People who complain that government unions colluding with government officials for extravagant pay are “bargaining with themselves” are missing the whole point about collective bargaining:
When the government says something you need is so important that it claims a monopoly over providing it, then that government has an obligation to deliver that thing as promised, as long as you keep up your end, like paying your taxes. It can’t let its bureaucrats withhold what you need, for their own gain.
Bribery is Corruption
If the drone at the driver’s license bureau refuses to help you unless you slip him a fiver, or the mailman “can’t guarantee everything will arrive safely”, unless you “tip” him, we all recognize that as bribery, intolerable in a government official. They are entrusted with what we consider “public good”, and must deliver on it, because it’s considered essential, and has been made into a government monopoly. Withholding that trusted thing in demand for personal gain is intolerable corruption.
It’s OK to have to tip your waitress for better service, but not your fireman.
And we, for most of history, recognized in America how important this distinction is, unlike the rest of the world. We weren’t, say, India:
In India, if you want your driver’s license, you automatically bribe the bureaucrat who is supposed to give it to you. Same if you want electricity, or health care. In fact, you have to bribe hundreds of government officials per year, in order to simply function normally. You need to already have enough money to pay off public thugs, in order to be allowed to prosper. This is part of why hundreds of millions of poor have remained trapped in a caste system, while most of the world has outgrown theirs.
It’s not that regular people shouldn’t be able to trade money for service, it’s that government officials must never withhold service in order to get money.
Democrats against Collective Bargaining
This is why, for so many years when the rabidly pro-union Democrats dominated the Federal and state governments, government employees and civil servants were banned, by those Democrats, from collective bargaining and strikes. Even Franklin D. Roosevelt agreed that a union is a monopoly, over both the workers and employer, that strikes withhold services from legitimately customers, arbitrarily, in order to extort more money out of them — and when the customers are taxpayers, and the services essential, everyone recognized that this is wrong:
The process of collective bargaining, as usually understood, cannot be transplanted into the public service…A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government.
— Franklin Delano Roosevelt, Federation of Federal Employees against Strikes in Federal Service
It wasn’t until 1959 that, for the first time ever, a state government in the US — Wisconsin — allowed its bureaucrats to form monopoly unions that could cut off taxpayers from their paid-up, legitimate services. Unfortunately, other states began to follow suit. Soon, as we might fear, government employees began to threaten to withhold services from us, even though we’d paid our taxes, unless they got special money and favors.
In order to not be bankrupted immediately, the government officials who had caused this mess by allowing the unions were forced to impose taxes on the taxpayers’ grandchildren, by promising to pay extravagant retirement benefits to the monopolists later, when the extortionists retired. This is, of course, taxation without representation; the main people who’d be super-taxed to pay for the bribes in twenty to forty years were often not yet born, much less of voting age.
Those public sector bureaucrats held the people of Wisconsin hostage, for their own gain, and the payoff was insanely cushy, gold-lined pensions.
Well, now the ransom is coming due.
Protecting Americans from Extortion
Appropriately, the first to reach this crisis was the state that started the problem, Wisconsin. And, for once, they did the right thing:
Scott Walker reversed the previous trend and restored the taxpayer’s right to not be extorted by government bureaucrats.
Anyone who doubts that this is a good thing needs to look to Britain, where civil “servants” recently tried to extort money from the taxpayers, by cutting off essential services. They bragged about their goal of holding up travelers and bankrupting parents by forcing them to stay home with kids while the schools shut down. They admit that they’re already being paid far more than the private sector, and are striking simply because they’re being asked to pay a few percentage points of their fat pensions.
Tens of thousands of emergency calls were ignored, except for those deemed “life threatening”, and thousands of surgeries were postponed, leaving people to suffer longer. Millions were trapped in their homes by lack of bus and rail service. Over ten thousand schools were shut down, putting millions of parents in a bind, however happy it made their kids.
All because the government employees entrusted with providing these services, violated the public trust.
We don’t need that kind of ganster-like corruption, here in the US.
Of course we could also have a discussion about how this proves the government can’t be trusted to meddle in health care, mass transit, and education…but at the very least, when it usurps those vital needs, it must then provide them, no matter what.
This is why “collective bargaining” can’t be tolerated, when public good is at stake.
People are complaining, as they should, about how tuition prices are shooting up far faster than inflation…in fact, how they went up even faster while the economic depression had prices stagnant or falling, nationally.
It seems that the more the government increases grants and student loans, and gives special breaks to students or parents to help them pay for college, the more those prices shoot up and undo that benefit.
But this is not a coincidence. It’s exactly what must happen, because of those student benefits…and the more the government hands out student aid, the more the laws of Supply and Demand and of Unintended Consequences will force tuitions higher:
When you give away money to help people buy something in an industry, it’s technically called a “Subsidy“…and the primary function of a subsidy is to raise prices. The government, unfortunately, often does just that, on purpose, giving a subsidy in an industry because it’s been bribed by lobbyists to place the profits of the producers over the needs of the members of society (aka consumers). Farm subsidies are how it keeps milk and other staples too expensive for poor people to buy without the government’s own “help”, for example.
The way a subsidy works, of course, is that you increase the number of dollars available to buy the product, while the actual demand for that product, and therefore its supply, stays more or less the same. If people generally choose to spend a one hundred million dollars per year on apples, and they average $1 a pound, then the government offers people an extra fifty million dollars to “help” them buy apples, the average price of apples can increase to $1.50 a pound, driving up prices of pies, and giving poor people one less healthy snack they can afford. That’s a bit oversimplified, but pretty much how subsidies are used.
People didn’t actually want beet sugar more than cane sugar, the government simply threw more money at it, so that there was more to spend, and prices rose to a new level. Why? Bribes from beet farmers.
Of course the poor benefit from the inexpensive calories of sugar, so this hike in prices caused them to go hungrier…but they don’t have lobbyists as powerful as the more corrupt and irresponsible farm organizations do.
But money poured into an industry to pay for its goods is a subsidy, with the price-boosting impact, no matter whether that’s the official intention or not:
Health Care Prices
For example, Bush’s own socialized medicine plan, Medicare Part D, threw hundreds of billions of dollars at pharmaceutical companies, for the same medicine that was already out there. Naturally, prices went up even higher, helping precipitate the “crisis” that was used to pass Obamacare…and the Obama administration now admits that, indeed, the added money from Obamacare has caused health care prices to shoot up even faster, even in the short time since it was enacted…and contrary to the claim that it had to be rushed through to reduce prices.
In fact, if you track health care prices through the past century, they shoot up each time the government imposes a program to “help” pay. The largest increase was immediately after Medicare was implemented.
Therefore, it’s really no surprise that college tuitions go up each time government grants and loans increase, even when the economy is weak and driving many other prices down.
In fact, with the government’s fake “student loans” and grants now making up the majority of all money spent on tuition, it would be impossible for tuition prices to do anything but be inflated by many times what they would be if colleges had to actually compete for student money, directly.
People are, right now, complaining loudly about how tuitions are going through the roof…but Big Brotherment’s response has simply been to throw even more money at tuitions, like Obama’s recent, unconstitutional Executive Order, even though this will just increase tuitions more.
It’s as if your doctor’s proposed response to emphysema was for you to chain smoke, because the nicotine will make you feel good.
Each year, a generous social organization probably gives you tens of thousands of dollars, through your job.
You are very fortunate to be given this plentiful benefit, and should give back to the society of your bosses. Perhaps by giving them money, or volunteering to help them prosper.
“But wait” you say, “they didn’t pay me that money as charity…it wasn’t fortune! It wasn’t a windfall or luck! I earned that money! They were paying me for services I rendered to them! I owe them nothing, because it was a fair exchange!”
And you’re right, of course.
This is so obvious that my statements above were patently absurd. I couldn’t easily find a way to make them convincing, lest I drive you away by sounding like a nutcase.
And yet that’s just the sort of insanity that “progressives” advocate, these days.
That’s How They Got Rich
Certain class hate types are saying we should take even more money from the wealthy (families who make over $250K and already shoulder 90% of the Federal income tax), because “those who have benefitted most from our way of life can afford to give a bit more back“.
But most people who get rich earn their money, just like you d0. Their customers, like your employer, trade with them voluntarily, and (hopefully like your employer) believe they are getting as much or more as they are paying for. They “benefit” only exactly in proportion to how much they “give back”, already. If you earn a billion dollars in the marketplace, it means you have already given over a billion dollars in value to the people who (therefore) paid you for it.
Now it’s true that some wealthy people don’t get their money consensually. It amounts to ill-gotten loot they secured because they are the crony of some corrupt politician who hands them fat taxpayer money as pork — for example, Dick Cheney and Haliburton, or Democratic Senator Claire McCaskill’s husband. And I’m all for a special surtax on government officials, employees, and contractors and their cronies, who profit on the taxpayers’ backs instead of by contributing to society.
But if we want to attach being wealthy more with contributing to society, we need to reduce government’s influence, instead of expanding it. When government oversteps its legitimate boundaries, it ends up voilating our choices, making people rich whom we would not have chosen to pay, who did not to society for the money.
Whether with needless government contracts, bailouts, pork, or forcing you to buy from someone like a monopoly (cable and power companies) or mandate (health insurance under Obamacare, mercury-laden lightbulbs and inferior toilets), this does create wealthy people who’ve given nothing…and we need to stop it from happening.
People who earn their money have already “given back”, and don’t need to make some extra sacrifice as punishment for their success. That success shows how much they’ve already given. We need to stop the class envy greed, and focus on cutting the spending that is done on the backs of all productive Americans, freeing ourselves to succeed again.
In 2008, banks stopped lending as much money, helping drag the economy down.
They started holding it in extra reserves, instead.
This caused deflationary pressure the Federal Reserve has been “protecting” us from ever since.
We’re so lucky we have the Fed.
But why did the banks start holding excess reserves instead of lending? Were they simply scared of the economic conditions?
No, they are being PAID to do it, by the Federal Reserve.
That’s right…the Federal Reserve that is “saving” us from the banks’ refusal to lend, is paying the banks to do it.
How the Banks Work
See, banks usually take the money you deposit, and invest it. They make business loans, home loans, buy securities, and so on.
The profit they make doing that pays for the banking services they “give” you “free”.
In a sense, they are acting like a mutual fund for you…investing your money and paying you “interest” in the way of free banking.
But they don’t invest all of your money. The Federal Reserve requires them to hold back a bit “in reserve”. This is to ensure that they have money in case people want to withdraw it.
The Fed makes banks hold 10% of your checking account (and everyone else’s) in their Reserve.
The other 90%, the bank invests, driving the economy through business loans, buying securities, et cetera.
Or it did.
The Fed Wags the Dog
But in 2008, the Federal Reserve started paying banks interest for anything they held in reserve.
Immediately, banks started holding EXTRA money in reserve. This is called “excess reserves”, and it had never happened in any large amount before.
Strangely, the Fed’s response to the banks doing what it is now paying them to do has been to complain that they’re doing it, and to expand its power even more, to “save” us from the lost money.
See, our capitalist economy depends on money being used to create wealth. With hundreds of billions being stuck in “reserves”, it’s not being invested to create wealth, and the economy is suffering.
In effect, the Fed is causing what Friedrich Hayek called “hording”, and identified as something that NO economic school considers healthy.
It is agreed that hording money, whether in cash or in idle balances, is deflationary in its effects. No one thinks that deflation is in itself desirable.
– Friedrich Hayek’s 1932 Letter on the Great Depression
If banks respond to free market demand by increasing their reserves, that’s good.
If the government (including the Fed, acting as its agent) forces more reserves, that’s bad.
The reason the Fed has added, or says it is adding, over a trillion dollars in “Quantitative Easing” (including the recent QE2) is to fight the deflationary effects of banks “hording” in their reserves.
This “easing” is the printing of temporary money the Fed uses to buy securities. It hopes that money will get spent without going into excess reserves…but this is dangerous, because that extra money could cause inflation after the economy recovers.
The Fed hopes to sell those securities and destroy the money it gets back, but history says it will respond almost two years too late, leaving us suffering inflation.
So the Fed is risking dramatic inflation, in order to save us from the risk of deflation it is paying the banks to create in the first place.
Many thanks to Steve Horwitz for his feedback during the writing of this article.
Most of the loudest critics of the Federal Reserve are aghast at Ben Bernanke’s recent interview, in which he stated that:
We’re not printing money.
The amount of currency in circulation is not changing.
The money supply is not changing in any significant way.
– Ben Bernanke, 60 Minutes Interview, December 2010
What on earth, people wonder, does he mean by that? How could he say such an obviously crazy thing?
I mean, he is spending NEW money buying up bonds and notes…everyone but Bernanke is calling this QE2 (Quantitative Easing)…and the whole point of this is to add money to the economy.
How can he say the money supply is not changing?
But he isn’t simply crazy…he means something specific, and sane (if misguided).
He means this:
Quantity Times Velocity
The real money supply is not simply the number of dollars in existence. As Nobel-laureate economist Friedrich Hayek pointed out, real money supply is really a multiplication of the amount of money, times how much the money is moving around.
(S)upply equals (Q)uantity times (V)elocity.
And right now, money velocity is as low as it’s been since the Great Depression…not surprising, since this is the first depression the US has suffered, since.
That means it’s moving very little. In fact, it’s mostly sitting around in banks, doing nothing. It is, as Bernanke implied, effectively out of circulation.
That money is as absent from the economy as if it did not exist. This is the Fed’s fault, because they started paying interest on reserves held idle right at the beginning of this depression, but that’s a separate article.
So even though we now have more Quantity than ever, it’s multiplied by an abnormally low Velocity, to the real supply is lacking.
Right now, Austrians like Hayek and socialists like Keynes would agree that our real money supply is actually at a traumatic low, because much of the quantity is sitting around, unavailable.
Let’s hear Hayek agree with Keynes, himself:
On the first issue — whether to use one’s money or whether to hoard it — there is no important difference between us. It is agreed that hording money, whether in cash or in idle balances, is deflationary in its effects. No one thinks that deflation is in itself desirable.
— Hayek in an open letter to Keynes, 1932, regarding how to respond to the Great Depression
Money, money, everywhere, but not a cent to spend.
Like the ocean in my favorite poet’s most famous poem, the money sitting around in banks is, ironically, unavailable for the real money supply.
Bernanke is trying to fix this, by temporarily buying up bonds and treasury notes, therefore bypassing the banks’ massive reserves, putting money directly in the economy.
For the moment, he is correct, that this isn’t boosting the real money supply, because so much of the money is lying salted in (virtual) bank vaults, useless.
Now his critics, those who know enough monetary theory to understand about velocity the way you now do, say this doesn’t matter, because eventually the velocity will recover, and then we’ll have normal velocity times much more quantity. And that would mean inflation…there’s no way around that.
Bernanke would point out, correctly, that this is not correct, either…
See, the Fed doesn’t consider the money it is printing real. It is ephemeral, temporary money, like a Virtual Particle in physics…popped into existence for a bit, then gone.
And this is true:
When the Fed lends money to a bank overnight, the bank is required to pay it back the next day, plus interest. The same for its more recent, unhealthy bout of lending for thirty or ninety days…after that time, the bank pays the money back, with interest.
And when that money is paid back, it literally “vanishes”, into the “thin air” out of which it was created.
For now, the banks keep re-borrowing money, keeping the extra Quantity in a cycle…but when the Fed decides things are getting better, it can start making that borrowing less desirable, so banks re-borrow less, causing the Quantity of money to decline.
When it engages in Quantitative Easing (Bernanke hates that term, and calls it Credit Easing…bureaucrats love euphemisms), the same thing happens;
The Fed buys notes, adding money to the economy…but later it can SELL those notes, and destroy the money paid for them. It will probably sell them at a higher price than it bought, allowing it to actually destroy MORE money than it created, if it chooses.
So it could, in theory, keep the real money supply at a constant, stable level, allowing prices to be natural.
So Bernanke is Right, Everything Is OK?
The first problem is that Bernanke, and his peers, don’t understand some economic basics:
We’ve been very, very clear that we will not allow inflation to rise above two percent or less…We could raise interest rates in 15 minutes if we have to. So, there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time.
Now THAT is the part that makes me gasp in horror…he thinks he can stop inflation in fifteen minutes? Doesn’t he know the fishtail effect?
Bernanke’s predecessor, Alan Greenspan, and the Nobel Laureate Chicago school economist Milton Friedman, both understood that when the Fed meddles with the economy, its effects take up to EIGHTEEN MONTHS to show up.
So the day that Bernanke decides “Oh, we’ve hit two percent inflation”, he will raise rates…and then inflation will KEEP GOING UP for at least the next eighteen months.
Eighteen months is a LONG time, in economic terms.
It’s long enough that the Fed will become frantic, as its efforts fail to show any results…they’ll keep raising rates, selling notes and bonds, destroying money, until the economy finally seems to be turning around…weakening.
Then they will have overshot the actual mark by around 18 months. For the next 18 months the economy will KEEP getting worse, KEEP getting slower, until it enters into a recession. Because of the amount of money the Fed bubbled in during this depression, and has to suck out, it will probably be the worst recession since the Stagflation of the late seventies and resulting recessions, which were the worst in history.
It’s like when you are on an icy road, and you try to turn…the car doesn’t respond, so you turn the wheel more, and more…by the time the car responds, you’ve turned too much. You straighten the wheel happily, but the car KEEPS turning past where you wanted. So you turn in the other direction…but it keeps turning the original direction. By the time it responds, you turned too much the other way…et cetera.
This is the source of the modern “business cycle” of recessions, that have happened since the US left the Gold Standard in the 1930s. The Fed, and the rest of government, are constantly meddling with the economy, and then discovering the damage they did when it shows up years later, then reacting to that with even more damaging behavior, back and forth in an endless cycle of unintended consequences.
Now this has, up to now, been better than the “business cycle” of depressions and panics the US suffered from 1873-1933, when the US was on a fiat gold standard. But now we’re suffering a depression, despite being off the gold standard, so that’s all out the window.
What we need, of course, is for the Federal Reserve’s monopoly dollar to be replaced by a free market in money, as Friedrich Hayek proposed.
But, failing that, we need the Fed to at least go back to mostly staying out of the economy, as Alan Greenspan tried to do, instead of constantly expanding its meddling, as Bernanke has done, helping lock us into this cycle of economic devastation.
The job you really want, right now, is being held by some lazy, incompetent fool, whose boss wants to fire him…but cannot, thanks to people like Representative Steve Cohen, Democrat of Tennessee. In fact, Cohen probably identifies with the guy stealing your job.
This is because of the way government meddles with the hiring and firing of employees, now.
Obviously, part of the problem is that it’s so hard to fire bad employees.
- First, ridiculous laws allow privileged groups to claim discrimination or mean treatment based on race, sex, lifestyle, or many other things, claims as vague and unrefutable as fake neck injuries…and just as indicative of the evils of lawyers and our corrupt legal system.
- What’s more, an employer is nearly as likely to be assumed guilty, by the public or the courts, as if accused of child molesting.
- The maze of what is a privileged group is so insane that the employer can’t guess WHO might turn out able to sue. Are you of a privileged lifestyle? A favored fringe religion? They’re not even allowed to ask…so EVERYONE is seen as a potential trap.
So the safe thing to do is just leave the bad employee in his job, and suffer the economic burden to the company (and therefore economy), spending even more money to work around the problem.
If only employers were free to fire bad workers, it would be easier for ALL workers to get jobs, and then prove themselves to keep them. Even if you lacked experience, an employer could feel free to take a chance on you, and see how you work out.
Since you are banned from proving yourself on the job, you need to prove yourself before you’re hired, but when you first apply for a job, the employer knows nothing about you but some claims on a piece of paper. When he interviews you, he can ask questions that show how much you have memorized, and he can get an idea of how likable you are…but he still can’t know how you behave as an employee.
It’s to your benefit to be able to show a prospective employer what a great worker you really are, and the only really effective way to do this is through references.
But laws and our harmful legal system have made that almost impossible.
The references of bad former employees have to fear repercussions if they say anything bad about an employee…in fact, it’s considered increasingly dangerous to say anything NEUTRAL about an employee, as this has become a way of clearly not saying something good about him, to bypass the prohibition.
This means that anyone trying to call your references can’t really trust all your good reviews, so you’ve lost this tool for proving your value.
Know Your Associate
It is also illegal, effectively, to hire mainly people you know or have some social affiliation with, especially if most of whom you know are healthy, straight white males. You are required to have some artificial ratio of sex, race, sexual preference, even political viewpoint and other things, depending on how crazily PC your state is…and statistics say you won’t accidentally know exactly the right proportions of each, when thinking of what friends could fill that job opening.
This is unfortunate, because you have a better idea of the abilities of people you know, despite any biases you may have from friendship or other factors, than you could possibly know about strangers applying, especially under the current anti-reference conditions.
Another tool for finding a good employee, down the drain.
So employers are unable to screen workers well before they hire them, yet are trapped with the bad ones once they do.
Let’s Ban MORE Hiring Tools!
As employers grow more desperate to find ways to pre-prove employees they are scared to hold to any standards once hired, some are resorting to running credit checks. Obviously, while it doesn’t directly show how they work, it increases the odds of knowing something about the character of the person. Not perfectly, but it gives them some chance to reasonably guess.
So you can’t prove your worth on the job, because the employer fears firing being stuck with bad workers.
You can’t prove how great you are with references, because it’s effectively illegal for them to be honest.
One of the few ways left is to allow a potential employer to run a credit check. Sure, it doesn’t show how you do a job, but there is some loose correlation between character and good credit. If your credit’s at least OK, the odds are at least somewhat better of you taking commitments seriously. And, anyway, it shows you have less incentive to steal from the company.
Having them run a credit check on you may be the thing that seals the deal.
But now, Representative Cohen and others like him want to ban even this entirely plausible hiring tool.
They literally want to make it illegal for you to give your job prospect permission to run a credit check.
Obviously, aside from how almost any intrusion in the free market causes harm, this is wrong. They want to deprive both you and the employer of one of the few remaining ways to prove you should be hired.
Why, we wonder, aren’t they instead trying to restore the other, better ways that were already banned?
If checking credit does not work well, it will die out with competition. If it works well, they have a RIGHT to use it.
Interestingly, the only employers I’ve ever had do a credit check on me were government agencies and their contractors….and this bill exempts those, as corrupt Congresscritters typically protect themselves from the bad laws they impose on us.
This bill needs to be stopped, and the current laws preventing good job matching need to be fixed.
Among my political companions, “End the Fed” has been the hot, trendy thing for a while. This is mainly because Ron Paul correctly distrusts it, and has sponsored a bill to have it audited.
Now, I almost named this article Eff the Fed, because I, too, dislike it, and know it can never manage money properly…no government agency ever could. Instead of the a fiat dollar, we should have a free market in currency, like the Austrian economist Friedrich Hayek advocated . But when it comes to the fight to end it, there’s a problem.
The End the Fed crowd seems to think that getting rid of it is some magic bullet, that will accomplish all kinds of different things.
They believe it will:
- Bring back “sound money”, by imposing a gold standard.
- End the printing of new, extra money
- Restrain runaway government spending
- Prevent budget deficits
The problem is that ending it will accomplish none of those things.
In fact, it would probably make them worse.
Because the Fed isn’t what started those things happening, and none of them depend on the Fed’s existence.
Axe the IRS
In effect, fighting those things by attacking the Fed is like wanting to fight the income tax, and high taxes, by demanding “Ax the IRS”.
Obviously, we had taxes before the IRS, and we’d have taxes after it. In fact, the IRS was not created by the 16th amendment establishing the income tax, but five decades earlier, by Abraham Lincoln.
If we got rid of the IRS, we’d still have the income tax, and high taxes. Putting our time, energy, and money into attacking the IRS would be a waste of time, when we could have fought for actual tax reduction, reforming or ending the income tax, et cetera, directly.
What’s worse, the government would still want to oversee the taxes we failed to actually fix, and would probably end up using something worse than the IRS.
Well, all of this is true of the Fed, as well:
The Feds Don’t Need the Fed
The Fed and a Gold Standard are Compatible
Ending the Fed won’t bring back a forced gold standard, because they are two unrelated issues.
We had both at the same time for decades, anyhow.
The US had a fiat gold standard from 1873, through 1934.
The Fed, of course, was established in 1913. It existed alongside the gold standard for over two decades. It helped cause the Great Depression while the US was on a gold standard. It created floods of new money in the 1920s, and drew down the money supply by 30% (which would cause any economy, at any time, to collapse) in 1929…both of these things while we were on the gold standard.
Congress Would Just Print More Money
Not only did we have a gold standard while we had the Fed, but we also printed fiat paper money when we did not have the Fed. The reason the dollar is sometimes called the Greenback, is that this was the nickname commonly used for the paper money common in the United States in the 1860s and 1870s, printed to finance the Civil War, known for its green ink .
Right now, the Federal Reserve is a bureaucratic middleman, standing between Congress and simply printing money willy-nilly. The Fed uses what are ironically called “mechanical” means, to create its electronic, funny money for banks. In other words, it has a set of rules that cause the money to be created according to some specific set of conditions, not simply all the money the government wants.
Without it, Congress will simply mandate the printing of more money, on its own, surely in accordance to its bloated, and ever-snowballing spending. They printed floods of extra money before the Fed, and would print it after.
As with the IRS, however it replaces the Fed (and, in a sense, it will have to) will probably be with a mechanism that is even worse.
The US government issued treasury notes, and created deficits in other ways, for the majority of US history where there was no Federal Reserve Bank, and would do it again without it.
Restrain the Deficits…How?
This is the silliest one, and speaks to an ignorance of how the Fed works.
The Federal Reserve certainly responds to some deficit spending by selling more treasury notes…but as with printing money and collecting taxes, this would happen whether the Fed existed or not. It simply is the middleman, again.
You might as well blame the mailman for delivering your bills.
A Big, Fat Windmill
The problem with Don Quixote attacking windmills wasn’t just that the windmills wasn’t only that the windmills weren’t actually dragons, harming people.
It was also that he was wasting the energy and time that could have gone into fighting actual bad causes.
And that’s what the End the Fed noise is doing. This energy could be spent fighting deficit spending directly, which has run rampant under Democrat and RiNO alike…or any of dozens of other issues of government abuse.
It’s Going Nowhere
Of course the last problem with tilting at windmills was that it was never going to get rid of them, anyhow.
The Federal Reserve is in no danger of being “ended”. Ron Paul is actually only sponsoring a bill to audit the Fed, which (unfortunately) will not even permanently open its records to the public, the way they need to be. It will do even less to “end” it, since government self-investigations only ever are used to create a pretense that a few new regulations have “put the problem behind us”, and things usually just get worse, thereafter.
A majority of Americans oppose the drug war. Nearly all Americans not directly on the government teat oppose its massive spending and deficits. But the mechanisms for keeping the Fed in place, on both the private and public side, are massive. Not only would getting rid of it have no more effect than axing the IRS, but it’s no more likely to happen.
How To Actually Fix Things
What we need to do, rather than waste our time tilting at the Fed, is to directly address the problems we’re using it as a whipping boy to attack, or at least focus on their actual sources.
Balance the Budget; A balanced budget amendment would stop massive deficits, rein in government spending, and eliminate much of the incentive to print money and treasury notes, under the current system.
Line-Item Veto; Giving the President the power to veto any specific detail in any spending bill would be a step in that direction, as well. This may need to be an amendment, too, in order to override corrupt Federal courts claiming that it’s somehow unconstitutional.
Pull the Pork; Rules against pork, against Congress specifying projects in detail intended just to send money to their own cronies in their district, would be devastating not only to spending (which, unfortunately, is more centered on entitlements), but also to motives to give officials legalized bribes like campaign contributions.
Or maybe something else, entirely…but, whatever is done, it needs to be done. We need to choose surmountable obstacles that will actually matter, not waste our effort and attention on some scapegoat, however undesirable it is. The Fed is a poster child for government’s destruction of finance and economy, but what we need now is real solutions, not symbolic gestures, however satisfying this one would be.
But, unlike neocons at Fox and on the radio, and other advocates of Big Brothernment, true Conservatives have no problem at all with this, for two reasons:
First) It’s true. Bush governed like a Liberal, spending money, increasing regulations, and dragging us into a trillion dollars in wars, and then mismanaged them abysmally. Even if it is embarrassing to “our side”, we believe in supporting the truth, taking responsibility for mistakes (something Bush rarely did), and fixing problems.
Second) It’s not a condemnation of Conservatism, anyway, because Bush was so Liberal. Like neocons in general, he only talked Conservative, but when the chips were down he always turned to huge government solutions, more squandering of taxpayer money, et cetera.
It’s no surprise that we had economic and political trauma, when Bush violated Conservative principles in these ways:
- He had claimed the economy needed to be deregulated, yet he rolled out more huge regulatory schemes, even counting only his first two years in office, than Clinton did in eight…hundreds of billions of dollars in new regulations on insurance, shipping, health care, and many other industries.
- Even his “tax cuts” were mostly semi-annual welfare checks disguised as “refunds”, along with “tax credits” that are literally welfare, plus a maze of new exemptions that truly increased tax compliance cost just as much as any actual tax savings. Compare this to Reagan simplifying the tax code so much that people saved as much in compliance costs as they saved in taxes.
- His “solution” to the failure of socialized education was to break his School Choice promise and set up a massive Federal bureaucracy called No Child Left Behind.
- His response to 9-11 was to set up a police state in violation of the Constitution, to refuse Afghanistan’s offer to turn over bin Laden for war crimes trial in order to invade, and to attack Al Qaeda’s mortal enemy, Saddam Hussein.
- His promise to make Socialist Security more privatized and voluntary was abandoned because he was spending all of his political capital on a voluntary trillion-dollar set of wars.
- Speaking of socialism, until Obama’s health care plan passes (shudder), Bush’s prescription drug plan stands as the largest socialized medicine expansion in US history.
- Speaking of being more Liberal than Clinton, in EVERY SINGLE YEAR, of his eight years in office, Bush increased domestic spending more than Clinton did in his entire second term.
- His answer to Katrina was to throw $87,000,000,000 dollars at the region, that had already squandered more than the rest of the nation’s combined Army Corps of Engineers budget at NOT fixing its levees.
- His response to the economic decline was to not only increase spending above his super-Clinton levels, but to bail out companies and squander hundreds of billions on “stimulus” packages that actually depress the economy more.
Who’s seriously surprised that this kind of socialism caused an economic depression? Hoover’s big-government approach helped cause the Great Depression, and Bush’s similar approach did the same.
Real Conservatives don’t try to defend this. Instead, we say:
Yes, that’s right, Bush’s domestic policies cause economic catastrophe…so stop doing exactly the same stuff, Obama!
Blame the Parents
Statistically, parents really do spend less time with their families, these days. Because of this:
- Social conservatives, and some others who blame Hollywood, the music industry, and public schools for the decline in “family values”, condemn parents for not spending more time with their kids to offset those bad influences.
- Teachers, in a dramatic demonstration of how to serve as an irresponsible role model, prefer to blame parents, not themselves, for the decline in public education’s results. Those parents just aren’t spending the time with their offspring that they once did.
- Police like to blame parents for the trouble kids get in after school…they’re not spending enough time with them as role models.
- Technophobes blame newfangled televisions, video games, the net, and mobile phones for, well, anything cultural or behavioral…and blame the parents for not screening such entertainment, not knowing what the kids are seeing.
And, statistically, there’s no question that there’s some strong correlation between the amount of time parents spend with kids, or families in general spend together, and many other things, like drug use and success later in life. The more family time, the better-off the kids are.
It isn’t clear which way the causal relationship goes, but there’s certainly something happening there.
Prosperity-haters therefore blame most of society’s problems on how Greedy Materialists in America spend all day working, both parents, therefore leaving the children in the hands of day care help that is luck to keep the kids healthy and sane, much less serve as good role models and teachers.
If only they were willing to do without many of the nice things in life, like a second car and TV, they’d raise better kids.
They’re halfway correct.
The problem isn’t that people are so greedy as to wish to have decent lifestyles for themselves.
Working Man’s Burden
The actual cause of this decline in family time is taxes.
You thought the title was simply hyperbole to drag you in, didn’t you.
The typical main breadwinner in the US pays about 28% of his income in Federal taxes.
The typical second earner in the US brings in 27% of the first earner’s income, after taxes.
This means that the second parent is actually gone all day just to pay the first parent’s taxes.
And that’s only counting Federal taxes taken directly out of each earner’s check.
It doesn’t count the massive local tax burden they both pay for the public school that is failing their children, the state income taxes, and the many other tax and regulatory burdens we all shoulder outside of the direct hit on our paychecks.
But what it all adds up to is that, if not for high governmental costs, the second earner would not have to work at all, and yet the family would still have more money than it does now.
One of You Labors ONLY For Government
In fact, the second earner’s ENTIRE after-tax income is only a fraction of their household’s governmental burden.
Just cutting the tax and regulation-compliance burden in HALF would allow the second earner to stay home completely, or both earners to work far less than they currently are, and therefore spend more time with the kids…or even each other.
The greed is not on the part of the people who want to live better lives, but the government bureaucrats and the selfish people who support their massive spending (calling for expanded government, voting for politicians who bring home pork), therefore a tax burden so huge that people need to spend all day working, neglecting their families.
The death of the family is yet another problem caused by Big Brotherment, not simply bad parents.
Social conservatives, cops, teachers, and everyone else who is concerned about absent parents and family values should focus first on freeing parents to do something other than toil for the tax man.
e’re told by teachers, politicians, and the media that unions are the best thing ever to happen to people who work. Without them, we’d all be working 80 hour weeks, for pennies per hour, and dying by 30 from how dangerous the conditions are.
And yet, for some reason, most people not only don’t belong to unions, are not even thinking about forming unions, but wouldn’t even want their industry unionized, if they had the chance. In fact, unions are dying out. The odds are that if you don’t more or less inherit a union career because you’re locked into a Company Town situation, you will never join one.
In the 1940s, 35% of American workers belonged to trade unions. Today in the private sector, membership is less than 7%. It is even lower in states that protect your right to have a specific job without joining a union.
Because, in reality, a union takes more freedom away from a worker, than from anyone else.
Pay is Important
It’s not fun, negotiating with an employer for your compensation. Well, not unless you’re really in demand. Then it can be joyful agony, trying to decide which offer is best, and what to require you be paid…but, the rest of the time, it’s unpleasant.
But the joy and pain are both because of how completely important your pay for your work really is. Your entire lifestyle depends on that set of decisions.
Not just how much you’ll be paid, but in what form. Do you want more cash, or would you prefer more days off? Are you better off putting up with a company insurance plan, that is cheaper but less responsive and lacking in choices, or more money and save up for your own checkups? Do you want paid lunch and breaks, or more money and come home sooner?
The problem with a union is that it strips away any control you have over that life-changing question.
You don’t even get to choose when, or how, to negotiate. Union management takes all power away from you, and you have to cross your fingers, praying whatever they think is best happens to be something you can tolerate.
Even under the best circumstances, they’ll be negotiating for the lowest common denominator. What the average worker is worth, and the union will gain from getting. The problem is that in the real world, almost nobody’s average. A good compromise, famously, is one where everyone goes away equally unhappy. With a union, you don’t just have to compromise with an employer, but also with all of the other workers.
You Become a Cog
With a union, you must settle for:
What the average worker is worth…
Diluted by what benefits the union management and corporate management negotiate.
You also lose the power to be paid for your effort, quality, ideas, and unique traits.
For example, you may be willing to work extra-hard to make more money, or have more job security. You may not even need to work hard; there may be some special part of your occupation you’re particularly good at.
But most unions avoid the idea of being paid for how well you do the job, replacing it with being paid for how many years you’ve worked. What could be a worse system of payment than this?
Of course it’s bad for the customers, because quality falls by the way-side…and therefore is bad for the company, as its profit depends on that quality. But it’s also bad for you, the worker, whose efforts become meaningless…just hang on to the job for as long as you can, that’s the only way you can make more money.
Likewise, no amount of effort can protect you from being laid off during the slow or hard times, with a typical union contract. You could be the very best at your job, but if you’ve only been there a few years, you’re out the door.
The Worst Kind of Middleman
It’s bad enough that unions harm companies, consumers, and society by causing unemployment, playing insider favoritism, price increases, inefficiency, low quality, reducing non-union worker pay, and other means, plus all the above disadvantages to union members, but what do you gain, in return for this?
- The right to be forced to pay union dues, whether you find them worthwhile or not.
- The privilege to have part of that hefty fee spent to bribe government officials with policies you probably don’t actually like, and be punished if you object.
- The fortune of having some of the rest divvied up among the secretive, corrupt union management and their cronies and masters, for no apparent reason whatsoever.
- Oh, and the joy of having yet another Tyranny of the Majority government ruling over you, in the form of that union’s quasi-elected crony management.
It’s no surprise that unions actually reduce real household income.
Not a Number, but a Free Man
The reason most of us eschew labor unions like they’re a porcupine who recently attacked a skunk’s posterior, is that we really are better off as free people, than as vassals of a collective, whose real function seems to be the profit of its “leaders”.
In other words, I’d rather protect my right to earn pay based on what I’m worth, not my seniority, and not be given useless token “compensation” that sucks part of it away, like hourly coffee breaks and a dubious promise of unreasonably high, distant retirement pay, I probably won’t see, once the union bankrupts my employer.
Unionism seldom, if ever, uses such power as it has to insure better work; almost always it devotes a large part of that power to safeguarding bad work.
- H. L. Mencken
- Henry George
he Founding Fathers despised democracy. They called the idea of 51% voting to impose its will the “violence of majority faction“. Poor Thomas Jefferson spent a great deal of effort and political capital proving he wasn’t a closet democrat. When writing Democracy in America, French philosopher Alexis DeToqueville coined the phrase Tyranny of the Majority referring to an idea from Plato’s Republic.
Majority rule imposes the will of a mere half of the population, plus one vote, upon minorities in each issue.
You need only to look at how this impacted blacks in the US to understand how evil majority rule over the minority is.
The Founders sought to solve this problem, by banning democracy in America, setting up a Republic where the majority could never legally vote to violate the natural rights of the minority. The only powers allowed to the Federal government were those listed in the Constitution, with the 9th and 10th articles of the Bill of Rights banning it from doing anything else, even if the majority voted for it.
Majority as Consensus
Of course the Federal government has been corrupted enough to overstep its legitimate authority, but that’s another article.
The modern apologists for majority rule, who unfortunately have managed to get the word “democracy” spun into a positive thing in public schools, defend their tyranny over minorities by saying “hey, at least we can be sure that there isn’t a larger group who opposes a vote, than the group who supports it”.
Advocates of liberty, though, object that you still should not violate the will of ANY people, in a free society. They say that you have no more authority to violate the rights of another because you are a large group, than if you are one man trying to impose your will on your neighbor. At least not legitimately.
Of course, the obvious retort is “hey, the only way to solve the problem of having minorities on issues is to have a unanimous vote…and that’s impossible! If we depended on unanimity, then nothing would ever get accomplished at all!”
A free market is based, purely, on unanimity.
This is because the fundamental principle of liberty is private property:
Each person is a government of one, over his rightful possessions, starting with his own body.
But if someone wanted a vote on what everyone in the country is going to have for supper tonight, the odds are that he would not be able to get everyone to agree on the same thing. So if this were a power of the government, up to half of the population, minus one vote, would have their right to choose what to eat violated.
Of course that’s if there are only two options…which is a sort of farce of an election in the first place. With a real selection of all things people might reasonably desire for supper, probably more than 99% of people will be forced to eat something they would not have chosen.
And, let’s face it, with how goofy people are, you’re almost always going to end up being forced to eat something you don’t even like, much less want for tonight.
On the other hand, if each man governs his own life, as in a free market, then you may choose not only exactly what to eat, but even when to eat it.
Every time you are hungry, there is a vote, and you are unanimous. Sure, it’s limited to what you can afford, but what better way to determine what a meal is worth than that? Imagine if the majority were always voting themselves caviar and steak, bankrupting society.
With majority rule, you only get rare input at all, and only one option is selected, with most people being losers in the process.
But with the free market, you vote every instant, of every day, and are able to reverse yourself at will.
Of course, this also applies to groups, not just individuals, because their membership is purely voluntary, unlike an authoritarian government:
Sure, your chess club or paintball team may have majority votes, but your participation in them is purely consensual. Each moment of your life, you are free to leave, and if you stay you are voting unanimously for your own membership.
If you leave an organization in a free society, they are not going to blockade your house until you’re forced to fire on them, and then claim you started a hostilities, invade, and conquer you.
If the majority of your local town council votes to condemn your perfectly sound family home, just to put up a strip mall that will bring them more tax money and campaign contributions, it does this in violation of the unanimity of private property rights, and you can’t simply withdraw your membership.
Don’t worry; in two years you’ll be allowed to cast a single vote against at least one of those politicians who stole your home…if you still live in town, and at a legal residence, not in a cardboard box.
You might even try to get 51% of all voters in your city to set aside all other issues and vote for the single challenger to each of those bad politicians.
Of course, if your private property rights were protected as they should be, you wouldn’t be in this predicament. Maybe you should just push for laws protecting those rights in general, so such things couldn’t happen in the first place.
While majority rule imposes tyranny over minorities, capitalism, through private property rights, protects even the smallest minority, that of the individual, with unanimity.
The political principle that underlies the market mechanism is unanimity. In an ideal free market resting on private property, no individual can coerce any other, all cooperation is voluntary, all parties to such cooperation benefit or they need not participate.
– Milton Friedman, The Social Responsibility of Business is to Increase its Profits, The New York Times Magazine
Measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority
Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There was never a democracy yet that did not commit suicide.