Voice For Liberty

Tag: Role of government

  • Reform the “other” welfare

    Writing from Little Rock, Arkansas

    A recent USA Today editorial (“Hooked on Handouts” July 31, 2006) makes the case for reforming corporate welfare, given the success of “regular” welfare reform:

    Most of what the government does could be called welfare, using a very broad definition of the word. It’s not hard to find individuals, corporations, states or communities hooked on one Washington handout or another. The result of this largesse is a society that is unproductively dependent on government support — and politically organized to keep it coming.

    Agriculture is a leading example. Supports have become a sad hoax on the U.S. taxpayer. According to a recent report by The Washington Post, the government has handed out $1.3 billion since 2000 to people who don’t even farm. It has sent billions of dollars in drought relief to areas where there was no drought. And, oh yes, it has paid out a staggering $144 billion over 10 years, according to the National Taxpayers Union, 72% of which went to the 10% of farmers with the largest holdings. Such spending is an insult to hardworking, unsubsidized, Americans. Wasteful farm programs should be cut.

    The federal budget is replete with hundreds of payments to, and tax benefits for, other politically potent industries. This “corporate welfare” ranges from government-funded logging roads to subsidies for electric utilities. Last year, according to the non-partisan Congressional Research Service, Congress earmarked 15,877 items worth $47.4 billion to specific recipients, many of them companies with well-connected Washington lobbyists.

    This not only squanders taxpayers’ money, it also clogs decision-making in the private sector. Rather than making a smart business decision promptly, companies wait to see whether they can make more by delaying and doing something that could be less sensible.

    With so much available in the form of government handouts, it is no wonder companies spend billions on lobbying, and that there are scandals.

    F.A. Hayek wrote in his book The Road to Serfdom: “As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power.” Lobbying scandals are a symptom and manifestation of a government that has too much power and spends too much time rewarding one person at the expense of another.

    Is there a solution? Can we persuade the rewarded class to give up their spoils? The economist Walter E. Williams relates this story and solution: “Nearly two decades ago, during dinner with the late Nobel Laureate Friedrich Hayek, I asked him if he had the power to write one law that would get government out of our lives, what would that law be? Professor Hayek replied he’d write a law that read: Whatever Congress does for one American it must do for all Americans.”

    It could be that simple.

  • Government harms those it means to help

    A column by economist Thomas Sowell Preserving a Vision–at the Expense of the Facts tells just how harmful big-government liberalism is to those it aims to help. In particular, black families have been harmed. “… the black family, which survived centuries of slavery and generations of discrimination, has disintegrated in the wake of the liberal welfare state is only one example.”

    After the end of slavery, blacks started to advance in America. Even though they were often discriminated against — both informally and formally by government, as in the case of Jim Crow laws — they were making progress in education and economically, too. But then government gets involved and wants to “help.” Here’s the legacy:

    One of the most telling examples of the social destructiveness of the left’s welfare-state vision can be found among the white slum dwellers in Britain described in the brilliant and insightful book “Life at the Bottom” by Theodore Dalrymple.

    There it is not possible to blame social degeneracy on slavery, racism or any of the other things cited as causes of the behavior and consequences found among blacks in American slums. Yet the results are virtually identical, right down to children beating up classmates for trying to get an education.

    But the left will not admit its mistake, and continues to doom a class of Americans to failure.

  • A Return to republican (small “r”) government

    Writing from Miami, Florida

    Would you rather live in a republic or a democracy?

    In an article by the economist Walter E. Williams (Are we a republic or a democracy?) we discover the difference between a republic and a democracy:

    So what’s the difference between republican and democratic forms of government? John Adams captured the essence of the difference when he said, “You have rights antecedent to all earthly governments; rights that cannot be repealed or restrained by human laws; rights derived from the Great Legislator of the Universe.” Nothing in our Constitution suggests that government is a grantor of rights. Instead, government is a protector of rights.

    In recognition that it’s Congress that poses the greatest threat to our liberties, the framers used negative phrases against Congress throughout the Constitution such as: shall not abridge, infringe, deny, disparage, and shall not be violated, nor be denied. In a republican form of government, there is rule of law. All citizens, including government officials, are accountable to the same laws. Government power is limited and decentralized through a system of checks and balances. Government intervenes in civil society to protect its citizens against force and fraud but does not intervene in the cases of peaceable, voluntary exchange.

    Contrast the framers’ vision of a republic with that of a democracy. In a democracy, the majority rules either directly or through its elected representatives. As in a monarchy, the law is whatever the government determines it to be. Laws do not represent reason. They represent power. The restraint is upon the individual instead of government. Unlike that envisioned under a republican form of government, rights are seen as privileges and permissions that are granted by government and can be rescinded by government.

    I suppose that if you happen to hold the same beliefs as the majority in a democracy, you’re in a good position — unless you want to let others believe and live differently.

    Another good article by Dr. Williams on this subject is How to create conflict.

  • Let markets fund arts and culture

    Writing from Miami, Florida

    Former Wichita City Council member and present Arts Council chairwoman Joan Cole wrote an article titled “City needs dedicated arts funding” that appeared in the March 16, 2006 Wichita Eagle. This article advocates continued and increased government funding for arts in Wichita.

    In her article Mrs. Cole mentions a policy that she seems to approve of: “Moreover, for the first time, performance measures and desired outcomes will be used to assess the progress that these organizations demonstrate.” The organizations are the various groups that will receive funding from the City of Wichita.

    I do not know how these performance measures are counted, and I don’t know what outcomes are desired. But I do know this: if the government would stop funding arts, there would be no need for government-mandated performance measures, and the outcomes that occur would be precisely what people really want.

    Without government funding, organizations that provide culture and art will have to satisfy their customers by providing products that people really want. That is, products that people are willing to pay for themselves, not what people say they want when someone else is paying the bill. With government funding, these organizations don’t have to face the discipline of the market. They can largely ignore what their customers really want. They can provide what they think their customers want, or, as I suspect is the case, what they believe the people of Wichita should want, if only we were as enlightened as we should be.

    Without the discipline of the market, these organizations will never know how their customers truly value their product. The safety net of government funding allows them to escape this reality. We have seen this many times in Wichita and Sedgwick County recently, as organizations fail to generate enough revenue to cover their costs, only to be bailed out by the government. Other businesses learn very quickly what their customers really want — that is, what their customers are willing to pay for — or they go out of business. That’s the profit and loss system. It provides all the feedback we need to determine whether an organization is meeting its customers’ desires.

    Some say that without government support there wouldn’t be any arts or museums, and that art shouldn’t be subject to the harsh discipline of markets. Personally, I believe there is little doubt that art improves our lives. If we had more art and music, I feel we would have a better city. But asking government commissions to judge what art we should have is not the way to provide it. Instead, let the people tell us, through the mechanism of markets, what art and culture they really want.

    It might turn out that what people want is different than from what Arts Council members believe the people should want. Would that be a surprise? Not to me. Then we could disband the Arts Council and let people decide on their own, without government intervention, how to spend their personal arts budgets on what they really value.

  • Economics In One Lesson, 50th Anniversary Edition

    Economics In One Lesson, 50th Anniversary Edition
    Henry Hazlitt
    Laissez Faire Books, 1996

    This book, first published in 1946, explains common fallacies (a false or mistaken idea) that are particularly common in the field of economics and public policy. At the very start of the book Mr. Hazlitt explains:

    Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine — the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for then plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

    In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.

    At first it seems as though not much has changed since the end of World War II. What has changed, though, is the scope of the dangers Mr. Hazlitt identifies. That’s because government is much expanded and more assertive today than when this book was written. In 1946 the New Deal was not very old, and the tremendous expansion of government social programs was still in the future. We should take these lessons as even more important today.

    It is the overlooked consequences that cause harm. They are overlooked sometimes because they are difficult to see, as in the broken window fallacy explained by Frederic Bastiat and also in this book. They are also “overlooked” because, as Mr. Hazlitt tells us, one group wants special favors from the government, and although there is no way to grant these favors without harming some other group, the favor-seeking group will seek to hide, obfuscate, muddle, or minimize the bad effects. At the same time they promote the policy as good for everyone. This is largely the job that lobbyists perform, and billions are spent on it each year. That’s because a powerful government has the ability to bestow valuable favors, those favors being paid for by someone else, someone often not easily seen.

    An example of overlooked secondary consequences is government spending. When government spends, it means it must tax or borrow. What government spends is not available for individuals to spend. When we see magnificent public works (say a new downtown arena in Wichita), we don’t see all the things that would have been bought had the government not taxed to build the public work. We see the jobs created by the public work — all the construction workers that will be building the new arena — but we don’t see the jobs destroyed because people had to reduce their spending elsewhere.

    Foreign trade is a case where people often fail to grasp the complete picture. We often see exports as something good for our economy, while imports are seen as bad. Imported things are things that American workers can’t compete with, and so American jobs are lost, it is often said. But as Mr. Hazlitt says: “It is exports that pay for imports. The greater exports we have, the greater imports we must have, if we ever expect to get paid. The smaller imports we have, the smaller exports we can have. Without imports we can have no exports, for foreigners will have to funds with which to buy our goods.” So those wanting restrictions on imports are also — although they do not say this, either because they do not recognize it or it doesn’t matter to them — calling for fewer exports.

    In recent years we have been told that our is a “consumer-driven” economy, fueled by people tapping their home equity that accumulated from increased home values, or spending by going into debt. It is as though if consumers started saving rather then spending on immediate consumption, the American economy would collapse. But Mr. Hazlitt tells us that “saving is only another form of spending.” After all, what is done with money that is saved? Today, few put their savings under the mattress. Instead, it is loaned to a bank or invested. Then it is spent on capital goods, which businesses use to increase their productive capability. The key fact is that businesses spend it. And, they spend it on capital goods that either expand their capacity to produce, or decease their present costs of production. Either way, that is good for everyone. It means more jobs, and better jobs. But this saving is derided as not being “productive.”

    As a conclusion Mr. Hazlitt tells us:

    And this is our lesson in its most generalized form. For many things that seem to be true when we concentrate on a single economic group are seen to be illusions when the interests of everyone, as consumer no less than producer, are considered.

    To see the problem as a whole, and not in fragments: that is the goal of economic science.

    This is a very valuable book, which while dated a bit, cuts through the fog and haze of economics and public policy and lets us understand the effects of our government’s policies.

  • Separation of Sport and State

    I recently discovered that all over the country there are taxes being directed to Sports teams and Arenas.
    So, I created a site www.separationofsportandstate.com
    Please visit, and contribute by emailing the administrator.

  • Political Decision Making Increases Conflict

    A column by economist Walter E. Williams (Why we’re a divided nation) strongly makes the case for more decision making by free markets rather than by the government through the political process.

    When decisions are made through free markets, Dr. Williams says, both parties win, because in a free market, parties voluntarily enter into only those transactions that benefit them.

    When decisions are made for us by the government, however, it is almost always the case that one party’s gain is someone else’s loss. Therefore, there is conflict. The more decisions made through politics, the more potential for conflict. Coalitions arise in order to try to get more from the government, and the most effective coalitions “are those with a proven record of being the most divisive — those based on race, ethnicity, religion and region.”

    The final paragraph of the column is this: “The best thing the president and Congress can do to heal our country is to reduce the impact of government on our lives. Doing so will not only produce a less divided country and greater economic efficiency but bear greater faith and allegiance to the vision of America held by our founders — a country of limited government.”

    In an earlier post, I mentioned some columns by Dr. Williams that I thought were important. This column is certainly one of his best, as it very simply, in one short page, shows us a major fault in our current political landscape.

  • Attacking lobbyists wrong battle

    The economist Walter E. Williams has a column dated January 18, 2006, that places the current lobbying scandal in proper perspective.

    (We should caution Democrats against overindulging in schadenfreude [enjoyment obtained from the troubles of others] at this time. Democrats took money from Jack Abramoff too, and if there were more Democrats in positions of power, you can be sure there would be more money given to Democrats.)

    Professor Williams explains to us that given the “awesome growth of government control over business, property, employment and other areas of our lives” Washington politicians (and I would add state and local politicians too) are in the position to grant valuable favors. “The greater their power to grant favors, the greater the value of being able to influence Congress, and there’s no better influence than money.”

    Continuing: “The generic favor sought is to get Congress, under one ruse or another, to grant a privilege or right to one group of Americans that will be denied another group of Americans. A variant of this privilege is to get Congress to do something that would be criminal if done privately.”

    “Here’s just one among possibly thousands of examples. If Archer Daniels Midland (ADM) used goons and violence to stop people from buying sugar from Caribbean producers so that sugar prices would rise, making it easier for ADM to sell more of its corn syrup sweetener, they’d wind up in jail. If they line the coffers of congressmen, they can buy the same result without risking imprisonment. Congress simply does the dirty work for them by enacting sugar import quotas and tariffs. The two most powerful committees of Congress are the House Ways and Means and the Senate Finance committees. These committees are in charge of granting tax favors. Their members are besieged with campaign contributions. Why? A tweak here and a tweak there in the tax code can mean millions of dollars.”

    What is the solution? I believe, and I know Dr. Williams does too, that we should reduce the power that government has over our lives. I believe we should rely more on free markets for solutions to problems, as these markets are composed of people voluntarily entering into transactions, rather than a coercive government forcing decisions on us based on who lobbied the hardest. Dr. Williams also relates this story and solution: “Nearly two decades ago, during dinner with the late Nobel Laureate Friedrich Hayek, I asked him if he had the power to write one law that would get government out of our lives, what would that law be? Professor Hayek replied he’d write a law that read: Whatever Congress does for one American it must do for all Americans.”

    Hayek also wrote in his book The Road to Serfdom: “As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power.” We are well down this road, where government becomes more important than liberty and individuality. This is the battle we need to fight. Lobbying scandals are just a symptom and manifestation of the larger problem.

  • How government makes us unhappy

    Arthur C. Brooks, associate professor at Syracuse University’s Maxwell School of Public Affairs, has a commentary in the December 8, 2005 Wall Street Journal titled “Money Buys Happiness.” Rich people, the author tells us, are much more likely to say they are happy. Although we are becoming richer as a whole, the percent of people saying they are “very happy” is the same today as it was 30 years ago. Some people say it’s the rich having relatively more than others that makes them happy. This excess happiness of the rich being bad, they say, we should use progressive taxation to improve our “moral fiber” by making after-tax incomes less divergent.

    But is this a good idea? “In fact there is another explanation for unchanging happiness levels over time which is rather less supportive of income redistribution. As incomes rise, so generally do levels of government revenues and spending, and there is evidence that these forces work against personal income on the overall level of happiness. For example, a $1,000 increase in per capita income is associated with a one-point decrease in the percentage of Americans saying they are ‘not too happy.’ At the same time, a $1,000 increase in government revenues per capita is associated with a two-point rise in the percentage of Americans saying they are not too happy. In other words, not only can money buy happiness, but it may be that the government can tax it away as well.”

    Mr. Brooks also tells us that donating money and time — that is, the giving of charity — illustrates the link between money and happiness: “Givers of charity earn substantial mental and physical health rewards, even more than do the recipients of charity — empirical evidence that it is indeed more blessed to give than to receive.”

    The actions of government can swamp private charity efforts. In the week after hurricane Katrina, I read that private donations had reached $600 million. I thought that was wonderful, until the next news story told me that Congress had just approved some $60 billion in relief, that being described as merely the down payment on the final spending. Government spending overwhelmed private charity, even though not many seem satisfied with the government response, and there are many stories of effective help supplied privately.

    So when government taxes us to pay for programs that take the rightful property of one person and give it to another to whom it does not belong, government harms us in two ways: it taxes away happiness and reduces our capacity to engage in charitable activity.