On the Fiscal Cliff

Thomas Sowell expresses his thoughts about the Fiscal Cliff, and these portions echo exactly what I think and feel:

First of all, despite all the melodrama about raising taxes on "the rich," even if that is done it will scarcely make a dent in the government's financial problems. Raising the tax rates on everybody in the top two percent will not get enough additional tax revenue to run the government for ten days.

No previous administration in the entire history of the nation ever finished the year with a trillion dollar deficit. The Obama administration has done so every single year.

Referring to the Federal Reserve System's creation of hundreds of billions of new dollars out of thin air as "quantitative easing" makes it seem as if this is some soothing and esoteric process, rather than amounting essentially to nothing more than printing more money.
Debasing the value of money by creating more of it is nothing new or esoteric. Irresponsible governments have done this, not just for centuries, but for thousands of years.
It is a way to take people's wealth from them without having to openly raise taxes. Inflation is the most universal tax of all.

But it is not the same politically, so long as gullible people don't look beyond words to the reality that inflation taxes everybody, the poorest as well as the richest.

And there are these nuggets from Part 2:

A key lie that has been repeated over and over, largely unanswered, is that President Bush's "tax cuts for the rich" cost the government so much lost tax revenue that this added to the budget deficit-- so that the government cannot afford to allow the cost of letting the Bush tax rates continue for "the rich."

What is remarkable is how easy it is to show how completely false Obama's argument is.

What both the statistical tables in the "Economic Report of the President" and the graphs in Investor's Business Daily show is that (1) tax revenues went up-- not down-- after tax rates were cut during the Bush administration, and (2) the budget deficit declined, year after year, after the cut in tax rates that have been blamed by Obama for increasing the deficit.  

And here are the table and images referred to above:

We Meet to Meet

"When an organization has more of its decisions made by committees, that gives more influence to those who have more time available to attend committee meetings and to drag out each meeting longer. In other words, it reduces the influence of those who have work to do, and are doing it, while making those who are less productive more influential." - Thomas Sowell

I have found this to be incredibly true.

If you look around your company, you can probably identify several people who seem to be on all sorts of project teams or committees or groups or whatever they may be called at your place of employment.

The natural response to recognizing this fact is usually "How do they have time for all of that?".

The answer to that question is quite simple: they either don't have enough work to do or they don't do the work they are supposed to do, usually pushing it off onto other people.

The sad thing is that managers love to see people who are "great team members" running from meeting to meeting to meeting and are so busy. Although they might never accomplish a single thing of significant value, the effort and time involved in those meetings is valued far greater than the value of the person with his head down in the cubicle cranking out work that adds to the bottom line of the company. In fact, more often times than not, the person in the cube is also carrying the workload of the meeting monster next door.

It's a shame that managers who love to meet for the sake of meeting breed people who meet for the same reason. Meetings do not get work done. While it is useful to pull groups together from time to time to strategize how the workload will get completed, most meetings that are on the schedules of many employees are not helpful and add little, if any, value to the bottom line of the company.

So managers - Kill the meetings and get back to allowing your employees to do some real work. Hold your employees equally accountable for the work that they are accomplishing, not the work they are talking about doing someday.

That is what the employee in the cubicle would love to tell you.

Occupying Something

I've resisted posting anything about the Occupy Wall Street protests to this point, but I wanted to say something about it today.

Here in St. Louis, we have our version of it currently operating on downtown St. Louis. Even the local newspaper can't figure out what the fuss is about. With that being said, it seems that one of the common themes of these activities is to make the wealthy pay their "fair share", which apparently translates into simply meaning they need to "pay more". If the some of the people doing the protesting are, in fact, currently unemployed, then they are essentially working against themselves.

Let's say that the politicians adopt the strategy of taxing the wealthier even higher rates. Inevitably, this will lead to the wealthy moving their financial assets from the American economy to another economy with less exorbitant taxes. In doing so, the American government will take a massive hit on tax income. The result of that income loss will lead to program cuts. Undoubtedly, some of those program reductions/eliminations could be in the welfare programs that currently support the unemployed, although knowing that politicians recognize this program as a way to maintain/buy voter support for re-election, I doubt many drastic measures would be taken. In the above scenario, if cuts do happen in these programs, the unemployed will be the ones paying the price, not the wealthy. And if they didn't happen, the politicians would be scrambling to find other areas to reduce their expenditures. Given Washington's track record of late, I think it is more likely that they would borrow against the future even more and drive the country towards a place where unemployed protestors in a park are the least of our worries as a nation.

In the meantime, the lack of a clear agenda and recognized leader of the movement provide little reason to listen to them at all.

Get organized (beyond union lines), figure out what your issue is that you want changed, offer several viable solutions and work towards influencing people in a positive direction. At the moment, it would seem that this is a bunch of unhappy people ready to protest anything. And that is fine, because they have that right. And they have that right, because other people are working hard and paying their taxes. But that doesn't mean they should be given the power to dramatically impact the lives of others or the future of our nation.

We'll see how the protest hold up when the weather turns much colder.

- Oh, and with the St. Louis Cardinals going to the World Series, I'd like to see the fans of the game reclaim the public property that has been used as a rally area for years and, prior to Wednesday's game 1, take back Kiener Plaza from the "99%" that are currently monopolizing it.

Why I Think America Is In Deep Trouble

Last week I was thinking about all of the hype surrounding the debt-ceiling when it occurred to me that I haven't check the status of the Federal Reserve's Monetary Base lately. What follows is a lengthy post where I try to recapture all of my thoughts on this and various topics that I have written about over the course of the past few years.

I started tracking the Monetary Base prior to attending the April 15, 2009 Tea Party in downtown St. Louis, after which I posted my reasons for attending the tea party event. Included in that post was a graph showing the National Debt Per Capita and the Adjusted Monetary Base.

Fawkes Friday

"Remember, remember the fifth of November..."

Large Bureaucracy Leads to Democracy's Demise

"Least of all shall we preserve democracy or foster its growth if all the power and most of the important decisions rest with an organization far too big for the common man to survey or comprehend. Nowhere has democracy ever worked so well without a great measure of local self-government, providing a school of political training for the people at large as much as for their future leaders. It is only where responsibility can be learned and practiced in affairs of one's neighbor rather than some theoretical knowledge of the needs of other people which guides action, that the ordinary man can take a real part in public affairs because they concern the world he knows.Where the scope of political measures become so large that the necessary knowledge is almost exclusively possessed by the bureaucracy, the creative impulses of the private person must flag."       

- p. 257-258 The Road to Serfdom by F.A. Hayek

Large-scale Economic Planning Leads to Using Force

"To imagine that the economic life of a vast area comprising many different people can be directed or planned by democratic procedure betrays a complete lack of awareness of the problems such planning would raise...To undertake the direction of the economic life of people with widely divergent ideals and values is to assume responsibilities which commit one to the use of force; it is to assume a position where the best intentions cannot prevent one from being forced to act in a way whih to some of those affected must appear highly immoral."

- p. 244-245 The Road to Serfdom by F.A. Hayek

Authority Presented As "Organization"

"When authority presents itself in the guise of organization, it develops charms fascinating enough to convert communities of free people into totalitarian States."- "The Times" (London)

- p. 199 The Road to Serfdom by F.A. Hayek

Collectivists Must Be Unbound By Morals

"The principal that the end justifies the means in individual ethics is regarded as the denial of all morals. In collectivist ethics it becomes necessarily the supreme rule; there is literally nothing which the consistent collectivitist must not be prepared to do if it serves "the good of the whole," because "the good of the whole" is to him the only criterion of what ought to be done..."

"There can be no limit to what its citizen must be prepared to do, no act which his conscience must prevent him from committing, if it is necessary for an end which the community has set iself or which his superiors order him to achieve."

- pp. 161-162 The Road to Serfdom by F.A. Hayek

One Inherent Contradition of Socialism

"But what socialists seriously contemplate the equal division of existing capital resources among the people of the world? They all regard the captial as belonging not to humanity but to the nation - though even within nation few would dare to advocate that the richer regions should be deprived of some of "their" capital equipment in order to help the poorer regions. What socialists proclaim as a duty toward the fellow-members of the existing states they are not prepared to grant to the foreigner..."

"One of the inherent contradictions of the collectivist philosophy is that, while basing itself on the humanistic morals which individualism has developed, it is practicable only within a relatively small group. That socialism so long as it remains theoretical is internationalist, while as soon as it is put into practice, whether in Russia or in Germany, it becomes violently nationalistic, is one of the reasons why "liberal socialism" as most people in the Western world imagine it is purely theoretical, while the practice of socialism everywhere if totalitarian. Collectivism has no room for the wide humanitrianism of liberalism but only for the narrow particularism of of the totalitarian."

- pp. 155-156 The Road to Serfdom by F.A. Hayek

The Creation of a Totalitarian Regime

"We must here return for a moment to the position which precedes the suppression of democratic institutions and the creation of a totalitarian regime. In this stage it is the general demand for quick and determined government action that is the dominating element of the situation, dissatisfaction with the slow and cumbersome course of democratic procedure which takes action for action's sake the goal. It is then the man or the party who seems strong or resolute enough "to get things done" who exercises the greatest appeal. "Strong" in this sense means not merely a numerical majority - it is the ineffectiveness of parliamentary majorities with which people are dissatisfied. What they will seek is somebody with such solid support as to inspire confidence that he can carry out whatever he wants. It is here that the new party, organized on military lines, comes in."

- p. 150 The Road to Serfdom by F.A. Hayek

Unrestricted Government Leads to Democratic Destruction

"Democratic government  has worked successfully where, and so long as, the functions of the government were, by a widely accepted creed, restricted to fields where agreement among a majority could be achieved by free discussion; and it is the great merit of the liberal creed that it reduced the range of subjects on which agreement was necessary to one on which was likely to exist in a society of free men. It is now often said that democracy will not tolerate "capitalism". If "capitalism" means here a competitive system based on free disposal over private property, it is far more important to realize that only within this system is democracy possible. When it becomes dominated by a collectivist creed, democracy will inevitably destroy itself."

- pp. 77-78 The Road to Serfdom by F.A. Hayek

Planning and Competiton

“Both competition and central direction become poor and inefficient tools if they are incomplete; they are alternative principles used to solve the same problem, and a mixture of the two means that neither will really work and that the result will be worse than if either system had been consistently relied upon. Or, to express it differently, planning and competition can be combined only by planning for competition but not by planning against competition."

- p.48 The Road to Serfdom by F.A. Hayek

Socialism Destroys Freedom

“While to many who have watched the transition from socialism to fascism at close quarters the connection between the two systems has become increasingly obvious, in the democracies the majority of the people still believe that socialism and freedom can be combined. There can be no doubt that most socialists here still believe profoundly in the liberal ideal of freedom and that they would recoil if they became convinced that the realization of their program would mean the destruction of freedom."
...
"That democratic socialism, the great utopia of the last few generations, is not only unachievable, but that to strive for it produces something so utterly different that few of those who now wish it would be prepared to accept the consequences, many will not believe until the connection has been laid bare in all its aspects."

- p.35-36 The Road to Serfdom by F.A. Hayek

Democracy Versus Socialism

"Democracy extends the sphere of individual freedom; socialism restricts it. Democracy attaches a possible value to each man; socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude." – Alexis de Tocqueville

- p.29 The Road to Serfdom by F.A. Hayek

Socialism Means Slavery

"We have progressively abandoned that freedom in economic affairs without which personal and political freedom has never existed in the past. Although we had been warned by some of the greatest political thinkers of the nineteenth century, by De Tocqueville and Lord Acton, that socialism means slavery, we have steadily moved in the direction of socialism."

- p.16 The Road to Serfdom by F.A. Hayek

Where Will This Movement Lead Us?

"The main question is where this movement will lead us. Is it not possible that if the people whose convictions now give it an irresistible momentum began to see what only few apprehend, they would recoil in horror and abandon the quest which for half a century has engaged so many people of good will? Where these common beliefs of our generation will lead us is a problem not for one party but for every one of us - a problem of the most momentous significance. Is there a greater tragedy imaginable than that, in our endeavor consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?"

- p.7 The Road to Serfdom by F.A. Hayek