A Government of Special Interests

[ACCT]

We are a government of special interests, by special interests and for special interests. The concentration of power in the hands of government creates special interests. “Public” education is an example. The education system is not public because the power now resides with our state governments, not our local governments. This concentration of power creates the specialist interest groups of the teachers’ unions and state employees. These special interest groups do not want competition. They are the ones who oppose school vouchers.

Economics is the allocation of scarce resources to meet insatiable wants. Economics is a social science like sociology and psychology. Economics studies one facet of human behavior, economic behavior. Economics does not give us the answer to all human behavior, however. Surely the terrorists on September 11, 2001 were not motivated by economic behavior!

Scarcity is the key word in the definition of economics. If there were unlimited resources, there would be no economics.

There is no such thing as a free lunch. Someone always pays for “free lunches.” Economics is interesting because economics reads like a detective novel. “Who done it?” Who benefits and who pays?

Adam Smith’s genius was that he recognized the value of voluntary
exchanges. Voluntary exchanges produce a win-win situation. Both
buyers and sellers benefit. The price that they agree upon is the
market price, or the equilibrium price. Adam Smith said that a seller,
seeking only his interests, and through no conscious effort, is led by
an invisible hand to seek the public good.

Milton Friedman postulated his own invisible hand theory. He states
that an individual, seeking only the public good through government
regulation, and through no conscious effort is lead by an invisible hand
to seek the good of the individual. Milton Friedman, in his book, Free to
Chose, states that he has seen the government do little good.

Thomas Jefferson, in his first inaugural address, stated that the role
of government was an umpire, not a participant. Thomas Jefferson’s
political theories and Adam Smith’s economic theories go hand-in-hand.

The market economy means power to the people! Which goods are produced, how they are produced, and whom should get them are determined by you and me.
We vote with our dollars.

Is the market economy fair? Economists cannot define “fair” or “needs.” Give away new cars, and suddenly everyone “needs” a new car!

Incentives matter. Benefits have to exceed costs. Even a thief makes that economic decision.

Employers are constrained by scarce resources just like everyone else. The only way that an employer can get more resources is to bid the resources away from someone else. That is why the supply curve has a positive slope. A manufacturer will only produce more if he can get a higher price.

 

[sedonaman]

We are a government of special interests, by special interests and for special interests. The concentration of power in the hands of government creates special interests. “Public” education is an example. The education system is not public because the power now resides with our state governments, not our local governments. This concentration of power creates the specialist interest groups of the teachers’ unions and state employees. These special interest groups do not want competition. They are the ones who oppose school vouchers.

I understand your frustration here, but we have to ask whose fault is it? The first qualification for a candidate is name recognition; his second is his quality of oratory. He can’t get either without advertising. No one will vote for someone he never heard of no matter what his message. Advertising costs money. Where is the money going to come from? A: Special interests.

Economics is the allocation of scarce resources to meet insatiable wants. Economics is a social science like sociology and psychology. Economics studies one facet of human behavior, economic behavior. Economics does not give us the answer to all human behavior, however. Surely the terrorists on September 11, 2001 were not motivated by economic behavior!

Scarcity is the key word in the definition of economics. If there were unlimited resources, there would be no economics.

There is no such thing as a free lunch. Someone always pays for “free lunches.” Economics is interesting because economics reads like a detective novel. “Who done it?” Who benefits and who pays?

Adam Smith’s genius was that he recognized the value of voluntary
exchanges. Voluntary exchanges produce a win-win situation. Both
buyers and sellers benefit. The price that they agree upon is the
market price, or the equilibrium price. Adam Smith said that a seller,
seeking only his interests, and through no conscious effort, is led by
an invisible hand to seek the public good.

Milton Friedman postulated his own invisible hand theory. He states
that an individual, seeking only the public good through government
regulation, and through no conscious effort is lead by an invisible hand
to seek the good of the individual. Milton Friedman, in his book, Free to
Chose, states that he has seen the government do little good.

Thomas Jefferson, in his first inaugural address, stated that the role
of government was an umpire, not a participant. Thomas Jefferson’s
political theories and Adam Smith’s economic theories go hand-in-hand.

The market economy means power to the people! Which goods are produced, how they are produced, and whom should get them are determined by you and me.
We vote with our dollars.

Is the market economy fair? Economists cannot define “fair” or “needs.” Give away new cars, and suddenly everyone “needs” a new car!

Incentives matter. Benefits have to exceed costs. Even a thief makes that economic decision.

Employers are constrained by scarce resources just like everyone else. The only way that an employer can get more resources is to bid the resources away from someone else. That is why the supply curve has a positive slope. A manufacturer will only produce more if he can get a higher price.

I have read all these authors plus most of Dr. Thomas Sowell’s works. These subjects are all abstract concepts that the average voter is not interested in since he knows his vote on the margin is meaningless.

 

[ACCT]

Bureaucracy

“The growth of the bureaucracy, reinforced by the changing role of the courts, has made a mockery of the ideal expressed by John Adams in his original (1779) draft of the Massachusetts constitution: ‘a government of laws instead of men.’ Anyone who has been subjected to a thorough customs inspection on returning from a trip abroad, had his tax returns audited by the IRS, been subject to inspection by an official of OSHA or any of a large number of federal agencies, had occasion to appeal to the bureaucracy for a ruling or a permit, or had to defend a higher price or wage before the Council on Wage and Price Stability is aware of how far we have come from a rule of law. The government official is supposed to be our servant. When you sit across the desk from a representative of the Internal Revenue Service who is auditing your tax return, which one of you is the master and which the servant (Friedman)?”

References

Friedman, M., & Friedman, R. D. (1990). Free to Choose. New York: Harcourt, Inc.

 

[sedonaman]

Bureaucracy
The growth of the bureaucracy, reinforced by the changing role of the courts, has made a mockery of the ideal expressed by John Adams in his original (1779) draft of the Massachusetts constitution: ‘a government of laws instead of men.’ …

The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
…
**He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance. … **

Reference: The Declaration of Independence

Today, the equivalent of “swarms of Officers” is “czars”.

 

[ACCT]

Have you ever considered that there is a revolving door between big business and big government? How can you condemn one without condemning the other? For example, one of our senators is now working as a lobbyist for a large corporation!

 

[sedonaman]

Have you ever considered that there is a revolving door between big business and big government? How can you condemn one without condemning the other? For example, one of our senators is now working as a lobbyist for a large corporation!

Forty years ago, I was watching a business course out of USC on TV. One session concerned business involvement in politics, and the host asked his businessman guest how he would respond to the comment, “Businesses should not get involved in government.” He said, “As a businessman, I have to get involved with government or get out of business.”

When the Great Depression hit, Old Man Kennedy correctly predicted that power would shift from New York to D.C. because in a crisis, the people will always demand the government to “do something.” Of course, there are those who will see political opportunity in this.

 

[ACCT]

Forty years ago, I was watching a business course out of USC on TV. One session concerned business involvement in politics, and the host asked his businessman guest how he would respond to the comment, “Businesses should not get involved in government.” He said, “As a businessman, I have to get involved with government or get out of business.”

When the Great Depression hit, Old Man Kennedy correctly predicted that power would shift from New York to D.C. because in a crisis, the people will always demand the government to “do something.” Of course, there are those who will see political opportunity in this.

The emperor has no clothes. The irony is that government is incapable of producing wealth. Government is just a parasite. Government regulation can only produce shortages and surpluses. Bottom line: government can only misallocate resources.

I feel sorry for the people who believe that the government can improve the economy. They remind me of the people who went into the New Orleans Super Dome for Hurricane Katrina, believing that the government would protect them!

 

[sedonaman]

The emperor has no clothes. The irony is that government is incapable of producing wealth. Government is just a parasite. Government regulation can only produce shortages and surpluses. Bottom line: government can only misallocate resources.

I only wish more people realized this.

I feel sorry for the people who believe that the government can improve the economy. They remind me of the people who went into the New Orleans Super Dome for Hurricane Katrina, believing that the government would protect them!

And they vote, so we’re all doomed.

 

[ACCT]

I only wish more people realized this.

And they vote, so we’re all doomed.

People will ask, “What Happened?,” when their 401ks become worthless in less than an hour. If you do not listen, you have to feel.

The government is doomed. The socialists are just kicking the can down the road for as long as they can.

Christians are never doomed. Worry is useless. However, you are to get as far away from this doomed economy as possible. Starting a garden this spring in your backyard is a good start. God made us to sweat with physical labor. God provides for the birds, but the birds have to get out of their nests every morning.

 

[sedonaman]

People will ask, “What Happened?,” when their 401ks become worthless in less than an hour. If you do not listen, you have to feel.

The government is doomed. The socialists are just kicking the can down the road for as long as they can.

Christians are never doomed. Worry is useless. However, you are to get as far away from this doomed economy as possible. Starting a garden this spring in your backyard is a good start. God made us to sweat with physical labor. God provides for the birds, but the birds have to get out of their nests every morning.

I got the following graph in an ad for gold back in the 1970s. It shows the price of commodities in 1923 Germany. Note the fine print at the bottom where it says we would need over 2,800 miles of graph paper to complete the plot.

 

[ACCT]

Margaret Thatcher: “The trouble with Socialism is, sooner or later you run out of other people’s money.”

“When you subsidize poverty and failure, you get more of both.” - James Dale Davidson, National Taxpayers Union

“The more corrupt the state, the more it legislates.” - Tacitus

“A Liberal is a person who will give away everything he doesn’t own.” - Unknown

 

[ACCT]

I made up the example of home ownership, and equating rent with property taxes. From my point of view, if you are paying $4,200 in property taxes and the house is worth $350,000, then the city owns 1.2% (42,000/350,000) of your house. The situation is far worse with corporations!

Corporations are 39% socialist in terms of ownership. How can I say that? Simple. I looked at the income tax rates for corporations in 2002. All income over $100,000 is taxed at 39%. The federal government owns 39% of every corporation.

What does stock ownership mean? It means that if you own 2% of the common stock of a company, you share in 2% of the income and 2% of the losses. The federal government shares in 39% of the income and 39% of the losses. Where is the difference?

Keep in mind that the right to own private property is a cornerstone of economic freedom. Corporate taxes are a major restriction on that economic freedom.

From my point of view, property taxes are the same as rent. If you are paying $4,200 in property taxes and the house is worth $350,000, then the city must own your house. Why?

Who do you think really owns your house? You are paying rent (taxes) to the local government to the tune of $4,200 per year. If you do not pay the property taxes (rent), the local government will put your house up for sale at a sheriff’s auction.

Do you or the local government own the house? If the local government has the power to sell your house because you did not pay your house taxes (rent), then I think that the government must own your house.

Corporations are 39% socialist in terms of ownership. How can I say that? I looked at the income tax rates for corporations. All income over $100,000 is taxed at 39%. Therefore, the federal government owns 39% of every corporation. The federal has it right when they say that they want to be your partner in business.

What does stock ownership mean? It means that if you own 51% of the common stock of a company, you share in 51% of the income and 51% of the losses. The federal government shares in 39% of the income but does not share in the losses.

Keep in mind that the right to own private property is the cornerstone of economic freedom. Taxes are a major restriction on that economic freedom.

 

[LeafByNiggle]

I made up the example of home ownership, and equating rent with property taxes. From my point of view, if you are paying $4,200 in property taxes and the house is worth $350,000, then the city owns 1.2% (42,000/350,000) of your house. The situation is far worse with corporations!

Corporations are 39% socialist in terms of ownership. How can I say that? Simple. I looked at the income tax rates for corporations in 2002. All income over $100,000 is taxed at 39%. The federal government owns 39% of every corporation.

What does stock ownership mean? It means that if you own 2% of the common stock of a company, you share in 2% of the income and 2% of the losses. The federal government shares in 39% of the income and 39% of the losses. Where is the difference?

Keep in mind that the right to own private property is a cornerstone of economic freedom. Corporate taxes are a major restriction on that economic freedom.

From my point of view, property taxes are the same as rent. If you are paying $4,200 in property taxes and the house is worth $350,000, then the city must own your house. Why?

Who do you think really owns your house? You are paying rent (taxes) to the local government to the tune of $4,200 per year. If you do not pay the property taxes (rent), the local government will put your house up for sale at a sheriff’s auction.

Do you or the local government own the house? If the local government has the power to sell your house because you did not pay your house taxes (rent), then I think that the government must own your house.

Corporations are 39% socialist in terms of ownership. How can I say that? I looked at the income tax rates for corporations. All income over $100,000 is taxed at 39%. Therefore, the federal government owns 39% of every corporation. The federal has it right when they say that they want to be your partner in business.

What does stock ownership mean? It means that if you own 51% of the common stock of a company, you share in 51% of the income and 51% of the losses. The federal government shares in 39% of the income but does not share in the losses.

Keep in mind that the right to own private property is the cornerstone of economic freedom. Taxes are a major restriction on that economic freedom.

I don’t understand why paying taxes on sometime implies that the entity to which you pay the tax therefore owns the percentage of the item in question. Having the authority to tax does not automatically imply the right to exercise ownership, and the tax rate certainly has nothing to do with the percentage of said ownership. It is true that your use of what you own is limited by public laws, but that would be true whether or not the item is taxed. So please explain the connection.

 

[ACCT]

I don’t understand why paying taxes on sometime implies that the entity to which you pay the tax therefore owns the percentage of the item in question. Having the authority to tax does not automatically imply the right to exercise ownership, and the tax rate certainly has nothing to do with the percentage of said ownership. It is true that your use of what you own is limited by public laws, but that would be true whether or not the item is taxed. So please explain the connection.

Who owns your house when the sheriff sells your house at public auction because you did not pay your property taxes? Property taxes look like rent to me. Don’t pay and you are kicked out.

Field audits are only 8/10 of 1%; however, most audits are correspondence audits. The IRS once sent me one of those computer-generated letters. I owed $52.40; when I did not pay on time, the IRS sent another letter threatening to garnish my wages, freeze my bank account, etc. I no longer believe in the government’s “public servant” image. I am the servant and the IRS is the master.

I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible. The reason I am is because I believe the big problem is not taxes, the big problem is government spending.

"I think we can all agree that taxes are no laughing matter…crying might be the more appropriate reaction…I guess this is what TS. Eliot had in mind when he called April the cruelest month (Updegrave).”

Students of their music will know that in 1967 George Harrison wrote a song ‘The Taxman.’ The lyrics went something like this:

‘If you drive a car I’ll tax the street
And if you walk, I’ll tax your feet
If you’re cold, I’ll tax the heat
And if you sit, I’ll tax your seat
98 percent would be too small
Be thankful I don’t take it all
Cause I’m the taxman, yeah.’

The greatest threat to human freedom is the concentration of power, whether in the hands of government or anyone else.

 

[LeafByNiggle]

Who owns your house when the sheriff sells your house at public auction because you did not pay your property taxes? Property taxes look like rent to me. Don’t pay and you are kicked out.

The concept of ownership is not without its limits. Apparently you think the only kind of ownership worth the name is absolute ownership where you can do whatever you want with the property forever no matter what. The fact is all kinds of ownership come with limits. Having your house sold for non-payment of taxes is not the norm. Most people are able to keep their house until they sell it. A better case for non-ownership can be made in the case of a mortgage. Here again they can take your home if you don’t pay the lender. Such a thing is called a foreclosure, and it is more common than losing your home for tax reasons. Yet I don’t hear you complaining about mortgage companies owning your home. Why not?

The greatest threat to human freedom is the concentration of power, whether in the hands of government or anyone else.

Since you identify yourself as Catholic then there is at least one instance where you approve of concentration of power and that is in the Pope. Or are you one of those Catholics who believes that all the power to set rules in the Church should reside with the local parish priest, or better yet, to the individual?

 

[ACCT]

These are some of my favorite quotes from Ludwig von Mises. He is known as the head of the “Austrian school” of economics. He was a Professor of Economics at the University of Vienna from 1934 to 1940

“It is important to remember that government interference always means either violent action or the threat of such action. The funds that a government spends for whatever purposes are levied by taxation. And taxes are paid because the taxpayers are afraid of offering resistance to the tax gatherers. They know that any disobedience or resistance is hopeless. As long as this the state of affairs, the government is able to collect the money that it wants to spend. Government is the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom.”

 

[ACCT]

There was a time when the United States was the only game in town. If you wanted freedom, you had to come to the United States. However, the United States is no longer the only game in town.

India, for example, learned some very bad socialist ideas from England and the United States. They had a marginal tax rate of 85% and excise taxes of 100%. Is it any wonder that they never exported any jewelry? Today India is a major exporter of jewelry. I visited some of those factories, and they are more modern that our jewelry factories in the United States! Why? The Indians call it an “economic miracle.” I call it no taxes. There are no corporate taxes on exported jewelry!

I also visited New Zealand for three weeks. This was a country that was down and out because of socialism. Now the country has embraced political and economic freedom in a big way. Listening to New Zealand’s politicians and its people was like a breath of fresh air compared to what I get from the politicians in the United States.

Perhaps the best example was Hong Kong before it was turned over to Communist China. Maids and plumbers became multi-millionaires. “Hong Kong has no tariffs…no government direction of economic activity, no minimum wage laws, no fixing of prices…Low taxes preserve incentives. Businessmen can reap the benefits of their success but must also bear the costs of their mistakes (Freidman).”

When they left Hong Kong, very few settled in the United States. Our taxes were too high. When Clinton passed the $500 billion tax bill, I think that we surpassed England as the most heavily taxed industrial nation. Most people from Hong Kong settled in Canada, which is not exactly a tax haven.

 

[ACCT]

The government can solve the accounting transparency problem. The government can create another bureaucracy to monitor the books of all public corporations online in real time!

There is one thing that I am sure of. The new regulations concerning accounting transparency will be incomprehensible. Language is imprecise. Therefore, many provisions in the law are an effort to limit and restrict more than one variable. Extremely long sentences are the end-result!

Tax Court judges also have to read the incomprehensible. **Research shows that the Tax Court could not discern the intent of Congress in one-third of the cases reaching them. **The Tax Court judges did not rewrite the law, however, even when the statues were unworkable. Their attitude was that the statue always comes first (Kirkpatrick and Pollard, 1986).

References

Kirkpatrick, T. L., & Pollard, W. B. (1986). Reliance by the tax court on the legislative intent of Congress. The Tax Executive, 358-359.

 

[ACCT]

You must understand one thing about the Federal Government and your SOX (Enron Act) regulations are a perfect example to explain this additional regulatory burden. Since I worked on the regulatory side for several years the one thing that I learned is without more regulations the less of a need for Federal employees. Here is how it works: in order for a Federal employee to become a supervisor he or she must supervise a specific number of individuals. In my case, I had to supervise a total of 14 people before I was promoted to a GM-15. However, to support these 14 people there must be some work for these individuals to conduct. Now, enter a major regulatory proposal to expand reporting requirements or institute some new form of regulatory burden. An example of this would be SOX. However, in my case, the major regulatory burden was the bringing of open-access transportation of natural gas. This increased regulatory burden has provided many new jobs in the Federal Government and produced many new supervisors into the Senior Executive Service. This is very similar to the SOX situation you have new regulations being instituted thus causing the need for many new jobs in the Federal government and in most cases unnecessary additional burden for private companies.

The sad thing about Federal regulations is they are excessively expensive and in most cases have no return to the taxpayer for the services they offer. Take for example, the US Department of Energy, that has a annual operating budget in excess of $4.0 Billion however, they have yet to produce any form of energy or develop any new energy source.