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  • The National Debt is the Most Serious Crisis America Faces

    A generation ago, the national debt stood at just a smidgen over USD $4 trillion and a young presidential candidate named Bill Clinton was discussing a great plan he had to have it entirely paid off by now. Oops. The national debt is now 5.5 times bigger.

    More than anything, this astoundingly bad public policy is the fault of Barack Obama, undoubtedly the most irresponsible president in our history…who added on more to the national debt than all other presidents combined in an orgy of Washington, DC, debauchery that saw the size of the federal government mushroom while hundreds of thousands of new bureaucrats were added to federal payrolls, and Washington, DC, housing prices skyrocketed as federal government employees and private industry sub-contractors paid for by the government reveled in their six-figure paychecks and outrageously lavish healthcare and pension plans… all paid for by us, the taxpayers.

    Obama’s stewardship of our national finances was truly obscene, but George W. Bush was nearly as bad. He has even less of an excuse, in fact, because he had a Republican Congress to work with for most of his eight years. During that time, Bush took us from USD $5.8 trillion to USD $10 trillion, something that seemed reckless at the time. Of course, in light of the Obama USD $10 trillion spending extravaganza, Bush looks prudent by comparison.

    people with law and medical degrees and MBAs from Ivy League universities, people that come from the finest law practices and accounting firms and consultancies and banks and financial institutions in the country…and our end result is the debt avalanche we now have before us?

    Why do we believe politicians of either party when they tell us that they will make our national debt a top priority?

    Why is it that the American people seem to fail to understand how ruinous our national debt truly is and what an astounding percent of our national budget we are now spending on servicing that debt?

    Former Pennsylvania Governor Ed Rendell has penned an op-ed which presents some eye-opening statistics as to just how bad our national debt really is. By next year, the cost of servicing the national debt (paying interest on it), will exceed the cost of Medicare. By 2025, it will exceed the cost of our military spending, making it the most expensive item in our entire national budget!


    Today’s high school and college students are well-versed in a whole host of social justice topics, courtesy of their Marxist professors. How much would you venture to bet that they hear little to nothing about the national debt and what it means for American workers and families?

    Today’s campus culture social justice themes include the “right” to “free” healthcare and education… transgender bathrooms… the need for “safe spaces”… the enforcement of campus “speech codes” designed to make sure that no one ever gets their feelings hurt… a robust and comprehensive policy on identifying and denouncing inappropriate Halloween costumes… and a stale and tired Marxist discourse on the exploitative nature of American capitalism.

    But… when was the last time college students ever got together to protest a USD $22 trillion and rising national debt? Do they understand the threat, even?

    And even more importantly… do they understand why and how we have gotten here?

    Quite simply… we have arrived at this point by spending infinitely more than we collect in tax revenue, mainly on things that have no mention in the Constitution as being a function of the federal government.

    Public sector unions, and the millions of workers and hundreds of millions of dollars that they spend every year to support the Democratic Party, play a fundamental role in not only our ruinous levels of federal debt but the debt crisis facing our state and local governments as well.

    Nothing is more ruinous to our future than the ever-increasing demands of government employees… specifically public sector union employees such as those at AFSCME and the SEIU. They live like kings and queens on the backs of actual working class people… all the while donating hundreds of millions of dollars to the Democratic Party to ensure that their six- and seven-figure paychecks never run dry.

    They couldn’t care less about government budgets or the national debt or actual working-class people. They couldn’t care less about “public service.” There are only two things that public sector unions care about: soaking the rest of us for the biggest paychecks possible… and shoveling money to socialist politicians like Bernie Sanders and Elizabeth Warren.

    But it is not merely their salaries and the fact that government employees rarely, if ever, get fired. It’s the highly lucrative nature of their healthcare and pension plans… plans to which they contribute far less than their private sector counterparts.

    For states, these plans have proved a bitter pill to swallow, and have led to the greatest fiscal crisis in the United States that you have most likely never heard about: unfunded pension liabilities. When you drill down into the details, it is almost impossible to believe that the situation is true. Essentially, states promise outrageously generous pensions to state employees (who, of course, rally to support whichever candidate promises them the most money), and then fail to fund those very plans… kicking the can down the road to future administrations and generations.

    Now, it amounts to a USD $6 trillion crisis.

    For the libertarian and conservative movements, it’s time to stand for fiscal responsibility and common sense. It’s time to stand against government employees and their demands, and explain to the American people that the government is spending their money on entirely unconstitutional (read: illegal) things. It’s time to take a strong stand against the public sector unions like AFSCME and the SEIU that are leading this country to fiscal ruin.

    And more than anything, it’s time to force Trump to actually live up to his promise of draining the swamp: reigning in the excess and beginning to drastically reduce the size of our bureaucratic state: firing large numbers of government employees.

    These government employees are driven by self-interest.

    It is hard to envision government employees stepping back from the situation and saying:

    Well, I have a pretty generous salary, healthcare, and pension. It’s far more generous than the private sector enjoys. And we are $22 trillion in debt, and the government is spending too much money. So… as much as it pains me to say… me and some other government employees should lose our jobs. The government is spending too much money, deficits and debt are growing, and I should go look for a job in the private sector.

    That is never going to happen. Public sector unions are a millstone around our neck, and as many commentators have noted, they have no natural enemies.

    Except, of course, for citizen watchdog groups and independent media outlets who are not afraid to denounce them and point out their ruinous nature.

    I, for one, will not rest until we return our government to the vision of the Founding Fathers, who would not have approved of any of this. Let’s start by ending the Department of Education, the Department of Housing and Urban Development, the Department of Energy, and the Department of Agriculture. That would be a good start. We could use the money we saved to begin paying off our national debt, and government employees would have to do something that the vast majority of real working class people have to do every day: compete in a highly competitive free market economy to earn our daily bread.

    This article is reprinted with permission from Panam Post. 

    David Unsworth

    David Unsworth is a Boston native. He received degrees in History and Political Science from Washington University in St. Louis and subsequently spent five years working in real estate development in New York City.

    This article was originally published on FEE.org. Read the original article.

  • Egonomics in One Lesson

    For much of human history before the Enlightenment and the birth of economic science in the 18th Century, power, pretense, and superstition plagued the thinking of men. Some people today, often under the banner of “socialism” or “progressivism,” seem determined to turn the clock back to those benighted times.

    Pick a century before 1700. Any of them after the fall of the Western Roman Empire would suffice for my purpose here. In terms of ideas about society, what makes it tick, and who should be in charge of it, the changes over those centuries were painfully glacial compared to the explosion of intellectual liberation and creativity in the 18th.

    The consensus in the Middle Ages held that certain men (and occasionally some women too) were meant to rule and everyone else was meant to take orders. If the king or queen or their minions didn’t run our lives for us, chaos would reign. Where there was order, it wasn’t of the peaceful, Hayekian “spontaneous” variety; it tended to be the result of fear of those with political or ecclesiastical power.

    Then along came the thinkers of the Enlightenment—men with names like Diderot, Bacon, Descartes, Locke, Hume, Ferguson, Spinoza, Montesquieu, Voltaire, and Smith. They stressed reason over the irrational; proof and evidence over baseless assumption; the sanctity of the individual and his rights over the arbitrary dictates of monarchs and priests. The “Century of Philosophy” bequeathed to the world a new understanding of things like liberty, markets, science, human potential, toleration, separation of church and state, and limited, representative government.

    Economics as a discipline of its own was born in this period. In France, the philosophes pioneered in suggesting that the clock of society need not be wound by presumptuous government, that there are natural forces at work that can propel us to progress without the ham-handedness of despots playing God. Adam Smith pulled it all together in The Wealth of Nations, wherein he explained the marvelous mechanism of “the invisible hand” and proclaimed that “in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.”

    Before Smith and the Enlightenment, pompous men who rationalized power for themselves over society believed in what I call “Egonomics”—or what F. A. Hayek might call “the fatal conceit” or “a pretense to knowledge.” Whatever they wanted was what the rest of us should get. They were, after all, the ones smart enough to put themselves in the driver’s seat. They could provide the order that society craved. And they convinced a lot of people that this was perfectly natural, beneficial, and indisputable.

    After Smith and the Enlightenment, the pseudo-science of Egonomics gave way to the genuine science of Economics. To apply Hayek again, this time with a little license, the curious task of Egonomics was to fool men into believing far more than they know about what they dreamed they could plan, whereas “it’s the curious task of Economics to demonstrate to men how little they really know about what they imagine they could design.”

    And so with the flowering of Economics in the two centuries since Smith, the world began to learn some very important truths. Here are a few:

    1. Kings and queens really don’t know what they’re doing most of the time (and modern Congresses aren’t much better) and they make needlessly miserable the lives of others upon whom they impose whims and schemes.
    2. Information is decentralized, not concentrated in the minds of a few. Wisdom begins, the old saying goes, in the admission by each of us of how little we actually know. In free markets, information is coordinated from disparate sources by the interplay of supply and demand as reflected in flexible prices.
    3. Value is a very personal, subjective matter. It is not inherent in a thing; it’s “attached” to things by individuals, each of whom acts in the marketplace to improve his well-being. That, in turn, generates a usually-unintended improvement in the well-being of others in the process.
    4. A spontaneous order arises naturally from market participants that is infinitely more “orderly” and conducive to wealth creation than any plan of the power-wielders could ever hope to be. (As Austrian economist Murray Rothbard pointed out, this was actually a resurrection of a notion put forward at least as far back as the 4th Century B.C. by the Chinese philosopher Zhuangzi, who wrote that “good order results spontaneously when things are let alone”).

    Economists Frédéric Bastiat in the 19th Century and Henry Hazlitt in the 20th showed us that if our economic thinking is enlightened, each of us will be humble enough to recognize that planning our own life is a full-time job; planning the lives of others is futile and destructive. If our economic thinking is thorough, we will consider the effects of any proposal, act, or policy on the long run and all people, not just the short run and a few.

    The Swiss psychologist Jean Piaget, the father of the study of “cognitive development,” argued that children are “egocentric” because they contemplate the world from their own perspective exclusively. A child fails to realize that others might not enjoy or value things the same way or to the same extent that he does. He does not comprehend that others may have very different values, so the thought that it might be wrong to impose his on them doesn’t enter his mind.

    As the child grows up, he doesn’t shed his self-interest but to be a responsible adult he must come to understand that it should be satisfied only by respecting others. To assume one’s own superiority and seek to impose it is to practice Egonomics well past when it should be jettisoned as toddlerism.

    There’s so much that the world of Economics has taught us that the Egonomics of earlier times obscured or opposed.

    So what about the statement from my first paragraph, Some people today, often under the banner of “socialism” or “progressivism,” seem determined to turn the clock back to those benighted times?

    I see the recent resurgence of socialism and its euphemistic-sounding sister called progressivism as the reincarnations of medieval Egonomics. Listen to every presidential candidate who labels himself one or the other. Each has a litany of society-bending proposals and virtually every one of them is compulsory. Bernie Sanders declares the dire necessity of “fundamentally transforming our culture” through new programs and mandates from on high.

    The “Green New Deal” of Alexandria Ocasio-Cortez is chock-full of proposed edicts that get right down to even the nitty-gritty of retrofitting your house with environmental gimmicks. In her infinite wisdom, she knows which industries should be suppressed and which ones should be subsidized. She just knows. Everything. She also declares that she’s “in charge” even though she’s not. And these two people are not isolated; they are cheered on by the mainstream media and large swaths of at least one major political party.

    Take the matter of wealth creation, an utter necessity if poverty and distress are to be reduced. As they teach us much about where wealth comes from, serious economists use terms like entrepreneurship, investment, return on capital, risk-taking, division of labor, innovation, customer service, incentives, etc. The egonomists of the socialist/progressive persuasion seem to have no theory whatever of wealth creation. They have only endless schemes to grab it and divvy it up. They talk and act as if wealth materializes magically just so they can personally redistribute it.

    This is not science. It’s not Economics. It’s medieval Egonomics rearing its ugly head again. It’s coming from people, supremely confident in their ignorance, who have overdosed on self-esteem. They fancy themselves as scientists for society. In the most egregious cases, it’s an illustration of the Dunning-Kruger Effect on steroids.

    Economics teaches us to be mindful of what things cost and who pays for them. Socialists and progressives are allergic to such matters. Even in the face of massive annual budget deficits and a national debt exceeding $22 trillion here in America, they propose “free” stuff by the boatload.

    They make almost no effort to cost it out. How can it all be paid for? It’s the same line every time: soak the rich.

    Never mind that you could take every penny the rich have and fund but a fraction of their proposals, and the government could only do that a single time before the rich would flee or quit. The egonomists essentially say, “Have faith in us. We have good intentions. It’ll all turn out OK, somehow. And if you keep asking us about the numbers and why they don’t add up, it’s because you’re greedy, racist, selfish, or you don’t want people to have health care.”

    As I watch these antics on the nightly news, I think to myself, “Intellectually speaking, this is what the Dark Ages must have been like.”

    Austrian economist Ludwig von Mises nailed it when he wrote in Bureaucracy in 1944,

    The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau. What an alluring utopia! What a noble cause to fight!

    Socialists and progressives should be showered with honorary degrees in Egonomics but any they may have “earned” in Economics should be returned to sender.

    Egonomics or Economics. It’s like alchemy vs. physics. They’re not compatible so take your pick. Do you want to be an egonomist or an economist? A single letter makes all the difference in the world.

    Lawrence W. Reed

    Lawrence W. Reed is president of the Foundation for Economic Education and author of Real Heroes: Incredible True Stories of Courage, Character, and Conviction and Excuse Me, Professor: Challenging the Myths of ProgressivismFollow on Twitter and Like on Facebook.

    This article was originally published on FEE.org. Read the original article.

  • 3 Reasons Why Facebook’s Zuckerberg Wants More Government Regulation

    Facebook CEO Mark Zuckerberg wants more government regulation of social media. In a March 30 op-ed for The Washington Post, Zuckerberg trots out the innocent-sounding pablum we’ve come to expect from him:

    I believe we need a more active role for governments and regulators. By updating the rules for the Internet, we can preserve what’s best about it — the freedom for people to express themselves and for entrepreneurs to build new things — while also protecting society from broader harms.

    But what sort of regulation will this be? Specifically, Zuckerberg concludes “we need new regulation in four areas: harmful content, election integrity, privacy and data portability.”

    He wants more countries to adopt versions of the European Union’s General Data Protection Regulation.

    Needless to say, anyone hearing such words from Zuckerberg should immediately assume this newfound support for regulation is calculated to help Facebook financially. After all, this is a man who lied repeatedly to his customers (and Congress) about who can access users’ personal data, and how it will be used. He’s a man who once referred to Facebook users as “Dumb F-cks.” Facebook lied to customers (not to be confused with the users) about the success of Facebook’s video platform. The idea that Zuckerberg now voluntarily wants to sacrifice some of his own power and money for humanitarian purposes is, at best, highly doubtful. (Although politicians like Mark Warner seem to take it at face value.)

    Fortunately for Zuckerberg, thanks to the economic realities of government regulation, he can both support government regulation and enrich himself personally.

    Those who are familiar with the effects of government regulation will not be surprised to hear a billionaire CEO throw his support behind it. Large firms with dominant market share have long made peace with government regulation because it often helps these firms create and solidify monopoly power for themselves.

    Specifically, there are three ways that regulation will help Facebook.

    Many Facebook critics like to claim that Facebook is a natural monopoly. That is, they think Facebook is so dominant in the marketplace, that it can use its supposed market power to keep out competitors. We’re told that Facebook has so many users, no serious competition will ever be possible.

    But remember MySpace? People used to say exactly the same thing about that social media platform. A recently as 2007, The Guardian was asking “Will Myspace ever lose its monopoly?” Xerox corporation was once a tech powerhouse, as well. It has now all but disappeared.

    Obviously, the answer to The Guardian‘s question is “yes.” But we’re now hearing about how Facebook is a monopoly. The reality, however, is that unless governments artificially erect barriers to entry, no firm can expect a safe place as a dominant firm. Other firms with new ideas will come along, threatening the older firm’s dominance.

    The answer to this problem, from the point of view of a firm like Facebook, is to make things more expensive and difficult for smaller startups and potential competitors.

    Facebook knows that if government regulations of tech firms increase, the cost of doing business will increase. Larger firms will be able to deal with these additional costs more easily than smaller startups. Big firms can access financing more easily. They have more equity. They already have a sizable market share and can afford to be more conservative. Large firms can absorb high labor costs, higher legal costs, and other high fixed costs brought on by regulation. A high-regulation environment is an anti-startup, anti-entrepreneurial environment.

    In an earlier age, many might have taken Zuckerberg’s new proclamation as sincere. Fortunately, we live in a cynical age, and even a beat reporter at Mashable knows how this game is played. Mashable‘s Karissa Bell writes:

    It may seem obvious that Zuckerberg’s proposal is self-interested, but it’s important to remember that his ideas are, of course, designed to help Facebook….

    And by touting the social network’s existing work around political advertising and content moderation, Facebook has an opportunity to determine the rules the rest of the industry will also have to abide by.

    Part of the reason Zuckerberg has made peace with the idea of government regulation is the knowledge that Facebook will be one of the most powerful groups at the negotiating table when it comes to writing the new regulations. In other words, Facebook will be in a position to make sure the new rules favor Facebook over its competitors.

    This is a common occurrence in regulatory schemes and is known as “regulatory capture.” When new regulatory bodies are created to regulate firms like Facebook, the institutions with the most at stake in a regulatory agency’s decisions end up controlling the agencies themselves. We see this all the time in the revolving door between legislators, regulators, and lobbyists. And you can also be sure that once this happens, the industry will close itself off to new innovative firms seeking to enter the marketplace. The regulatory agencies will ensure the health of the status quo providers at the cost of new entrepreneurs and new competitors.

    Moreover, as economist Douglass North noted, regulatory regimes do not improve efficiency, but serve the interests of those with political power:

    Institutions are not necessarily or even usually created to be socially efficient; rather they, or at least the formal rules, are created to serve the interests of those with the bargaining power to create new rules.

    After all, how much incentive does the average person have in monitoring new regulations, staying in touch with regulators, and attempting to affect the regulatory process? The incentive is almost zero. The incentive for regulated firms, on the other hand, is quite large.

    Not only will a small start-up lack the resources and political pull to challenge Facebook in the rule-making sphere, but those small firms won’t be large enough to be considered important “stakeholders” on any level. Thus, Facebook will continue to wield more power than its smaller competitors through its regulatory power.

    Another big benefit of regulation for Facebook will be the potential for using government regulation to limit Facebook’s legal liability when things go wrong. Bell continues:

    By offloading decisions about harmful content, privacy rules, and elections onto third-parties, Facebook may not have to take as much of the heat when mistakes are made.

    Put another way, Facebook can protect itself from both the legal and public-relations repercussions to itself when it uses its platform to delete the posts and visibility of users with whom Facebook employees disagree.

    As FTC commissioner Brendan Carr put it, Facebook’s proposed regulatory agenda would allow it to “outsourc[e] censorship.” Not only would this put the federal government in a position to be directly determining which opinions and ideas ought to be eliminated from tech platforms, it would also allow Facebook to pretend to be an innocent third party: “Don’t blame us for deleting your posts,” Facebook could then say. “The government made us do it!”

    Moreover, regulation can be employed by firms like Facebook to shield the firm from lawsuits. Potentially, in the marketplace, Facebook could be sued for using its platform to endanger domestic abuse victims or victims of suicide. Whether or not the firm should be found guilty of such things would be complex legal questions decided on a case-by-case basis. However, regulation can be used to circumvent this process entirely, and serve the interests of large, abusive firms.

    This phenomenon was explained by Murray Rothbard in the context of construction regulations:

    Suppose, for example, that A builds a building, sells it to B,and it promptly collapses. A should be liable for injuring B’s person and property and the liability should be proven in court, which can then enforce the proper measures of restitution and punishment. But if the legislature has imposed building codes and inspections in the name of “safety,” innocent builders (that is, those whose buildings have not collapsed) are subjected to unnecessary and often costly rules, with no necessity by government to prove crime or damage.

    They have committed no tort or crime, but are subject to rules, often only distantly related to safety, in advance by tyrannical governmental bodies. Yet, a builder who meets administrative inspection and safety codes and then has a building of his collapse, is often let off the hook by the courts. After all, has he not obeyed all the safety rules of the government, and hasn’t he thereby received the advance imprimatur of the authorities?

    Let’s apply this to the tech industry: Firm A is a new startup which has developed a way to make money in a way that satisfies consumers and does not expose them to any unwanted harassment, de-platforming, or violations of privacy. Meanwhile, Facebook (Firm B) continues to use its dominance in the regulatory process to keep in place costly regulations that prevent new startups from making much headway. These same regulations, however, continue to allow privacy violations, and other abuses up to a certain threshold established by regulators.

    Thus, the outcome is this: Firm A is unable to deploy its new, inventive, non-abusive model at all because regulatory costs are too high. Meanwhile, Facebook can continue to endanger and abuse some users because regulations allow it. Moreover, Facebook enjoys greater immunity from lawsuits because it complies with regulations. Thus consumers are denied both the benefits of the new startup and legal remedies from suing Facebook for its continued abuse.

    In short, Zuckerberg’s pro-regulation position is just a pro-Zuckerberg position. By further politicizing and regulating the internet, policymakers will assist large firms—and their billionaire owners—in crushing the competition, and ensuring the public has fewer choices.

    This article is republished with permission from the Mises Institute.

    Ryan McMaken

    Ryan McMaken is the editor of Mises Wire and The Austrian. Ryan has degrees in economics and political science from the University of Colorado and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

    This article was originally published on FEE.org. Read the original article.