Free Markets, Free People

entitlement spending


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

[tweetmeme only_single="false"]