Category: Money Matters

The Debt Debate

A U.K. commenter remarks:

Meanwhile, changing the subject completely, I fail to understand the game of 'chicken' that the two houses are playing over debt. (Wasn't there a James Dean film that started that way, with bad results?). I would be interested in hearing your views in a post.

Here are some quick thoughts.

To understand what this wrangling is all about you must understand that the USA is a deeply divided country in which the common ground on which we formerly stood is shrinking.  To borrow a phrase from Thomas Sowell, what divides us is a very deep "conflict of visions."  The conflict concerns the nature and purpose of government, its size, scope and reach, what it can and cannot legitimately do.  The Left favors, in practice if not always in theory, an ever-expanding welfare state which provides citizens with cradle-to-grave security.  Although liberals don't like to be called socialists, and will retreat to an exceedingly narrow definition of 'socialism' in order to avoid this label, their tendency is clearly in the socialist direction and they have been marching in this direction since FDR at least.  A perfect example is President Obama's health care initiative, popularly known as 'Obamacare,' which increases government control of the health care system.  Particularly offensive to libertarians and conservatives is Obamacare's individual mandate which requires citizens to purchase health care insurance whether they need it or not, whether they want it or not.  A clear indication of the 'visionary' and ideological nature of this initiative is that it is being forwarded at a time when the country simply cannot afford another entitlement program.  But this hard fact cuts no ice with the ideologues of the Left.

The Right, on the other hand, resists the expansion of government power, championing the traditional values of self-reliance, individual responsibility, and limited government.  This deep Right-Left conflict of visions plays out over a myriad of issues major and minor from guns to light bulbs to soda pop to circumcision to using federal tax dollars to fund abortion clinics, and so on.

Perhaps we should distinguish the political and the economic aspects of the conflict of visions.  What I have just sketched is the political difference, the difference as to what the polis, the state, ought to be and ought to do.  But there is also deep disagreement about economics.  The Left favors central planning and top-down control while the Right looks to a more or less free market for solutions. 

If you ask a liberal how to generate government revenue he will tell you to raise taxes while the conservative will say the opposite: lower taxes, thereby stimulating the economy.  The creation of jobs will increase income, FICA, and sales tax revenues.  Each side looks for 'facts' to support its overarching vison, which underscores the fact that what we have here is fundamentally a conflict of radically opposed visions. 

In sum, we Americans are fundamentally divided and in a way that is irreconcilable at the level of ideas.  We do not stand on the common ground of shared principles and there is no point in blinking this fact.  Left and Right are riven by deep and unbridgeable value differences.  And so any compromises that are reached are merely provisional and pro tem, reflecting as they do the fact that neither side has the power to  clobber decisively the other and push the nation in the direction in which it thinks it ought to move.

And so it should come as no surprise that there is bitter wrangling over the national debt.  Making it worse is the fact that on the Republican side there is a split between libertarians and true conservatives on the one hand and RINOs (Republicans in name only) on the other.  A proper subset of the first group is the Tea Party folks whose central animating desideratum is fiscal responsibility.  The Dems are more unified toeing as they do the leftist party line.

The Tea Party faction has rightly sounded the alarm concerning the national debt which under Obama is increasing at the rate of 4.1 billion dollars per day.  (Under G. W. Bush the rate of increase was also unacceptable but much less, around 1.6 billion per day.)  Unfortunately, their standing on principle could have disastrous effects.  I mean the principle that the debt ceiling ought not be raised.  The crucial fact here is that the Republicans do not control the Senate or the White House.  So they really can't do much.  What they can do is get themselves perceived as pigheaded extremists.  If enough ordinary Americans come to view  Republicans as obstructionists or extremist then then the Right will lose the 2012 battles and it will be all over.

The Boehner Plan is the way to go given the current political climate and the current distribution of power among the branches of government.

Charles Krauthammer has it nailed. (Get the pun?) 

Actually, Krauthammer would make a great president except that he looks like a cadaver, is bound to a wheel chair, and is a chess player.  Totally unelectable.

In Debt We Trust

I saw the documentary In Debt We Trust on TV on one of the lefty channels.  Trailer here. It is a typical leftist treatment of the problem of indebtedness, but interesting  nonetheless. One of the people interviewed states that "Society preaches the gospel of shopping." That is the sort of nonsense one  expects to hear from libs and lefties. First of all, there is no such thing as society. To think otherwise is to commit the fallacy of hypostatization.  So if the sentence means anything, it means that  certain people, advertisers primarily, urge people to consume recklessly. No doubt about it. But libs and lefties ignore the main  thing, namely, the individual's ability to resist the siren song of the advertisers. If you are in debt, it is not 'society's' fault; it is your fault. Your ignorance of simple arithmetic and personal finance, and your refusal to control yourself are your responsibility.

Do I 'give a pass' to the predatory credit card companies, the subprime mortage scammers, and the payday loan sharks? No, but if it  weren't for your weakness of will and financial stupidity they wouldn't be able to get a handle on you. Don't blame others, blame  yourself.

I Lay in a Supply of Incandescent Light Bulbs

Virginia Postrel writes,

If you want to know why so many Americans feel alienated from their government, you need only go to Target and check out the light bulb aisle. Instead of the cheap commodities of yesteryear, you’ll find what looks like evidence of a flourishing, technology-driven economy.

There are “ultrasoft” bulbs promising “softer soft white longer life” light, domed halogens for “bright crisp light” and row upon row of Energy Smart bulbs — some curled in the by-now- familiar compact fluorescent form, some with translucent shells that reveal only hints of the twisting tubes within.

It seems to be a dazzling profusion of choice. But, at least in California, where I live, this plenitude no longer includes what most shoppers want: an inexpensive, plain-vanilla 100-watt incandescent bulb. Selling them is now illegal here. The rest of the country has until the end of the year to stock up before a federal ban kicks in. (I have a stash in storage.) Over the next two years, most lower-wattage incandescents will also disappear.

Read the rest.

Light Banned on the Left Coast in the People's Republic of Californication!  It figures. It's sad to see what has become of my native state.  But I am fortunate to flourish in Arizona where bright sun and hard rock and self-reliant liberty-lovers have a suppressive effect on the miasma of leftists.  So with a firm resolve to stick it to the nanny-staters I headed out this afternoon in my Jeep Liberty to Costco where not a single incandescent was to be had.  So I went to Lowe's and cleaned 'em out.  I bought four 24-packs.  Three packs were Sylvania 60W 130V A19's @ $10.03 per pack  and one pack was Sylvania 100W 130V A19's @12.02 per pack.  Total: $42.11 for 96 bulbs. That comes to less than 44 cents per bulb.

The 130 volt rating means that I will get plenty of life out of these bulbs at the expense of a negligible reduction in illumination.  A voltage check at a wall socket revealed that I'm running just a tad below 120 V.

Next Saturday I'll pay a visit to Home Despot Depot and add to my stock. 

And now I am remined of what were supposed to have been Goethe's last words: Licht, Licht, Mehr Licht!  Light, light, more light!

The Upside of the Downturn

Written a few years ago, this entry from the old blog merits reposting.

As the economy stumbles, CD rates tumble, the stock market falters,  gas prices soar, and foreclosures mount, I look at the bright side: less development, fewer sales of State Trust Lands, less destruction of desert and wildlife habitat. A temporary respite from the hyperkinetic rush to a universal pave-over. And less mindless zipping around in gas guzzling behemoths. I don't reckon there is much of a market for Escalades and Hummers these days. Out on U.S. 60 the other day the traffic seemed surprisingly light. People are feeling the pinch of higher gas prices. Good. Maybe they will learn to cultivate local pleasures, those of hearth and home. Maybe they will learn to slow down and walk. Or ride a bike.

Call me a green conservative. I have no patience with libertarians and other open-borders types who think economic considerations trump all others. To sacrifice quality of life and natural beauty to economic expansion makes little sense to me. But don't confuse me with eco-extremists like Dave Foreman who, in a book of his I read some years back, claimed that a bear and a human being have the same value.  That is an equal but opposite form of moral and intellectual idiocy.

And then you have the Sierra Club, the members of which are mostly squishy bien-pensant latte liberals who refuse to work with Jim Gilchrist and the Minuteman Project because they stupidly think that   anyone who insists on the enforcement of immigration laws is a 'racist' and a 'xenophobe.'

So it's a mess and I for one see little point in getting my blood pressure up over it. You've got Republicans who like cheap labor and  Democrats who are hoping that a flood of illegal aliens will assure the permanent ascendancy of their party. Contemplative types like me laugh at those who piss their lives away in activism battling activists of some other stripe. I prefer to use the time and good health I have left enjoying as much natural beauty as I can while there is still some left to enjoy.  A shot from my backyard:

IMG_0396 

Just Say ‘No’ to Panhandlers

What do you do when a beggar approaches you on the street? Do you give him money? I've given away food, but as a general rule it is foolish and wrong to give money to bums. Once, in downtown Phoenix, I came out of a rib joint with a box of luscious leftovers. A beggar approached asking for money for food. I opened the box, showed him the ribs, and said, "If you are  hungry, you can have these." He thankfully accepted the gift and we both went away satisfied.

But if a bum asks for money, I refuse, sometimes adding, 'Get a job.' This isn't the Great Depression. There are jobs galore. That's why there is a Mexican invasion.

Beggars are for the most part scammers and liars. A bum in Hawaii once asked me for a quarter to make a phone call. I foolishly gave him the quarter.  Later in the day, he passed me again and again asked for a quarter to make a phone call. (No, I am not hasty generalizing, I am illustrating a general proposition to the effect that bums are for the most part liars and scammers.) If you give beggars money, they will buy alcohol or drugs with it. Do you want to contribute to their further degradation? Do you want more inebriated people on the streets?  Do you give any thought to what the bums do to others when drunk?  But even if they use the money for a good purpose, by giving them a handout, you undermine what little work ethic they have.

It is not easy to be genuinely helpful to others.  It takes thought, lest you make them worse. 

Of course, I don't expect the typical  liberal to understand this. For a guilt-ridden, feel-good liberal, one who substitutes emoting for thinking, one shows 'compassion' by contributing to people's dependence and degradation.  It is not that liberals intend to degrade and make dependent, but that is the unintended consequence of their unthinking  'compassion.'

The conservative who refuses to aid and abet unproductive behavior is the man of true compassion. For he gives the bum a reason to cease his bumming. This is why the expression 'compassionate conservative' is ill-advised. True conservatism is compassionate by its very nature. The expression 'compassionate conservative' is a foolish concession to the Left, suggesting as it does that conservatives are not as a rule compassionate. It is an expression like 'articulate black,' which   suggests that blacks are not as a rule articulate.

Further reading: Have a Heart, Give Smart.

 

Spend It Now or Pass It On?

The quality of  his heirs
Must give pause
To him whose loot
Is slated for their jaws.

A rather more classical meditation on this theme we find in  Horace.

Quis scit an adiciant hodiernae crastina summae
     tempora di superi?
Cuncta manus avidas fugient heredis, amico
     quae dederis animo. 

Who knows if Jove who counts our score
Will toss us in a morning more?
What with your friend you nobly share
At least you rescue from your heir. (Samuel Johnson)

Who know if the gods above will add the hours of tomorrow
 to the total of today?
Whatever you give to your own dear self will escape
 the greedy hands of your heir. (David West)

Who knows if heav’n will give to-morrow’s boon
 To this our daily pray’r?
The goods you take to keep your soul in tune,
 Shall scape your greedy heir. (Christopher Smart)

Big Government on the Brink

We are in deep trouble as Robert Samuelson ably documents in this troubling piece.  So what does Nero Obama do?  He fiddles while Rome burns and its legions get mired in Libyan sand and other sinkholes of the  benighted and backward.  Even if Obama the Irresponsible and every worthless Democrat were sent packing we'd still be in deep trouble.  Meanwhile gold approaches $1500 an ounce.  'Lead'  ain't cheap these days either.  It is a bad sign when gold and 'lead' appear to be wise investment choices. 

Overextended abroad, collapsing within.  The bigger the government, the more to fight over.   It's time for a return to good old American self-reliance. Make your plans and prepare for the worst.

Money, Power, and Equality

 J. R. Lucas, "Against Equality," in Justice and Equality, ed.  Hugo Bedau (Prentice-Hall, 1971), pp. 148-149:

Since men value power and prestige as much as the possession of wealth—indeed, these three `goods' cannot be completely separated—it is foolish to seek to establish an equality of wealth on egalitarian grounds. It is foolish first because it will not result in what egalitarians really want. It is foolish also because if we do not let men compete for money, they will compete all the more for power; and whereas the possession of wealth by another man does not hurt me, unless I am made vulnerable by envy, the possession of power by another is Inherently dangerous; and furthermore if we are to maintain a strict equality of wealth we need a much greater apparatus of state to secure it and therefore a much greater inequality of power. Better have bloated plutocrats than omnipotent bureaucrats.

This is a penetrating passage from a penetrating essay. Lucas is in effect pointing out a paradox at the heart of the egalitarian  position. If the egalitarian wants to equalize wealth, perhaps via a scheme of income redistribution, then he will need to make use of state power to do it: the wealthy will not voluntarily disembarrass themselves of their wealth. But state power is of necessity concentrated in the hands of a few, those who run the government,  whose power is vastly greater than, and hence unequal to, the power of  the governed.

The paradox, then, is that the enforcing of equality of wealth requires inequality of power. But, as Lucas points out, the powerful are much more dangerous to us than the wealthy. Your being wealthy takes away nothing from me, and indeed stimulates the economy from which I profit, whereas your being powerful poses a threat  to my liberty.

But I hear an objection coming: "Wealth is convertible into power since the wealthy can buy their way to political influence, whether legally or illegally." True, but the seriousness of this problem is a function of how intrusive and overreaching the government is. A government stripped down to essential functions offers fewer opportunities for the power-hungry. Note also that the wealthy may  feel it necessary to buy influence just to protect themselves from  regulatory zeal. 

Samuelson on Social Security as Middle-Class Welfare

Here.  Excerpt:

Here is how I define a welfare program. First, it taxes one group to support another group, meaning it's pay-as-you-go and not a contributory scheme where people's own savings pay their later benefits. And second, Congress can constantly alter benefits, reflecting changing needs, economic conditions and politics. Social Security qualifies on both counts.

Part of the problem with the SS system is that no one quite agrees on just what it is or is supposed to be.  Some call it a Ponzi scheme. (Steve Forbes, Judge Andrew Napolitano)  But obviously it isn't.  Ponzi schemes are fraudulent in intent by definition.  SS is not.  What Napolitano et al. presumably mean  is that it like a Ponzi scheme in being unsustainable.  But that is not quite right either for it is sustainable if one is willing to do one or more of the following:  raise taxes, limit/postpone benefits, reduce spending in other areas, increase the money supply thereby inflating the currency.

To call the SS system a form of welfare as Robert Samuelson does is closer to the mark but still wide of it.  How can it be called welfare when the recipients of it (most of them anyway) have paid in a lifetime's worth of contributions?  The average hard-working  Joe who has contributed all his life via  payroll taxes will bristle, and with justification, if he is branded a welfare recipient when he retires.  He will insist that he has worked hard and long, and now wants what is due him: the money that was coercively taken from him plus a reasonable return. 

So SS is not a welfare scheme either, Samuelson's slanted definition notwithstanding, though it is like one in some respects.

My understanding is that when it was originally set up,  in the '30s, SS was envisaged as destitution insurance.  The idea was that a decent society does not allow its members to fall into the gutter and eat cat food if through no fault of their own they end up destitute at the end of their lives.  But of course if it is destitution insurance, then, like all insurance, the 'premiums' will be small relative to the payout, and only those who end up destitute would get a payout.  But the system is nothing like this now.  It has transmogrified into a retirement program, but one without individual accounts and the sort of  fiscal discipline that they would bring.

So it's not a Ponzi scheme, not a welfare scheme, and not a form of insurance, if  these terms are used strictly.  (And if you are not using them strictly, then you shouldn't pretend to be contributing to a serious discussion.)  Conceptually, SS is a mess, a mess that aids and abets all the unhelpful rhetoric that we hear on all sides.

If memory serves, Speaker Boehner (before he was speaker) called for means-testing.  The moral absurdity of that should be evident, especially  when espoused by a supposed conservative.  You work hard all your life, you play by the rules, defer gratification, exercise the old virtues, and end up well off.  And now the government penalizes you for having been self-reliant and productive.  Disgusting.  You expect that from a liberal.  But from a conservative?

As one further indication of the conceptual mess that is the SS system, consider that the FICA tax is called a tax.  It is no doubt a coercive taking, but what other kind of tax brings with it an expectation of getting one's money back down the line?  Property owners pay real estate taxes to the county.  But no one who pays these taxes expects to be able to pay a visit to the Assessor's office sometime in the future to recoup what he has paid.  That's not the way a tax works.  So why is the FICA tax called a tax?  This is just another indication of the conceptual obfuscation built into the SS system.

 

Taxation: A Liberty Issue

Despite their name, liberals seem uninterested or insufficiently interested in the 'real' liberties, those pertaining to property, money, and guns, as opposed to the 'ideal' liberties, those pertaining to freedom of expression. A liberal will go to any extreme when it comes to defending the right to express his precious self no matter how inane or obnoxious or socially deleterious the results of his self-expression; but he cannot muster anything like this level of energy when it comes to defending the right to keep what he earns or the right to defend himself and his family from the criminal element from which liberal government fails to protect him. He would do well to reflect that his right to express his vacuous self needs concrete back-up in the form of economic and physical clout. Scribbler that I am, I prize freedom of expression; but I understand what makes  possible its retention.

Taxation then is a liberty issue before it is a 'green eyeshade' issue: the more the government takes, the less concrete liberty you  have. Without money you can't get your kids out of a shitty public school system that liberals have destroyed with their tolerate-anything mentality; without money you cannot live in a decent and secure neighborhood.  Without money you can't move out of a state such as California which is 'under water' due to liberal fiscal irresponsibility.

Taxation is a liberty issue.  That is one thought as April 15th approaches.  Another is that the government  must justify its taking; the onus is not on you to justify your  keeping. Government exists to serve us, not the other way around.

We Get What We Deserve

It is perhaps only fitting that fiscally irresponsible people should get a fiscally irresponsible government. Before blaming stupid legislators and greedy lenders, take a hard look into the mirror.  At least the person staring back at you is a person over whose behavior you have some control.