That may be true. More people are asking about the size and scope of the federal government. The Chairman of the Federal Reserve is giving press conferences and being asked tough questions. Government deficits are getting plenty of attention.

But do that many people really agree with Dr. Paul on the causes and solutions to those deficits? In his May 11 U.S. News article “5 Reasons Taxes Are Going To Rise”, Rick Newman writes:

The United States has been spending well beyond its means for a decade, borrowing to make up the difference and racking up debt that now totals more than $14 trillion—about the size of the entire U.S. economy. This year, the government is on course to spend about $3.8 trillion, while taking in just $2.2 trillion, mostly through taxes. So it’s borrowing to finance an astonishing 42 percent of its spending. For anybody who thinks it’s easy to cut 42 percent of all federal spending (and still get reelected), here’s how that spending breaks down:

Social Security and Medicare, the government’s two most popular programs, account for 39 percent of all spending.

Defense accounts for 20 percent.

Medicaid, which helps keep our embarrassingly high poverty rate from being even higher, accounts for 7.5 percent.

Interest on the debt, which must be paid unless Washington is willing to default and cause a global depression, is 5.4 percent of federal spending.

Everything else — which includes running the government, keeping the federal courts and foreign embassies open, managing the air-traffic control system, building and maintaining interstate highways, offering aid to victims of floods, hurricanes, and tornadoes, and thousands of other functions no other entity can really handle—accounts for the other 28 percent of spending.

Some of that can surely be cut without ruining the republic. But not 42 percent of it.

Not 42 percent? Just under 40 percent alone comes from unconstitutional transfers of wealth to those over age 65. (The money withheld for Social Security and Medicare are not and have never been “locked away”, but instead almost immediately transferred to those eligible to receive it.) Another 7.5 percent comes from transfer payments to the poorest among us.

Another 20% is from what is euphemistically called “defense” but which is, as Dr. Paul repeatedly points out, more realistically an overextended military engaged in pre-emptive policing in foreign lands and outright offense. That $760 billion per annum on “defense” could probably be cut to far less than 10% if the military’s activities were truly scaled back to simple defense.

Mr. Newman — and no doubt several hundred million U.S. citizens — also believes that highways, air control and “thousands of other functions” can only be handled by a centralized federal authority. Right now we don’t need to argue about how markets (and market anarchism) could provide roads, education and justice. But we do need to realize that the “two most popular” social programs are almost entirely responsible for the part of the bill that the government can’t pay.

It seems that government can easily afford to pay for the basic infrastructure and justice system with the tax money it collects (whether it provides these things efficiently is a worthy consideration for another time). These are the things that everyone but anarcho-capitalists can agree on: the physical infrastructure of roads, the administration of justice and the defense of the national borders.

It’s the Other Stuff, the wars of aggression and most tellingly the welfare programs that are putting the government deeper and deeper into debt every year.

Balancing budgets really isn’t that tricky. You spend less than you take in until your debts are paid. It’s the realization that you can’t have it all where most people get caught up. You can’t buy more than you can afford, at least not forever. At some point your creditors stop extending you a line and the repo men start to appear.

Americans seem to want to give nothing up…or to delude themselves into thinking unworkable compromises will actually work. Maybe just slightly higher taxes with slightly reduced benefits. Maybe much higher taxes with the same benefits. A vanishingly small percentage of the populace — mostly the kind who would welcome a Ron Paul Presidency — is thinking of truly drastic reduction or even elimination of entitlement spending and a eventually a lower tax burden.

Government can try to raise taxes, but is it really a good idea to take more private funds to keep up welfare transfer payments? It’s hard for entrepreneurs to invest in new business or for businesspeople to grow existing businesses when their profits are increasingly appropriated to pay for strangers’ retirements and their medical care…or to send drones to bomb another village in a foreign desert for that matter. The more taxes are raised, the more the private sector shrinks; there is less wealth to tax; less of an economy to provide jobs and therefore more of a perceived need for government to step in and “help”. This vicious cycle has been accelerating for nearly a century (starting with the creation of the Federal Reserve, then continuing with two world wars and the explosion of social programs under Lyndon Johnson).

But growing numbers of people are catching on. That’s why Ron Paul made his announcement to run yet again. The ugly truth is that welfare (Social Security, Medicare and Medicaid) and warfare are doing what they always do: bankrupting a nation. The only way to arrest the problem is to make people realize that the government has made more promises than it can afford to pay for with the money it takes in…and that many (all?) of those promises should never have been made in the first place.

Dr. Paul may very well not win the presidency. He may not even get the Republican nomination, but he’s already done the vital work of educating the public and initiating a change in public opinion. He’s the herald of the proverbial Idea Whose Time Has Come. Like he said in this morning’s interview, he’s already won.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder

May 13, 2011

The Timeliness of Another Ron Paul Presidential Bid was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

To this editor’s mind, the only way to avoid being complicit in the crimes the victorious party will inevitably commit is to wash your hands of the whole affair. Vote with your feet, in other words…by walking away from the ballot box and tending instead, as Voltaire might say, to your own garden. That way the next time the Republocrats decide to dip into your kiddies’ savings account to prop up this or that corrupt financial institution or to start a greasy war to “win hearts and minds” in some far off land, at least you’ll know they didn’t do it with your implicit backing.

As Doug Casey pointed out recently, “I think it’s like they said during the war with Viet Nam: suppose they had a war, and nobody came? I also like to say: suppose they levied a tax, and nobody paid? And at this time of year: suppose they gave an election, and nobody voted?

“The only way to truly de-legitimize unethical rulers,” the International Man went on to say, “is by not voting. When tin-plated dictators around the world have their rigged elections, and people stay home in droves, even today’s ‘we love governments of all sorts’ international community won’t recognize the results of the election.”

Those looking to affect real change in the system, therefore, might wish to start by refusing to support the existing one. Just a thought…

But by wading into politics we’ve digressed from our non-stated mandate; strayed from our usual beat.

Wait! No we haven’t!

More and more these days do the spheres of politics and economics overlap. Both can and do seriously impact your money. And that’s what these pages are about: your money and, at least of equal importance, your money as a means to achieve your personal freedom.

Welfare/warfare states aren’t cheap to run…There are bombs to make, bases to build and banks to bail out. Then think of all the people the government pays not to work…the 42 million mouths- worth of food stamps…the money to bribe people to trade in their old cars for new ones…and, of course, the cash to hand directly to the auto companies themselves!

This is by no means an exhaustive list, of course. A “good” politician is never short of something to sell. A new scheme, scam or the like. Let this racket run long enough and pretty soon plasma television ownership becomes a “basic human right” and the overreaching arm of the state takes to telling you what you can and can’t watch on the thing.

Society is full of busybody do-gooders and navel-gazing morons who are happily eating up a larger and larger share of the nation’s once- productive capital. And, as this group grows and grows, they eventually shift from a disheartened minority down on their luck to taking full control of Congress. That’s when the taxpayer checkbooks really come out. Initiatives that begin as “state services” invariably end up making us servants to the state. And, in the end, voters only have themselves to blame.

Regards.
Joel Bowman
Whiskey & Gunpowder

November 3, 2010

The Only Good Vote Is a Non-Vote was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Doug: No.

L: That’s it? No?

Doug: Most charities aren’t worth the cost of the gunpowder it would take to blow them to hell.

L: And the permitting for the demolition — fuhgeddaboudit. But can you explain why?

Doug: Sure. Charities are largely counterproductive. Their main beneficiaries are not the intended recipients, but the givers. They get some tax benefits, but mainly they get the holy high of do-goodism. Frankly, the idea of charity itself is corrupting to both parties in the transaction.

For instance, take Bill Gates and Warren Buffett. Both are geniuses at their businesses. But they’re the type of geniuses I consider to be idiot savants. If they really wanted to improve the state of the world, they should continue doing what they do best, which is accumulating wealth. Or, actually, creating it — as opposed to dissipating it by giving it away. Giving money away breaks up a capital pool that could have been used productively by those who build it for making new wealth (which increases the amount of wealth that exists in the world).

Worse, giving money away usually delivers it into the hands of people who don’t deserve it. That sends the wrong moral message. People should have, or get, things because they deserve them. And you deserve things because you earn them. In other words, wealth should be a consequence of doing things that improve the state of the world. Endowing groups, or individuals, because they happen to have had some bad luck, or are perpetual losers, is actually immoral.

When money is given away, it’s almost as bad as government welfare. It makes it unnecessary for the recipient to produce, and that tends to cement him to his current station in life. The very act of making an urgent situation non-urgent takes away the incentive, the urgency, to improve.

Morally speaking, charity is not a virtue, it’s a vice.

L: The giver gets to feel good at the expense of the people whose independent drive they undermine. But what about the programs that are specifically designed to teach an individual to fish, rather than to just hand out fish — those that teach job skills, for example — do you see them the same way?

Doug: I’m not saying that programs like that can have no positive effect. There are people who genuinely want to improve themselves, but, for whatever reason, just can’t manage it on their own. But charity is not the best way to approach the issue.

Look, the basic point I’m making is that the best way to reduce the amount of poverty in the world is to create more wealth — as much as possible, as quickly as possible.

The essence of a charity transaction is to transfer wealth from those who have shown they can create it to those who have not shown they can. I mean, if a man doesn’t know how to “fish,” which isn’t exactly rocket science, after all, you have to wonder why. Money is best left in the hands of the most competent and productive people, and the best way to tell who’s the most competent and productive is generally to look at who’s created the most wealth.

L: And the more wealth there is in the world, the better off everyone is — even those who end up working for the creators.

Doug: Right. And those employees are creating and earning on their own wealth as well. It sure has a lot more dignity than being a welfare bum. Besides, if they are competent and creative, there’s no reason for them not to rise to the top.

L: And as we’ve discussed before, you need large pools of capital to develop new technologies, and new technologies tend, on average, to improve the lot of the little guy proportionally more than the guy at the top of the social pyramid.

Doug: Yes. Charity exists, mostly, to make the donor feel good. It assuages guilt people accrue over a lifetime, for real or imaginary reasons.

L: I remember that interview John Stossel did with Donald Trump, in which he asked him to explain why he gave a billion dollars to the UN. Trump looked poleaxed for a minute, then got up and walked out of the interview.

Doug: [Laughs] That’s a polar extreme opposite to charity. That was giving money to an organization that is itself destructive. Counterproductive in the extreme. The UN, which is just a corrupt club for governments, should be abolished, not subsidized. And here’s this fool actually feeding the beast.

It’s a perfect example of what most so-called charitable giving is about. It’s an excuse for people to display their fine philanthropist plumage. It’s a never-ending contest of one-upmanship, to see who can be the king of the hill of fools for a day, by giving the most. In most cases, it’s not about what the money is going to, it’s about being a big shot among peers and getting invited to all the most fashionable parties. They get to socialize with celebrities and others who, in our corrupt society, buy fame by giving away money — which in many cases was either easily earned or unearned.

In most cases, philanthropy doesn’t arise from a love for one’s fellow man, but from a need to assuage guilt, a need to show off, and a lack of imagination.

L: So, your basic argument is like the old saying about it being common sense that it’s better (and cheaper) to put a fence at the top of a cliff, rather than to put an ambulance at the bottom of the cliff. That is, rather than putting band-aids on the poverty-stricken, it’s better not to have any poverty-stricken. Therefore, it’s better to allow wealth to continue accumulating and creating more wealth. And that means that any effort to take wealth away from the wealthy — the productive — and give it to the non-productive, is… counterproductive.

Doug: That’s basically the argument. Yes. And it’s true for both practical and ethical reasons.

L: Okay. So, what happens when you run into literally starving orphan babies in Haiti, the way you did? Even if you allow wealth to accumulate, and society becomes 50 or 100 times wealthier, and that decreases poverty by 50 or 100 times — or maybe 1,000 times. There will still be some cases of people who, through genuinely no fault of their own, truly need a helping hand — and the consequences would be dire if they don’t get it. What would you advocate in those situations?

Doug: Well, in the first place, though I’m not a Christian, let me quote Jesus of Nazareth. He said, “The poor, you will always have with you.” He had a different context in mind, but he was quite correct. That’s because in most cases, poverty is not a function of bad luck.

It can be, sometimes, of course. Perhaps if you’re born in a country with a brutal and repressive regime, or if you’re born with mental handicaps — there are all kinds of things that can happen. But generally, with a few such exceptions, poverty is simply a sign of bad habits. In a relatively free country, it’s a sign of an inability or unwillingness to save, which is to say, to produce more than you consume. It’s a sign of a lack of self-discipline. Sloth that afflicts those not willing to learn skills they can sell to other people. It can be a sign of having no self-respect, as among those who spend all their money on drugs and alcohol, which are debilitating, rather than strengthening.

In the vast majority of cases, those who suffer from poverty are not victims of anything other than their own bad habits.

L: Wow. Tough words.

Doug: It’s even worse than that. Think about it. Let’s say we’re looking at some place where there’s been a drought, or some other serious natural disaster, and then organizations like the UN ship in thousands of tons of food. What happens when that food hits the local market?

L: Does it even get there? Doesn’t the local dictator usually take it and sell it in some other country where people can pay for it, and then stash the cash in a Swiss bank account?

Doug: Well, that’s the first thing that happens, of course. But even when it gets through to them, such aid rarely helps the people it’s supposed to help. In fact, it usually hurts them, because, as I was saying, when all that free food hits the local market, it drives the price of food down so low, the local farmers can’t produce profitably.

What happens when you drive the local farmers out of business? They stop planting, there’s no crop the next year, and the shortage of food becomes even worse. The very acts of these charities trying to help people in famine-stricken areas prolong the famines.

Now, I’m not saying that if you know someone who needs a helping hand, and you feel good about helping — which is different from feeling guilty about not helping – that you shouldn’t do it. It can be a good-karma thing to do – and I do believe in karma, incidentally.

But when these things are institutionalized, they create distortions in the marketplace.

L: People may think it strange to hear you talking about markets in famine-stricken places or regions devastated by earthquakes, etc. But markets are everywhere. They are not physical places in New York and London, but are aspects of human psychology. They are patterns of human behavior created by people when they enter into voluntary transactions — as distinct from government action, which is always based on coercion. In today’s world, famine can still be caused by storms, drought, and other natural events. But it’s more often caused, and always aggravated, by distortions in the market: taxes, wars, idiotic regulation, runaway inflation, and the like.

Doug: And when a big charity intrudes on one of these weakened, distorted markets, it usually adds even more distortions, prolonging the problem.

Consider these charitable organizations going around the world treating diseases. The reason these countries have these terrible diseases that kill so many people is because they are economically undeveloped. Keeping people alive via extraordinary measures in such a place only results in more people competing for the same scarce resources. The answer to the problem is not to send in teams of doctors, so that you’ll have even more destitute people producing no wealth, but to free the local market so the people can become wealthy. The disease will go away as a consequence — this is the only permanent cure. What they are doing is the exact opposite of what they should be doing; they are making things worse.

L: Sounds pretty cold, Doug, to say, “Don’t send doctors-”

Doug: Well, don’t forget that a lot of people have supported the likes of Mugabe and deserve the economic ruin they are getting — and the diseases that are going to follow. Send doctors in if it makes you feel good, but it’s putting band-aids on smallpox. Don’t imagine that you’re actually helping solve the problem. People who do this kind of thing, I believe, do it because of feelings of guilt and shame they carry around inside. I understand them, but I don’t agree with them.

It does sound cold-blooded, and I’m sorry. I like kids and dogs and the same things most people like. But I’m not talking about whatever I or others might imagine is nice. I’m talking about the only real way to solve such a problem.

It’s disgusting to see the hot-shot yuppies self-righteously driving around the African bush in their new Land Rovers, pretending they’re eliminating poverty. That’s where most of the money goes, in fact. High living and “administration.”

L: You didn’t let me finish. I was saying that it sounds cold-blooded, but who’s really more cold-blooded: the one who knowingly spends precious resources on measures, knowing they won’t be effective and will lead to greater sorrow, or the one who has the courage to make the hard decision and reach for the real, long-term solution?

Doug: Yes. That’s the way I see it.

L: It occurs to me, reacting to the distinction you made earlier between individual charity and institutional charity, that perhaps it’s like religion. Whether we agree with their beliefs or not, it’s clear that many people derive value from those beliefs. But when religions become organizations and dogma sets in, they can get really destructive.

Doug: Well, as an individual, if I come across a person who I have reason to believe is worthy of my charity, and my trust, I might act individually. But yes, when things get organized, they get bureaucratized. It’s just the natural course of things; it seems almost universal that as organizations get older and more structured, they become counterproductive to their intended purposes.

Charity is especially prone to this problem because of the phony ethical notions that now seem to pervade Western society. It’s gotten worse over the last 100 years. People have come to believe that an instrument of coercion, the state, has to take care of them. Perversely, when the state engages in charity – which isn’t charity, because tax-supported giving is not voluntary — it discourages true charity. People who have money taken from them by the taxman have less of it to give to those they might know who genuinely need help.

L: The Tragedy of American Compassion. Marvin Olasky.

Doug: Great book. I think the Chinese are much more intelligent than Westerners in this regard. The only charity you find in most oriental societies is organized by beneficial societies that seem less pervious to squandering. Peer pressure and moral approbation keep them in line, unlike governments, which exist primarily to serve themselves. And taxes tend to be a lot lower in the Orient, so people have more money to give, if that’s their inclination.

In fact, one of the horrible aspects of this issue, in the United States, is that large amounts of money are stolen from estates in the form of death taxes. The idea seems to be that the government will deploy wealth more wisely than the children of its creators. But this is ridiculous. It’s part of the whole ethical morass that charity and taxation are tied up in, in the U.S.

Suppose you have a Chinese and an American, of equal intelligence, work ethic, education, skills, etc. — and an equal amount of starting capital. The American who starts with a dollar might end up with a million. But the Chinese guy in the same circumstances will end up with 50 million. All because of the difference in taxes and regulations.

But it’s worse than that, because whatever amount of money the American is going to leave to his kids, half of it is going to disappear down the tax rat hole, while 100% of the money the Oriental guy leaves will go exactly where he wants it to go.

That has major implications for wealth accumulation of the sort that we help people achieve. It’s another reason for the diversification of political risk we keep reminding people is so important.

But sadly, even if an American ends up with $100 million, odds are he won’t leave the bulk of it intact as an effective capital pool, to be expanded upon by his chosen heir. He’ll give it to some charity that will be run for the benefit of its board of directors. They get to be big shots with other people’s money — corrupting both themselves and the intended recipients.

L: So, the bottom line is that if you had a magic wand and could abolish all charitable institutions with a wave of it, you’d do it. And you would not replace them with anything. You’d use the wand to reduce taxes and regulations everywhere, to allow for more wealth creation. And for those few desperate cases clinging to the bottom rungs of the social ladder, you think individual conscience would suffice.

Doug: Exactly. To me, charity should be strictly an individual, one-to-one thing. That’s the only way you can know that it can really help, and even then it doesn’t always work. Once you have to hire somebody to run a charitable organization and have secretaries and assistant vice-presidents in charge of light-bulb changing, it’s just another bureaucracy headed for disaster, dissipating wealth as it goes, and doing more harm than good even among the intended recipients of the charity.

L: I don’t see a lot of immediate investment implications here, but there’s certainly a lot of food for thought for those intent on wealth accumulation.

Doug: Let’s just say that your moral obligation to the rest of humanity – insofar as you have such an obligation — is to keep your capital intact. First, that means to deny it to the state, which will very likely use it in a destructive way. Second, direct it to those who will use it to produce more — not to unproductive consumers. Third, take some personal responsibility, and do it yourself — don’t devolve it upon some unknown board of worthies who will have their own ideas about what to do with your money.

L: Got it. Thanks.

Doug: You’re welcome.

Doug Casey
Whiskey & Gunpowder

May 17, 2010

Charity and the Real Root of Poverty was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Personally, I give to political candidates who express my feelings, and especially at the local level. I tithe to my church. I give to the Nevada Northern Railroad, which is perhaps the one remaining steam railroad or railroad of any kind, which is totally original in every respect. I give to the Durango Railroad Historical Society which has restored the 315, the oldest narrow gauge steam locomotive there is. I am a life member of six historical societies, Colorado Railroad Museum, Museum of the Mountain West, the NRA and GOA. I have supported my kids many times. I am a big tipper at restaurants, because wait persons have to work hard for what they do, and far too many restaurant patrons leave a 10% tip or stiff them. I can go on and on, but that’s just me. It gives me great pleasure to give to those charities for which I approve.

I wouldn’t give a dime to the ACLU, Democrats, unions, the homeless, the lazy, dirty, beggars, or lots of others. I patronize symphony concerts, and give to the Utah Symphony. When I lived in Phoenix I was on the board of the Arizona Opera, and won a beautiful brass lamp for selling the most season tickets to the Phoenix Symphony. I love old people, buildings, cars, trains, carousels, books, film, music, and history. See? Now you know all about me and my likes, for what that’s worth. You can take it and maybe get a cup of coffee at Starbucks.

The point is that when I give to a cause or person, I want to be certain that the cause or person is a worthwhile cause or person. In times past, when a charity outfit existed and gave to the poor or needy, they had a woodshed out back, and the recipient was made to work for his or her handout, which is as it should be. I will give to help my neighborhood, town, state, or even nation. I consider the Tea Party Movement to be our one chance of national salvation, and I give to it, and stand on street corners waving my flag. I sent money to Ron Paul, and locals who are good people and who are running for office. I send money to Sheriff Joe Arpiao and J.D. Hayworth. John McCain has to go!

Many men in history have given their lives and money for their favorite cause. Henry Flaggler was a rich man, and he decided that he wanted to build a railroad to Key West, Florida. He did it, and it ran till a hurricane in the 1930’s took it out. He spent his wealth hiring thousands of men to do what he wanted to do. When you drive to Key West today, you drive over Flaggler’s bridges. Consider our Founders, who took their lives in their hands by signing the Declaration of Independence, and those brave fighters who fought for our independence. Good people are not afraid to give and work for causes or people they consider to be deserved.

The point of this is that when people do as they are able, to help those they consider worthy, it is totally on a volunteer basis. I give to those who will work for what I give them, preserve things, or be a good politician. Those on the opposite side of me will give to street panhandlers, Democrat candidates, and left wing causes, but still they are doing what they do on a strictly volunteer basis, which is as it should be. Slobs and ner-do-wells don’t keep their homes well groomed, thereby harming their neighborhood. Fools don’t discipline their kids and they turn out badly, but even this is voluntary. Fools don’t maintain their cars, and they suffer for it, but it is also voluntary. In a free nation, as we are supposed to be, charity starts at home, as the old saying goes. But does it?

Now that we have gotten the unimportant part over with, let’s get on to the real problem. My personal giving habits, are important only to me, although I did receive one letter from a reader who truthfully believes that some of the homeless are really worthwhile and can be helped. I don’t disagree, but not for me. We are generally adults as we were as children, or were raised as children, and it’s that way with me. I was exposed to railroads, old buildings, etc, as a child, and it stuck. I am probably a so-called ‘snob,’ because I was a spoilt only child who was sent to a superb private school. I can’t help my up-bringing, only to be thankful for it, which I am!

The point is, that whether you wish to give to the homeless, or whoever or whatever you wish to give to, it will be a blessing to you. But suppose you were forced to give to a cause you despised? Suppose you were forced to give to a foreign nation you disliked, or a charity you hated? This is what is happening to the tune of hundreds of billions of dollars every week, or maybe more. Your dollars, to the tune of $50 billion of them, and it will be more, believe me, has been sent to bail out Greece. I don’t want to bail out Greece, as it is their problem, not mine. The Germans have sent a lot more, to their loathing. Why do the Greeks need to be bailed out? Because their politicians, like those in D.C. have spent and spent, and spent, in order to get re-elected, and they have bankrupted Greece, just like the D.C. Gang has bankrupted America. The politicos in Spain and Portugal have done the same thing. No citizen in Greece, Spain, or Portugal voted to bankrupt their respective nations, and neither did we, but it happened, thanks to a small group of politicians in every nation.

Politicians have ALWAYS invented causes, bureaucracies, departments, and cabinet positions, which cost huge sums of dollars, and now euros, which will “benefit,” “protect,” or some such nonsense, which are damned lies 99% of the time. This spending, or forced charity, has bankrupted America, Spain, Portugal, Greece, etc. Japan, the UK, America, Mexico, and others may fall in line, and destroy the entire world’s currency and economics, which is why we have gold and silver. They are immune to political votes and destruction.

How about public housing, Medicaid, Medicare, and food stamps? How about TARP, and hundreds of billions of bailouts ‘to save the economy?’ How about foreign aid, and dozens of bureaucracies which are supposed to ‘make you safe,’ or ‘protect you from your enemies?’ Funny, but I don’t consider Iraq, Iran, Vietnam, or Korea, ‘my enemy.’ If a foreign nation is invaded or has a problem, let them solve their own problems, and don’t drag me down with them. I think that if a business, nation, or person can’t make it on their own, or can’t find a suitable private charity to help, they should simply go broke, or evaporate from the earth. Think of how clean and tidy the world would be, without those hangers on, and recipients of government largess, all paid INVOLUNTARILY by billions of taxpayers. The world’s scumbags and trash of all races, which pollute the streets and byways of most major cities, would not exist. Our taxes would be a fraction of what they are now, if indeed there were any taxes at all.

Then there are the public school systems, which long ago have failed to really educate kids, other than those who have had home schooling or caring parents. The public school systems gobble up about 75% of your property taxes. For what? As baby sitters? American children, BEFORE PUBLIC SCHOOLS, were hundreds of percentage points better educated, than they are now. Suppose, before public schools, parents didn’t teach or care for their kids? What then? Those kids would have failed in life, and probably had a short life span. Cruel? Absolutely not. If someone spends too much, drinks too much, does drugs, smokes, drives recklessly, takes chances with a bungee or parachute jump, and has their life cut short, so what? It’s their choice, just as it is a parent’s choice to train their kids and educate them or let them go the way of all flesh, and die young or be poor. Did George Washington, Ben Franklin, or Tom Jefferson go to a public school? Some of the most brilliant, artistic, and successful people in the world, had little formal education [as we understand it today], but they had caring parents.

Forced giving, in the form of taxation and currency degradation, throughout the world, should not exist, and it just as simple as that. Our Constitution limits the power of government, and 99% of what world governments do, is unjust to their constituencies, and actual robbery and wholesale theft. My parents thought that the public school system was abysmal in the late 40’s and early 50’s, and took me out of it, but they were hundreds of percentage points better then than they are now. Don’t blame the teacher’s unions any more than the entire concept of “public” anything, be it rest rooms, schools, housing, or hundreds of bailouts, subsidies, and benefits. All these things are given to the weak sector of the population or business world, at the expense of, and dragging down the strong. If they are weak and stupid, they should fail by their own devices, and not be allowed to hang on at my expense, your expense, or the expense of the world’s taxpayers.

Wouldn’t it be great to reform the world? We have a chance to reform America this fall, and in November of 2012. Let’s do it and contribute to and work for true conservative candidates. So far, it’s working, with several liberals or RINOS (Republicans in name only) being defeated in primaries. Anyone who voted for TARP, including John McCain, should be defeated. A long time Republican Utah Senator who voted for TARP, just got thrown out. Now he says he will run as an independent, which may allow a Democrat to win. How stupid!!!! Keep it up, and send checks to those who are needing of your support.

Regards,
Don Stott
ColoradoGold.com
Whiskey & Gunpowder

May 14, 2010

Forced Giving Isn’t Charity and It Causes Harm was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

One of those bad decisions, Social Security, still haunts America today like the grim reaper waiting to take his harvest. It’s strange to think the same men who courageously stormed the beaches of Normandy didn’t have the political courage to dismantle this ticking time bomb. If it wasn’t for WWII veterans, many believe that this article would be written in German. That might be true. But due to an exploding national debt and that generation’s failure with Social Security, we’ll be speaking Chinese sooner than German.

The lack of political will isn’t surprising since most past retirees were net gainers from Social Security while new retirees are net losers. Older folks love bemoaning runaway spending, welfare queens, and handouts. But often they don’t consider their own gains from the welfare state.

As Social Security taxes increased over time, so did the benefits. Essentially, previous generations paid into the system when taxes were low and retired when the benefits were high. A retiree’s maximum tax loss from Social Security in 1940 was $923 in today’s dollars. Compare this to the current maximum of $13,243.

To find the dividing line between net gainers and losers, we created a projection assuming an individual with a salary equaling the top taxable Social Security limit for 45 years (to get an idea of this amount, consider the limit was $3,000 dollars in 1940 and $106,800 in 2010 – both nice salaries). Our test dummy paid the maximum Social Security taxes every year.

On the other hand, upon retirement, he would receive maximum benefits. According to the Social Security Administration, maximum taxation is a prerequisite to maximum payouts. Next, we added Social Security benefits received over 13 years (derived from the average U.S. life expectancy of about 78). Finally, we calculated the difference between taxes paid over 45 years and the payouts received for 13. The results were shocking.

Before 2007, our projected retirees were net gainers from Social Security. 2007 retirees were the first net losers at -$411. By 2011, retirees will be -$40,403 in the red.

In the ‘80s, a Greatest Generation survivor retiring at 66 in 1985 received a net gain over his expected lifespan of $113,350 in 2010 dollars. Just a decade down the road, a 1995 retiree still profited by $67,982.

While welfare is often equated with public housing residents, perhaps nursing home residents should be considered too. These Social Security payments outweigh many welfare handouts. For example, California’s maximum TANF (welfare) payments for a family of three were $9,373 a year in 2005, inflation-adjusted for today. It takes over 12 years of welfare to equal the 1985 retirement net gain. (To be fair, if housing subsidies, food stamps, and other benefits were included, the number of years would be lower.)

So, are pre-2007 retired generations complete bums? Well, not exactly. It depends on how the money would have been spent otherwise. Suppose that instead of paying Social Security, the same amounts had been placed into an account earning five percent a year.

After 45 years starting in 1940 and ending in 1984, this account would have been worth over $297,000 in 2010 dollars. This is $44,000 more than 13 years of Social Security benefits starting in 1985.

Hence, older retirees are bums on a case-by-case basis. An investment-savvy penny-pincher would have lost from Social Security. Without the program, he could have invested privately. But spendthrift retirees benefitted enormously. The responsible saver is punished and the careless spender rewarded – the same old story of welfare retold for an older generation.

How Much Do You Really Pay for Social Security?

The government has pulled a fast one on most people. You pay half the Social Security tax and your employer pays the second half, right? No, wrong. You actually pay both.

Let’s go through this example to understand the point. Let’s say that a person earns $100,000 a year and pays $6,000 in Social Security taxes and the employer pays $6,000. In the eyes of the employer, the person’s services are worth $106,000 ($100,000 salary + $6,000 in Social Security taxes), that’s how much he costs the employer.

Now, imagine what would happen if Social Security taxes disappeared overnight. For a little while, the employer would profit by paying $100,000 for an employee worth $106,000. However, in a free market, prices move toward levels equaling the underlining value. Just like good underpriced stocks will eventually move up, so does the price for good undervalued employees – although, both may not be immediately appreciated.

Eventually, the person’s wages would be bid up in the market from $100,000 to $106,000. Because of this, the employer’s half is actually your half too. Without Social Security, your wages would be close to your value to the employer, in this case, $106,000. So, in reality, the person pays $6,000 in taxes and makes $6,000 less than he would in a completely free market, meaning that the real loss is $12,000 per year.

Regards,
Vedran Vuk
Whiskey & Gunpowder

April 8, 2010

When We Could Afford the Welfare Scheme of Social Security was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

I queried the ranger, “Why NOT feed the animals. It looks like they could use a bit of food.”

The ranger replied, “Well, there are MANY reasons. One reason is that we have many visitors here each year. If all the visitors routinely fed the animals, they would grow quite fat. Also, they would not have to forage for their food, and would become dependent upon the visitors for food. They would ‘forget’ how to forage for themselves and lose their independence. Not only that, but they learn to eschew their natural food and prefer ‘human’ food—which is not healthy for them. Also, since they don’t forage, they don’t get exercise, they develop health problems, and die early because of the improper diet and lack of exercise.

“If they become accustomed to being fed by the visitors, they will EXPECT to be fed by the visitors. As such, any visitor that did NOT give them food would disappoint them. A disappointed animal is a dangerous animal. The animal might well attack to secure the food to which he expects and believes he is ‘entitled’. This is not particularly hazardous if the animal is a squirrel—a bear is another story. Raccoons “vandalizing” garbage cans are quite common.

“If visitors were allowed to give out food, animals from all over would migrate here. The area would be overrun with various animals—which would lead to territorial fights among the animals. As more and more animals migrated and the supply of food remained constant, the animals would become very aggressive in their demands for food.

“Feeding such animals is fine if they are in some form of ‘captivity’, where the amount and type of food can be controlled, but it is not a good idea to feed such animals in the wild when they are free—particularly when the type and amount of food cannot be controlled.

“If an animal is injured in some manner, we often take them in and care for them and feed them—but it is strictly a temporary measure. We cut them off from dependency as soon as possible and place them back in their natural habitat.”

I asked the ranger if it wasn’t something like a “co-alcoholic”—a person that lives with and/or supports an alcoholic in his behavior. The support may be financial or moral or other, but it allows the alcoholic to continue to lead a destructive life. I asked, “When we feed the animals, is it that we do it to ‘feel good’ about OURSELVES that we are doing ‘something charitable’ by feeding the animals, when in fact we are doing great damage to their lives?”

The ranger agreed with me and said that in his opinion I was correct.

I left the park thinking about what I had seen and my conversation with the ranger. As I drove out the park entrance, a “street person” was there with a “please help” sign. I reached for my wallet for some money to assist this person in need when I recalled my conversation with the ranger. In a moment of insight, it was clear to me that I should NOT give this person money. In doing so, I was simply allowing this person to lead the kind of life he was leading—I was being a “co-alcoholic”. I was “Feeding the animals”.

I did not give the person money. Instead, I thought about our whole welfare system and the way is works (or does NOT work). It became clear to me that we are encouraging generation after generation to become dependent. They are essentially a slave to the welfare system. In some sense, they are in captivity.

I thought about the “families” of three and four generations of welfare recipients—many obese—living in poverty; people that have been “trained” to ask for “handouts” and have never learned how to “forage” for themselves.

I thought about the people in New Orleans during hurricane Katrina that had no ability or desire to fend for themselves and simply waited for the government to provide a handout and save them.

I thought about the “migration” of welfare recipients to various states where the welfare benefits are most generous—in particular to major cities in certain states. (Where the various politicians court their votes.)

I thought about how, as more and more people are receiving “subsidies”, each segment becomes more and more aggressive in their “claim” to “their share”.

I thought about the “demands” of the welfare recipients, the riots, the “welfare rights” organizations, the demonstrations, the court cases, and thought, “The similarities are so great they cannot be ignored.”

I thought about the “War on Poverty”, and wondered about the “exit strategy”, or the “definition of victory”.

I thought about all these things and thought, “What have we done through a mistaken notion of benevolence? In a sense, we have not only accepted inappropriate behavior and dependency, but we have encouraged and solicited it for our own purposes. We have been ‘co-alcoholics’ to these people. We have not helped them; we have domesticated them.”

May God forgive us.

Regards,
Anthony De Maio

October 29, 2009

Please Don’t Feed the Animals was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Of course, then you’ve got to live in Detroit. The papers report that life in the city is so grim 1,000 people move out every month.

We’ve never been to Detroit. Out of curiosity, we offered to take Elizabeth for a romantic getaway to Detroit for her birthday. Our offer drew this reply:

“Are you out of your mind?”

Poor Detroit. No one goes to the city for a holiday. Not even students. As near as we can tell people only go there if they have to. And then, they get out as soon as they can.

We can imagine what it is like. We lived in the Baltimore ghetto for nearly 10 years. If you want to know what it is like, there’s a TV show that chronicles life there – The Wire.

Was it disagreeable living in the inner city? No, it would have to undergo major improvements to be disagreeable. It was Hell. Drug dealers on the street corners. Trash in the alleys. Everybody with a pistol in his pants and a chip on his shoulder.

Elizabeth was once on the phone with her brother.

“What’s that noise in the background?” he asked. “It sounds like popcorn popping.”

“Oh, that’s just someone shooting in the alley,” Elizabeth replied. “I think they’re trying to settle an argument.”

We’d been there too long. Elizabeth hadn’t even noticed the gunfire.

But it shows what government can do when it tries to fix a problem. In the case of Detroit and Baltimore, the government provided massive bailouts. Education standards collapsed…so the government provided money to the local education bureaucracy. Jobs disappeared (largely because people couldn’t read or write)…so the government provided massive bailouts in many different bureaucracies – training centers, welfare, food stamps. Pretty soon, the only industry left was the welfare bureaucracy.

We don’t know how it works now, but when we lived in the ghetto a girl’s best career path was promiscuity. She got more money with each child she had…provided, of course, that the father didn’t take responsibility for it. Then, the child grew up…took drugs and stole cars…until he got sent to prison. One problem led to another – but it could all be traced to the government’s giveaways. They had the same effect in Baltimore as they had in Burkina Faso. The political elite took the money and lined their pockets…the masses become more miserable than before. And the worse conditions got, the more money the cities received from federal bailout programs.

Baltimore is still in business. But from what we read, Detroit sounds like it has become a kind of Port-au-Prince with snowdrifts. The whole city sounds like a hellhole without the warm fires.

And now Obama is proposing to make things worse. More bailouts…more giveaways…more programs…more bureaucrats… Already, the ‘rich’ support whole sections of the population. Obama says he will raise taxes on ‘the rich,’ creating even more parasites. Of course, who cares if the rich have less money? They will still live in their leafy suburbs and send their children to private schools. But pity the poor parasites.

Neither Mr. Obama nor none of the candidates for Mayor of Detroit (the last mayor is doing time in a federal penitentiary) has asked for our advice. We will give it anyway. Want to save Detroit? Here’s how:

Abolish all welfare of all sorts…no unemployment insurance…no child tax credits…no welfare…no foods tamps…no nothing, except privately-sponsored charities. Close the public schools. Kick out all the bureaucrats and all federal and state employees. Abolish all rules concerning employment – no minimum wages, no overtime, discriminate all you want. Require all residents to say please and thank you…dress properly…and sneer at people who don’t seem to be gainfully employed or polite. Declare the city an Open City and Free Trade Zone. In exchange for cutting all federal aid programs, eliminate federal and state taxes for people living in the city. Allow unlimited immigration into the city…giving all immigrants a U.S. passport after 5 years of residency. Levy a flat 10% tax to pay for basic services. Eliminate elections…have the city controlled by a town council composed of 10 citizens chosen at random.

Within five years, Detroit would be the most dynamic city in the nation.

Regards,
Bill Bonner

March 6, 2009

Baltimore Redux: Still Thanking the Government for the Ghetto was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Americans of obvious African descent really got a raw deal. Their ancestors were slaves in Africa and sold to Europeans by their African masters. That’s some introduction to American society…and you never really get over the first impression you make. And then there was the fact that Africans just looked so alien; surely, if you weren’t one of them, it must have been hard to think of them as human in quite the same way; the same genus perhaps, but not the same species. The swarthy Greek and Italian, epicanthic fold-bedecked Pole and Swede and even the unwashed Irish all eventually melded into the existing Anglo-Germanic society of North America…but at least they were honest-to-God white people. And the Asians! As exotic as they must have seemed to a European, they at least weren’t so brown (well, maybe the South Asians were…), nor at all nappy-headed.

It must have been easy for people of pure European stock to view Africans as chattel with only vaguely humanoid shapes: sort of like bipedal goats and cows. That, of course, didn’t stop white slave owners from doing what slave owners have done with their female slaves from time immemorial: add them to the harem. The result: there is hardly a person of African descent in the New World today who doesn’t have anywhere from 10 to 60% European ancestry (the median is about 20%; those with more than 60% or so were able “to pass” and sometimes they integrated into white society). In Latin American countries some of them wouldn’t even have to check “black” on the census box! On the other hand if you’re white in America and your ancestors’ arrival predates one of the waves of European immigration in the 19th and 20th Centuries, then you may be surprised at what’s in your family tree; it’s probably not just “a little bit of Indian.”

There are tons of blacks in North America with no immediate pure white ancestry who nevertheless carry about as much European DNA as someone like Obama whose own father was about as pure black African as one can get. Obama, despite having a white mamma, looks like any random sampling of blacks in the U.S. who on average have almost as much white ancestry, though very rarely as immediate as a full-blooded parent or grandparent. Someone like Obama has geographical/racial genetic markers occurring in clumps as opposed to the more sifted occurrences in the chromosomes born of generations of mixing. Whatever the case, it doesn’t take much African blood to make one black. A drop will do…particularly if the evidence is written on one’s features.

Let’s be frank: a lot of the resentment folks rightfully feel about government handouts and entitlements are focused very squarely on a particular group of recipients: the descendants of the African slaves in the U.S. To the average white taxpayer, they amount to shiftless negroes, crack-dealers and bastard-producing welfare queens…even more simply put: just about every single black person on these shores who isn’t a professional athlete, entertainer, Colin Powell, or Condoleezza Rice.

What does this have to do with the price of tea in China or the price of gold in a Comex squeeze?

I dunno.

I’m just pointing out that there is a very real and seemingly irreconcilable resentment among a small handful of different groups in this country. The two largest players are the American white and black races, but making a growing claim are the Spanish-speaking folk of largely indigenous descent (the majority of those reading this will know them simply as “Mexicans” or “illegals,” whatever their actual nationality). Their arrival to our black/white tussle is like that of fashionably late Kurds to an all-nighter being thrown by the Sunni and Shia.

I can only guess at the role these post-1492 mestizos will play as our nation wends its way toward currency destruction and resource shortages. Maybe a lot of them will just go back home. Maybe the ones who’ve been in the Southwest of this country for generations will conspire with the government of their ancestors and help reconquistar California, Texas, Nevada, New Mexico, and a hearty chunk of Arizona. I do know that just about every one of the hundreds of Mexican or South American immigrants I’ve ever met usually works at least 10 hours per day and is willing to live in a small, neatly kept room for years at a time, often in a houseful of strangers. In other words, like the white immigrants who preceded them, they are willing to risk, sacrifice, and work hard in hopes of a better a future for their descendants. I also know that they feel about as much solidarity with blacks as do the Irish or Italian immigrants who came before.

Though the ethnic, linguistic and cultural differences certainly don’t help the situation, the hatred toward Hispanic immigrants (remember: the ones we see tend not to be primarily of European descent who tend to stay in their home countries…unless a communist dictator kicks them out…) is largely a byproduct of our welfare state. Those of us paying into it can’t help but resent those who benefit from it without paying a dime. Few probably hate the old, the sick or even the illegal immigrant so much as they hate being forced to give strangers money…though giving money to strangers from another tribe is probably more painful. Alas national socialism is a perfectly natural end result of the state…and it tends to breed the longing for genocidal purging.

But as I pointed out a little earlier, at least the Hispanic immigrant will be looking to earn his keep, even if he benefits from the taxes we pay and which he does not…and even if his descendants in this country are tripped up on their way to integration because of multicultural political frippery like bilingual education. On the other hand, black folks in this country have come to rely on politics to address grievances, instead of simply getting to work. Yet they mistrust and hate the state from which they demand resources. The result is an entire race stumbling through life like an indolent teenager who when asked to pitch in falls back on the line, “I never asked to be born.” Fair treatment before the law is about as far as anyone should want to take things. Government subsidy just begs for resentment.

Race is a troublesome and unscientific way to group things, but like Newtonian physics, it’s tremendously useful for where the rubber meets the road. Race is both real and ephemeral, a concrete phantom, a mirage that you can smell and taste just enough to think it has considerable substance. As with the aforementioned Newtonian mechanics, it breaks down when you look really close, but it’s real enough for the gross world in which people must live. Angels and molecular biologists can ignore it; most of us can’t.

The trouble really comes not from folks making personal decisions based on race, but on the state doing so. And here we come to the meat of this argument. The ideal American attitude toward people-who-aren’t-exactly-like-me ought to be “I’ll tolerate you…but don’t expect me to pay for you. I ask that you do the same.” Perhaps it would be so if we hadn’t been accelerating toward outright national socialism for the past hundred years. Socialism, despite its attempts at kindergarten inclusiveness, naturally lends itself to genocide. It’s what happens when you mix the basic human tendency to favor those clearly of one’s own tribe with forced resource-sharing a la the state.

Forced integration is as pernicious as forced segregation. Leave people alone and they’ll sort themselves out. I can’t fault anyone for wanting to live among people who look like they do and speak the same language. But that’s really a matter of property rights and personal freedom. When it becomes a matter the state feels obliged to address, the results are the enhanced division we see manifest in the decay and color-based blight in our cities. It was the state that initially passed laws forbidding people to intermarry and that racially codified who would be property, thus retarding integration of people of obvious African descent into mainstream society. It is the state that now uses money stolen from one set of citizens to pay off and simultaneously cripple another along glaringly racial lines.

It doesn’t matter whose ancestors did what or had what done to them. Things are as they are now, and compounding past errors with the excuse of past grievances is just not a good idea. Of course, the state doesn’t agree with me on this. Hence the past hundred years of forced integration and legislation, whose end result has been to strip one segment of the people of initiative, morals, and hope…and which continues to foster resentment and mutual distrust…and often hatred.

Working whites don’t’ mind the relatively small portion of their own race on the dole so much, but they see the black race as (innately) parasitical and perhaps intellectually challenged. And this goes for those whites who voted along party lines for the black messiah. Whether they think this calls for coddling, deportation or extermination is an individual matter, but the perception is probably fairly uniform. They may view Hispanics the same way to varying degrees, while Hispanics may have similar intimations towards blacks. Whites see non-whites as taking food from their own children’s mouths at the point of the government gun and offering only criminal violence in return. Whatever the accuracy of this perception—and it’s very accurate to quite a few—whites may not stand for it as the going continues to get unbelievably rough for them financially. Meanwhile, the black race seems to be itching for a chance to enact wholesale violence against the white race…and probably won’t be in any better shape materially as scarcity increases.

A black face will be superimposed on the head of the monster from D.C. I suspect that it doesn’t mean a blessed thing in terms of healing the damage done to race relations by state intervention in the first place. And then there’s what we expect will happen to the currency. Hmm…hyperinflation and three large and distinct racial groups who really don’t care for each other? How do you think this is going to turn out? Personally I think no amount of wishful thinking and singing “Kumbaya” together is going to help. When resources get scarce, people tend to eat the horses…and then each other…and they tend to do their killing along ethnic and racial lines.

Regards,
Gary Gibson

January 16, 2009

A Few Nations Under God: Race and National Socialism in America was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.