countries (and others) the Surveillance State was growing uncontrollably, including on financial markets. In the U.S., so many business executives are going to jail that perhaps repression will have to be outsourced to China.”

“Thus, the ‘economic freedom’ that is being measured is a rather special animal: it is the freedom to do what is narrowly defined as freedom in the statistics underlying the index. In practice, the freedom indexes encompass some general conditions for economic freedom (like a stable currency, or narrowly defined ‘property rights’), specific government restrictions or controls (on foreign investment, for example), and consequences of state intervention (the informal economy or corruption). And, of course, the weights assigned to the components of the indexes are arbitrary.”

“I am not saying that such indexes are totally useless. They do regroup variables that are correlated with GDP per capita and its growth, but keep in mind that GDP is a very unreliable construct that reveals basically nothing about the general welfare, and is based on arbitrary value judgments (this is pretty standard welfare economics: see my upcoming article in The Independent Review). The indexes may correlate with the difficulties the businessman will have with local bureaucracies. They may even indicate opportunities for investors to make money in limited contexts, assuming the information has not already been incorporated in prices. The HF/WSJ publication even contains some useful country summaries and international statistics.”

“But the freedom indexes have little to do with ‘economic freedom’ as we use the term in politics, economics and philosophy.”

UPDATE (Oct. 17): Interestingly, John Stossel has addressed Myron’s question:

“This evening on Eric Bolling’s show, Follow the Money, when I argued that economic freedom brings prosperity, lefty lawyer Ron Kuby said I was ‘full of it’ because the freest countries are not at the top of a list of the world’s richest countries:

1- Monaco
2- Liechtenstein
3- Norway
4- Luxembourg
5- Channel Islands
6- Qatar
7- Bermuda

But this is deceptive nonsense, like so much of what lefty lawyers say. It’s no surprise that small oil-rich nations, tax havens, and countries with old wealth have the highest per capita income. But the freest counties are all near the top of the list. Here’s Heritage’s list of the least economically free countries:

172- Democratic Republic of Congo
173- Libya
174- Venezuela
175- Burma
176- Eritrea
177- Cuba
178- Zimbabwe
179- North Korea

Do you want to live in any of those counties? I sure don’t.”

QE2: That Ship Has Sailed

Debt, Economy, Federal Reserve Bank, Inflation, The State

I’m not talking about “The Queen Elizabeth 2” cruise ship, but of “‘Quantitative Easing,’ which is state-speak for the government’s monkeying with the money supply.” That ship has indeed sailed a long time ago. At the end of September, we reported here on a $1 trillion Fed infusion of paper into our hot-air balloon of an economy.

How many pinpricks away from runaway hyperinflation are we?

Now you know why a stock market rally does not a recovery predict. In fact, stocks will be buoyed after a funny-money injection. “But as usual,” concedes Larry Kudlow, ignored are “the plunging dollar and soaring commodity prices, which will lead to an inflation tax on consumers and businesses, something that is not good for profits or economic growth.”