Tag Archives: Economics

News

If government is paying the piper, then government is calling the tune

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Veronique de Rugy

Check out this post from GMU economist Veronica de Rugy on Big Government. (H/T ECM)

First, she puts up this chart.

Veronique writes:

On this chart we can see the changes over time in the composition of personal income in the United States since 1929. The most notable trend is the increase in the portion of personal income coming from government transfers (mainly social Security payments, unemployment benefits, food stamps, and personal and business tax credits.)  And the increase isn’t minor: the proportion of total personal income constituted by government money has grown from 0.9% to 17.2%.

Complementary decreases of wage earnings as percentages of total personal income (from 59.5% to 52.3%) are also going on.

The problem with government giving people money is that it creates a culture of dependency, as with Greece. Politicians take money from job-creating business-owners, or from productive individual workers, and they redistribute it to whiny unproductive, immature victim groups like unions, in order to buy their votes. Eventually, the government goes too far making promises and the productive people just stop or slow their working or they move away, since they keep less and less of their own money for the same amount of work and risk-taking.

And that’s when welfare checks of the losers dry up, and they have no choice but to riot and kill people. Why do they riot? Well, if they were earning their own money by working, then they would know that they are responsible for themselves, not government. They would understand that something might go wrong, and they would know that they had to cut their spending and save for a rainy day. So when things do go bad, they would have known how to live cheaply off of their savings while they find another job.

But people who take welfare don’t save – they think the money will always be there. What do they do when the taxpayers slow or stop production? They have no skills, and they have no savings. They can’t just find a new government because a new government isn’t going to find any more money from somewhere – there isn’t any left. So the only way to get their welfare back is to revolt – which is exactly what the socialists in Greece are doing right now. They’ve been spoiled rotten and they want their welfare back, like little babies crying for their mommies.

It’s sick. And this is what Obama and the Democrats idolize, because that’s how they grew up – begging their rich parents for money and bailouts for their own irresponsible behaviors. Their policies aren’t thought through – it’s just reliving their silver spoon childhoods of never having to work for anything.

Would you like to know what Republicans are like? Consider Michele Bachmann.

At 13, Bachmann was forced to become almost financially independent after her parents divorced. She used her babysitting money to buy her own clothes and lunches at school and saved up enough to purchase her first pair of contact lenses. Between college semesters at Winona State University, she took her hardworking streak to Alaska where on one memorable day she cleaned 280 salmon.

She also quit her job as a tax litigation attorney to homeschool her five kids, because she didn’t like the job the public schools were doing. Her business runs a small business, and she helped him to start it. That’s what Republicans do. We work. And we give.

We need to stop increasing the size of government so they can “take care” of all our needs. We need to take care of all our needs, and to take care of our neighbor’s needs, too. That’s capitalism. Having something to share from what you can make from your own industry and labor.

News

How well did a government-run green energy policy work in Spain?

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Story here from Pajamas Media. (H/T Stuart Scheidernman)

Keep in mind that the socialists under Zapatero are running Spain now, and that’s where this green energy policy came from. Is it working out for socialist Spain?

Excerpt:

Pajamas Media has received a leaked internal assessment produced by Spain’s Zapatero administration. The assessment confirms the key charges previously made by non-governmental Spanish experts in a damning report exposing the catastrophic economic failure of Spain’s “green economy” initiatives.

[…]Unsurprisingly for a governmental take on a flagship program, the report takes pains to minimize the extent of the economic harm. Yet despite the soft-pedaling, the document reveals exactly why electricity rates “necessarily skyrocketed” in Spain, as did the public debt needed to underwrite the disaster. This internal assessment preceded the Zapatero administration’s recent acknowledgement that the “green economy” stunt must be abandoned, lest the experiment risk Spain becoming Greece.

The government report does not expressly confirm the highest-profile finding of the non-governmental report: that Spain’s “green economy” program cost the country 2.2 jobs for every job “created” by the state. However, the figures published in the government document indicate they arrived at a job-loss number even worse than the 2.2 figure from the independent study.

Spain is giving up their green energy / green jobs initiative. What does Obama learn from Spain’s failure?

Excerpt:

This document is not a public report. Spanish media has referred to its existence in recent weeks though, while Bloomberg and the Washington Examiner have noted the impact: Spain is now forced to jettison its plans — Obama’s model — for a “green economy.”

Remarkably, these items have received virtually no media attention.

An item which has been covered widely, however, is that President Obama is now pressuring Spain to turn off its spigot of public debt in the name of averting a situation similar to that of Greece.

Also covered widely is Obama’s promotion of the American Power Act — the legislation which would replicate Spain’s current situation in the United States.

Put simply, Obama is currently promoting a policy in the U.S. which is based on a policy that he wishes to see Spain abandon.

Why can’t we learn from Spain’s failure and avoid making the same mistakes they did? Is that too much to ask?

News

Fiscally conservative Canada campaigns against global bank tax

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Canadian Prime Minister Stephen Harper

Story from Breitbart.

Excerpt:

Canada will “resist” a bank tax, Industry Minister Tony Clement said Tuesday as ministers fanned out across the world to raise opposition to the proposal for avoiding another financial crisis.

“Canada is, and will remain, opposed to a tax that would penalize financial institutions that remained strong and prosperous while many of the world’s banks failed,” Clement told a press conference with Foreign Minister Lawrence Cannon.

“We will resist the bank tax here at home and we seek to convince other heads of government of the virtue of our position,” he said as senior ministers echoed his message in Mumbai, Beijing and Washington.

Attempts to reach international agreement on coordinated bank taxes at last month’s G20 and IMF meetings ran aground.

Nations including Canada and Brazil, whose banking sectors emerged largely unscathed from the financial crisis, objected to the plan, favoring higher capital reserve requirements instead.

[…]Clement said the bank tax would “encourage risky behavior” if it is used to create a bank bailout fund and “reward bad behavior” of those institutions responsible for the recent financial crisis in the first place.

As well, it would “unduly burden” Canadian banks and put them at a “competitive disadvantage” to other financial institutions.

“This tax would reach into consumers’ pockets and punish our financial institutions which have taken precautions to avoid the very turmoil that is afflicting other parts of the globe,” Clement lamented.

Stephen Harper is a fiscal conservative. He knows that low interest rates are bad, so he created tax-free savings accounts to get people to work and save their money. And he knows that people who buy houses need to be able to pay for them, and his banking policies reflect that. There is no Democrat-sponsored “Community Reinvestment Act” in Canada to allow the socialist mafia (ACORN) to pressure private banks into making risky loans. And there are no Democrats taking political contributions while blocking attempts to investigate Fannie Mae and Freddie Mac. And there are no bank bailouts!

The Conservative Party of Canada keeps its banking sector squeaky clean. They even plan to cut spending! And the Canadian people support fiscal conservatism. That’s why they aren’t facing the mess we are facing. And they have lower unemployment, too – 8.1% compared to our 9.9%. Canada is kicking our tails! How can this be? How did they manage to elect an economist, while we are stuck with this perpetually-bowing flibbertigibbet and his legions of bloviating boffins, each more corrupt and incompetent than the last? Democrats have no real-life experience! They just had rich parents!

Look at this article from the Financial Post.

Excerpt:

“In Canada, there were no taxpayer bailouts of financial institutions, so we believe there is no justification for levies on banks and financial institutions,” Harper said at a news conference following meetings with European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy.

[…]Canada and the EU are in the midst of negotiating an ambitious trade deal. The Comprehensive Economic and Trade Agreement (CETA) was launched at the 2009 Canada-EU summit and to date, three rounds of negotiations have taken place. There are at least two more to go over the next year.

The deal will give Canada greater access to the markets of the EU’s member countries and will strengthen an economic relationship that is already worth $75-billion in trade. The EU is Canada’s second-largest trading partner after the United States and is also Canada’s second-largest source of direct foreign investment, putting $162-billion into Canada in 2009.

This is grown-up fiscal policy. Government should stay out of the mortgage-lending industry, and sign as many free-trade deals as possible. The exact opposite of what the Obama administration is doing.