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Archive | Economics

Cradle To Grave? Brook and Watkins on The “On Your Own” Economy

Write Yaron Brook and Don Watkins in The “On Your Own” Economy – Forbes:

Are you bothered by the thought of government embedding itself in every aspect of your life? According to President Obama, the only alternative is “a government that tells the American people, you are on your own. If you get sick, you’re on your own. If you can’t afford college, you’re on your own. . . . That’s not the America I believe in.”

[...]

Did people shrink from the twin values of freedom and responsibility? On the contrary, the vast majority of Americans during the 18th and 19th centuries eagerly embraced life’s challenges and flourished under the new system. People didn’t flee from America, they fled to America. They
came here poor, but ambitious—ready to carve out a life for themselves in a country that offered them the only thing they asked for: an open road.

Of course, Americans during this era were not “on their own” in the lone-wolf, asocial sense implied by Obama. Free Americans developed complex webs of association based on voluntary agreement. An unprecedented division of labor—capitalists, businessmen, and workers
coming together to create wealth on an industrial scale—was a product of this new found freedom.

Read the full article at: The “On Your Own” Economy – Forbes]

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Obama’s Christmas Tree Tax

Writes David S. Addington over at Heritage on Obama’s Christmas Tree Tax:

President Obama’s Agriculture Department today announced that it will impose a new 15-cent charge on all fresh Christmas trees—the Christmas Tree Tax—to support a new Federal program to improve the image and marketing of Christmas trees.

In the Federal Register of November 8, 2011, Acting Administrator of Agricultural Marketing David R. Shipman announced that the Secretary of Agriculture will appoint a Christmas Tree Promotion Board.  The purpose of the Board is to run a “program of promotion, research, evaluation, and information designed to strengthen the Christmas tree industry’s position in the marketplace; maintain and expend existing markets for Christmas trees; and to carry out programs, plans, and projects designed to provide maximum benefits to the Christmas tree industry” (7 CFR 1214.46(n)).  And the program of “information” is to include efforts to “enhance the image of Christmas trees and the Christmas tree industry in the United States” (7 CFR 1214.10).

To pay for the new Federal Christmas tree image improvement and marketing program, the Department of Agriculture imposed a 15-cent fee on all sales of fresh Christmas trees by sellers of more than 500 trees per year (7 CFR 1214.52).  And, of course, the Christmas tree sellers are free to pass along the 15-cent Federal fee to consumers who buy their Christmas trees.

[...] The economy is barely growing and nine percent of the American people have no jobs.  Is a new tax on Christmas trees the best President Obama can do?

And, by the way, the American Christmas tree has a great image that doesn’t need any help from the government. [Obama Couldn't Wait: His New Christmas Tree Tax]

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Insight Into America’s Largest Ponzi Scheme

In recent debates GOP presidential rivals have been sparring on Social Security, with some (Rick Perry) insisting it’s a “Ponzi scheme” that should be decentralized (run by fifty states), and others (Mitt Romney) conceding that it’s shaky and needs “reform” but isn’t fraudulent because “millions of people depend on it.” (Mitt Romney). Another (Herman Cain) says privatize it, as Chile did. They’re all wrong, because they don’t name the real problem with the system – and they forego an easy fix that might boost their election chances.

That we’ve only seen GOP rivals “spar” on this key issue is an apt description, for there’s no real fight going on. It’s mere shadow-boxing. Worse, the GOP contenders are mostly on the same side of the issue (the wrong one) and aren’t sufficiently distinct from the rival party. Yet Democrats don’t even try to be candid about Social Security, or try to present a real fix; they’re content to run ads with GOP suits tossing granny off a cliff, which means they’re content to be infantile – which means they’re unfit to lead this great nation.

The facts about Social Security are these. Yes, it’s a Ponzi scheme, thus criminally fraudulent (as I’ll explain), but even worse, because it coerces us to be a part of it. Since the scheme began in 1935 the full force of the U.S. government has compelled a growing portion of citizens to suffer by it, such that we all do so by now. A scheme of such widespread, compulsory fraud is unprecedented in U.S. history, and one of the most shameful (and popular) of FDR’s schemes.

Rationality and justice require that this atrocity be terminated – now. Yet neither virtue can be found in Perry’s proposal to pawn it off to fifty states and thus to decentralize the fraud – or in Romney’s plan to “reform” and “save” the scheme and thus to perpetuate the fraud – or in Cain’s notion that it be operated by quasi-profit-seeking (loss-imposing) “firms” like Bernard Madoff Investment Securities LLC, and thus to privatize the fraud. A fraud remains a fraud regardless of its size, scope, or duration, and it is simply evil to evade this plain fact and deliberately enact policies to decentralize the fraud, perpetuate it, or profit by it.

Read the rest.

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Religious Freedom vs Economic Freedom: Kennedy Townsend’s False Alternative

Ms. Kennedy Townsend is very confused about Ayn Rand.

Sadly, because like many of Rand’s critics, her views on Ayn Rand are based on third-rate biographies as opposed to actually reading Ayn Rand’s views first hand. Take for example Kennedy Townsend’s  straw man attack on Ayn Rand’s view of government.

Writes Townsend in The Atlantic:

America was a beacon of freedom from its earliest days. But the freedom to earn one’s living is not the same as the freedom to emasculate government. It’s a mistake to enshrine individual liberty without acknowledging the role that a good government plays in preserving and promoting it. Look at places like Haiti, Somalia, and the Congo to see what happens when governments aren’t around much.

When government is marginalized, it’s not just individual freedom that suffers; the economy suffers too. A vibrant capitalism requires a legal system: contracts must be honored, fraud punished. Markets have to work, and for that we need a strong infrastructure of roads, rail, energy, and water and sewage systems.

Ayn Rand was no anarchist as pure libertarians are.

Rather than blindly accepting Kennedy Townsend’s view that Ayn Rand was against a legal system that honors contracts, lets see what Rand actually wrote on this issue in The Virtue of Selfishness:

The only proper purpose of a government is to protect man’s rights, which means: to protect him from physical violence. A proper government is only a policeman, acting as an agent of man’s self-defense, and, as such, may resort to force only against those who start the use of force. The only proper functions of a government are: the police, to protect you from criminals; the army, to protect you from foreign invaders; and the courts, to protect your property and contracts from breach or fraud by others, to settle disputes by rational rules, according to objective law. ["The Nature of Government"]

Ayn Rand was for good government. In Rand’s view the essence of good government was judged by one principle: the protection of individual rights, which means in practice the banning of the initiation of physical force from all human relationships. Rand would agree with a government to enforce contracts, however, there is no reason for government being required to build roads, railroads, build power plants or sewage systems. Practically, because private industry can do these things more efficiently and at a better bang for the buck, i.e., before they were nationalized, America’s railroads were actually built by private industry. Morally, because such endeavors by government can only be funded by robbing the wealth of those forced to finance such projects against their will.

Even worse is Ms. Townsend’s misunderstanding of the relationship of religion and the concept freedom, the latter of which she views as a competing set of contradictory freedoms as opposed to an inseparable whole:

 I’ve always understood that one’s loyalty to God should take precedence over one’s patriotic duty. [As did the 9/11 terrorists! -- D&C] Churches are exempt from taxation, and conscientious objectors aren’t required to serve in war. Our high regard for the First Amendment shows the preeminence of faith in the American consciousness.

But to place economics on the same level as religious freedom seemed to me almost blasphemous. Are we really to believe that the freedom to make money should stand on the same level of religious liberty?

Yes, because freedom is an inseparable whole.

The right to religious freedom is not merely the freedom for the individual to practice religion as he chooses (so long as he does not violate the rights of others), but is the freedom from religion being imposed on the individual whether by private criminals or public bureaucrats, i.e., the freedom to not practice any religious doctrine.

Quoting Thomas Jefferson, in his letter to Danbury Baptist Association, CT., Jan. 1, 1802:

Believing with you that religion is a matter which lies solely between man and his God, that he owes account to none other for his faith or his worship, that the legislative powers of government reach actions only, and not opinions, I contemplate with sovereign reverence that act of the whole American people which declared that their legislature should ‘make no law respecting an establishment of religion, or prohibiting the free exercise thereof,’ thus building a wall of separation between church and State.

Quoting Jefferson in a letter to Horatio G. Spafford, March 17, 1814:

In every country and in every age, the priest has been hostile to liberty. He is always in alliance with the despot, abetting his abuses in return for protection to his own.

Religious freedom is the application of the right to free speech and property applied to the religious sphere. You are free to say what you wish on these matters — even that God does not exist — and no one can physically force you to think or act differently. Remarks Jefferson’s on this point in his Notes on Virginia, 1782:

But it does me no injury for my neighbor to say there are twenty gods or no God. It neither picks my pocket nor breaks my leg.

Religious freedom — the right to free speech and action so long as one does not violate the rights of others — and economic freedom — the right to produce values necessary to support ones own life so long as one does not violate the rights of others — are equals, because the right to life is an inseparable, non-contradictory whole.

Religious freedom (the freedom from the state forcing some religious doctrine upon you) is an instance of the principle of freedom applied to the religious sphere. It is hierarchically a derivative of the fundamental right to life, liberty and the pursuit of happiness.

There is no compromise or antagonism between religious and economic freedom when the two are properly grasped and defined.

Or in Ayn Rand’s words:

It is not society, nor any social right, that forbids you to kill—but the inalienable individual right of another man to live. This is not a “compromise” between two rights—but a line of division that preserves both rights untouched. The division is not derived from an edict of society—but from your own inalienable individual right. The definition of this limit is not set arbitrarily by society—but is implicit in the definition of your own right.

Within the sphere of your own rights, your freedom is absolute. [“Textbook of Americanism,”The Ayn Rand Column, 85]

As for charity and the “special responsibility” of the wealthy here is what Ayn Rand had to say:

The small minority of adults who are unable rather than unwilling to work, have to rely on voluntary charity; misfortune is not a claim to slave labor; there is no such thing as the right to consume, control, and destroy those without whom one would be unable to survive. [CUI]

Quoting Ayn Rand in her interview in Playboy, March 1964:

My views on charity are very simple. I do not consider it a major virtue and, above all, I do not consider it a moral duty. There is nothing wrong in helping other people, if and when they are worthy of the help and you can afford to help them. I regard charity as a marginal issue. What I am fighting is the idea that charity is a moral duty and a primary virtue.

Rand did not see charity — the benevolent act of giving away one’s wealth to aid someone in need — as a badge of moral honor; she did award such a badge for the ability to produce that wealth. In Rand’s view your only political responsibility in regards to others is not to violate their rights by initiating force against them:

The basic political principle of the Objectivist ethics is: no man may initiate the use of physical force against others. No man—or group or society or government—has the right to assume the role of a criminal and initiate the use of physical compulsion against any man. Men have the right to use physical force only in retaliation and only against those who initiate its use. The ethical principle involved is simple and clear-cut: it is the difference between murder and self-defense. A holdup man seeks to gain a value, wealth, by killing his victim; the victim does not grow richer by killing a holdup man. The principle is: no man may obtain any values from others by resorting to physical force. [“The Objectivist Ethics,”The Virtue of Selfishness, 32 ]

And again quoting Rand in “The Nature of Government,” The Virtue of Selfishness, 108:

Man’s rights can be violated only by the use of physical force. It is only by means of physical force that one man can deprive another of his life, or enslave him, or rob him, or prevent him from pursuing his own goals, or compel him to act against his own rational judgment.

The precondition of a civilized society is the barring of physical force from social relationships—thus establishing the principle that if men wish to deal with one another, they may do so only by means of reason: by discussion, persuasion and voluntary, uncoerced agreement.

The difference between Ayn Rand and Townsend’s ilk is that Ayn Rand leaves people free to be good as dictated by their own reason and free choice; Kennedy Townsend wishes to use the power of the government to force her altruistic conception of the good on others (i.e., robbing the “rich” to help those who sleep under bridges, i.e., Marxian “fair” taxation, etc.).

Kennedy Townsend wishes to unleash the criminal power of government to initiate force against those who violated the rights of no one — illegitimate and immoral means — to achieve her ends. In Rand’s view, rights are not things to be violated by regulation, but are to be protected by right. Quoting Ayn Rand:

Freedom, in a political context, means freedom from government coercion. It does not mean freedom from the landlord, or freedom from the employer, or freedom from the laws of nature which do not provide men with automatic prosperity. It means freedom from the coercive power of the state—and nothing else.

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“Baseline” Gimmick: “Cut” is in Reality a Lower Increase in Spending

Richard Salsman crunches the numbers at Forbes on the attempt to “cut” the size of the public debt:

[...] Even the most “radical” GOP plan, to “cut” $9 trillion, would boost federal outlays by 30% in the coming decade versus outlays in the past decade, while the most modest GOP plan, to cut a mere $2 trillion, would boost outlays by 55%. Yet Democrats lambaste GOP plans as “Draconian,” prone to trigger a “depression.”

By “baseline” federal spending over the coming decade, the CBO means the sum that’ll be spent even with no changes in current fiscal policy, whether in tax rates or spending schemes. As mentioned, the CBO says $45.8 trillion in outlays over the coming decade are effectively on “auto-pilot,” so any proposed “cut” is relative only to this huge number. As mentioned, Washington spent $28.3 trillion over the past decade, so embedded “baseline” spending of $45.8 trillion in the coming decade already entails an astounding increase of 62%. In the coming decade neither U.S. population nor real economic output would rise nearly so much.

[...] Why are today’s politicians, journalists and economists so complicit in deliberately misleading the public about the current and future state of U.S. finances? Why do they speak of “cuts” in future federal spending when the CBO routinely projects increases in the range of +30% to +65%? Check those numbers again, dear citizen: they’re positive, not negative. “Baseline budgeting,” which blithely presumes a perpetually-growing government, was first enacted by the U.S. Congress in 1974, in order to side-step White House efforts to “impound” (limit) federal spending; but that doesn’t condone the gimmick – or justify lying to the public. When people hear that Washington will “cut” spending by $2 trillion over the coming decade, they think that’s a lot of money and that outlays might be $2 trillion lower a decade hence – not higher by 50% or more. Even Boehner’s budget plan, like many others, backloads the “cuts” into later years; he’d “cut” outlays by only $23 billion in 2012, equivalent to less than three days of total federal spending at the current spending rate.  [Richard Salsman, Forbes,  Washington’s Budget “Cuts” Would Boost Spending 50%]

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Video: John Allison on Principled Leadership – Using Ayn Rand’s Values to Create Competitive Advantage in Business

The amazing, John Allison, who as chairman and CEO made BB&T Corporation the 10th largest financial institution headquartered in the United States, attributes the success of BB&T to the concept of Principled Leadership, based on an uncompromising commitment to fundamental values. In this talk, he explains how Ayn Rand’s ethical system can be used practically to create a competitive advantage in any organization.

Part I: Lecture

Part II: Q&A

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Shades of Atlas Shrugged: Government Motors “Chevy Volt” is Another Reason to Buy Ford

Writes Patrick Michaels over at Forbes on the Chevy Volt:

The Chevrolet Volt is beginning to look like it was manufactured by Atlas Shrugged Motors, where the government mandates everything politically correct, rewards its cronies and produces junk steel.

This is the car that subsidies built. General Motors lobbied for a $7,500 tax refund for all buyers, under the shaky (if not false) promise that it was producing the first all-electric mass-production vehicle. ["Chevy Volt: The Car From Atlas Shrugged Motors"]

Unfortunately, the car is NOT an electric car, but a hybrid.

It turns out that the premium-fuel fired engine does drive the wheels–when the battery is very low or when the vehicle is at most freeway speeds. So the Volt really isn’t a pure electric car after all. I’m sure that the people who designed the car knew how it ran, and so did their managers.

So what’s the catch?

[...] It’s doubtful that GM would have gotten such a subsidy if it had been revealed that the car would do much of its freeway cruising with a gas engine powering the wheels. While the Volt is more complicated than the Prius, and has a longer battery-only range, a hybrid is a hybrid, and the Prius no longer qualifies for a tax credit.

So should we expect to see the Chevy Volt losing it’s tax credit status anytime soon?

Recently, President Obama selected General Electric CEO Jeffrey Immelt to chair his Economic Advisory Board. GE is awash in windmills waiting to be subsidized so they can provide unreliable, expensive power. [..] Immelt announced that GE will buy 50,000 Volts in the next two years, or half the total produced. Assuming the corporation qualifies for the same tax credit, we (you and me) just shelled out $375,000,000 to a company to buy cars that no one else wants so that GM will not tank and produce even more cars that no one wants. And this guy is the chair of Obama’s Economic Advisory Board?

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Pre-Order Objective Economics: The Implications of Ayn Rand’s Philosophy on the Science of Economics

 Professor Northrup Buechner has just completed Objective Economics: The Implications of Ayn Rand’s Philosophy on the Science of Economics.

 This book is written for any man who wants to know how a free economy works and/or some of the implications of Ayn Rand’s philosophy for economics. The philosophical overview of my book is this: Modern economics is the product of modern philosophy. Since on every important issue, Objectivism is the opposite of modern philosophy, Objectivism changes everything about economics. This includes economics’ method, the conception of the economy, the meaning of competition, the conception of price, the principle of gains from trade, the nature of business costs, the concepts of supply and demand, the theory of price, the role of scarcity, and the theory of aggregate production. Overall, as the result of all the preceding, Objectivism confirms the practicality of capitalism.

You can pre-order your copy today by Contacting Customer Service at Rowman & Littlefield Publishers by telephone 1-800-462-6420 or email customercare@rowman.com and ask for “Objective Economics: How Ayn Rand’s Philosophy Changes Everything About Economics.” Please make sure to give them the order code “UPREPUB.” It is not available on Amazon at this time.

Read an excerpt from the preface at Capitalism Magazine or visit his site at www.ObjectiveEconomics.net.

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