Sunday, January 27, 2013

In Denial over the Budget Crisis

The arguments being made with regards to solving the governmental budget crisis are becoming fundamentally absurd as the situation with the federal deficit and federal debt worsens. As the deficits do not shrink and as the debt continues to grow the hysteria to deny the only three solutions gets louder.

People are actually proposing that there is no reason to balance the budget, and that paying off even a portion of the debt is bad for the economy. Perhaps there would be a short term downturn if a portion of the debt were paid off, and perhaps not, but the long term effects would only be beneficial. The argument is made citing the downturn of 1937, where an additional tax as well as additional labor regulations combined to create a recession in the middle of a depression.

Suggesting tax increases as a means to close the budget gap elicits a response that taxes aren’t raised for that purpose but instead to control inflation. This puts the paltry show of raising the taxes on top earners a few points in a new light, as it shows that the purpose had nothing to do with dealing with the fiscal cliff but was entirely and only about making the rich pay more. That it took place during fiscal cliff negotiations was showmanship, nothing else.

Those who are burying their heads in the sand are actually hoping that people making arguments about balancing the budget and paying down the debt are just posturing for political purposes, because the belief is that no person seriously believes that fiscal responsibility is a good thing.

A proposed solution is that the United States, being in control of its own currency and with the ability to print more, is unable to go bankrupt. This is presented as the grown up and mature solution, mocking those who say the budget should be balanced before there is a fiscal disaster.

The denial that the current Kenyesian order is failing is intense. And as the situation grows more dire, the arguments needed to bolster it grow more and more extreme. It can cause a person to wonder what defenses would be offered when it finally does collapse.

Sunday, January 20, 2013

Private Prisons Aren't Private Prisons

The most common example, and also the worst, of privatization of government functions occurs with the prison industry. More than any other, "private prisons" are held up as a reason why government functions should not be privatized.

Perhaps the reason is that with other functions, sometimes the job gets done. Construction projects to eventually get completed and many contracting functions are also examples of experts being brought in to give advice on a task. With prisons there is little in the way of advanced technical expertise, and the job is ongoing.

Still, the "private prison" is not private. Every single customer of a "private prison" is a government agency. Every single client of a “private prison” is sent there by a government agency.

A private prison would have private customers, those that subject people to incarceration outside of the government system. A private prison would have private clients, people incarcerated outside of the government system. Since those don’t exist, every single example of a so-called private prison is not actually private but is instead a contracted prison.

This also means that if there was a private prison, the owner and all of the employees would be criminals. They would all be engaged in the crime of kidnapping, as well as other assorted crimes necessary to make the private prison operate.

There is no real justification for people to make this kind of error. Private and contracted are two different arrangements. Just because the company that conducts the enterprise makes a profit does not mean that it is a private enterprise.

Sunday, January 13, 2013

They Should Be Allies

There was recently a gun buy-back program, sponsored by a medicinal marijuana dispensary. This is an interesting, if unfortunate event considering the common ground between those who believe in marijuana reform and protecting the second amendment.

It is a common enough occurrence, people who should be allies find themselves separated by party lines and the same underlying issue is divided between red and blue. Those who believe in ending the war on drugs are seldom the same people who believe in ending the war on guns, yet both are reacting against an overly strong federal government violating people's rights.

It is the same basic issue, self determination and the freedom to act in any way that doesn’t cause harm to others. Yet many liberals who support marijuana reform are terrified of firearms, and many conservatives who defend the second amendment are staunch opponents of drugs.

Not all liberals support drug reform, but it is within the allowable range of ideas for liberals. Likewise not all conservatives want to protect the second amendment, but it is within the allowable range of ideas. But support for gun liberty is not allowed for liberals and support for drug reform is not allowed for conservatives. Libertarians are once again completely outside the standard spectrum.

This is yet another in a long list of examples of how the two party system is designed to keep people apart from and opposed to each other. Natural allies lose sight of the common ground by the focus on specific issues as well as the great blinders of the red versus blue divide.

Sunday, January 06, 2013

Krugman's Phony Disaster

Paul Krugman penned an unusually dishonest editorial recently, When Prophecy Fails, in which he chastises the "economic doomsday prophets" for there being no catastrophe coinciding with the fiscal cliff negotiations.

It is an absurd piece because even Paul Krugman must know that those he considers to be "doomsday prophets" are primarily of the Austrian School of economics, and the reason followers of that school see economic hardship increasing has little to do with kabuki negotiations taking place in Washington that won't have any effect on solving the fiscal problems of the United States.

While economists cannot predict politicians and their decisions, there was little reason for anyone to predict that there would be anything other than some variant on the dominant Keynesian model resulting from the negotiations. As it turns out, there were some superficial proposed cuts in spending and a small tax increase on the top income earners, but nothing that would indicate a desire to balance the budget.

When the fiscal cliff negotiations failed to significantly accelerate the collapse of the economy, something no Austrian had reason to predict, Krugman seized the opportunity to say "see, these negotiations failed to significantly accelerate the collapse of the economy."

Some would say that Paul Krugman should know better, but his purpose in writing that was not to convey economic information from the author to the reader. His purpose, as is the case with most of his columns, is political, to lend support to the establishment economic model by virtue of his name and prestige through a straw man attack on an alternate economic model.

Prophecy did not fail. There was no prophecy to fail, except in the political and not economic imagination of Paul Krugman himself. Only those economists who subscribe to the mainstream view, and not the "doomsday prophets", were at all concerned about the fiscal cliff model.