Category: Politics

The US Federal Government and poverty

Welcome Elliot Engstrom

Learning from Dogs has been publishing on a daily basis since July 15th, 2009.  That’s over 460 posts and is a great tribute to the commitment of all the authors of this Blog.  We are grateful that our regular readership is also measured in the hundreds and is growing steadily.

Elliot Engstrom

It seemed time to make a small change.  We have decided to include articles from Guest Authors on a regular basis.  Our first guest is Elliot Engstrom.

Elliot Engstrom is a senior French major at Wake Forest University, and aside from his schoolwork blogs for Young Americans for Liberty and writes at his own Web site, Rethinking the State

Elliot first post for Learning from Dogs is about the US Federal Government and Poverty.  This also appeared in The Daily Caller.

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The federal government, which claims to be the greatest supporter of those in need, is anything but a friend of the impoverished.

Often times when conservatives speak of the government treating the rich differently than the poor, the discussion is framed around taxes and welfare, with the argument being made that the government forces the highest earners to pay a massive percentage of all taxes, both punishing success and stifling overall economic productivity and making it all the more difficult for anyone not in the upper echelons to accumulate wealth for themselves. I sincerely hope that I have not constructed a straw man version of this common conservative argument, as I certainly think it has a great deal of credibility. However, I also would like to draw attention to the fact that while government loots the rich through the direct means of taxation, it likewise loots the poor, albeit through a different set of means that is much more difficult to recognize, and thus much more difficult to counteract.

While looting the wealthy can often be construed as some kind of humanitarian effort to aid the poor, looting the impoverished is a much more difficult enterprise to disguise as a moral good. Thus we will find that the government’s means of taking money from the poor are much more difficult to detect, comprehend, and eliminate than the means of direct taxation that is used to extract money from the wealthier members of society.

The dollar in which the majority of Americans receive their wages or salary has no absolute, set value. We see this in the fact that the value of the dollar is constantly fluctuating when compared to gold, silver, or the currencies of other nations (which are all constantly fluctuating in value themselves). “Value” is determined by a wide range of factors, but is based in the fact that human beings are all rational maximizers who are all trying to get what they want while expending the least amount of resources possible to do so. The occurrence of this phenomenon in the mind of every single individual economic actor coordinates the price system in a free market economy.

A given worker making $10.50/hour may see himself as bringing home a constant source of income. However, this is not the case at all due to the constantly shifting value of the dollar. Even in a free and unhindered market, the value of the dollars that this worker takes home each day would fluctuate based on factors like how much liquid currency was actually in existence in the market, how many resources had been invested in banks or stocks, and what amount of resources had been converted into physical capital or products. In the end, the dollar itself has all the value of a flimsy piece of cotton paper – it derives its true value from the productive activities of economic actors who use it as a medium of exchange. In other words, the dollar is a widely accepted “I.O.U.” This would be the case even in the freest of economies. Values of commodities and currencies are always changing based on the effectual demand and effectual supply of the moment.

But, as we all know, we live in anything but a free and unhindered economy. Our supposed “free market” is criss-crossed with a Federal Reserve System that manipulates the value of the dollar at will, a corporate welfare system that socializes the losses of corporations at the expense of the rest of society, and law enforcement policies that weigh the heaviest on those who do not have the time or resources to easily deal with court and lawyer fees, jury duty, and detainments prior to trial, not to mention the fact that the War on Drugs does substantially greater damage to the lower classes of American society than it does good, particularly when speaking of poor African-Americans.

And here’s the scary part – this was all the case before the bailouts and stimulus package that George Bush began and Barack Obama continued and amplified. Not only do these bailouts threaten to massively inflate our currency, spelling disaster for those whose livelihood is based in hourly wages paid in dollars, but it also directly took from all of society, not just the rich or the poor, and gave to a few select corporate entities such as Goldman-Sachs and Wells Fargo. We know this because every new dollar created by the government in the stimulus plan detracted from the value of every dollar already existing in the pre-stimulus economy (or will do so when released into the economy).

Does this sound confusing? It should, because it is, and that’s exactly how the federal government likes it.

While the federal government would tell us that they protect the poor from the exploitation of the rich, economics would tell us that it is in fact the federal government itself that is the greatest exploiter of our nation’s impoverished, and it is this institution that in fact facilitates much of the disparity in wealth between wealthy national corporations and impoverished local communities.

Those of the small government mindset who wish to rally more people to their cause should not go about proclaiming that we should be immediately getting rid of affirmative action and welfare for the poor, but instead should be putting forth a rallying cry against corporate welfare, an inflation-minded Federal Reserve System, and a law enforcement system whose economic penalties weigh heaviest on those with the least money in their savings accounts. It does not have to be out of selfishness that we advocate for a reduction of the federal nanny-state. It can, and should, instead be out of a concern for the poverty and destruction of wealth that is directly generated by this institution’s misguided policies.

By Elliot Engstrom

Man on the moon

How many remember this?

Very early on in the life of this Blog, indeed on the second day, I wrote a short article about the NASA mission to the moon, some 40 years after the event.  You see, for me that has been the historic event of my lifetime.

I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth. No single space project in this period will be more impressive to mankind, or more important in the long-range exploration of space; and none will be so difficult or expensive to accomplish.
Apollo 11 badge

That speech before Congress by President Kennedy was on the 25th May, 1961.  I was 16 and was enthralled by the idea of being alive when man first set foot on another planetary body.  That came about on July 20th, 1969 at which time I was living and working in Sydney, Australia.  I took three days off work, rented a TV and watched every minute of the event.

Exploration is a core need of man.  By pushing out the boundaries of our knowledge we continue to offer hope to mankind.

So it is with great disappointment that it has been announced by President Obama that the manned mission programs to the moon are to be severely curtailed – that sounds terribly like political speak for cancelled!

As Eugene Cernan (last astronaut to set foot on the moon) said:

I’m quite disappointed that I’m still the last man on the Moon. I thought we’d have gone back long before now.
I think America has a responsibility to maintain its leadership in technology and its moral leadership… to seek knowledge. Curiosity’s the essence of human existence.

Curiosity is indeed the essence of human existence.

That curiosity and the investment in space exploration by NASA on behalf of the whole world has shown us some remarkable findings about Saturn and it’s majestic rings.  Just watch the video segments in this piece from the BBC.

The one-time cost of Cassini-Huygens mission was $3.26 billion. Just 0.3% of the cost of one year’s expenditure on U.S. defense spending.

Science missions like Cassini enhance cooperation between nations, and greatly contribute to scientific progress which benefits everyone.

Perhaps the big Banks would like to pick up the cost of further manned missions to the Moon?

By Paul Handover

The Fed’s Exit Strategy

The Federal Reserve finally addresses how it plans to unwind trillions in toxic assets

Finally, we hear from the Federal Reserve about how they plan to unwind the billions of dollars of toxic assets they purchased over the last 18 months or so without creating further distortions in the U.S. and world financial markets (Fed lays out exit detail). This after the Fed barely acknowledged one of the most dramatic runups in the money supply in U.S. history.

Brian Sack, EVP Markets Group, Federal Reserve
The announcement came in a speech by Brian P. Sack, the executive Vice President of the Markets Group at the Fed.  I am impressed by this guy. He seems to know what he’s talking about and seems to understand how markets and fed policy interact.

In earlier posts I wondered aloud how the Fed might accomplish this tricky task. It is a very delicate balance between reducing the money supply too quickly, which would spike short term rates, and too slowly, which would increase long-term rates due to worries about inflation (which occurs when money growth is higher than the economy’s real growth, even if money growth is falling).

The Fed, the article explains, apparently intends to let $200 billion of the estimated $1.25 trillion in new money supply simply “mature” by the end of 2011 without replacing it. This represents largely toxic assets. The Fed might let another $140 billion of Treasuries it purchased during normal open market operations mature at the end of 2011, but they aren’t committing to that.  So that’s about $340/$1,250 or about 35% of the historic increase in money supply that may be vaporized over the next 21 months. What about the rest?  It would be nice to know but….

The Fed is doing the right thing by explaining its policy intentions — ANY of its policy intentions — to the markets.  Markets want, need, and deserve information from our officials, something that has been sorely lacking of late. With information, lenders and borrowers can plan, they can optimize. Without information, guessing, withdrawing from the market, and fear rule the day. Not a good environment for economic recovery.

by Sherry Jarrell

Let there be markets

Here’s a novel idea – make markets be markets!

I apologise for the rather trite sub-heading but it was a bit of attention grabbing to promote the results of a recent conference called Let Markets Be Markets.  It was published by the Roosevelt Institute and had one very impressive line of speakers.

One of the speakers was Simon Johnson of Baseline Scenario fame, a Blog that Learning from Dogs has followed since our inception.

Here’s 8 minutes of Simon pulling no punches.

If you want to read and watch other presentations, then Mike Konczal’s Blog Rortybomb is the place to go.

As this Blog has repeated from time to time, this present crisis is a long way from being over.

By Paul Handover

Lessons of a Government Intern

When lending is motivated by politics, losses are not far behind.

Years ago, in the summer of 1980, I worked as an intern in the Federal Home Loan Bank Board at the Department of Agriculture.  I was a senior in college majoring in business and had been accepted to the University of Chicago doctoral program.  I didn’t want to take the internship because I wanted to take more courses over the summer to help prepare me for the rigors of grad school, but my college advisor had openly worried that I was far too serious for a young person.  He strongly encouraged me to accept the internship and take a break from academics before I immersed myself in graduate school, and buried myself once again in all things economics!

The U.S. Department of Agriculture was a major lender

I agreed, but only after I had arranged to take 6 credits of independent study in D.C.  I chose to examine the Negative Income Tax program, one of the largest social experiments in U.S. history. More on that at another time. Today, I want to talk about what I learned from being an employee of the U.S. federal government.

The first thing I learned was that the “problem” with government work is not the people; well, not all the people.  There was one man who spent his entire day going back and forth to feed quarters to the parking meter rather than pay for public transportation or do his work.  He represented the worst in government employees.  Most all of the others I met were hard-working and honest people, trying to do a good job and make a difference.

President George H. W. Bush

No, I learned that the real problem was the way the “work” was done in government. I worked for the Federal Home Loan Bank Board (FHLBB) that summer, which was one of the largest lenders in the world.  The FHLBB was responsible for small business, rural, agricultural, and economic development lending. My job was to review loan applications from community groups, fairs, farmers’ markets, and various municipal organizations to make sure that they were complete.

We did not analyze the applicants for creditworthiness.  Instead, if the application was correct and complete, and satisfied the application process, it was approved.  The FHLBB, which was publicly trashed by the first President Bush as being largely responsible for the savings and loan crisis, was abolished and replaced by the Office of Thrift Supervision (OTS) under the Department of the Treasury in 1989.

The OTS eventually expanded its oversight to companies that were not banks, including Washington Mutual, American International Group (AIG),  and IndyMac,  all implicated in the current U.S. financial crisis.

AIG

Little did I know back in 1980 that I was witnessing, from the inside, a government lending process that would lead to the most significant financial crisis since the Great Depression. Looking back, the outcome was perfectly predictable: when politics replaces profits as the motivation of the lender, it should be no surprise that losses result.

By Sherry Jarrell

Stop Flaunting Sexuality Please

Oh, this is really clever! Not!

I was stunned the other day to read this:

In the latest development in his campaign to show how dramatically the Tories have changed, David Cameron has published the party’s first-ever official list of openly gay MPs.

The Conservatives say they have 20 openly gay candidates standing in the Election. Of those, 11 told party chiefs they were ‘happy’ to be named in the first authorised list of gay Conservative candidates.

David Cameron

Homosexuality is no longer – thankfully – a crime.  It has always existed and no doubt always will. It is therefore – logically – a normal feature of human society. Isn’t it time to accept it as such and stop flaunting it constantly in the media? Can we not keep private those parts of our lives which are private? Do heterosexuals go around flaunting their heterosexuality?

Why on earth does a potential government-forming party feel obliged to publish lists of people’s sexuality? Why do I suddenly feel as if I am bizarre in thinking that one’s sexuality should be something private? Personally I haven’t got the faintest interest in other people’s sexual inclinations. Like religion, it should be personal and not eternally flaunted in the media.

And it is all illogical. Either homosexuality is normal or it isn’t. If it is (as it is), then why the constant need to bang on about it, as for example in the Tory party? What on earth has it got to do with running the country? Are the Tories supposed to be better-qualified to run the country the more homosexuals they have? Is there a point at which having TOO MANY becomes a negative point? Would they then start to proclaim how many heterosexuals they had? On a personal level, I keep my sexuality to myself. It is nothing to do with you and certainly not with running the country.

It is analagous to sex in the media. It is overdone. The endless superficial titillation and flaunting of sexuality is demeaning of the Human Spirit. Sex is – or should be – a private matter. It’s better that way. It is more mature that way, but the media – and now the political parties – sink to the lowest denominator instead of focusing on what really matters.

Please, please give us some politicians with common-sense.

By Chris Snuggs

The EU and the European Taxpayer

Integrity? Here is your quiz question for today:

Which international, taxpayer-funded organisation has an unelected crony of the British Prime Minister in a high-level post (though not the highest) who earns more than the President of the United States and double the salary of Hillary Clinton?

Clue!

Yes, you’re right. It is the European Union. This is an organisation of member states that in principle is supposed to be

Baroness Ashton

about creating a free, democratic and open market in Europe. It has turned into a proto-state (in the eyes of the Brusselocrats) which – therefore – has to have a “Foreign Minister”, in this case Baroness Ashton.

This is a person with very little knowledge of international affairs sent by Gordon Brown to Brussels because he couldn’t afford to lose Peter Mandelson or David Milliband. This is a person never elected to any public post, yet who receives a vast salary and benefits package higher than that of ANY of the Presidents and/or Prime Ministers of ANY of the member states of the EU.

As “The Daily Mail” points out, in addition to this very large salary the Foreign Minister also enjoys an extraordinary raft of other benefits:

“Her basic pay of £250,000 is double that of her U.S. counterpart, Hillary Clinton (who’s on £124,000). And on top of that, Lady Ashton is entitled to a raft of benefits including a £38,000 yearly accommodation allowance, £10,000 annual entertainment budget, two chauffeurs, plus thousands of pounds more in sundry allowances and – if she survives – a pension of £64,000 pa (three times the average salary in Britain) plus a “golden handshake” of over £450,000.”

All this goes hand-in-hand with billions spent on the new EU “diplomatic service”.

But hang on a minute! The EU is NOT A STATE!

The EU has no army! Baroness Ashton as “Foreign Minister” can decide on practically nothing that the key heads of government do not agree to. So what is going on here? Is all this vast waste of public money in a time of financial crisis either A) the bloated pretention of Brusselcrats who have a delusional idea of their own importance or B) another brick in the wall which one day WILL be a United States of Europe.

One can see how the thinking goes: “We’ll set up a “Foreign Ministry” so big and powerful that one day they will just have to agree to creating a single state to justify it. And of course the more it costs, the more important it obviously is and therefore the more powerful we ourselves will be. And naturally, the more jobs there will be for us to go to on the Brussels merry-go-round.

Of course, it is both A AND B. And how can they afford these humungous salaries? Well, because they can get away with it. In theory they are accountable, but in reality? How many people even know who their European MP is? Once you get onto the Euro Gravy Train it disappears out of sight. Nothing the voter says or does seems to stop the bloated upward creep of salaries, allowances and pretentions.

How ANY Brusselocrat can justify such a ludicrous salary for an unelected and essentially unimportant  “minister” is a mystery. The main justification seems to be “self-interest”. The EU is NOT A STATE. States have Foreign Ministers.

It is dishonest and amounts to theft of public funds. But that is not the WORST of it. The saddest thing is that it damages the morale of those who – like me – used to believe in a Europe united but not “statefied”. I want a free and open market. I do NOT want a United States of Europe. But this is where they want to lead us, and – like a black hole – each year sees a tiny creep in that direction, or in the above-mentioned case, a BIG creep. I also do not want a venal, money-grabbing, bureaucratic elite in Brussels which makes 80% and rising of British law.

Once again, one wonders if delusional pretentions will bring the whole edifice crashing down and the baby go out with the bathwater …

By Chris Snuggs

Shame on you, President Obama

President Obama’s lack of grace.

Shame on you, President Obama.

Presidents Obama and Bush

To publicly comment on the singular importance of the Iraqi elections without crediting President Bush for having the courage and fortitude to free those people from a tyrannical leader who threatened the security of the free world – shameful.

Of course, you also failed to acknowledge President Bush’s role in enabling the historic Afghanistan elections of 2009. I just hoped you would have matured a little since then.

The media is not doing much better on this issue.  But then we expect less of our media than our President.

by Sherry Jarrell

A genius of a teacher

A lesson for all of us

An economics professor at a local college made a statement that he had never failed a single student before, but had once failed an entire class.

That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, “OK, we will have an experiment in this class on Obama’s plan“.   All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A…

After the first test, the grades were averaged and everyone got a B.   The students who studied hard were upset and the students who studied little were happy.   As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little. The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.   The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.

Could not be any simpler than that.

By Bob Derham

Nationalist Hysteria Yet Again

Politics, history and daftness!

Blah

The Armenian “genocide” of WWI is once again in the news.  The Americans seem to be on the point of recognizing what happened as genocide, much to the fury of the Turks. (though Obama is – once again – apparently wobbling ….)

To my mind, what happened WAS genocide or as near it as makes no difference, but that judgement is best left to historians and is not what interests me in this matter. No, once again it is the absolute hysteria that nationalism can provoke that intrigues me. I take hysteria to be a form of insanity; it is certainly as potentially destructive. How can most of an entire nation be insane?

The point is – but logic seems to go straight out of the window when nationalist hysteria takes over – that this happened nearly ONE HUNDRED YEARS AGO. Any Turks involved are long dead. Present-day Turks cannot POSSIBLY be blamed for what their predecessors did, no more than Germans today can be blamed for Hitler or indeed today’s Mongols for Genghis Khan.

What is the POINT of Turks protesting so loudly about what was the appalling mass killings of Armenians? Nobody is going to blame TODAY’S Turks, are they?

The Turks’ current position could be described as anything from wrong through illogical to insane. For goodness sake, just admit the truth and let’s get on with the future. It happened, it wasn’t YOUR fault but THE TRUTH must be told. Without the truth, we are lost.

The irony is – and irony is never far from human experience – that one supposes the Turkish reluctance to admit that it WAS a genocide or as near as dammit is because to do so would mean they “lost face” or “were guilty”, whereas in fact what is reprehensible is the very FACT that they refuse to admit it,  not the original events themselves for which THEY TODAY cannot be held responsible.

This seems to me such a self-evident truth that I truly do not understand the Turkish position. Perhaps someone else can help me here ……

As for “we must avoid damaging relations with Turkey”,  I can only throw up my hands in despair. The truth is the truth, and what is the VALUE of “relations” based on lies?

As for joining the EU, forget it. There is enough hysteria within our borders already without adding another 90 million people’s worth.

PS And while we’re on the Turks and Armenia, it is time that the Japanese made a more convincing admission that their army was guilty of appalling atrocities in WWII.

By Chris Snuggs