Archive for March, 2009

Government Spending Versus Private Spending

March 29, 2009

The following is a step-by-step logical proof that private spending is more efficient than government spending when it comes to increasing the happiness of all private citizens. All logical conclusions are derived using basic economics.

1.) Every dollar the government spends is a dollar taken from the private industry. Thus we must decide which is most efficient in increasing the happiness of private citizens.

2.) Private business salary is based on performance, as their customers directly feel the actions of private business. Thus private business participants have incentive to increase the happiness of all of their customers for minimum price, where their customers make up the entire economy. Giving more resources to the economy as a whole improves the personal situation of a private business participant. Money given to a private business participant goes directly back into the economy. They first spend money on what their customers want, and then spend the remaining profits on themselves(both of which stimulates the economy and increases the happiness of all of their customers). They have to please all of their customers to guarentee themselves future employment.

3.) Government officials’ salaries are based on the amount of money they acquire for their next campaign, as their customers do not always directly feel the actions of government officials. Thus government officials have incentive to increase the happiness of the customers who vote for them, where their customers are only a  percentage of the economy. Taking more resources from the economy as a whole improves the personal situation of a government official. Money given to government officials does not go directly back into the economy. They first allocate large amounts of money for themselves, before spending the remainder of the money on what they want to buy(which does not always increase the happiness of their customers) They only have to please a certain percentage of their customers to guarentee themselves future employment.

3.) Private business participants have to please all of the citizens in the economy to guarentee future employment, whereas government officials only have to please a percentage of the citizens in the economy to guarentee future employment. Thus private spending is more efficient than government spending when it comes to increasing the happiness of all private citizens. Q.E.D.

For example, consider any government industry. See all of the flaws? Compare government education to private education. There’s a reason that one has a better reputation than the other: Incentives.

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AIG Regrets Buying a Senator and a President

March 18, 2009

President Obama and Senator Dodd have known about the AIG bonuses since last year, and Dodd even added provisions to the stimulus bill to protect those AIG bonuses. Also, along with Obama, Dodd has received the most AIG campaign contributions(103,400). Hmm… Interesting. Very interesting.

It doesn’t take a political strategist to see that Obama and Dodd wanted to reward AIG for their support. But now that the news has gotten out, they need a scape goat. So they’re going to try to tax the very bonuses that they have known about since last year. Once again, our big government places the blame on anyone but themselves, even though they are the ones who signed the bill to give AIG all of this cash.

The Pot Calls the Kettle Black

March 17, 2009

Talk of the AIG bonuses are all over the televised news, internet blogs, and even Facebook.

What’s so exciting about this money? Why, it’s 165 million dollars! That’s 165,000,000. Alot of money, isn’t it? In fact, through some simple division, those bonsues cost each taxpayer  55 cents(165,000,000/303,824,640 American citizens). Outrageous! You know that quarter you found on the street the other day, and the next quarter you find? Both will go to AIG employees in bonuses. And you’ll still owe them a nickel. How dare they spend this money? Aren’t you glad that President Obama is pursuing every legal path to block those bonuses?

Actually, if you think about it, President Obama has also been spending taxpayer money through a binding contract with the American people. In fact, just recently, he signed a bill worth 787 billion dollars. (that’s 787,000,000,000) That bill has created $2590.31 in national debt for you and each of your children. (787,000,000,000/303,824,640 American citizens) You know that quarter you found on the street the other day? Throw it back. It won’t help in paying that sum off.

In fact, since you’re the government’s cosigner on every loan they take, you owe an equal share of 11,019,358,248,648 in national debt. Your equal share is payable in a friendly payment plan called inflation. You and each of your children owe $36,368.81 in government created debt. If you want to buy something, you had better buy it now, because you won’t be able to afford it once they raise taxes and start printing more money. But just think, if it weren’t for our government borrowing so much money, and making so many regulations, where would the US economy be now? Read Stossel’s article about it.

So next time you hear President Obama making angry remarks about ‘corporate greed’ at AIG, just think of what he himself has done, and of the 3.6 trillion dollar budget he proposed recently. Can anyone say ‘The pot calling the kettle black‘?

As long as you’re here, be sure to thank the few congressmen who voted against increasing your debt.



 


									

Market versus government

March 14, 2009

Look around at the various industries we have today, and divide them between privately owned and operated, or government operated(there are actually more secretly government subsidized industries these days than you might think). Which bring you the most satisfaction? Do you ever notice how much faster private businesses are when it comes to getting back to you? The lines at privately owned industry are short, because the owners know that if they don’t hire enough competent employees striving to meet higher standards, the customer will do their business with someone else. Consider a driver’s licensing facility. The lines can be hours long, or maybe they don’t ever even get to you and you have to come back tomorrow, but they don’t care. They get your money whether or not you are satisfied.

It’s two different types of motivation. A government manager does not have any motivation to meet higher standards, or to compete, because there is no one to compete with, and he is guaranteed his job will stay, because you pay high taxes to support him. Whereas a private manager knows that he must meet higher standards to keep his job, because for any given private industry, there are numerous competitors, and the manager will be fired if the customer is not satisfied.

Is that to say that all government managers are not motivated to do a better job? No, of course not. There are those with good morals who will do a better job despite fewer motivations. But the natural incentives for them to do a better job are not there.

However, there is a balance to be had. Consider the industry of law enforcement. Can you imagine if that was privately owned? That would mean that the richest people would make up rules for everyone else. But law enforcement is something that effects everyone, not just the customer.

Does transportation effect anyone besides the customer? Yes, best to leave its operation to the government. 

Does education effect anyone besides the customer? No. Note how much more efficient private education is than government education. And yet, whether you use the government education or not, you still wind up paying for it. If education was privately paid for, then the prices would fall significantly and the quality would increase.

So the next time President Obama proposes more government spending, regulations, or agencies, consider the effect it will wind up having on your life. With no market incentives, no one will be served to their full satisfaction.

“How is it the government is going to be able to spend a dollar in such a way that it generates a dollar or more in value?” asked George Mason University economist Peter Leeson. “A more likely possibility is that a dollar that government takes out of the private sector is a dollar the private sector doesn’t have to spend anymore.” – Quote used from economist John Stossel’s article Is the Government’s Bailout Just Dollars and Nonsense?

Economists agree… or do they?

March 14, 2009

President Obama recently announced that “There is no disagreement that we need action by our a government, a recovery plan that will help to jump-start our economy.”

Well, President Obama, that simply isn’t true.

There are actually over 250 economists that recently denounced big government spending, increased national debt, more government regulations on the economy, and higher tax burdens as a solution to our economic woes.

Views of complete socialism from the inside – from a Russian spy’s perspective

March 8, 2009

The following are excerpts from “I Was An NKVD Agent” (Living Sacrifice Books) by Anatoli Granovsky, an ex-Russian spy, written in the first person perspective. They are interesting because they shed light on some of the darker aspects of socialism; aspects that are difficult to reverse once enacted. The bolded parts of the following are most interesting for the sake of comparison to ongoing events in the United States.

“During the long, hard advance over 500 miles of territory beyond the western frontiers of the U.S.S.R., both soldiers and officers of the Red Army had seen many aspects of western life that made them wonder. Is this the degenerate capitalism that we have heard so much about? How is it that the slaves of capitalists live in such nice, cozy little houses with radios, gas stoves, and sometimes even hot and cold running water? ”

Unfortunately, in a socialist system, the government isn’t able to get water, electricity, and heat to everyone. You have to apply for it, and it can take months or years to acquire. The country of India is a fine example of this.

“He[a high ranking soviet official] had Rijkov[a capitalist]dismissed from his job, and ordered all his property and possessions confiscated. For a Communist there can be no gratitude towards capitalism. To a Communist such people are by definition inhuman and unworthy: it is never a question of whether to destroy them, simply of when to destroy them.”

“For Gregori[Another Russian spy], communism was an affair of the heart, not of the head.”

“Communization was being carried out very fast. In the Sudetan area particularly, where the Communist party had always been very strong, the population now found itslef treated with that total disregard for individual liberty that is characteristic of the Soviet Union. The principal industries and banks were nationalized(…)”

“Most of the information, as per my orders, concerned people who had show signs of having sympathies with the West: people who would eventually have to be somehow rendered harmless to the Soviet purpose. They would have to be either eliminated, jailed, deported, somehow discredited or ruined, and there were many hundreds of them.”

“Now, in order to achieve its purpose,the Soviet Union(…)made full use of not only the more orthodox methods of espionage, sabotage, propaganda, and naked power, but also of the whispering campaign, false rumor and organized ridicule. All groups who were not pro-Communist were open to subtle attack by the method of discrediting its leaders and prominent members in the eyes of their fellow members and followers.”

“During the time I spent in Czechoslovakia I saw many things that angered me, though why they should have done so I did not at first understand. The truth is that before going to Prague I would not have been unduly worried by the sight of what was, after all, simply the rule of power. But to see this cultured and civilized people being surely bent under the yoke of Soviet domination, to see them being forced to accept the Soviet system and way of life when their own had been demonstrably so much better, was somehow pitiful. I realized that my feelings about life and the common people were undergoing the final stages of a complete change.”