No Free Market Health Reform Will "Work"—by Socialist Standards

Last Fall's attempt by the Republicans to force a defunding of ObamaCare through the budget process, thus precipitating the confrontation with Democrats that in turn precipitated the government shutdown, was, I believe, a poorly conceived political strategy. My reasons are two-fold. First, I believe that ObamaCare must be confronted openly and on principle, rather than smuggled in through the budget process. 

By principle, I mean fundamentally opposite of the statist ObamaCare. To do that, the GOP must offer a fundamentally opposite healthcare reform to anchor their opposition. Being against without being for something is not a viable strategy. The Republicans have failed to come close to offering a viable principled alternative.

Worse, they've gone the opposite way, basing their opposition to ObamaCare on the Democrats' basic premises. House Republicans introduced a health care reform plan in September that would replace ObamaCare if Republicans are successful at repealing ObamaCare. According to TPM's Dylan Scott:

The plan, drawn up by the House Republican Study Committee, starts with repealing the 2010 health care reform law. It then aims to lower health care costs through a few mechanisms. Income and payroll tax deductions would be available to individuals ($7,500) and families ($20,000) for health coverage. Insurance plans could be sold across state lines. The federal government would pump $25 billion into state high-risk pools for people with preexisting conditions. Medical malpractice laws would be reformed to reduce doctors' risk of litigation.

Although the GOP plan does have a few good free market reforms, it is vague and underwhelming. Worse, the preamble's muddled message reads like a weak-kneed attempt to achieve the Democrats' goal of universal coverage, only more slowly:

Americans want a step-by-step, common-sense approach to health care reform, not Speaker Nancy Pelosi’s costly, 1,990-page government takeover of our nation’s health care system. Republicans’ alternative solution focuses on lowering health care premiums for families and small businesses, increasing access to affordable, high-quality care, and promoting healthier lifestyles – without adding to the crushing debt Washington has placed on our children and grandchildren.

The GOP plan won't "work,"  argues Scott, because it doesn't help poor people get insurance in the way ObamaCare does.

But ObamaCare "helps" poor people get health insurance by subsidizing their premiums with money seized from taxpayers against their will. ObamaCare further subsidizes some peoples' healthcare at the expense of others through insurance mandates that force everyone to buy only government-approved coverage whether they need, want, or can afford such coverage. The contraceptive mandate is a prime example of this. And, of course, there is the individual mandate, which requires everyone to purchase a government-approved policy under threat of fines. The effect of these mandates is to raise premiums on people who would otherwise be able to get much cheaper coverage, in order to subsidize—lower the premiums of—others. As a corollary, ObamaCare accords federal regulators unrestrained power to write regulations; i.e., to make law.

All of this amounts to a monumental regulatory/redistributionist scheme that massively violates the rights of individuals to control their own wealth and healthcare. The only fundamental alternative to ObamaCare and like schemes is a free market. But no free market plan can comply with the standard of government help for the poor or the uninsured. No free market plan can "work" by socialist standards on socialist premises. A free market protects individual rights. A plan that guarantees coverage for everyone must necessarily violate rights on a massive scale. If the Republicans are to credibly counter the Dems' universal coverage schemes, they must reject the Dems' premises and boldly hold individual rights as the standard for healthcare reform.

Some of their proposals do advance toward more freedom; e.g., "Allowing Americans to buy insurance across state lines" and "Enhancing Health Savings Accounts (HSAs)." But it also contains provisions for "Universal Access Programs to guarantee access to affordable care for those with pre-existing conditions." Nowhere do the Republicans uphold individual rights and free markets as their standard. They simply accept the Democrats' standard and, of course, by that standard the GOP plan won't "work."

Of course, the natural incentives inherent in a fully free market—consumers shopping for the best healthcare and health insurance at the best price, coupled with providers competing to attract customers and expand sales and profits—inexorably leads to lower costs and higher quality. Problems like pre-existing conditions are largely a consequence of the government-instigated third-party-payer system that ties health insurance to employment, which wouldn't exist in a free market. (The GOP plan seeks to partially rectify that by allowing tax deductions for individuals and families to equalize tax treatments between individuals and businesses.) The lower costs and higher quality that results from competition in a free market does help everyone, including the poor, to pursue healthcare. But that must be recognized as a consequence, and individual rights as the standard, if the GOP is to avoid the trap set by Scott and other Leftists.

And that's what a free market does; protects everyone's right to pursue healthcare and health insurance that fits their values, needs, wallets, and overall personal circumstances. A free market does not give anyone an automatic claim on other people to provide for needs they can not provide for themselves, with the government acting as his agent to carry out those claims. A free market does not guarantee that everyone's needs will be satisfied. A free market only protects the rights of the needy to seek charitable help, and everyone to offer such help as and when they choose. The government's only role is a neutral one; to protect everyone's individual rights to life, liberty, property, and pursuit of healthcare equally and at all times. This government protection is what makes free market capitalism the only moral social system. 

As long as the GOP frames their ideas as a way to achieve socialist goals, as their recently submitted plan is implicitly designed to do, they will fail to stem the tide toward full, single-payer socialized medicine. In fact, they will enhance the trend. Why go for a slow-motion, halfway Republican plan of universal coverage when the Democrats are offering to take you there much quicker and explicitly. 

Consistency will always win over half measures, and the Dems have been fully consistent in pursuing universal healthcare. As Ayn Rand observed about "The Anatomy of Compromise" in Capitalism: The unknown Ideal: "In any conflict between two men (or two groups) who hold the same basic principles, it is the more consistent one who wins." The GOP, if it is to be the political voice of free markets, must heed her advice.

Related reading:

As ObamaCare Failures Pile Up, Get Ready for the Mother-of-All Healthcare Battles

Professor Nicholas Carnes's Warmed-Over Marxism is Not what We Need in Washington

Nicholas Carnes, an assistant professor of public policy at Duke University’s Sanford School of Public Policy, has proposed a solution to the mess in Washington: Elect more middle and working class politicians. This new wave of politicians, Carnes argues in a NJ Star-Ledger editorial, Can blue collar pols fix this white collar mess?, will "probably go much further to protect the middle and working classes if more of them came from those classes themselves."

What does Carnes mean by "protect?" Today, he says of the people represented by the politicians currently in power:

We’re letting people who have always had health insurance decide whether to help people without it. We’re letting people with personal fortunes that insulate them from the rest of society decide how much to spend on the schools and hospitals and other public goods that everyone else depends on.

Get that? To "protect the middle and working classes" does not mean to protect their rights. "Protect" means to empower them to force others to provide them with unearned benefits—as if, under the burgeoning weight of today's welfare state, people's wealth isn't already being forcibly redistributed on a mass scale.

I left these comments:

The question one must first ask is: How did the middle and working "classes" get so dependent on government spending to begin with? The workers' champions themselves—the ivory tower Marxists and their wealthy political shills—did it to them. Who funded this dependence? In large measure the wealthy, but also the workers themselves.

So, to what end do we need more blue collar politicians?; to hook blue collar workers into even greater dependence on forcibly redistributing wealth from those who earned to those who didn't? To further cripple the job market and stifle the opportunities of the young with higher minimum wage laws, more occupational licensure cartelization; more labor law mandates on those who create and maintain jobs?; to further burden business and the most productive entrepreneurial individuals—the very people who produce the material goods, productivity tools, and remunerative jobs that a prosperous "working class" depends on—with more taxes and regulations?

Mr. Carnes's "solution" is just warmed over Marxism with its "class struggle" fantasies. We don't need more Marxist politicians. We don't need a government that favors workers over "the rich", rather than the other way around. We don't need a government that favors "the will of the people"—the economic interests of the electoral majority-of-the-moment—over the will of all others. 

We need politicians who understand the proper role of government; one that represents all of the people by protecting the individual rights of all people, at all times, to pursue their values by their own efforts; to keep the property they earn; to voluntarily associate, contract, and trade with others—and then begins rolling back government's massive intrusions into our lives based on those principles.

Related Reading:

The Shadow of Marx Blankets the "Fiscal Cliff" Fight

Marxism "Begins with Theft and Ends with Murder"—Ari Armstrong

Related Listening:

"Why Marxism?" An Evening at FEE with C. Bradley Thompson—Foundation for Economic Education

The Rise of Collectivism and the Fall of the Constitution

In urging House Speaker John Boehner to "stand up to the extremists" in his party to end the government shutdown, New Jersey Councilman Kevin Scollans said this in a recent letter to the NJ Star-Ledger:

The good of the nation is more important than any individual, regardless of what high office a person holds or political gains his party achieves. This protracted shutdown and potential default of U.S. debt can only harm Americans. The inability of Congress to act on important matters reaffirms the view that Washington is broken and that compromise — the fundamental reason our Constitution exists — is an impossible dream in 2013.

Scollans concludes his letter with a quote from Republican President Rutherford Hayes's 1877 inaugural address, “He serves his party best who serves his country best.”

I left these comments:

RE: Boehner’s backbone 

"The good of the nation is more important than any individual . . ."

A more evil, un-American statement could not be uttered. Collectivism is the ideology that holds the group, rather than the individual, as the focus of moral concern. The group could mean the proletariat,  the race, the public, society, the tribe, the nation. Whatever the manifestation of the group, the political rulers—the state—acts in its stead, since the group is made up of individuals and only individuals exist and can act. Collectivism is the same ideology that gave rise to the Stalins, Hitlers, Maos, and Pol Pots—and the horrors their political systems perpetrated.

Collectivism is becoming entrenched in America at the expense of individualism, the American ideology that undergirds liberty. Is it any wonder that our politicians feel ever more emboldened to force ObamaCare and minimum wage laws and eminent domain and the whole panoply of regulatory welfare state infractions of individual rights down our throats? What can't the nation do to its individual citizens if "the nation is more important than any individual?" Redistribute his wealth? Regulate his life and business? Force him into slave labor or a concentration camp, gulag, or Killing Field? Why not, if the nation deems it to be to its good?

"The inability of Congress to act on important matters reaffirms the view that Washington is broken and that compromise — the fundamental reason our Constitution exists — is an impossible dream in 2013."

The misunderstanding (or evasion) of the meaning of the constitution is related to the rise of collectivist ideology in America. "Compromise" is not a fundamental reason for the constitution. Compromise is not even the unalloyed good it is taken as today. Whether a compromise is good or bad or justified depends on what one is compromising on. The fundamental purpose of the constitution is to limit the power of the government to its proper purpose of protecting individual rights, precisely so that "the nation"—i.e., the government—doesn't compromise away those rights.

At the root of this nation's expanding problems—including the conflict over ObamaCare that triggered the shutdown—is the rise of collectivist ideology and the resultant obliteration of the meaning of the constitution. The fundamental struggle in America is collectivism vs. individualism. As long as some people believe they can trample the rights of others in the name of "the nation," Washington will become ever more "broken." No compromise is possible without recognition of the sanctity, dignity, and primacy of the individual, because no compromise is possible between those whose rights to life, liberty, property, and pursuit of values are violated and those who profiteer on the sacrifice of others' rights. No compromise is possible between individualism and collectivism. One side or the other must cave in.

I don't mean to imply that the Republicans are consistent champions of individualism and the constitution (individual rights and limited, rights-protecting government). Most are not, which is why their current political strategy will probably fail. And I don't mean to imply that Councilman Scollans wants totalitarianism. But his sentiments, if ever fully accepted, will be the death knell for America.

Scollans quotes President Hayes's 1877 Inaugural Address. But let's not forget the full context of his message. Focusing on the need to bring full realization of individual liberty to the former slaves, Hayes said that "The permanent pacification of the country [depends] upon such principles and by such measures as will secure the complete protection of all its citizens in the free enjoyment of all their constitutional rights. . . ." He put individual rights above country. The same can be said regarding today's political polarization. To all of our elected officials in any level of government—and to all Americans—I would add to President Hayes's quote in the letter: ". . . and he serves his country best who serves the cause of the constitution and individual rights best."

Related Reading:

Individualism vs. Collectivism: Our Future, Our Choice—Craig Biddle

Collectivism vs. Individualism in Letters

Individualism vs. Collectivism, Profit vs. Non-Profit, in the Education Debate

The Blinding Effect of Pragmatism

Replying to my comments about NJ Governor Chris Christie's re-election and the fate of the Tea Party, gyre said:

Actually, I mistrust the Tea Party for two reasons: 1- their continuing blind and all-consuming hatred of President Obama. It's not rational. 2- their willingness to lead American into a catastrophic debt default (and please don't tell me it wouldn't have been all that bad, because I'll just ask you, "You're sure, right? I can trust you guys on that theory?") No, zemack [my screen name], it has nothing to do with ideology. I'm a pragmatist and not burdened by faith-based views on the economy. My eyes are wide open and I don't like what I see when I look at Tea Partiers.

If economics "has nothing to do with ideology," then how can gyre conclude that a debt default would have been catastrophic? If he is truly a pragmatist, then how can he judge the Tea Party? I answered him this way: 

A pragmatist is a short-term oriented individual who is not burdened by principles and thus no means of learning from the past, projecting future consequences, or understanding unintended consequences of current actions, leaving nothing but faith and feelings as a guide. Pragmatism is self-imposed blindness. So you go right on being a pragmatist, and I'll go right on being a free market ideological purist, because free market economics is backed up not by faith but sound economic theory supported by real-world evidence, common sense, and morality. Socialist "economics" has no supporting economic theory, only the ethical principle "from each according to his ability, to each according to his need" (not to say you're a socialist).

Your pragmatism is why you can't see that the current conflict in America is all about ideology—the role of government, the nature of society, and the individual's place in it—collectivism vs. individualism. If you took a principled rather than pragmatic view, you'd see that that conflict lies at the root of every major issue that divides us. 

And who said that defaulting on the national debt would not be catastrophic? You misread the issue. No one that I know of said that. The point is, an end to future bond borrowing is not synonymous with not servicing past bond borrowing, any more than not charging your next consumer purchase means not making your next mortgage payment. Refusing to raise the debt ceiling need not have been catastrophic. Obama could have easily serviced the debt, because current federal tax revenues are ten times the current debt service. Default would have only happened if the Obama Administration refused to service the debt in order to protect the bloated redistributionist welfare state. It was Obama who was threatening default, in order to blunt the GOP's heroic attempt to reign in federal borrowing and spending. 

Would a sudden shrinkage of the welfare state cause short-term economic adjustments? Sure. But all to the good, because every dollar that the government doesn't spend is one less dollar transferred from those who earned it to those who didn't. Of course, the rational approach would be an orderly, planned shrinkage of federal spending. But what Democrat is willing to compromise on wealth redistribution? (For that matter, what Republican is really against the welfare state?)

Related Reading:

The Tea Party: Is It Do-or-Die Time?

The Menace of Pragmatism—Tara Smith

The Republican Debacle and its Consequences for the Tea Party 

The Tea Party: Is It Do-or Die Time?

The Tea Party has taken some blows recently, including the recent election, some by its own political bungling. Has it seen its day? Libertarian, Paulist columnist Paul Mulshine thinks so. Many on the Left believe (hope) so. The New Jersey Star-Ledger says that Tea Party candidates' "obsession with ideological purity and determination not to compromise at any cost may have finally been their undoing." 

Following his landslide victory, the Left-leaning Star-Ledger writes that Republican Governor Chris Christie is the GOP's best hope for reinvention. It even endorsed the popular governor for reelection against Democrat Barbara Buono (that should tell you something).

I left these comments:

It is understandable that the Star-Ledger loves Chris Christie. He is a "big government" Republican (e.g.-he supports minimum wage laws, but with smaller increases). Reinvention? Rather than "reinvent," a national leader Christie would resurrect the Democrats' most reliable secret weapon; that old-time me-too Republican Party. 

To be sure, the Tea Party is not ideologically pure, and I disagree with a great many Tea Partyers, especially its social conservative wing. The Tea Party is beset with internal philosophical contradictions (see Mulshine's column). But remember that the Tea Party was born as a rebellion against the ever-expanding growth of government and the corresponding retreat of individual liberty in America. Its opposition to "big government" was always too vague, but for all of its faults, the Tea Party is the only viable cultural/political force around to defend individual rights and limited, rights-protecting government. It just needs an intellectual/ philosophical foundation.

When the editors condemn Tea Party candidates for their "obsession with ideological purity and determination not to compromise at any cost," what they illustrate is the Left's fear of a principled cultural opposition to their own collectivist/statist ideological purity. 

Despite the Tea Party's recent political fumbles, the GOP and America needs the Tea Party at this point. A Republican Party without the Tea Party means essentially one-party rule, with the collectivist/statist Democrats controlling the agenda and the "moderate" GOP compromising away liberty at every step of the way. 

I wouldn't write off the Tea Party just yet. I remember the 1960s New Left. It seemed to die off in the 1970s. Yet, here it is in control, in the form of the Obama Democrats. Labels can disappear, but ideas are much harder to defeat. The left has always been ideologically pure, only willing to "compromise" on details but rarely on its fundamental ideals.

If the Tea Party can congeal around a consistent platform of individualism, political freedom, and free market capitalism—as a counterweight to the Left's collectivism, political authoritarianism, and fascist/socialism—it can win in the longer run. The Tea Party's potential to upset the Left's designs on America is why it hates and fears the Tea Party.

It may be do-or-die time for the Tea Party. As Mulshine rightly points out, "the tea parties started out with great promise" but then went off the rails. For example, Mulshine notes:

    The tea party’s objections to Obamacare as socialized medicine weren't based on principle. They were based on naked self-interest. This new government program threatened to cut into the benefits they received from the old government program.
    If the tea partiers were truly opposed to socialized medicine, they would have urged the Republicans in Congress to defund Medicare, not Obamacare.

Though I wouldn't call supporting Medicare in the self-interest of a liberty advocate, Mulshine's essential point is valid. The Tea Party as a movement always lacked explicit principles.

Has the Tea Party had its day? Maybe. But, for ideologically pure proponents of liberty and capitalism, their day has not yet arrived.

Some Fallacies Behind the Drive for the NJ Minimum Wage Increase Amendment

It's election day in New Jersey, and as I've stated before, the biggest issue on the ballot, from a long-term perspective, is Public question #2, commonly known as the Minimum Wage Amendment. I've made my position clear on November 3rd and 4th that voters should reject it, so today I'm going to focus on the proponent's framing of the issues vs. the real issues involved.

Yesterday, November 4, 2013, one day before New Jersey's gubernatorial election, the lead front page article in the New Jersey Star-Ledger by Susan K. Livio concerned the  New Jersey Minimum Wage Increase Amendment. That this is the lead article in NJ's largest newspaper on the eve of a gubernatorial election highlights the importance of this ballot question. Here are the opening paragraphs:

    TRENTON — The governor’s race is getting all of the attention, but the most contentious contest this year is a fight between business and labor leaders who together have spent $2.3 million to sway the outcome of a ballot question that asks: Do minimum wage workers in New Jersey deserve more than $7.25 an hour?
    If the answer is yes, not only would the 49,000 people who earned the minimum wage last year automatically get paid a dollar more an hour in January, the state’s constitution would be changed to ensure future increases are tied to the cost of living.
    At press conferences and rallies, community groups defined the minimum wage as a fight for economic opportunity for working poor and under-employed people of all ages and backgrounds, with some describing how they’re forced to hold several jobs and still can’t make ends meet.

What follows is based on comments I left below Livio's article.

This "news" article reads more like an op-ed, considering how the issue is framed. I count at least four fallacies in the first 3 paragraphs: 

"a ballot question that asks: Do minimum wage workers in New Jersey deserve more than $7.25 an hour?"

No, it doesn't. The ballot asks: "Do you approve amending the State Constitution to set a State minimum wage rate of at least $8.25 per hour?"

Voters can not possibly know who of the 49,000 minimum wage workers "deserve" higher pay. Only the employer can make that determination. Workers who believe they deserve more money can negotiate for higher pay or seek a higher paying job elsewhere. Only employers and employees have the moral right to determine "deserved" wage levels through voluntary, mutually beneficial contracts. Minimum wage laws destroy that right and are thus immoral.

"If the answer is yes, not only would the 49,000 people who earned the minimum wage last year automatically get paid a dollar more an hour in January, the state’s constitution would be changed to ensure future increases are tied to the cost of living."

This is an echo of Obama's dishonest "If you like your health insurance, you can keep it." Many of those 49,000 workers will lose their jobs, because they will be priced out of the labor market. This is easily proven by posing this simple question to each voter: Is price a factor in your myriad spending decisions? Yes? Well, a wage is a price, and thus a factor in any employer's decision on hiring. Too high a labor price, and the employer won't create or maintain that job, just as too high a price for the product or service the employer's business produces will make you unwilling or unable to buy it. 

". . . community groups defined the minimum wage as a fight for economic opportunity for working poor and under-employed people. . ."

Minimum wages destroy economic opportunity, for reasons cited above. Minimum wage laws especially hurt low-skilled, inexperienced but ambitious young people by destroying opportunities to get onto the lower rungs of the “jobs ladder.” By making entry-level jobs less economical, such laws rob them of the chance to gain the skills, experience, self-discipline, and self-esteem needed to climb that ladder. Minimum wage laws kill jobs, and the higher the rates are set above market, the more jobs are killed, as any good economics textbook proves and as common sense dictates.

". . . some describing how they’re forced to hold several jobs. . ."

No one is forced to hold any job, unless you consider nature's law that human beings must work to support their lives as "force," which is absurd on its face. The people actually being forced here are employers through legally mandated minimum wages, and prospective workers who are unemployment because they are legally forbidden to voluntarily agree to take a job for less than minimum wage.

As I urged yesterday, NJ voters should resoundingly reject the New Jersey Minimum Wage Increase Amendment. Not only would they be striking a blow for a better economy and job market, they would be taking a moral stand for individual rights and free markets.

Related Reading:

NJ Voters Should Vote No on the New Jersey Minimum Wage Increase Amendment

Minimum Wage Issue is Not "about what it’s like to live on $7.25 an hour"

Work Is a Means of Rising From Poverty, Not an Entitlement to Rise Above Poverty

New Jersey has an election coming up in November, and one of the initiatives that voters will decide is whether to amend the state constitution to raise the state's minimum wage and lock in future increases tied to the cost of living. A NJ Star-Ledger letter urged passage of this amendment. In No worker should be in poverty, Michael Elchoness wrote:

Not everyone who works deserves to be a millionaire, but no one who works deserves to be stuck in poverty.Time to right a wrong and increase the minimum wage.

I left these comments:

Poverty is the natural state of man. Nothing man needs comes ready-made in nature. That individuals must work to live and thrive is natures ultimatum. But what any person produces is determined by his individual productiveness. The more productive a person is, the more he rises above poverty—the more he earns. The less productive, the less he rises. No one is entitled to more than he produces. Minimum wage laws force some people (employers) to pay others (his workers) more than they are worth to the employer, and so are fundamentally unjust. 

If a worker thinks he is worth more, he can seek other employment. If he wants to earn more, he can take steps to improve his productiveness. But no one has a right to escape poverty by the simple act of working. 

It is not true that "no one who works deserves to be stuck in poverty." People deserve to live in accordance with their productiveness, whether that means being a millionaire or living in poverty. Any means of lifting someone out of his natural state of poverty that involves physical coercion against more productive people is anti-life and thus immoral.

(Of course, minimum wage laws don't really raise the wages of less productive people. Nature—i.e., the laws of economics—won't allow it. Such laws simply throw the less productive out of work, preventing them from gaining the self-discipline, self-esteem, experience, knowledge, and skills that lead to better paying jobs.  Minimum wage laws in fact keep people "stuck in poverty," as attested to by the high rates of unemployment among the young, especially in the inner-cities.)

Related Reading:

Morality and the Minimum Wage

Minimum Wage Doesn't Belong in the Consitution

Excerpt from On Regulation and Power @ Prin-Spec References, in which I was addressing another correspondent:


"Every man faces a basic choice…to work or to starve. This is not the “coercion” of a “money economy”. This is a metaphysical fact of man’s nature as a being of self-made wealth. That today’s social systems, from our own semi-free mixed economy to outright socialism, allows some to live off of the work of others does not change the fundamental choice… to work or to starve.

"Food, shelter, health care, potable water…everything man needs to survive and thrive, from space ships to nails…where do you think they come from? Are they free in nature, to drop out of thin air on the whim of anyone’s need? (These question are rhetorical, so don't take offense.)

"They must be produced by the individual process of reason, thought, and logic… which is the precondition of productive labor. Who produces material wealth? It’s not the men who choose to starve, but the men who choose to live. 

"But wealth production is not automatic. Certain social conditions are required to make it possible. These conditions include individual rights, the rule of objective law, and a government that protects those rights. It is only under these conditions that the men who choose to live, at all levels of ability, are free to produce and trade their work product for the products they need but that are produced by others. In short, only a free market makes production and trade possible. The commodity that facilitates production and trade is money. Anyone who condemns the free, money economy can not claim the mantle of labor champion."

Tea Party Resistance to "Big Government" Raises Fear on the Left

Although the government shutdown was a political disaster for the Republican Party, the reaction on the Left gives one pause. 

Typical of responses to the government shutdown and debt ceiling coinfrontation is the New Jersey Star-Ledger's editorializing about The Tea Party's Tantrum. The paper used terms like "extortionist tactic" and "bomb-throwers like Sen. Ted Cruz (R-Texas)" and "hostage-taking." The editors lamented that "the Republican Party is in a state of dysfunction that will haunt the nation again soon," thanks to the "stridency" of the Tea Party "extremists." This "political crises . . . won’t change until the Cruz faction of the Republican Party is put to rest for good."

One wonders if the editors realize that their editorial is itself a tantrum over the Tea Party.

I left these comments:

While I think the Republican political strategy in this budget battle was ill-conceived, the shutdown did highlight the broader issues involved. 

The question any concerned citizen should be asking is: How is it that a partial government shutdown and a freeze on federal borrowing can have such a devastating impact on so many American individuals and businesses? The answer to that question contains an important warning: The government has accrued enormous rights-violating powers over our economic lives, and it is the Left-wing statists that is primarily responsible. 

Another message is that the Tea Party resistance is a major threat to the Left's fascist-socialist designs on America. This explains the hysterical vitriol leveled against the Tea Party—coming from power-crazed people who have no respect for individual rights. The Left loves a "moderate" me-too Republican Party that will pave the Leftward road with compromise. The Tea Party—admittedly a fractious, often contradictory movement—is the only political/cultural force, spawned at the grass roots level, that is at least taking a stand against rampaging statism. The Tea Party is a long-term threat to the Left, and the Left fears it. 

This Fall's budget battle highlights just how much control the state has gained and just how dependent Americans have become on government spending—spending financed by Americans themselves. It should motivate any liberty-loving, compassionate American to sit up and take notice—and listen. As long as one political faction believes it can wage economic aggression against their fellow Americans, with the government as its hired gun, we can only hope that the Tea Party will regroup and continue the fight.

Related Reading:

Ayn Rand: Tea Party Voice of the Founding Fathers

9.12.09 - Here We Go

Some Post - DC Observations

Government Shut Down and All I Got was This Blog Post—Ari Armstrong

The Republican Debacle and its Consequences for the Tea Party

If you want an abject lesson in what happens when you try to fight a political battle without philosophical ammunition, the government shutdown battle provides it.

To start with, the Republicans attempt to use the government shutdown as a means of stopping ObamaCare's implementation was a politically senseless strategy to begin with because it was doomed by a failure to offer a sharply defined free market alternative healthcare reform plan. Oh, sure, they did offer up a wishy-washy plan in September that contained a few good ideas. But, that plan was not offered as a pro-individual rights path to a fully free market to counter the Dem's vision of single-payer. It was merely a set of "common-sense reforms" intended to achieve the Dem's goal " without adding to the crushing debt Washington has placed on our children and grandchildren." The stated goal? Not more freedom. Just lower costs of healthcare.

It went down hill from there. The Democrats ended up looking like the responsible party; the Republicans like a bunch of irresponsible, clueless idiots, swinging from one "compromise" proposal to another, with each one representing another letter in the word SURRENDER. Worse, the Democrats—the unabashed collectivists—came across as morally confident. And the Republicans? What do you expect from a me-too party?

The worst part is, they discredited the Tea Party Movement, at least for now, handing the Left the opportunity to paint the movement as a callous band of renegades that "threatened to sabotage the economy to gain political leverage. They put a knife to the nation’s throat." The Tea Party can recover, but only if it adopts an unequivocal stand in defense of individual rights.

But that's the problem. The Tea Party never did congeal around a consistent philosophy. Many of us tried to seed the movement with the right ideas. But we were just one small faction of a fractious conglomeration that ran the gamut from the Religious Right and social conservatives to economic conservatives to pragmatic libertarians to single-issue groups like the pro-Second Amendment activists to defenders of Medicare shouting "Down with ObamaCare." What was needed was a movement anchored to a philosophy of individualism and capitalism. What we got was a blown opportunity to stem the statist tide.

Am I being too pessimistic? Perhaps. But the spectacle was nauseating. The one silver lining may be that the Republicans can at least claim that they took a politically risky stand against runaway government—and build on that. They can use the shutdown to highlight how vast a hold the government has gained on Americans' lives, jobs, and businesses; i.e., how much government now violates their rights.  But they're not going to get very far if all they can do is to muster philosophically empty alternatives to ObamaCare like their "Common-Sense Reforms to Lower Health Care Costs."

In a TOS blog post, I said:

As Ayn Rand observed: “A political battle is merely a skirmish fought with muskets; a philosophical battle is a nuclear war.” The Democrats are waging nuclear war on behalf of collectivism. If Republicans want to win, they must respond in kind and embrace the true, the moral, and thus the invincible principle of individual rights.

While the Republicans quibble over utilitarian details, the Democrats fill the moral vacuum and seize the moral high road by default. When will the Republicans—and the Tea Party—wake up and realize what kind of war they are in?

Related Reading:

Will the Republicans Wield Muskets in a Nuclear War?

My Challenge to the GOP: A Philosophical Contract with America

Would a Failure to Raise the Debt Limit Mean National Default and Economic Calamity?

A NJ Star-Ledger editorial excoriating the "GOP crazies" said this of a failure to raise the debt limit:

If we don’t make sure the United States has enough money to pay its bills, it could cause big problems for our economy and the global financial markets. All the major countries and banks own Treasury bills, and if they don’t think we’re good for the money and can pay them back on time, “there’s going to be a huge global crisis of confidence,” said CNBC’s lead economist, Andrew Ross Sorkin.

I responded this way:

Big government apologists have always peddled the myth that government taxing and spending is good for the economy, but the same money spent by the people who earned it is not. This Keynesian snake-oil is logically absurd on its face, and proven time and again in practice to be utterly false—e.g., the aftermath of WW II and today's weak economy. 

And why must freezing the debt ceiling lead to default, unless the Obama Administration would allow it for political reasons? Existing debt could be rolled over, and existing tax receipts used to pay the interest on the existing debt. Spending could be cut elsewhere. There would be no "huge global crisis of confidence" if the Obama Administration announced immediately that America would not default on its debt under any circumstances.

The Star-Ledger also said: 

Goldman Sachs estimates spending cuts would come to about 4.2 percent of GDP — a more severe drop than the sequestration budget cuts or furloughs caused by the government shutdown.

I left these comments:

"Goldman Sachs estimates spending cuts would come to about 4.2 percent of GDP": Yes, and that's 4.2% left in private hands! 

The government is not some giant tooth fairy that brings wealth miraculously into existence by spending money. Every dollar of spending cuts is one more dollar left in the hands of productive individuals who earned it to spend and invest as THEY choose. 

Yes, let's "Think about what that could do to our fragile economy." A sudden end to government borrowing may cause a short-term economic contraction but would be a boon to the economy longer term—PROVIDED the government cuts spending wisely. There need be no default. The government can continue paying interest on the existing national debt and funding rights-protecting functions like the military and the court system. 

Where to cut? Tax receipts currently equal 70% of current spending. Immediately cut corporate and personal welfare across the board. Shut down cabinet-level departments like Education, Energy, Agriculture, and all of the unproductive jobs and subsidies that go with them. There is so much redistributionist spending ripe for rolling back that bringing spending into line with tax receipts would be easy if we recognize that forced redistribution is immoral. 


Related Reading:

Whose Money is it, Anyway?

The American Right, the Purpose of Government, and the Future of Liberty—Craig Biddle

Washington Budget Debacle Highlights Extent of Our Dependence on Government

The Washington budget debacle has a silver lining: It could be a wake-up call for every American who considers himself responsible. The litany of "catastrophes" we're told will descend on Americans (and the world) without a budget agreement highlights the extent to which we have become dependent on government.

For example, a Washington Post article by Zachary A. Goldfarb and Jim Tankersley
screams Debt-ceiling breach would push economy into free fall, without a government safety net. That's debatable. But, if true, how and why did it come to this? How and why did the once powerful, dynamic American economy become hooked on the drug of government spending; spending, we must remember, that is fed by money that Americans themselves earned? How and why did so many Americans become dependent on government confiscating his fellow Americans' earnings and property to get through temporary hard times?

For answers those questions, I direct the reader to Ayn Rand's Atlas Shrugged and her other works. For a quick short-hand answer, Yaron Brooks and Don Watkins's Free Market Revolution would be immensely helpful.

As to some concrete consequences resulting from the partial government shutdown, a related failure to raise the borrowing capacity of the U.S. government, and what to do about them, here are a few alleged problems that could result from the partial shutdown and possible short and long-term solutions: 

The shuttering of National Parks (not mentioned in the WP article). Why does the government own and operate the parks to begin with? And since it does, why are the parks not free-standing financial entities, funded entirely by admission and other fees paid by visitors, or by voluntary private donations? End taxpayer support for the parks in the short term, and sell off the parks to private owners in the long term.

The delaying of Social Security checks. What ever happened to the "Social Security Trust Fund"? After all of the years productive Americans work to "pay into the system" through payroll deductions, we are dependent on current taxpayers and government borrowing for the promised benefits. If the system were converted to a personal account system invested in the taxpayer's own name—effectively walled off from congress's greedy hands—the money would be there for retirees regardless of Washington shenanigans. Longer term, because it violates our rights to spend and invest our money according to our own judgment, Social Security should be phased out and abolished.

Goldfarb and Tankersley note that, if the budget impasse isn't resolved, "daily tax receipts will make up only about 70 cents of every dollar of necessary [federal] spending [including interest on the national debt]." The federal government, they say, will have to prioritize its spending to stay within its means. What's so bad about that? The question is, what principles should guide the decision-makers' prioritization? That's easy. Focus cuts on areas that are contrary to the government's proper purpose of protecting individual rights.

For example, Goldfarb and Tankersley claim that "delayed safety-net payments [like food stamps and unemployment benefits] are one of the biggest worries because of their outsize economic impacts." But these are rights-violating programs, so why not simply cut those payouts by 30% to bring them into line with tax receipts? Longer term, these programs should be phased out. As to their "outsize economic impact," Goldfarb and Tankersley cite studies that claim that "every $1 spent on food stamps or unemployment benefits tends to drive about $1.70 in economic growth." But this ignores the economic growth that would result if the money feeding those expenditures remained in the hands of those who earned it to spend (or invest) as they choose. 

Goldfarb and Tankersley note that, in order to save the "safety net" payouts, the feds "might have to suspend all federal salaries and benefits and veterans benefits, as well as operations of the Justice Department, the Energy Department, the FAA, the Environmental Protection Agency and other agencies." But with rights-violating safety net payouts cut by 30% across the board, funding for rights-protecting functions associated with the military and the Justice Department could be preserved. Instead, the Departments of Energy and Environmental Protection could be suspended, along with other departments like Education and Agriculture. 

As to the FAA, the funding for much of what it does, like air traffic control, can be permanently picked up by the airline industry and its customers. Whey should the non-flying public be subsidizing the flying public like vacationers and business travelers?

One area ripe for spending cuts has to be corporate subsidies like those handed out for so-called "clean energy." The fed prioritizers should find choice pickings in corporate welfare.

This is just a sampling of what can be done to adjust to smaller, but nowhere near laissez-faire, government. There is so much government spending that violates the principle of rights protection that the cuts listed above represents only a down payment on what adhering to proper principles of government would require. 

Of course, this is all hypothetical. In today's political environment, the Republicans will cave in, lacking as they do the required philosophical firepower. (They are actually welfare statists, which is why their budget strategy is, I believe, a bad one and doomed to fail.) The cuts will be restored, and the government will resume its growth. But let's imagine, just as an exercise in "what if?", that the government must suddenly stop borrowing because no debt ceiling increase can be agreed upon.

Sure, there may be a sharp, short-term economic correction resulting from the sudden curtailment of government spending. But the contraction, if it happens at all, will be followed inexorably by a monumental economic boom, just like after World War II. Why? Because, contrary to Keynesian statists, the government can't create wealth out of thin air, like some sort of giant tooth fairy. It gets it money from productive private individuals. Every dollar the government doesn't spend will be one more dollar the private sector has to dispose of; which means another dollar used by the people who earn it to better their own lives by their own efforts, rather than to finance cronyism and subsidize un-productiveness and sloth. 

And sure, there will be a substantial reallocation of resources, resulting in many businesses and individuals dependent on government spending facing declining sales and loss of jobs. Their pain will be real, but new businesses and new jobs will emerge to take up the slack. The businessmen and workers will find new opportunities. 

Modern welfare states are in deep trouble, and Americans suddenly have an opportunity to head off the inevitable before it's too late. Call it "tough love." Call it the "meat ax"  approach. Call it what you want. But if the budget impasse continues and the government runs into a borrowing wall, we will find that the country can survive and adjust to smaller government, and be better off in terms of prosperity as private enterprise flourishes due to less private-sector wealth being seized by government.

Longer term, of course, setting America on a permanent course toward more prosperity and liberty is fundamentally a philosophical task of educating people on individual rights and capitalism. But the current budget drama, once it passes, could, and should, be a chance for Americans to start to reexamine the direction our country has been moving—toward more and more dependence on bigger and bigger government—and do something to start taking back control of our lives, property, and long-term financial security. Americans should look at the areas of "economic pain" and ask: Why and how did so many Americans' well-being get chained to the political class for its funding? 


Related Reading:

How About: Hands Off Our Money and Our Choice?

From Middle Class to Welfare Class

Sequestration"—A "Teachable Moment"