The Free Market Project

Promoting personal freedom & free market economics.

One of the things that changed my life, and my view of capitalism, was something my father did when I worked for his company. At that time I was still under the sway of my college training and relentless demonization of “corporations” in the media and by Democrats in particular. It seemed the bad guys were always businessmen.

A short history (which I only appreciated fully after I took my blinders off): My father started a company (publicly traded) when I was a little kid. The company was successful, due mostly to his hard work and vision. It wasn’t an Apple Computer, by any stretch of the imagination, but it was a profitable small business that provided needed products for industry, made money for investors, and employed about fifty people. (If you read my book, The Tamarack Conspiracy, the company and characters I describe are taken from the real thing).

On a bit of a lark, partially in reaction to some politician talking down business, my dad gave the comptroller of the company an assignment. He wanted to know how much the little company he’d started had contributed to society, forgetting the value of the products to the consumers, but just looking at the taxes collected by the federal, state, and local governments. To do this, you need to look at corporate income tax (paid to the feds and state), but also the taxes paid by the employees (who couldn’t pay those taxes without those jobs), also including the FICA, and the property taxes paid locally. The comptroller couldn’t figure out a way to estimate sales taxes paid by employees for purchases that would be accurate (purchases made possible by the employees having a job that gave them pay that allowed them to make purchases), or how to estimate gasoline taxes paid (again, as a result of people having a job that gave them pay that enabled them to drive), or what the property taxes paid by employees owning their homes (as a result of, etc. etc.) amounted to. Those items were extra, but also made possible by the company being successful enough to hire people, and pay them a good wage.

The existence of this relatively small, fairly successful company, over time, had contributed many millions of dollars to society (if you define society as governments). It had also supported communities with donations both to charities and community activities such as sponsoring baseball teams and community projects such as building parks.

The business was not built for greed, by the way. It was built for love. My dad loved the product he’d invented that started the company. He’d seen a problem and he figured out a way to solve it. He loved the freedom of working in his own company (though, as CEO, he really worked for his shareholders, customers, and even his employees… something most people don’t really understand who have never owned a business). He really loved his employees, and they loved him back. Nobody was happier than my father when an employee was able, because of their job in my dad’s company, to get married, or buy a house, or even purchase a cabin on a lake. I believe this is true of most entrepreneurs. Sure, they want to get paid, but they want to get paid as a result of having done something worthy, having contributed to people’s lives with their product or service, and the money is simply the acknowledgement of their success at having made that contribution.

My point, however, is the millions of dollars that rolled out of that small company that paid for government at all levels. Businesses make government possible. They not only create wealth in the private sector, but they are the only vehicle for producing the wealth consumed by government. Anything good government can do can only be done because of the businesses that are creating the wealth. This is obvious to anyone who would read this blog, because I assume my readers understand free market capitalism and wealth creation. But there are people, one of whom occupies the White House, who don’t seem to understand this simple concept. Harm businesses and you harm everything.

An aside: One day I was sitting on the dock at our family’s cabin, fishing (when I was in my early twenties my dad was finally getting paid enough so that he could afford a vacation home–something VERY common in Minnesota and the rest of the upper midwest). I was watching the clouds and it suddenly occurred to me that the way water was transported by nature–oceans and lakes, evaporation, condensation into clouds, clouds roaming over the land, rain and snowfall, rivers taking the water back to the oceans–was an incredibly efficient system. It is a beautiful design, really.

Back to business: Harming businesses (with taxes, regulations, cronyism, creating a business unfriendly environment in general) is like figuring out a way to destroy clouds and then wondering why there’s a drought.

My father’s little company (still going, by the way, even after his death–I don’t work there though) contributed many millions of dollars to society. In my post yesterday I called your attention to a PJTV episode of Trifecta in which Bill Whittle talked about the same thing regarding a huge company, the richest company in the world at this moment, Apple Computer, which was apparently accused of not paying it’s fair share of taxes. How many billions do you suppose Apple Computer could account for over time if it did my father’s little experiment and tallied all of the tax revenue generated not only through corporate income tax, but also the taxes collected because of the jobs it provided, and the property taxes it paid? From the smallest mom and pop operation, to companies like my father’s, to Apple Computer, the contribution of business is… Well, it’s the only contribution there is. That’s the bottom line.

Where else is government at any level going to get money? No businesses, no jobs, no taxes collected, no government. Why don’t leftist, statists understand this? Rather than appreciating the miraculous efficiency of evaporation and cloud formation and precipitation and rivers, they’re cursing the clouds and trying to destroy them.

Here’s an odd paradox for you: Conservatives are always accused of racism, yet I don’t know a conservative that would not work their butt off and then vote for a Republican presidential ticket of Thomas Sowell and Walter Williams. I love those two guys.

Thomas Sowell just wrote a two part article called, A Cynical Process (part one is here, part two is here). It’s a must-read. Part one deals with unions (mostly with the public sector unions, plus the Obama administrations desire to allow unions to basically threaten people into unionizing). Part two deals with the way politicians (particularly leftist politicians) do themselves good by making people dependent on government handouts while actually doing harm to the prospect of larger prosperity, such as Obama creating an unfriendly business climate that slows job growth while giving people more unemployment and food stamps.

Walter Williams reveals something very interesting about “1%”, and the Occupy movement in his article, America’s Two Faced Liberals. It turns out that of the ten richest counties in the country, many of them surround Washington DC, and seven of ten are very much supporters of Democrats (interesting… given their location, one might surmise that these are counties which contain the people of the progressive elite who want to run the monster state that takes care of we poor, stupid citizens who can’t fend for ourselves in a free economy). His information on the identities of those arrested in the Occupy movement last winter is priceless. (hint: it turns out that they weren’t really downtrodden youth).

Read them all.

Play with this for a while

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The left thinks we can hammer fatcat CEOs and tax businesses and all will be well. Play with this app and see how wrong they are: Soak the Rich

Also, just for fun, there are a couple of good charts and a website you might want to bookmark in this article by John Hinderacker at Power Line.

Speaking of good charts, Dan Mitchell at International Liberty has a couple of charts comparing the personal wealth created by Australia’s social security system (a privatized system) and the staggering debt incurred by our Ponzi scheme social security system. How ignorant to people have to be to buy into the Democrat argument that privatizing social security (forced savings invested in relatively safe mutual funds) is more risky than putting 14% of our pay (our half, plus the employers’ half) into a system where the asset not only doesn’t grow, but the system it’s being put into is already failing. I’ve had failed businesses… Anyone want to invest in them NOW?

So much for the static model relating to taxing and spending… Warren at Coyote Blog has an article about the unexpected shortfall in tax revenue in California turning a (supposedly) balanced budget into a $12 billion deficit in 9 months. Hmmm… Are you trying to tell me that perhaps a state with high taxes and a government collapsing from overspending might be driving high earners out of the state, thus leaving them with an “unexpected” revenue shortfall? Nah… How would anyone possibly predict that (entirely probable and widely supported by evidence) outcome? Warren has another interesting article here about the supposed “austerity” in Europe, which doesn’t seem to include decreased government spending… Odd.

A good Trifecta from PJ Media, featuring Bill Whittle, Scott Ott, and Steven Green talking about people complaining that Apple doesn’t pay enough in taxes. I love the points Bill makes at the end. A corporation pays its corporate income taxes, but it is also responsible, as the source of, payroll taxes (in Apple’s case, amounting to an amazing amount of money, I’m sure), property taxes (on its buildings), and sales taxes when people buy their products. Can you imagine what the numbers would be if we added up what Apple has been responsible for in terms of federal, state, and local taxes over the years?

Accurate Speculation

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In my role as a lay-consultant to the Romney campaign (unbeknownst to the Romney campaign), I suggest this response to President Obama’s laughable assertion that Mitt Romney would not have authorized the Seal Team to take out Bin Laden.

The president has speculated that a President Romney would not have authorized the strike on Osama Bin Laden. Since we are speculating, here is what we know will happen if President Obama is Re-Elected:

He will not authorize drilling for more American oil and natural gas on federal lands, and will, in fact, demagogue the issue using misleading statistics. On the other hand he will continue to pour billions of dollars into green energy boondoggles, mostly owned by his cronies.

He will not produce a plan to save Medicare and Social Security by altering the nature of those programs from the current Ponzi schemes that they are to something that is actually sustainable. He will, however, criticize any effort to make much needed alterations to those programs while never acknowledging that the combined costs to them will soon bankrupt the programs and the country.

He will not push Democrats in Congress to produce a budget. He hasn’t done this for three years, including during a time when they easily had the simple majority needed to pass a budget, why would he start now?

He will continue to speak about reducing regulations while the agencies in the executive branch of government that he controls continue to create new regulations at a blistering pace, piling more burden on businesses and increasing prices to consumers.

He will eschew responsibility, continuing to blame others for the ineffectiveness of his policies. And he will continue to use misleading statistics to try to fool the people into believing his administration has been more effective than it has been.

He will also continue to pretend that the European style socialism that he’d like to impose on America is working while the countries of the European Union suffer from stagnant economies, high unemployment, and national debt that threatens to take down many nations.

President Obama can speculate about whether or not a President Romney would have made the relatively easy call to capture or kill Osama Bin Laden when we had intelligence telling us where he would be. President Obama has to strain credulity to do so.

The speculation about his policies above are based on three and a half years of his performance in office. Do we want four more years of him?

 

One of President Obama’s themes is, when talking about the economy, to say, “We tried it the old way, and it didn’t work. We need to do something different” (or some version thereof).

He’s never really clear on what “that way” or “the old way” or whatever phrasing he’s using is. He’s also not really clear about his new way. One can make assumptions, though, even though he is always deliberately vague. He’d be considered insane if what he said was, “Capitalism doesn’t work. We need to have European style socialism.” After all, European style socialism, has the countries of Europe farther along toward catastrophic collapse than we are. There’s just some vague something that didn’t work, and some vague new way that will.

Let’s look at it. Given his big government approach, he can’t be saying that the “old way,” the “thing that got us here,” is government interference in the market. The credit bubble that burst, and the shenanigans on Wall Street to deal with all of the credit and mortgages, can easily be laid at the feet of a government that wanted a certain result and used its coercive power to create that result. The culmination was 2008. However much the president would like to imply that it is Wall Street or greed in the private sector, or capitalism itself that causes problems, when you look at things going wrong in the economy, it is not difficult to find the hand of government in it. Most problems are the result of distortion caused by policy decisions, not by the market.

The implication that it is capitalism that got us here is interesting. Capitalism made us the most affluent country in the world. I’m not talking about a country that has more rich people. I’m talking about a country that has poor people that would be considered rich by world standards. Name me someplace else where the poorest of the poor have a real problem with obesity, where the vast majority of the poor have televisions, telephones, cars, microwaves and air conditioning. We also have a vast middle class made of of people doing well, enjoying their lives, raising their families. And we have a lot of rich people. The beautiful thing about this country is that all it takes is a great idea and work and a poor person or middle class person can become rich. Capitalism has given us the possibility (and the reality) of upward mobility.

Since our founding, it is capitalism that gave us individual and societal prosperity. Is that the way that Obama says “doesn’t work”?

If I were a speech writer for Romney (contact me, Romney campaign, I’m available for the duty!) I’d write a speech that directly confronted Obama on this oft-given message of his. The first thing I’d do is talk about how capitalism, the free market system, has brought us to where we are as a prosperous country. Sure, we have occasional hiccups, but left alone, these are corrected rapidly (there’s much evidence to back this up).  Then I’d have him talk about Pres. Obama saying that the system is broken (another version of “the old way”). At that point I’d lower the boom and talk about how it is government that breaks capitalism and causes pain. The demand by government to lower qualifying rules for mortgages and interference through Fannie Mae and Freddie Mac are at the heart of the current recession. Government spending at a rate that induces fear in business people, combined with massive amounts of new regulations keeps businesses sitting on their money rather than hiring, expanding, or investing it. Government rules intended to reward cronies stifle competition and give power to businesses that wouldn’t thrive in the face of innovative and agile competitors.

It is increasing government interference in the private sector, which is the “new way” Barack Obama and his big government believing friends would have it, that harms the economy. That is the way that is broken.

I’d then go on to say that the big government approach that is Obama’s “new way” is not so new. It has been tested in Europe, and the Greeks will testify that it does not work, ultimately. So will many other countries in Europe. Everywhere government has become too large, tried to do too much, there is economic stagnation and ultimately bankruptcy. The possibility of upward mobility in an increasingly prosperous society is crushed under the weight of government.

To be prosperous again, we need to return to the “old way,” which is the way of less government interference in our lives and the proven reality of increasing prosperity for the nation as a whole and upward mobility for individuals. If all you get is what the government will give you, you will not prosper and you will be stuck where you are. Big government creates a vortex, first consuming the possibility of a better future for the poor, and eventually consuming the entire economy as its size and scope expand and more and more of the economy is pulled into the vortex. What may now feel like a comforting hug eventually crushes you.

The choice is clear. The “new way” that President Obama espouses is actually the cause of our economic problems, however much he’d like to shift the blame to the one thing that produced over 200 years of growing prosperity. The evidence is clear in Europe and in any other big government example. The real “new way” we need is to return to free people exercising their creativity and hard work unfettered by big government, trusting that the people will find the way to create prosperity if given freedom to pursue their dreams. Leaving it to government officials makes us serfs in an economic reality that people far away from our lives have decided is what is best from us. What American wants that life? Yet that’s the life that Obama and his progressive elite friends would give us.

Worthwhile Reading

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I love Andrew Klavan’s “Klavan on the Culture” videos and blog posts at PJ Media. This was a great Earth Day post: Screw the Earth.

This is interesting from Daniel Mitchell at his blog, International Liberty.

This article by John Hayward at Human Events includes a MUST SEE VIDEO.

 

Defending the Rich

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A Poor Man Never Gave Me a Job

This is a truism. It’s important that people begin to understand the implications of this statement. The rich, wealthy individuals, or successful companies, drive the economy. Harming them in the name of “fairness” is a recipe for a declining economy, less opportunity, and ultimately poverty for a large number of people.

Investment

Say I’m a middle class guy (which I am) and I have an idea for a product or service. “Go to the bank! Get a loan!” people will advise. There are two aspects of this that most people don’t seem to think about.

The first is that the money that the bank has to loan is the savings of people… people with money! The wealthy or well-off. Sure, some people who are not wealthy have savings, but that doesn’t amount to a lot usually. Most of us have our checking accounts where money is going in, and coming back out before the end of the month in roughly equal amounts. The big savings that allows people of lesser means to take loans from banks comes from people who have large savings accounts–the rich.

Second, when you walk into a bank to ask for a loan to start or expand a business, you need collateral. You are putting your personal assets on the line for the loan. If you don’t have enough collateral, or the guy reading your business plan doesn’t understand the vision and potential behind your product or service, you’re not getting a loan.

So if you get the loan, what you’re getting is a loan of money from people better off than you, ultimately. The dreaded rich, for example. If the money that the rich person would have saved is, instead, going to taxes for the government to spend, that’s bad news for you. The bank has no money to loan.

If you don’t get your loan, where do you turn?

You can only turn to people who have what we call “risk capital” available… The rich. Look at the story of Apple Computer, for example. Steve Jobs and Steve Wozniak had this great little product and a great vision. They created it in Jobs’ parents’ (middle class family) garage. Unless they met Mike Markula, who had risk capital available to fund the project, they would have been dead in the water.

It is the people with extra money lying around and who have a desire to expand that wealth who invest in risky ventures. They risk the money knowing that they could easily lose it all, but they can afford it. They can afford it because at some point in their lives they made a lot of money working for it, and with the success of other investments. These people know that they are going to lose money most of the time (using their knowledge or their vision as the only guide to reducing that risk), but they also know that if an investment hits, it could hit big! That washes out other losses.

You simply cannot go to people with no risk capital available and ask them to invest in your new venture. They either don’t have the money (literally, as they are living paycheck to paycheck) or their savings is too small and precious to them to risk it. Not to mention the SEC regulations that “protect” people from making risky investments (I have to read the new law just passed to see what that’s done to enable people who are not “qualified investors”–people with over a million dollars in liquid assets–to take risks that might provide big rewards).

It is the rich who fund new opportunities, taking the risks financially as the entrepreneur takes the risk with their ideas and vision.

In terms of a rich person providing jobs, here we’re also talking about people who are already successful hiring new employees as their businesses expand. A struggling business isn’t hiring. Someone losing money isn’t hiring. Only the successful–the rich, or the on-their-way-to-rich, are hiring.

What about other jobs? Does a poor person hire someone to paint their house, or do their yard work, or even tackle a plumbing problem? No. They do it themselves if they can afford to do it at all. The people who make their livings taking care of other people’s property do so only because of people who have accumulated enough wealth so that they don’t have to do those things themselves. A poor person isn’t even going to give a kid a job mowing his lawn.

The Great Market Makers

When any product idea is new, there aren’t economies of scale that bring prices down so that the average person, or even the poor, can afford them. The first market for emerging technologies is the rich. This was true for the flush toilet, and it’s true for cell phones and flat screen TVs. One of my favorite examples of this is the original DVD-type player, the laser disk, where movies were put on a (usually gold in color) disk the size of a vinyl record. Nobody could afford that unless they were rich. The technology actually failed, as the manufacturers saw there could be a market, but they needed a less expensive, less cumbersome, technology. You don’t find old, unused laser disk players in the attics of poor and middle class people. It was the rich who spent the money on the new technology (ultimately wasted money), which ultimately enabled manufacturers to improve the technology and bring the price down with economies of scale.

Same story with flat screen TVs and cell phones. Who, but the well-off were carrying around huge bricks they could make phone calls on, or having big phones installed in their cars, and paying outrageous fees per minute for the convenience of making a phone call wherever they happened to be? The signal had to be bad, because there weren’t many towers. But it was those well off people making those purchases that identified the market and enabled manufacturers and service providers to both see the potential and afford the expansion, through economies of scale, that got us to the point where it seems everyone, even the poor, can have a cell phone. It may not be an iPhone, but a low-cost, prepaid phone purchased at Walmart can serve the purpose. That would not have been possible if the rich weren’t the early adopters and advocates of the technology.

Indoor plumbing, HVAC, all manner of recreational and leisure products… The story is the same. The rich consume the products, even the “destined-to-fail” products, and provide the manufacturers with the means and knowledge to expand production with economies of scale to bring the prices down so that everyone can eventually afford the products. Look at the stats of HVAC, bathrooms, TVs, microwaves, computers, phones, etc. in “poor” peoples’ homes if you don’t believe me. Most of the poor at the beginning of the 21st century live with many more conveniences than the rich at the beginning of the 20th.

Carrying the Burden

The Democrat meme about the rich “not paying their fair share” is simply a falsehood. Forget that they never define “fair,” which is done on purpose so that they can simply demagogue the issue. Anyone with any sense of fairness looks at the top 1% of earners paying 38% of the taxes (I heard yesterday that the preliminary new data on that is that the top 1% most recently has paid 44% of the taxes), and the top 5% paying almost 60% of the taxes (I didn’t hear the preliminary new data on this, but obviously it’s gone up too) and they can’t say those people aren’t paying their fair share. This is especially true when you look at the percentage of income made by those groups, which generally works out to about half of the percentage they pay in taxes (the top 1% of earners make 19% of the income, for example).

Any way you slice the numbers, the rich pay a disproportionately large share of the taxes. They try to fool us with idiocy like saying that Mitt Romney had an effective tax rate of 15% (or was it 14%… I forget), never mentioning that it is all dividend income which is taxed twice, once at the corporate level (where profits–the only thing that can be paid out as dividends–are taxed at a world-leading rate of 35%) and again when it hits Mitt’s pocket at 15%, giving the treasury an overall tax rate on the money Mitt Romney puts in his wallet of 50%. And this is to say nothing of the benefit to the economy via the growth of the company (the jobs it provides, the ancillary jobs created for people in other businesses that do business with that company, etc.) of Mitt’s investment in the first place.

The other burden the rich carry is charitable giving (unless you’re a Democrat, particularly a wealthy Democrat politician, which makes you far less likely to charitable with your money, statistically speaking). Do poor people give charities endowments? Many people with lesser means are extremely generous, even foolishly generous. But, even when they’re generous beyond what they logically should be, do you think it is the money of the poor and lower middle class that provides funding for charities and community projects? I don’t know about your community, but in my community it is the successful business people and successful businesses that provide damned near all of the funding for every community project and charity. And these are the people who are already paying the highest tax rates (property taxes, state, and federal taxes).

Summary

The savings, spending, and investment of the wealthy people in this country makes the economy go and grow. It’s really that simple.

Most people don’t get wealthy by accident. We don’t live in a society where some relative, somewhere back in time was deemed a duke or earl by a king or queen and was able to amass great wealth on the backs of the peasants. The leftists want us to believe that’s the case, but it simply isn’t.

In the USA, even if you have inherited money, someone, at some point in your family’s history, figured out a way to earn it. Even if you inherited it, you have to save it, spend it, or invest it, which is helpful to the overall economy. Most people who are wealthy are newly wealthy. The top 1%, or even the top 5% or top 20% are not a fixed group. As Thomas Sowell points out, if you look at individuals over time, there is a lot of movement to and from the higher income groups. It is only when you look at the static percentages that you can be fooled into believing that the same people (or families) are always at the top and always at the bottom. The leftists want us to think that way, but the reality is very different. Wealth is still something that can be attained from anywhere along the spectrum. Losing family wealth is also a real possibility, and, in fact, unless money is shepherded in ways where that money continues to contribute to the overall economy through savings and investment (and spending) losing it is a probability, not a possibility.

Becoming rich is still something that we should, if we are so inclined, aspire to. It is not an evil. It should not be demonized. The rich make a tremendous contribution to the nation, not merely in the taxes they pay, but by using their resources to build more wealth and prosperity. It doesn’t trickle down, it flows down. A rising tide does lift all boats. Wealthy people spending their money creates jobs and prosperity for someone else. Wealthy people saving their money provides the money banks can loan to others to fulfill their dreams. Investment in risky ventures by the wealthy (the only group who can afford the risk) provides us with new products and services, and new jobs… New opportunities to become wealthy ourselves so that we can make the same kinds of contributions other rich people make.

 

 

 

Big Government and Big Business

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Many people I know and love are Democrats. I like them as people. I don’t have any hostility toward them, but would enjoy being able to change their minds. That’s often difficult, because around politics they do get hostile. The thing is, they get hostile and use arguments that are nonsense.

One such nonsensical argument is that businesses have too much control in this country. The name you often hear is Monsanto, the huge ag company. In a comment to my post about the Hunger Games which was cross posted at America’s Chronicle, one guy said that there was a place where it was illegal to collect rainwater (doubtlessly to use to water gardens or crops) because Monsanto had control of all of the water in the area. I don’t know if that’s true or not, but it does give a great jumping off point to make my case.

Businesses only gain too much control because of government. It is big government, meddling in the free market capitalist system and rewarding cronies (those who can fill campaign coffers), that gives business any control it might have. When government steps in with regulations that stifle competition (such as putting an onerous compliance burden–due to the amount of paperwork or cost of equipment–on small competitors that large entrenched companies can afford more easily) more control over a market is given to the large crony company. For example, a company such as Monsanto could design (for example) a hybrid seed, and could then, through political maneuvering, get that hybrid approved as the only acceptable hybrid that can be planted. The competition either spends the money to create the same hybrid (which could even be patented) or… Well there would be no competition, would there?

If my correspondent at America’s Chronicle is correct and it is illegal to collect rain water somewhere because a company like Monsanto owns the water rights, one has to ask: What entity can make laws like that? It’s not Monsanto. Monsanto has no ability to coerce compliance with what they want. The government has that power, though.

Conservatives and libertarians who are capitalists believe in competition. Competition is at the very heart of free market capitalism. It is what drives prices down, and quality up. It is what leads to innovation. It allows the start-up in the garage to take down the huge dinosaur company that is no longer agile enough to compete in new markets or in creating new technology.

The entity that thwarts competition is government. The way it does it through cronyism. It passes laws and regulations favoring certain companies or business practices. It alters the tax code in ways that favor a certain company or industry and makes it difficult for smaller competitors to get the same advantage.

In a truly free market, monopoly, or oligopoly (more then one large company dominating an industry, usually colluding) is not possible. It is only with government support that it becomes possible because the government can freeze out competition in ways no business can do on its own.

“That may be true,” you might say, “but it is the political spending of the big businesses (or labor unions) that is the problem.”

To that I say, no, it is not the political spending. It is the fact that the political spending can get results that is the problem. It is the politicians and the big government making themselves available to do the bidding of their cronies that is the problem. This is not a chicken and egg thing. If the spending got no results, companies would not spend the money. Good Lord! There are much better things to do with money than throw it at politicians. It is only because government is willing and able to stick its big nose into everything that makes giving that money to politicians a good idea–a worthwhile investment.

Do you think the lobbying industry, and the billions of dollars spent lobbying would be necessary (or would even exist) if government didn’t involve itself in things that it really has no business becoming involved in? Politicians sit down to write laws that they do not understand–they don’t understand the industry they are affecting, the law that’s being written, or the ramifications of it–so lobbyists basically write the laws. Who are those laws going to favor? Even on a state or local level (where I assume this rainwater law, if it exists, is in force), the politicians have to be deferring to the company based on promises (for what? You almost have to assume corruption at some level), and money changing hands. Only the government can put the force of law behind something like that. Only government can coerce the citizens. Monsanto (using the example of the rainwater) can’t come to a homeowner and tell them they have to remove their rain barrel from under their downspout. The citizen can tell the representative from Monsanto to go to hell. The citizen can use force to get the Monsanto representative off of their property. But when a cop pulls up and tells the citizen they have to remove the rain barrel, the cop (the government) has the gun. The cop can fine or imprison the non-compliant citizen, and the citizen has to go to jail, or has to pay the fine.

The anger directed at big companies should be directed at big government. Listen, when the banks did a horrid job protecting assets and we had the collapse of 2008, there was an opportunity to let the market work. Let them collapse and let something new, or new players arise. Government stopped that. They didn’t just stop it, they then allowed (of all friggin’ people) Barney Frank and Chris Dodd to submit legislation that didn’t fix any of the core problems (like separating investment banking from consumer banking, or the “too big to fail” issues). People blame the banks. But, if you read Confidence Men by Ron Suskind, you see that the bankers knew they screwed up and were ready for Obama to swing the hammer and dismantle what the banking industry had become. They were literally sitting in a room, waiting for Obama to give the word. Obama came in and let them off of the hook. The cronyism was more important to the politicians than getting it right and actually protecting consumers (or the economy in general).

When we conservatives and libertarians say “Let the market work,” we’re being incredibly pro-consumer. We’re FOR the little guy. We want competition, which provides all manner of benefit to consumers. Government alters the playing field. Government changes the rules and stifles competition. It does so at the behest of the big companies, but the only reason the big companies find cronyism to be a viable business plan is because politicians let them know that it will be profitable. The only way the politicians can fulfill that promise is by expansion of government.

All of my Democrat friends who are angry at big businesses, but love big government have it completely backwards. Shrink government and you have the effect of forcing big businesses to play on a level playing field on which they are vulnerable to competition. The big business has to be more agile, more responsive, more competitive… That is what diminishes their influence and power. More government intervention in the market (bigger government) simply means that those with the money to invest in political favoritism will be able to exert inordinate influence and will be protected, at consumer and citizen expense, by the government.

Smaller government and a competitive free market is the answer even my angry Democrat friends are looking for. They just don’t understand it yet.

One question: When did determining whether or not a law is Constitutional according to the letter of the Constitution become something an “activist” court does? Isn’t that what a court, especially the Supreme Court, should do?

President Obama’s made an incredibly stupid comment regarding what the role of the Supreme Court actually is. That’s been dissected at length by a lot of people. So has his howler that “a large majority” of democratically elected representatives of the people passed the law, so it should stand. That statement may have contained both the most ignorant and dishonest things I’ve ever heard uttered by a sitting president (except for perhaps Bill Clinton’s “I did not have sex with that woman.”)

What’s bothering me more now is that Democrats are trying to redefine judicial activism. Suddenly, a court that is trying to follow the Constitution and affirm limits on government power (you know, like the Constitution does) is “activist.” According to Democrats who are trying to gin up a meme that Republicans are somehow hypocritical because we want the court to act. Ever notice how often they try to paint Republicans as hypocrites? Cast the word around enough and perhaps you can get people not to think.

The definition conservatives use of “judicial activism” is when a judge or a court reads something into the Constitution that is not there. For example, the justification (as I understand it) for Roe v. Wade was a finding that the Constitution provided a “right to privacy” which covered the ability to have an abortion on demand… anywhere. The best argument I’ve heard against the Roe decision isn’t that abortion should be illegal, it is that there is no “right to privacy” in the Constitution and, therefore, the legality of abortion should be something left to the states, or, perhaps, a new amendment should added to the Constitution that provides that right, because it does not currently exist. If left to the states, some states may say it is legal in that state, some might say it is not. Because of the judicial activism in the Roe decision, not only did it legalize abortion in all states, but it also paved the way for tax dollars to be utilized to fund abortions (government funding for Planned Parenthood, for example), which then takes away the right of people who have strong feelings against abortion to refrain from supporting it.

Another definition of judicial activism that occurs most often at the state level is when a judge legislates from the bench, basically inserting something into the law that was not passed by a legislature, or overturning a law passed by referendum without (state constitution) backing for the decision.

The term “judicial activism” is NEVER applied to a judge or a court adhering to the letter of the Constitution. For example, using something that would be considered a conservative issue, if Congress passed a law stating that everyone must own a firearm, one would expect that the Supreme Court would overturn that law (even if it passed by large majorities in Congress). We have a right to keep and bear arms, but having a right to do it implies that we also have a right not to do it. It would be an infringement on the rights of people who don’t want to own a gun and would therefore be unconstitutional.

Take notice of the attempt by the administration, Dems in Congress, and Dem talking heads to change the definition of judicial activism. Be prepared to counter the argument. These people are Orwellian.

UPDATE: The guys at Trifecta on PJTV took on this issue last week (I didn’t see it until today).

The president is at it again. Misrepresentation and economic ignorance… Taking advantage of the ignorance of his diehard followers.

His subject is now demonizing oil companies by decrying the “subsidies” they are given. This is a complete misrepresentation deliberately done to anger people. “Subsidies” are generally (and rightly) thought of as checks written to various enterprise–government revenue collected from taxpayers and sent out to a particular company or industry. Like subsidies for light rail, where checks are sent from general tax revenue to support the operating costs of the trains. Obama is deliberately conflating “subsidies” and “tax deductions” to elicit an angry response from people who will think that not only are they paying for gas at the pump, but checks are being written with their tax dollars to the oil companies.

Of course, the truth is that far more taxes are being collected by government at the pump as a portion of the cost of a gallon of gas than is being taken as profit by oil companies. This is from 2011, but I’m certain it hasn’t changed much:

According to this post on Exxon Mobil’s Perspective Blog , “For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That’s not a typo. Two cents.”

The average tax per gallon of gas in the United states is 48.1 cents, of which 18.4 cents is federal tax. That, of course, would mean that Exxon is profiting two cents per gallon (those profits are then taxed) and the federal government is making nine times more per gallon.

My point, however, is that what Obama is doing is misrepresenting tax deductions as subsidies. The truth is that the oil companies have the same business tax deductions as every other business in the United States, plus one pertaining only to that industry (which allows them, as a group, to retain less than a billion dollars per year). Conservatives on Fire and LD Jackson led me to this article at American Thinker (read it to see the tax deductions oil companies get that Obama is now referring to disingenuously as subsidies).

The only reasons to use the word “subsidy” (assuming you know the difference between a subsidy and a tax deduction given to every business in the United States) is to get people angry, and to make it seem that a tax deduction given to a profitable business (oil companies) is the same exact thing as writing checks out of the treasury (with borrowed money) to subsidize green technology. He knows his base is dumb enough to believe it, but he’s hoping the rest of us are that ignorant as well.

Now we get to the other half: economic ignorance. Obama seems to think that we will either be so angry at oil companies that we’ll want to smack them with more taxes, or that we’ll somehow believe that hitting oil companies with more taxes will somehow lower the price of gasoline. The tricky thing that Obama does not seem to understand (and hopes we don’t understand either) is that when taxes go up, prices go up. That is why someone who understands economics, like Paul Ryan, wants to lower the tax rates before closing the tax loopholes. The best you can hope for when raising the taxes on a business is that the business will absorb the hit itself in which case there is less money available for dividends to investors (keeping that money out of private hands–where it is taxed!–and where it circulates as private spending, savings, or investment, and giving it to the government instead), or there will be less money for buying new equipment or hiring, or less money for expansion of operations. The worst that will happen is that the increased tax rate will be reflected in the price of the product (which is why, for the most part, the consumer pays all taxes, corporations don’t really pay them because the eventual tax is built into pricing just like other costs of doing business). In either case, nothing particularly good happens, and if the increased taxes are incorporated into the price, our price at the pump goes up further as a result of Obama’s desire to demonize and punish the oil companies.

Again, he relies on people’s ignorance to garner support for his policies. Fortunately, last week enough Senators weren’t ignorant (mostly Republicans) and his policy of punishing oil companies didn’t pass. But that doesn’t mean he’ll stop making the same misrepresentations, the same economically ignorant statements, while trying to deflect blame and lead us into an unworkable utopian future (for which the technology is simply not ready).

UPDATE: I wonder if it ever occurs to anyone in the Obama administration that driving up the price of gasoline (through lack of domestic production, or through tax policy) to get people to drive less also results in fewer tax dollars collected per gallon (fewer gallons purchased = fewer taxes received for the feds and states). Those taxes are supposedly for infrastructure, to pay for highways, bridges, and the things necessary to keep the transportation system running and improving. Driving up prices, which drives down use, results in less revenue, which they then make up for (supposedly) by borrowing money and spending that borrowed money on (supposedly shovel ready) infrastructure projects. Do you see the insanity of that scenario? (No one in this administration does.)