Tom DiLorenzo has written an analysis of the TIME Magazine plan for the next Presidency. It's excellent, and I advise everyone to take a good look at the future. TIME for Socialism http://mises.org/story/3013 Anyone who is still wondering why the so-called "mainstream media" was so hostile toward Congressman Ron Paul's campaign for the Republican presidential nomination will find an answer in the June 2 issue of Time magazine. Congressman Paul is a deeply educated student of economics, among other things, and an unabashed advocate of economic freedom and limited constitutional government; Time magazine is staffed by socialist ideologues who display little or no evidence of ever having studied economics at all. The second paragraph of "How the Next President Should Fix the U.S. Economy," by one Justin Fox, explains the real problem as Time sees it: Americans enjoy too much economic freedom. The natural solution, therefore, is to strip them of their freedom with higher taxes, more regulations, and greater regimentation of their lives. The cause of all of today's economic problems, says Time, is of course Ronald Reagan, who supposedly cut taxes, went about "slashing regulation," and preached "the gospel that individual Americans were better suited to make economic decisions than bureaucrats in Washington were." Where on earth did Americans ever get such a crazy idea? But there is hope, says Time. "There are signs that … America's 25-year love affair with tax cuts and deregulation" is ending. One reason for this is that the federal budget is "way out of balance." According to Time, the fact that the Bush administration has been even more spendthrift (on domestic spending as well as military) than the notorious Johnson administration, and has accumulated huge budget deficits, is evidence that Americans have too much freedom and too much money in their pockets. They need to be taxed more severely in the name of budgetary "balance." Not one word is devoted to the idea of cutting spending of any kind by a single dollar, let alone abolishing entire government bureaucracies altogether. Then there are "soaring energy prices," caused by increased worldwide energy demand coupled with sluggish supply growth that has been blocked by environmental regulation. This would include the regulations that prohibit oil exploration in 85–90 percent of the outer-continental shelf off the Atlantic and Pacific coasts, as well as in most of Alaska. Even though regulation has caused this problem, the "solution," according to Time, is more regulation of the energy industry. A third reason for "hope" that Americans will give up their economic freedom is the housing crisis, which again was caused primarily by the Fed-generated boom-and-bust cycle, with a little help from the government's thirty-year policy of forcing banks to make bad loans to uncreditworthy borrowers under the Community Reinvestment Act. Time wants to blame it all on the free market, however, and makes no mention at all of the role of monetary policy in generating the housing-market crisis. Health-care costs began spiraling out of control as soon as government became involved in the post–World War II era, especially with the advent of Medicare and Medicaid. Health care and health insurance are arguably the most heavily regulated industries in America; decades of cost-increasing regulations have been the main cause of the "health care crisis" that the socialist ideologues at Time are so worried about. Government control of health-care markets is the problem; therefore, the obvious "solution" is even more government control of health-care markets, says Time. Time's Justin Fox presents a tired, old, laundry list of failed socialistic interventions. These include protectionism; more income "redistribution" (a.k.a., legal theft) via the tax system, i.e., "heavy taxes on the rich"; more pork-barrel "infrastructure" spending — and higher taxes to pay for it; an additional round of tax increases "to close the budget gap" (which of course tax increases never do); yet another round of tax increases on oil, gas, and natural gas to "steer" consumers away from these items; more tax increases still in the form of elimination of the mortgage-interest deduction, which "costs the government about $80 billion a year"; and, of course, socialized medicine, the tax increases for which would entirely swamp all of the previously mentioned tax increases. (Time promises to explain how to "make universal health care work" in a separate article. I can't wait.) What Time's "fix" involves is essentially the Sweden-ization of America, where the average working family would be handing over 65–70 percent of its earnings to government bureaucrats, with regulation-induced price increases eating up perhaps another ten percentage points. This all needs to be done at the very beginning of the next administration, moreover, for "putting off change won't be an option much longer." It is a perfect recipe for impoverishing America. I've added a poll. Do you prefer TIME's recommendation for more government or DiLorenzo's position of less government? The TIME article is linked in the above.
Less Government is the Answer. Socialism has always failed, because it punishes people for better performance, by taxing more of their hard-earned money.
And as Mises sought to prove, Socialism can't calculate. It cannot determine market demand, and thus cannot properly price goods. Without price knowledge, it is impossible to produce the goods and services in the correct quantities (allocation of resources) to best serve the consumers and make use of capital. Which is why when the Soviet Union and Berlin Wall fell, we had a look into countries that were decades behind in living standards, capital infrastructure and technology.
Having read the Time article it clearly looked at America's current financial problems from the perspective of "what can government do to tackle these issues rather than how can we limit government in ways to empower the economy. The article was skewed toward government actions. Yet the Libertarian response is so twisted, distorting, and absent of facts that its prescriptions and commentary point to a focus that would worsen problems. Typically it ignores reality and focuses with a full scale attack on the least problematic issues. Why does it focus on the least problematic issues? Because they represent government regulation typically made to "balance" the negative impacts of an unleashed business environment that focuses solely on short term profits to the detriment of those that are typically screwed, those that have no protections against business taking advantage of the individual, and areas that might support the regular person against the strength and advantages of the strong. In fact the nation was originally set up to protect against those types of abuses. The prime case of libertarian negligance of facts has to do with its argument against the Community Reinvestment Act. (CRA) Somehow, without any consideration of facts or history the libertarian perspective blames this regulation for the mortgage mess that exploded during this decade. This article uses facts and analyses from a number of different sources to totally debunk the Libertarian perspective. Among those facts consider the following: 1. The CRA was established in 1977. If the CRA fostered the subprime housing crisis why did it take so long for the sub prime mortgage mess to occur? 2. Half of sub prime loans originated with mortgage lending offices that have absolutely zero restrictions or regulations from CRA. 3. 25-30% of sub prime loans were made by separate bank affiliate offices that fall under lessor levels of CRA oversight. 4. Perhaps 25% of loans were made by institutions governed by CRA oversight...BUT there is no indication that the CRA oversight encouraged or promoted these sub prime loans. In fact long term lending norms for CRA lending practices run contrary to the norm for subprime mortgages. 5. CRA regulations and requirements were weakened as of 2001 and 2004, substantially during the time when the sub prime mortgage explosion occurred. In other words there were fewer requirements for the types of loans mandated by CRA during the exact time that the sub prime mortgage explosion occurred. How can libertarian's argue that these regulations promoted the subprime mortgage mess when in fact these regulations existed for over 2 decades before the subprime mortgage mess. Moreover I'd like to see a study that defines that specific CRA lending put undue profit problems on financial institutions over that 2 decade period. A lot of grousing but no meat. If anything the subprime mortgage mess is a result of an explosion of lending that neither followed standard or safe lending procedures and a lack of oversight that allowed this explosion to occur to the detriment of the economy. As one takes a look at these libertarian claims, one finds a scary trend that takes a distorted view of protections against the excesses of business that have resulted in a series of financial disasters. Its as if the libertarian perspective wants us to ignore common sense and hard facts for some kind of theoretical answers that in fact have had dire impacts on the economy again and again.
I'm more for earning suffrage that I am for small government as a solution to governmental ills, though I do consider the latter as such. Of course, there would be no way to determine absolutely who has earned suffrage and would denigrate to people buying their way in eventually among numerous other problems. I'm still working out the details. But if I could get all the details worked out, commies wouldn't get to vote! Mwahahahaha!
This is a strawman. This is another strawman. Why do you say this is "the prime case"? How did you determine that it is the primary libertarian position? Seems like another strawman, and a sweeping generalization. If you read Tom's other piece on the CRA, you would know that the CRA is only one component, albeit a particularly dangerous one when constructing the sub prime meltdown apparatus. The libertarian position is not that the CRA alone caused the problem, and if you maintain that position, I challenge you to support it with a source. Says the guy whose entire rebuttal is predicated on a series of strawman fallacious arguments. Lack of oversight? You're completely missing the moral hazard of Fannie Mac, Freddie Mac and the CRA. You're completely missing the moral hazard of dropping interest rates below the market rate of interest. You're completely missing the federal mandate to get people into homes by encouraging, nay actively promoting home ownership, even if it was to people who could not afford them! To claim this was a market failure with no intervention or regulation intermixed is naive and insincere in my opinion. You're picking and choosing your villains to suit your social agenda, the very thing you accuse DiLorenzo of. And yet, you've repeatedly stated no one follows the libertarian tact, so all of the market disasters are actually caused by your so-called common sense Keynesian/Neo-classical economic views. Libertarianism didn't cause sub prime. It's not collapsing the dollar. It's not driving oil prices up. It's not responsible for massive government deficits or unfunded entitlement debt. Good ol' Austrian theory correctly fingered the FED for causing the Depression (which current Chairman Ben Bernanke admitted to Milton Friedman publicly), it also predicted the end of Bretton Woods, and it's next big prediction is the end of the US dollar hegemony (which we can already see unraveling, with no principled or rational argument for why it would stabilize and return to strength). I appreciate your response, but relying heavily on strawmen and conjecture isn't going to win you any points. A lot of grousing indeed.
just curious but aren't some of the countries with the highest standard living in the world in some part, socialists?
Depends upon what the metrics are for determining standard of living. If you want state education, state health care and a social safety net and are willing to trade 50~70% of your income in taxes Limitations on voluntary social agreements and allow the state to own you for selective military service (as many countries have mandatory public service, typically military) then yeah. But if you refuse to work for the government, you want to do your own thing, your way in the privacy of your home, and/or keep the fruits of your labor and create your own social safety net, then you're screwed. Liberty and government (and make no mistake, socialism is all about government) are a zero sum game. You have to trade one for the other in some increment to shift the paradigm. I don't have a problem with socialism, communism, fascism, satanism. As long as I have the opportunity to exercise my free will and not participate, I could care less if people get together and form a communist town or a fascist state. What I do not approve of, is 50%+1 vote by a bunch of idiots forcing me to be Communist or live under socialism, against my will.
Socialism is a slippery slope. With Obama's economic plan we can count on income redistribution in which 2 classes will be formed. Those who pay for all of society and those who draw off of all of society. His tax plan will substantially tax anyone who makes over $100,000 (up to 50% in most cases), substantially increase the capital gains tax so that you will have to pay when selling a home, substantially increase the inheritance tax (when the Bush administration was trying to get it lowered). So anyone who has lived on the straight and narrow, came from a good family, educated themselves and worked hard to get a home and a good income will have to pay for those who choose not to. The "rich" will fund the "free" heath care plan in which the "one's who choose not to" will most benefit as well as other socialistic schemes. Additionally, it appears that not to much is being planned to lower gas prices in the Obama campaign. Expect the gas prices to remain the same throughout any potential Obama presidency unless a miracle happens of someone discovering and economical way to produce and redistribute hydrogen or electric super cell technologies. Those in the interim will just have to suffer until a moderate approach to increased exploration and drilling on/off American soil can be used in conjunction with other future technologies.
Ferret: That is absolutely correct. Wealth is created by the successful implementation of business and the earnings of profits. Businesses are developed in nations independant of the usage of theoretical terms such as capitalism, socialism, etc. that are freely thrown around here. For instance this list: Richest Countries in the World Rank Country GDP - per capita 1 Luxembourg $ 68,800 2 Equatorial Guinea $ 50,200 3 United Arab Emirates $ 49,700 4 Norway $ 47,800 5 Ireland $ 43,600 6 United States $ 43,500 7 Andorra $ 38,800 8 Iceland $ 38,100 9 Denmark $ 37,000 10 Austria $ 35,500 Source: CIA World Factbook This list is representative. It has examples of nations wherein the wealth (or GDP divided by the population) is created by oil (Equatorial Guinea, UAE, Norway), nations of Europe that have many of wealth distribution, (called socialism here and elsewhere) wherein once wealth is accumulated it is distributed to the population, the US (possibly larger than all those nations combined), a nation such as Ireland which represents this amazingly successful wealth creation process over a relatively recent period. Ireland, has an individual tax basis similar to the US and many European nations but a dramtically low corporate tax rate and others. The simple fact is that wealth creation is clearly independant of the often thrown around concept and words of "capitalism".....(used here and in Libertarian worlds) but not used elsewhere....and certainly not used by those that create wealth--the businesses. You can look at other lists of the worlds wealthiest nations and find lists that are similar with some variations. Still what you will find is a wide diversity of nations with a wide diversity of wealth creation elements. Clearly, the distinguishing or similar characteristic is anything but this "theoretical" concept of capitalism.
When the libertarian writers tend to attack an issue they often do it without any substantiation and/or gross exaggeration that isn't merited with facts. When I pointed out that the commentary on the Community Reinvestment Act was full of errors my specific comment above was.... Guerilla you wrote..... Gross distortion of facts and distorting arguments...as you did above does nothing to further prove your points. They are full of emotional commentary and "what I see as "elementary economics that skirt hard facts. I read both articles. Here is how the author attacks CRA..... Okay Libertarians. Prove it. Find the CRA loans. Total the bad loans against the good. Find the percentage of bad CRA loans against good ones. Compare the profitability of CRA loans against non CRA loans. Do the homework. Don't go badmouthing entities with baseless lack of facts and emotionalism. See if it has caused outrageous loss of profit. Besides being based in nothing but opinion and a total lack of facts, it shows an incredible level of lack of sophistication, experience, and any sense of reality with loan making or investment. Meanwhile CRA loan oversight by the feds was seriously limited before the subprime explosion occurred. The real ludicrousness of the attack is that just as it became a non issue and a non requirement the flood of bad loans occurred from a plethora of unregulated entities that couldn't give a rat's @ss about anything but the enormous fees generated. When one thinks about poor investment or what you theorists like to call "mal investment" consider this investment explosion of the late 1990's/early 2000's that was the ultimate undoing of the telecom depression of that period --led to the inititial dot.com depression and opened the door to the nationwide recession of the early 2000's. Approximately $35 billion (ALL OF IT PRIVATE) was invested in laying high capacity fiber everywhere (nationwide, world wide, under the seas) to carry anticipated high frequency internet traffic. Within the beginning of the anticipated payback period approximately 5% of the high speed fiber was lit (and wasn't even necessarily carrying revenue producing traffic). If there had been a lucrative 20% return on the 5% (highly highly unlikely)....there would have been a grand total of a 1% return on the $35 billion. Hence the investors shut down on cash for the industry, and along with other issues it cut the growth throat of the industry and led to that recession. Bad investment, you probably don't realize, can come in any environment, from any source, and has little to do with the emotional claims you and your brother theorists make. (Not that investment issues are the main thrust of the authors attacks, but they do grab the emotional side of the argument.....but I thought it would help you to learn something about the real world.) The endless attacks by libertarian writers never seem to include substitive facts. I'll be pleased to give you a few other examples.
Earl, again, too much writing. 1. You are quoting one libertarian writer. Not all libertarians. Thus, you're constructing a strawman, that because X believes Y and Z, then everyone who believes Y believes Z. It's a logical fallacy. X= DiLorenzo Y= Libertarians Z= CRA failure 2. Yes, he says that the strawman by his critic does not disprove anything. See below. I can write to Tom, and I might, but I'm relatively certain the data was not available, because his books are very well sourced and researched. He is not a stupid or lazy man. He does use colorful rhetoric though. 3. It's nice to see you using the phrase "mal investment". Apparently you can teach an old fella a new idea. 4. I would prefer you use Austrian as opposed to libertarian when it comes to economics. Not all Austrians are libertarians, and not all libertarians are Austrians. Austrianism is actually a minarchist philosophy that many libertarians reject as vulgar. 5. Mal investment in the Austrian sense can only be caused on a mass scale by a couple things. Credit expansion, or a total lack of entrepreneurial skill or blind luck in the economy. In order to make careless investments that are high risk, credit must be cheap and readily available. Monetary inflation accomplishes this, as the credit is mandated by fiat. True capital investment is saved productive gains or accumulated deferred consumption. It's a priori that people are less inclined to save and then squander. Real, physical savings created through labor or sacrifice are handled more conservatively than free credit. That's why high risk investments are made in an inflationary atmosphere. That is why government endlessly throws bad money after good at failed departments, wars and programs. Government, off of a hard money standard is not constrained by it's tax base when it comes to expenditure, and likewise, when the FED manipulates the rate of interest below the market rate (which would reflect the amount of real capital available for investment) bogus "free credit" expansion occurs, which leads to these foolish, unproductive and risky investments being undertaken en masse. That's your ABC Theory, or Austrian Business Cycle Theory. Credit expansion leads to credit deflation. Or in layman's terms, the boom must always bust. The longer it takes, the deeper the bust will be. 6. Your barb about the real world is very funny. Because the economics you espouse has lead us to where we are today, which is the real world. Real government spending out of control (von Mises), endless war (Chalmers Johnson), and a shrinking middle class and a growing socialist state complete with reduced civil liberties (Hayek). The economics I promote on the other hand, predicted the failures of communism, the Depression, the Bretton Woods agreement, the welfare and warfare state, etc. Sub-prime, the tech bust, stagflation etc. are all covered accurately and factually unlike neoclassical or Keynesian economics, which are left bewildered, constructing strawmen and seeking market villains to explain their intellectual shortcomings. Keynesian economics, which was so popular during and after the New Deal era has been mostly refuted and is now widely considered to be not only poor policy, but poor economic theory. No surprise, considering that Keynes thought his general theory would be best implemented in a totalitarian state. lol
Out of date, here's 2007 GDP figures: 1 Qatar $ 80,900 2 Luxembourg $ 80,500 3 Bermuda $ 69,900 4 Jersey $ 57,000 5 Malta $ 53,400 6 Norway $ 53,000 7 Brunei $ 51,000 8 Singapore $ 49,700 9 Cyprus $ 46,900 . 10 United States $ 45,800 Source
Blitz: I saw that more updated list. I didn't pull it because there are some oddities on it. Specifically the calculations for Malta and Cypress. I suspect the methodology being used to calcualate and show wealth per person by GDP on a per purchasing power indices is skewed in some fashion. Simply Malta and Cypress were never ranked so high before and haven't had earth shattering elements within their economies that would have caused such a change. It is why I used the somewhat loose terminology...."for instance this list". Certainly, though, the list you provide is more up to date. Dave