Monthly Archives: February 2013

False Alarm

It seems that can our government kicked down the road back on January 1 is upon us in the form of the looming March 1 “sequestration” cliff. One can both admire and be sickened by the hyperbole employed by politicians when discussing these impending “cuts”. President Obama in his 2013 State of the Union address  described them and their effects as “harsh” and “devastat(ing)” to our “priorities” as well as “jeopardizing” military readiness. Really? So a 5% cut is going to jeopardize essential government operations? That’s funny, because the governments own Congressional Budget Office report states that “If no additional appropriations are provided by then, nonessential functions of the government will have to cease operations.” The operative word there being “non-essential.” If all the things the President pointed out are truly “priorities” then there should be nothing to worry about as only non-essential items will be cut. Of course this begs the question as to why these “non-essential” things were funded in the first place. Isn’t government only supposed to do what is essential by definition? Claiming that essential programs will be devastated by a 5% cut is to claim that the government lacks the common sense of any citizen. If your ability to spend is reduced do you immediately cut back on your food budget in order to keep paying your cable bill? No, you prioritize. Those things valued most highly are paid for first, those things valued least are paid last or cut. It’s the same ruse they used during the debt-ceiling crisis in 2011 that precipitated this whole mess. At that time they suggested grandma wouldn’t get her social security check. Yes, that’s right, let’s pick the thing everyone values the most and claim it will be the first thing to be cut. That makes so much sense. I mean, how stupid do they think we are? (Don’t answer that.)

But I have to hand it to Obama, somehow he deftly managed to imply that everyone’s oft paraded and favored government employees (teachers, police, and firefighters) would be laid off if sequestration takes place. It’s really more of an assertion as it has no basis in fact whatsoever. They are funded at the local level and would not be in any way affected by sequestration. This is just another scare tactic that the dishonest use to mislead the uninformed.

So, if a 5% cut is devastating then I don’t know how this country survived a mere 10 years ago when the federal budget was about 50% smaller than it is today! Even adjusting for the ratio of budget to GDP, the Clinton years should have been a time of societal and defensive collapse with a mere 18% federal budget burden to GDP. Today it is over 22% and cuts that might bring it to 23% are impugned as bringing about the end of civilization as we know it. Wait, 23% is not down from 22% is it? Read on.

Federal outlays are projected to be $47 trillion from 2014-2023 and these cuts amount to removing $1.2 trillion from that total or a 2% decline in overall federal spending. But even this is not a true decrease. Even if the 2014 projected budget were frozen for 10 years the total outlay would be $36.2 trillion. So even with these “cuts” total federal outlays will increase by 27% which is still an increase from 22% to 23% of GDP. Repeat after me. There are no cuts. There are no cuts. There are no cuts.

Obama and his ilk are simply trying to sell us the government diet. That’s the diet where you gain 10 pounds but claim you lost 5 lbs because you “projected” you were going to gain 15 lbs.

A tax by any other name

And so it has come to pass – nearly 100 years since the post office ceased Sunday mail delivery (dropped in 1912 primarily due to religious and workers rights reasons) the United States Postal Service will cease Saturday mail delivery later this year. This time the reasons are financial rather than ecclesiastical. The Postal Service expects this change to save $2 billion a year – although this barely scratches the surface of a $15.9 billion loss in 2012 (although $11.1 billion of that loss was the result of a Congressional mandate forcing it to pre-fund future retiree health benefits – something it requires of no other federal agency). The Postal Service is a quasi-private entity. It technically receives no funding from Congress, however it’s ability to operate is tightly controlled by Congressional whim. But one area where it does benefit from its governmental relationship is with respect to the “Private Express Statutes”. These are a set of statutes that confer on the US Postal Service a legal monopoly of letter delivery. This monopoly is enforced by a mandate that any entity delivering “letters” must charge at least 6 times the current rate for the first ounce of a single piece First-Class mail letter. Fortunately “parcels” do not fall under that mandate; otherwise FedEx and UPS would be nothing but big “What ifs”.

Although Congress is specifically authorized in the Constitution (Article 1, Section 8) to  “establish Post Offices”, such authorization does not on its face imply that the federal government is the ONLY entity permitted to do so, merely that this is one thing it MUST do. The reasoning behind establishing a monopoly position in the marketplace was the concern that private business would simply come in and “poach” business away from the more profitable mail routes. This would then mean either prices would have to rise on the less profitable (rural) routes or tax dollars would need to be employed to subsidize costs along these less profitable routes. Gee, with a justification for monopoly like that I don’t understand why we don’t establish a monopoly within each sector of the economy. Why not give Publix a monopoly on groceries in this country? Then they wouldn’t have to waste money on competing or advertising and could provide “affordable” food prices for everyone by subsidizing less profitable stores with the receipts from the more profitable stores.

Mandated monopolies, whether in private industry (e.g. utilities), or in government (Postal Service) make no economic sense. Consider the argument here: private mail delivery companies would out compete the Postal Service by charging less thereby depriving the Postal Service of income. So instead of overcharging some customers in order to subsidize the undercharging of other customers it would be necessary to overtax some people in order to provide a net benefit to some other people. How are the two processes different exactly? Both involve individuals in Group A paying more than necessary in order that individuals in Group B pay less than necessary. So if the worst outcome (raising taxes) is equivalent to what you are doing right now, then there is nothing to lose in trying the alternate approach. Best case it is a zero sum game (the money people save is simply taxed away to fund the Postal Service losses). The more probable outcome is that there is a net benefit to society when multiple entities compete for the customer’s dollar. Perhaps private competitors might be so efficient that they could provide mail service to even the “unprofitable” areas at an “affordable” price (which is what I believe UPS and FedEx currently do in the area of package shipments).

Congress should eliminate the monopoly provisions on mail delivery, let the chips fall where they may and let the market solve this problem. In the age of $20 cell phones somehow I doubt there will be an issue in providing “affordable” delivery of folded pieces of paper.

Barking at Ethics

Georgia House Bill 142 (introduced on January 29, 2013) attempts to reform ethic laws in this state. Sadly, legislators have, in their zeal to cast a wider ethical net, broadened the definition of lobbyist so wide that it now encompasses basically everyone except elected officials themselves (just wait, that will come next!). Yes, this includes even you and me. The particularly onerous portions of this bill, the reporting requirements, do not apply to individual citizens expressing “personal views” UNLESS they are speaking to someone elected statewide who was not elected within their district. In other words, as the law is written (as of today February 10, 2013) if you wish to speak to the Governor, Secretary of State, Public Service Commissioner, etc. and discuss anything other than the weather or sports you technically would need to register with the state of Georgia as a lobbyist and pay a $300 annual fee for the privilege thereof.

This provision clearly violates the 1st Amendment to the US Constitution (in conjunction with the supremacy clause) or the 14th Amendment (take your pick) insofar as the 1st Amendment guarantees “the right of the people… to petition the Government for a redress of grievances.” That key phrase “right of the people to petition” – defines precisely what “lobbying” is. Therefore any laws that in any way hinder the ability of anyone to petition (lobby) are violations of this core Constitutional right. It is immaterial toward the exercise of this right whether I (or a group of people) personally petition the government or if I hire someone to act on my (or our) behalf.

The idea that society requires the intervening hand of a strong, beneficent governing body in order to keep us all in line relies upon the argument that, in general, people are bad and need to be governed. This faith in a paternalistic government rests squarely on the assumption that elected officials must necessarily be “better” than the rest of us, for if they are not, what is the point in being ruled by those no better than we? And if they are indeed not any better than we (as evidenced by the apparent need for various ethics and transparency laws), this then begs the question: if the problem with society is imperfect humans, why put imperfect humans in charge? We make the problem worse by conferring special power privileges to those in charge that invite a level of abuse that would otherwise be impossible absent such special privilege.

The fact that we find it necessary to pass ethics laws demonstrates the fundamental flaw of monopoly government. Abuse of power. Ethics laws are mere band-aids that do not address the underlying incentive problem. It is in man’s nature to abuse power just as surely as it is in a dog’s nature to bark. You can muzzle the dog, but he still barks, albeit softly. Ethics laws simply shift unethical behavior underground. I suppose if sweeping dirt under the rug constitutes “cleaning” then ethics laws “solve” ethical issues equally well.

I, like so many others, am justifiably upset with the power and sway some lobbyists seem to hold over many in government. But I’m not upset with the lobbyists; rather I’m upset with a system that encourages rent seeking by a small but vocal minority (rent seeking being the activity of manipulating the power of government so as to benefit oneself at the expense of others). The only way to solve “ethics” problems in government is to remove the incentives to “buy” power. Eliminate the monopoly power government has over the activities being lobbied. I don’t lobby McDonalds to build a restaurant near me, rather, I eat at Burger King. If McDonald’s wants my dollar, they have to earn it. So too should it be with government.

National ID = National Disgrace

The Washington Post’s editorial board recently opined that a national ID card would be the most effective method to thwart illegal immigration. Their idea was bolstered by the fact that both President Obama and a bipartisan group of eight senators recently put forward similar ideas (“fraud-resistant, tamper resistant Social Security card”). Superficially this makes sense. If the problem is uninvited guests crashing your party then the most logical solution would be to demand your guests show their invitation at the door. The Post then dismisses any potential concerns about civil liberties as nothing more than empty rhetoric by citing the fact that 35% of Americans already have a passport.

The Post misses the point in a grandly ironic fashion by citing the innocuousness of the tool the state uses to violate our civil liberties whilst simultaneously ignoring the actual violation. Move along, nothing to see here. The truth is that ID’s don’t harm civil liberties; rather it’s those that require them that do. Government says to step from point A to point B you must show this card. Government says to get a job you must show this card. Government says to start a business you must show this card. There is no end to what new actions the government could conceivably try to control by making one’s right to engage in an action contingent on the possession of “proper” ID. Do you want to go shopping? Buy gas? Go to a movie? Buy a car? Open a bank account? Go to the library? Go to the park? Please – show me your papers. Yes, ID is already required for many of these things. But that is the point. It should not be. Think about it. What are you doing when you show your ID? You – a grown adult – are asking for PERMISSION to engage in some action. It is one thing to ask for permission to engage in something that is not a natural right (i.e. enter a private residence or business), it is quite another to ask permission from the State to engage in an activity that is innocuous to others (traversing a border, starting a business, getting a job, etc.). We are not children, and the State is not our parent. I stopped asking for permission when I turned 18. How about you?

Sadly the real immigration “problem” has never been addressed. The problem is immigration prohibition. In fact the prohibition of anything innocuous to third parties always leads to more harm than ever could result from the prohibited activity itself (violence being the primary result). Drug prohibition is at least plausible albeit still as harmful as alcohol prohibition. But immigration? How can immigration harm anyone? By “stealing” that lucrative low wage job no American wants? Some say immigrants drive wages down. Although nominal wages for low skilled labor may decline, real wages rise for society because cheaper goods and services mean each dollar buys more. Some say immigrants are mooching off our socialist safety net. Well seeing as how it is not so much as a net as it is a luxuriant feather bed what did you expect? Turn it back into a mere net and that problem will vanish. Both big employers and low skilled workers use government to protect themselves from competition. The former uses regulation and the latter uses immigration. A few benefit at the expense of the many.

The solution to “illegal” immigration is to end the prohibition on immigration. Completely free and open borders. Chaos? The end of America? Hardly. Illegal aliens constitute a mere 2% of the US population. Even if every Mexican (all 110 million) came to live in the US (an absurd notion) “native” Americans would still outnumber them 3 to 1. Since even that outlandish scenario would not “end” America, perhaps we should face what immigration control has always been about. Fear. Fear of the unknown, of new customs, of new languages, of new competition. It is only when we humans give in to fear and allow it to guide our actions do we engage in the most reprehensible and irrational behavior. Since fear guides all immigration policy perhaps it is time to examine the rationality of such policies. If the process of entering or exiting this country is indistinguishable from the process of entering or exiting a jail, then are any of us truly free?