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Libertarianism

Austerity is the new fashion in politics. The Greeks need it; the Germans want it. Some in Congress feel we don't have enough of it in the U.S.

But no one wants real austerity; just ask the Latvians. What politicians want is the respectability of fiscal discipline without actually asking voters to lower their standard of living. What they are dabbling with is the equivalent of ordering a Diet Coke with their bacon triple-cheese burger. The Senate is considering a $30 billion dollar "jobs" bill. Whether it is a good bill or a bad bill, saving $30 billion in one time expenditures is a paper cut on a $1.3 trillion budget deficit. This is not austerity.

Real austerity can not be a fad. It has to be followed for years before it shows results. In today's "get through the next election" policy mentality; austerity is not possible. The danger is that the austerity posers will prevent government from making the needed investments to fortify economic growth. And economic growth is the best solution to our deficit problem. A side order of real austerity would be nice; but I don't see it on the menu.

Quickie

Signs you may be a Libertarian:

When government says "Don't worry, we'll take care of it.", you have a hard time sleeping at nights.

Anniversary

This week Obama has been trying to tout the success of his stimulus program. As I said last year, the package passed by Congress was too small to have a noticeable effect on the economy. There are very few times when additional fiscal spending can prove effective and now that interest rates are less accommodating, the Democrats suddenly realize that they need to create jobs. To create jobs this year, they need to budget the money last year. So expect to see a lot of expensive and useless election year gimmicks being proposed and some fraction of them being passed into law.

Overall, Obama has been ineffective in his first year in office, but he has exceeded my incredibly low expectations. Hopefully, he is learning the lesson that he can't just let Congress create legislation by itself. This is a President who wants to be liked by everyone, but if he wants the job to get done, he's going to have to step on a few toes. I suspect he will be very polite as he does so.

Healthcare Debate

One of the unacknowledged truths that everyone tries to dance around is that the crisis in health-care costs is the result of government policy. The basic problem is that politicians from both parties (the Freeloaders and the Illiterates) have been promising older Americans unlimited health-care at little or no cost. In addition, they have have encouraged larger corporations to make the same promise to their workers. This has lead to the extravagant over-consumption of health-care by these minorities.

As the cost of this over-consumption has risen, Congress, under both parties, has enacted Medicare "cost cutting." The first round may have actually encouraged increased efficiencies, but subsequent rounds were actually exercises in cost-shifting. Hospitals lost money on treatment of Medicare patients but paid for the extra capacity to provide those treatments by raising prices to non-government consumers. Eventually insurance companies began to demand the same prices as the government was getting. This concentrated the cost-shift on the only group with power to negotiate prices with health-care providers: the uninsured.

Thus we have reached a point where we have a system where poor, mostly minority, people subsidize older, mostly richer, mostly white, people. This does not seem compatible with the supposed ideology of either party. And yet, since Social Security and Medicare remain the "third rail" of politics, both parties are trying to solve the problem without actually changing anything. Remember, it was the Freeloaders, at the urging of the Liberal from Texas, who just a few years ago added the largest expansion of Medicare since the program was launched.

The bad news is that we are likely to get some sort of health-care reform this year or in two years time. The good news is that it will be a colossal failure and will likely result in real health-care and entitlement reform down the road. If we live that long.

Stench of rage

There is a certain moral undertone to being a libertarian. "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness." Libertarians believe in inalienable rights for all men. When you defend your property rights, you aren't being a libertarian. When you defend the property rights of other people, then you are being a libertarian.

The recent plan to tax the bonus money for financial services workers at 90% (leaving 10% for the State of New York) is an outrage. I don't know any workers at AIG or any of the large banks that took the TARP money and if I met them I probably wouldn't like them. But I smell property right being trampled by the government and the stench turns my stomach. I can understand that the Illiterates (AKA Democrats) started the plan but it sounds like the Freeloaders are not objecting to this ludicrous idea (at least not so anyone can hear them.)

Senator Grassley went so far as to say that the AIG workers should commit suicide. I say Senator Grassley should lead by example. Who was the Chairman of the Senate Finance Committee in 2005 and 2006 when most of these CDS were sold? Senator Grassley.

stimulus rant

It is difficult to be a libertarian in an economic crisis. The Freeloaders and Illiterates spew their stupidity everyday. Eventually, you get to the point where you simply have to rant.

Government can not create wealth. Government can transfer wealth; government can destroy wealth; government can, on its better days, create an environment and incentives so that individuals can create wealth. But Government itself can not create wealth.

When overall demand is low, Government should make investments, especially in areas where the costs are lower due to excess capacity. Tax shifts to later generations make no sense when demand is low. People are already deferring consumption; government should lean in the other direction. And do not overestimate what government can do; it can not "restart" the economy; it can not fully make up for private demand. The idea that bankers will suddenly do their jobs better because they are now government employees --well I can't politely describe what that is.