Free Markets, Free People

Why "me first" in the market is different from "me first" in entitlements

If you’re interested in reading one of the most mixed up pleas to get entitlement spending under control, I invite you to read Neel Kashkari’s (I love the last name though)op/ed in the Washington post.

His premise is that entitlements are breaking us.

Sold.

His assumptions, however, are all over the place and misrepresent the real problem.

He claims that it is a ubiquitous "me first" mentality that both drives the market and also drives entitlement. That self-interest drives the boat.

Yes, self-interest is always a motivator. But when it comes to the market and entitlements, "me first" mean entirely different things. In the market, "me first" means seeing what you want, earning what is necessary to get it and then obtaining it. Pricing and demand come from that – and jobs, expansion, etc. The point is, in the sense of the market it’s "me first because I’ve earned what is necessary to purchase it".

Not so when it comes to entitlements. In that case, "me first" means, "I want what someone else has earned because I (excuse goes here) and therefore I’m owed this".

That’s an entirely different concept of the market "me first". In the latter, money is taken from the earner (thereby limiting his ability to act on his "me first" priorities), the market is denied whatever percentage as it is taken by government, wends its costly way through the system, and ends up in the pocket of someone who has determined that the benefit of earning the equivalent through work is just not worth it.

Kashkari then tries the “fairness” argument:

Cutting entitlement spending requires us to think beyond what is in our own immediate self-interest. But it also runs against our sense of fairness: We have, after all, paid for entitlements for earlier generations. Is it now fair to cut my benefits? No, it isn’t. But if we don’t focus on our collective good, all of us will suffer.

Fairness has nothing to do with this. Is it fair when you take money from one person to give to another for whatever arbitrary reason? Of course not. So if we want to play the fairness game, the first stake holder on the "not fair" side of the game is the taxpayer who has his earning taken to subsidize someone’s entitlement benefit.

And, honestly, our "collective good" would be better served by getting government to hell out of the entitlement business (and there by reducing its size and the size of the chunk it takes out of our wallets) and getting back to what has made America both great and, despite Obama’s claims, exceptional.

… [B]ailing out the financial system went directly against our shared beliefs in free markets and fair play. While the vast majority of Americans did not cause the financial crisis, we all had to sacrifice to stop it. Such a cultural violation has angered people nationwide, which makes cutting entitlements more difficult because it will again betray our sense of fairness.

Here’s where he almost gets a clue, except he attributes it to “fairness” again.  Instead it was a revolt of the taxpayers, already enraged about the cost of government and the impact it had on their own choices, saw government suddenly expand that cost exponentially, head into areas it had never been before and indenture their grandchildren and great grandchildren to a tune of multi-thousands of dollars each.  It wasn’t about “fairness” it was about “get the hell out of my life and wallet”.  The Tea Party movement wasn’t formed because anyone was concerned with “fairness” – it was formed to cut taxes, reduce the size of government and demand government spend less.  And yes, if that means cutting entitlements, then by all means, do so.

Kashkari’s concludes with 3 steps to cut entitlements:

– Our economy needs to experience sustained growth, creating good jobs, so Americans feel economically secure. It is hard for anyone to think about long-term sacrifice when they are worried about how to pay their bills today.

– The emotional bruising inflicted by the financial crisis needs to heal. Along with the passage of time we need a renewed sense that people are succeeding and failing on their own merits.

– Our leaders need to make the case for cutting entitlement spending by tapping into our shared beliefs of sacrifice and self-reliance. They must be willing to risk their own political fortunes for the sake of our country.

Or to paraphrase myself from above, we need to get government back to basics and Americans back to a culture that made this nation great, rich and exceptional.  And that includes self-reliance, sacrifice and earning our own way in life.  It is the latter part of the equation that will solve the entitlement problem and something Kashkari doesn’t include.

~McQ

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37 Responses to Why "me first" in the market is different from "me first" in entitlements

  • Respectfully, there is no “me first” in a market exchange.  They don’t happen if either party maintains a “me first” position, just as mediated settlements don’t happen if either party is trying to go for the gold.
     
    By their very nature, market exchanges have to occur where both parties want something more than they want what they have.  They have to come to terms with the people who hold that desired thing.
     
    In “entitlements” there is compulsion and redistribution; one participant…the producer…has no say.

    • “The customer is always right”. But in the market, the customer pays in return for some thing or service.

      In entitlements, who’s the customer? The fleaced taxpayer, or the welfare recipient who gets something for nothing?

      I’m inclined to see modern socialism as a form of feudalism. It is just an advanced form that’s less honest. The real people who benifit are the elite political class (see Ms. Obama’s trip to Spain with her younger daughter as an example). The political class fleces the productive class, but the productive class is balanced out by a parasite class who’s purpose is to vote for the elite political class. The parasite class is rewarded for their support by the elite political class by wealth transfer from the prouctive class.

  • We have, after all, paid for entitlements for earlier generations. Is it now fair to cut my benefits?

    We’ve been lenient on cheating in schools. Is it now fair to crack down on cheating and lower my grades?

    jeeese… What a maroon

  • “We have, after all, paid for entitlements for earlier generations. Is it now fair to cut my benefits? No, it isn’t.”

    Therefore the Ponzi game must continue, and later generations must pay my benefits (in addition to the interest due on the previous generation’s benefits). “Me first” indeed.

    • Understanding the concept of ‘sunk costs’ is as hard to impress upon the general populace as it is on many in business.

    • He may not believe this himself, but its what a whole bunch of baby boomer voters are going to say when we tell them their social security is being touched.

    • At 60, I am totally prepared to work until I cannot…and, if possible, never apply for any benefits.  I live on a rather modest income, and have no funds cashed away, so that isn’t a small commitment.
      That is one of the bequests I can leave my children and grandchildren.   Lots of people need to join me.

  • I always take my political advice from someone with limited life experience (born in 1973), who held one real job (engineer at TRW) changed his career to investment banking (VP atGoldman Sachs) and then government work (at the US Treasury hired by Hank (Goldman Sachs alum) Paulson).
    I’ve been a Goldwater/Reagan/Nation Review subscribing conservative for many years. But more and more I’m finding that the first thing I do when I read someone’s “opinion” is to check their biography. I’ve always held that good ideas come from many sources. Based on our experience in the last 20 years, I’m convinced that Buckley’s observation about being represented by 400 random names from the Boston telephone book is more true today than it was when he said it 50 years ago.

  • I think we need to be careful not to project our own hopes and ideas onto the Tea Party movement. At least some people involved absolutely are a part of it because they feel like the bailouts were unfair. Certainly they’re annoyed with the spending, but the idea of banks getting huge bailouts at our expense while we lose homes and jobs really annoys a lot of people.

    • Nonsense!
      The Tea Party movement is pure as the driven snow.  Void of anyone motivated by their own pet peeves or their own axe to grind.  Ready, willing, and able to write off their own claims to entitlements for the benefit of everyone else.
      A libertarian locomotive driven by only those most principled.
       
      To parody a parody:
      The Tea Party movement is most definitely not motivated by “fairness.”   McQ decrees it!!!  ;)
       
      Cheers.

    • Christopher – the three things I mentioned have been touted as what the Tea Party is all about by the Tea Partiers. I’m not projecting a thing – I’m repeating what they’ve said they want.

      • I’m just saying that a lot of people are in the Tea Party movement and they all have their motivations. Some, at least, are there because they think the TARP bailouts were unfair – based on the signs I’ve seen.

        • Well, like I say, I can only go by what they put out in their propaganda, and fairness has never been a word used in any of it. However the big 3 I listed are seen within it constantly.

        • Well, like I say, I can only go by what they put out in their propaganda, and fairness has never been a word used in any of it. However the big 3 I listed are seen within it constantly.

        • Well, like I say, I can only go by what they put out in their propaganda, and fairness has never been a word used in any of it. However the big 3 I listed are seen within it constantly.

    • Personally I’m most annoyed by a huge, overreaching government.

      But I know that some of the fall out in the town halls was from those afraid of losing Medicare or SS. Granted, some might have worried about Medicare Advantage, i.e., the extra coverage some buy, and that is at least a little closer to my views.

      Up in UT, we have a candidate who’s falling behind Harry Reid because (at least in part) she wants to close Social Security and the Dept of Education. Those ideas only make me want her to win, yet to many that’s radical right territory.

      Most Americans don’t want more socialism. But they are not inclined to give up the socialism they have, even if we can’t afford it.

  • There definitely was an entitlement mentality involved in the bubble economy, as people figured they could just throw money into accounts or real estate and expect large returns with minimal effort.    The super wealthy have garnered massive gains believing they are entitled to it because they could get away with it.   There is no magic line between “markets” and “government” — one isn’t perfect and the other isn’t evil.  Both can function well when regulated and with transparency, both lead to ruin if left uncontrolled.

    • Gawd, what a vacant lode of crap.

    • Both can function well when regulated and with transparency, both lead to ruin if left uncontrolled.

      Which is one reason that I support the idea of removing as much money from politics as possible.  I don’t see how we can expect government to transparently and effectively regulate or police business when business is allowed to pour money into the pockets of politicians.  You’re right that it’s not a battle between good versus evil, because it’s difficult to find “good” in any equation that involves lobbyists, politicians, and unchecked greed.

      • Both can function well when regulated and with transparency, both lead to ruin if left uncontrolled.

        I challenge Erp to show us an example of the market leading “to ruin” when “unregulated”.
        I think any of us here with any integrity and understanding can cite many examples of regulation leading to ruin.

    • Erb is just “mailing it in” these days and can you blame him?  One year ago he was strutting his stuff.  Coming by here and taunting us with his Messiah supposedly on the cusp of greatness, at least in his eyes, and the GOP and what remained of the Conservative movement seemingly in ruins.

      Now, it is the Democratic Party that is falling apart at the seams.  Imploding from squabbles and recognizing that in reality they have been leadership for all these many months.  Independents, RINOs, Jews, Women, and even Hispanics are fleeing from the Democratic party in droves.  Now matter what has been thrown at the Tea Party, they continue to rise as an actual political force to be reckoned with in the 2010 mid-terms and are seemingly set to upset sitting Dems, and even a few RINOs, left and right all over the country.   What was once an overwhelming majority in both houses of Congress could all be gone the first week of November.

      With his Messiah’s popularity free falling to the mid-to-low 40s there is even talk of reviving Hillarys’ chances as the new Democratic hopeful for the 2012 general elections.  So it is not surprising that Erb is no longer the brash, swaggering, bomb throwing troll of by-gone days.  And now all that is left is some desultery, feverish,  leftish mutterings as he slinks off to find shelter under some nearby rocks.

      So sad . . . . NOT!!!!  LOL!!!!!

    • There is no magic line between “markets” and “government” — one isn’t perfect and the other isn’t evil.

      Yes, there is a line – one is voluntary, self-chosen, the other is FORCE, coercive.
      A market may not be perfect (if by that you mean it doesn’t do what you, the tantrum-prone statist punk, wants vs. what others want) but it is self-correcting.

  • Wealth will try to find a way to increase it’s amount. In the past the wealthy could get a decent return on bonds,  CD’s, even saving accounts had a decent interest rate. What changed? The market , or government interference in the market? Who caused interest rates to plummet to near zero? The market , or the FED? When the hedge funds and other big money players had to look for the ‘best’ return in this contrived ‘marketplace’ where did they go? To Fannie nad Freddie, who were  shoveling billions of sub-prime (read high return , AND HIGH RISK , which  of course the tax-payer is now on the hook for) loans out the door . Who gave Fannie and Freddie the ability to do so? CRA? Barney Frank telling the Republicans that they are viable and not in any danger of default? Who does Frank represent?  Markets or Goverment?

  • What market left uncontrolled ever killed  millions? ever locked up innocents? ever took property without compensation? ever told individuals what they MUST DO, or CANNOT DO? only uncontrolled government can do these nefarious things. It is but one of lifes many  ironies , but Statists are the bane of civilization.

  • I am starting to cringe whenever I hear somebody use the word “fair”, as I’ve come to realize that it doesn’t mean the same thing to different people.  Broadly, there are two definitions:

    1.  To abide by predetermined rules, ideally adhered to by all parties involved but, when necessary, enforced by a neutral judge, or;

    2.  A conclusion or outcome that does not necessarily depend on adherence to predetermined rules but is agreeable to at least some of the parties involved and ESPECIALLY the judge.

    In principle, we learn to understand the first of these two definitions of “fair” on the playground as children: three strikes and you’re out; a touchdown counts for six points; the game lasts until one side gets to 15 points; etc.  The teacher or referee is supposed to enforce these rules; it’s only “unfair” when he obviously breaks them to favor one side or the other or when one side cheats and doesn’t get caught.

    Unfortunately, there are those people (“liberals”) who DIDN’T learn this lesson.  They think that the referee SHOULD change or selectively enforce the rules to get outcomes that are more agreeable to them: “It’s not FAIR that the other team won!  Johnny got on their team, and he’s the strongest kid in the class!  You should make him play for OUR team / make it harder for them / not count any goals he scores!”

    Unfortunately, those people grew up to become the people who run the government, and so they get to BE the referee: “Gosh, it’s not FAIR that some people make / have more money than others!  I’ll change the tax code* so I can take money from one person and give it to somebody else.  THAT is fair.”

    It is hard for anyone to think about long-term sacrifice when they are worried about how to pay their bills today.

    Um, why, exactly, should ANYBODY think in terms of “long-term sacrifice” unless they CHOOSE to do so?  For example, if I want to sacrifice a new TV now so I can have a nice vacation later, that’s fine.  If I want to sacrifice a nice vacation now so I can put money aside for a new car later, that’s fine, too, because I CHOOSE to do it.  I suspect that the “long-term sacrifice” that Kashkari has in mind is rather more along the lines of an IMPOSED sacrifice a la the USSR, Red China, or any other totalitarian country: “Let us all sacrifice to build the bright future of the dictatorship of the proletariate… and we’ll tell you what you have to sacrifice.”

    —–

    (*) Consider how huge the tax code is and how often it is changed.  The reason for this is obvious: politicians keep changing the rules to favor one group over another to meet their arbitrary definition of “fair”.  What would ACTUALLY be “fair” is to set up a fairly simple tax and LEAVE IT ALONE.  But we can’t have THAT, can we?  Don has a great point about this: it’s really not about what’s “fair” so much as it is about the ruling class grabbing power and wealth for itself.

  • Fairness is the biggest bugaboo of modern times.  How many times do I, as a teacher have to tell kids that there is nothing fair in life?  Yet adults often forget the lessons they learned in childhood.

    Fairness is a chimera that can never be obtained. The only things that can be obtained through law are, individual rights, and equal legal treatment. Anything else is a fool’s quest.

    • “Fairness” is such an odd concept that many languages have no equivalent word.