Monthly Archives: November 2009

Red Sky at Morning, Part 1

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“I have no fear that the result of our experiment will be that men may be trusted to govern themselves without a master.”
~ Thomas Jefferson, 1787

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A tide is turning as populist sentiment returns to the Republican base. This renaissance is loosely based on fiscal conservatism and individual liberty, which I discussed about 18 months ago, here, here, and here. This comes in response to the leftists who hold the reins and control the levers of all facets of federal government. The independent, right-of-center base is undergoing a reckoning in the wake of the 2008 Election, a process based on foundations I discussed here, here, and here. As Democrats choose to ignore what’s going on outside their congressional office echo chamber, they seal their own fate.

Some Republicans seem to be getting it, though (while some are still oblivious). One of the strongest Republican supporters of comprehensive health care reform is Senator Orrin Hatch from Utah, who is now (rightly) questioning the very Constitutionality of the impending Health Care legislation. He says the Supreme Court has ruled that government can regulate goods produced by an industry, but can’t require certain goods to be bought. If Democrats can’t convince him… his analysis is worth reading.

Sadly, I understand that many “Independent voters” out there are nothing more than turncoats, driving to rallies with adhesive still on their bumper from a recently-scraped Obama ’08 sticker, and joining the ranks with their Gadsden Flags and picket signs, bemoaning death panels and bailouts, simply because it’s hip now. Many of these people were “crying out for change” in 2008. Now that winds have shifted, they’ve switched sides. These folks are ideologically unreliable. So, as a self-described independent, and not an Independent voter, I want to be clear: my sentiment since last year’s election hasn’t changed. I didn’t cry on Inauguration Day like all those leftists on the Mall; I cried on two months earlier, on Election Day, flying back from Texas, sensing my country was turning into something unrecognizable.

Markets Über Alles

Tea Party rallies typically argue for capitalism over socialism, or liberty over tyranny. Prominent Austrian economists contend economies can only function one way or the other, resulting in one governing system or another. Von Mises specifically said, “There is simply no other choice than this: abstain from interference in the free play of the market, or to delegate the entire management of production and distribution to the government. Either capitalism or socialism: there exists no middle way.”

I am not so sure, and tend to agree with Ayn Rand’s assessment that American capitalism is a “mixed economy,” where some things are socialized, and some things are privatized. While this has questionable long-term sustainability, I would contend current public-private partnerships are more problematic in the long run. Although not immediately evident, there is a broad distinction between pro-business and pro-market policies. Businesses embed themselves with government to gain favor at the cost of the market; this is referred to as a “non-market interaction,” as it takes place outside the free market.

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As an advocate of laissez-faire free market and supply-side economics, I consider market intervention regrettable, but must occur when regulating certain industries to prevent danger to the public (you wouldn’t want just anybody building their own nuclear reactor, now would you?), and in anti-trust matters, to prevent monopolies. In this instance, market intervention is executed to save the free market from domination. Likewise, to save American business, the link between certain businesses and public policy decisions must be broken. This may seem counterintuitive, but so do 2000+ page health care legislation designed to “help” us. What’s really in these bills? Depends on who’s buying.

Disagree? Do you not see the difference between American business and the free market? This may seem controversial to some, to indict certain businesses of foul play, but ask yourself: Why is the Internal Revenue Service tax code 16,000 pages long? A copy of the law costs almost a thousand dollars! It takes a lot of pages to insert all those clever company-funded loopholes and discreet bribes in the form of subsidies and tax credits. Senate legislation these days is even less subtle.

Who’s to Blame?

You have to be careful with this realization, or you’ll find yourself siding with the likes of filmmaker Michael Moore or Senator Bernie Sanders, the Independent Socialist from Vermont. In the end, preserving the market protects individuals from this runaway beer truck we call our federal government. Whether that keeps jobs inside the United States, however, is up to trade policy, which I’ll leave for another day.

Ultimately, Tea Party Patriots need to understand and embrace the market over business; separating the two does not mean you are anti-business. Saving business requires simplifying our system, and insomuch, businesses cozy with government may suffer, but business largesse will thrive. I’m not even saying cut taxes (yet), or cut regulation (yet); just simplify the system first. Above all, remember capitalism is not the problem. Do not confuse the American economic system with Adam Smith’s notion of capitalism, because the two are not the same.

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The Tea Party movement has been particularly vocal in slowing our downward march, but their effectiveness has yet to be determined, because, while vibrant, they are unfocused. Tea Parties need a singular mission, and it is this: to sever the link between government and business. With an average 40% tax rate, this is not business’ fault. To compete in the market, businesses must lobby for amendments with tax breaks, or worse, lobby for tax hikes with well-crafted exemptions for themselves.

Contrary to beliefs, imbedded corruption is not “just business.” The high water mark for fraudulent activity in government is this Health Care legislation, which forces citizens to buy a product for the first time in American history. What are we, Venezuela? Insomuch, we are losing our soul. Sure, laws can be rolled back by the Supreme Court, but the nation’s trajectory will be harder to correct if the bill passes. The public-private partnerships have disoriented our nation, and “what happens next” will define our new direction.

We have experienced the beginning of this frightening economic crisis – yes, I said the beginning – and instead of confronting our endemic problems, we pile on. If we do not work on drawing down our national debt, in ten years the interest on that debt alone will cost “more than the combined federal budgets for education, energy, homeland security, and the wars in Iraq and Afghanistan.” Since China, whom we owe $800 billion, is funding our debt, what percentage of domestic and foreign policy do they own? What kind of leverage do they have in our daily affairs?

I would contend it’s not curtains for us yet, and the world’s richest man, Mr. Warren Buffett, agrees, and is substantially investing in American companies. He recently stated, “It’s an all-in wager on the economic future of the United States… I love these bets.” This isn’t just patriotism; he believes there is money to be made. In the long run, however, we are all left with some hard political choices: How do we draw down our crippling debt? Specifically, how do we raise taxes at this point without stifling growth? And most importantly, how do we cut spending without abandoning fellow citizens? I will explore these issues in the following post.

“It is difficult to free fools from the chains they revere.”

~ Voltaire

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Filed under Ideology, News
Nov 26, 2009

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