The Rules

These are the rules.  Learn them.  Follow them.  There will be a test.  It's called life.

You don’t create wealth by taxation.  Taxation just takes wealth away from some and gives it to others.  Redistribution is not creation.

You get more of what you subsidize and less of what you tax.   If you tax those who create wealth, you get less wealth creation.  If you subsidize illegitimacy and poverty (which go sadly and frequently together) you get more poverty and illegitimacy.  In other words, if you punish success, you get less success.  If you reward those who do not contribute their hard work, you get fewer folks willing to contribute hard work. 

Wealth creation happens more easily and more often in a stable economic environment.  Before folks lay their time, effort, and money on the line starting a new business and creating new jobs, they need to know that the rules of the game will be fairly and predictably applied and that the government won’t be tilting the playing field against them or doing magic tricks with currency, like flooding the marketplace with fiat dollars, thus making every dollar of every person worth less and less.

The condition of an apartment tends to follow its price.  If, by some legislative connivance, you put a price-ceiling on an apartment in order to keep down its rent, its condition will go down to that price point.  Virtually every rent-controlled housing project proves it.  Rent control is the parent of squalor and danger, not thrift or great neighborhoods.

The fundamental building block of a society is the family, not the allegedly autonomous individual.  Whatever undermines traditional families and traditional family roles tends to undermine the society as well.  Poverty tends to circle around broken homes.

The key to financial success is now what it always has been:  work harder than those above you; save your money; invest your money; and keep your family intact.

Whether you are a family or a government, don’t spend what you don’t have; make a budget; stick to it.  Good governments and good families are characterized by prudence and self-discipline.  Learn the important difference between a desire and a need.

To act wisely, you first must know wisely.  You must think with your head, not your heart.  Good intentions don’t mend the matter of foolishness at all.   

Dystopia Comes to Michigan: Detroit, Unions, and Welfare

         Because they are the two chief contributing factors in Detroit’s fiscal demise, I’m going to talk about (1) Detroit and unions and (2) Detroit and poverty, in that order. 

         (1) Detroit and Unions

         If you have gout, you must be careful what drugs you take and when you take them.  If you take drugs from the xanthine family, it can help control gout.  But if you take xanthine at the wrong time, it can actually cause an attack.  Labor unions are like xanthine.  They can do, and have done, some good.  But taken at the wrong time or in the wrong way, they produce problems, not solve them.  Detroit is a case in point:

         When the Detroit car makers were in their heyday, the unions thrived.  As a result, they became increasingly powerful and effective within southeastern Michigan.  They voted en masse for Democratic politicians and, as a result, those politicians often got elected.  Consequently, those elected politicians supported extending union representation to public sector workers.  Those public sector unions were very effective in acquiring generous pay raises, numerous vacation days, excellent health care coverage, and outstanding retirement packages for their members.  The unions could not, however, get for the city of Detroit the money it needed to pay for those impressive public sector benefits.  Even so, the city’s Democrat leadership, not known for fiscal restraint or for prudent taxation, simply went ahead and approved union contracts that the city could not afford without imposing higher and higher tax rates.  They taxed and they spent, which, for the Dems, is standard operating procedure.    When the tax rates got too high, auto workers and municipal employees, the chief beneficiaries of union power, jumped ship.  They moved out of Detroit into the suburbs, where their taxes went to support other communities, leaving Detroit a mere shell of a city, with block upon block of once thriving neighborhoods reduced to an urban desert.  In the ‘50s, it was white flight.  In the ‘60s, it was black.  Once folks reached the middle class and could afford to do so, they fled.  Detroit lost more than 60% of its peak population, declining from a population of almost 2 million to less than 700,000.  While the Detroit carmakers were thriving, things remained in, if not acceptable, then at least temporarily sustainable, condition.  They could afford to pay more, and did.  But once the carmakers had to compete against German, Japanese, Swedish, English, and Korean carmakers, the game changed dramatically.  Conditions worsened for everyone in and around the Detroit auto industry.  They had to re-consider, and even re-negotiate.  In order better to handle their worsening finances and their heavier financial burdens, workers moved out of town.  Retirees did too, taking their very large and generous retirement packages with them not simply to other towns or other states, but even to other nations, leaving nothing behind for Detroit but uninhabited houses and empty lots that produced no income for the city.  But the Democratic leadership of Detroit stayed the course.  It marched blithely and blindly in a direction it falsely believed was forward.  Despite a declining tax base, Democratic leadership continued to approve ever more generous contracts for its municipal union workers, and ever more welfare payments for its poor, thereby putting the city on track for a financial train wreck.  While the Democrats’ plan did not fix the problem, it did get Democratic politicians re-elected.

         With higher financial commitments, and fewer taxpayers to foot the bill for them, the city predictably plunged into greater debt, which it amplified by:  (1) extensive and expensive political corruption, and (2) maintaining a municipal superstructure much too large for its population and its tax base.  Over time, the city’s debt climbed not merely into the millions (or even hundreds of millions) of dollars, but to nearly 20 billion, which is clearly unsustainable for any city in rapid financial and population decline.  Detroit’s is the largest municipal failure in history, period.  That’s how terrifically incompetent Detroit’s leadership actually is -- the all-time worst.  Yet, rather than vote the incompetent Democratic bums out of office, Detroit voters kept them securely in place, voting Democratic regimes into power, one after the other, for more than 60 years in row.   No matter how badly Detroit Democrats did for their city, they kept control of it because they catered to the city’s most important voting blocks:  the unions and the poor, who wanted the money to keep coming.

         For this ongoing municipal travesty, Detroit voters have no one to blame but themselves.  Rather than judging the regime by its dismal results, they judged it by their own selfish concerns and by the regime’s mere stated intentions, as if those stated intentions were reliable and true and as if good intentions were ever a suitable substitute for good policies.  If your schools do not work, if the police take, on average, an hour to respond to a 911 call, if your favorite politicians get caught in scandals of various sorts time and again, then you need to change your vote.

         I’m talking to you, Detroit. 

         When outside entities, like the state of Michigan, came in to help the city out by taking on some of its financial burdens in order to operate traditional money losers like parks, Detroit voters, following the paranoid delusions of their race-baiting city leaders, resisted the offers, insisting that the state and other allegedly white-controlled entities simply wanted to steal things from Detroit.  Count on it:  If you vote on the basis of racial conspiracy theories, then you will vote self-destructively.

         The chickens, as the say, have come home to roost.  Detroit is the chicken coop.  It is now what it has been for years, perhaps decades:  It is incapable of self-rule.  It has gotten so bad that I suspect it might have to be disbanded and re-incorporated by fragments into other cites or else into the county or state at large.  Nothing less seems to offer any hope for the future.  Detroit voters cannot be trusted.  They vote for welfare programs and for union advantage, however unsustainable those things actually are.  Majority rule does not magically transform electoral nonsense into wisdom.  Detroit voters vote nonsense. 

         Speaking of political nonsense:  Just this week, several television talking heads said that Detroit’s failure was the result of government being too small.  I kid you not.  They think that if you can’t pay for the government you have, just make it bigger.  I can say nothing to such prodigious nonsense but this:  If you have no connection to reality, do not expect it to support your stupid views and do not expect to learn from reality when it proves you wrong.  The greatest municipal failure in history will not prevail to teach some folks this simple dystopic equation:  Unions +Democrats = Detroit.  Detroit = the greatest municipal failure in history.

         I could put it in a sentence:  If you want Detroit automakers to make a comeback, pray that the UAW makes inroads with foreign car makers.

         Those car makers are praying just the opposite, which is why, when they make cars here in America, they flock to right-to-work states, the list of which Michigan has recently joined.

         You can’t fix Detroit’s municipal ailments with casinos, with tax transfers, or with bigger government programs.  You cannot.  Government is not the fix in Detroit; government is the problem.  You can’t fix this problem by restructuring because no matter what structure you put in place bad political and economic policy will ruin it.  You fix it only by addressing what is wrong:  (1) unrestrained union greed and (2) the dissolution of the urban black family and the leftist political incentive system that dissolves it, to which I now turn.

         (2) Detroit and Welfare

         For more than 2000 years since Aristotle, we have known that whatever undermines the family undermines the culture.   Welfare payments, which drive fathers out of the home, do just that.  Those payments leave black youngsters without the fathers they need to provide the food, money, guidance, shelter, and examples that keep them on the straight and narrow.

         But welfare payments are predicated on the absence of father figures.   Consider this:  if you are a poor black young woman in the inner city who is living at home with your parents, and if you want personal freedom and the money that makes it possible, if you want a housing allowance, food subsidies, and medical attention, then have a child out of wedlock.   If you want more money, have more children -- but only by another man.  If your children are all by the same man, then the welfare bureaucracy thinks there’s a man around who ought to be footing these bills, and your checks will stop.  In short, they pay you to have children outside marriage.  The more children you have, the more money you get. 

         But sensible people know that poverty circles around broken homes, especially homes where the chief breadwinner is a woman with multiple children to support.  If you want to be poor, have lots of children outside wedlock.  In Detroit, more than 70% of the children in the black urban underclass are born outside wedlock, with no father around to support and guide them.  If you lack a father, your chances of dropping out of school sky rocket; your chances of taking drugs sky rocket; your chances of going to prison sky rocket; and your chances of having children who live the same desperate life you did sky rocket.

         It’s an incentive system from Hell.  When you pay folks to do the very things that make them poor in the first place, poor they will remain.  Remember this rule of political economy:  you get (A) more of what you subsidize and (B) less of what you tax.  Democrats subsidize illegitimacy, and more illegitimacy is what they get.  Illegitimacy is the handmaid of poverty.  In Detroit, illegitimacy is what they pay for.  In Detroit, it’s what they get, the result being countless folks locked into intergenerational poverty.  You do no favor for folks by turning them into mere wards of the state, generation after generation.  But you do keep them dependent upon government and keep yourself in political power, which seems to be the real purpose of such destructive government programs, whether they are aimed at the poor or the unions.

         That’s what leftists subsidize.  What do the leftists tax?  They tax prosperity.  They soak the rich, which means they drive away successful business owners, the only ones who have proved they are capable of making a profit and providing jobs for others, even in the hostile conditions provided by Detroit.       

         Here’s the headline:  Dystopia comes to Michigan.

         Watch out.  It’s coming to Illinois also; not just to Chicago but to the whole state.  After that, Washington, DC.

         Then we’re sunk, unless you change the way you vote.

         I’m talking to you, America.                           

Left, Lefter, and Leftest

BHO has repeatedly forced the federal government further and further into the economy, increased the national debt, and printed money recklessly.  In that light, read the following quotations:

(1) ". . . the role of the state in economy was made absolute, which eventually lead to the total non-competitiveness of the economy. That lesson cost us very dearly. I am sure nobody would want history to repeat itself."

(2) " . . . during the last months, we have been witnessing the washout of the entrepreneurship spirit. That includes the principle of the personal responsibility -- of a businessman, an investor or a share-holder - for his or her own decisions. There are no grounds to suggest that by putting the responsibility over to the state, one can achieve better results."

(3) "Unreasonable expansion of the budget deficit, accumulation of the national debt -- are as destructive as an adventurous stock market game."

(4) "It is of vital importance that the countries responsible for the world’s reserve currencies offer more transparency for their credit and monetary policies."

Those quotations did not come from Mitt Romney; they came from Valdimir Putin.

Now ask yourself, who's actually further to the economic left, Obama or Putin, the former Chicago community organizer and current President of the United States, or the former KGBer and current head of Russia?  Who learned from the Soviet debacle and who did not?

Voted for the wrong guy, did you? 

The Mortgage Deduction, or The Makers and the Takers

         I think the mortgage deduction was a terrific idea and ought to be kept.  Indeed, it ought to be expanded.  We ought to give even greater tax breaks to those who buy and maintain houses.  We need what they do.  But lawmakers, with their insatiable appetite for confiscating and squandering other folks’ money on government-sponsored projects that simply cannot succeed, are now considering its elimination.

         The mortgage deduction is good for us in many ways.  Here are just a few: 

         Human beings are creatures of incentive.  They have a nose for, and tend to follow, the path of personal benefit.  The mortgage deduction is just such a benefit.  It gives folks a reason to work hard, to save, to buy a house, to maintain and improve that house, to grow a family, and to maintain stable relationships – all good things in so many ways.

         To work hard is to have a job, keep that job, and to produce goods and services, which adds to the nation’s wealth, not just to one’s own.

         To save is to live responsibly and to make available through banks and other lending institutions more money for investment by others, investment that creates more jobs and more goods and services, also adding to the nation’s wealth.  More jobs mean more taxpayers, which means more government revenue precisely because of the mortgage deduction.

         To buy a housemeans being responsible and productive for many, many years -- or else the house is gone and you are on the street.  Economic stability is good both for families and for the economy.  When millions of folks buy homes and keep them, it’s good for the nation.

         To maintain a homerequires constant investment, which means more commerce and more jobs.  It also means better neighborhoods and the persistent watchfulness needed to keep those neighborhoods that way.

         To grow a familyin an environment of hard work, responsible action, foresight, personal stability, and community involvement is a blessing to all concerned.  Children raised in that context with those values are an enormous asset to the nation on all levels.

         To maintain stable family and community relationships is the best apprenticeship for the next generation and its ability to provide future stability, which is the prescription for avoiding the devastation wrought in our inner cities by a welfare system that destroys families, encourages instability, and that fosters irresponsible action and violence.

         In other words, the politicians in Washington want to cut things that make the nation better, things like the mortgage deduction, but not cut the things that undermine us, things like welfare and entitlements, which injure the very persons they are ostensibly designed to help.  It’s as if they never heard that you get more of what you incentivize and less of what you tax.  Let’s incentivize responsible home ownership and not broken families.  To the left that sounds evil, which is proof the left does not understand what its higher taxes and its higher subsidies have done to America and its citizens.

         But please understand that I’m not simply blaming the politicians.  Ultimately, we’ve got no one to blame for this but ourselves.  We voted the bums into office.  We’re getting what we deserve.  We’ll keep getting it until we learn to vote more responsibly.  Home ownership tends to do just that.  It tends to make us vote more responsibly.  When you’ve got something, you’ve got something to lose, and you vote so as not to lose it.  When you’ve got nothing, you vote so as to get something.  There’s nowhere else to get it except from others.  That rapacious incentive is the death of personal responsibility and autonomy for all concerned, the makers and the takers.     

Richard Ebeling on the Great Divide

 The following analysis comes from my friend and former colleague, economist Dr. Richard Ebeling, to whom many thanks for permission to reprint his ideas.

        The news media -- both the "mainstream" and the "fair and balanced" one -- has made much, since Tuesday's election results, of the ethnic, social, and cultural divide in the country in terms of which groups voted for which of the presidential candidates.  And it is clear that the two leading political parties appealed to different segments of the society.
         But the real divide in the country, may I suggest, is that between those whom John C. Calhoun called the "taxpayers" and the "tax-receivers" in the society.  That is, the divide is between those on opposite sides of the redistributive state.
         But it is not simply between those who, on net, pay the taxes and those who, on net, receive the taxes. (Though as Frederic Bastiat said, in the spider's web of transfers it is often difficult for a person to know if he has, on net, "gained" or "lost".)  It is the political philosophical divide between those who believe in the moral "rightness" of income and wealth redistribution and those who believe that an individual has an inherent right to that which he has honestly earned in the productive market place of trade and exchange.
         This is the real and true battleground of ideas within which the future of the country must and has to be fought out.
In this context it is important for friends of freedom to reach out and persuade people in various groups who have been falsely convinced that the "State" is their "champion."
         The Republicans and conservatives (and libertarians), I believe, have made a serious mistake in not reaching out to many in the Hispanic community who should be and can be receptive to the "freedom philosophy."  They or their parents came to America --like earlier generations of immigrants -- to make a better life for themselves and their children. Many of them are or desire to be self-supporting and hardworking, if only they had a chance to do so in the market. Many are or would like to be small business people, with the hope of being successful and leaving a legacy for their families.  Many are strongly community-oriented with an attitude of mutual self-help in times of personal or family trouble.
         But they have been duped by collectivist and altruistic rhetoric and demagogic politicians, inside and outside their own community, to believe that "capitalism" won't provide them with a "fair chance" and that the "State" is the only avenue for a better life through redistribution, regulation, and special favors to help the "little guy."
         What friends of freedom need to do is to help those duped in this way by the Statists to distinguish between (as Bastiat said) "what is seen and what is not seen," to understand that the siren call of collectivist promises is a road to their perpetual serfdom and not the path to the "American Dream."

Who Pays?

(1) If someone cannot pay for a service, then someone else -- not government -- has to pay for it.  Government does not pay for anything.  It uses the power of coercion to force some other citizen(s) to foot the bill.  The only money government has or can get is money it takes from citizens.

         (2) Health care is not a right because health care is a service provided by others.  We have no right to their work.  That is, we have no right to force others to do work for us.  If we could compel the work of others at our will, they would be slaves.  Your doctor is not your slave.  Neither is your grocer, your plumber, or your auto body repairman.  If you want health care, you must be willing to pay for it, just like you must be willing to pay for it if you want a muffler, a television, a computer, a cell phone, or groceries.  Those things all come at a price.  Someone must pay that price.  The only real question is, "Who ought to pay for it?"

         (3) Without exception, every public policy hurts someone.  If you decide to hurt someone by law or by policy, you'd better have a remarkably good moral and political reason.  Frankly, there just aren't any good reasons of that sort because to discriminate by law against the successful is an evil.  You must not target others by law because of their bank account any more than you ought to target others for their skin color or their gender.  Evil is evil regardless of your intentions. Good intentions don’t mend the matter at all.

         (4) If you want government involved in this issue at all, it should be involved only as a way to prompt or promote voluntary charity.  By that I mean that government should give tax breaks to those who voluntarily decide to assist the less fortunate in their time of need, whether that need be for health care, groceries, housing, etc.  The generosity of the American people is legendary.  Government, therefore, should be creating incentives that set that charity loose to do well the things for which government is shockingly ill-suited, things like charity.  

Freedom, Government, and Your Soul

Some years ago, in an Introduction to Political Thought course I was teaching, while we were discussing the American Constitution, I asked my 29 students if they would rather be free or safe.  All but one chose safety.  Monica, the lone dissenter, a girl who wore black to class every day, chose freedom.

When I asked her why, she said, “Unless you are free, you can never be safe.”

She was exactly right, of course.  Hers was an insight lost on too many contemporary Americans, who would much rather be safe than free.  For safety and security, they would willingly surrender to the nanny state all or part of nearly every freedom they have.  The nanny state is quite willing to provide for them in every way, from health care, to education, to housing, to retirement, to food subsidies -- as if government could live your life for you, and fulfill all your moral and personal responsibilities in your stead.  All government requires in return is that you sacrifice your independence and your inalienable responsibilities, which are the obverse of your inalienable rights.  (The inalienable rights that cannot be taken away imply responsibilities that cannot be forfeited or assigned.  Just as the rights are irrevocably yours; so are the obligations they entail.  If you want to keep them, rights and freedoms are challenges you must live up to.)  Government asks only that you become a permanent ward of the state, and vote in accordance with your dependency.  Too many modern Americans do not know what George MacDonald knew:  Security is a mortal’s greatest enemy.

You can never be what you were meant to be if you cede your responsibilities over to the state -- or to anything else.  To do so is to rob yourself of the chance to be yourself, to be the man or woman God intends.  He intends you to be conformed to the character of his Son, Whom no one ever accused of selling His soul to Caesar for a meal or a handful of coins, as if government were His God, bureaucrats were His bishops, and federally produced case manuals were His Bible.  Those things are not the means to freedom.  Truth is (John 8: 32).  And if you want to make free persons, you must bring them to the Truth (John 14: 6), not bind them to the state.  When governments operate as they ought, they are the protectors of freedom.  When they operate as now they often do, they are among its greatest enemies, and therefore also the enemies of sanctification and your soul.

Remember this:  Government money always comes at a price.  That price is your freedom and, therefore, your self-determination and spirituality.  If you expect to derive your security and your provisions from government and not from God or his people, then your very soul is stymied.  It was made for God, and for God only.  It cannot thrive or grow by feeding at the government trough.  Lift your eyes Higher, and your soul will follow.


P.S.  A few weeks later, after making her comment about human freedom and security, black-wearing Monica came to class dressed all white.
"Monica," I said, "you're wearing white!"
"Yeah, she replied, "I'm depressed."

"Balanced and Compromised"

           Suppose you were sick and needed a doctor desperately.

Suppose your doctor prescribed a mixture of real curatives and of deadly poison, say penicillin and curare.

Suppose your doctor defended this approach to medicine as both “balanced” and a suitable medical “compromise.”

From such a deadly and incompetent doctor, you doubtless would flee for your life.  One does not “balance” penicillin with curare.  If you do, nothing is “compromised” but your survival. 

As hideous, bizarre, or unimaginable as that medical scenario seems, its political equivalent works itself out around us every day.  I am sorry to say that this doctor’s political cousins live and work in Washington, where they have been for decades.  For anything that ails us, whether it has a political cure or not (and most human problems do not), they prescribe poison and defend doing so as a “balanced” approach and a suitable “compromise.”  They want to “balance” the curative of deficit reduction with the double curare of higher taxes and greater spending.

It will never do; it never has.

It makes as much sense as hiring a football coach who calls a lot of plays designed to lose ground because he wants a “balanced” offense and wants to “compromise” with the other side.  You wouldn’t accept that nonsense from your football program.  Don’t accept it from your government.

But if you refuse to accept nonsense from your government, those who work in that government will denigrate you publicly and then banish you to Middle Earth, as if you, and not they, were the devotees of fiction, fable, and myth.

It’s as if a whole nation has gone mad with Rodney Kingism:  “Why can’t we all just get along?”
We can’t all just get along because truth matters; because wisdom is irreplaceable; and because stupidity has consequences.

All but the most conceptually benighted among us (i.e., Harvard trained) understand that raising taxes in a time of severe economic hardship is a fool’s prescription.  It’s poison.  It kills.  It sucks away venture capital so that new businesses are not begun and old businesses are not expanded.  It creates a climate of uncertainty and economic oppression such that prudent investors either hold their money in reserve or else send it overseas, where policies are more sensible and predictable, where investment can actually pay off, and where the payoff won’t be confiscated to fund even more “balanced” poisoning.

In other words, sucking blood from the successful by raising their taxes (1) drives up unemployment to ever higher and higher levels; (2) higher unemployment levels create more poor; whom our political witch doctors (3) try to help by sucking even more blood from the successful, which (4) keeps the poor coming back to the witch doctors again and again, generation after generation, which (5) keeps the witch doctors in business and in power.

The political witch doctors and economic blood letters in charge of the federal budget, addicted as they are to their own medicine, cannot help themselves.  They cannot stop.  They habitually prescribe economic poison -- higher taxes -- and they relentlessly apply their tax code leeches to the veins of the successful.  It’s the only prescription they know:  Suck blood from some; turn it into an addictive; give that addictive to others; and keep them coming back for more.

In other words, imagine your horrid fate if your pusher were your doctor.

Of course, not all the political quacks and charlatans operate out of Washington.  We should be so lucky.  But we are not.  The witch doctors, the quacks, and the charlatans live and work here too.  We’ve been going to them for more than 60 years in a row, and they have tried to "balance" every proposed curative with old poison.  The results are everywhere to be seen.

Call your doctor “Democrat,” and call yourself “Detroit.”

The Flying Wallendas were a "balancing" act, too.  You might recall what happened to them -- in Detroit.