Category Archives: Capitalism

Capitalism, Libertarianism

PEP Amendment (Privatize Everything Possible)

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Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

The government shall engage in no service that private enterprise is able and willing to provide not specifically designed to protect the rights of others. – My proposed Constitutional Amendment.

Recently a Michigan woman named Amanda Clayton was discovered to have been using food stamps after winning a million dollars. Once the story broke, her assistance was quickly cut off, but apparently her actions may not have been illegal. (update: She pleaded No Contest for fraud, and eventually was found dead of a drug overdose.)

Amanda Clayton
Amanda Clayton

 

I liken government to a loving three year-old who draws their parent a picture. Sure they mean well, and the picture was drawn with love, but let’s be honest; the kid is not Picasso, and it’s a picture only a mother could love.

Government tries honorably to help the helpless, but if you put food outside for the local feral cat, it’s probably going to get eaten by a raccoon, opossum, or a myriad of other local scavengers because self-enrichment is in every animal’s nature. Whether it was intended for them is irrelevant.

Imagine if I were to put a million dollars in a town square, leave it unguarded with only a sign that reads:

Money for the needy. Take ONLY what you need.

Most understand that money would be gone in seconds, and much of it would be going towards “wants” not “needs,” and not necessarily taken by the needy either. It may seem like they are bad people, but they are not—they are simply doing what comes natural, either by squirreling away every nut they can in case winter comes early and ends late, or just improving their own standard of living.

The government should try to prevent this type of behavior that leads people to take advantage of government programs they don’t genuinely need, but why would they? They do not fear going out of business nor have a bottom line to meet. They have no motive to improve because they don’t have a competitor coming up with more innovative methods they could emulate such as private companies in a free market.

I want America to go crazy with privatization! For example, statistics show charters and private schools predominantly outperform public schools. Some fail, just like any other business, but they will be replaced with newer and better ones, just like any other business.v2002-44a[1]

I’m 40 years old, childless, and sick of paying to educate the children of others. If you’re going to produce children, it’s your fiduciary responsibility to educate them, not mine. I’m even sicker when young people don’t understand why I give them $8.14 for my $7.89 Taco Bell order because they apparently don’t teach mathematics in public schools anymore either. All I want is a freaking quarter, kid!

With my new PEP amendment, the government would be banned from education altogether. Give every citizen their money back from school taxes, and let the parents deal with their children’s education how they best see fit.

The post office loses money like a gambling addict in Vegas. Let Fed-Ex or UPS buy up that business. Their balance sheets show they’re clearly better at it, and if the USPS went away, one of them would certainly pick up the slack more cheaply and efficiently. Some might argue that if this were true, Fed-Ex and UPS would already do it, but since 1845, federal law prohibits any organization from delivering 1st class mail outside USPS.uspslogo1[1]

Private jails have proven to be far better economically than government-run ones. Privatize them all!

Ever watch a public road crew work? There are five supervisors watching one guy do all the labor. You can just feel your tax dollars burning, and you can’t even make s’mores with the fire. When the government allows private companies to bid for these jobs, they are almost always done ahead of schedule and under budget because companies get rewarded for doing so. The quality of the work is often better as well.

Back to the lottery person and entitlements in general; I used to work for an insurance administrator overseeing the claims process. We were literally in charge of a third party’s checkbook. We processed claims using our expertise on contractual law, parts resource knowledge, ability to detect fraud and waste, and so on. There are many similar administrators–some good, some bad. The bad ones failed, but we grew strong because we paid every legitimate claim possible while guarding the checkbook like our life depended on it. Oh wait, it did.

If the government had paid us to do so, I have no doubt we could have protected your tax dollars from Welfare, Social Security, Food Stamp etc. fraud and waste far better than they do themselves.

A friend argued that if we got an incentive for saving money, we would just avoid paying claims altogether and deny everything. However, we would still answer to our claimants as well as our employer. If we didn’t pay legitimate claims, we’d open ourselves to lawsuits which are more expensive than just paying the claim, public outrage, our auditor’s ire, and the people with the checkbooks taking their business elsewhere.

The one shining example of our government doing something right is our military. Ever notice that the military doesn’t build much? They get planes from Northrup Grumman, weapons from Colt, vehicles from AM General, etc. It’s a great example of the government utilizing the private sector whenever possible, and it works damn well as evidenced by our dominant military might.

I’m sure many of you could think of more instances where government could turn services over to private companies. I’m also confident most of our legislators could as well. It’s time we Americans demanded it of them.

 

Capitalism, Libertarianism, Logic & Reason

The Myth of Evil Corporations

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Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

How many times have you heard “that’s how they get you” in reference to corporations? Advocates of socialism love to paint a picture of corporations as evil entities that get rich at the expense of the poor working class.

I had someone ask me about corporate person-hood—in particular, the legislation that among other things, allows corporations to donate funds to a political campaign.

I responded that corporations should be able to donate as much money as they want, since it’s their money. As long as the donated money is publicly available information, and there is no expected “behind-the-scenes” quid pro quo—meaning that it remains a donation, not a secretive payment for services rendered, then there is no reason to deem such transactions as inherently bad.

In my perfect scenario, we would get rid of corporate donations along with corporate taxes. Logic being that if they have to pay into the system, they have a right to participate in it. But, if we move to just taxing the incomes of the corporation’s employees and officers, we don’t need to tax the corporation as well, and then we make all political donations come from private individuals.

But back to my friend and his “evil corporations” thoughts.

His argument was that politicians getting large donations from corporations will act at the behest of those corporations at the expense of the American people. But let’s analyze the flaws in this argument.

The most abhorrent reason to me is that they assert corporations are the archenemy of the electorate as if it’s unquestionable fact. While Michael Moore and other self-described socialists would have you believe that corporations are evil, it’s simply not true. They have a highly-vested interest in being responsible and beneficial parts of society, because a free market, and free press guarantee they’ll be destroyed if they’re not.

Filmmaker Michael Moore
Filmmaker Michael Moore

My friend’s arguments are the position of people who form opinions based off of fictional idealistic utopias, not the historical data available to them. History has routinely shown that economic freedom has always done better by its people than state-run totalitarianism—the evidence is overwhelming.

Nearly every American, including many of the socialists among us, has dreamed of owning their own business or being their own boss, even if few actually achieve it. Usually, those dreams are of providing a product/service they enjoy using or doing themselves. So am I to assume that they would call themselves evil if they were to achieve their dream?

Jealousy is a powerful emotion, and it drives people to say mean, hateful, and ignorant things. What these people are saying, in effect, is, “Although I’d be a responsible business owner, I don’t believe anyone else would be.” It’s a pathetic blend of class warfare and hypocrisy to assert that you and only you would be a kind and responsible business owner.

Corporations are a group of human beings just like the rest of us who deliver a product or service in order to make a living by way of making a profit. There is nothing wrong with that, and you should be wary of anyone who thinks a corporation looking after its bottom line is “evil”.

Bill Gates
Bill Gates

While some corporate big-wigs might be bad people, to classify them all as evil is irresponsible and unfair. Bill Gates donates over a billion dollars to charity, and yet he ran one of the largest and most fiercely competitive corporations.

The free market is driven by competition. If a corporation didn’t do everything in its power to sell more products and gain market share, then it shouldn’t be in business.  The success that comes from this creates jobs and delivers superior products for a reasonable price.

The other problem I have with this is the notion that a politician acting in the interest of a corporation must be acting against the interest of America. The two are not mutually exclusive.

For example, if legislators deregulated the auto industry by curtailing the overreach often employed by OSHA and the EPA because GM, Ford, and Chrysler lobbied them to do so, that would allow those companies to grow, beat their overseas competition, and create more jobs here in the United States. More often than not, what benefits corporate America, benefits all of America. To insinuate otherwise equates to ignorance of basic economics.General Motors

America should avoid painting corporations out to be evil. They are the backbone of economy and are inherently good. They provide virtually everything we enjoy for a far more reasonable price than we could attain if we had to build it ourselves, and they help us pay for it by providing us jobs.

If corporations are bad, the only alternative is government. The evidence we have from the former socialist Russia, Cuba, North Korea, etc. all indicate those folks have a significantly worse quality of life than you and I here in the USA.

Capitalism, Libertarianism, Logic & Reason

The Economics of a Frivilous $8,000 Purse

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Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

Recently, a socialist-minded coworker was having a discussion in the office, and indicated she was disgusted that a famous celebrity bought a new purse, costing thousands of dollars. They said something to the effect of, “Yeah, that’s why the rich need more tax breaks, so they can buy expensive purses” followed by a pejorative laugh.

So I did a Google search for this purse company, Bohlux. As it turns out, they are made here in the United States. Certainly I think $8,000 is a ridiculous sum of money for a purse, but I’ve always told people that it’s important to understand that “expensive” is a relative term. Since I am fairly poor, I couldn’t dream of spending money on something like that, but to someone who makes several million dollars a year, it is less than a week’s pay, meaning that $8,000 to her was like me buying a nice dinner.

Bohlux Structured Hand Bag
Bohlux Structured Hand Bag

My left-wing cohort’s argument of course, is that the money would be better spent in the form of taxes to assist solving every American’s problems at the government level. But let’s think about what would happen in the two scenarios for a moment.

If that money went to the government, it would end up in places like Solyndra. It would end up in the hands of entitlement abusers such as welfare fraud perpetrators or unemployment collectors who could work, but choose not to. It would end up in the pockets of politicians. Or it would end up supporting a myriad of other wasteful government programs—the list goes on.

I’m not condemning all government functions, I do believe that there are some good roles for Uncle Sam, and there is a need for taxes to pay for those services. I’m a libertarian, not an anarchist.

I am not trying to assert that the above list is representative of the whole of government or even the majority of it, but it is a substantial portion. The problem is, virtually none of those people or causes actually did anything to earn that money and therefore should have no right to it.

On the contrary, if a millionaire buys an expensive purse, an American purse maker made money, the store that sold it made money, the employees of the manufacturer and the store got paid. Then all those people probably spent that money on goods and services at local stores who also made money…and the cycle just keeps going into a nice, free-market, economic circle. The most important part of that though, is that the people in this scenario did actually earn that money.

The fact is that the people who get mad at rich people blowing their money on frivolous items don’t seem to get how that helps the economy. The money they spend literally creates jobs because someone is performing the service they are paying to receive or building the product they are buying, where entitlements simply delay the inevitable.12627-highlights-rockstud-craftsmanship[1]

If rich people just sat on their money and stuffed it in a mattress, then yes that would hurt the economy, but that rarely happens. The rich invest their money, they spend their money on needs, they build companies that create jobs, or they enjoy it through wasteful spending on purses and such.

We covered how spending helps, but investing helps too of course.

If they buy a million dollars of stock from a company, that company uses that money to grow their business, often in a new direction. That results in the company hiring new employees which is also a boost to the economy.

Standard Oil Common Stock
Standard Oil Common Stock

If they buy stock from a private owner, that person now has cash in their hands to spend on goods and services, which again creates jobs.

People often refer to the term “Income redistribution.” I think the term is inaccurate because both situations redistribute wealth. However, the system those of us on the small government conservative side promote redistributes it to people who earned it, whereas our big government friends redistribute it to those who didn’t.

So when they talk about “fair share,” I’m sorry but their understanding of the word “fair” is grossly misappropriated.

Capitalism, Libertarianism, Logic & Reason, Science & Skepticism

Simple Math: Economics 101 – Why Government Sucks

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Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

Math Problem #1

Let’s imagine there was a country with 50 citizens.

Then let’s imagine they all made a product that generated them $2.5 million in income. For purposes of this argument, we’ll say $50,000 a year for each of them.

Then let’s imagine they decided to elect one person of the group to be their “government” because they felt like they needed someone to handle things a government generally does. This means that they can now only make $2,450,000 worth of goods, because the 50th person isn’t producing any longer.

At that point, the 49 people, making $50k each still, would have to sacrifice about $1000 each to pay their government employee who is no longer generating product themselves because he/she is the government now. The result would be that they would all only make $49,000 each instead of $50k, including the government worker.

Now, let’s imagine that you kept adding government functions and thus needed more people to administrate them until you got to a 50/50 ratio of private sector/government workers. The 25 remaining private sector workers that started out making $50K would have to contribute $25K each so that their 25 government counterparts could make $25k each as well.

Notice that in each scenario, as more workers were moved to the government, the average income for everyone went down while the amount of goods they produced went down as well? The fact that government employees no longer generate a marketable good is often lost on people. They are a necessary expense, but entirely an expense, nonetheless.

Here’s where the math gets interesting though. The drop from 50:0 private sector/government workers to 49:1 resulted in a mere 2% loss for everyone. However, the drop from 25:25 to 24:26 ($25,000 to $24,000) would result in a 4% loss for everyone, and if we were to go from 10:40 to 9:41 ($10,000 to $9,000) it’s a difference of 10%, and the 2:48 to 1:49 ($2000 to $1000) is a difference of 50%!

What does this mean you ask? It means that as we add government employees, the losses are not linear, they are exponential, as it relates to the earner. The addition of each government employee hurts at a higher percentage than the addition of the one before it, as opposed to just the same hit each time.

This is a simplified equation to make it easily understandable, but the beautiful thing about math is that it doesn’t care whether one likes it or not. It simply is what it is.

While it is easy to want the government to solve all of society’s problems, individual problems are the responsibility of the individual to fix—not mine, not their neighbor’s, and not their government’s. When the government grows, we all hurt.

Math Problem #2

People assume that government workers are taxpayers. While it is true that they return some of their income in the form of taxes, from a mathematical standpoint this is false.

Again let’s assume they make a $50k salary, and then let’s assume they pay $15k in taxes. That is a net cost to the actual taxpayers of $35k, right? Wrong actually, but I’ll get to that in a minute. So while they are paying taxes, it’s still a debit, not a credit. The term payer gives the impression they’re contributing, but from a mathematical standpoint, government workers are takers, not contributors, and when they “pay” taxes, they are effectively just reducing the amount they take.

I know I said that that’s a cost of $35k, but like a stereotypical politician, I lied to you. Because if that same person were in the private sector making $50k and paying $15k in taxes, that would be a $15k credit to the tax pool. So it’s either a $35k loss if they work for the government or a $15k credit if they’re in the private sector. This means that the loss is the entire $50k. So yes, they do “Pay” taxes, but be assured their complete $50k salary is the cost to us taxpayers, not just the untaxed amount of $35k.

Summation:

After reading this, it may seem that I am anti-government. I am not anti-government or even against government workers. Government serves an important role as it is the only thing separating us from anarchy.

However, one should think of government workers like food. It is necessary for us to have government, a proper diet and proper portions are required for good health. But while that stimulus slider, regulation cookies, and entitlement cake may look good and even taste good, they are surely the way to diabetic shock and an early death if not done in moderation.