Monthly Archives: October 2012

Don’t Tread On My Private Property

In our current day of “social justice”, fair has come to mean an equal distribution of resources.  But there is a barrier to this goal.  That barrier is known as private property.

For years, being a moron myself, this term, “private property”,  was confusing.  I was raised in a rural area with plenty of “private property” signs around.  But this is not what private property is; at least not solely.  There are all kinds of private property… like money for example.  The fundamental component of “private property” is ownership.  One can say “that’s mine” with the weight of law backing it up.

But the misguided ideas that drive “social justice” muddies this concept.  One of the tasks of capitalist governments is to protect private property, which is why there are laws against theft.  But what if the government is enlisted by the majority to participate in theft from the minority?  If this can happen, is anyone’s property really private, or is it more a privilege dependent on the whim of the majority?

While the tension between ownership and social justice involves many facets, here is one: The emotion based appeal of equality versus the right to acquire and accumulate private property to do with as one pleases.

Most however don’t see this tension because most don’t have what is arbitrarily deemed to be more than their fair share.  There is no reasoned defense capable of answering this emotional argument, but there is sound economical reasons to defend private property. And, there are sound reasons to deny the authority in society to participate in theft.  To not do this is a slippery slope because once the right to private property is destroyed for one, the door is opened for it to be destroyed for all.

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Filed under Economic Science, Economics, Equality, fairness, Government, Morality, Worldview

How To Fleece The People With Maximum Efficiency

Government accomplishes more by tax rates than filling it’s coffers, which is kind of funny these days when you think about it because the government coffer is brimming over with I.O.U’s.

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Filed under Economic Science, Economics, fairness, Government, Human Nature, Politics

Prices, When I’m Selling They’re Too Low And When I’m Buying They’re Too High

A real estate agent relayed to me a story.  She went to see a couple wanting to list their house.  The couple informed her of the price at which they wanted to list the house.  Puzzled the agent asked them where they got such a figure.  “Easy” they said.  “We just added up all our debt” and this is what we need to pay it off.  She burst into laughter.

So how are prices set?  For anyone interested in economics this is a great question because the answer  is the same regardless of what is being sold, a house, a piece of candy, or even your services to your employer.   To think about how the price of something was arrived at is a good start to understanding the economic reality in which we live.

We tend to think that it costs however much to make, say, a loaf of bread, then the store buys it and sells it for a profit.  But it’s not quite that simple. The farmer who grew the wheat also hoped to make a profit, as did the truck driver, the baker and so on.

So the question of how a price is derived is not only the chain of costs associated with putting it on the shelf, but also the profits of each of those involved in that chain. As you might imagine this is a lot of people, many that you wouldn’t think of like oil and steel refineries, tractor companies, and so on. It is an extensive list and an extremely complex undertaking.  Yet, at the end of the chain, there it is for about two bucks, a loaf of bread. So how are the prices set all along the way?

Well that’s not so complex at all and no different than what you charge your employer really… it’s as much as possible.

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Can’t We All Just Have A Utopian Style Economy?

Some time back I told a group of ten year olds that I had hidden a bag of candy.  I passed out maps that I assured them would lead to the treasure, but I purposely withheld the beginning point.  They began walking around, turning this way and that, counting their steps, as they each dutifully followed the map .  Not one of them asked for that key piece of information that would have unlocked it.  This surprised me for some reason.  In the end no one found the candy. So I ate it myself… In front of them.

There is a lesson here in economics.  Where one begins in the study of economics will determine where he ends up.

When most hear the word “economy” they think of the availability of jobs, money and so on.  But the starting point of economics is man, namely, answering the question, how will he act, good or not so great, under given circumstances?  With this answer in hand it then attempts to answer another question, how do we enlist our fellow man to participate in our own benefit?

While capitalism begins with the more negative view that man is only interested in himself, and from selfish motives will work, improvise, innovate, trade, think, risk, explore and other things that make for a good economy, communism is based on an assumption that man is more altruistic. It assumes he will do these same things with the same zeal in return for his fair share of resources, however much some wealthy, innately-benevolent leader decides that is.

That this hasn’t ever worked is a testament to the faultiness of communism’s premise.  That it will ever be attempted  is a testament to the validity of capitalism’s premise regarding man’s condition… well, that and his resilience to the truth regarding that sad condition.

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Filed under Economic Science, Economics, Equality, fairness, Harsh Reality, Human Nature, Morality, Work, Worldview

When Figures Lie And Liars Figure

Current events are providing teaching opportunities these days.  We saw last time how increases in spending can be called cuts and vice versa.  This time we look at how tax cuts are not really tax cuts, and how a politician can promise no tax increases with big increases coming.

President Obama is now claiming that Romney will bankrupt the government by cutting taxes some astronomical amount.  But a closer look reveals how figures lie, and how liars figure on giving us a snow job.

This bate and switch is done by a scheduled tax increase put into effect first by Bush, then extended by Obama 2 years ago. (Hence the name Bush Tax Cuts)  As you think about this keep in mind that Washington lives in a static world.  It looks at the revenues today then assumes that if taxes are raised 10%, then revenues will increase 10%.  Therefore, if there is already a scheduled tax increase set to trigger next year, a corresponding increase in revenues is figured into its budget.  So if someone delays that scheduled increase, it is called a cut.  See?  Simple.

This allows for politicians to say the opposite of the truth without technically lying.  They can say “I will not raise your taxes”, for example.  Which is true.  The law raises them; or put differently, the taxes raise themselves.  At the same time it can also be said that your opponent is going to bankrupt the government by cutting taxes, even if that person simply promises to keep the existing rates in place.

We will all be less moronic if we realize this one simple truth.  When money, power, taxes and politicians are put into a pot and stirred around, no matter how good it looks or smells, don’t be too eager to gobble it down.

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Filed under Government, Politics, taxation

Lose Weight By Eating All You Can, A Proven Method

The federal government has proven this method to work, though in budgeting rather than weight loss.  But considering the fed’s fiscal obesity, the analogy transfers fairly well.

Here’s how it works.  You plan your weight next year to be 200 pounds more than it is now.  After that you eat all you can.  Next year you count the difference between your projected weight and your actual weight as lost tonnage.  That’s it.  Now even you can be, as they say in reality TV, a big loser.

This is foolishness you say?  In the real world perhaps, but Washington doesn’t live in a real world. It does its annual budgets in much the same way as this weight loss program. Let me explain.

The federal budget by law increases each year by a certain percentage.  (It’s called baseline budgeting if you want to look it up.)  But then let’s say a frugal politician suggests fiscal responsibility by increasing the budget less than the projected increase.  Now that politician can be tared and feathered by his political opponents and the media for wanting draconian cuts; yes, even though the budget would still increase. Like the “lost weight”, it is still considered a cut.

So why does this happen?  That’s not important.  What is important is that politicians can use it to call increases cuts and cuts increases, depending on if they are attacking their opponents, defending themselves against attacks, or politicking   Only economic morons buy it though.  And no one need be an economic moron.  One need only look at the numbers.  You’ll see that “draconian” cuts are still increases and increases can still be called cuts.  For more information on baseline budgeting for goodness sake Google it.  We are, after all, living in the age of the internet.

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Filed under Government, Politics, taxation

America Has An Unfair Economy

Rule number one in economics:

All economies are unfair.

This rule, as with most economic rules, falls under the “reality is harsh” heading.  Much blood has flowed in attempts to break this rule, and it’s obvious that we’re not anywhere near done.  Yet, after all the blood letting, there stands all those unfair economies.  So what’s going on here?

The one problem I’ll discuss here is undefined terms. In this case, the term is “fair”.  Consider a kitchen table.  If someone looks at it and asks, “What’s that”, and another answers,” Well, it’s certainly not a chair”,  the question wasn’t answered satisfactorily.  Yet, still, the answer was true.  The fact remains that one could possibly go on for days saying what the table isn’t, all the while speaking true answers, yet never answering.

The truth is that a table is a table, and a chair is not a table.  This truth is not subject to opinion.  Fair, on the other hand, is very much subjective.  We have a president claiming that some are not paying their fair share in taxes.  But he is not pointing to some objective standard as to what anyone’s fair share is. He’s only saying what he thinks it’s not.

Others say that it’s not fair that that person over there has so much more than I do.  Again, this is an appeal  to what is not fair while giving no indication as to what is fair.  But even if “fair” is specified, those specifications can only be based on subjectivity.  While a table will always be a table, what is fair for one is not always fair for another.

This is not to say that there exists no objective standard for fair in which, like a table is a table, fair is fair.  It is to say that that standard is found outside of the self.  It is in the self that such “standards” are confused with self-interest.

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Filed under Economics, Equality, fairness, taxation, Worldview