Free Markets, Free People

Daily Archives: April 28, 2010

Welfare State In Crisis

The bailout of Greece may not work. Spain is teetering on the edge of serious financial doom. The Euro is taking a beating. And the banks of Europe are not looking too healthy overall. Meanwhile, here in the States, unfunded government debt, already expanding at an unprecedented rate, is set to explode. What do all of these things have in common? They are the direct result of expanding the welfare state without any means of actually paying for all of it.

In truth, there is never a way to pay for expanding the welfare state because, while wealth creation isn’t a zero-sum game, the population of wealth-creators is; after all, not just anyone can create electricity, telephones, heart medications, MicroSoft, Wal-Mart, or even pencils without some know-how, sweat and inspiration. If that were possible, then wealth creation could never be retarded, regardless of the impediments. Some wise, noble, and completely selfless individual would always emerge to drive the economy forward. Alas, self-interest trumps all, without which wealth-creation is for the horses.

No matter how ingenious the plan, or divine the motives, the only way for governments to fund the welfare state is to tax the wealth-creators. As even the most Marxist of intellectuals knows, if you want less of something, then tax it. This is why cigarettes are levied against in ridiculous proportions, and why carbon taxes are considered (by some) to be the savior of our planet. Well, taxing wealth-creation works exactly the same way: tax it more, and you will get less of it. Which leads to the inexorable conclusion that, as the governments of the world sink deeper into fiscal crisis, the looters will be coming en masse.

Does that mean that we are in for another Great Depression? Not necessarily. In fact, I predict that no such thing will occur. For starters, we have many institutions in place today that didn’t exist in the 1930’s such as the FDIC, Social Security, Medicare, the IMF, and the World Bank. Some of these things are arguably beneficial in that they smooth out the rough patches that economies inevitably encounter. The U.S. economy, for example, may not have realized the devastation it did if old people, like McQ, could have survived without taxing their families’ resources so much, or the FDIC had been in place to quell bank runs. Maybe. But more importantly, in this day and age our politics and law-making bodies (and those of every democratic society) are dominated by those whose own self-interest is firmly grounded in the ability to buy votes. That ability is highly dependent upon feeding the welfare state, since the vast majority of votes are bought from those who don’t create electricity or heart medications. This is why politicians of all stripes won’t take steps that would decrease the welfare state, because to do so will cost them votes — to the politician who promises more largesse at the expense of whatever hated rival is being villainized at the time. Accordingly, the odds are rather stacked against wealth-creators continuing to employ their skills in service of the very state that punishes them.

Instead of the Great Depression, Part Deux, I would predict that the elites (those, and their friends, who hold the power to dole out goodies for votes) will shuffle the deck just enough to ensure that they stay in favor, while allowing the overall health of the economy to softly fade into oblivion. They are like Dr. Kevorkian administering to capitalism. The ability to create wealth will slowly continue to be arrogated to the governors and “experts,” while the welfare state expands in decrescendo. Eventually, we will be left with something akin to the Ottoman Empire: all power and glory in name only, inside a rotting shell, harkening back to a time so dissimilar as to be unworthy of the title. What’s left will be hopeless, farcical and cruel, and will not have the slightest ability to nurture the welfare state that started it all. Perhaps the “Long Morose” would be a better title.

Irrespective of my gloomy predictions, there simply isn’t any question that, at some point, the beneficiaries of the great welfare state will have to take a bath. Most likely, that day will come when everyone jumps in the tub together. Until that time, prepare for the politically powerful to loot the wealth-creators out of existence in order to pay off the welfare beneficiaries. Eventually the only ones left to take that bath will be the filthy and the unwashed.

Charlie Crist to launch independent Senate Run

Apparently, Charlie Crist has convinced himself that the people of Florida desire his leadership keenly, despite taking a vicious hammering in the polls for the Republican nomination. So, he’ll be announcing an independent run for US Senator.

Stick a fork in him. He’s done. The Republicans will henceforth treat him as if he has a case of virulent Ebola and herpes. I’ve got no clue where he’s going to get financing from.

The best he can do is split the Republican vote, and ensure a Democrat gets elected. If that happens he’ll be like a new Arlen Specter, except for being even more of a loser.

More debt pressure on Europe…and US business

Following yesterday’s announcement that Greek debt was downgraded to junk status, today Spain’s debt was downgraded as well. Spain is, in many ways the bellwether for Europe’s debt crisis. Spain has a much larger economy than Greece. So large, in fact, that it may be too big to bail out.

Fortunately, Spain’s debt is still less than 60% of GDP; however, the country is on a reckless fiscal path and the government shows no signs of doing anything about it.

As a result of the growing crisis, the Euro is getting hammered in the FOREX market, while the dollar is soaring. This is, in effect, an interest rate hike for US businesses that export to the Euro zone.

Naturally, this places downward pressure on US export sales at a time where the overall business climate is still weak. So, none of this is good news for the American economy, either.

Lindsey Graham finally gets the message … and delivers one

And that message: is if your political opponents are in a hole of their own making, don’t throw them a rope.

That’s precisely what Sen. Lindsey Graham (R-SC) was in the middle of doing prior to this past week.  He was the lone Republican Senator working on the “climate” bill with Senators John Kerry (D-VN) and Joe Lieberman (I-CT).  Additionally, he was also the only Republican Senator working on immigration.

This past weekend, Graham pulled out of the cap-and-trade “climate” bill, leaving it in doubt – although word now has it that it was Harry Reid (D-Desperate) who decided it must wait for immigration. That would actually make sense since it is Harry Reid who is in re-election trouble in a state with a large Hispanic population who’ve complained Democrats haven’t done anything with immigration.

Graham seems to have finally awakened to the fact that he has an opportunity to slow both cap-and-trade and immigration down and hobble the administration’s agenda in this Congress. Today he made it clear that immigration was off the table, as far as he was concerned, for this year – if not next:

Sen. Lindsey Graham, the sole Republican working on a bill to legalize illegal immigrants, in effect put the bill on the shelf on Tuesday, saying that a debate now would destroy any prospects for passage and that the issue needs to wait until 2012.

The remarks likely signal the end of any serious chance for broad immigration legislation to pass this year, since Mr. Graham, South Carolina Republican, was the best hope for a partnership with President Obama and Democrats who want to write a bill.

Unlike the cap-and-trade bill, there has been no immigration bill yet written. So, given the process, even given priority, legislation would take months and months before passage. Graham was the forlorn hope of Reid and the Democrats on immigration. He effectively slammed that door in Reid’s face yesterday. And he’s playing some smart politics in how he’s framing his decision. He’s tapping into that latent anger within much of the country about the refusal of the federal government to secure the borders.

“It is impossible for me and any other serious Democrat to get this body to move forward until we prove to the American people we can secure our borders,” Mr. Graham told Homeland Security Secretary Janet Napolitano, who was testifying at a Senate Judiciary Committee hearing.

“I believe we can do it by 2012 if we’re smart,” he said.

Ms. Napolitano, a former governor of Arizona, disagreed with Mr. Graham’s evaluation of border security. She said she knows the southwest border as well as anyone and, by every measure Congress has laid out, the border is more secure: Fewer illegal immigrants are being apprehended, and more fencing and infrastructure have been deployed.

But under close questioning by Mr. Graham, Ms. Napolitano could not say whether she would declare the border secure if she were still the governor of Arizona. She called it an “unfair question.”

“It is a fair question, and I’ll give you my answer: I don’t think it is,” Mr. Graham said. “I think since the last effort to solve immigration the border situation has deteriorated.”

Popular position that plays well to the Tea Partiers and again points to ineffective government. Essentially, in one week, Graham has made the completion of the Democratic/Obama agenda much, much more difficult – if not impossible – during this session of Congress.

Happy Meal toy ban followup

You remember the story yesterday about Santa Clara county’s desire to ban toys in meals the board of supervisors had decided were unhealthy?

They’ve passed the provision:

On Tuesday, the Santa Clara County Board of Supervisors took action by prohibiting fast-food restaurants from using toys to lure kids into buying unhealthy meals. The vote was 3-2.

Have to love the “reporting”.  Obviously a supporter of arbitrary government intervention the LA Times’ Karen Kaplan gives us another example of unbiased reporting:

Not surprisingly, the toy ban has angered folks who resent government efforts to help Americans eat healthier.

And if you’re wondering, the link above brings you right back to the QandO story yesterday on this subject.  I, of course, make no bones about being biased, never have – this is more “nanny state goodness”.  You see, Ms. Kaplan obviously thinks it is the role of government to “help Americans eat healthier” even if it means banning things.  My guess is she’d not be quite as ready for government bans it they had to do with, oh I don’t know, books or something similar.

The excuse?

In Santa Clara County, one out of every four kids is either overweight or obese. Among 2- to 5-year-olds from low-income families, the rate is one in three. The county health system spends millions of dollars a year treating kids for health problems related to obesity, and the tab is growing.

If you haven’t yet figured out that the passage of ObamaCare has emboldened the nannies at all levels, this ought to make the case.  Trust me, this reporter didn’t dig this nugget out.  It was handed to her by those trying to justify this power grab.

Anyway, how will this work?  Well, just as the FDA is going to be fiddling with the salt content in your favorite spaghetti sauce, the board of supervisors – all board certified nutritionists I’m sure – have decided on these criteria for a “trinket” to be included in order to “lure kids into buying” the meal:

In order to combine trinkets with burgers, chicken nuggets or other children’s fare, a meal must meet some basic nutritional requirements. Among them:

— No single food item can contain more than 200 calories, the drink cannot have more than 120 calories, and the entire meal cannot exceed 485 calories.

— No single item can contain more than 480 milligrams of salt, and the entire meal is limited to 600 mg of salt.

— No more than 35% of the calories can come from fat.

— No more than 10% of total calories can come from added sugar.

What has to be understood here is this is one of those precedent setters – if you give the Board of Supervisors this without a fight, how can you deny them the right, next time, to go after something else? Legitimate question. Because you know if they win this, there’s very little to restrain them from managing the rest of your life.

So where does this fight have to be won now that the board of supervisors have voted? Well thankfully it has to be approved again at a second Board of Supervisors meeting in May. If the article cited is to be believed, a poll shows 80% of the county opposes the ban. A bunch of that 80% needs to be in attendance at that BoS meeting next month and tell the emboldened nanny to butt out.

~McQ

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