Tuesday, April 21, 2009


Dave Budge is now posting on Electric City Weblog, (what is it with all the guest posters Greg? Taking a break?) and has a piece about Tea Parties and herding cats that is well worth the read. Dave calls for a new Jefferson or Adams to define what the purposes of the movement should be.
While I am no Jefferson, I might be an Adams, simply because he was such an obnoxious sort, but I think that the first things that we need to do is to try and get a grip on what it is that the Tea Parties are protesting, and where to go from there. The interesting thing about the protests are not the numbers, which compared to other protests are not that impressive, but that the people protesting don’t usually protest. To rouse this group that is not part of the usual rent-a-mob, indicates that there is something unsettling about the direction that the country is headed that has inspired them. As I said below, there is a general consensus that the Tea Party movement is more an action against things, rather than for anything in particular. The contradictions among the various members are ignored for the moment, but this won’t last if the Tea Party is to be more than a one off. At the least, there is a certain unease with the dramatic increase in usurpation of power and authority by the federal government.
The frequent questions by the Left of why now there is a protest, ignores the outrageous growth of interference by the government in all aspects of what had previously been private activities, especially in the last ninety days. And it is not limited to just being against Obama. The problems obviously started with Bush and the bank bailouts. Whether it was necessary or not won’t be determined for quite a while. I am tempted to give Paulson the benefit of the doubt for the moment that some action was necessary. However, the way he went about it, starting with a three page document and using the number of $750 billion simply because he wanted an amount that would make people take the situation seriously does not inspire confidence.
Then General Motors and Chrysler came to Congress for bailouts. The reason that their requests were even listened to had more to do with the electoral counts of Michigan and Ohio than any real economic issues. While much is made of the 250,000 jobs that would be lost if GM or Chrysler were to go under, that ignores the inherent value of the plants, facilities and people that would remain after a bankruptcy. Bankrupting GM would not mean an end to domestic auto production, it would simply change the company in the same way that United Airlines was changed when it went bankrupt. In fact, the cheapest way to save the auto companies is to give the bailout money to the Pension Resolution Trust fund and separate the retirees from the manufacturer’s obligation. It would result in lower costs to the car manufacturers and constrain the growth of the retiree benefits. Instead, the government gave money to a losing proposition that only has delayed the inevitable, while at the same time giving Obama authority over the management decisions of a somewhat private company. No matter how many times I read my copy of the Constitution, I can’t figure any approach that can justify the actions that have been taken.
From there, we had a $787 Billion dollar “stimulus” package, which really was nothing but a spending list that would never have been passed if Congress had exercised due diligence. In fact, there was no diligence at all, with panic being used to force the bill through both houses without debate, or for that matter even comprehension of what was in the bill. Our Congress at work! Sheesh.
Many on the Left seem confused about the idea of protesting what they see as individual benefits from the actions that the government is taking. For instance, the CNN infobabe who wanted to know why the Chicago Tea Party protests ignored the $8 per week in tax cuts that the Obama administration had handed out. Never mind that they weren’t real tax cuts, but reductions in withholding, she along with the Left and most of the major media outlets ignored the latent effects of those actions. The acceleration of debt that has to be repaid by someone is not something to be ignored. Sure, Obama promised tax cuts for 95% of the population while raising it on the top earners. Of course, for about half the country, these are not tax cuts, but tax credits which are not a reduction of taxes paid, but a transfer of wealth. Even assuming you tax the top 5% at 100% of their earnings, there is not enough money there to pay for the debt that he has decided to burden the country with.
Which brings me to the title of this piece. TANSTAAFL is an acronym for There Ain’t No Such Thing As A Free Lunch. Every action that the government takes, even if it is a perceived individual benefit, comes with strings. Take money from the wealthiest and transfer it to the poorest sounds noble. Unfortunately, it ignores what would have been done with the money if it hadn’t been transferred. Short of hiding money in a mattress, wealth has a worth beyond its immediate face value. What do rich people do with their money? They buy things, build things and invest it to make even more wealth. When they do any of these actions, they create demand, which creates jobs, which spreads the wealth around. Couple this with innovation and initiative and the potential for growth increases as someone makes a better, cheaper whatever. I know that this concept has been rejected as “trickle down economics” but if the separation of the differing economic classes was as total as some claimed, the poor and middle class would have been completely immune to this recession. Instead, the fact that everyone is losing money or jobs show that the economy is so intertwined that trickle down does work. But when the government takes the money, there is less wealth created.
For instance, take $100 held in the possession of a wealthy person. Let’s have that person spend it on a widget. That means that there has to be a salesperson, a business and a manufacturing capability for widgets. The purchase stimulates the need for a replacement widget on the shelf for future sales keeping everyone in the system engaged in business.
Take the same $100 and give it to the government. The government cannot just hand it to some deserving poor person. Instead, it has to be logged, accounted for, rules have to be made and enforced to make sure only the right person gets the money. Regulations have to be promulgated, compliance officers will have to ensure that the rules are followed, and the net result is not $100 but more like $80 (and even this might be a best case scenario). So, the difference is a $100 paycheck versus an $80 welfare check for the same amount.
Everything that the government does comes with a cost. Many times, these costs are reasonable, such as the construction of the Interstate Highway system. The costs are spread about fairly and evenly through the gas tax which incurs a heavier burden on high users than it does on those whose only means of transportation is a bicycle, even if they are using the same roads paid for by cars.
With every action that the government does for us or to us, it comes with a cost. Whether increased debt, or reduction in personal liberties. Think that universal health care is a great idea? Sure it is, but what happens when you get it? Do you trade the greedy corporate HMO for the parsimonious accountant from the government that determines that your life is not cost effective enough to save? Why is that better? The almost childlike belief that the government can do a better job of allocating resources has never been shown to work. But just like children waiting for Santa Claus, they know that if they truly believe, that Santa will bring them just what they want.
It’s time for the adults to take control of the government. To assume responsibility needs to be more than a meaningless slogan and a call to action.
Aux Armes Citoyens!

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