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Monday, December 24, 2012

Why pay people not to work and then complain about unemployment?


Government stimulus and The Parable of the Broken Window was going to be the subject of my post today. Luckily for me, that work has already been done. The idea that central government spending can fix a broken economy, and furthermore that this spending can be a more efficient use of scarce resources than is possible within the private sector is the driving force of Keynesian economics. The recent 800 billion dollar stimulus plan that was passed in 2009 was full of pork....I know, I know...you could have knocked me over with a feather, too. What was the reason behind the stimulus? Wikipedia has this:
The rationale for the [American Recovery and Reinvestment Act] was from Keynesian macroeconomic theory which argues that, during recessions, the government should offset the decrease in private spending with an increase in public spending in order to save jobs and stop further economic deterioration. Shortly after the law was passed, however, Keynesian economist and Nobel laureate Paul Krugman while supportive of the law, criticized the law for being too weak because it did not "even cover one third of the (spending) gap."
The stories of $5000.00 hammers are unfortunately true. If you wonder at government efficiency, wonder no more: the government always counts workers, never work. When you watch bureaucrats who actually are working, you'll notice a strange torpor about them. They remind me of those marathon runners at the start of a race who stay together in a pack, pacing each other with nobody really even trying to break out into any kind of substantial lead. The difference between those runners and these bureaucrats is that at some point the runners will start pushing the pace, while the bureaucrats will start slowing it down.

The United States Postal Service is the closest thing to free enterprise the government has attempted. They provide postal service for a fee, yet despite having an army of workers, and the full weight of the Federal government behind them, they've operated in the red to the tune of billions, year after year after year. Since the days of the internet the need for the United States Postal Service has declined, but even in their heyday they were a source of continual embarrassment. Read the following Cato institute analysis written in 1988, which was before the routine use of email.

Obviously public sector unions—which appear insidiously overnight like mushrooms in some swampy stinking cow pasture—are the main culprits. People who go to work for the government apparently believe that they're entitled to a life of ease after they've worked for Uncle Sam for twenty years or so. By the way, these unfunded government employee retirement programs are a major part of the unfunded liabilities that are the reason why we're almost bankrupt and why bankruptcy now seems inevitable.

We've borrowed sixteen trillion dollars, which is 107% of the annual gross domestic product of the United States of America. Unfortunately that number is just the tip of the iceberg, because it doesn't include our unfunded liabilities which are many times more than this 16 trillion in current debt. These future debts when they come due will add perhaps as much as 55 trillion dollars. Some argue that these unfunded liabilities may never be owed because Congress can change the nature of the deal for retired seniors anytime they have the votes to do it, however it's unlikely that seniors will ever decide they want this deal changed. The percentage of seniors who actually vote is much higher than for any other demographic. Old people vote, period. And when they vote they're going to be voting for the people who promise to leave Social Security and Medicare intact. Furthermore, the number of elderly voters will continue to increase because the median age of all Americans continues to rise due to the birth slow-down that followed the post WWII baby-boom.

Our politicians mortgaged America to the hilt betting on Keynesian economics, then when they lost that bet they borrowed the money to go double or nothing. Keynesian economics is exactly like opening your front door to let the heat out, because you think it's too cold outside. It's exactly like paying someone not to grow crops. It's exactly like throwing rocks through windows because the people who make windows will benefit, it's like cash for clunkers, it's like a farm bill with a trillion in it for food stamps, it's like handing the unemployed a monthly check for as long as they don't get a job. It's like getting a dime's worth of solar power for a dollar. It's like growing enough corn to feed the world and then after letting it rot, filling up gas-tanks with the residue.

I've got a million dollar question for all the PhD equipped R-tards running around with their pet theories and pouring money out like it was water and they were a maniac trying to flood the Sahara. If these brainiacs with their advanced economic degrees are so smart, so savvy, so worldly-wise and in tune with economics, finance, and such, then I wonder why they aren't running a million dollar business? Such is the insanity inherent in the system. The people who make our laws are good at running campaigns not running the country. The people these professional campaigners hire to actually run the country are good at memorizing, passing tests, and bullshitting their way through a dissertation defense, but they've never once in their lives managed a successful business. To say that these economists are clueless is an insult to people who merely lack a single clue. Someone who was genuinely clueless might accidently, for once, do the right thing!

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