26 October 2010

A Problem of Perspective

Austan Goolsbee, the new chairman of Obama's Council of Economic Advisers addresses tax "cuts" in this video. I put "cuts" in quotes because, as noted elsewhere, this is not a tax cut but a tax hike. Anyway, here is the clip:

Around the 0:50 mark we come to the fundamental difference in perspective between the progressive/socialist model of government and the classical liberal/libertarian model*. Goolsbee says, "giving these big red eggs to the very high income people would cost $700 billion that we would have to borrow to give it. If you ask objective economists and analysts around the country about what is effective you will find that everyone agrees that these giant tax cuts for very high income people are the least effective thing we can do to get the economy growing."

Let's just stipulate once again that what is proposed is a tax hike, not a tax cut. If the Obama administration has its way, so called "very high income people" will be paying more in taxes next year, not less. That is a tax hike.

Next, Goolsbee says "giving these big red eggs to high income people." The government has nothing to give here. This money already belongs to those "high income" bastards who earned it. Taxation is taking, plain and simple. Just because someone earns more money doesn't mean that they have less of a claim, or the government more of a claim, on it. Any income legally obtained is a person's property.

Then Goolsbee says that giving people what already belongs to them will cost $700 billion. This is stretching the concept of cost beyond any sensible use of the word. "Allowing" people to keep what is theirs is not a cost. Not squeezing more money out of other people for being productive is not a cost. Spending is where costs come from. What costs the government billions and trillions of dollars is throwing away all of the revenue they already take from us, most of it in the form of transfer payments beholden only to bureaucratic inefficiency. That we would have to "borrow" money to pay this cost is sophistry.

But to prove his thesis Goolsbee says that you need only "ask objective economists and analysts about what is effective." I'm noticing this argument technique more and more. It is used constantly by people like Paul Krugman who know full well that there is just as much objective analysis out there, and usually more so, showing unequivocally that what you're selling is horse feathers. It marginalizes any counter-argument as unserious and unworthy of response. In this scenario, anyone with the temerity to disagree with the Goolsbee analysis is politically motivated, while he merely represents what is best for the country as all of the objective smart people concur.

"Everyone agrees that these giant tax cuts" are ineffective at spurring economic growth. See above and see above but also there's some other sleight of hand going on here. There is indeed literature that supports the notion that massive tax cuts during recessions are ineffective at ending recessions in and of themselves. From a classical economics standpoint it is feasible but debatable and certainly not the open and shut case Goolsbee promotes. Morally, of course, it is a slam dunk not to take that which does not belong to you but that's another matter entirely. But again, we are not debating a tax cut. What is much more prevalent in the literature, whether classical, neo-classical, Austrian, hell, even Keynesian, is that tax increases, which this surely will be, are a horrible idea and severely restrict economic growth. The most simple reason is that the market, for all of its flaws, is the most efficient method man has come up with for resource allocation. And government, for all of its useful purposes, is usually the worst. And neither Austan Goolsbee, Barak Obama, Paul Krugman, John Maynard Keynes or any of their strawmen can change that.

*The liberal-conservative dichotomy doesn't work because conservatives have shown just as much fealty to government and using power never given to it to promote idiotic social policy as opposed to idiotic fiscal policy.

It appears Dr. Goolsbee has used his White Board disingenuously before:

15 October 2010


The only thing more annoying than a politician that "rolls up his sleeves" to show solidarity with those who actually have to work and produce things for a living is when politicians curse to show how tough/cool they are--you can imagine how I would feel if a politician were silly enough to do both.

Check out the above video, especially from 1:58 to 2:10. This was embedded with an article from Roll Call about Patrick Murphy (D, PA-8, the rat I'm currently cursed with) addressing and how his race is emblematic of Pennsylvania politics as a whole.

For now, I'll skip his opponent claiming that Murphy doubled the unemployment numbers and focus on Murphy's idiocy. First, Mr. Murphy cannot point to a single job, firm or industry from his district that pulled up and headed to Central America after CAFTA was passed. Second, even if he could, would Americans, including members of his district be better off? Short-term of course some would be worse, but balanced by the immediate short-term gain by everybody else, that's a wash. Long-term, of course, everybody gains with free trade.

Mr. Murphy, as he has done since he took office, here proves that either he knows absolutely nothing about economics or that he does and ignores all of that silliness and facts to pander to his constituents in an effort to keep his job. If it's the former, fine. If you don't know your subject, though, you really ought not speak on it. True, this would make politics a lot quieter, but I think that's something most voters would embrace. If it's the latter, also fine. I just wish he had a capable opponent who could effectively demonstrate this, expose the idiot and have him drummed out of office. The problem here is that his opponent is doing the exact same damn thing.

One of my favorite teachers in high school once said that the "function of politics is to remain in office." The older I get and the more elections and campaigns that I see, I realize that this may have been the most accurate statement uttered in my four years there.

Bonus Time

The federal government is about to get generous, again. Not happy that there won't be a cost of living increase in the transfer payments administered by the Social Security Administration--because the cost of living hasn't increased--Congress is about to give $250 dollars to each recipient of Social Security transfer payments. 58,000,000 people at $250 each comes to $14,500,000,000 (or $1.45 * 10^10).
It's like a christmas bonus, except the "employees" (transfer payment recipients) haven't produced anything, and the "employer" (Feds) also hasn't produced anything, especially profits, to disburse. They are taking more money from productive citizens (or future productive citizens) to give more money to millions of voters for doing nothing and whose costs haven't gone up.

14 October 2010

Oldie But Goodie

Great article from the New Yorker on the "Rubber Room" for incompetent and/or derelict teachers in the NYC school system. They get paid full salary and continue to accrue pension benefits. Complete waste of taxpayer money.
Why does competition in private enterprise make other goods and services cheaper and/or better every year, yet it is considered beyond the pale to suggest a competitive market model for education?
A neighboring school district is about to go on strike, and is currently "working to contract," because the school board has the temerity to ask that the teachers contribute to their healthcare plan (currently the teachers pay nothing). By working to contract, this means not doing things like attending back to school night or assigning/grading homework.
The treachers associations aren't the only problem. Administrations and school boards also have no feedback loop that prices and competition provide.
So get rid of all of them.