Laissez Faire Links: Rational Production, Debt Hysteria, Economic Ignorance, and Obamacare

Where does wealth come from?  The answer is simpler than you ever thought.  Washington’s antics over the current debt crisis and people’s ignorance of Obamacare’s deceptive design.

  • Over at Objectivism for Intellectuals, the idea that wealth comes from action based on rational thought is not a new revelation, but simply a rebuttal to those who still maintain otherwise.  Wealth, according to the classical tradition in political and economic theory (i.e. Locke and Smith), is a product of one’s labor.  See my discussion here for elaboration on this point.  Wealth cannot be anything but a “product” of action, not wish or whim.
  • Dan Mitchell from the Cato Institute points out the current debt hysteria in Washington as nothing more than political posturing.  The issue of raising the debt ceiling, lest the government default on its obligations, overlooks many aspects of U.S. fiscal responsibilities that point to a much less severe predicament.  His comments on the Treasury Report are particularly insightful:

“The Obama Administration is deliberately trying to blur the difference between defaulting on the debt, which would have real consequences, and “defaulting on obligations,” which is a catch-all phrase that includes mundane and uneventful matters such as postponing a Medicare payment to a hospital or delaying a grant disbursement to a state government.”

“The White House wants people to believe genuine default is likely even though tax receipts this fiscal year are expected to be more than $3 trillion and interest on the debt is projected to be only $237 billion. In other words, the Treasury will collect more than 12 times as much revenue as needed to pay interest on the debt….I want to reiterate that a default only would happen if the White House wanted it to happen.”

  • The Objective Standard has an interesting, albeit bit depressing, piece on how many of the Americans who voted for Obama visualize how government, economics, and insurance markets actually function.  I highly recommend taking a minute or two to read this!
  • On a related note, Laissez Faire Today provides a piece with particular insight into why health insurance markets are so difficult to understand and so expensive.  For example, what makes them different from life insurance markets?

“When premiums reflect expected costs, people are essentially paying their own way. When that happens, it really doesn’t matter very much who chooses to buy insurance and who chooses to self-insure and bear the risk themselves….Why are things so different in the market for health insurance? Because in this market, premiums are regulated, and that regulation is completely dominated by the idea that it’s unfair to charge real premiums. In fact, the most common belief is that everybody should pay the same premium for health insurance, even if everyone’s expected health cost is different.”

See the whole article here.

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Honors Night Canceled for ‘Fairness’

via The Jawa Report

via The Jawa Report

Coddling our youth is Principal David Fabrizio’s primary objective. Whether he realizes it or not, the principal of Ipswich Middle School in Massachusetts is teaching a very dangerous idea to all of his students.  It is better to safeguard the feelings of those who did not come out on top than to recognize the achievements of the successful.

This, from the Jawa Report:

Middle School Principal Cancels ‘Honors Night’ Because It Might Upset Students Who Didn’t Make The Grades

A Massachusetts principal has been criticized for canceling his school’s Honors Night, saying it could be ‘devastating’ to the students who worked hard, but fell short of the grades….

But, apparently, it’s okay to devastate the kids who worked hard and achieved academic honors…

The entire article, along with the principal’s contact information can be found here.

Principal Fabrizio’s response that the honors night was not canceled, but merely changed from a private ceremony to a more inclusive gathering of all students throughout the day may offer some comfort for those students and parents not included in the honors spotlight. However, this still diminishes the hard work and dedication those at the top must exhibit to attain such a station in relation to their peers.  What Principal Fabrizio has done here is to effectively water down the achievements of those at the top to safeguard the rest of the students from the very real feelings that all of us must deal with on a daily basis.

Nobody wins every time, and the spirit of competition demands a solid line of delineation between winners and losers.   Without this, competition becomes just another issue of fairness.

Apathy in America, The Answer is Philosophy

20130228-174934.jpgThe degree of political ignorance among the American populace is difficult to surmise. On one hand, college enrollment has steadily increased over the past four decades, indicating a much larger educated segment of the population. In addition, the advantages of the internet in information dissemination is so great, it literally furnishes the potential for a truly informed democratic republic. On the other hand, the apathy of the American people in the face of our government’s oppression of individual rights in the name of the public welfare is equally astounding. Our lack of opposition, or of any useful degree of organized opposition, is symptomatic of apathy.

Yet in lieu of the information revolution, room for a more hopeful interpretation exist. Perhaps the lack of response stems not from apathy fueled by a largely distracted populace, but rather from a different kind of apathy, one that too often results from information overload. Too much information too quickly thrown into the homes of America, perhaps turns people away from the important issues of the day, i.e. the economy, government spending, privacy versus national security. Over the last decade, legislation such as the Patriot Act, Obamacare, and the National Defense Authorization Act (NDAA) have passed into law often unread by the very legislators voting yay or nay. Less likely is that the average American is familiar with these laws or how they affect individual rights. Nor is the bureaucratic language that often weaves these unintelligible bills together typically accessible to anyone without a law degree.

So the riddle is this. What does a person require in order to filter massive amounts of information often representing opposing viewpoints? What is required of people to be informed short of a genuine desire to maintain one’s general awareness of current events? While people will disagree on the specifics, the simple answer is philosophy. For philosophy is a framework by which information can be analyzed, compartmentalized, and analyzed again for future use. It allows one to establish a system of beliefs that coincide with one’s life choices. More importantly, philosophy furnishes a backdrop by which one can analyze choices and cause and effect, so that if the perceived outcome of a choice is not what was expected, one still has a means of looking back to see what caused the outcome.  Given America’s ongoing economic turmoil, I believe the following words from philosopher Ayn Rand are particularly relevant.

The power that determines the establishment, the changes, the evolution, and the destruction f social systems is philosophy.  The role of chance, accident, or tradition, in this context, is the same as their role in the life of an individual; their power stands in inverse ratio to the power of a culture’s (or an individual’s) philosophical equipment, and grows as philosophy collapses.  It is, therefore, by reference to philosophy that the character of a social system has to be defined and evaluated.

Passage from The Ayn Rand Lexicon, s.v. “Philosophy.”

In short, a good philosophy sheds ambivalence. It allows its user to see essentials without the gray that often accompanies political and social debate. And it also acts as a how-to guide amidst information overload.

When thinking of philosophy, we typically associate it with a time long passed, yet never before has the need for a solidly based system of thinking been so prescient.  As technology advances, the amount of information available will increase as well as its rate of circulation throughout society.  In this sense, philosophy acts as a how-to guide to living with and evaluating massive amounts of information.  Consequently, the times ahead will require that we all embrace philosophy more than ever before.

Dr. Yaron Brook on Government, Healthcare, and Individual Rights

The following is a brief address given by the Ayn Rand Institute‘s Yaron Brook on the inherent immorality of government involvement in health care.  As the Supreme Court finished up its hearings this week, much attention will continue to focus on whether the Patient Protection and Affordable Care Act will remain in tact, broken apart, or simply overturned.  What is important here however, is Dr. Brook’s focus not on the constitutionality of Obamacare’s individual mandate, but on the moral rightness of individual freedom.  Dr. Brook points out that such morality exists solely from the right of ownership of one’s life.  It is critical to realize that this tenet lies at the heart of the American experience; it is the essence of what America was founded upon.  Obamacare, then, while seeking to provision health care to 40 million Americans simultaneously destroys the very foundation of western democratic society.

 

 

On an additional note, you can find the Supreme Court transcripts for the hearings here.

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Why America Needs to Kill Its Entitlement Ideology

via Google Images

Largely a result of decades of government dependence, too many people today lack the basic concept of personal accountability.  Many view the act of collecting their government benefits (whether they be food stamps, WIC, TANF, or other programs) as an act to which they are entitled.  Yet, few acknowledge that this ideology is politically counter-intuitive, morally alienating, and fiscally unsustainable. The following account of a Walmart employee’s encounters with welfare recipients illuminates not simply a few bad apples, but an ideology of rot.

“I understand that sometimes, people are destitute. They need help, and they accept help from the state in order to feed their families. This is fine. It happens. I’m not against temporary aid helping those who truly need it. What I saw at Wal-Mart, however, was not temporary aid. I witnessed generations of families all relying on the state to buy food and other items. I literally witnessed small children asking their mothers if they could borrow their EBT cards. I once had a man show me his welfare card for an ID to buy alcohol. The man was from Massachusetts. Governor Michael Dukakis’ signature was on his welfare card. Dukakis’ last gubernatorial term ended in January of 1991. I was born in June of 1991. The man had been on welfare my entire life. That’s not how welfare was intended, but sadly, it is what it has become.”

Full Article  →

What we are witnessing as a society is not a few destitute people, but a culture gradually consumed by an ideology that fails to permit returns on personal growth and achievement.  Rather, the welfare-entitlement ideology rewards bad behavior. This is known as perverse incentive in professional circles and has been linked to the actions of our most troubled institutions: banking, investing, education, and of course government.

via Google Images

The political implications that this destructive force has reached everyday Americans is certainly not without importance.  From the voting booth, the problem is a double-edged sword.  So long as my neighbor feels social justice entitles him to a portion of my paycheck, he is likely to vote in politicians supporting the same ideology.  And a particularly disturbing political phenomenon known as “the tail wagging the dog” states that if such an ideology grabs hold of America many politicians will – against their better judgment – adopt said ideology in order that they be voted into office. The average voter holds onto sentiments divorced from the productive attributes of healthy society, while the politician embraces the same political ethos for personal gain.  The people think they’ve earned such benefits, while politicians enjoy the wide support they receive for supporting them.   Thus, the welfare-entitlement ideology is especially damaging because it attacks America from both ends of the social scale.  The result is often the demise of the middle, and most productive, segment of any three-class structure.

Where this will lead America is of course the core question that lies at the heart of the welfare debate.  Laying emotional attachments to notions of entitlements aside, the debate should focus on the financial implications to the health of America.  The insolvency of our federal government cannot be ignored and, coupled with the notion of dependence, highlights a further complication as to how those dependent upon government handouts will survive once the government (by fiscal necessity) withdraws its hand?  This is a loaded question, for most will be destitute absent the necessary skills to survive.

So the moral and practical implication of the welfare-entitlement ideology is two-fold as well.  Just as government spending crowds out the private sector, reliance on government crowds out self-reliance.  Benjamin Franklin knew this fact well.

“I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.” 

Necessity is the mother of invention, as the saying goes, but our current ideology completely negates necessity.  The consequences are severe.  Under the welfare-entitlement ideology, America becomes not a nation of promise and prosperity, but one where government controls both its economic vitality and the very sustenance of its people.

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