Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Frederic Bastiat

If Dudley is Right, Then Let’s Pray for the Flooding of the Entire Country!

This article was published by The McAlvany Intelligence Advisor on Monday, September 11, 2017:

Cover of "The Emperor's New Clothes"

Cover of The Emperor’s New Clothes

Taken to its logical conclusion, William Dudley, the president of the Federal Reserve Bank of New York, thinks a flood covering all of the United States would stimulate the economy. Several sources confirmed that this is what Dudley said on Friday in an interview at CNBC concerning the economic effects of hurricanes Harvey and Irma:

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There is No “Permanent” Fix for Social Security

This article was published by The McAlvany Intelligence Advisor on Monday, December 12, 2016: 

Social Security Poster: old man

Social Security Poster:

There’s no doubt that Texas Representative Sam Johnson means well. He and his constituents are concerned about their financial futures and about the viability of Social Security as an important part of those futures. So on Thursday he offered his plan “to permanently save Social Security.” He calls it the “Social Security Reform Act.”

The plan doesn’t deserve a close look.

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Texas Congressman Proposes “Permanent” Fix for Social Security

This article appeared online at TheNewAmerican.com on Saturday, December 10, 2016:  

Congressman Sam Johnson (R-Texas), chairman of the House Ways and Means Social Security subcommittee, presented his plan, the “Social Security Reform Act,” on Thursday, which he called “a plan to permanently save Social Security.”

His proposal involves the same solutions often proposed by others trying to keep Social Security from going broke: cutting benefits, raising the retirement age, adding “means” testing, and cutting or eliminating altogether the COLA — Cost of Living Adjustment.

According to Michael Linden, an associate director at the liberal Center for American Progress, the cuts to benefits would be severe — between 11 percent and 35 percent — and they would include those already receiving Social Security benefits. Social Security actuaries who analyzed Johnson’s plan (at his request) came up with different numbers: Cuts would range from 17 percent to 43 percent but over a longer time period and with the same conclusion: everyone in Social Security (with the exception of the lowest-income participants) would take a hit under Johnson’s plan.

Nowhere in Johnson’s plan is any mention of privatizing the program, which is surprising, as it was a topic of discussion during the Republican presidential debates. Rand Paul, Mike Huckabee, Rick Perry, and Ted Cruz all expressed their support for privatizing Social Security as the best way to solve its myriad problems.

Here are some of those problems:

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Frederic Bastiat Wouldn’t Approve of Social Security

This article was published by The McAlvany Intelligence Advisor on Wednesday, October 12, 2016:  

Frédéric Bastiat

Frédéric Bastiat

Frederic Bastiat was a “classical liberal” who lived briefly in the first half of the 19th century in France. But his legacy, including his development of the fallacy of the broken window through his Parable of the Broken Window continues to resonate today. He is perhaps best known for his definition of “legal plunder”:

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

When it was enforced at the point of a pistol by a government bureaucrat, Bastiat opposed it:

I do not dispute [politicians’] right to invent social combinations, to advertise them, to advocate them, and to try them upon themselves, at their own expense and risk. But I do dispute their right to impose these plans upon us by law – by force – and to compel us to pay for them with our taxes.

There’s little doubt, then, that Bastiat would support the philosophy of The Bastiat Society, founded a dozen years ago:

Capitalism is the only economic system to produce widespread peace and prosperity. But if those in the private sector do not understand the intellectual and cultural institutions that make entrepreneurship and peaceful trade possible, what chance do they have to withstand a steady series of attacks from those who desire to bring capitalism and personal freedom to an end?

One of the battles that freedom lost was Social Security. Enacted as part of FDR’s Great Society, it remains a fixture that appears to be immovable. Today the only conversation heard is how to keep it from going bankrupt.

All manner of “fixes” are proposed. Obama’s National Commission on Fiscal Responsibility and Reform came up with ten fixes while The Motley Fool proposed 15:

  1. Cut benefits across the board right now;
  2. Change the COLA;
  3. Raise the earnings cap;
  4. Allow beneficiaries to invest in the stock market;
  5. Do nothing and cut benefits when the [trust fund] is depleted;
  6. Do nothing and enact payroll tax hikes when the [trust fund] is depleted;
  7. Offer a buyout [to the wealthy, removing them from the program];
  8. Link life expectancies to benefit levels;
  9. Means-test [to qualify] for benefits;
  10. Raise the full retirement age;
  11. Use the Estate Tax to cover Social Security [shortfalls];
  12. Freeze the purchasing power of benefits [i.e., eliminate COLA altogether];
  13. Freeze the … benefits on a sliding scale;
  14. Transfer [some] costs to [the] government [now]; and/or
  15. Increase the payroll tax on everyone right now.

Social Security has the peculiar characteristics similar to Bernie Madoff’s Ponzi scheme: eventually it is exposed and it ends in bankruptcy. The difference is that Social Security is enforced by people with guns and badges: everyone must be covered and forced to support everyone else, or else.

No one questions the math: the program’s “trust fund” is slowly being liquidated to cover the annual shortfalls between revenues and benefits. Thanks to the Baby Boomers, the liquidation is increasing more rapidly: those Boomers have developed the nasty habit of living longer, far beyond the original mortality tables predicted back in the mid-1930s. There’s also the declining birth rate, which is reducing the number of new entrants into the system whose taxes are needed to support it.

It’s the ideology: freedom versus force. So-called conservatives want to fix it, as do liberals. Conservatives, when pressed, question the intergenerational conflict that requires young people to contribute to a plan paying benefits to seniors. They question the use of resources: tax and spend now, or save and invest for later. Conservatives even argue over who should control the money. They never question its morality.

Liberals think it’s a proper function of government, going along with the Supreme Court’s decision in Helvering v. Davis that the program is constitutional, the Tenth Amendment notwithstanding.

As economist Herb Stein noted: “If something cannot go on forever, it will stop.” With Social Security it will continue as long as it can be patched up with temporary fixes. Eventually the mathematics and the bond market will end it.

Social Security to Announce Tiny Increase in Benefits for Next Year

This article appeared online at TheNewAmerican.com on Tuesday, October 11, 2016:  

Seal of the United States Social Security Admi...

Next Tuesday the Bureau of Labor Statistics (BLS) will announce Social Security’s COLA (Cost of Living Adjustment) for 2017. It is widely anticipated to be between nothing and $3 a month for the average beneficiary.

But Medicare premiums (retirees are often expected to pay a monthly fee for coverage) for seniors receiving Social Security retirement benefits are expected to jump nearly $30 a month. That premium increase would reduce the average retirement benefit by about $25 a month, except that Congress had inserted a “hold harmless” provision into Medicare law. Instead, the premium increase will be funded by Medicare, thereby hastening the day when that part of Social Security runs out of money.

The statistics reflective of the current gradual liquidation of Social Security’s so-called Trust Fund are familiar to most recipients:

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A Bald-faced Daylight Robbery in Massachusetts

This article was published by The McAlvany Intelligence Advisor on Wednesday, August 24, 2016:  

One has to give Massachusetts Governor Charlie Baker credit: he has devised a plan to punish ride-sharing newcomers, save the state’s failing taxi cartel, and fund much-needed “infrastructure improvements,” all with free money: a new tax on ride-sharing customers that won’t be paid by either the driver or his customers. Instead, it will be levied on those evil newcomers – Uber, Lyft, and the like – who dared to innovate and take business away from the existing cartel.

Here’s how it works:

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Big Taxi Wins Big in Massachusetts

This article appeared online at TheNewAmerican.com on Tuesday, August 23, 2016:  

Sign Taxi Zagreb, Croatia

Massachusetts is now the 35th state to regulate ride-sharing services such as Uber and Lyft, but with a vengeance not seen elsewhere: A portion of a new 20-cent tax per ride will be used to fund improvements for the old taxi cartel.

First, the new tax is not called a “tax” but a “fee.” Second, the tax won’t be charged either to the driver or to his customer, but to the ride-sharing company itself. Third,

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51 OECD Countries Sign Tax Evasion Treaty

This article first appeared at TheNewAmerican.com on Monday, November 3, 2014: 

Last Wednesday’s agreement among 51 countries belonging to the Organization for Economic Co-operation and Development (OECD) in Berlin to share tax information across borders in a continuing effort to crack down on tax evasion was announced with great excitement but precious little logic.

German Finance Minister Wolfgang Schaeuble told the group at a meeting entitled the “Global Forum on Transparency and Exchange of Information for Tax Purposes” that the agreement is “a joint contribution to more transparency and fairness in our globalized 21st century.” Britain’s Finance Minister George Osborne added, “Tax evasion is not just illegal, it is immoral. You are robbing from your fellow citizens and you should be treated like a common thief.” Said Osborne, the new treaty “strikes a blow on behalf of hard-working taxpayers.”

A careful look reveals that the new treaty in fact is designed to benefit tax collectors, not taxpayers.

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Wal-Mart Shrugs: Pulls Plans to Build Stores in Washington, DC

Writing in the Washington Post on Tuesday, Wal-Mart’s regional general manager Alex Barron told Washington DC’s city council that if they voted to pass the Large Retailer Accountability Act (LRAA) his company would “not pursue [building] stores at Skyland, Capitol Gateway or New York Avenue” shopping centers and they would

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Is Hurricane Sandy Good for the Economy?

Broken Window Fallacy

Broken Window Fallacy (Photo credit: KAZVorpal)

It didn’t take long for some ignoramus (as usual, a college professor) to explain one-half of the broken window fallacy concerning the economic impact of Hurricane Sandy: it’s going to be good! All good! Yes!

Here’s the story line from this fellow:

Disasters can give an ailing construction sector a boost, while unleashing reinvestment that actually improves stricken areas and the lives of residents. Ultimately, Americans always seem to emerge stronger and rebuild better in the wake of disaster.

Happily and predictably, my friend (I don’t know him, but I know his thinking, with which I agree) Donald Boudreaux jumped onto the article with a letter to the editor pointing out the

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Thanks to Hurricane Irene, Business Is Booming!

Hurricane_off_Florida

Image via Wikipedia

According to Laura Chanthalath, manager at High’s Chimney Service, business is booming. Located in Gaithersburg, Maryland, her company might rebuild one chimney a day during the summer when business is slow. But now, thanks to Irene, “We’re completely booked. This has been a big boost to our business because the summer is extremely slow, especially in the chimney business. So it’s been good for us.”

Not counting lost man-hours and production, Irene is estimated to have cost at least $20 billion but, as the Washington Times wrote, 

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Counting the Costs of Unemployment Insurance

Bismarck ca. 1875.

Image via Wikipedia

As part of the backroom deal to extend the Bush tax cuts for another two years, the GOP gave the progressives an extension of one of their favorite welfare-state building blocks: unemployment insurance—which will undoubtedly add to the long lines of suffering Americans in our country.

Otto von Bismarck, the “Iron Chancellor” of Germany in the 1880s, first introduced the concept of state-mandated unemployment insurance. It was then forcibly introduced in the United States during the Great Depression under the Roosevelt administration and has been expanded regularly ever since. In fact, the proposed extension would be the sixth such expansion since June of 2008.

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What Part of “No” Doesn’t He Understand?

Pelosi Showing Obama Health Care

Image by Truthout.org via Flickr

This change allegedly reflects the impact the Brown win in Massachusetts last week had on politics in general, but also that it had not been anticipated by Obama or the Democrats.

“The entire political community was caught a little bit unawares on that one,” said David Axelrod, White House senior advisor. The impact of Brown’s win on Obama’s healthcare bill was significant in that it deprived the Democrats of the opportunity to push the bill through the Senate without a Republican vote.

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.