I can speak to the truth of this one personally. The burden of government intervention in small business is so heavy that it is almost not worth doing it. My biggest reason for staying in business sometimes is to continue to aggravate the government.
The Day by Day Cartoon by Chris Muir, http://www.daybydaycartoon.com/2011/08/14/
While you’re at it, head on over and support is small business.
DLH
One of the ideas that keeps appearing as a solution to the debt crisis is that the president could unilaterally raise the debt ceiling by using the power some see implied in Section 4 of the 14th Amendment.
The problems I see with this interpretation is that it doesn’t seem like the 14th Amendment was intended to grant any president that kind of power and that the power to spend money at all still rests firmly with Congress.
Now, I grant that the debt ceiling question results from the fact that Congress authorized spending in excess of what it authorized in borrowing, and I also grant that the president has the responsibility to ensure the sovereignty of the United States, which includes its debts.
I think the underlying problem here is that there is no check against excess by the federal government against its citizens. Granting any president the right to borrow without the approval of Congress seems like an even worse slope than deficit spending already represents.
Yet, this problem is hardly cut and dried, and I am not sure where I stand on it either. What do you think?
DLH
In American politics, at least, underhanded tactics are a time tested way to bully one’s political adversaries into doing what one wants them to do. Barack Obama seems particularly versed in underhandedness, as he once again demonstrated yesterday.
The problem, as is usually true with underhanded political tactics, is that it does nothing to solve the problem and will likely make the problem worse. Obama has used fear to motivate millions of Americans to badger their representatives into doing something that could very easily prove destructing for the country, and he did so to achieve political goals that could very easily prove destructive to the country.
Let’s face reality: Social Security is part of the reason our federal government is so far in debt to begin with, and without substantial reform–yes, even cuts–to the program, our federal government cannot remain solvent. The specter of checks not going out in August is just the tip of a very deep iceberg for a government that borrows almost half of every dollar it spends.
If the president wants to be a real leader, he should present a plan that might actually save the government from default, both now and in the future. Instead, he makes the same old tired arguments he always has: tax the rich, spend like a drunk sailor on shore leave.
In the meantime, he fiddles while Washington burns, and now his song has been tuned to make people dance in fear.
DLH
As the budget and deficit talks between Congress and the White House drag on, I have been reading a lot of articles, especially from progressive sources, about how people need to act to preserve this or that spending program because of how beneficial it is. Almost every one of those programs shares very specific characteristics: they are almost always focused at a local problem and are almost always focused at helping individuals do something.
Here’s my idea: why not abandon the federal programs and try making these things happen ourselves if they’re really worth doing.
“But,” you might say, “where is the money going to come from?”
Isn’t that kind of the whole point? Because the federal government is taking so much money out of the the economy in taxes, there is no money for local people to do local things. If that reality is the case, then it makes sense to let the federal programs expire, let the money reenter the economy, and let local people take over doing local things.
Of course, the problem is a lot more complicated than that. For instance, even if the federal government makes these cuts, it won’t add up to the $1 trillion in deficit spending projected for next year, nor will it really dent the $14 trillion in debt the federal government has already accrued.
No, even if these locally focused federal programs expire, there still may not be money, and that reality must force local people focused on local things to consider an even more aggressive approach. In my view, it’s time for us to rebuild our localities so that they can withstand the disaster our federal–and state, really–governments have inflicted upon us.
This aggressive approach means abandoning the government solution in favor of hard work and sacrifice at the local level. It means accepting that the government, and the people who continue to benefit from government spending, is going to continue to rip us off. It means deciding to work together to find local solutions to local problems even when there is no money. It means caring enough about what happens to us and our neighbors that we’re willing to do what it takes to make things work for us.
These things can happen, but people have to do them. I will give you an example:
This year, the village of Covington, Ohio and several enterprising individuals started a farmer’s market (Facebook) on Friday nights in the parking lot of the government building there. It’s a small market, one I participate in, but it has the distinction of having no government involvement except at the local level.
Now, this market will live and die on two things: will people from the area who are doing things participate, and will people who live in the area frequent it? Frankly, this is a test of whether people believe a local thing can work, and it’s up to the local people to make it work.
Some might say that it’s just a farmer’s market, but I say it’s more than that: it’s local; it’s independent; it’s focused on the community; it’s the way jobs and the future will be created. But, these things will only be true if people actually participate.
So, here’s the test: will people participate locally, or will they keep expecting someone else to solve the problem for them? It’s up to you to decide.
DLH
I cannot help but get the sense as I watch events unfold in Greece that we are watching the unfolding of a slow motion disaster, the beginning of a whole series of disasters as western economies begin to fold under the weight of the incredible debt they have accrued over the past 50 years paying for social programs their nations could never afford.
No one ever wants to believe these kinds of things will happen to them or in the time they are living, but a quick look around the world right now with any kind of realistic outlook shows that they are happening and that they are going to affect every one of us soon.
The question that remains is what each of us is going to do in response to the massive and enduring changes that will result from this slow motion disaster. Now is the time for people who care to stop talking in terms of rhetoric and to start doing. Get ready while there is still time to do so.
DLH
I often wonder–as the debates rage on about government budgets, deficits, and taxation–how many people realize that most taxation is an assault on their productivity.
You see, all you have available to you in life is your time and your effort, collectively referred to as your productivity. You choose to invest your productivity in a certain way, then along comes the government who says that a certain amount of that productivity–quantified as income–belongs to them off the top. Then, they say another amount belongs to them if you take your quantified productivity and do anything with it–that is, spend it. Finally, the government says that they are going to spend the productivity they took from you on infrastructure, products, and services it is now going to force you to use–literally force you, as the government has engineered a near monopoly on the use of force–and they’re going to take even more of your productivity in the form of fees for the privilege.
As far as I can tell, this system of robbing people of their productivity means that people, in general, have become less productive. Why should anyone work hard and apply themselves if the government is just going to come along and take what you’ve done, especially since it takes more as you are more productive.
So, the reason that local, state, and federal governments are going broke, and are taking all the rest of us down with them, is that they have effectively capped the amount of productivity their citizens can produce even as they demand more of it to pay for their infrastructure, products, and services they are going to force you to use by taking even more of your productivity.
This is a self-defeating system and can only result in collapse. What’s ironic about this whole mess is that this is not the first time in the history of the world this very thing has happened, nor will it be the last. People think that letting the government force them to do something certain ways in return for giving up their productivity seems like an easier way, but it always fails. There is no such thing as something for nothing, and as the number of people to cease to be productive goes up, it’s not possible for those who try to continue to be productive to make up the difference. The system collapses into an tragic, entropic heap, usually a lot of people die, and those who worked the hardest–that is, those who were most productive–rebuild on the ruins.
The manifestation of this condition in 2011 is massive global budget shortfalls. The US federal government alone has spent $14 trillion more productivity units than it managed to collect since the end of World War II, or 280 million household-years worth of productivity. That means that, even at full employment (unemployment around 4 percent, or about 68 percent of the total population working), it would take all of the salary of all of the households two years to pay off the debt, and that would not provide a dime to the government to maintain anything.
So, what’s the solution? It’s easy: stop penalizing people for being productive. How do we do that and still keep all of our pet programs? In short, we can’t do that exactly. The pet programs will have to change, get cut back, go away altogether, but that reality cannot help but be offset by the benefit most people will gain from having access to more or most of their own productivity.
In real terms, this probably means some sort of flat or “fair” tax, probably in the form of a transaction (sales) tax on things regulated by the government. And, no, I do not believe such a scheme would penalize the poor more because, frankly, the poor would be less so as wages rose because businesses could grow because they would have more money being spent by people who have more of their productivity back.
Of course, these sorts of things rarely resolve themselves by way of reason, dedication, and hard work in any kind of mutually beneficial way. Again, history tells us, they usually resolve themselves by bloodshed and hardship, but there is always a first time for everything. What this first time would take is the people demanding their productivity back at the ballot box.
DLH
There’s been a lot of talk over the past several years about the incredible volatility in the commodity food market, especially with staple crops like corn , rice, and wheat. Prognosticators, researchers, and talking-heads go on and on about what to do to control a market that, like most commodities, proves to be beyond control.
I have an idea that would help eliminate such volatility in its entirety: get out of the market altogether.
“But,” you might say, “where will all our food come from? We can’t possibly grow enough to feed ourselves without the market, right?”
Well, yes, we can, and it can happen once we start growing food ourselves and buying what we can’t or won’t grow ourselves from people we know.
The problem with the modern commodity food market is not that there is not enough food, it’s that there are not enough people involved in raising it. The commodity food market exists because such a small number of people produce food that it has to be grown using industrial techniques that involve turning food into a raw material for manufacturing.
Contrary to what you may have learned in your history and sociology classes, the history of the world is not the history of people almost starving to death every year until the last half of the 20th century. In fact, people fed themselves quite well for the most part, usually on plots many people would think of as large gardens rather than farms. If they had not been able to do so, how do you think the world could have reached 6 billion people? They had to come from someone, somewhere, and where they came from they were well fed.
We can return to the same idea now, if we choose. It is possible for more people to return to tending gardens, growing small plots of staple foods, caring for small herds of food animals, and all without giving up the parts of modern life most of us enjoy. And, for those who want to go even further, the possibilities are endless.
But we all have to take a first step, and for most people that means passing up the grocery store in favor of the farmer’s market or the stores many local producers have set up to make their produce available to the wider public. If we all take that step, such markets and the producers who populate them will increase in numbers, prices will go down, and food markets will stabilize at the local level. It’s really rather simple, but you have to do it first.
DLH
End note: links to local food resources:
Local Harvest – Eat Wild – Seed Savers
Ohio Ecological Food and Farm Association
Columbus, Ohio North Market – Dayton, Ohio Second Street Market – Troy, Ohio Downtown Farmer’s Market – Piqua, Ohio Farmer’s Market – Covington, Ohio Farmer’s Market
Dear farmers,
I’ve read a lot about how none of you want cuts to federal farm subsidies or programs. I’m betting no one whose federal budget is on the chopping block right now wants their funding to go, but the extreme nature of the budget crisis means that something is, by definition, going to have to go.
My proposal to all of you is that we be the ones who stand up and say, “We don’t need the money.”
You see, from my point of view as a small farmer just getting started on the sustainable agriculture journey, the reason we have such a hard time making money and getting our message out as farmers is because so much of the money and so much of the message is controlled by the government. Because the government controls the money and the message, we farmers have very little control over how the money gets spent and what gets said.
For those of us who have decided to go it alone, the experience is quite different. I know from first hand experience what kind of money can be made and what kind of message can be put out there by a single farm. People are hungry–literally and figuratively–for what we are doing and they want more. In the next few years, unless something dramatically changes for us, our farm will be paying for itself without the benefit of a single government subsidy or program.
How is this possible? Because I, and those who work on and support my farm, understand that farming is a calling and a lifestyle, not just a job. I am my farm, and because of that, I care very deeply about what happens to it. Therefore, I am willing to put in the kind of blood, sweat, and tears that a mere job could never demand.
Now, is that kind of commitment for everyone? Of course not. Yet, I cannot help but notice that, if your’re not willing to make that kind of commitment, then what are you doing?
For those of us who are willing, the path leads away from the government. We don’t need government sponsored local food programs. We don’t need government price supports for commodity crops. We don’t need government rules telling us what, when, where, and how to plant.
What we need is our own determination and perseverance, and in a few years using those things, we would be free to do the thing we have come to know and love.
So let’s stop this dependence on the government and start our own independence based on the merits of our own effort.
DLH
Anyone reading this weblog knows by now that I blame the government for most of what is wrong with the economy. It spends way too much, arbitrarily regulates, makes promises it neither funds nor keeps, yet continues to grow in size and scope on an almost daily basis. None of these claims are to say that other elements have not contributed to the problems our economy faces, yet I cannot help but notice that everywhere there is a problem in our economy, there is also a government presence.
That said, I have been asked–more than once now–how I would fix the problem. Given that my ideal of a constrained-to-the-original-and-intended-limits-of-the-Constitution government would be almost impossible to implement in a meaningful way any time soon, I have tried to give the idea of a fix thought with the intent solutions that could be implemented now. Here is what I have come up with to date:
Replace the income tax with a national sales tax
One of the Constitutional mandates of the federal government is to regulate interstate commerce. Taxing individual income–that is taxing productivity–does nothing to fulfill that mandate. A national sales tax would, and would also function to fund the government in a way that could not be evaded by anyone. I agree that some amount of money should be exempted from such a tax to avoid the immediate impact it could have on lower income earners (in the form of a rebate, probably), and I think allowances should be made for certain kinds of wholesale business, but on the whole I would tax all sales at a nominal rate with targeted higher taxes on certain kinds of goods and services.
Abolish the IRS
With no income tax, there would be no reason to have an Internal Revenue Service, and it should be abolished.
Abolish the Fed
In my opinion, the Federal Reserve and the Reserve Bank system is one of the worst ideas ever conceived by modern man. Giving the government the ability to manipulate currency for its own gain, to control banks, and therefore to control every citizen’s money is immoral and unethical. Kill the Fed, and that action by itself could right the economy.
Institute an independent, judicially managed federal audit service
Our federal government is crooked. Anyone who has spent any time working for, studying, or being afflicted by our government knows this is true. It spends trillions of dollars every year, yet is constantly broke, fails to deliver promised services, constantly cuts back the services it does offer, even as those who fund it and maintain it continue to give themselves raises, make money from their positions, and pat the backs of their cronies. I would implement a quadrennial governmental review that would alternate with the presidential election cycle and that would deliver its report to the public before it delivers it to Congress as part of the budget cycle.
Thrift Social Security
Contrary to the claims of mafias like AARP, the current Social Security scheme is broken and cannot be fixed by mere tweaks. To fix the program, perhaps permanently, I would implement something very similar to the Thrift Savings Plan into which federal government workers invest as part of their retirement plans. If the system works for and has remained solvent for the government, why not for the rest of us?
Invest Medicare
I would replace the current Medicare scheme with individual medical savings accounts funded by pre-tax dollars with a government guarantee against most risk. Some sort of federally guaranteed catastrophic care insurance might be appropriate, but I think it would be rendered unnecessary by other reforms.
Abolish all federal subsidies
Yes, I mean all of them. Abolish everything from agriculture subsidies to student loans to unemployment, and instead focus on encouraging the growth of local and state entities to tackle any problems that might remain once the billions and billions of dollars currently tied up in handouts return to the economy.
Tort reform
I would reform and simplify our chaotic and unmanageable civil justice system so it favored justice over income for lawyers, especially with regard to medical, patent, and copyright lawsuits.
Reform the national incorporation system
Without an income tax, a lot of corporate law would no longer be necessary, but for what remained, I would implement a system that allowed for more categories of corporations in an effort to differentiate between small companies and the monstrous ones responsible for most of the abuse. I think I would make the consequences for breaking the law categorically far worse for larger corporations, and I would constrain the way larger corporations are allowed to function within the political and legal systems.
These are just several ideas that I think could go a long way toward improving our national situation in a short period of time, mostly by returning trillions of dollars to the economy. I am sure there are many people who would disagree, but then again, maybe they could offer their own solutions.
DLH
I advise everyone to pay close attention to the economic news over the next several days. From the reading I have been doing over the past 24 hours, the S&P downgrade of the government’s credit rating has the potential to be just the first of several hammer blows to the economy over the next week. This news is coupled with drastically rising wholesale inflation numbers, significantly rising commodity prices, the specter of rising interest rates, and the potential that S&P may only be the first to downgrade.
The potential outcome of this toxic brew of circumstances is that it could trigger yet another recession (or the second dip if the existing recession). This potential becomes most threatening in that a second recession will further reduce the revenue being collected by the federal government, increasing the size of the deficits at current spending levels just at the time when it became harder for the government to borrow money because of higher interest rates and more credit restraints. In the most extreme circumstance, the government may find itself unable to borrow sufficient amounts, forcing it to defund or reduce funding on programs in mid cycle.
Be ready before it is too late.
DLH