Over at Marketwatch, Rex Nutting lists “The 10 best things government has done for us“:
- Protecting our freedoms
- Giving away the land
- Educating everybody
- Helping us retire with dignity
- Improving public health
- Building our transportation networks
- Investing in communications
- Building our energy supply
- Inventing the future
- Defeating totalitarianism
Yet, Nutting writes that “everyone knows that the government can do a lot to create the right conditions for prosperity” and “Our democratic government — along with you, me and our ancestors — created the conditions that have allowed private citizens and companies to build a great nation.” But many of these are simply government handouts–redistribution of wealth–not the creation of conditions.
Did we really want the government to give away land? (I write about this very issue in Angry Mobs and Founding Fathers.) Funny, now the government takes land away from private individuals instead of giving it to them.
And why should the government invest in the future, building our energy supply, invest in communications, build our transportation networks (I also write about this in Angry Mobs and Founding Fathers), etc.? Aren’t those the domain of private enterprise?
But why shouldn’t the government provide these free goods and services to us? Yes, I said FREE! Because the author, Rex Nutting, not once mentions taxes. He fails to mention that the resources used by the government to do these things took resources away from the private economy, which would have made use of them to provide the same or different goods and services to us.
Thus, Mr. Nutting provides us with just half the picture, and a distorted half at that.
We often complain about the excessive spending of our federal government, and for good reason. We even argue for “states’ rights” as a way to restrain the federal government. But are the states any better than the federal government?
This first chart clearly show that the federal government spends, on average, as a percentage of GDP, more than our state and local government. But notice that state and local government spending caught up to the federal government back in 2001 (after the fiscal responsibility of the 1990s).
Obviously, the chart above has two large spikes representing World War I and World War II. What would it look like if we excluded volatile defense spending?
Doing this, it looks like the state and local government spend more money than the federal government. More important, states and local government has grown from about 15 percent of GDP in 1980 to 22 percent today. The federal government has “only” grown from 15 percent to 19 percent.
Looking at these chart, I have no confidence that the states will act with more restraint than the federal government. If our governments are incapable of fixing the problem, that only leaves you and me. We have to replace the people running and governments. We have to teach them and ourselves the value of small governments designed to protect our rights of life, liberty and pursuit of happiness. Everything else government does is an infringement of our rights and they should leave us alone.
Posted in big government
Tagged big government, charts, conservative, Federal government of the United States, Government, government spending, graphs, Local government, states rights, Tea Party, United States
The Washington Times reports:
The federal government posted its largest monthly deficit in history in February at $223 billion, according to preliminary numbers the Congressional Budget Office released Monday morning.
That figure tops last February’s record of $220.9 billion, and marks the 29th straight month the government has run in the red — a modern record. The last time the federal government posted even a monthly surplus was September 2008, just before the financial collapse.
Last month’s federal deficit is nearly four times as large as the spending cuts House Republicans have passed in their spending bill, and is more than 30 times the size of Senate Democrats’ opening bid of $6 billion.
Actually, those figures overstate the cuts because it is comparing a yearly cut to a monthly deficit. In reality, the annual deficit of about $1.6 trillion is 26 times as large as the Republican budget cuts and 267 times the size of the Democrats’ proposed cuts.
I’m glad to see Washington is taking this problem seriously…
The sovereign debt crisis is back! Actually, it never went away…
Portugal yields soar, underline euro worries
ECB comes off THE sidelines to buy Portuguese bonds
Proving that the euro zone’s sovereign-debt crisis is yet to be vanquished, yields on Portuguese government bonds continued to climb to levels viewed as unsustainable on Thursday, prompting the European Central Bank to intervene.
Yields on the 10-year bonds soared to a euro-era high of more than 7.6% at one point Thursday morning, according to strategists. The European Central Bank later intervened to buy Portuguese bonds, several analysts said, after staying out of the markets amid relative calm in recent weeks.
Read the rest of the article here…
Back in the 1700s, income taxes were rare, yet more countries were adopting such revenue generating schemes. Adam Smith minced no words in attacking such “absurd and destructive” taxes. In a section of The Wealth of Nations titled “Taxes upon the Wages of Labour,” Adam Smith wonders why countries institute such income taxes:
Absurd and destructive as such taxes are, however, they take place in many countries.
Just a decade later, the Founding Fathers recognized that limits needed to be placed on government. One such limit would be to make it more difficult for government to raise our taxes. In Federalist #21, Alexander Hamilton argued that a consumption tax would effectively limit the size of government:
It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, “in political arithmetic, two and two do not always make four.” If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.
We have seen how the income tax has accomplished the growth of government that duties were unable to do previously. I return to this chart of the size of government excluding defense dating back to 1910. Remember, the income tax amendment to the Constitution was ratified in 1913.
Click on image to zoom in:
Seeing the growth of government since the income tax appeared a century ago, Smith and Hamilton were correct in their assessments. Based on the above quotes and their other writings, Adam Smith and Alexander Hamilton would support a switch to a consumption tax, more commonly called a sales tax today or the proposed Fair Tax.
Posted in Books, Economics, Government spending, History, Quotes, Taxes
Tagged adam smith, alexander hamilton, Consumption tax, Fair tax, federalist papers, Federalist Party, Government, income tax, Sales Tax, Tax, taxes, Wealth of Nations
A couple of news stories in the ongoing sovereign debt crisis.
Bad news for Ireland:
The cost of insuring Irish debt against default hit a fresh record Friday with investors fearing that Ireland’s draconian budget cuts will slow economic growth and further weaken public finances.
Spreads on Irish five-year sovereign credit default swaps topped 6.10 percentage points Friday, according to data provider Markit, after having briefly touched 600 basis points Thursday.
This means that investors will have to pay EUR610,000 annually to ensure EUR10 million Irish debt against default. Some market watchers note that CDS trading starts to dry up at these levels as investors worry about being caught on the wrong side of the trade.
CDS are tradable, over-the-counter derivatives that function like an insurance contract for defaulting on debt. If a borrower defaults, the protection buyer is paid compensation by the protection seller.
The Irish 10-year yield spread over German bunds, which show how large a premium investors demand to hold Irish bonds versus more-stable German debt, also hit a record of 5.31 percentage points Friday.
Bad news for Spain:
The Bank of Spain on Friday said it estimates third-quarter gross domestic product in the country was unchanged from the prior quarter. That follows a gain of 0.2% in the second and 0.1% in the first quarter. In a monthly economic bulletin, the Bank of Spain said the economy likely grew 0.2% on an annual basis in the third quarter. Official third-quarter GDP data will be released by the National Statistics Institute on Nov. 11. The Bank of Spain said growth was likely stymied by government austerity measures and the effects of consumers tightening spending as value-added taxes went up from July 1.
Today, the Dollar is up as traders sell Euros. Even with the Dollar up (which usually hurts commodity prices), gold and the other precious metals are rallying to record highs. Traders are looking for safety as the chances of an Irish default increase. Furthermore, we are seeing in Spain that “austerity” is a bitter but necessary medicine.
After years of liberal government spending and big deficits, Ireland and Spain (along with Greece and Portugal) are damned if they do and damned if they don’t. Unfortunately, the United States is not that far behind them.
Posted in big government, Economics, Gold, Government spending, Sovereign debt crisis, Stimulus spending
Tagged 2010 European sovereign debt crisis, Bank of Spain, big government, Credit default swap, Default (finance), Deficit, economics, Government, Government debt, government spending, greece, Gross domestic product, Ireland, Irish people, Markit Group, spain, United States
Congratulations to the GOP. They accomplished a historic election victory. The largest change in government since 1948.
However, I continue to fear for this country. Not because of the politicians, but because of the people. Of the 40-50% of those eligible to vote who actually voted, how many voted for liberty and limited government? The GOP won about 54% of the total vote, so maybe 54%. Maybe more, maybe less. But considering the majority of people didn’t even bother to vote, you are looking at a very small portion of the population who understands and cares enough to vote in favor of liberty and limited government. The number is 30% of the population, at best. Probably closer to 25% or even lower.
That is a very disappointing figure. While we must be involved in the political system, that will only help us on the margin. If 25% of the population supports limited government, nominating attractive candidates may boost that to 26% or 27%. Enough to temporarily defeat the political opponent, but not enough to fundamentally change our country.
The only long-term solution is education. We need to further the ideas of liberty, limited government, and checks and balances.We need to read, we need to write, and we need to share. With Amazon.com and social media, we have the tools to spread the knowledge. All it takes it effort.
So, now that the election is over, we have three main jobs:
- Make sure that government officials from both parties work toward smaller government.
- Begin recruiting for the next election.
- Educate ourselves and the public as to the benefits of limited government and checks and balances as described by our Constitution and elaborated upon in the Federalist Papers.
As you know, I’ll be focusing on the third item. I’ve already written one book warning the people of the evils of big government and the democratic demand for free gifts from the government. Many of you already know that I am working on a second book, the topic of which has not yet been announced. I have many more books planned, each of which advances the cause of liberty.
But while I will concentrate on the education portion, I will not be ignoring the first two parts. I will remain active in the political arena to ensure our governments (federal, state, and local) limit their size and scope and to help choose future candidates for political office.
We have a lot of work ahead of us. It has taken 100 years for our government to go from a very minor portion of our society to the huge behemoth it is today. It may take 100 years to reverse what has been done and we may not be alive to see our success. But succeed we must for the fate of our country and the world depend on us.
Eleftheria i thanatos!
Posted in big government, Books, Constitution, Elections, Federalism, History
Tagged 2010 election, Barack Obama, big government, constitution, Democratic, elections, federalist papers, GOP, Government, Limited government, Politics, Republican, Separation of powers, United States, United States Constitution, Voting