`Socialism or Capitalism?` ~ Concepts (7-14-2012)

(As usual, you can click the article to enlarge) I do not have the time to delve into John’s latest like I would want, but simply, I wish to respond to three ideas in the article. For instance, John said:

  • Should the government never get involved in private enterprise or should it create a fair playing field for all participants? Most of the time, the latter is already the case.

Firstly, “never,” is setting up a false dichotomy, a straw-man. He is using an extreme to set up his case. secondly, this is the divide between progressives and conservatives that Dennis Prager zeroes in on so well — Prosperity or Egalitarianism:

Two Models: Prosperity or Egalitarianism from Papa Giorgio on Vimeo.

Johns second statement is this one, and I will again zero in on some California examples (where John lives) so the reader can understand what government involvement means. John says

  • When I buy a product from a hardware store, I am satisfied, the owner is satisfied, the government gets its share and the employees get to keep their jobs. There are many win-wins. Why do some people perceive the government as a friend, others as an enemy?

Here is the answer with a great example from a few years back, right down the road a bit from both John and I… it comes from an article I have saved from the June 26, 2002 Daily News, Editorial Section, entitled “Killing Jobs”:

Billingsley’s Restaurant at the Van Nuys Golf Course may soon fall victim to the economic illiteracy of the Los Angeles City Council [almost all liberals by the by].

Five years ago, the council pandered to organized labor by passing a measure requiring all businesses that contract with the city to pay their employees a “living wage,” an hourly salary tied to the Consumer Price Index that tends to run about three dollars more than the California minimum wage.

The measure, intended to bolster economic status of the city’s working families, was a classic example of arrogant politicians thinking they could magically legislate wealth into existence.

But grandiose schemes have consequences. Extra money for salaries has to come from somewhere. Usually from customers, workers or taxpayers who end up paying the bill.

Billingsley’s is a case in point of what’s wrong with this scheme [which Santa Monica has made policy].

Because the restaurant’s lease on the city-owned golf course is up for renewal, it will soon have to start paying the living wage, which owner Drew Billingsley says will cost him $100,00 a year [keep in mind this is not only in wages, but the time and money spent on the mountains of new paperwork to make sure he is following this new regulation]. In an effort to meet that expense, he has laid off as many employees as possible, but its not enough.

Thus Billingsley now has two choices: Either he can raise prices and alienate his loyale clientele (which consists largely of retirees on fixed incomes), or he can close up shop altogether.

Either way, the community will suffer. That’s what happens when feel-good posturing, not sound policy, governs lawmaking.

City Hall has done its best to chase away well-paying jobs, and public schools have done their worst at educating people so they aren’t qualified for well-paying jobs. Artificial living wages won’t solve real people’s problems.

Loss of jobs and customer dissatisfaction are the result of government interference. Here are more examples noted by Dennis Prager:

More Businesses Leave California from Papa Giorgio on Vimeo.

And any person should acknowledge why someone should “fear” government more than business. In fact, I made this point on my FB outgrowth of this blog in talking to my liberal friend:

…you see, when the government chooses winners-and-losers instead of getting contracts with private companies (like Ford, GM, etc.), they are invested to [i.e., forced to] only choose a government run business and stock their fish (so-to-speak) with GM fleets… leaving the non-government company to flounder.

This next audio (below/left) deals with the differences of the Koch brothers, in comparison to the Left’s version of them, Soros. There are many areas that one can discuss about the two… but let us focus in on the main/foundational difference. One wants a large government that is able to legislate more than just what kind of light-bulbs one can use in the privacy of their own home. Soros wants large government able to control a large portion of the economy (see link to chart below), and he has been very vocal on this goal. The other party always mentioned are the Koch brothers. These rich conservatives want a weak government. A government that cannot effect our daily lives nearly as much (personal, business, etc) as the Soros enterprise wants. And really, if you think about it, what business can really “harm” you, when people come to my door with pistols on their hip… are they a) more likely to be from GM, or, b) from the IRS?

The possibility of them being from the IRS is even more possible with the passing of Obama-Care [i.e., larger government]. So the “fear” (audio in next comment) I think the Left has of “Big-Business” is unfounded, and the problem comes when big-business gets in bed with big-government. Here I am thinking of (like with the penalties that were found to be Constitutional in the recent SCOTUS decision) a government that can penalize you if you do not buy a Chevy Volt, or some other green car in order to save the planet. When this happens, guys coming to my door because of unpaid (hypothetical… but historical examples abound of the tax history of our nation) “fines” are likely to be IRS agents because of a personal choice made in the “free-market.”

Appendix: If the above example didn’t inspire any liberal fear (forced to go green or be penalized), maybe this one will

…First, the government needs to issue a mandate that all households must own at least one firearm. We will need a federal agency to ensure that people aren’t just buying cheap BB guns or .22 pistols, even though that may be all they need or want. It has to be 9mm or above, with .44 magnums getting a one-time tax credit on their own. Let’s pick an agency known for its aptitude on firearms and home protection to issue required annual certifications each year, without which the government will have to levy hefty fines. Which agency would do the best job? Hmmmm … I know! How about TSA? With their track record of excellence, we should have no problems implementing this mandate.

Don’t want to own a gun? Hey, no worries. Supreme Court Chief Justice John Roberts says citizens have the right to refuse to comply with mandates. The government will just seize some of your cash in fines, that’s all. Isn’t choice great? Those fines will go toward federal credits that will fund firearm purchases for the less well off, so that they can protect their homes as adequately as those who can afford guns on their own. Since they generally live in neighborhoods where police response is appreciably worse than their higher-earning fellow Americans, they need them more anyway. Besides — gun ownership is actually mentioned in the Constitution, unlike health care, which isn’t. Obviously, that means that the federal government should be funding gun ownership….

…read more…

This is why people fear government, to answer John’s question. Thirdly, John tackles charity versus government mandated “charity.”

  • Why should charity be a virtue for a person, but a sin or fault for a government? Why is it a virtue for every church, but “socialism” for a government? You might say in one situation it is voluntary; in the other, it is mandated by law. You would be right, but ask people if they can do without their mandated Social Security or without their mandated Medicare. My guess is that most would be in deep poverty.

Here are some analogies to make the point and then some comparison of the effectiveness of such ideas.

A great analogy that explains the dilemma of our “redistribution program” here in America (welfare, food stamps, or Medicaid, etc.) is one of a triplex.  I must thank Neal Boortz for this analogy (his book, The Terrible Truth About Liberals), by the by.

Our government, as our Constitution says, derives its powers “from the consent of the governed.” The idea here is that we cannot and should not ask the government to do anything for us that we cannot legally or morally do for ourselves.  Sounds logical, doesn’t it?  With that premise in mind, lets build the following scenario.

You live in a triplex.  You are in apartment No. 1, Johnson is in apartment No. 2, and Wilson lives in No. 3.  You discover that Wilson is ill and cannot work.  He never bothered to buy a health insurance policy because he just didn’t believe he would need it for quite some time.  Wilson, it seems, is not good at making rational decisions.  He has no savings because it was more important to use that money for bondo on his Camaro and a good Panama City Beach vacation every summer.

You believe that Wilson is about to starve to death.  His electricity is going to be cut off, and he can’t afford to buy his blood pressure medication.  You decide to help, charitable soul that you are.  You scrounge through your bank account and find $200 to help your neighbor out.

Good for you.  What a guy!

A month later Wilson is still in trouble.  Your $200 wasn’t enough.  It turns out that he spent $20 for a case of beer and at least another $100 or so at the horse races.  Things may not be all that desperate, though.  One of the thirty-five Lotto tickets he bought with that carton of cigarettes might pan out.

You decide to visit Johnson in apartment No. 2 to see if he can chip in.  Johnson tells you that, while he certainly understands the seriousness of Wilson’s situation, he needs his money to send his daughter to college in the fall and to pay some of his own medical bills.  Besides, he’s trying to save up some cash for a down payment on a house so he can get out of this weird apartment building.

You make the determination that it is far more important for Wilson to have some of Johnson’s money than it is for Johnson to keep it and spend it on his own daughter’s education and a new home.  So, here’s the question:

“Do you have the right to pull out a gun and point it right at the middle of Johnson’s forehead?  Can you use that gun to compel Johnson to hand over a few hundred dollars for Wilson’s care, and then tell Johnson that you’ll be back for more next month?”

Obviously, when put like this, you won’t run into too many people who will tell you that they have the right to take Johnson’s money by force and give it to Wilson.  They might say that they would try to talk Johnson into being a bit more charitable, but they don’t think that they have the right to just rob him at gunpoint.  But this is the next question:

Well, if our government derives its powers from the consent of the governed, how can you ask your government to do something for you that, if you did it for yourself, would be a crime?  Why would it not be OK for you to take that money from Johnson by force and give it to Wilson, but it would be perfectly OK with you if the government went ahead and did it?”

Last time I checked, IRS agents were armed.

Another way to put this is an example from J. Budziszewski’s book, The Revenge of Conscience: Politics and the Fall of Man:

a. On a dark street, a man draws a knife and demands my money for drugs.

b. Instead of demanding my money for drugs, he demands it for the Church.

c. Instead of being alone, he is with a bishop of the Church who act as bagman.

d. Instead of drawing a knife, he produces a policeman who says I must do as he says.

e. Instead of meeting me on the street, he mails me his demand as an official agent of the government.

If the first is theft, it is difficult to see why the other four are not also theft.

Here is the idea as put forward by University Republicans (audio is not ideal):

From video description:

Many students believe that it is moral to confiscate money from hard-working Americans and entrepreneurs and give it to those who didn’t earn it, yet don’t support the same philosophy when it is applied to their GPA scores. Check out our website http://www.ExposingLeftists.com and follow us on facebook at https://www.facebook.com/ExposingLeftists

Another aspect of this is exemplified in how well private business/charities/churches can do what government cannot. In regards to Social Security, the CATO Institute explains a bit about the Chilean model that would work well here in the Stetes:

…Chile allowed every worker to choose whether to stay in the state-run, pay-as-you-go social security system or to put the whole payroll tax into an individual retirement account. For the first time in history we have allowed the common worker to benefit from one of the most powerful forces on earth: compound interest.

Some 93% of Chilean workers chose the new system. They trust the private sector and prefer market risk to political risk. If you invest money in the market, it could go up or down. Over a 40-year period, though, a diversified portfolio will have very low risk and provide a positive rate of real return. But when the government runs the pension system, it can slash benefits at any time.

The Chilean system is run completely by private companies. We now have 15 mutual funds competing for workers’ savings.

We guaranteed benefits for the elderly — we told those people who had already retired that they had nothing to fear from this reform. We also told people entering the labor force for the first time that they had to go to the new system.

Today, all workers in Chile are capitalists, because their money is invested in the stock market. And they also understand that if government tomorrow were to create the conditions for inflation, they would be damaged because some of the money is also invested in bonds — around 60%. So the whole working population of Chile has a vested interest in sound economic policies and a pro-market, pro-private-enterprise environment.

There have been enormous external benefits: the savings rate of Chile was 10% of gross national product traditionally. It has gone up to 27% of GNP. The payroll tax in Chile is zero. Of course we have an estate tax and an income tax, but not a payroll tax. With full employment and a 27% savings rate, the rate of growth of the Chilean economy has doubled….

The bottom line: Government spends about 70% of tax dollars to get 30% of tax dollars to the needy. The private sector does the opposite, spending about 30% or less to get 70% of aid to the needy.

Again, the savings rate in Chile went up from 10% to 27% of GNP. There’s no payroll tax, and with full employment and that great savings rate, the economy has blossomed. Here is the second portion I think is important, that is, private interests redistribute a higher percentage per dollar. I will end with this great question/answer post:

Question:

About ten years ago you wrote: “When help is given privately, approximately 80% of each charitable dollar gets to a worthy recipient. Only 20% of each tax welfare dollar reaches the poor.”

This is a very powerful argument for why government should leave issues of the poor and disabled to non-profits and people who care. In fact, those numbers make it sound almost cruel to support government welfare programs. What’s your source for this estimate?

Answer:

I am currently using a slightly more conservative figure, though it still makes the same point. I would now, if asked, say: “When help is given privately, 70% or more of each charitable dollar gets to a worthy recipient. But only about 30% of each tax welfare dollar reaches the needy.”

Here is a citable source for that. The Costs of Public Income Redistribution and Private Charity [pdf], by economist James Rolph Edwards, Journal of Libertarian Studies, Vol. 21, Number 2 (Summer 2007).

On pages one and two, Edwards cites two studies, over a seven-year period, backing up that figure. He writes:

“[Government] income redistribution agencies are estimated to absorb about two-thirds of each dollar budgeted to them in overhead costs, and in some cases as much as three-quarters of each dollar. Using government data, Robert L. Woodson (1989, p. 63) calculated that, on average, 70 cents of each dollar budgeted for government assistance goes not to the poor, but to the members of the welfare bureaucracy and others serving the poor. Michael Tanner (1996, p. 136 n. 18) cites regional studies supporting this 70/30 split.

“In contrast, administrative and other operating costs in private charities absorb, on average, only one-third or less of each dollar donated, leaving the other two-thirds (or more) to be delivered to recipients. Charity Navigator, the newest of several private sector organizations that rate charities by various criteria and supply that information to the public on their web sites, found that, as of 2004, 70 percent of charities they rated spent at least 75 percent of their budgets on the programs and services they exist to provide, and 90 percent spent at least 65 percent. The median administrative expense among all charities in their sample was only 10.3 percent.”

Later on he adds: “In fact, the average cost of private charity generally is almost certainly lower than the one-quarter to one-third estimated by Charity Navigator and other private sector charity rating services…” and tells why.

The bottom line: Government spends about 70% of tax dollars to get 30% of tax dollars to the needy. The private sector does the opposite, spending about 30% or less to get 70% of aid to the needy.

There is much more of interest in that article, including this important observation:

“[R]aising only half as much money through voluntary donations, the private agencies (and families) could deliver the same amount as the government, saving, in the process, all the costs the government imposes on the public through the compulsory taxation. Given that aiding the poor must have large support among the public for coercive government redistribution to be policy, couldn’t the supporters raise, through voluntary donations from among themselves, half the amount that would have to be raised through taxation, and avoid coercing the rest of the nonpoor public?”

That’s the promise the libertarian vision offers: more effective aid for the poor and needy than ever before, delivered voluntarily by the private sector at a far smaller cost than today’s welfare state.

I laugh sometimes at myself… because I started out the post with, “I do not have the time to delve into John’s latest like I would want.” I ended up giving a pretty thorough refutation as if I had time.

Smaller or Larger Government? Equality or Prosperity?

For context:

The following comes from a discussion elsewhere on the Web, and should serve as a great reminder to the deleterious effects of larger (more regulatory) government vs. a smaller form of it:

The main point is that one party has people in it that are for small government — people like Ron Paul, Larry Elder, and the late Milton Friedman (a libertarian “god” of sorts). In the other you have people who want to grow government larger, and larger, and larger. California is a microcosm of the effect this has on businesses and regulating people’s lives. However, this drive to regulate people and their lives and to grow government, has, in every case, increased the possibility of government intrusion by force into the lives of ordinary people, which increase the risk (again, this is provable in history) of detention and death.

Which is why most libertarians vote Republican, they want smaller government. A great example is the housing market crisis. Some people are under the impression this was caused due to an easing of regulation. Not true. In fact, it was government-regulating banks to loan to people it would previously not. Why is this? Because the left wants [material] equality, the right wants people to prosper. One offers the most freedom, the other forces one person to pay for another. Here is an a small sampling of 2012 regulations from California that is helping businesses make the choice in moving to other states:

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✦In addition to mandatory insurance coverage, eligible female employees can take four months pregnancy disability leave, under provisions of SB 299.
✦The independent contractor law, SB 459, is worth discussing with a legal or h/r expert, because the rules are so tough and potentially expensive. That $5,000 to $25,000 fine is PER INCIDENT.
✦Employees can take up to 30 business days in a year for donating organs or bone marrow. SB 272 clarifies the law a bit.
✦Company dress codes must accommodate transvestites and cross dressers under AB 887.
✦Companies operating in multiple states must offer the same insurance coverage for same-sec couples and domestic partners as they do married couples in California.
✦Five new laws change workers compensation insurance. Check with your insurance carrier.

(Orange County Register)

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Everything the growth in government touches (which is typically from the left… or, the right embracing the foundational thinking of the left [like Bush working with Kennedy to increase the size and focus of the Dept of Education]). This regulation causes friction between government and regular people. As more and more regulations are added, the increase in the possibility of armed persons coming to your door increases — like this example of natural foods markets being raided: http://biggovernment.com/reasontv/2011/08/04/reason-tv-rawesome-foods-raided-again/

So persons that *REALLY* want to effect the political spectrum and possibly decrease the size of the government the most would want to vote Republican (like Milton Friedman, Larry Elder, and Rand Paul [Ron Paul’s son]). And this decreases the abrasive aspect of government and the regular Joe meeting. Congress — for instance – should meet for 3-months during the year, and do less of this:

“Federal agencies publish an average of over 200 pages of new rulings, regulations, and proposals in the Federal Register each business day. That growth of the federal statute book is one of the clearest measures of the increase of the government control of the citizenry…” James Bovard, Lost Rights: The Destruction of American Liberty (St. Martins Griffen; 1994), 1.

“All forms of the liberal agenda interfere with the rational relationship between human action and the conditions of life by disconnecting outcomes from adaptive behavior. Government welfare programs of all kinds disconnect the receipt of material benefits from productive behavior and voluntary exchange, and from those normal developmental processes that lead to adult competence. Social Security, Medicare, Medicaid, and all other federal and state welfare programs divorce an individual’s material security and emotional well being from his economic and social connections to his community, and replace them with a marriage to government officials. In particular, welfare programs disconnect the individual’s security and well being from two of his most reliable resources: his own initiative in producing and exchanging with others, and his social bonds to members of his family, church, neighborhood or village. The liberal agenda’s takeover of countless individual and community functions, from early education to care of the elderly, has had the effect of alienating the individual from his community and robbing both of their essential mutuality. In the economic sphere, especially, the liberal agenda’s rules have become strikingly irrational. Countless restrictions dictate what the ordinary businessman and professional may or may not do regarding hiring procedures, sales and purchasing, health insurance plans, retirement plans, safety precautions, transportation policies, racial and ethnic quotas, immigration matters, liability rules, and provisions for the handicapped. Endless paperwork adds to the already crushing burden of confiscatory taxation. Licensure requirements needlessly prevent workers from entering new fields in which they are willing to work hard and risk much in order to make life better for themselves and their families. Unnecessary and unjust restrictions in the freedom with which individuals can run their economic lives are the hallmarks of the liberal agenda. But the social pathology of collectivism extends well beyond the economic realm. While children can be happy in dependent relationships with parents, adults cannot be happy in any mature sense in dependent relationships with government welfare programs, no matter how well intentioned or administered. The reasons for this are developed more thoroughly below and occupy a major portion of this book. Stated briefly, however, the large-scale dependency of the adult citizen on governments is always inherently pathological and always profoundly detrimental to…” Lyle H. Rossiter, The Liberal Mind: The Psychological Causes of Political Madness, p. 71.

Cal Watchdog adds to the idea with the most recent businesses leaving:

Waste Connections, a Folsom-based garbage hauling and landfill company, said last week it is busting a move for Texas. Santa Barbara-based Superconductor Technologies Inc., which develops advanced superconducting wire, also confirmed this week it is leaving for the Lone Star State.

After California’s ongoing budget imbroglio, there is arguably no greater crisis facing our once Golden State than the continuing exodus of homegrown companies like Waste Connections and Superconductor Technologies. Yet, lawmakers in Sacramento are doing next to nothing about it.

In fact, Waste Connections CEO Ron Mittlestaedt actually warned state officials back in August that his company was thinking about relocating to another state. Those officials failed to step up and dissuade the Sacramento region’s largest publicly traded company from leaving.
Higher Taxes

Mittlestaedt echoed the lament of all too many California CEO’s that the state is inhospitable for business. It “has the highest tax rates in the nation,” he told the Sacramento Bee this week, “and they’re going higher.” And California is not only fiscally broke, he said, but also “structurally.”

By that, he was referring to the state’s hostile regulatory environment. As when the Legislature this year neglected to pass a measure that would have made it easier for Waste Connections and other landfill operators to move trash around the state, while doing no harm to the environment.

Superconductor Technologies CEO Jeff Quiram said in a statement that the company’s goal of becoming “a leader in the superconducting wire industry recently reached the inflection point where it was time to make a move.”

Translation: The cost, the hassle of doing business in California has risen to such a level that aspiring companies like STI cannot grow their businesses the way they can in competing states….

…read more…

Other posts referencing these issue worth checking out: