Paul on Politics: Silly Sophistry of Consensus

Hoover Addresses Congress

President Hoover addresses joint session of Congress at bicentennial ceremony commemorating the 200th anniversary of the birth of George Washington.

My guest writer today is my uncle Paul.

Notion of Consensus

Today’s conventional wisdom touts consensus as the ideal for a congress or legislators to seek. However, conventional wisdom isn’t always right or wise, nor is consensus necessarily a noble goal. Consider this:

Consensus means average. Do you want our ambitions to be just average? In addition, the authors of our Constitution constructed Federal law as a system of checks and balances on government — not as a consensus building document. Our founder’s design for legislating dictated that concepts are to be brought before the separate chambers of Congress where discussion about elements described in bills occurs.

After receiving the bills, Congressional members make their most persuasive arguments for or against the bill. After all members that want to have had their say, the vote for supremacy follows. Based upon the vote, the bill is either accepted or rejected by the Congress. The agreed upon bills are referred to the President for his concurrence and signature before succeeding to become law.

No Requirement for Consensus

The foregoing is a simplification of the process but illustrates that there is no requirement for consensus at all. Attempting consensus connotes horse trading which leads to corruption. In the vernacular the products are called earmarks among other appellations.

Slavishly striving for consensus as a goal rather than good government is an aberration of Constitutional intent. Poor law deserves no confirmation. Why would a legislator agree to bad law for the sake of being recognized as one who grants concessions searching for affability, or worse — corruption? If there is merit to the bill and enough voting members are sufficiently convinced, then the bill becomes law. Otherwise the bill is rejected and good riddance. Compromise rather than rewriting the bill or rejecting it leads to bad law. Further, the collusion of legislators who engage in passing laws strictly to appropriate funds for special interests whom they are dependent upon for campaign contributions is an abomination on the noble act of making laws for a free people.

A Shoddy Rationalization for Corruption

“Bringing home the bacon” is a popular misconception about governing. What if the bacon isn’t needed and who pays for the bacon? For example, what is the public good of forcing the Armed Services to accept weapons systems because some legislator is skillful at under the table deals? Who can justify taking money from a struggling family and giving it to someone for purchasing services we don’t need? It follows the “bacon” is a shoddy rationalization for corruption. Thankfully that notion is being challenged by the Tea Parties. Moreover, our Constitution doesn’t require compromise or dirty dealing to pass laws. Law making simply requires a vote. Our Constitution is not designed to make passing laws easy. Passing bad law is supposed to be hard to do.

Experience show us that Legislators are conditioned to fear being labeled an obstructionist if they don’t compromise. My experience is that if one takes a principled stand he loses some votes and gains others. Then there is the oily legislator that refuses to take any stand fearing voters on both sides of the proposition. Where is the dignity arising from being mendacious?

Collision Between Parties

Where has consensus gotten us? Consensus got us into a national debt for one thing. After the Republican drubbing during the 2008 election, all the talk afterwards was that Republicans needed to be more like Democrats if they were to regain power — that is a false premise.

Getting along, loosely tabulated, since 1939, is what kept Republicans in the minority for thirty years. Republicans have held both houses of Congress only 14 years while Democrats count 68 years.

Best government depends upon Collision between parties. Without collision, we suffer collusion. On a collusive basis, why have parties at all? We don’t all agree about everything nor should a vibrant nation be a Johnny-one-note. Parties help us to avoid open civil warfare.

Photo Credit: Library of Congress

Paul on Politics: Market versus Government Economy

Capitol Hill


Department of the Treasury seal

Government distorts the market

My guest writer today on the Rickety blog is my uncle Paul. Your comments are welcome.

A Productive Economy

Money for services and service jobs arises out of a productive economy — not vice versa. Moreover, service jobs are useful to the economy only if the service furnishes increased value to the products we make to sell in our markets and foreign markets. That truism leads to the distinction between government and private services.

More Government Than We Need

We need to purchase some government service. The difficulty is we purchase more government services than we need because of political power rather than market demand. Our private economy is self-regulating when the producers and their labor must compete in a free market. Government service jobs do not. If a company cannot manufacture a competitive product it will not survive economically. Government service jobs are creatures of political power, therefore are regulated by political force. The role of government in this instance is to keep the market honest.

Contrary to popular assertions by politicians, free market forces did not cause the monetary breakdown we are experiencing. Introducing government into the market always distorts market value by addling costs. It was distortion of the market through congressional action that set the scene for failure. If left to its own devices, the market would drive out inefficient money houses. Moreover, government bailouts created larger monopolies on the premise that money entities are “…really are too big to (let) fail.” Government further degrades the market by choosing who receives the bailout monies. Monopolies are anti market and detrimental to free trade. For example:

Out of necessity to build lending capital, a normal market will pay higher interest to attract capital and replenish their funds. Because banking is a percentage game, banks live on revenue from a percentage of the money it lends. The bailout does just the opposite by propping up inefficient markets in an attempt to shore up prices and continue bloated valuation. Self-serving politicians rationalize their poor decisions by declaring the entities are “too big to fail.”

Keep Government Out of the Market

Keeping government out of the market allows housing and other goods to seek their value furnishing prices that are cheaper for average citizens. Investors collect more interest from the increased sales that fills government tax coffers and furnishes investment capital facilitating new business. Furthermore, by its action, government loses money from the treasury exacerbating the predicament because taxes collected from artificially imposed low interest rates to savers maintains unsustainable prices and moves the day of reckoning farther into the future. It is worth repeating that purchases of expanded services arise out of healthy income from production and not vice versa. We cannot exist as a great nation on a service economy. The production of goods makes the national worth greater by adding value through work thereby creating greater money reserves that fund new economic activity.

Work

Note that the operative word is work. The notion that a nation or anyone else can create wealth by spending money we don’t have is baseless and will result in a catastrophic occurrence of the economy. If deficit spending were the antidote we all ought to go out and get many more credit cards. There is no easy way or quick fixes. We must allow a resettling of the economy to sustainable levels that reflect worth before we can recover. And we must go back to work. Bear in mind the words of politicians who admit they don’t have a clue about what they are doing or what the results may be. They, out of ignorance, say all they know to do is borrow big and spend! Spend!

Make Work Jobs

Credit: Steve Wampler

Because government by definition does not produce new products for sale in foreign markets and our own, government diminishes wealth through taxation that could have been used by entrepreneurs for new investment in production. Moreover, government collecting taxes to employ people in “make work jobs” simply takes money from the investment pool and transfers funds to the non-productive parts of our service economy.

An argument may legitimately be made that a service such as building a new highway to facilitate movement of commerce is a vehicle-service that adds value to the local product. In general, commerce that idly sits in traffic costs us money and wastes our resources. However, if concocting an artificially imposed “good” — as perceived by a few with political power — wastes capacity, then we are purchasing too much service not regulated by market forces. In this case we are purchasing services by political fiat and are inefficient and wasteful. Jon Entine has said:

Political pressure to be “socially responsible” distorts the market decisions of government-related enterprises, leading to risky investments. (Reason Online Feb. 2009 The Next Catastrophe)

Deflation and Conventional Wisdom

Conventional wisdom declares deflation to be wrong for the country. In my view, that depends upon which social class it involves; money classes such as investors, bankers, “rich people” — you get the idea; or poor and middle class people. Deflation is deleterious for the money people who imprudently made bad investments but it is good for the poor and middle class. Here is why:

Deflation forces lower costs to manufacture goods in the U.S. allowing more jobs to be created. Housing costs are less, allowing more people to become homeowners. Deflation makes our products cheaper to make and more home produced products can be sold in our markets and world markets. Deflation makes foreign products more expensive to import into our markets. Market forces will cause manufacturers to come home provided we remove tax incentives that encourage manufacturing off shore.


No Bailout.

Never too big to let fail

Destruction of Our Collective Mettle

Failure makes one stronger. Trying over and over until one succeeds both educates and hardens the striver. Forcing us to work out our own enigma causes us to devise fresh ideas and new inventions for survival that makes real jobs that last into the future. Waiting for someone else or the government to do it for you keeps you weak and dependent — and disappointed. Most of the stimulus package works against the poor and middle class. Here is why: stimulus promoters pronounce, “Financial institutions are too big to let fail,” and created larger monopolies, the package props up the real estate market warping the true worth of property, the package prevents deflation (normal market correction), supports public employee unions that inflate prices for public service through political pressure, and promotes further public employee union organizing, faux stimulus diminishes capital formation through artificially low interest rates.

Waiting for Government

Currently, commerce is stagnant while everyone puts off the inevitable. They wait to see if the government will continue false valuation of an unsustainable economic plight. Meanwhile producers are taking advantage by culling excess labor and non-performing assets conjunctive to restructuring their tax position. Here is an example from the Tacoma News Tribune:

Much of the quarterly loss comes as Weyerhaeuser wrote down the value of its mills, land and products to reflect their current value.

Full Employment Economy Creates Wealth

Many argue about which set of events propelled us out of the 30’s depression. Most agree World War II ended the great depression. Others religiously propound the gospel of Franklin Delano Roosevelt’s New Deal. I am old enough to remember WW ll and posit the reason for recovery came from work. During WW II everyone worked that were physically able and those who weren’t worked at something to contribute to the war effort. We saved and bought war bonds. Even children bought Victory stamps to be pasted one by one into books of stamps. Thousands were employed in the armed forces. Women came into the factories to work. In pursuit of the war effort we built manufacturing capacity by making products for war. That heightened capacity served us well in our economy after the war. It was an all hands work economy that created wealth for the future that was the envy of the world. All the while we intended to pay off the debt and we did.

Wealth Is Not Finite

There is no circa sixties easy way out. Wealth is not finite. Economies grow by adding work to the product. No government can grow an economy by taking the work of others and through political extortion give it to those that don’t earn it. Can you say we plan to pay off the enormous debt being incurred by the so-called stimulus plan?

Photo Credits

Capitol Hill: Wally Gobetz
Money Grab: Steve Wampler

Paul on Politics: How to Reduce the Federal Deficit

My guest writer today on the Rickety blog is my Uncle Paul. We have been talking about the deficit and I present here some of Paul’s thoughts. He characterizes them as “musings” that are subject to discussion and not his final word.
Source: Summary Report of the 2007 Financial Report of the US Government.

Percentage Cuts

How to reduce the Federal deficit? Lopping off a percentage across the board is one strategy and used most of the time. I don’t prefer that type of approach because it may reduce programs that are performing for us. Moreover, when we make percentage cuts, the agencies simply cut the programs that hurt the electorate the most. Then there is a hue and cry until the public pressures legislators to restore the cuts or they pass a special levy to create a new program.

Paul’s maxim takes effect: “The demand for services rises to consume all available resources.” Programs came into effect one by one. Some do furnish services we need like law enforcement — not all law enforcement programs by the way should be kept. We can do without programs like D.A.R.E. as an example.

Reduce Unnecessary Services

Therefore, reducing unnecessary services dictates an examination of each program one by one to evaluate its efficacy. And, it dictates some honesty on our legislator’s part to deal with special interests. Of course, legislators are, for the most part, elected by special interests — teachers’ unions for instance. So it is up to the voters to remove ill performing legislators. Especially professional legislators. A big step in that direction would be to remove retirement benefits from the list of legislative benefits for elected officials. Our system of liberty demands citizen participants that rotate to refresh the body politic and intellect and who want to serve the public.

To evaluate efficacy, services need to be audited by an outside source who then reports to the legislature. Here in Washington, we passed an initiative from the people to create independent audits. The legislature had to be dragged by the heels screaming and kicking like some spoiled child. Some of us worked to promote independent audits for at least ten years. Results are promising but we need more time to evaluate how it is working.

Agency Function

One year, the Republicans in the legislature, in concert with a Democratic Governor (Gary Locke), approached the problem by forcing every agency to list their functions in terms of the agency priority. Then the Governor lopped off the lowest valued programs until his budget goals were met. That worked marginally O.K. but we are still left with the fact that agencies protect themselves first which doesn’t mean the public is necessarily served well by their evaluation.

If I were the legislature, I would cause the agencies to compete for funding instead of colluding to run up all their programs. When an agency must justify itself to survive, we get more information to work with in deciding which program is performing, intended, and worth funding.