Californiomics

I was listening to the news on the radio this morning when my brain got into first gear. The announcer on the radio was discussing how some judge had given his approval to Gov. Schwarzenegger's decision to give state workers two days unpaid leave each month to ease the California's financial problems. Eureka! I exclaimed to the man in the car next to me. I think he did not hear me for he drove away heading south on the Pacific Coast Highway. You see, the economy of California will benefit from less money being spent on state workers. The state will save money and everyone except the state workers who get furloughed will be better off economically. I know that you already know this. The poignancy of this is illuminated by asking the comparative question: How is the reduction in hours for government workers different from the reduction in hours for private sector workers? Private workers, insofar as they are productive, add to the wealth of everyone. Government workers create very little wealth overall. Many actually do not create any wealth at all, but only consume the wealth of others.

This leads us to an analysis of wealth. What do I mean by the production and consumption of wealth? The production of wealth is the creation of goods and services which continue or enhance our standard of living. Bread, meat, houses, cars, shoes, movies, novels, medicine, needed professional services from doctors, lawyers, police and courts, et cetera. These are wealth and things that preserve and protect persons and wealth. Production and services must be useful and wanted to be wealth. This is why the more people we have working efficiently producing things that people really need the wealthier we all are. This is why the more government workers we have shuffling papers and telling people how they should live the poorer we all are. Productive private workers as a rule create more than they consume. Government workers, on the other hand, consume more than they create. Ergo, if the government workers produced more than they consumed then California would be poorer for employing them less as would a private enterprise would make less profit for laying off its most productive employees. When a private enterprise trims the fat it lays off its least productive employees, at least in theory. If California will be better off for having some state workers take two days each month off without pay, imagine how much better off we will be if they take four days off each month instead. In fact, we should move to trim the fat even more and encourage the government workers to move from non-productive government jobs to productive private sector jobs providing goods and services that are useful, desired, and actually needed. Ditto for Washington. Now you can take away Paul Krugman's Nobel prize and give it to me instead. Yes, Mr. Krugman the Earth is in fact round; and no, governments cannot spend us into prosperity.

Various Proposals for Fixing the Economy

Number 1

This is the proposal that we hear most often proffered by almost everybody. It goes something like this: First we have the government hire 600,000 new federal employees. Then we print a whole bunch of new money. Then we pass it around so companies and private citizens alike can go on a spending binge and "grow the economy." Washington will pass out lots of new contracts to private companies to engage in public work projects thereby putting hundreds of thousands, if not millions of people back to work. We will bridges. We will drain swamps. Scratch that, swamps are now called wetlands; we will hire environmental guardians. A solar panel on every roof! We will build hundreds of billions worth of collective transportation (light rail) and staff it with new union employees. We can conscript the youth into "national service" driving unemployment even lower. And don't forget the bailout for the UAW- I mean the big three auto companies. We have to maintain all those good union jobs and union political power- I mean we have the patriotic duty to protect the greatest automobile industry in the world. We will spend so much that instead of being poorer we will be wealthier.

And, if for some unforeseeable reason this does not work- the dollar completely collapses and we face social turmoil and economic upheaval- we can always rebuild the economic infrastructure by cooperating with Canada and Mexico to create a single North American currency. We can then force the average American to jettison his unbridled individualism in favor of a more cooperative spirit. Can't we all just get along.

Number 2

This proposal is a bit more draconian. Let us call it the "trimming the fat" proposal. The goal is to eliminate all non-productive behavior and to stimulate productive behavior thereby raising ourselves to perpetual prosperity. The first thing we are going to do is to end slothful behavior by outlawing unemployment. If you are chronically unemployed you will be subject to military conscription. That will get the lazy bums back to work. Next we take everybody sentenced to more than five years in prison and summarily execute them. No more free ride. And speaking of the indolent, we then criminalize homelessness. The government will gather up all those bipedal eyesores who beg for change and are olfactorily offensive and grind them into hamburger and feed them to the working poor thereby eliminating the need for food-stamps and welfare payments. Of course, we have yet to deal with those who don't work not because they are shiftless, but because they cannot work. The state will have to euthanize persons when it is discovered that they are handicapped or retarded to the point that they burden our emerging great society. Imagine no more special ed, no more handicapped parking, and no more compliance with the Americans with Disabilities Act. We should probably extend the opportunity of a good death to all youths who cannot meet their public school benchmarks. (Mommy, can I do more homework instead of playing Nintendo?) We will eliminate all people who are a net drag on the economy. Imagine all the money we will save. Imagine all the money we will save when we end social security and medicare. Let the elderly work until they cannot, and then stop using up resources and taking up room. When your car has broken down, is beyond repair and will never drive again you do not wax it and park it in the garage. If you have not saved for the future, and no one else is willing to take you in, then you're in for a measure of tough love. Soylent Green is people!

Number 3

You can call this proposal what you will. It works something like this: Instead of aiming to eliminate all non-productive behavior like proposal number 2 we stop subsidizing non-productive behavior. The government stops paying people not to work. If you want to be paid you will have to do something productive for someone else. In fact, we stop subsidizing any kind of behavior. We let each and every person decide for himself if to work, where to work, how much to work for, what to buy, how much to save, etc. But what about the current state of the economy? What about it? Everyone was happy during the party. Now we have a hangover. It will pass. It is not pleasant, but it will pass. The Fed was the main culprit with its cheap and easy money. Therefore, the solution to our economic hangover is not more cheap and easy fiat dollars, but spending restraint, tax reform and a return to sound money. Washington needs to immediately start spending less than it takes in. This is not the time to take the scalpel and trim a little fat. (Actually, most of the govermentarians don't want to trim any fat at all but to suck the marrow right out of the bones of every tax-payer and productive American.) This is the time for the meat-cleaver. What Would Murray Rothbard Do? Only a return to to the dynamic responsiveness and unmatched prosperity of free-market entrepreneurial capitalism can save this country now.

With the outright plundering of the American taxpayer to prop up the businesses of the politically connected, Washington seeks to chain our children to this behemoth debt and turn us all into indentured servants to the masters of our money. Great change is coming to America. It is uncertain, however, whether this change will be a return to a viable economic system which enhances our personal liberty, or will be a further decent into socialism, the elimination of prosperity, the spread of want, and the emergence of a new dark age insofar as individual liberty is concerned. All things of this Earth must come to an end, and if the United States abandons its heritage of respect for the individual in favor of collectivism, then it is more than likely that this great experiment of self-rule through democratically elected government will, for now, come to an inglorious end as the one-time champions of liberty and human freedom will content themselves with a few scraps from their masters' tables and huddle together in the dark bereft of courage and dignity.

Che Chic

Shoppers meander through the shopping center capitalist consumer goods to acquire with fist-fulls of filthy lucre. But what is this? I spy another one.  Can it be?  Another adolescent with a Che Guevara T- shirt.  I taste bile.  Momentarily, I calm.  Based on her acne, awkward gait and vacuous expression I guesstimate her age at about fifteen and the product of little education.  Of course, I cannot blame her for her ignorance.  She just knows that if she wears that t-shirt then her social cache will increase- she will be cool.  But who told her that an evil man, a Communist, a murderous thug is such a great guy that she should wear his image as if he were her patron saint?  

Let us examine a few facts.  Ernesto Che Guevara was a communist.  Not an armchair, ivory tower, useful idiot type of communist.  He was a violent revolutionary, murderous communist.  From 1957 to 1959 Che murdered 180 people.  From 1959 onward as one of Fidel Castro's main executioners he acknowledged ordering "several thousand" executions.  Among his myriad rants he spoke regarding the murders in which he partook.  Consider the following:

"To send men to the firing squad, judicial proof is unnecessary... This is a revolution!  And a revolutionary must become a cold killing machine motivated by pure hate." 

"Crazy with fury I will stain my rifle red while slaughtering any enemy that falls in my hands.  My nostrils dilate while savoring the acrid odor of gunpowder and blood.  With the deaths of my enemies I prepare my being for the sacred fight and join the triumphant proletariat with a bestial howl."

"We must carry the war into every corner the enemy happens to carry it: to his home, to his centers of entertainment; a total war. It is necessary to prevent him from having a moment of peace, a quiet moment outside his barracks or even inside; we must attack him wherever he may be, make him feel like a cornered beast wherever he may move."

A believing Marxist-Leninist or Maoist might consider this evil man a hero, but most people will see him for what he was- a dangerous sociopath. Of course, most adolescents who wear his image don't really know who he was or what he did.  However, if an adult knows who Che was and what he did it becomes inexcusable to promote his image.  Now we must return to my question: Why would someone wear the image or promote the idealization of an evil person?  Is it out of a desire to be overtly counter-cultural or anti-social like a person who wears an image of Charles Manson?  I think not.  Said cacogen is only interested in the shock and discomfort of others like the artist who finger paints with feces.  To choose to display a political figure is to make a political statement.  However to choose to display a communist, a totalitarian socialist, is to take it a step further.  Murray Rothbard noted that Marxism is really a religion and not primarily a economic philosophy.  It is concerned with the transformation of man, the total upheaval of the social order, the end of history and the establishment of a utopian future- a secular version of "heaven on earth" mimicking the post-millenialist belief in the Kingdom of God on Earth- with the dictatorship of the proletariat, the withering away of the state and the emergence of the eternal social harmony and perfection of man.

Consider the witless, cerebrally void statement by supermodel Naomi Campbell who said that Fidel Castro was "a source of inspiration to the world... I'm so nervous and flustered because I can't believe I have met him."  Or perhaps the feeble-minded statement by comedian Chevy Chase who said at Earth Day 2000 in Washington D.C. that he believes "socialism works" and explained that "Cuba might prove that."  Finally consider  Steven Spielberg who visited Cuba and dined with Castro in November of 2002. Spielberg declared that his time with Castro "was the eight most important hours of my life."  Mr. Spielberg is an intelligent and successful man.  This statement makes no sense in light of his success which is only possible in a free and open society. The only explanation is that he is hopped-up on dope.  What dope?  The opiate of the masses, albeit a secular one. These celebrities may not even identify themselves as Marxists or Marxist leaning for the undertones of Marxism permeate our culture especially in Hollywood and in educational institutions.

The idolization of Ernesto Che Guevara and his boss Fidel Castro is exactly that- idolization.  Che's image is on t-shirts and posters not like a patron saint, but because he is a patron saint in the religion of Marxism.   When Hollywood celebrities meet with or talk about Castro and socialism with hope and ebullience not only do they expose their ignorance, but they also unveil the source of their hope in a better future.  An audience with Castro is like a Catholic having an audience with the Pope.  They may have caveats but they nevertheless would have us all drink from the poison well of Marxism.  And what of Che?  He is both saint and martyr.  Yes, in the end he finally became a "good communist" on October 9, 1967 when the Bolivian army, who had captured him, executed him.   

 

Bail This Out!

Enough is enough for this bailout mania. It is about time that instead of asking who needs or would like a bailout someone tacked on the important question "At the expense of whom is this bailout?" Yes, it is true that a bailout or subsidy or government handout will benefit the receiving corporation or party involved, but the other side of the coin requires that the same action be to the detriment or at the expense of somebody else.

Let us imagine that every person in the United States formed a giant circle and that each one of us wrote out a check for $5000. Next, each person placed that check in the pocket of the person to his left. This would mean that I would have received a bailout from the person to my immediate right, but I would have bailed out the person to my left. I have benefited at the expense of the person to my right; however, the person to my left benefited at my expense. Unfortunately, the present bailout mania is not so benign. Let us next imagine that half of the people in the United States were to be facing east and the other half facing west. Each of us would be face-to-face with one other fellow countryman. Now, the half of the people facing east wrote a check for $5000 and handed it to the person facing west. The half of the country facing east has bailed out the half facing west. The people facing west have benefited from a bailout at the expense of the people facing east.

Now let us turn to the issue of the proposed bailouts of Ford, GM, and Chrysler. If The Big Three get the taxpayers' money like they want, then those who would benefit would be the automobile companies themselves, their suppliers, the UAW, the stockholders, etc. In short, the beneficiaries would be anyone who stands to receive money from the continued normal operations of The Big Three including politicians who will benefit from future donations from both the automobile manufacturers and the UAW. Who will be the subsidizer, as we have already established that this money must come from someone. Will Washington immediately send us each a bill so that we all might pay our share forthwith. This is unlikely but more honest as we would all see the immediate cost of the bailout. (If the government were to do this some people might object strenuously.) Predicting actions that will take place in the future can be a little tricky, but it is likely that Washington will somehow manage to borrow this money, add one more big IOU to the already existing monstrous pile of IOUs, print some more money and then pay it back with greatly devalued dollars.

There are of course secondary costs which are more difficult to see as they require the use of imagination to see what might have been. Let us say that Washington acts more responsibly and turns the US automotive manufacturers away to go behave like legitimate for-profit capitalist enterprises. What then? GM restructures and forces the union to renegotiate or GM becomes a non-union shop. As the company is in trouble and needs to cut labor costs it does so across the board. Big CEO salaries must go too. They are for executives whose companies make money hand over fist. GM needs to cut costs and become more efficient. Maybe this means new machinery which will outperform some employees. GM will kill-off underperforming products and cut the dead weight. It will advance where it needs to advance, retreat where it needs to retreat and regroup where it needs to regroup. The bottom line is GM needs to make a profit for its shareholders. If this produces a much smaller GM then so be it. Only a company which produces a profit can and should survive. Even with a bailout there is no guarantee that GM would survive in perpetuity. (A bailout might just encourage GM to not make changes necessary for long-term survival. And when they near insolvency again, viola, another bailout.) As supernumerary and inefficient employees are laid off they provide the human resource necessary for new ventures at which the employees have a chance at being more productive than they were at their old inefficient and only somewhat productive jobs. Thus also will follow Ford and Chrysler.

So who pays for it? At whose expense will the bailout be? It will be at all of our expense. Not just in the immediate future in terms of the unrealized opportunities and continued inefficiencies, but also down the road a little way when the bill comes due. If we allow this to continue then it is to a great degree our own fault. However the Spendocrats in Washington do not simply laden me with this burden. They intend it for our children and grandchildren. They want my children to cut the check and hand it over. Then the CEOs and the union bosses and the politicians will laugh all the way to the bank.