On my nightstand right now is “The Fatal Conceit: The Errors of Socialism” by Hayek. I’m only about halfway through but I can more or less sum up what he’s trying to say; proponents of central planning, i.e., ‘Socialism’ or the more general ‘Collectivism’, are fundamentally wrong on the facts of Anthropology. Put simply, no part of our evolution as Human Beings from purely instinctual animals to rational beings was or could have been planned. Every single occurrence in human history where one or more individuals attempted to control or plan society (economy, culture, etc.) has resulted in that society’s stasis in one degree or another. Everything vibrant and ‘progressive’ in all of history is the sole result of unabridged human endeavor; where individuals acting in their own rational self-interest develop customs and traditions amongst themselves that allow for innovation, wealth and progress.

There is not one single instance in all of human history where a collectivist society has planned a workable economy. The reason is because it is factually impossible.

Enjoy.

Russ

Via Mises.org

By. F.A. Hayek

I.

The link between classical liberalism and present-day Socialism — often still misnamed liberalism — is undoubtedly the belief that the consummation of individual freedom requires relief from the most pressing economic cares. If this seems attainable only at the price of restricting freedom in economic activity, then that price must be paid; and it may be conceded that most of those who want to restrict private initiative in economic life do so in the hope of creating more freedom in spheres which they value higher.

So successfully has the socialist ideal of freedom — social, economic and political been preached that the old cry of the opponents that socialism means slavery has been completely silenced. Probably the great majority of the socialist intellectuals regard themselves as the true upholders of the great tradition of intellectual and cultural liberty against that threatening monster — the authoritarian Leviathan.

Yet here and there, in the writings of some of the more independent minds of our time who have generally welcomed the universal trend toward collectivism, a note of disquiet can be discerned. The question has forced itself upon them whether some of the shocking developments of the past decades may not be the necessary outcome of the tendencies which they had themselves favored.

There are some elements in the present situation which strongly suggest that this may be so, such as the intellectual past of the authoritarian leaders, and the fact that many of the more advanced socialists openly admit that the attainment of their ends is not possible without a thorough curtailment of individual liberty.

We see that the similarity between many of the most characteristic features of the “fascist” and the “communist” regimes becomes steadily more obvious. Nor is it an accident that in the fascist states a socialist is often regarded as a potential recruit, while the liberal of the old school is recognized as the arch-enemy.

And, above all, the effects of the gradual advance toward collectivism in the countries which still cherish the tradition of liberty in social and political institutions provide ample food for thought. Anyone who has had an opportunity to watch at close range the intellectual evolution of the peoples who eventually succumbed to authoritarianism cannot fail to observe a very similar chain of cause and effect in a much less advanced state proceeding in the countries which are yet free.

Can we be certain that we know exactly where the danger to liberty lies? Was the rise of the fascist regimes really simply an intellectual reaction fomented by those whose privileges were abolished by social progress? Of course the direction of affairs in those countries has been taken out of the hands of the working classes and has been placed in those of a more efficient oligarchy. But have the new rulers not taken over the fundamental ideas and methods and simply turned them to their own ends:

It is astounding that these fateful possibilities which suggest themselves have not yet received more attention. If the suspicion of such a connection should prove correct, it would mean that we are witnessing one of the great tragedies in human history: more and more people being driven by their indignation about the suppression of political and intellectual freedom in some countries to join the forces which make its ultimate suppression inevitable. It would mean that many of the most active and sincere advocates of intellectual freedom are in effect its worst enemies and far more dangerous than its avowed opponents, because they enlist the support of those who would recoil in horror if they understood the ultimate consequences.

II.

An attempt will be made here to show why this connection, which experience suggests, must be regarded as of a necessary character — as dictated by the inherent logic of things.

The main point is very simple. It is that the central economic planning which is regarded as necessary to organize economic activity on more rational and efficient lines, presupposes a much more complete agreement on the relative importance of the different ends than actually exists. Therefore, in order to be able to plan the planning authority must impose upon the people that detailed code of values which is lacking.

And imposing here means more than merely reading such a detailed code of values into the vague general formulae on which alone the people are able to agree The people must be made to believe in this particular code of values, since the success or failure of the planning authority will in two different ways depend on whether it succeeds in creating that belief. On the one hand, it will only secure the necessary enthusiastic support if the people believe in the ends which the plan serves; and on the other hand, the outcome will only be regarded as successful if the ends served are generally regarded as the right ones.

A fuller exposition must begin with the problems which arise when a democracy begins to plan.

Planning must be understood here in the wide sense of any deliberate attempt at central direction of economic activity which goes beyond mere general rules that apply equally to all persons, and which tells different people individually what to do and what not to do. The demand for such planning arises because people are promised a greater measure of welfare if industry is consciously organized on rational lines and because it seems obvious that those particular ends which each individual most desires can be achieved by means of planning. But the agreement about the ends of planning is, in the first instance, necessarily confined to some blanket formula like the general welfare, greater equality or justice, etc.

Agreement on such a general formula is, however, not sufficient to determine a concrete plan, even if we take all the technical means as given. Planning always involves a sacrifice of some ends in favor of others, a balancing of costs and results, and this presupposes a complete ranging of the different ends in the order of their importance. To agree on a particular plan requires much more than agreement on some general ethical rule; it requires much more than general adherence to any of the ethical codes which have ever existed; it requires that sort of complete quantitative scale of values which manifests itself in the actual decisions of every individual but on which, in an individualist society, agreement is neither necessary nor present.

This fact — that a measure of agreement which does not exist is required in order to translate the apparent agreement on the desirability to plan into concrete action — has two important consequences.

In the first instance it is responsible for the conspicuous inability of democratic assemblies to carry out what is apparently the expressed will of the people, because it is only when it comes to translate the vague instructions into action that the lack of real agreement manifests itself. Hence the growing dissatisfaction with the “talking shops” which fail to carry out what to the man in the street seems a clear mandate.

III.

The second effect of the same cause, which appears wherever a democracy attempts to plan, is the general recognition that if efficient planning is to be done in a particular field, the direction of affairs must be “taken out of politics” and placed in the hands of independent, autonomous bodies. This is usually justified by the technical character of the decisions to be made, for which the members of a democratic assembly are not qualified.

But this excuse does not go to the root of the matter. Alterations in the structure of the civil law are no less technical and no more difficult to appreciate in all their implications; yet nobody would seriously suggest that legislation should here be delegated to a body of experts. The fact is that such legislation will be carried no further than is permitted by true agreement between a majority.

But in the direction of economic activity, say of transport, or industrial planning, the interests to be reconciled are so divergent that no true agreement on a single plan could be reached in a democratic assembly. Hence, in order to be able to extend action beyond the questions on which agreement exists, the decisions are reserved to a few representatives of the most powerful “interests.”

But this expedient is not effective enough to placate the dissatisfaction which the impotence of the democracy must create among all friends of extensive planning. The delegation of special decisions to many independent bodies presents in itself a new obstacle to proper coordination of state action in different fields.

The legislature is naturally reluctant to delegate decisions on really vital questions. And the agreement that planning is necessary, together with the inability to agree on a particular plan, must tend to strengthen the demand that the government, or some single person, should be given power to act on their own responsibility. It becomes more and more the accepted belief that if one wants to get things done, the responsible director of affairs must be freed from the fetters of democratic procedure.

Democratic government has fallen into discredit because it has been burdened with tasks for which it is not suited. Here is a fact of the greatest importance which has not yet received adequate recognition. Yet the fundamental position is simply that the probability of agreement of a substantial portion of the population upon a particular course of action decreases as the scope of state activity expands.

There are certain functions of the state on the exercise of which there will be practical unanimity. There will be others on which there will be agreement among a substantial majority. And so on until we come to fields where, although every individual might wish the government to intervene in some direction, there will be almost as many views about how the government should act as there are different persons.

Democratic government worked successfully so long as, by a widely accepted creed, the functions of the state were limited to fields where real agreement among a majority could be achieved. The price we have to pay for a democratic system is the restriction of state action to those fields where agreement can be obtained; and it is the great merit of a liberal society that it reduces the necessity of agreement to a minimum compatible with the diversity of individual opinions which will exist in a free society.

It is often said that democracy will not tolerate capitalism. But if here “capitalism” means a competitive society based on free disposal over private property, the much more important fact is that only capitalism makes democracy possible. And if a democratic people comes under the sway of an anti-capitalistic creed, this means that democracy will inevitably destroy itself.

IV.

But if democracy had to abdicate only from the control of economic life, this might still be regarded as a minor evil compared with the advantages expected from planning. Indeed, many of the advocates of planning fully realize — and have resigned themselves to the fact — that if planning is to be effective, democracy in the economic sphere has to go by the board.

But it is a fatal delusion to believe that authoritarian government can be confined to economic matters. The tragic fact is that dictatorial direction cannot remain confined to economic matters but is bound to expand and to become “totalitarian” in the strict sense of the word. The economic dictator will soon find himself forced, even against his wishes, to assume dictatorship over the whole of the political and cultural life of the people.

We have already seen that the planner must not only impose a concrete and detailed scale of values upon the vague and general instructions given by popular clamor, but must also, if he wants to act at all, make the people believe that this imposed code of values is the right one. He is forced to create that unity of purpose which — apart from national crises like war — is absent in a free society. Even more, if he is to be allowed to carry out the plan which he thinks to be the right one, he must retain the popular support, that is, he must at all costs appear successful.

The decision on the relative importance of conflicting aims is necessarily a decision about the relative merits of different groups and individuals. Planning becomes necessarily a planning in favor of some and against others. The problem here is, of course, not that the different people concerned have not the most decided opinions on the relative merits of their respective wishes; it is rather that these opinions are irreconcilable. But the ground on which the more or less arbitrary decision of the authority rests must be made to appear just, to be based on some ultimate ideal in which everybody is supposed to believe.

The inevitable distinction between persons must be made a distinction of rank, most conveniently and naturally based on the degree to which people share and loyally support the creed of the ruler. And it further clarifies the position if to the aristocracy of creed at one end of the scale there corresponds a class of outcasts at the other, whose interests can in all cases be sacrificed to those of the privileged class.

But conformity to the ruling ideas cannot be regarded as a special merit, although those who excel by their devotion to the creed will be rewarded. It must be exacted from everybody. Every doubt in the rightness of the ends aimed at or the methods adopted is apt to diminish loyalty and enthusiasm and must therefore be treated as sabotage.

The creation and enforcement of the common creed and of the belief in the supreme wisdom of the ruler becomes an indispensable instrument for the success of the planned system. The ruthless use of all potential instruments of propaganda and the suppression of every expression of dissent is not an accidental accompaniment of a centrally directed system — it is an essential part of it.

Nor can moral coercion be confined to the acceptance of the ethical code underlying the whole plan. It is in the nature of things that many parts of this code, many parts of the scale of values underlying the plan, can never be explicitly stated. They exist only implicitly in the plan. But this means that every part of the plan, in fact, every action of the government or its agencies, becomes sacrosanct and exempt from criticism.

It is, however, only the expression of criticism that can be forcibly suppressed. But doubts that are never uttered and hesitation that is never voiced have equally insidious effects, even if they dwell only in the minds of the people. Everything which might induce discontent must therefore be kept from them. The basis for comparison with conditions elsewhere, the knowledge of possible alternatives to the course taken, information which might suggest failure on the part of the government to live up to its promises or to take advantage of opportunities to improve the lot of the people — all these must be suppressed.

Indeed, there is no subject that has not some possible bearing on the estimation in which the government will be held. There is consequently no field where the systematic control of information will not be practiced.

That the government which claims to plan economic life soon asserts its totalitarian character is no accident — it can do nothing less if it wants to remain true to the intention of planning. Economic life is not a sector of human life which can be separated from the rest; it is the administration of the means for all our different ends. Whoever takes charge of these means must determine which ends shall be served; which values are to be rated higher and which lower — in short, what men should believe and strive for. And man himself becomes little more than a means for the realization of the ideals which may guide the dictator.

It is to be feared that to a great many of our contemporaries this picture, even should they recognize it as true, has lost most of the terror which it would have inspired in our fathers. There were, of course, always many to whom intellectual coercion was only objectionable if it was exercised by others, and who regarded it as beneficial if it was exercised for ends of which they approved.

How many of the exiled intellectuals from the authoritarian countries would be only too ready to apply the intellectual coercion which they condemn in their opponents in order to make the people believe in their own ideals — incidentally another illustration for the close kinship of the fundamental principles of fascism and communism.

But although the liberal age was probably freer from intellectual coercion than any other, the desire to force upon people a creed which is regarded as salutary for them is not a new phenomenon. What is new is the attempt to justify it on the part of the socialist intellectuals of our time.

There is no real freedom of thought in a capitalist society, so it is said, because the opinions and tastes of the masses are inevitably shaped by propaganda, by advertising, by the example of the upper classes and by other environmental factors which relentlessly force the thinking of the people into well-worn grooves. But if, the argument proceeds, the ideals and tastes of the great majority are formed by environmental factors which are under human control, we might as well use this power to turn their thoughts in what we think a desirable direction. That is, from the fact that the great majority have not learned to think independently but accept the ideas which they find ready-made, the conclusion is drawn that a particular group of people — of course, those who advocate this — are justified in assuming to themselves the exclusive power to determine what the people should believe.

VI.

It is not my intention to deny that for the great majority of individuals the existence or nonexistence of intellectual freedom makes little difference to their personal happiness; nor to deny that they will be equally happy if born or coaxed into one set of beliefs rather than another, and whether they have grown accustomed to one kind of amusement or another.

That in any society it will be only the comparatively few for whom freedom of thought is of any significance or exists in any real sense is probably only too true. But to deprecate the value of intellectual freedom because it will never give everybody the same opportunity of independent thought is completely to miss the reasons which give intellectual freedom its value. What is essential to make it serve its function as the prime mover of intellectual progress is not that everybody may think or write everything, but that any cause or any idea may be argued by somebody.

So long as dissent is not actually prevented, there will always be some who will query the ideas ruling their contemporaries and put new ideas to the test of argument and propaganda. The social process which we call human reason and which consists of the interaction of individuals possessing different information and different views, sometimes consistent and sometimes conflicting, goes on.

Once given the possibility of dissent there will be dissenters, however small the proportion of people who are capable of independent thought. Only the imposition of an official doctrine which must be accepted and which nobody dare question can stop intellectual progress.

How completely the imposition of a comprehensive authoritarian creed stifles all spirit of independent inquiry; how it destroys the sense for any other meaning of truth than that of conformity with the official doctrine; how differences of opinion in every branch of knowledge become political issues — these must be seen in one of the totalitarian countries to be appreciated.

We must hope that those in the Western world who seem to be ready to sacrifice intellectual freedom because it does not mean the same economic opportunity for all will yet realize what is at stake.

The great danger comes from the fact that we take so much of the inheritance of the liberal age for granted — have come to regard it as the inalienable property of our civilization — that we cannot fully conceive what it would mean if we lost it. Yet freedom and democracy are not free gifts which will remain with us if we only wish.

The time seems to have come when it is once again necessary to become fully conscious of the conditions which make them possible, and to defend these conditions even if they seem to block the path to the achievement of other ideals.

F.A. Hayek (1899–1992) was a founding board member of the Mises Institute. He shared the 1974 Nobel Prize in Economics with ideological rival Gunnar Myrdal “for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena.” See Friedrich A. Hayek’s article archives.

This article was originally published in the Contemporary Review of London, April 1938. It was reprinted in American Affairs, Vol. 7, No. 33 (1945), pp. 178–181.

By Brian C. Riedl

Last January, a report by White House economists predicted the $787 billion stimulus would create (not just save) 3.3 million net jobs. Since then, 3.4 million net jobs have been lost, pushing unemployment over 10 percent. And now the White House concedes that by next summer the stimulus will be “contributing little to further growth.”

By the White House’s own standards, the stimulus failed.

Its central flaw? It was based on the myth that government spending is a free lunch.

Stimulus advocates assert that government spending injects new dollars into the economy, thereby increasing demand and spurring economic growth. It makes perfect sense under one condition: No one asks where the government got the money.

Congress doesn’t have a vault of money waiting to be distributed. Every dollar Congress “injects” into the economy must first be taxed or borrowedoutofthe economy. No new income, and therefore no new demand, is created. It is merely redistributed from one group of people to another.

Removing water from one end of a swimming pool and pouring it in the other end will not raise the overall water level - no matter how large the bucket. Similarly, redistributing dollars from one part of the economy to the other will not expand the economy, no matter how much is transferred. Not even in the short run.

The White House says the $200 billion spent from the stimulus thus far has financed nearly 1 million jobs. That may be true. However, the private sector now has $200 billion less to spend, which - by the same logic - must lose the same number of jobs, leaving a net jobs impact of zero. But the White House’s single-entry bookkeeping simply ignores that side of the equation.

Some dispute this logic by insisting that this $200 billion represents new demand because it was transferred from savers to spenders. That implausibly assumes every dollar lent to Washington for this spending would have otherwise been saved. Anyone who has observed America’s miniscule savings rate understands the private sector would have spent the vast majority of this $200 billion had it not lent the money to Washington instead.

Furthermore, even if all the stimulus money had been borrowed from savers, it still would make no difference. Savings do not fall out of the economy. They are invested or deposited in banks - which then lend them out to others to spend. Even when recession-weary banks hesitate to loan money, they invest it in Treasury bills instead. They don’t hoard customer deposits in massive basement vaults. One person’s savings quickly finances another person’s spending.

Consequently, all $200 billion would have otherwise been spent by the private sector. The government stimulus spending merely displaced private spending dollar-for-dollar.

Even money borrowed from foreigners is no free lunch. Before China can lend America dollars, they must acquire them by running a trade surplus (which is a trade deficit for America). America’s increased trade deficit exactly offsets the dollars borrowed, leaving a net impact of zero.

It is tempting to believe that government spending creates income and jobs because we can see the factories and people put to work with government funds. We don’t see the jobs that would have been created or factories utilized elsewhere in the economy with those same dollars had they not been lent to Washington.

Consider that a family might normally put its $10,000 savings in a CD at the local bank. The bank would then lend that $10,000 to the local hardware store, which would then recycle that spending around the town, supporting local jobs. Now suppose that the family instead buys a $10,000 government bond that funds the stimulus bill. Washington spends that $10,000 in a different town, supporting jobs there instead. The stimulus hasn’t created new spending and jobs, it has only moved them to a new town.

This explains why, despite all the new stimulus-supported jobs, the unemployment rate remains high.

If governments could spend their way to economic growth, then Germany, Spain and Greece would be wealthier than America, instead of stagnating and seeing downgraded credit ratings. If budget deficits stimulated growth, then this year’s original $1.2 trillion budget deficit would have overheated the economy even before the stimulus added $200 billion more to bring the deficit to $1.4 trillion. It clearly did not.

In reality, individuals and businesses drive economic and productivity growth through work, investment, innovation and entrepreneurship. This requires less government spending, taxes and budget deficits - not more.

Brian M. Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs at the Heritage Foundation.

By John Stossel

I just got a free golf cart.

Actually, it cost me $6,490 — but the dealer, Colin Riley of Tucson, Ariz., points out that there’s a $6,480 federal tax credit on such vehicles. Riley runs ads that say: “FREE ELECTRIC CAR … !”

Some consumers probably assume it’s a car-dealer scam, but it’s not. It’s an Uncle Sam scam.

The tax code is outrageously complex and damaging in many ways, but it is made especially complex and damaging when congressmen use it “creatively” to manipulate us into doing things they deem “socially constructive.” These are things that always bestow advantages on some politically connected manufacturers at the expense of others. After all, you were either planning to buy a golf cart or you weren’t. If you were, the policy is unnecessary. If you weren’t, you were induced to spend money on that product rather than something else. The unseen victim is whoever would have sold you the alternative product.

Such manipulation is at the heart of the entire “green” strategy.

The Wall Street journal reports that business is busy taking advantage of the tax credit. “Is that about the coolest thing you’ve ever heard?” Roger Gaddis of Ada Electric Cars in Oklahoma said.

I thought “free” golf carts were outrageous enough that the publicity would embarrass Congress into killing the tax credit. I thought the media would be all over it. But even though Riley has received thousands of calls for cars — and sold hundreds — he hasn’t seen much media attention. The Journal commented, “You can’t blame a guy for exploiting loopholes that Congress offers.”

In Florida, Tony Colangelo also sells subsidized cars. He said the golf-cart credit is — good for politicians:

“It’s all (about) going green. They want all those gas vehicles off the street. They’d rather have the electric than anything.”

The golf-cart boom follows an IRS ruling that many golf carts qualify for the electric-car credit. A credit is better than a subsidy since you keep money the IRS would have taken. Still, it is an insidious form of manipulation used to benefit some forms of industry at the expense of others.

Colangelo says: “I never, in my entire life, got anything back from the government, and I’ve always paid taxes. Why shouldn’t the people who worked hard for their money get something back?”

Because government shouldn’t be in the business of taking money and giving it back! That just gives the venal cretins more power over our lives.

After I drove the car onto my first Fox Business Network show last week, viewers wrote in asking how they could get one.

But others got the concept.

Sirsickofit writes: “People, please stop asking for information on the golf carts. … Stossel is trying to make a point!! If you purchase these carts you will be adding to the problems.”

True.

I’d like my taxes (and government spending) cut, too, but I don’t want a manipulative favor from government — I’ll give my cart to charity.

The electric-vehicle subsidy is ludicrous not just because it is a form of industrial policy — which almost always picks losers — it’s also destructive because it creates more pollution, not less. That’s because much of the electricity needed for their operation comes from burning coal. As the National Research Council puts it:

“Although they produce no emissions during operation, they rely on electricity powered largely by fossil fuels for their fuel and energy intensive battery manufacturing.”

In addition, check out the complexity of the credit:

“(1) $2,500, plus (2) $417 for each kilowatt hour of traction battery capacity in excess of 4 kilowatt hours. Section 30D(b)(1) limits the amount of the credit allowed for a vehicle to amounts ranging from $7,500 to $15,000, depending on the gross vehicle weight rating of the vehicle.”

How many hours will accountants and tax lawyers waste over that?

Congress makes life worse every time it meets, and green hysteria sucks so many good things from the country.

Government is a meddling presumptuous pain in the neck. The sooner we get it to stop manipulating us through tax laws, the better.

Source: Free Stuff from Sam (http://townhall.com/columnists/JohnStossel/2009/12/16/free_stuff_from_sam?page=full&comments=true) by John Stossel

By Cal Thomas

In 1952, Shepherd Mead wrote a little book called “How to Succeed in Business Without Really Trying.” In 1961, it became an award-winning Broadway musical. It’s an instruction book about how a young man with lots of drive and cunning can rise from the mailroom to the top of the company. One of the songs from the musical, sung by the main character, J. Pierrepont Finch, is “I Believe in You.” Finch sings it to a mirror.

Today that song might be re-titled “I Believe in Government.”

President Obama delivered his latest speech on job creation and the economy Tuesday at the liberal Brookings Institution in Washington. As with all of his speeches, this one was loaded with first-person references and blame of the Bush administration for America’s economic troubles. Apparently George W. Bush has finally replaced Herbert Hoover as the Democrats’ favorite whipping boy.

The president again claimed his “Recovery Act” has “created jobs and spurred growth.” He got the “act” part right. The facts tell a different story about recovery.

ABC’s Jake Tapper analyzed the administration’s claim to have saved one million jobs when that assertion was made at the end of October. Tapper wrote, “The ‘majority of funds’ came from state governments because (stimulus) distributed the money in block grants to the states. What did the states do with the money? They did save jobs, but primarily bureaucratic jobs. States used the money to temporarily paper over budget gaps which would have forced layoffs of state employees, which should have been a necessary step in slimming down state-level spending.”

At Brookings, the president said, “My economic team has been considering a full range of additional ideas to help accelerate the pace of private sector hiring. We held a jobs forum at the White House that brought together business owners, CEOs, union members, economists, folks from nonprofits, and state and local officials to talk about job creation.”

He might as well have assembled a group of scientists to discuss how water is made. The combination of two parts hydrogen, one part oxygen is learned in Chemistry 101. The way to create jobs is to allow businesses to make sufficient profits so they can afford to hire more workers and manufacture more “widgets.” If businesses must pay more in taxes to government and more in health care costs there will be less profit and fewer employees. Why is that formula so difficult to understand?

Union and state workers don’t create jobs. Nether do economists and nonprofits. Nonprofits exist because people and companies have enough money left over to contribute. If the donors are making less they will contribute less and nonprofits, like for-profits, will lay people off, or not hire new employees.

The president also wants to “invest” in infrastructure and “create jobs” by giving people “incentives” to prevent their homes from leaking heat in winter and cool air in summer. Hasn’t that been tried in previous administrations? And the president wants to give tax incentives so that employers will hire workers. But the “incentives” are miniscule compared to the salary and benefits it would cost an employer to hire someone. The president would achieve real success by cutting taxes, eliminating unnecessary regulations and liberating the free enterprise system to do what it does best: create products and services people will buy so that companies will hire people.

That has always been the formula that has produced a strong American economy. Government produces little that people want to buy. Government mostly takes from those who produce. Government can spread wealth, as this president is attempting to do — but it can’t create wealth. So by spreading wealth rather than allowing wealth to be created, the result is less wealth to spread.

Why can’t liberals understand this? It is because this president and much of his administration have never punched a time clock or run a business.

The economic power of America is in Americans, not in government.

Source: How to Create Jobs Without Really Trying (http://townhall.com/columnists/CalThomas/2009/12/10/how_to_create_jobs_without_really_trying?page=full&comments=true) by Cal Thomas

By Michael Barone

"What have you done for me lately?" It's a question that voters implicitly ask politicians, especially ones they have supported and who are seeking their votes again. And it's a question that young voters in particular may be asking Barack Obama, whom they supported by a 66 percent to 32 percent margin 13 months ago.

It's a question that is obviously on the minds of some thoughtful Democrats. They've noticed that unemployment among the young is well above the national average -- it reached 27.6 percent among those ages 16 to 19 in October.

They've noticed that an increasing number of young people -- about half of those between ages 18 and 24 -- are still living in their parents' homes. They've noticed that entry-level work is scarce, as older workers cling to their jobs.

So they're urging the Obama administration and the Democratic Congress to do something to help young people. But they seem to be having a hard time coming up with solutions that match the scope of the problem.

For example, John Podesta, chief of staff in the Clinton White House and head of the Center for American Progress, urges in Politico that Congress make a "strategic investment" in expanding AmeriCorps, Volunteers in Service to America and Youth Corps.

He argues forcefully that these programs help communities and provide valuable work experience for those enrolled. He says the expansion he proposes would cost less than $1.5 billion -- small change in today's Washington.

But he's only proposing to create 150,000 jobs, a drop in the bucket when something like 3,000,000 Americans under 30 are unemployed.

Morley Winograd and Michael Hais, co-authors of the insightful "Millennial Makeover," also want government to do more for young people. Writing on the newgeography.com Website, they endorse proposals for creating internships, loan forgiveness programs and "mission critical" jobs in such fields as health care, cyber-security and the environment. Plus, "increased entrepreneurial resources (should) be made available to youth."

All that sounds kind of nifty, but it leaves many questions unanswered, starting with the price tag -- and whether government can readily create work that is useful in the real world. The experience of the Comprehensive Employment and Training Act (CETA) program, put out of its misery in the recession year of 1982, is not encouraging.

Neither is the precedent of the New Deal jobs programs of the 1930s. Then, talented administrators like Harry Hopkins employed millions in a matter of months. But that would be impossible with the encumbrances of today's civil service, due process, civil rights and environmental rules, even if Barack Obama could find someone as able as Hopkins.

The uncomfortable reality is that creating many millions of useful, interesting, psychically rewarding new jobs is something only the private sector can do. And it does it, as we saw during the prosperous quarter-century from 1983 to 2007, in ways that government planners are unable to predict.

In the meantime, the big-government policies of the Obama administration and the Democratic Congress have worked to stifle private-sector job creation. A large share of the $787 billion stimulus package has gone to keep current state and local public sector employees on the payroll (and paying union dues). That does nothing for young people seeking work.

In addition, the Democrats' health care bills would raise the cost of health insurance for young Americans, who would in effect be subsidizing their elders. And the staggering federal deficits that, according to the Congressional Budget Office, loom as far as the eye can see will mean more national debt that young Americans will have to pay off.

Barack Obama in his autobiographies records how he spurned private-sector work and opted instead for community organizing and political office. Public-sector careers can provide good incomes and the satisfaction of doing useful work -- but only for a comparative few. A vibrant and competent public sector depends on a vibrant and competent, and much larger, private sector.

Encouraging the growth of the private sector did not seem to be a problem when Obama began his campaign in February 2007, when unemployment was at 4.5 percent. It is certainly a problem now, with unemployment at 10.2 percent. Thoughtful Democrats can see that their party has not done much lately for the young voters, who provided 80 percent of their victory margin in 2008. But they're having trouble figuring out what to do.

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Views expressed in this column are those of the author, not those of Rasmussen Reports.

This is an incredibly important lesson to learn from the Austrian School of Economics. You can apply the lesson Williams talks about below to virtually every single product of human endeavor. It is a bedrock principle of human nature and as close to economic law as you will ever find. Also note that there really is no such thing as "voluntarism" once the government is involved because of the ability to coerce and punish. What do you think would happen if the government controlled any given industry and the means of production and those individuals who were tapped to run the industry or pay for it decided not to do so?

They'd go to jail. That's what.

For a more scholarly explanation of classical economic theory vs. the socialist "exploitation" theory, read George Reisman's excellent piece at Mises here.

Russ

Via FrontPageMag.com

By Walter Williams

How many things in our lives would we like to depend upon the generosity and selflessness of our fellow man, and do you think we would like the outcome? You say, “Williams, are you now putting down generosity and selflessness?” No, I’m not. Let me ask the question in a more direct way. Say you want a nice three-bedroom house. Which human motivation do you think would get you the house sooner: the generosity of builders or the builders’ desire to earn some money? What about a nice car? Which motivation of auto companies and their workers do you trust will get you a car sooner: the generosity of owners and workers, or owner desire for profits and worker desire for wages?

As for me, I put my faith in people’s self-interest as the most reliable way to get them to do what I want and believe most other people share my faith. What would your prediction be about the supply of housing, cars and most other things if Congress enacted a law mandating that a house or car could only be donated, not sold? If you said there would be a shortage of houses and cars, go to the head of the class.

Bone marrow transplantation is a relatively new medical procedure that is used to treat diseases once thought incurable such as leukemia, aplastic anemia, Hodgkin’s disease, immune deficiency disorders and some solid tumors such as breast and ovarian cancer. Every year, at least 1,000 Americans die and others suffer because they cannot find a matching bone marrow donor. The reason why there is a shortage of donors is the National Organ Transplant Act (NOTA), enacted by Congress in 1984. NOTA makes it illegal to give anything of value in exchange for bone marrow and that includes, for example, giving a college student a scholarship or a new homeowner a mortgage payment. Everyone involved in such a transaction — doctors, nurses, donors and patients — risks up to five years in a federal penitentiary.

There might be light at the end of the tunnel because the Washington-based Institute for Justice (ij.org), one of my very favorite liberty-oriented organizations, has brought suit against this inhumane practice of the U.S. Congress. The suit, Flynn v. Holder, was filed in the Los Angeles Division of the U.S. District Court for the Central District of California on Oct. 26, 2009. Doreen Flynn, the plaintiff, is the mother of five children, three of whom have Fanconi anemia, a serious genetic disorder affecting the blood whose sufferers often need a bone marrow transplant during their teen years.

The Institute for Justice is not challenging Congress’ ban on compensation for solid organs such as hearts, kidneys and livers. Instead, the lawsuit challenges only the provision of National Organ Transplant Act that bans compensation for bone marrow. The premise of the Institute for Justice’s legal challenge is that there is a fundamental biological distinction between renewable marrow cells and nonrenewable solid organs. In the case of bone marrow, the donor’s bone marrow is completely replenished in a few weeks. That’s less time than it takes for the human body to fully replenish a pint of donated blood that is often sold to blood banks.

Just about everyone would agree that there would be massive shortages and discontent if there were a congressional mandate that we must depend on our fellow man’s generosity for our home, our car, our food and thousands of other items that we use. Why then must a person depend on his fellow man’s generosity for an item like bone marrow that might mean the difference between life and death? There is no rhyme or reason for the congressional prohibition of bone marrow other than arbitrary unconstitutional abuse of power that far too many Americans tolerate and would like to see extended to other areas of our lives.

Source: Voluntarism or Self-Interest (http://frontpagemag.com/2009/12/01/voluntarism-or-self-interest-by-walter-williams/) by Walter Williams

By Bobby Eberle

Unemployment is spreading like a virus across the country. The more Barack Obama and his team do to try to "fix" the problem, the more people lose jobs. And now we see that the American people are starting to wake up from their "hope and change" coma and are realizing that this is not the change they had hoped for.

Unemployment doesn't simply cost jobs. It also makes it harder for businesses to hire in the future. As unemployment rises, so do the taxes levied on businesses in order for states to pay unemployment insurance. Couple this with the laundry list of taxes that Obama wants to impose on American families, and America is in deep trouble.

As noted in a report by the Associated Press, "As if small businesses needed another reason not to hire, consider their latest financial burden: The cost of rising unemployment itself."

Employers already are squeezed by tight credit, rising health care costs, wary consumers and a higher minimum wage. Now, the surging jobless rate is imposing another cost. It's forcing higher state taxes on companies to pay for unemployment insurance claims.

Some employers say the extra costs make them less likely to hire. That could be a worrisome sign for the economic recovery, because small businesses create about 60 percent of new jobs. Other employers say they'll cut or freeze pay.

The Wall Street Journal reports that in October, 29 states recorded increases in unemployment rates. That national unemployment rate jumped from 9.8% in September to 10.2% in October. In May 2007, the unemployment rate stood at 4.4%.

To see how unemployment has spread through the U.S. on a county level, just click on the graphic below:

Does Obama have a government job for these people? Will he raise taxes on everybody in order to pay for more "job creation?" Not even Obama can raise taxes that high, but it just goes to show that the entire approach by Obama and his socialist allies misses the mark.

Does this virus of unemployment reflect the loss of government jobs? No. These are private sector jobs being lost by workers in companies and businesses large and small. Jobs are created by businesses. It is so misguided and utterly stupid that when a recession hits and jobs are lost, that the first impulse by the left wing is to raise taxes and actually make it harder for hiring to occur.

Government can't magically "fix" the problem if it attacks the resources for job creation: American businesses and companies. Taxes should be cut, not raised. Regulations should be reduced, not increased. And those who do the hiring should be given a climate in which more hiring can occur. The best solution? Have government get out of the way!

Source: The Virus Known as Unemployment (http://www.gopusa.com/theloft/?p=152) by Bobby Eberle

By Vasko Kohlmayer

“The higher jobless rate could be the new normal” reads the headline of a recent AP report. Further down we read:

“Even with an economic revival, many U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years.”

The report’s message is clear. It will be a long time before we recover our former prosperity. Things, in fact, may never be as good as they used to be, at least not in our lifetimes.

But how can this be? After all, it is Barack Obama who is in charge. Less than twelve months ago, the Associated Press and the whole of the mainstream media were selling Obama as the one who would speedily solve this nation’s economic ills. Obama was presented as nothing less than a national savior who had all the right answers.

Writing at CBS, Bonnie Erbe posted a piece in January titled “The Economy Could Actually Turn Around Under Barack Obama.” The piece quoted Jerome Idaszak, associate editor of the Kiplinger Letter, who said: “There’s also a new sense of public confidence in Washington. About 70% of Americans say they are optimistic that the Obama administration will be able to spur growth.” Michael Hirsh of Newswek showed childlike confidence in Obama’s abilities even before he assumed office:

“The new president may think his only task is to rescue the economy. But like FDR, he may have to save capitalism itself.”

How do we, then, explain AP’s present lack of hope in a better tomorrow? It would seem that they are coming to realize that the Messiah of yesterday is making a mess of things today.

To be fair, Barack Obama has been dealt a difficult hand. He has repeatedly said that this crisis was years in the making and in that he is correct. But it should be noted that it has been brought on by the very policies he subscribes to. This crisis, as almost all other economic crises, has been caused by government. The housing bubble – the bursting of which set things off – was a government creation. Inflated by a combination of unsupportably low interest rates  – set by the Federal Reserve – and Congress’ misguided desire to increase home ownership among low income people, it was a governmentally-induced phenomenon from beginning to end.

Even though Obama was not a major player when those policies were enacted, they were precisely the kind of measures he has always stood for. After all, he worked for ACORN, an organization which threatened to shut down banks that did not meet mortgage quotas for low income earners. So while it is true that Obama did not personally bring about the crisis, the policies he espouses most certainly did.

In any case, now that Barack Obama is in power he is doing everything he can to drive the economy off the cliff and into the ground. David Horowitz recently made a strong case on Glenn Beck that Obama is a far-left radical who poses a great danger to this country. Nowhere is this more obvious than on the economic front. So ruinous have Obama’s actions been that if a Hugo Chavez or some other America hater were given an opportunity to call the shots, he could hardly outdo the president in the destructiveness of his policies. Working relentlessly to impose government control over the American economy and to annihilate the remaining vestiges of the free market, Obama has already wrought untold damage. Nationalizing banks and car companies, debasing the dollar, passing odious business regulations and running up debts that we will never be able to repay are only some of the highlights of Obama’s performance so far.

But all this is just the beginning, because still in the works are two monumentally deleterious schemes – Cap and Trade and Healthcare Reform.

The purported aim of Cap and Trade is to eliminate the nonexistent phenomenon of man-made global warming, but its real goal is to put a stranglehold on the American economy. This will be done under the guise of penalizing those who use energy deriving from fossil fuels. It is rightly said that energy is the lifeblood of the American economy. Significantly, Americans obtain 85 percent of it by burning C02-emitting substances, mainly oil and coal, which is why Cap and Trade would have devastating consequences.

According to analysis by The Heritage Foundation, Cap and Trade “promises serious perils for the American economy for the years and decades ahead.” It would result in the loss of millions of jobs and it would cut trillions of dollars from America’s economic output. Under Cap and Trade the price of gasoline would go up 58 percent and the average household electric rate would increase by 90 percent. Paradoxically, all these immense costs would yield virtually no discernible benefits. More from Heritage:

Climatologists estimate that Waxman-Markey’s impact on world temperature will be too small to even measure in the first several decades. The theoretical moderation of world temperature would be 0.05 degree centigrade by 2050.

All this for less than one tenth of one degree, and even this infinitesimal gain only shows up on models that run on most optimistic assumptions. Looking at all the facts, one cannot but conclude that Cap and Trade is nothing other than a stealth move for the economy’s jugular.

As far as healthcare is concerned, the president’s works are no less destructive. The bill that was passed last Saturday by the House and hailed as a “victory” for Obama contains a provision that would prohibit insurance companies from refusing coverage based on pre-existing health conditions. This is the equivalent of allowing people to buy car insurance after their crash their car or buy fire insurance after their house burns down. Highly controversial, this provision was kept on the urging of President Obama who insisted that it be included in the bill.

If you do not believe that an American president would ever force such an onerous requirement on private businesses, you should refer to an e-mail sent to supporters on August 8 by Obama’s senior advisor David Axelrod. The first bullet point under the heading “8 ways reform provides security and stability to those with or without coverage” reads:

Ends Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.

Clearly no insurance company can operate under such a regime and continue as a viable commercial entity. Obama’s healthcare “reform” would thus end up driving all insurers out of business and eventually leave the government as the sole provider of healthcare in America.

It should be obvious that the American economy cannot survive the implementation of these odious programs as they would vitiate America’s capitalist foundation. This is why the president wants to make their passage his signature achievements.

David Horowitz is all too correct when he writes that Obama’s goal is “the systematic transformation of our nation from an open, capitalist society, to a Big Brother-type socialist nation.” Obama actions prove Horowitz right almost every day as he takes this country down the sewage tubes of socialism. Despite all his flowery promises, the American people have nothing good to look forward to. The president’s media spokesmen know it, and they are dutifully preparing us for the hardships to come.

Source: How to Wreck the Economy (http://frontpagemag.com/2009/11/16/how-to-wreck-the-economy-by-vasko-kohlmayer/) by Vasko Kohlmayer

By D.W. MacKenzie

A Petition from the Producers of Health Insurance, Medical Equipment, Drugs, Diagnostic and Surgical Procedures, Physical Therapy, and, Generally, of Everything Connected with Healthcare.

To the Members of the US Congress and Senate.

Ladies and Gentlemen:

You are on the wrong road. You embrace defective theories in which government produces abundance and low prices. You concern yourselves mainly with the fate of the consumer, but without knowledge as to how we in the private sector can attend to his needs. You wish to free him from lack of private competition, that is, to create a competitive market for healthcare through government intervention.

We come to offer you an admirable opportunity, because our — what shall we call it? — our theory? No, nothing is more offensive to those in power than the idea that theoretical laws might supersede state legislation. To put it in terms you can understand, we shall say, then, our personal interests — our personal interests, along with those of the consumer, are at stake.

We face the intolerable competition of a rival, placed, it would seem, in a condition so far superior to ours that our future is questionable. This rival can flood the healthcare market with health services at an incredibly low marginal cost. The moment he shows himself, our trade leaves us — all consumers are compelled to pay for his services, even those who still buy from us.

Given that consumers must pay this rival even if they reject his services, our industry faces potential stagnation. This rival, whose influence on the industry is already as broad as sunlight, is waging war mercilessly against us, and we suspect he is being stirred up by perfidious ex-Soviets, particularly because socialists have always sought our destruction.

You are this rival.

What we pray for is that you may decline passing additional laws requiring consumers to pay for healthcare through taxation. We trust that you will not regard our request as a satire, or refuse it without at least first hearing the reasons that we have to urge in its support.

First, if you impose taxpayer-funded healthcare, this will place consumers in a position where they must choose between paying for our services and opting for your "free" healthcare. As we have already noted, you have the power to tax. Citizens pay for your services whether they want them or not.

Second, the sad irony is that your so-called free public services are not only costly, they typically cost more than what could be provided privately. We in the private sector must survive by keeping costs low relative to revenue. You do not face this burden.

The power to tax enables you to bear high costs, or rather to shift such costs onto citizen taxpayers. Your bureaucracies are bloated and inflexible. You waste money on special-interest payoffs. You have failed to adequately fund existing entitlements, like Social Security and Medicare.

There are also serious issues with the quality of many of your services. Consumers are forced to pay direct and indirect taxes to fund public schools, even those schools that are dismal failures. Many consumers struggle to pay both taxes and private tuition.

Can you offer assurance that your proposed "competition" against our industry will not be equally ruinous? Why should we expect to survive competition against a rival with the power to tax? Why should our customers expect to remain sovereign as consumers in a government-dominated healthcare industry?

We foresee your objections, but there is not a single one of the things you object to that you have not caused yourself. Healthcare costs are rising, but you have imposed greater costs: through regulations that increase administrative costs, through licensing laws and other restrictions on private competition, and through frivolous and fraudulent malpractice lawsuits.

You may respond that we do not have much to lose at all, because the consumer will bear the expense. We have our answer ready:

It is true that you have often sacrificed the interests of the consumer when they are opposed to those of the producer. Many of us contribute to your campaigns specifically to gain influence over policies that affect us. Your power can work to our advantage. But the expense of lobbying for political privileges in our deeply politicized industry is itself a burden. Despite all there is to gain in winning your favor, we as an industry can easily expend as much in lobbying costs as there is for any of us to gain.[1]

To put it simply, your proposal to act as a mere rival lacks plausibility. We cannot compete against you in markets because you exert control over our entry into markets. Furthermore, you possess market-independent funding sources — the power to tax.

Your past record of sacrificing the consumer's interests casts doubt upon your stated goal of reducing costs for him. Many of us have benefited from a partnership with you in the past, but rivalry against you is futile. Given that you seem to be engaged in deceit, we cannot trust you.

You are on the wrong track. You may believe yourselves to be in a position of limitless power to reshape society, but this is not true. Economic laws exist, and we, as producers, want to use them for profit.

Your stated goal of assuming greater control over the economy for the purpose of improving consumer welfare is not credible or even logical. It is impossible to define the economic interests of consumers collectively.[2] You generally do not try to serve consumers in the first place. We do not trust you, and neither should anyone else.

Source: A Petition from Producers of Everything Connected with Health Care (http://mises.org/daily/3826) by D.W. MacKenzie

By John Stossel

Much of what government does is based on the premise that people can't do things for themselves. So government must do it for them. More often than not, the result is a ham-handed, bumbling, one-size-fits-all approach that leaves the intended beneficiaries worse off. Of course, this resulting failure is never blamed on the political approach -- on the contrary, failure is taken to mean the government solution was not extravagant enough.

We who have confidence in what free people can achieve have long believed that government should not venture beyond its narrow sphere of providing physical security. It should not attempt to cure every social ill. So it's good to learn that serious scholars have demonstrated that our intuitions are right. Free people, given the chance, solve what many "experts" think are problems that require state intervention.

For that reason, Elinor Ostrom's winning of the Nobel Memorial Prize in Economic Sciences ought to kindle a new interest in freedom. (See my earlier column here.)

Ostrom made her mark through field studies that show people solving one of the more vexing problems: efficient management of a common-pool resource (CPR), such as a pasture or fishery. With an unowned "commons," each individual has an incentive to get the most out of it without putting anything back.

If I take fish from a common fishing area, I benefit completely from those fish. But if I make an investment to increase the future number of fish, others benefit, too. So why should I risk making the investment? I'll wait for others to do it. But everyone else faces the same free-rider incentive. So we end up with a depleted resource and what Garrett Harden called "the tragedy of the commons."

Except, says Ostrom, we often don't. There is also an "opportunity of the commons." While most politicians conclude that, depending on the resource, efficient management requires either privatization or government ownership, Ostrom finds examples of a third way: "self-organizing forms of collective action," as she put it in an interview a few years ago. Her message is to be wary of government promises.

"Field studies in all parts of the world have found that local groups of resource users, sometimes by themselves and sometimes with the assistance of external actors, have created a wide diversity of institutional arrangements for cooperating with common-pool resources."

She has studied, for example, self-governing irrigation systems in Nepal and found successes never anticipated in the textbooks. "Irrigation systems built and governed by the farmers themselves are on average in better repair, deliver more water, and have higher agricultural productivity than those provided and managed by a government agency. ... (F)armers craft their own rules, which frequently offset the perverse incentives they face in their particular physical and cultural settings. These rules may be almost invisible to outsiders. ..."

In "Governing the Commons," she writes about self-governed commons in Switzerland, Japan, the Philippines and elsewhere that date back hundreds of years. For example, in the alpine village of Tobel, Switzerland, herdsmen "tend village cattle on communally owned alpine meadows" under rules of an association created in 1483. The rules govern who has access to the grazing lands and how many cows a herdsman can place there, preventing overgrazing. The cattle owners themselves run the association and handle the monitoring. Sanctions are imposed for violation of the rules, but compliance is high.

Don't mistake the association for government. Rather, it is a private co-op designed for a narrow purpose. "All of the Swiss institutions used to govern commonly owned alpine meadows have one obvious similarity -- the appropriators themselves make all the major decisions about the use of the CPR."

She found something similar in Japanese villages, where residents use private property for some agricultural purposes and self-managed common forests for others.

Solutions imposed by external authority were not necessary -- and usually self-defeating: "Academics, aid donors, international nongovernmental organizations, central governments, and local citizens need to learn and relearn that no government can develop the full array of knowledge, institutions and social capital needed to govern development efficiently and sustainably. ..."

How about that? Freedom works.

Source: Self-Governance Works (http://townhall.com/columnists/JohnStossel/2009/10/28/self-governance_works?page=full&comments=true) by John Stossel