"Government Investment" = Money Laundering

In "Obama's Right: Business Needs Government Investment," NJ Star-Ledger letter-to-the-editor writer Barbara Wolfe wrote:

   President Obama is right when he says small businesses have been built because of government investments, not solely by the hard work of the business owner. The Romney campaign has taken his comment — "If you’ve got a business, you didn’t build that. Somebody else made that happen." — out of context.
   Consider the investment made by the government in the 1980s to create the internet. Since then, major companies including Facebook, Google, Amazon and many others were launched by entrepreneurs, who have created thousands of jobs and made billions of dollars. But these businesses required the internet. So, who built these businesses? Mark Zuckerberg did not build the internet, and he never could have built Facebook without it.
   Romney is the candidate who doesn’t understand how the economy really works, because he refuses to acknowledge the important role that the government has always played in nurturing the private sector.

Here are my comments:

zemack

There is no such thing as “government investment,” as Barbara Wolfe thinks. The money government “invests” is private money taken by force of taxation, and then handed out to private individuals who do the work. The government produces nothing, by its basic nature as an instrument of legalized force.  
 
In regards to the internet, infrastructure, basic research and development, and other “investments,” the government is nothing more than a political money laundering operation. The only reason it can operate its laundering mechanism is because of the wealth generated by private individuals working, creating, and trading in an environment of relative economic and political freedom. It’s absurd to believe that if government hadn’t taken over those fields, we would have no research, roads, or internet. The government didn’t create the people who built them, or the people who earned the money that funded them. It merely usurped the rights of the people who did earn it to spend and invest their own money as they see fit.  
 
Obama got one thing right, though. Government does perform one vital function; ensuring the “unbelievable American system” of individual rights, including property rights—however imperfect—that enabled a thriving private economy. That is key, as noted in the Declaration. History is dominated by dictatorships of all stripes, so if government can create wealth, history would have been one long economic boom. Instead, history is dominated by grinding, relentless poverty—including today in third world countries—except to the extent where capitalistic freedom exists.  
 
Yes, many businessmen like Zuckerberg owe a debt of gratitude to the people who built the internet, who in turn owe a debt of gratitude to people who created electrification and the fossil fuels, nuclear, and hydro power that makes its mass generation possible, who in turn owe a debt of gratitude to other achievers that came before, and so on and so on. There is a hierarchical structure to industrial progress and each contributor deserves full credit for what he/she contributed to that structure—i.e., the part that he built—and we as “consumers” owe a debt of gratitude to them all. But let’s give credit to whom it belongs—productive people and free enterprise—not the political money launderers. Wolfe should learn basic economics, so she could learn how the economy really works.  

As to the idea that Obama's comments were taken out of context, I recommend re-reading the speech in its entirety. But here is the relevant section:

     There are a lot of wealthy, successful Americans who agree with me -- because they want to give something back.  They know they didn’t -- look, if you’ve been successful, you didn’t get there on your own.  You didn’t get there on your own.  I’m always struck by people who think, well, it must be because I was just so smart.  There are a lot of smart people out there.  It must be because I worked harder than everybody else.  Let me tell you something -- there are a whole bunch of hardworking people out there.  (Applause.)
     If you were successful, somebody along the line gave you some help.  There was a great teacher somewhere in your life.  Somebody helped to create this unbelievable American system that we have that allowed you to thrive.  Somebody invested in roads and bridges.  If you’ve got a business -- you didn’t build that.  Somebody else made that happen.  The Internet didn’t get invented on its own.  Government research created the Internet so that all the companies could make money off the Internet.
     The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.  There are some things, just like fighting fires, we don’t do on our own.  I mean, imagine if everybody had their own fire service.  That would be a hard way to organize fighting fires.
     So we say to ourselves, ever since the founding of this country, you know what, there are some things we do better together.  That’s how we funded the GI Bill.  That’s how we created the middle class.  That’s how we built the Golden Gate Bridge or the Hoover Dam.  That’s how we invented the Internet.  That’s how we sent a man to the moon.  We rise or fall together as one nation and as one people, and that’s the reason I’m running for President -- because I still believe in that idea.  You’re not on your own, we’re in this together.  (Applause.)
     So all these issues go back to that first campaign that I talked about, because everything has to do with how do we help middle-class families, working people, strivers, doers -- how do we help them succeed?  How do we make sure that their hard work pays off?  That’s what I've been thinking about the entire time I've been President.

While by "you didn't build that," by "that" Obama was referring to government programs, his ridicule of "hard working" and "smart" people makes clear that he believes luck is the predominant factor in business success. The proper application of one's intelligence and work through good judgement and choices--not to mention one's character, values and goals--have no reality in Obama's worldview.

Obama's "together" theme is one of an ant colony, where all people are indistinguishable from one another. It is not one of individuals each possessing a unique character performing his work and being paid according to his own abilities, ambitions, and contributions to a cooperative effort geared to a common goal.

Related Reading:

Obama's Way vs. the American Way

"More Prosperity" of "Shared Sacrifice"

"You Didn't Build That"--Obama's Ode to Envy

"Money-Makers" vs. "Money-Appropriators"

In a recent NJ Star-Ledger letter-to-the-editor, a correspondent took to task a columnist's misrepresentation of Ayn Rand on an important issue; the relationship of success to moral virtue. Kevin Belanger wrote in his opening paragraph:

I recently finished reading “The Fountainhead” by Ayn Rand for school. I believe its message has been misrepresented by columnist Eugene Robinson (“Romney-Ryan: A campaign out of balance,” Aug. 14). The novel does not, as Robinson suggests, equate capitalist success with moral virtue. It denounces money-grubbing and power-hungry individuals. 

Belanger went on to describe the difference between Howard Roark, Rand's hero, and Peter Keating, Guy Francon, and Gail Wynand. His conclusion: "Rand’s message is clear: Men who dedicate their lives to money and prestige are trumped by men who dedicate themselves to their principles."

I left the following comments:

zemack

Romney’s pick of Paul Ryan has understandably brought Ayn Rand into the forefront of the political campaign. Ryan has named Ayn Rand as an inspiration (although he has disavowed her philosophy of Objectivism). That being the case, it is important for all thoughtful people to make an honest effort to understand Rand. 
 
The best way to understand her is to read her books. So I was glad to see Kevin Belanger’s effort to set the record straight in regard to Rand’s views on money by reference to her novel “The Fountainhead.”  
 
Rand’s novels are the best place to start, but Rand’s non-fiction work is also a good source. For example, her essay The Money-Making Personality in the book “Why Businessmen Need Philosophy” distinguishes between the two very different types of personalities cited by Belanger. Here is an excerpt from that essay: 
 
“Prospectors looking for gold know that there exists a mineral which deceives the ignorant by its brilliant glitter: they call it fool’s gold. A similar distinction exists between the real producers of wealth and the pseudo-producers… 

“Most people lump together into the same category all men who become rich, refusing to consider the essential question: the source of the riches, the means by which the wealth was acquired.” 

Rand called the real producers “money-makers” and the fool’s gold pseudo-producers “money-appropriators.”  
 
Here is a link to the free audio version of Rand’s essay:http://www.aynrand.org/site/PageServer?pagename=ar_money_making 
 
It’s also worth reading "Francisco’s money speech” (from Atlas Shrugged):http://capitalismmagazine.com/2002/08/franciscos-m... 

Related Reading:

On Ayn Rand's Dishonest Critics

The Left's Continuing Fit over "Citizens United"

Here is the opening sentences from my latest post at The Objective Standard blog:

   Under the pretense that so-called “super-PACs” would “drown out the voices of ordinary citizens,” President Obama “proposed the idea of a constitutional amendment to overturn the Supreme Court’s 2-year-old Citizens United decision . . . which paved the way for today’s unlimited political expenditures by political action committees.”
   But Obama’s rationale is a straw man.

Find out why in Obama Urges Amendment to Overturn the First Amendment.

Related Reading:

Free Speech vs. Freedom of Speech

Are Media Corporations Next

Free Speech, Not Disclosure, is the Main Issue

The Truth About Robin Hood

In a recent NJ Star-Ledger letter-to-the-editor, Walter A. Korfmacher praised the paper's 8/20/12 editorial,     A Moral Choice on the Ryan Budget. He concluded:

It is clear Ryan is no fan of Robin Hood. On the contrary, the Ryan budget would take money from the poor in order to give money to the rich.

Korfmacher apparently doesn't know the difference between  earning money and not earning it--between a thief and his victims. I left the following comment:

zemack

THE TRUTH ABOUT ROBIN HOOD 
 
Actually, Walter A. Korfmacher, Ryan is more of a fan of Robin Hood than Obama—the real Robin Hood, that is. The real Robin Hood is not the Robin Hood of today’s legend. Robin Hood lived at a time when looting rulers got rich by robbing the poor masses. He was a champion of justice and property, taking from the looters and giving back to their victims. 
 
Today’s Robin Hood myth stands for something entirely different—something sinister and evil—taking from those who earned it against their will and giving the loot to those who didn’t. Today, except for criminals and government favor-seekers, money is made through productive work and trade. One man’s riches do not come out of another man’s hide, but by enriching others—by providing life-enhancing products and services to others in exchange for their money. This is self-evident every time you trade your dollars for something you didn’t yourself produce, or put in an honest day’s work for pay. 
 
Ryan at least has some respect for the victims of today’s version of the looting ruler—the welfare statists. By attempting to slow down the runaway redistribution of wealth from the productive to the non-productive, Ryan is taking a page from Robin Hood’s reverence for justice and property rights. It’s time to kill the evil Robin Hood myth, and hail the real Robin Hood. Though far from perfect, I’ll be casting my vote for Romney/Ryan. It’s by far the better moral choice. 

Related Reading:

Atlas Shrugged

Russell Crowe vs. the Real Robin Hood

The Real Robin Hood Never Robbed the Rich

The Truth About "Trickle Down"

A NJ Star-Ledger letter-to-the-editor by Herb Gordon takes aim at Romney's tax rate and Bain Capital:

   Do you think it is fair that an employee pays a higher tax rate than an employer? The tax break was supposed to “trickle down” to new jobs and never did when President George W. Bush endorsed it. Now, the GOP is proposing larger tax breaks for the rich for another “trickle down.”
   When Mitt Romney was CEO at Bain Capital, people lost their jobs due to bankruptcy while he and his investors walked away with millions. 

Here are my comments:

zemack

THE TRUTH ABOUT "TRICKLE DOWN" 
 
Question for Herb Gordon: Should employees be free to quit a job to pursue better life opportunities, like a better paying job? Or should they be chained for life to the same job? If your answer is free to quit, you are a hypocrite. A business owner has a much moral right to fire an employee as the employee has to quit, and for the same reasons. Private equity firms like Bain make millions by growing good businesses, turning around struggling but sound businesses, and dissolving less viable firms and reallocating the capital to more promising businesses and technologies. Their motives are the same as the employee who quits for a better paying job elsewhere—to make more money. Successful private equity firms like Bain are economic heroes because their wise investments lead to better products and services, more jobs, and more overall prosperity. They are moral heroes because they make money by their own reasoning minds, which leads to wealth-producing, life-enhancing results. 
 
Anti-capitalists ridicule free market policies as “trickle down,” but here’s another question: How much of what you buy with your money did you produce yourself? There are none as blind as the self-blinded. Look around you. Everything your money can buy is provided by someone else’s productive intellectual and physical work, investments, and pursuit of money and profit. If you think that flood of wealth is a “trickle,” then try putting your money under a mattress, stop spending, and see where your life goes without it. And while you’re at it, quit that job that someone else provided, since you’ll no longer need the money. 
 

As to taxes; no, they are not fair. Better would be a single flat rate so that all taxable income is treated the same, and tax increases and tax cuts are shared equally by everyone regardless of total income. It’s time to end discrimination based upon income.  

Related Reading:

"Greed" is a Two-Way Street

Distorting Words for Political Gain

Modern-Day George Wallaces in Reverse

In response to the letter by Kristina Tomaino I recently addressed, I posted this comment:

zemack

"The most comprehensive charter study performed to date, by the Center for Research on Education Outcomes, demonstrated charter schools were twice as likely to produce underperforming students in traditional public schools and underserve special-needs populations.” [--Kristina Tomaino]
 
I’ve seen this argument against charter schools before—most recently in a column by James Florio—and it deserves special attention for the evil that it exemplifies—the sacrifice of virtue to lessor or non-virtue.  
 
It is morally perverse to shackle motivated parents and children to the level of the worst students. Whether the underperforming students are the fault of the teachers, parents, the students themselves, or some combination—or due to problems beyond anyone’s control or fault—is irrelevant. To hold any child back to the level of an inferior is so unjust that it boggles the mind that anyone would embrace such a course of action.  
 
Getting their kids out of schools they deem bad for them should be every parent’s top priority. Parents who seize an opportunity to get a better education for their children should be lauded and free to do so. The kind of mentality that would block them for the sake of “underperforming” or “special needs” students is not motivated by any kind of concern for better education or children’s welfare. They are motivated by pure hatred of the good, the insignia of collectivism.  
 
Opponents of parental choice and freedom are modern-day George Wallaces in reverse; standing in the schoolhouse door—not to keep children out, but to keep them in. 


And received this response from:

nbilfan17

Oh, zemack. You have got to be kidding me. So no politician, Republican or Democrat, has ever used the term "invest" to talk about using taxpayer money? You're semantical issue illustrates your overall bias. Charter schools are not the answer, and the Charter school approval process in NJ is a disaster to say the least. Some charter schools have a place, particularly in high poverty areas, but Christie, Cerf, Duncan, Rhee, etc. talk about them like they are a silver bullet. Virtual charter schools are just about the biggest scam I have ever seen. We all know there is a real push from corporate education "reformers" trying to get a piece of the public education kitty. That is the reality of modern education "reform". Anyone who knows anything about education knows that Charter schools disproportionally serve the student population. Of course it is easier to educate children when there are less special-need children to educate. And what about the kids left behind? What's the plan for them? Duncan points to the fact that kids in poverty in Massachusetts on average perform better than those in Georgia as proof that "poverty is not destiny" and therefore to fix poverty you need to fix education. What he fails to acknowledge is that ALL students on average do better in Massachusetts than in Georgia. It's time to start working with real educators, not billionaires with no education experience, to get real reforms to improve educators. Putting the blame on teachers, like zemack chooses to do, is shameful and unproductive.

My answer:

zemack

The fact that you think words are mere semantics is a tip-off. Real educators take words and definitions seriously, rather than use them as tools of obfuscation. Another tip-off is your reference to the need for “a plan for them.” Every child—gifted, special needs, or anywhere in between—is an individual with his own unique character and needs deserving of his own advocate—namely, his parents (or guardians)—with the freedom to act for the best interests of his child. If you’re really serious about “leaving no child behind”—a collectivist slogan if ever there was one—you’d want to dissolve the “public education kitty” and leave parents free to spend their own money on their own children’s education as they judge best. What we don’t need is another man with another grand plan funded by the public kitty. 
 

I never said charters are a silver bullet or “the answer” (although the tremendous parental demand for them is a good indication of the changes we need). Nor do I “put the blame on teachers.” Quite the contrary: I want the education field liberated so educators can bring us the kind of diversity of ideas that can meet the diversity of children’s needs. My “bias” is individual rights and free markets. Yours is obviously the central planners and the stifling status quo. I repeat: To establishment defenders who find this idea horrifying, I ask: Why do you fear parental freedom and competition in a free market? Don’t you think that parents would voluntarily choose your schools, and voluntarily pay for them? If not, then what moral justification do you offer to support forced government schooling? If so, why do you need it?   

And the conversation continues:

nbilfan17

See, you actually prove a point for me: When parents are motivated, kids do better. What about the kid who doesn't have a motivated parent putting them into a charter school? What about that kid? (Also "No Child Left Behind" is a government pipe dream lingo) The problem is when parents are MIA, which happens quite frequently in high poverty areas. And I challenge your assertion that there is "tremendous parental demand" for charters. Can you back that up? The reality is the majority of parents already have choice. If you don't like your schools, you are free to move to another district. In fact, many people move to NJ just because of the school systems. Why are we using the high-poverty, low-achieving districts as the impetus to change education EVERYWHERE in NJ? Outside of those Abbott districts, NJ ranks near the top in the world in education. BTW, who has been controlling those Abbott districts for decades now? The state itself. Do you really think turning it over to for-profit private entities is the solution?

Reactionary defenders rarely challenge my basic arguments. Instead, we get the argument from collectivism: "NJ ranks near the top in the world in education." To which I answer, so what? If the schools are so great, why the fear of parental choice? No answer to such queries is ever forthcoming. Here are my posted responses to a few of his queries:

zemack

While I don't believe charter schools are any kind of silver bullet, the parental demand for good charters is real: 
 
http://njcharters.org/index.php/new-jersey-charter... 
 
"Do you really think turning it over to for-profit private entities is the solution?" 
 
That's not the point. The point is, what right does anyone have to force people to turn their money over to government schools, including charter schools? 
 
"The problem is when parents are MIA, which happens quite frequently in high poverty areas." 
 
Ok, there are irresponsible parents, for sure. How does that justify hampering responsible parents, or their kids? This argument is a red herring--or worse, as I've said. 

Productivity, Not Labor unions, Created the Middle Class

A Labor Day editorial at the NJ Star-Ledger, This Labor Day, Confronting Hard Truths Needed to Revive Middle Class,  ended with this amazing conclusion:

   This election, it’s said, is about rescuing the middle class from the Great Recession. But if that’s true, what’s lost is the vital role that organized labor — plus the GI Bill — played in creating the original middle class after the Great Depression and World War II.
   Before then, there was no middle class in America. And without a vibrant union movement, there’s little chance there will be one in the America to come.

I left the following comments:

zemack

It is simply not true that unions created the middle class. In fact, it is logically impossible for this to be so. If it were possible, the Soviet block would have been an economic oasis, rather than the impoverished economic wasteland it was. 
 
Only one phenomenon can raise the general standard of living; rising labor productivity, which comes about because of the labor-saving tools, machinery, and materials that inventors, entrepreneurs, and businessmen bring to the workplace. I know, because I lived it.  
 
Between the time I entered the workforce as a private sector union plumber in the 1960s and my retirement in 2012, the number of plumbers doing a given volume of work fell by perhaps 75% (i.e., a tripling of productivity). This enabled my union to negotiate steadily higher wages with employers, a rise in real wages that wouldn't have been possible otherwise. None of the tools and materials that raised my productivity came from trade unions. (Incredibly, trade unions often opposed these labor-saving advancements.) 
 
The true middle class emerged in the 19th century with the productivity explosion made possible by the liberation of "the masses" to work, produce, and trade in an atmosphere of unprecedented economic and political freedom. We went from massive grinding poverty in the Revolutionary era to mass production of cheap basic necessities like food and clothing; and the birth of the railroad, steel, automotive, airline, electric, and other great industries by the early 20th century. It was a time of rapidly rising real wages, amid a monumental influx of tens of millions of immigrants coming to the "land of opportunity" with "streets paved with gold."  
 
The Hoover-FDR Great Depression interrupted this growth, but the economic deregulation and tax liberalization policies of the Truman Administration, along with Bretton Woods, set the stage for the post-war recovery and boom. 
 
It is not necessary to be anti-union to recognize these facts.

Related reading:

The Inventive Period

The Capitalist Manifesto

Memo to Justice Sotomayor: Welfare Statism Threatens Children's Welfare

The Real, and Only, wealth Creators

Ayn Rand on the Middle Class