Food-Stamp Flood

When the food-stamp program was started in the 1970s, it was expected to assist 1-out-of-50 Americans in special need of food.

Now, 1-out-of-7, or 45 million Americans are using food stamps, at a cost of $78 billion. The Agricultural Department runs radio and TV ads urging more people to obtain the free food, even saying that food stamps help lose weight! Some 39 states have no realistic asset test to measure qualifications for the dole. Wealthy families that have no one working can sidle up to the trough.

It’s disgusting. The few enumerated powers granted to the federal government by the Constitution say nothing about food stamps. This is one more unconstitutional program. 

One among thousands.

Government programs usually become obese. The people who run them have no way to measure their success except by counting the number of employees they manage and the number of dollars they dispense.

If taxes were lowered and government vacated the compassion business, plenty of money would become available for the poor and the hungry. This is the way it was many years ago in America, and the way it would be again.

Lobbying Isn’t the Problem

The U.S. government would work better if it weren’t for all the lobbying!

Sorry, you’ve got it backwards. Lobbying isn’t the problem. The government’s effort to solve every problem – that’s the problem.

Given that the feds allocate so many resources, regulate so much of the private sector, and decide who wins and who loses, organizations can’t avoid lobbying. Squeaky wheels get the grease.  

These days, the hottest economic news, the most enticing gossip, and the best party invitations come from Washington. With the federal government such a goliath, businessmen must spend more and more of their time currying Washington’s favor. Lobbying is the most profitable investment they can make. The expense isn’t all that great in relation to the benefits – legislators act cheap. But a company that fails to stay on government’s good side may be swept under by government-favored competition.

It’s time for the federal government to abide by the Constitution. The government would do a whole lot less, causing less need for lobbying.

Self-Interest is Good - With One Notable Exception

Self-interest makes the economy work. Millions of people, endeavoring to satisfy their own needs, send price signals, which enable people to meet their needs as well as the state of technology allows.

In a free economy, the price signals also enable the poor to gain wealth faster than the rich.

But the self-interest of one group makes conditions worse for everyone, namely, the people at senior levels of government. They're the only ones who can induce us to do their bidding by exerting force.

Government officials are blind to the price signals that inform everyone else from minute to minute. Elections count, but they’re too infrequent to be as sensitive as price changes.

Government officials don’t judge their success by profit, because government earns no profit. Instead, they measure success in three ways: the power they exercise over others, the number of people who work for them, and the size of their budgets. Costs don’t count; those are paid by others. Officials just want the power and the money. It’s a one-way, ever-growing, highway to hell, because the bigger the government, the more net harm it does.

Tax Rates and Tax Revenues: Opposite Numbers

Let’s say you buy a radio station. To increase your income, you increase the percentage of time for advertisements. But this repels your listeners, and they turn to other stations. Your income doesn’t rise after all, it falls. This reaction is called “negative feedback” – counter to what one would intuitively expect.

Negative feedback also applies when government raises tax rates. People avoid reporting taxable income by working less, engaging more in the underground economy, or otherwise changing their behavior. With less income subject to taxation, government revenues fall, despite the higher rates. 

But when tax rates are reduced, the economy is strengthened, citizens earn more, and they choose to report more of their income. Government revenues rise, despite the lower rates.

Surprisingly enough, governments have no control over their revenues; they control only the tax rates. At a given rate, people change their behavior accordingly. If governments in the U.S. or Europe cut their tax rates, their economies would grow faster. The revenues would rise, and the deficits would fall. 

With most big-government policies, in fact, the results are counter-intuitive.

Pillars of International Peace

-- Repeal all tariffs and impediments to trade, even if other nations do not reciprocate. If one nation repeals its tariffs but other nations do not, all parties benefit, even the one without the tariffs. With no tariffs or impediments to trade, Hong Kong for many years was the world’s fastest growing economy. Trading partners are less likely to fight.

-- Require Americans abroad to provide for their own protection. Merchant ships would be armed. The possible loss of tourism would induce foreign nations to protect Americans.

-- Repeal all laws that criminalize the sale, purchase, or use of drugs.

-- Resign from the United Nations and require the United Nations to leave America.

-- The U.S. military would kill or capture anyone in the world who has the capability and clear intention to kill American citizens in the U.S. If the host nation denies permission, we would go in anyway. If our soldiers are killed or captured, we would consider this a cost of war, not an act of war. We would not apologize, but we would not reciprocate.

Privatize Regulations of Financial Companies

Numerous federal, state, and international agencies regulate banks and investment companies. Altogether, they’re not worth a bucket of warm spit.

Despite warnings, they didn’t catch Bernie Madoff’s Ponzi scheme ($65 billion). They didn’t catch Allen Stanford’s Ponzi scheme ($8 billion). Recently, they didn’t catch MF Global Holdings ($1.6 billion) or Peregrine Financial ($100 million). Now, they’re investigating the purposeful misreporting of a key global interest rate (“Libor”) which a U.S. agency was first warned about four years ago and did nothing about.

Instead, banks and investment should be audited and regulated by the people who have the most to lose when a bank or investment company goes bad – depositors or investors.

With bank-deposit guarantees in effect, depositors couldn’t care less about safety. “That’s the government’s job,” they say. Yeah, sure. Federal and state governments should terminate bank-deposit guarantees.

To privatize the regulations, bank associations would get together with depositor associations and iron out who can do audits and when. Likewise for investment companies and investors. Insurance companies would probably become involved.

Almost everything big government touches turns out badly. The regulation of financial companies is a fine candidate for privatization.

Pakistan Has Outdone Us

Since the New York terrorist attack in September 2001, Pakistan’s stock exchange index (KSE100) has risen 700 percent. Pakistan’s economy is growing at 4 percent a year, and the nation is entertaining peace talks with India.

During the same eleven years, the U.S. stock market index (SP500) has risen only 50 percent. Not that we compared unfavorably because of Pakistan; that’s nonsense. Out economic problems were caused by our own government’s domestic policies. 

Pakistan has been a rocky road for the United States. But the nation is making progress. The wealthier they become, the less they’ll put up with terrorism. Given the considerable advance of their stock market, we’ve probably been more of a help than a hindrance.

America’s deep involvement with Pakistan and Afghanistan was due to the terrorist attack on 911. The U.S. has not suffered another such attack since. By keeping the terrorists on the run, or dead, our activities in Pakistan have helped both countries.  

Now, if we can just change U.S. leadership, we can increase our own pace of advance. 

Pennsylvania Public Schools: Yuck!

In the ten years from 2000 to 2010, Pennsylvania’s public schools suffered a dropout rate of 20 percent and lost 27,000 students. (Among blacks and Hispanics, dropouts were 50 percent.)

Not only that, half of the 11^th graders have inadequate reading and math skills – greater than half if dropouts were taken into account.

Despite fewer students, Pennsylvania’s public-school spending during the same ten-year period grew by 69 percent. The system gained a net 33,000 employees.

Pennsylvania’s not alone in its rotten schools. One-quarter of Detroit’s high-school graduates are functionally illiterate. Generally, the public schools are especially poor in areas that have long had Democrat leadership. 

Enough! Let’s shut down public education and privatize all the schools. Some would be operated for profit; others non-profit. The costs would fall, and the quality would improve substantially.

But people in the central cities couldn’t afford the tuitions, right?

True, some couldn’t. But with government out of the way, tax rates could fall substantially. Prosperous people, paying less in taxes, would compete as to who could provide the most assistance to central-city schools.

Teachers unions aren’t exactly nuts about the idea.

Social Security: Massive Ponzi Scheme

From the beginning, Social Security tax revenues were paid out immediately to whatever the government was spending money on that day. They weren’t set aside and invested to cover future Social Security benefits. No, those benefits were to be paid from future FICA taxes. Will those revenues be secure? Let’s see: 

Originally, the payments to each Social Security beneficiary were collected from forty workers. Now, each beneficiary is backed by just three workers. In ten years, when baby boomers retire in great numbers, each beneficiary will be backed by only two workers. Will those two be willing to support half a beneficiary?

Of course they won’t. They’ll eject any Congressman who proposes such taxes.     

Social Security transfers wealth from young to old – until the old become too numerous and the young too few. It’s a gargantuan Ponzi scheme, heading toward disaster.

Poor black men, with short life expectancies, receive less in benefits than they paid in Social Security taxes. Wealthy white women, with long life expectancies, receive more than they paid in taxes. The money comes from the same pot. Poor blacks therefore subsidize wealthy whites.

Liberals talk about helping the poor. But actually doing it? Oh, that's a different story.

Green Energy Can’t Begin to Satisfy the Cloud

A message you leave on a social media goes to the electronic cloud, where it’s stored in a data center. Data centers gobble power. The 11 centers of Google alone require power enough to satisfy the needs of 260,000 homes.

Green energy couldn’t begin to do the job. The 500,000-square-foot data center Apple recently built in North Carolina, for example, would require 6.5 square miles of solar panels. That’s 2.5 miles on a side – with no trees or buildings to cast shadows. Since the data center lies in a densely populated region, such conditions are unrealistic.

For a suitable wind farm, even more space would be needed. Neither the sun nor the wind, you may have noticed, supplies power 24-7.

Data centers worldwide now consume 1.3 percent of all global electricity. In the next three years, Intel expects the number of devices connected to the Internet, including GPS-enabled locaters on shipping containers, to grow from the current 2.5 billion to – get this – 15 billion! 

U.S. data centers alone soak up more than 40 times as much electricity as that supplied by all of America’s solar-energy projects. Anyone who thinks green energy is a viable alternative has his head in . . . well, the cloud.

The Supreme Court Helped Wisconsin Liberals

In Wisconsin’s recent governor-recall election, Governor Scott Walker outspent the union-supported liberal candidate, won a resounding victory, and remained in office. Liberals members of the media haven’t blamed the victory of Walker’s union-busting policies. No, they blamed the Supreme Court.

In its 2010 Citizens United decision, the Court held that associations of Americans, including corporations and labor unions, could provide financial support to candidates for public office.

The left has complained that the decision enabled big corporate money to bring about the union defeat.  

But the very opposite is true. Corporation gave relatively little for Governor Walker’s campaign. The bulk of contributions to the governor came from wealthy individuals. Unlimited individual contributions were authorized many years ago and not by Citizens United.  

For the recall-election’s liberal candidate, however, the bulk of contributions came from unions. Those gifts were indeed authorized by Citizens United. Walker won despite the Court-authorized union contributions.

Liberals have a hard time with the truth.

Sell Bonds: Buy Stocks

In 1982, the interest rates on 10-year U.S. Treasury bonds peaked at 14.6 percent. Now, 10-year Treasuries pay only 1.7 percent. As interest rates decline, the prices of bonds advance. Bond prices have been on a rise for thirty years.

It won’t continue. The Federal Reserve is choking on all the money it has created. When the supply of money grows faster than the supply of goods and services, prices, eventually, cannot help but rise. As prices rise, interest rates on bonds go up as well, and the prices of bonds go down.

Sell most of your bonds and bond funds.

Stocks are a different story. Too many investors are avoiding them. Since 2007, some $350 billion has flowed out of stock mutual funds

This won’t continue either. Go opposite to the prevailing tenor of opinion. Investors love bonds, and they’re avoiding stocks. Do the opposite. Sell bonds. Buy a broad aggregate of stocks and hold them.

There are always reasons not to buy stocks. If you wait until the coast is clear, you’ll wait forever. Nobody buys at the absolute bottom and sells at the absolute top. Disregard current headlines. Sell most of your bonds and buy mostly stocks.

It’ll pay off.