Laissez Faire Links: Government Shutdown, Delaying the Obamacare Mandate, the Morality of Abortion, and Myths Against Capitalism

What would a proper government shutdown look like?  Why will President Obama need to delay his mandate provision?  Can a woman be charged with homicide for aborting her baby?  Did capitalism cause the 2008 financial crisis?

  • Ari Armstrong over at The Objective Standard talks about a government shutdown that would be welcomed.  His brief piece Toward a Shutdown to Celebrate makes the point that most government functions are superfluous, and there are many.  Beneath the umbrella of laissez-faire capitalism, the proper function of government is strictly limited to protector of individual rights.  He states, “In order to protect rights, the government needs to run an effective military, police force, court system, and the aspects of government necessary to support them. Those, and nothing else, are the essential functions of government.”
  • Forbes contributor Scott Gottlieb discusses problems the new government healthcare exchanges are having out of the gate.  Why President Obama Will Have To Delay His Health Insurance Mandate makes the case that technical problems with the virtual exchange rollout will necessitate a delay in the requirement for those uninsured to purchase coverage.  His prognosis is not optimistic: “The Administration started building these systems late, and rushed them online, without perfecting these networks. Working them out now, in real time, is going to take months, and maybe a year.”  With that large of a delay, the Obama Administration will have to backpedal on its threat to penalize the uninsured.
  • Just a little more from our friends at The Objective Standard tells us about a possible Colorado ballot measure that would effectively criminalize any and all abortions, even in cases of rape and incest.  The measure would go further though.  In addition to calling for “homicide prosecutions for killing the unborn,” the “Brady Amendment” violates a women’s moral right to choose how she lives and what is best for her and her body.
  • Did Capitalism Cause the Financial Crisis?  This is a short, but invaluable video regarding the common myth that capitalism failed, resulting in the 2008 financial meltdown. Yaron Brook, Director of the Ayn Rand Institute, states that this is erroneous because a true system of laissez-faire capitalism did not exist prior to 2008.  What did exist was a degree of government intervention that distorted the market, leading to bubbles in asset prices that never would have existed under natural market forces.  It is no coincidence that the three most highly regulated industries – housing, banking, and mortgages – were those that failed.  Pay particular attention to his comments on the Federal Reserve system.  For more information, see my discussions of the Federal Reserve.

What is it About Economics…The Debt Deal Examined

Given that it’s debt talk time in Washington, I thought I would repost my discussion from 2011. Given that Washington is still behaving the same, my discussion – with the exception of statistics cited – is still relevant. Indeed, after last year’s S&P credit rating downgrade of the U.S. and the Federal Reserve’s continued spending, the debt ceiling issue should be in the forefront of everyone’s mind. Below are a few other articles concerning Washington spending.

kapitalcon

Government spending is out of control.  The national debt is almost equal to GDP (97%).  Unemployment is at 9.6% officially, almost 20% unofficially.  The debt ceiling game in Washington leaves little room for comfort among middle class Americans and investors.  A U.S. credit downgrade is imminent.  The future is not bright.  So what is it about economics that leaves so many people (on many occasions myself included) confused and bewildered into a state of apathy?  After all, are we not taught the fundamental aspects of economics, namely that competition preserves ingenuity, the law of demand determines fair (market) prices, and that a market free of government encourages investment for future growth because the market is the amalgamation of millions of choices – for America approximately 311 million.  So long as these phenomena are allowed to occur unimpeded, the path toward prosperity continues.  As more jobs are created and more products…

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Ron Paul Speaks on Government Coercion and Failure

In the following video, Ron Paul lays out the conditions upon which Washington has usurped the American dream. Deficit spending, inflationary threats, the Federal Reserve, and wealth redistribution through the primary hub of government bureaucracy are all points of contention needing more open debate and general awareness among the people.  Mr. Paul discusses these with welcomed candor.

In addition, Paul speaks on the Washington’s newest threats to liberty and privacy, passage of the National Defense Authorization Act (NDAA), and most recently, the deployment of drones over American airspace.  It is a proven fact that as any government grows in size and influence, the people’s basic rights diminish at an equal rate.  Just taking a look at recent legislation from the Patriot Act to Obamacare to the NDAA paints a frightful picture of a Washington elite increasingly relying on coercion at a time when their policies are loosing popularity.

Take a look at the video and please feel free to pass it along to all you know.

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The Financial Crisis, Foreseeable and Preventable

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When a government bails out  an auto company or any bank, it essentially charges the central bank (our Federal Reserve System) with transferring the risk from that company to the government, i.e. taxpayers.  We’ve known this and many other basic economic truths for many years. Yet despite all the claims to ignorance by Washington and the media conglomerates,  here are some other economic truths that should have tipped off policy experts to the financial implosion in 2008.

We’ve Known for Thousands of Years

We’ve known for literally thousands of years that debts need to be periodically written down, or the entire economy will collapse. And see this.

We’ve known for 1,900 years that rampant inequality destroys societies.

We’ve known for thousands of years that debasing currencies leads to economic collapse.

We’ve known for hundreds of years that the failure to punish financial fraud destroys economies.

We’ve known for hundreds of years that monopolies and the political influence which accompanies too much power in too few hands is dangerous for free markets.

We’ve known for hundreds of years that trust is vital for a healthy economy.

Full Article

Of particular interest is the last statement above, that trust is vital for a healthy economy.  While this may seem obvious, actually creating trust and confidence in a market becomes more difficult as government interventions increase.  Governments intervene in markets when they fail, but when a government fails due to market intervention (stimulus/deficit spending), one has to ask whether such actions are sufficiently warranted.  Adam Smith issued a solemn, yet practical, warning against misdirected government intervention and the interests behind them.

“The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public.  To widen the market and to narrow the competition, is always the interest of the dealers.  To widen the market may frequently be agreeable enough to the interest of the public; but tot narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.  The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.  It comes from an order of men, whose interest is never exactly the same with that of the pubic, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it” (Wealth of Nations, 287-88. Modern Library Edition)

Despite the misconception that economics is an extremely complicated field, it essentially provides a methodology for examining human behavior, primarily how incentives contribute to individual choice.  Incentives, according  to Steven Levitt and Stephen Dubner (authors of Freakonomics), are at the root of economic analysis and provide a window into the economic, moral, and social musings of any society.  Although our so-called policy experts would have you believe that such complexities are not for the layman and should be left to them, nothing could be further from the truth.  Economic analysis such as this is simply a matter of aligning incentives with outcomes.  Whether they be of powerful interests, government officials, or the people, incentives govern behavior and the market bears that behavior to society and the people.

At this point, only one thing remains clear.  The more market distortions we see from government intervention, the more difficulties we inherit in trying to make rational decisions based on market factors and the overall position of our economy.   The implication is this: government intervention does more harm than good because it distorts market signals and creates misaligned incentives.

If you are not privy to this information, I suggest reading and rereading the article above in its entirety.  I first found this article on Monty Pelerin’s World, a very worthwhile site if you are attempting the daunting task of sifting through the lies and manipulation coming from Washington and the media.

Also on Technorati

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Elite Government, A Natural Progression?

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The following is an interesting piece from Monty Pelerin discussing the natural tendency of Democratic governments to transform from what public choice theorist’s term a principled government (the government of our Founding Fathers) to a pragmatic government (concerned primarily with fulfilling special interests at the expense of the people).  The implication is that if certain controls are not instituted on government, its natural evolution entails the destruction of liberty.

“The Founding Fathers would not recognize what has transpired in this country. Their creation and ideals have been savagely distorted if not destroyed forever. In its place stands the detested evil that results from increasingly unbridled power. The image of Leviathan ruthlessly ruling over its citizens is faintly visible. Each violation of The Constitution and The Rule of Law only strengthens the growing monster….”

“From a short-term perspective, the deterioration in government is barely noticeable. It proceeds slowly, in the same manner and to the same effect as rust or erosion. Looked at from a wider time perspective it is easy to see as some of these examples illustrate:
In the late 1800s, President Grover Cleveland, when criticized by a member of his own party, responded: “What is the use of being elected or re-elected unless you stand for something?” Contrast that with Rahm Emanuel’s statement in 2008: “Never let a good crisis go to waste.” In Cleveland’s time there was still a sense of “doing the right thing.” Today politics and self-interest are the ends. “Right” is anything which advances a political agenda.
Prior to 1913, there was no permanent income tax or Federal Reserve in this country. Government ran mostly balanced budgets, funding operations via excise taxes and tariffs. When government debts were incurred, they were usually paid off within several years.
Inflation was an oddity before the Federal Reserve. During the nineteenth century, arguably the fastest growth period in our history, declining prices were the norm. Only during the War of 1812 and the Civil War in the 1860s was inflation a problem. Even with those wars, prices were lower at the end of that century than the beginning.
Since the formation of the Federal Reserve about 100 years ago, inflation is a constant. The Fed has systematically destroyed the purchasing power of the dollar and with it many types of savings. This institution, sold to the American public as necessary to protect the dollar, has destroyed 95 cents of every dollar since its formation.
The nature of government and our attitudes toward it have changed dramatically. President John F. Kennedy’s views would not be acceptable to today’s Democrat party. He could be considered too conservative for many modern-day Republicans.
The humorous definition of a “great statesman” used to be a “dead politician.” For politicians who have expired within the last fifty or so years, there are few great statesment, even by this gratuitous definition.”

Full Article

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