Less Than Nothing

New article on FEE discussing the pressing question, what should the Governement do to stimulate the economy.  Sheldon Richman thinks that absolutely nothing is too much, the better answer is Less Than Nothing.

A Trillion Wrongs

There is a new article on the FEE website written by Lawrence W. Reed, entitled A Trillion Wrongs Don’t Make a Right. It is a scathing review of politicians and business men alike. A short but sweet article that helps put in perspective what is truly happening in our country. However, my favorite part is his quote of a portion of Resolution No. 2 of the 85th General Assembly of the State of Indiana, passed by that state’s House and Senate in January 1947. It reads as follows:

"Indiana needs no guardian and intends to have none. We Hoosiers—like the people of our sister states—were fooled for quite a spell with the magician’s trick that a dollar taxed out of our pockets and sent to Washington will be bigger when it comes back to us. We have taken a good look at said dollar. We find that it lost weight in its journey to Washington and back. The political brokerage of the bureaucrats has been deducted. We have decided that there is no such thing as ‘federal’ aid. We know that there is no wealth to tax that is not already within the boundaries of the 48 states.

"So we propose henceforward to tax ourselves and take care of ourselves. We are fed up with subsidies, doles and paternalism. We are no one’s stepchild. We have grown up. We serve notice that we will resist Washington, D.C. adopting us."

From the news reports, it sounds like we have a few governors that may still possess such resolve.

Mr. President, that is not true.

Recently, the President made the following statement:  "There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy."  Today, the CATO Institute ran a full page in in the New York Times that contained the following statement, and signed by many top economists including Nobel laureates and other prominent scholars:  (To see the full page add, click here.)

"With all due respect Mr. President, that is not true.

Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan's "lost decade" in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth."

Newspaper Bailout Would Undermine Political Freedom

Check out the article published by the Ludwig von Mises Institute discussing  the potential effects of a proposed government bailout of the newspaper industry.

Should the States be Bailed Out?

I found a short, two-page article on the CATO Institute website today entitled "10 Reasons to Oppose a Stimulus Package for the States." I recommend it.

Big Buts

Remember that scene from Pee-Wee's Big Adventure, where Pee-Wee and Simone are sitting and talking inside the head of that big dinosaur sculpture?

-- Simone: "You're right, but... "

-- Pee-Wee: "But what!? Everyone I know has a big but. Come on, Simone. Let’s talk about your big but."

Too many people these days seem to have a big but about capitalism and the free market. All over the news you hear people saying that they are big believers in the free market, but this economic crisis calls for drastic measures (i.e. government bailout).

Listen, either capitalism works, or it doesn't. Either the free market is the way to prosperity and liberty, or it is not. An economic crisis is not time for big buts. If there was ever a good time to embrace free markets and capitalism, it is now. If we are ever going to see our bright shiny bikes again, we are going to have to get off our buts, and let the free market do its thing.

Bailout Blues

If you're like me, you've been watching this auto industry bailout thing pretty closely. I look at the FEE website every morning. I look at the CATO Institute home page, Investor’s Business Daily and National Review Online. Everybody is saying the same thing. This is a bad idea. The truth is, we really don't need some smart economics folks to tell us this. You and I can smell truth, and this aint it. This is a bad idea, and a bad idea for a lot of reasons. And I don't know about you, but I'm making myself sick thinking about it all the time.

Seriously, have you talked to anybody in the last month that thought this might be a good plan? And, if everyone thinks this is such a bad idea, what are our representatives in Washington doing? At least with the bank bailout, we were giving money in hopes of resuscitation. For the auto industry, we are just trying to keep them comfortable until they die.

Another question ... If so many smart people (not me, the FEE folks!) are so sure that these bailouts are so damaging, then what the smoke is our government doing? Whose idea was it to let attorneys-gone-politician sort out the biggest financial mess of our lifetime. Honestly, and I speak from experience, if attorneys could count, they wouldn't have gone to law school.

Inflation

There is a must read article on the FEE site today explaining the cause and effects of inflation. It is a another new article published by Lawrence Reed. I love the first line. “Government,” observed the renowned Austrian economist Ludwig von Mises, “is the only institution that can take a valuable commodity like paper, and make it worthless by applying ink.”

You rarely hear somebody explaining this stuff. Honestly, for most of my life I assumed that rising prices were the cause of inflation. Like the article says, that is like assuming that wet sidewalks cause rain. I heard on the news this morning that the inflation rate in Zimbabwe is over 230 Million percent. Ouch!

Of course governments cause inflation, they are the only ones that can. They can't get their spending under control, but they don't want to raise our taxes anymore because we won't vote for them if they do. So, instead, they just print more money. The price of everything goes up, the value of our dollar goes down, and none of us even suspect that our own government is the one stealthily picking our pockets. Brilliant! I'm the dummy that thought that taxes were the only way for the government to mug me. Silly me.

Is anyone out there scratching their head, and wondering where the money for the $750 Billion bailout came from? Maybe Uncle Sam had that cash sitting in a savings account somewhere.

What is Economic Development?

Lawrence W. Reed hits another home run with his article entitled "The Perversion of Economic Development."  This article was originally published in February of 1996, and recently appeared on the FEE website.  This is just another example of how timeless these economic truths really are.  With all this talk in the news about how the government should come to our rescue by stimulating the economy, we might forget what true economic development is.

"In recent decades, economic development has come to mean something other than the spontaneous, entrepreneurial phenomenon that built America. It is often thought of as a kind of activist, public-policy responsibility of state and local governments...."

"The bottom line is what every American with a good sense of history really ought to know: economic development is what happens when government protects life and property and otherwise leaves us alone."  (emphasis added) Click here to read the entire article.

Bailout or Shakeout

The Cato Institute has posted Daniel J. Ikeson's article from the New York Daily News, There's Nothing Wrong with a "Big Two."

I agree with Mr. Ikeson that it is foolishness to use Federal tax dollars to bailout failing businesses, and then claim that capitalism has failed. We need to stand back, and allow the market to function properly. The invisible hand of capitalism will thin the sick and the weak companies out of the herd, allowing the fiscally dominant companies to rise to the top.

"The "Big Three" auto producers - Ford, Daimler-Chrysler and General Motors - want the public to believe their industry faces an existential threat. It doesn't. They want the public to believe they are innocent victims of circumstances beyond their control. They're not. They want the treasury secretary to authorize a fresh $25 billion bailout for the industry and the President-elect to pledge support for their parochial cause. Neither should..."

"If one or two of the Big Three went into bankruptcy and liquidated, people would lose their jobs. But the sky would not fall. In fact, that outcome would ultimately improve prospects for the firms and workers that remain in the industry. That is precisely what happened with the U.S. steel industry, which responded to waning fortunes and dozens of bankruptcies earlier in the decade by finally allowing unproductive, inefficient mills to shut down." For entire article click here.