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Brief Essay on the Post Sept 11 Recession

by David Veksler David Veksler No Comments

Tuesday, March 26, 2002

Brief Essay on the Post Sept 11 Recession:

(this was written for my IHS application)

If government wishes to see a depression ended as quickly as possible, and the economy returned to normal prosperity, what course should it adopt? The first and clearest injunction is: don’t interfere with the market’s adjustment process. The more the government intervenes to delay the market’s adjustment, the longer and more grueling the depression will be, and the more difficult will be the road to complete recovery.
–Murray N. Rothbard

 

The basic and only guiding principle for politicians should be the protection of the citizen’s life, liberty, and property. However, having failed at protecting the lives of innocent Americans on September 11th, many politicians actively enacted and promoted policies that only worsened the recession and demonstrated the negative consequences that result from government meddling in the economy, even when done with the best intentions during an economics “crisis.”

Take airline subsidies for example. Congress reallocated billions of dollars from already struggling sectors of the economy and gave it to a shrinking airline industry. Money that could have been used by businesses and individuals to fund alternative methods of transportation and get through the downturn was instead diverted to keep empty planes on the ground and inefficient airlines in business. Investors know that the airline industry is a risky investment and expect high returns for their risk, but Congress decided to transfer that risk to the taxpayers.

Airlines however, were just the start of the run for taxpayer’s money.

The farming interests received an unprecedented $74 billion “emergency” increase of farm subsidies over the next ten years, even though the farming industry only faces a 3 percent yearly bankruptcy rate, whereas the average non-farm business faces a 13 percent yearly rate. Most of this money ends up in less than 10 percent of influential corporate farms and only for a few “core” crops. The great majority of farmers meanwhile must compete to stay in business with their politically nimble neighbors.

The steel industry is another example of government protectionism run amok. It is hard to find a reason why the steel prices need to be artificially inflated by higher tariffs in a time when companies need all the support they can get to purchase raw materials for production, but that didn’t stop Congress from renewing it’s dedication to an overly large and inefficient industry. Meanwhile, steel-using industries such as airplane and auto makers hire over 50 times the number of employees employed in the steel industry and would benefit significantly from lower input prices.

One would hope the that military budget would be immune from such a run for funds, but while politicians are seeking to spend as much of the $48 billion dollar defense spending increase in their districts, the military spends many billions of dollars on Cold-War era projects and an over-stretched military that would be better used to fight terrorism. Even harder to justify are the 100,000 troops stationed in Europe as part of the Warsaw pact – eliminating the troops and resources employed there could easily cover the additional costs of fighting terrorism at home and abroad.

The combined effect of all this increased spending has a chilling effect on the economy and prevents a natural recovery that would happen much more rapidly if the government were not involved.

To sum, perhaps the best response to the economic recession such as the one following September 11th is for government to stop meddling with the economy and focus on defending the nation.

The Moral and Economic Basis of Government

by David Veksler David Veksler No Comments

November 27, 2001

POLS 475 Essay #2

by David Veksler

Topic: When does “big government” become too big?

The Moral and Economic Basis of Government.

 

Throughout the last decade, “Big Government” has been frequently denounced by Republicans and Democrats alike, especially after the term was popularized by President Reagan in the 1980’s and Clinton announced that “the era of Big Government is over” during his second term. Nevertheless, the reality is that during Republican and Democratic administrations alike, the government keeps growing regardless of the party dominating Congress or the Presidency. While this fact may be surprising to the average American, the politically-savvy citizen knows that budgetary and political expansion is almost always in the interest of any given politician or bureaucrat regardless of which major party he belongs to.

The presence of such perverse incentives and bureaucratic inefficiency is often justified by the idea that there are certain activities and functions which are not supplied by the market, and while government is not always efficient at performing them, it is the only entity capable of providing them. However, when evaluating the size of the government, a crucial question is to ask whether the benefits of a certain government activity outweigh the costs – costs such as loss of income through taxes, decreased economic efficiency, and a loss of civil liberties.

Because government by its very definition has a monopoly on the use of force, all of its actions are acted through involuntary measures. Whether it is providing for a military or optional services to business, all its services cost money that must be paid in involuntary taxes that in principle depend on the “consent of the people,” but in practice are beyond the control of the average citizen. Thus, the economic justification of governmental action must be complemented by an equally important ethical justification, as each governmental action necessarily restricts individual rights. It is my opinion that these two mandates for the existence of a government are crucial to the justification of every governmental action and lead to the same conclusion – the only government that meets the twin mandates of moral legitimacy and maximal economic efficiency is a constitutional republic that limits its actions to the protection of life, liberty, and property and the creation of a few basic institutions to maintain an environment suitable for a free-market economy.

The Constitution of United States provides for a form of government very close to such an ideal, but governmental powers have quite clearly expanded far beyond the original boundaries of the Constitution. Thus, when we ask if government has become too big, we can answer the question by analyzing both the economic and ethical basis for government action and seeing if the current functions of government overstep these boundaries.

 

The Economic Basis of Government

It is worthwhile to consider the ideal model of democratic government and the reality of what happens when politicians come into the scene. Ideally, citizens demand government actions to “fix” situations of “market failure” – cases where the market leads to less-than-efficient outcomes, such as when a used-car salesman lies about the quality of the cars he sells. Ideally, taxpayers consent to the use of their money to correct the asymmetrical information problems, by say, mandatory information stickers on used cars. If politicians had the sole interest of the public in mind, this might indeed lead to greater economic efficiency, but human nature dictates that man is self-interested and reality quickly confronts such ideals. The bureaucrat who makes his living inspecting car dealerships is unlikely to suggest to his superiors that a consumer protection agency would be better at his job, or that bringing a mechanic to the dealership is a cheaper solution to government intervention. He is more likely to suggest that more regulations be placed on used car lots so that he may hire assistants or increase his work hours. Meanwhile, the consumer knows little of such inefficiencies in the inspector’s work, because the best judge of the efficiency of inspecting used cars – the government inspector himself is the one least likely to reveal the inefficiencies of his job — because they may lead to his demotion or loss of work. The point is not that regulation of used car dealerships is harmful to consumers, but that government bureaucracy is inherently inefficient and self-promotional, and the costs of such inefficiencies must always be balanced with the potential benefits.

There is another, more dangerous aspect of government regulation. The used-car dealership rarely takes regulation lying down. Rather, it will hire lobbyists, create ad campaigns to raise public support, court politicians, and in various other ways attempt to influence public policy. It is undeniable that business has such influence with the policy-makers of the United States. The problem is that as soon as an industry seeks to influence the government, it begins to compete on two levels – the competition for market power and the competition for bureaucratic power. Firms no longer strive to produce the best product at the lowest price, but for political “pull” – and the ones that win the war of pull are rarely the ones that are the most efficient. Thus, firms try to out-regulate each other out of existence rather than out-compete each other. Such is the inevitable side-effect of government regulation.

Finally, it is crucial to recognize that government is not especially good at producing any one good – it is only capable of transferring wealth from one party to another. Taxes, tariffs, licenses, and regulations either take wealth or create barriers to market entry, and private and corporate welfare, agricultural subsidies, tax-breaks, and regulations give wealth and monopoly powers to other parties. There are many arguments for such transfers of wealth, and it is impossible to answer them all in a short space, but it is sufficient to consider the previous two arguments, as they inevitably corrupt any good intentions legislators have when they enact such legislation.

When one considers the above effects of market regulation, it is easy to see why politicians have such a bad reputation. Many reformers propose further regulations and agencies to oversee politicians’ actions and finances – but this only increases the size of government. The real solution was provided to us by the Constitution of the United States — while imperfect, it contained built-in limits on the power of government to intervene in the market. When the government remains small and stays out of the regulation business, businesses have little interest in lobbying government because their livelihood is not at stake, and consumer groups have little success in imposing regulation because of court oversight of legislation. Such is the ideal size of government. When it strays into the market, it immediately becomes too big and acquires tremendous incentives to expand more and more.

At this point, it is reasonable to mention that the free market requires certain institutions to function optimally. Property rights are the basis of a capitalist economy and several government institutions provide for their protection. Civil and criminal courts provide for mediation of personal and business conflicts, a patent office creates additional property rights in trademarks and patents, and other agencies may extend property rights to airway frequencies, marine territories, and even space in the form of non-interfering satellite orbits. Today’s federal agencies accomplish all these tasks, but they also inject a large amount of additional regulation that creates much inefficiency. Radio and television spectrums are complicated by a complex grid of grants to use certain frequencies that have come to resemble quasi-property rights, yet grossly deviate from market outcomes due to massive lobbying in the part of telecommunications companies, radio and television content providers and other such groups. The same idea applies to the fields of aviation, medicine, and many others, and the net effect is a stifling of innovation and combined with massive, bloated federal and state governments.

Protection of life, liberty, and property includes protection from criminals and outside invaders. The police and the courts accomplish the first task, and a military accomplishes the second. As long as their task remains solely to protect the rights of citizens, agencies such as the FBI and CIA are justified parts of the government, and may even impose certain restrictions on trade and immigration for the sake of national security. But when the military or police agencies focus on missions that favor a certain industry (such as oil interests in the Middle East) or are unrelated to the protection of citizens rights, (such as politically motivated forays into distant nation such as Bosnia and Somalia) as they often do, they once again lead to “big government” and expand endlessly as they acquire more and more goals unrelated to their primary duties but favorable to their bureaucratic instincts.

Regulations designed to “protect” the public from “coldhearted” industry have several additional flaws. Besides the economic harms described above, they assume that the common law courts will be unable to create an environment that discourages dangerous and unsafe products from being introduced into the market. This is clearly not the case as there have been many well-publicized examples of courts being too harsh on business, not too lenient. Public juries and court judges are clearly less likely to be bought off by rich corporations than politicians. Protective regulations also ignore the role of consumer report services such as Consumer Reports, which will inevitably spring up in the place of regulation and provide efficient reporting product safety and quality ratings such as the Good Housekeeping seal does today. Furthermore, new legal tools such as class action suits and technological progress in measuring damages allow even widespread harms such as air and water pollution to be tried and discouraged by the courts.

It is worthwhile to mention that there are alternatives to civil courts in the form of private mediators, alternatives to the police and military through private provision of defense services through insurance firms, and alternatives to patents through trade secrets, but these are only supplements to the basic duties of a government and suitable replacements if and when they are judged to be better than their public alternatives.

This is the basic outline of government’s legitimate functions. Any additional functions lead to “Big Government” and can only be detrimental to its citizens, because just as the used-car salesman has perverse incentives, so do bureaucrats, and they have no market oversight to punish their trespasses.

 

The Moral Basis of Government

 

One of the reasons why a moral justification of government action is necessary is because oftentimes equity rather than efficiency arguments are used to justify redistributive programs such as welfare, Medicare, Medicaid, social security, various other job-preservation policies of government, and even public education. These functions are major portions of the federal and state budgets, and if one is to maintain that a limited Constitutional view of government is ideal, it is crucial to dispute these programs on ethical as well as economics grounds. The major problem with redistributive programs is that they violate the primary purpose of government – to protect rights, and condone legal theft under a guise of democratic approval.

Redistribution as theft may be explained by looking at the two basic models of elected government – republican and democratic. The basic purpose of a republican government is to maintain a monopoly on the legitimate use of force by the consent of those governed and use it to protect individual rights from being violated. These are the rights to life, liberty, and property. Any other supposed rights – such as the right to healthcare, food, or a job necessarily infringe on the primary rights to liberty and property because welfare requires that wealth be taken by force from one party and given another.

An alternative view is presented by a democratic government. Such a government is ideally a mirror of the majority opinion, and the larger the public participation in such a government, the stronger its mandate to rule. In such a government, equity may have a higher value than property rights in some instances, and the individual thus becomes a tool for a vague ideal known as the “social good”. The problem with such a notion is that society is not a living entity – only the individual is capable of enjoying goods, and a standard of social good ultimately leads to an inefficient and unjust redistribution of wealth to those groups of society who have the most political influence. The concept of social good is not only at the heart of socialist regimes, but also pervasive in all “mixed-economy” states, including America.

It is possible to debate redistribute policy in terms of individual versus social responsibility, as the major political parties do, but this is not necessary. It is sufficient to point out that such policies violate the basic mandate and purpose of government — to protect individual rights and subject them to social good under the guise of democracy.

Finally, redistribute policies also have perverse effects on the recipients as well as the involuntary contributors to such policies. By preempting private charity, they discourage voluntary charity and provide an excuse to bureaucratic expansion. In a sense, high taxation combined with government social programs in place discourages private donations. Ironically, the enormous funds earned for the 9-11 terrorist attack suggest that the private sector has the ability and interest in providing charity, given proper information about causes and widespread motivation to be active. Another case us social security — a program that despite being a pyramid scheme is popular with both parties. Nevertheless, it a classic example of a government program. It forces working persons to give up some of their wage for a retirement program that consistently has a lower rate of return than the market—even if the market is in a recession! While there are many private retirement plans that are much more efficient than social security, bureaucrats have incentives to promote their own version out of their own self-interest and successful sell the necessity of the program to the public, which is far less aware of the program’s faults that the people running it. Meanwhile, the cost of social security withdrawals prevents all but the well-to-do from being able to afford a real retirement policy, and is likely to be a giving a false sense of security to those who rely upon the government version if some of the dire predictions about its financial stability hold true.

Thus, the moral premise and sole purpose of government is the protection of individual rights. Any other claimed rights to a minimum provision of any good or service are invalid because they necessarily infringe on this basic purpose. Government is a contract among the people it governs that maintains a monopoly on the legitimate use of force, but the will of the majority does not give it the right to go against its basic purpose and make any individual a tool of the state or the whim of the majority.

Listserv: How I Discovered Selfishness

by David Veksler David Veksler No Comments

October 8, 2001

How I Discovered Selfishness

From: David Veksler <[email protected]>
Date: Mon Oct 8, 2001 12:14 am
Subject: PHIL class response/Reaction to reaction to someone’s reaction/My Life’s Story/Command vs Autonomous Ethical Theory

So,
Unlike some of the "simple, sheltered minds" here, I've given my morality and philosophy a lot of thought for as long as I can remember,
so this is a long story, and if you are not willing to view your innermost beliefs in a critical light, you might as well skip over it.

I have never been satisfied with the dominant "social" morality that I found surrounding me. What follows is my reaction to the various
ideologies I have been exposed to in my lifetime and how they led to to my current beliefs.

*fadeout waaaay back to my childhood....*

Much of my childhood was spent in the former USSR, where the dominant morality was serving the State, -- blind faith in the actions of the State, and self-sacrifice of one's life- goals in exchange for the job which the state deemed you fit for. As an example, I remember, our teacher asking as what we wanted to do with our lives, and various kids in my 4th grade class said engineer, pilot, astronaut, etc. Then the teacher told us that that's all nice but we have to keep in mind that the State needs factory workers, potato pickers, etc, so we have to sacrifice our dreams, because the state knows what's best. Well, my parents didn't think that the State knew what was best, and they came to the U.S. shortly before the USSR collapsed because, as my dad told me long before the left --in America you decide what you want to do with your life. Because we were Jewish, we were quickly embraced by the Jewish community, and I, more that the rest of my family, discovered God with an intensity easily overshadowed the State. Even as a young child, perhaps because I was so young, I quickly adopted the idea that my life's purpose was to "serve God" and as I learned the horrors of the State (we lived close to Chernobyl for many years) I adopted what I thought was an Absolute (Divine Command Theory) in the form of the Ten Commandments, etc. The standard of value I adopted was God's Will, and the criteria I adopted was the ideal of the Torah (that's the Old Testament for you Christians) For several years I studied Jewish law in detail, including a summer-long trip to Israel. I learned a lot about Judaism, but I struggled to continually redefine my notion of God because I was unable to come to a logical notion of God, and I was unable to accept the idea that anything could be beyond my comprehension.

Eventually, I saw that an ethical life had its own benefit, without the need for heavenly reward or retribution, and adopted an Autonomy of Ethics position. I struggled for years as I read many different notions of God, and was particularly attracted by the writing of Baruch Spinoza, who had a semi-scientific first-cause notion of God. In effect, I became a secular humanist, whose standard of value was Society, as it was the only standard that provided me with a concrete evaluation of my actions. I believed that the Pious was that which was utilitarian, or provided the most good for the most people. With time, I stopped believing things "on faith" as my belief in God wavered, and yet I still embraced the ethic of the Jewish religion as a ready guide to life, and believed it its correctness by virtue of its practical success in leading to the happiness of the Greatest Number. I explored Christianity, but was dissatisfied with its negative view of existence, and refused to accept that man innately evil (i.e., original sin), and that man on earth is doomed to suffer, because I saw that happiness was indeed possible, and a virtuous life had its own earthly reward.

My ethical/religious development might have stopped there, but then I discovered Environmentalism. In search of the Greatest Good for the Greatest Number, I became a politically active liberal, and supported distributive economic policy, welfare, etc, as a means to the "debt" of self-sacrifice I felt we owed to society, and through environmentalism, to our grandchildren. This might have been all well and good, but I could not resolve the inner conflict I felt between the desire to "repay" the American society to whom I felt indebted for my welfare, and the happiness that I was supposed to achieve by doing this. This debate became a troubling issue to me, when I became an economics major in college, and learned, despite the insistence of my professors and religious leaders -- that self-interest was the one and only driving force behind wealth, that wealth had to be *created* not found and exploited as a natural resource in the form of a worker's labor or an ore dug up from the earth. I learned that the enforcement of property rights was the best way to protect the environment, and that charity based on need rather than merit encouraged men to live as moochers rather than producers -- basically that self-interest was the sole driving force behind the creation of the tools that raised our lives above that of cavemen, and allowed us to have the time to sit around discussing how we need to go back to a "simpler" time and decry the "materialism" that kept our lives from being "solitary, poor, nasty, brutish and short."

It was around this time that I discovered that it was the same idea that I had carried from my days in the USSR to America --- that whether I valued the State, God, or Society, it was collectivism that I had placed as my highest value, and collectivism meant the good of anyone but myself. About this time, a friend told me that my ideas resembled those of Ayn Rand, and in reading her books, I was suddenly able to name and define the beliefs that had recently changed the focus of my life.

*fadeout back to philosophy class...*

So, when we talk about what it is that gives morals their meaning, I say that morals to not come from God or a vacuum. It is MAN that gives values meaning, and it's is his welfare that defines them. The basic criteria of values is therefore man's LIFE. Anything that furthers one's life is moral and good, and anything that detracts from life, is thus immoral, and can only lead to death. The only way to live a moral life is then to follow our selfish, rational self-interest, not momentary hedonistic pleasure, but the long-term happiness that comes from living a successful life.


Well, that's all for now,


David V...
[email protected]

********************************

Aurelie Hardwick wrote:

> I've been struggling with this class from day one. Not because the
> topics or readings are difficult, but because my simple, sheltered
> mind refuses to "open up" during class discussions. I realized the
> extent of my problem just today. What follows probably isn't going to
> seem noteworthy to most of you, but for me, it's a huge breakthrough.
>
> In Tuesday's class, we were discussing/debating the Divine Command
> Theory and the Autonomy of Ethics position. As soon as I dutifully
> copied the definitions for each in my notes, I realized that the
> obvious theory for me to support was that of the Divine Command,
> because I am a Christian, and aren't I supposed to believe that
> /every/ good thing comes from God (morals certainly being good)? Since
> then I've been searching all of my C.S. Lewis books for some profound
> words to back up my "belief" in the idea that ethical principles are
> commands of God. Frustratingly enough, I found nothing. So I decided
> to read some more. While reading "What is Virtue" in our supplement
> packet, I kept thinking about what Pro! fessor Pappas said about
> someone being able to be a theist and still believe in the autonomy of
> ethics. Now maybe I'm just really simple-minded and confused in my
> thinking, but I think that if the whole idea of virtue can be separate
> and distinct from God, then perhaps morals are separate from God also.
> And I believe that the idea of virtue is very much separate from God.
> There is a quote in the article ("What is Virtue") based on an
> observation made by Aristotle that children "learn virtue by following
> rules of good behavior, hearing stories of virtuous people...and
> imitating virtuous models: parents, friends, and worthy public
> figures." This doesn't say anything about learning virtue by watching
> /religious, /or God-fearing people. This pointed out t! o me the
> obvious fact that not everyone who has morals has them as merely a
> by-product of their religion. I myself had morals long before I became
> a Christian. Now I don't know if these non-religious people get their
> morals from watching religious people acting on their morals, or from
> determining that they should do "good" just for the sake of doing
> "good." Either way, being non-religious, they probably aren't leading
> moral lives because they feel commanded by God to do so. Reading on, I
> came to this statement: "Sometimes virtues clash, as justice and
> compassion often do. Choices must be made, one good placed above
> another." Since choices have to be made between "goods," maybe God's
> commands are like hints on! which "good" to choose, because He has
> already made the choice for us (at least those of us who are
> religious.) And He makes His decision from the choices that are
> already there, apart from Him. So now I'm thinking that the idea of
> virtue is clearly autonomous. And while I have no proof of this right
> now, I'm going to say that if virtue is autonomous from God, and if
> virtue is a "branch" of ethics, don't ethics (morality) have to be
> autonomous from God also?
>
> (If anything I said sounded like total nonsense, y'all please go easy
> on me. This is the first time I've allowed myself to think outside the
> box- and it's really scary to be sharing this with all you
> philosophers! Still, I would love to hear your comments, so I can try
> to expand my thinking some more, and then hopefully clear things up.)
>

When should government promote or assist private business?

by David Veksler David Veksler No Comments

Monday, September 24, 2001

When should government promote or assist private business?

POLS 475 Essay #1

by David Veksler

Never. That is the short answer, and it is a substantial claim considering the plethora of subsidies and financial support given to business by the federal and state governments today. There are several reasons why government assistance is actually harmful to the economy and they clearly explain the failure of each government assistance policy to achieve the desired goals. The main policies used to “help” businesses are: tariffs and other protectionist measures, tax breaks and low interest loans, and subsidies to corporations and agriculture. Unfortunately, while every one of these measures is widely used today, they all end up hurting competition, business, and consumers.

It is no secret that protectionist measures hurt consumers and competition, as any introductory economics class will quickly show, but Congress rarely heeds the free-trade argument. America’s trade deficit at the end of 2000 was a record $370 billion according to Commerce Department figures, yet it accompanied the largest economic growth cycle in America’s history. This confirms the idea that trade deficits do not cause poor economic performance; rather, they typically accompany improving economic conditions because they are a sign of increasing foreign and domestic investment. Despite ideas to the contrary, trade deficits do not cause Americans to lose their jobs, as during the last nine (as of 2000) years of rising deficits, the unemployment rate has fallen by 0.4 to record lows. As the Cato Institute reports, as the economy experienced the recent recession, the monthly deficit figures fell right along with the stock market. (The 2000 U.S. Trade Deficit: Select Cato Commentary, http://www.freetrade.org/new/DGTD2000.html. February 21, 2001) Nevertheless, the Bush administration has been invoking protectionist measures for the steel industry among others, in what is probably a sign of their political influence. America’s protectionist policy is clearly a solely political one, and a costly one at that, as protectionist measures are harmful to consumers and manufacturers as well as hypocritical, since United States often encourages the WTO and other global free-trade organizations to lower their own member nation’s tariffs.

Tax breaks, low interest loans and other such financials incentives are used mainly by states to attract business to their area. These measures are costly to the taxpayers because as research shows, the money spent attracting business rarely pays of. It is hard to measure the effect of government economic policy on a national level, but it is possible to learn a lot from looking at individual states’ policies. As all states want to attract business to their area, all fifty states have passed a variety of tax and financial incentives that can be compared to measure their relative effectiveness. According to a study by Thomas R. Dye in the Journal of Politics # 42 (Winter 1980) pp 1085-1077 titled “Public Policies and Economic Growth in the American States,” there is actually a negative relationship between the number of incentives enacted by states and the foreign and manufacturing investment as percentage of GDP (’92-’94) The r coefficient is only .108, so there is no statistically significant relationship visible. There are however, several outliers, such as Minnesota and New Hampshire that only have one and two out of the six incentives studied and fare unusually bad in investment, while Kentucky, with all six investments, fares unusually well. Perhaps, politicians are impressed by these exceptions and ignore the general failure of state incentives in attracting business. If we look at employment growth, another important measure of a state’s economic well being, we find that there is a slight positive correlation, but the r-value is only .199, so once again there is no statistically significant relationship between economic incentives and employment growth. Additionally, these incentives have little effect becuase all of the states have at least one incentive to attract business, and 48 have at least three, with the majority having five or six. Once again, there is no relationship between the number of incentives provided, the wealth of a state, or the success it has in attracting business, and financially successful states like Texas and New Hampshire have three and two incentives respectively, while poorer southern states often have all six incentives enacted. (Friedman, Miles. Directory of Incentives for Business and Development in the United States. Washington: The Urban Institute, 1991.) As the evidence shows, the end effect of these state incentives to businesses is increased taxes to individuals with little or no reward in attracting business to a state.

Subsidies, the most expensive from of government assistance to business, otherwise known as “corporate welfare” are by far the most expensive form of government assistance to private business. Subsidies to businesses cost more than $75 billion of the yearly federal budget. (“Corporate Subsidies in the Federal Budget.” Testimony of Stephen Moore before the House Budget Committee, June 30, 1999.) Instead of helping business, they have several harmful consequences. Originally meant to correct marked failures, the highly political process of distributing these subsidies creates huge market distortions, effectively throwing a wrench in the market system. As Stephen More says, “The major effect of corporate subsidies is to divert credit and capital to politically well-connected firms at the expense of their less politically influential rivals.” While more than 90 percent of American businesses manage to survive just fine without subsidies, government grants, loan guarantees, or insurance, they do have to pay higher taxes to support their politically connected competitor, which lowers their competitiveness significantly. Agricultural subsidies are yet another case of price supports harmful effects. Out of 400 farm commodities, two dozen received price supports, of which 80 percent goes to farmers with a net worth of over $500,000. The end effect agricultural supports is that the bigger, politically well-connected farms get subsidies from the government, while over a million small farmers struggle to compete with them. (“Corporate Subsidies in the Federal Budget.) No wonder small farms have trouble staying in business.

The end result of all this government “help” is quite clear — government distorts the market system by politicizing the economy, and favors larger, better-connected bossiness over smaller, less influential ones. State financial incentives cost money in higher taxes without any visible success in attracting investment. Finally, tariffs lead to higher manufacturing costs for imported and domestic raw materials, and eventually lead to higher consumer prices. Meanwhile, the group most hurt by these programs is the consumer, who has little influence or knowledge of these programs, but ends up paying for them due to higher prices for imported and domestic goods and higher state and federal taxes to pay for the various government programs.

Abroad in search of monsters to destroy

by David Veksler David Veksler No Comments

Wednesday, September 12, 2001

Abroad in search of monsters to destroy

By David V.

When a friend called me with the news about Manhattan early Tuesday morning, I dismissed it as a sick joke until I turned on the television and realized that this was no joke. Certainly, I had many times thought of the possibility of something like this happening — after all, the towers rival only the White House as a symbol of American Capitalism and its global presence. But isn’t our government the most powerful nation in the world? Shouldn’t it protect us from terrorists blatantly terrorizing our skies? As the news got worse and worse throughout the day and the politicians pronounced threat after threat on an invisible enemy, I felt the urge to help my fellow Americans. I will give blood tomorrow when the lines here at Texas A&M University are shorter than an hour, but first, I needed to understand what happened, how this happened, why this happened, and what lessons we can learn from this horrific tragedy. What follows is my response, based on answers I found by looking beyond the front-page news and opinions I have previously held.

As most people know, the evidence so far points to a hijacking organized by an international network of terrorist cells, well-funded and well-organized, planned long ago, by men who were determined to send their message of hate to Americans. Their attack was planned to do the maximum amount of damage, as the jets were flown with a deadly accuracy, a maximum load of fuel for an intercontinental flight, and detailed knowledge of the structure of the buildings, timing of the New York traffic, and the security measures present on the planes themselves. The two towers were designed to withstand a direct hit by a small plane (which is why they did not tip over), and the tempered steel designed to withstand a fire for two to three hours while the occupants evacuated, but the dozens of tons of highly explosive jet fuel combined with many tons of paper and flammable materials in the buildings to quickly overwhelm the structural integrity of the buildings, which then collapsed downward under their own weight within an hour. The towers and the thousands of occupants inside them never had a chance.

It is hard to imagine the many thousands likely dead at the site of the bombing, as the numbers have no faces to most of us, but it is not hard to imagine what nearly 100,000 New Yorkers went through as they waited throughout the night for a loved one that had not come home, hoping desperately that he or she was still alive under the rubble or unconscious in some hospital. Having many relatives in New York myself, I received news early on that my own relatives there were ok, and this provided some relief as I heard stories of men and women buried alive and jumping in desperation from the top of the collapsing towers.

As serious as the toll to human life has been in New York and the Pentagon, perhaps an even greater toll will reciprocate throughout the United States and the world, as the economic effect reverberate and affect every one of us. The anonymous workers at the trade center towers facilitated the movement and creation of a huge amount of wealth that daily sustained our welfare. As horrible as the loss of life at the Pentagon is, the loss of whatever services were provided in the destroyed sections of that compound certainly do not compare to the unrewarded and for the most part unknown contribution that the traders, financiers, entrepreneurs, and thousands of other workers daily made to our economy. To compound the problem, the grounding of all flights by the FAA (except government flights, of course) will cause millions of tons of cargo, packages, and postal mail (they carry an estimated 10% of the total US daily economy) to be undelivered, not to mention canceled business trips, conferences, vacations, visits to see family and friends, lost school time, and untold other economic damage.

The reaction from politicians was immediate, but it did very little to comfort me. I heard President Bush say “Terrorism against our nation will not stand,” but it has stood, and all the trillions of the CIA, the FBI, the ISA, NSA, and all the other agencies that took our money to protect us from terrorism have completely failed us. Numerous airport security checks and the scanners, the safety regulations, the air traffic control network, the F16’s (Why were they 10 minutes too late?) the government snooping of telephone, cellular, internet, and all other forms of interference in our civil rights could not stop a bunch of determined and well-funded thugs from carrying out their plot. I suppose I should not be surprised. The FAA can stop guns from getting on a plane and perhaps after doubling the normal hassle associated with flying it will even be able to prevent knives from getting onboard, but a half dozen of desperate and unarmed men, with nothing to lose could still overpower a lightly loaded plane and send it down in a maelstrom of destruction, leaving the FAA powerless to stop them.

What makes men so evil as to kill thousands of innocent civilians? I hear people talk of being unable to comprehend the mindset of the terrorists who perpetrated this, and the Palestinians who cheer and fire guns up in the air in joy at the news of this tragedy. Perhaps I can provide a clue. As a disclaimer, I must admit that I am Jewish myself, and my entire extended family is divided between Israel and the New York City metropolitan area, so many people assume that I support U.S. involvement in the Middle East. However, while I strongly support Israel and the cause of Zionism, I strongly oppose U.S. involvement in the Middle East conflict, and consider it partly to blame for the current tragedy. Former president Bill Clinton made his role in the conflict between Israel and Palestinians the showcase of his presidency, trying to get his mug in as many photos of Palestinian and Israeli leaders as he could, while hiring lobbyists to get him the Nobel peace prize, but what has he achieved? Israeli forces and armed Palestinians are involved in a long and bloody conflict, with the blame being shifted to the United States, and our country becoming an enemy to a score of Middle Eastern countries, who otherwise could be our peaceful trading partners. I do not think that the United States should stop being an ally of Israel, as Israel is the only democracy in the entire region, but our continuous entanglements in the affairs of other countries and imperialistic policy have easily made us an enemy whose size makes it easily vulnerable to attack. The United States military, stretched thin in a global deployment exerting an influence unprecedented in the history of past empires is unable to defend itself or our own country, while Congress and the President send our troops to yet more battlefields in Somalia, Iraq, Macedonia, Yugoslavia, infringe the rights of China, all for some vague moral duty, or, much more likely, the political advancement of our political leaders. Meanwhile, the Palestinians and their allies fight back in the only way that is possible in a conflict with a military superpower—through acts of terrorism.

There is no doubt in my mind that we must find and decisively punish the cold criminals that organized and planned this crime, as well as their financiers, who expected to get away with their part in it only a few dollars poorer. However, the thousands of lives lost in this tragedy will be in vain if we do not learn the lesson that George Washington first taught us and instead continue our path of global policing and imperialism. As Washington said, we must keep “Peace, commerce, and honest friendship with all nations, entangling alliances with none.”

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by David Veksler David Veksler No Comments

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