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Government Spending Hurts the Economy

Posted by Jeff (ILoveCapitalism) at 6:27 pm - December 3, 2012.
Filed under: Big Government Follies,Economy

Last quarter, I wrote a guest post called Does government spending help the economy? Phrased as a question, because it reviewed an Arthur Laffer article that (in my view) fell just a little short of proving its case.

But yes, we know government spending hurts the economy. And Philip Bagus of the Mises Institute illustrates why. (Hat tip: Zero Hedge)

Tom wants to open a restaurant. He makes the following calculations. He estimates the restaurant’s revenues at $10,000 per month. The expected costs are the following: $4,000 for rent; $1,000 for utilities; $2,000 for food; and $4,000 for wages. With expected revenues of $10,000 and costs of $11,000 Tom will not start his business.

Let’s now assume… reduce[d] government spending. Let’s assume that the government closes a consumer-protection agency and sells the agency’s building on the market. As a consequence, there is a tendency for housing prices and rents to fall. The same is true for wages. The laid-off bureaucrats search for new jobs, exerting downward pressure on wage rates. Further, the agency does not consume utilities anymore, leading toward a tendency of cheaper utilities. Tom may now rent space for his restaurant in the former agency for $3,000 as rents are coming down. His expected utility bill falls to $500, and hiring some of the former bureaucrats as dishwashers and waiters reduces his wage expenditures to $3,000. Now with expected revenue at $10,000 and costs at $8,500 the expected profits amounts to $1,500 and Tom can start his business.

Bagus’ example is exaggerated for clarity: the point is that government spending takes resources of all kinds from the private sector (whether natural, financial, human, industrial, real estate, etc.). Even if government doesn’t commandeer the resources – if government generously (or wastefully?) bids top dollar for them on the open market – matters are worse, because businesses and consumers alike are faced with higher costs. Struggling businesses shut down, or are never started. Consumers can only spend on essentials, as food and gas and housing prices are all raised, and as jobs are lost. Sound familiar?

Conversely, if government spending is cut, then economic resources are released back to the private sector. Both businesses and consumers find their costs dropping (or at least not as high as they would be). Struggling businesses survive, and adventurous people start new businesses.

Leftists are terrified of that phenomenon. They coin scary words for it, like “deflation”, to try to stampede people into supporting ever-greater government spending. But “deflation” only means, declining prices. It’s a very good thing. When people have to pay less for food and gas and flat-screen TVs, their living standards have just gone up. They can spend more on other businesses. And when businesses can pay less for real estate, and ex-bureaucrats add plentifully to the unskilled labor markets, we get more new businesses and new jobs.

Such an economy will see more loan defaults; but that, too is a good thing: Irresponsible lenders (and borrowers) are punished by their defaults. And responsible lenders (and borrowers) thrive, as economic resources are released from the terrible burden of having to service giant, uneconomic debts that can’t be repaid.

Leftists have scary words for the loan-default cycle also, like “depression”. But a depression (such as the U.S. Great Depression) only lasts beyond a year or two when, and because, government deliberately gets in the way of economic adjustment (which the U.S. government did, under both presidents Hoover and Roosevelt). The U.S. economy came roaring back from the Depression of 1920, precisely because a small-government president (Harding) allowed free markets to work quickly to clear the economy’s deadwood.

Leftists have more scare terms for people, like “lack of demand”, “liquidity trap”, and emphasizing the initial recession that must happen when we first cut government spending and fire some bureaucrats. But I can’t take the space, right now, to refute every leftist canard.

Suffice to say that Obama’s spending policies are exactly wrong for our economy. They prevent economic recovery. Leftists claim that Obama’s policies haven’t been given enough time to work. They’re right… in a different way than they think: Obama’s policies can never work. No amount of time will be enough for policies of ever-greater government spending to fix the economy.

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140 Comments

  1. Is anyone truly surprised that Levi can’t help but love a totalitarian state that imprisons anyone who disagrees with them?

    Of course the little fascist tries to claim the events were in 2008 when in fact they were in August of 2011. Also this was India, not Madagascar (The 2009 ‘raid’ was over different wood). These also were ‘infractions’ that India didn’t feel rose to criminal activity. So you have US officials, persecuting US citizens under Indian laws India didn’t feel were violated.

    (Also from above, Pascal Vieillard, relied on Government Bureaucrats to make sure his Pianos were compliant. 17,500 (and legal fees) later, he’s a criminal, for trying to comply).

    ALso, surprise, Levi doesn’t have an issue with stealing other people’s policy w/o any due process.

    Now hush Levi, the adults are talking.

    Comment by The_Livewire — December 6, 2012 @ 12:18 pm - December 6, 2012

  2. TL: Right, it was India. Levi wasn’t even talking about what V was.

    Here is what I was talking about:

    [Memphis Daily News] The company stated it assumes the raid stems from an alleged violation of the U.S. Lacey Act, legislation that requires anyone coming into the U.S. to declare with unambiguous specificity the nature of materials being brought into the country.

    According to Gibson: “The U.S. Lacey Act does not directly address conservation issues but is about obeying all laws of the countries from which wood products are procured. This law reads that you are guilty if you did not observe a law even though you had no knowledge of that law in a foreign country. The U.S. Lacey Act is only applicable when a foreign law has been violated.”

    [Powerline:] America is a trivial importer of rosewood from Madagascar and India. Ninety-five percent of it goes to China [ed: !!!], where it is used to make luxury items like $800,000 beds. So putting Gibson out of business isn’t going to do a whole lot for the forests of Madagascar.

    It has come out that Juszkiewicz is a Republican donor, while the CEO of one of his principal competitors, C.F. Martin & Company, is a Democratic donor. Martin reportedly uses the same wood, but DOJ hasn’t raided them…

    Oh, one more thing: if Gibson has violated the Lacey Act, so, perhaps, has Michelle Obama, who gave French First Lady Carla Bruni-Sarkozy a Gibson Hummingbird acoustic guitar with a rosewood fret. Maybe, when the time comes, she can share a cell with Mr. Juszkiewicz.

    If nothing else, this incident illustrates the misguided priorities of the Obama administration. Harassing American businesses on frivolous grounds is not exactly what our economy needs at the moment. But the anti-business Obama administration just can’t help itself.

    Comment by ILoveCapitalism — December 6, 2012 @ 12:36 pm - December 6, 2012

  3. … which shows that Bush was a Big Government guy who did a lot wrong, as I have long been saying.

    You miss the point as usual, Levi: Whether or not the law was supported by a special interest (the logging industry),

    1) It’s a clear example of Obama harming American jobs; the more so because

    Holy shit, ain’t that something? The government prosecuting somebody for violating a law is ‘a clear example of Obama harming American jobs.’

    Let me try again to explain why that’s bullshit. This wood from Madagascar is extremely rare, it only grows there. It’s also endangered, which means that any industry that relies on this wood is threatened by its impending extinction. This concerns a lot of parties, including the Madagascan government and companies like Martin and Gibson. There is a certification process in place which allows companies to buy the wood so long as the trees were grown and harvested in a sustainable way. This ensures that the Madagascan government maintains one of their few natural resources, and allows guitar manufacturers to have access to this rare wood without risk of over-harvesting.

    This protects American jobs. Martin and Gibson have a better awareness of their supply line and can feel confident that they’ll be able to make guitars out of this wood for years to come. They’ll be able to hire workers to build the guitars, and they’ll also be able to charge premiums for guitars made of the rare wood, increasing profit margins and allowing for further reinvestment into their labor force or whatever else.

    But then Gibson decides that they’ll just sneak in a little bit of the illegally harvested wood. Gibson is willing to undermine the sustainability and the durability of their industry to gain a competitive advantage. If anyone in this scenario can be said to be harming American jobs, it’s Gibson. By contributing to the illegal logging trade, they are helping this tree become extinct, which means losses for themselves and their competitors in the near and short term. I already mentioned the adverse impact of illegal logging on our own logging industry, so that’s another way they’re harming American jobs.

    And our government caught them and punished them for it. Yes, it will probably hit Gibson’s bottom line, but it’s not too bad. It’s a $300,000 fine and they’ll lose the cost of their illegally-obtained wood, but we’re talking about maybe $1-$1.5 million total for them to learn this little lesson. If the CEO decides to make that up by firing people, that’s his decision, but he still has the responsibility for taking such a stupid, short-sighted risk. This is a bad manager, and bad managers tend to cause people to lose their jobs. But it’s not the government’s fault, and indeed, the government is actually doing far more to save and protect American jobs by enforcing this law.

    ILC, I know you tend to believe that businesses will regulate themselves, and you might even be right to suggest that the private companies that make guitars would have hammered out an agreement on their own to ensure the sustainability of this rare wood. But if a company is willing to take the chance of breaking the law when there are confiscations and fines to worry about if you get caught, then what’s keeping them from reneging on their agreement with the other companies when there are absolutely no penalties?

    2) Obama’s enforcement was entirely selective. Martin committed the same violations as Gibson and were not nailed. The difference? Martin donated to Obama. Gibson didn’t.

    Oh wait, I keep forgetting that you love arbitrary enforcement, if it favors the Left.

    Martin did not commit the same violations. Like I said, it’s still possible to get this wood, it’s just a matter of how it’s obtained. Gibson was buying from smugglers and ‘mistakenly’ (yeah right) mislabeling the wood on their customs forms.

    And again, I have to point out the ridiculousness of suggesting that this is some kind of Obama power play. This is just like Benghazi – why would Obama do this? What does he gain from it? I can’t even begin to imagine why he’d be singling out a company like this. How do you think it went down? Maybe Obama overheard that the CEO of Gibson was a Republican, and he just ordered someone to destroy him? He’s not even doing anything anyway, it’s a little fine – shouldn’t he be taking the company over or something? And aren’t there about a thousand higher-profile Republican CEO’s that Obama could go after if he were so inclined? People like Donald Trump and the Koch Brothers and Karl Rove have spent years and millions campaigning against Obama – wouldn’t he be better served by attacking those people first?

    One more time, an incomprehensible conspiracy theory about Obama’s sinister motivations does not pass the plausibility test.

    That should be the consumer’s decision.

    Oh wait, I keep forgetting you’re opposed to that.

    What does that have to do with anything? Consumers aren’t being affected here. Do you think it should be a consumer’s decision to eat the very last California condor?

    Comment by Levi — December 6, 2012 @ 12:53 pm - December 6, 2012

  4. 3 great lies:
    – The check is in the mail
    – I won’t **** in you
    – We regulators are here to help.
    It’s a self-organizing free market

    No, it isn’t. Because it’s freaking CHINA, so consumers don’t have consistent (thus effective) rights to free speech or to redress of grievances under the rule of law. Again:

    A free-market country must, first and above all, be a free country.

    Okay, whatever, I get it. You’re shutting it down. China is just off limits for me, because you said so. Even when we can point to a particular aspect of their economy and demonstrate how free market forces are in effect, you just get to ignore the point because CHINA.

    Comment by Levi — December 6, 2012 @ 1:02 pm - December 6, 2012

  5. It must be a very comforting delusion to believe that Government and Dear Leader can do no wrong.

    Comment by V the K — December 6, 2012 @ 1:03 pm - December 6, 2012

  6. You mean, like the way leftists scream when a legislature tries to pass a law subjecting abortion mills to the same medical standards as other medical facilities? All of a sudden, they start screaming about how the regulations will drive abortion mill operators out of business.

    Yeah, the left knows regulations are bad for businesses; but in their view, it’s a feature, not a bug.

    And here you have a perfect example of government over-regulating, and wouldn’t you know? It’s being done at the hands of the Republicans.

    Abortion is legal. Capturing government and passing a bunch of regulations that make legal abortion difficult to obtain is precisely the kind of government waste, bureaucracy, and over-regulation that conservatives claim to be so concerned about.

    Guess what? You’re a hypocrite.

    Comment by Levi — December 6, 2012 @ 1:10 pm - December 6, 2012

  7. Hmmm…. so leftists are so afraid that people might drink a 20 oz. soda that they think it’s right and proper for Government to ban them in the interest of public health.

    But it’s perfectly fine for women to get abortions in filthy, unsanitary clinics, because that’s none of the Government’s business.

    Yeah, that makes total sense.

    Comment by V the K — December 6, 2012 @ 1:14 pm - December 6, 2012

  8. And Levi continues to lie. Surprise.

    For the 2009 case, “Gibson relied on the fact that T.N.(the German supplier) was an established, FSC (Forestry Stewardship Council) chain of custody certified supplier. ”

    So Gibson, using a certified legal supplier, is punished for actions beyond their control. Plus, it was 2 years before charges were brought after the seizue. Hmmm, So much for a speedy trial.

    “We felt compelled to settle as the costs of proving our case at trial would have cost millions of dollars and taken a very long time to resolve. This allows us to get back to the business of making guitars. An important part of the settlement is that we are getting back the materials seized in a second armed raid on our factories and we have formal acknowledgement that we can continue to source rosewood and ebony fingerboards from India, as we have done for many decades.”

    At least Levi is consistent. When faced with the truth, shout the lie louder.

    Comment by The_Livewire — December 6, 2012 @ 1:19 pm - December 6, 2012

  9. V the K,

    It’s typical Levi. He doesn’t want honesty, or decency or safety. He wants only what he wants, and a pox on anyone who disagrees with him.

    Comment by The_Livewire — December 6, 2012 @ 1:24 pm - December 6, 2012

  10. Hmmm…. so leftists are so afraid that people might drink a 20 oz. soda that they think it’s right and proper for Government to ban them in the interest of public health.

    I understand Bloomberg’s perspective, that doesn’t mean I support it. I think we should be trying different things to improve American health. Not sure if this is the best way, but it’s hardly a big deal. One municipality banning large sodas is not exactly a threat to freedom in any meaningful way.

    Hey, did you know that George Bush was illegally wiretapping thousands of Americans? But you’ll only get out of bed for the soda size freedoms, got it.

    Now if you want to talk about REAL threats to peoples’ freedom….

    But it’s perfectly fine for women to get abortions in filthy, unsanitary clinics, because that’s none of the Government’s business.

    Yeah, that makes total sense.

    … here you are! Of course, the clinics in Virginia are neither filthy or unsanitary. It’s just that, since abortion is legal in this country, you can’t exactly pass a law that says “Abortion is illegal in Virginia!” because it would get thrown out. So abortion opponents construct a pretense about building codes and safety concerns, and try to pretend like they’re doing it as a public health issue. But everyone knows the real score – Republicans pass stuff like this to make it harder to procure an abortion. Please, save yourself some dignity, drop the filthy/unsanitary stuff, and get real if you’re going to talk about this law.

    And really, it does show you how little conservatives actually care about all their ‘small government’ crap. As advocates for small, limited government, you’d think that conservatives wouldn’t do this kind of thing. Even if you hate abortion, aren’t you betraying your principles by using government bureaucracy and regulators to address the problem? You do realize that you need inspectors and inspections in order for this law to be enforced, don’t you?

    Comment by Levi — December 6, 2012 @ 1:33 pm - December 6, 2012

  11. Ah watch Levi spin.

    I understand Bloomberg’s perspective, that doesn’t mean I support it. I think we should be trying different things to improve American health. Not sure if this is the best way, but it’s hardly a big deal. One municipality banning large sodas is not exactly a threat to freedom in any meaningful way.

    Then again, Levi also endorces keeping businesses from producing products consumers want.

    But dare to argue even one abortion clinic shows a need to hold them to the same standard as any other medical facility and he goes off.

    So remember, the Government should send Ronald McDonald to Gitmo, but not terrorists. Wendy’s should be watched intently to make sure no child eats a kids meal, but ripping a child out of its mother is something that can be done in any backroom.

    Now hush Levi, the adults are talking.

    Comment by The_Livewire — December 6, 2012 @ 1:54 pm - December 6, 2012

  12. Okay, whatever, I get it. You’re shutting it down. China is just off limits for me, because you said so. Even when we can point to a particular aspect of their economy and demonstrate how free market forces are in effect, you just get to ignore the point because CHINA.

    Comment by Levi — December 6, 2012 @ 1:02 pm – December 6, 2012

    Actually, Levi, it’s because nowhere in your statements are there any facts, links, references, or actually-researched information.

    Meanwhile, you ignore clear facts, links, references, and researched information showing how you unequivocally endorse and support the Obama Party and Obama supporters ignoring regulations, abusing governmental positions, and refusing to pay taxes.

    You have made it clear, Levi, that food inspection and restaurant inspection isn’t necessary; Obama supporters should simply use those jobs as a means of extorting and collecting bribes from businesses, and should punish businesses that complain.

    The reason you’re screaming and throwing your usual tantrum is because we have exposed you as a total hypocrite and liar. You support and endorse ignoring regulations. You support and endorse corrupt government officials. You support and endorse government intimidating business owners. You support and endorse Obama Party officials breaking the law, taking bribes, and refusing to pay their taxes.

    Don’t point at China and criticize their problems when you openly endorse and support the same in Chicago.

    Comment by North Dallas Thirty — December 6, 2012 @ 2:31 pm - December 6, 2012

  13. The obvious pattern in what Levi supports or opposes is pretty much “punish your opponents, reward your cronies;” which is exactly what his cult teaches.

    Comment by V the K — December 6, 2012 @ 2:36 pm - December 6, 2012

  14. … here you are! Of course, the clinics in Virginia are neither filthy or unsanitary.

    Comment by Levi — December 6, 2012 @ 1:33 pm – December 6, 2012

    Of course they are, Levi.

    Why?

    Because there aren’t regulations to keep them from being that way.

    As you have repeatedly stated, without regulations, business owners will cut corners and do bad things to maximize profits. You have stated that, without regulations and inspections, business owners will not keep their establishments safe and clean.

    Therefore, since there are no regulations mandating that they be, the abortion clinics in Virginia are filthy and unsanitary.

    And, since you have stated that the government’s position must always be to protect public health, the government must pass regulations to ensure that abortion clinics are operated in a safe and sanitary manner; after all, as you insist, without regulations, people will die.

    Furthermore, the expense does not matter; according to you, businesses that complain about the cost of regulations are engaging in criminal activity, since complying with regulations does not cost any additional money.

    In short, Levi, you just contradicted every single ounce of your own logic by insisting that abortion clinics do not need to be regulated, and proved that you don’t care about women’s safety or health by your refusal to regulate abortion clinics.

    You lose, boy. Now go spam another thread.

    Comment by North Dallas Thirty — December 6, 2012 @ 2:39 pm - December 6, 2012

  15. The other interesting thing, V the K; Levi screams that the abortion clinics (plural) in Virginia are not filthy or unsanitary.

    Which means he’s been in several of them.

    No surprise; after all, he defends coercing women into sex, having sex when you’re drunk, and unprotected sex, that he actually pressures women into sex without condoms, and that he is reluctant to use condoms at all.

    In short, Levi is going to know a lot about abortion clinics. That’s where he and his family fix their “problems”.

    Comment by North Dallas Thirty — December 6, 2012 @ 2:45 pm - December 6, 2012

  16. Levi expects to throw out key foundations of free markets, then say “why isn’t it producing perfection?”

    The question answers itself, if you state it properly.

    Comment by ILoveCapitalism — December 6, 2012 @ 4:10 pm - December 6, 2012

  17. Actually, ILC, it’s even simpler than that; Levi is a communist, who believes that any failure within his fascist system can be traced to “contamination” with “free market” and “capitalist” ideas.

    Hence, it’s not that communism has failed in China; it’s that they’ve allowed it to be tainted with capitalism. If they just imposed total state control, as Levi advocates, they wouldn’t have any problem.

    Levi doesn’t disagree with Nazism. He just thinks Hitler was incompetent at administering it.

    Comment by North Dallas Thirty — December 6, 2012 @ 5:09 pm - December 6, 2012

  18. Thing is, my position is that regulation should be light and minimal on everything. Levi thinks all enterprises should be regulated to the max, except for those operated by Democrat Special Interests, which should be completely left alone.

    Who’s the hypocrite in this situation?

    Comment by V the K — December 6, 2012 @ 7:05 pm - December 6, 2012

  19. “ILC, you’re missing the point”

    This is because he is a utopianist. These folks – god bless them – live in a world of a “ought to be” Not the way it actually is.
    They redefine things, paraphrase your point into a strawman, and move goalposts away from any real conversation about the world unless the discussion fits inside their parameters.

    Its what all ideologues, and utopianists do – on both sides of the political spectrum.

    Livewire – the government often restricts business from giving products to consumers – for example cigarettes, alcohol, trucks, cocaine, guns, pain killers, teeth fillings, electrical outlets, refrigerators, air conditioners, cars, computers, toothpicks, tooth paste, junction boxes, phones, radios and on and on and on.

    Its what the government does. They do this for “the greater good.” I am NOT saying I agree with it. But it is the way the world is. Does Bloomberg go to far? – Maybe, but I’ll leave that to the voters of NYC. This is the great thing about the USA. If the regulations become too onerous, the consumer can vote the regulators out.

    Comment by mike — December 6, 2012 @ 9:12 pm - December 6, 2012

  20. This is because he is a utopianist. These folks – god bless them – live in a world of a “ought to be” Not the way it actually is.
    They redefine things, paraphrase your point into a strawman, and move goalposts away from any real conversation about the world unless the discussion fits inside their parameters.

    Comment by mike — December 6, 2012 @ 9:12 pm – December 6, 2012

    Actually, no.

    ILC, myself, V the K, and Livewire have provided example after example of linked, referenceable facts taken directly from the real world.

    You and your fellow ideologue and utopianist Levi have done nothing but desperately run away from those facts. Indeed, you’ve not posted a single link, a single reference, or a single fact; you’ve simply made up stories and spun fantasies and strawmen.

    But that’s really typical of liberals like yourself. Liberals simply don’t live in reality; they live in a faculty-lounge version of society, where reality and work are kept out and diktats are created. Any facts that are contrary to their beliefs are automatically ignored and the person who brings it to their attention called names, just as you did with ILC.

    If you and Levi were intelligent people, you would be able to respond to the facts that have been presented to you. But you can’t. You are both incapable of criticizing your fellow Obamunists and also unwilling to give up your own belief that Leopold-you and your little Loeb Levi should be beyond such petty concerns as laws and regulations because you espouse the correct Obamunist Party ideology.

    This is why you amuse us so when you criticize China, because China is the utopianist society that your Obamunist Party wants: all dissent is suppressed, the government controls what you will eat, where you will live,and how you will work, and those who, like yourself, espouse the correct Party ideology may live luxuriously at government expense while you exhort everyone else to “sacrifice”.

    Comment by North Dallas Thirty — December 6, 2012 @ 9:36 pm - December 6, 2012

  21. NDT, indeed. No biggie but I happened to notice that there isn’t a single comment in this thread, up to now, where I mention mike’s name only to speak ‘about’ him without addressing his arguments, as mike did with me (#119). Up to this comment, I’ve been mentioning his name only to speak ‘to’ him and address his arguments, like he might be a person worth addressing. Perhaps he’s not?

    Comment by ILoveCapitalism — December 6, 2012 @ 10:25 pm - December 6, 2012

  22. I wrote:
    “They [utopianists] redefine things, paraphrase your point into a strawman, and move goalposts away from any real conversation about the world unless the discussion fits inside their parameters.

    Its what all ideologues, and utopianists do – on both sides of the political spectrum.”

    NTD wrote:

    “This is why you amuse us so when you criticize China, because China is the utopianist society that your Obamunist Party wants: all dissent is suppressed, the government controls what you will eat, where you will live,and how you will work, and those who, like yourself, espouse the correct Party ideology may live luxuriously at government expense while you exhort everyone else to “sacrifice”.”

    An Ideologue creates a strawman, and then beats the crap out it.

    Thank you for highlighting my point.

    (Who is “us” by the way? Are you like the Borg?)

    ILC – Your arguments did nothing to counter the likelihood that China is possibly the freest economy in the world on the local street level and their poor environment / food safety is a product of that free economy.
    An argument you could have made is China put billions if not trillions of dollars into the Macro economy but of course you wouldn’t make that argument because I have seen others make the argument that China is proof of the benefits of Macro State Spending as they say China has lifted more people out of poverty than any government in the world. (I would not make this argument as I have seen the drawbacks this state directed spend has caused)
    — However this does not change the fact that on the local level, China’s economy is amazingly Laissez-faire and we can see its negative ramifications.

    Comment by mike — December 7, 2012 @ 12:06 am - December 7, 2012

  23. Thank you for highlighting my point.

    Comment by mike — December 7, 2012 @ 12:06 am – December 7, 2012

    Indeed I did, mike.

    Which was, “I, concern-troll mike and my fellow Obamunist Levi, can use strawmen all we want while simultaneously whining and decrying everyone else’s arguments as one.”

    You’re a hypocrite who accuses others of what you yourself are doing. We already knew that.

    So let’s go to this:

    ILC – Your arguments did nothing to counter the likelihood that China is possibly the freest economy in the world on the local street level and their poor environment / food safety is a product of that free economy.

    But, since you provide no facts, no links, no references, and no checkable information, your statement has no evidence in the first place.

    There is nothing to counter because you have never provided facts or evidence in the first place. You simply spouted something and demanded that we prove you wrong.

    Meanwhile, here are the facts: liberals like yourself and Levi openly endorse, support, and elect high government officials ignoring regulations, cheating on taxes, and strong-arming bribes.

    So what that means is very simple: one, you don’t care about tax evasion or violation of regulations; two, you support people of the correct ideology violating the law and taking bribes in exchange for allowing the law to be violated; and three, that you will not apply any of your “fixes” for the problems that you have conjured up if they in any way would affect a member of or income source for your Obamunist Party, such as yours and Levi’s adamant opposition to inspection or regulation of abortion centers.

    What it boils down to is this: as ILC aptly put it, you’re out to bash capitalism and free markets and push state control and government regulation of others. Never yourself.

    Comment by North Dallas Thirty — December 7, 2012 @ 2:11 am - December 7, 2012

  24. ILoveCapitalism, you are wrong about regulation, specifically your post #50.

    You said that regulation doesn’t help protect consumers. I and another commenter used the example of China to show what happens when regulations are lax. If you buy milk powder from a Chinese company, for example, your baby might die from poisons intentionally laced in the product in order to increase its protein content.

    That might be an extreme example, but there are millions of less extreme examples that can still cause sickness and health problems, such as street vendors reusing oil.

    IF there was a regulator that looked at food and produce, then perhaps those babies would be alive, because the milk wasn’t poisoned. So obviously regulation can help consumers.

    There’s not some kind of bribery going on in China between peddlers on the street, who engage in the same kind of unethical and harmful tactics, and officials. Talk about the pirated goods market in China: They have a whole market in Shanghai filled with people selling fake luxury brand clothing. Everyone knows it, and it is talked about openly among residents. When the police come, the merchants shut their shop doors and pretend to be closed. I’ve been there when the police were there, and they have curtains over their warehouse doors, and some one comes up to you and asks if you want to buy, then they wait till the police aren’t looking, and they open the door a bit and rush you in under the curtain. Anyone knows what is going on, but I guess the police don’t have a warrant or something. Even China has this kind of law apparently.

    Your answer to lax regulation that can result in deadly products is that people should be left on their own potentially risking their lives or at the least wasting money. The problem is that consumers would be better off if they were guaranteed a minimum level of safety and reliability from products. It would make everyone’s lives better at no cost. (If the only products that are affected are dangerous and defective products, then they aren’t being denied anything. Does the EPA and other regulations sometimes go overboard? Yes. But my first comment advanced the idea of “rational” regulation.) People create governments specifically to carry out functions that they can’t carry out on their own in order to make their lives better. It’s the same reason that people support the government creating police departments, even though they could be allowed to act on their own and shoot criminals with concealed carry weapons.

    Anyway, consumers don’t have the expertise about so many products to know if a product is good or not. Consumers aren’t electrical engineers or chemists, and they have no way of knowing if an electrical product will cause fires or if an airplane will crash and kill them in flight.

    Your point suffers further when talking about items in the public space, such as air and water. As noted, China’s air is relatively polluted. To a certain degree, that is part of a trade off with development, and development is more important in general than trying to keep all pollutants out of the air. But there are some kinds of unnecessary pollution that occurs in the disposal of waste into water sources that could be done without while still promoting development.

    Let’s presume there is a company that disposes of waste in an unprotected fashion that causes public health consequences such as in Love Canal. Your solution is for consumers to simply not purchase the goods of the company that pollutes. That doesn’t work, because if a company pollutes that public resources, then it will affect everyone, regardless of whether they made a private choice to do so.

    Comment by Mitch — December 7, 2012 @ 2:46 am - December 7, 2012

  25. A few other responses to ILoveCapitalism:
    He says that economic self-correcting trends won’t take a long time “if the government gets out of the way,” but in the 1800’s, when the government’s scope and impact on the economy was much less than it is today, there were also lots of boom and bust cycles taking multiple years to correct.

    He did concede in his #4 response that yes, some small amount of government spending (that spent on roads, infrastructure) can help businesses, but he said it was very small, maybe “1%” of government spending. I do agree that the government spends too much money on wasteful crap such as Obamaphones and ObamaMedicaid and Obama”GreenEnergyJobs”, but I guess I was simply stating that SOME government spending does help the economy, which is a point that we both apparently agree on.

    Finally, government spending on most programs does help the economy by some amount in the short term even if the program isn’t a good idea. The money goes to people, being spent once, then is spent again by them, and is spent a few other times maybe, so that would help some in the short term, as argued by both Keynes, the Congressional Budget Office, and Congressional Republicans, who argue that if sequestration takes place as part of the so-called “fiscal cliff”, the economy will be hurt next year.

    Comment by Mitch — December 7, 2012 @ 2:57 am - December 7, 2012

  26. ILoveCapitalism:
    You also said that there shouldn’t be regulation, because sometimes regulation doesn’t work (Bernie Madoff). So you think something should work 100% of the time or else it is bad? In that case the private sector sucks because sometimes bad things happen.

    If the SEC not catching Madoff earlier reflects a fundamental problem that the SEC isn’t strong enough, then the answer is that it should be strengthen. Weakening the SEC would make it even HARDER for them to catch the next Madoff. But since he’s going to get punished for his crimes, I would argue that people would be discouraged from doing more Ponzi schemes. As long as there is a law against Ponzi schemes, there needs to be someone to enforce the law. Basically the police are a form of regulation, as they are enforcing laws, and regulators are enforcing rules that have the force of law.

    On 9/11, we were attacked and had 3,000 people killed. Bush responded by increasing terrorist surveilence measures and taking the fight to al-Qaeda via military action. His use of wiretapping and other measures has prevented multiple attacks. But, if we follow your logic, the 9/11 attack proves that anti-terrorism measures don’t work and we should cut down on anti-terrorism measures.

    Comment by Mitch — December 7, 2012 @ 3:13 am - December 7, 2012

  27. Mitch, why do statists like yourself constantly blather on about how we need more regulations when you support and endorse those who break them and you use the ones we have for extortion?

    And why do you insist that one incident proves that all businesses want to poison babies, while multiple incidents of regulatory failure and corruption don’t mean all regulations are bad?

    Answer: Because you are a statist. Your goal is to diminish the individual and expand the power of the state with regulations that you and your fellow cronies have no intention of following yourself.

    Facts do not support this as a good idea. That’s why you rant on and on with your “one time at band camp in China” stories, because you simply refuse to acknowledge all the facts concerning regulatory abuse, government abuse, and unnecessary costs that you have been shown in numerous factual references.

    We get it. You worship government as your god and want government to punish those who work hard and make more than you. That’s why you smear capitalism, attack businesses, and insist that all business owners want to poison babies and dump toxic waste.

    And then you support tax cheats because they spout your Obamunists doctrine.

    Comment by North Dallas Thirty — December 7, 2012 @ 9:02 am - December 7, 2012

  28. Oh, and statist Mitch: since you insist that government spending, even of its wasteful, is always better than allowing people to spend their own money, will you start signing 100% of your wealth over to the government?

    And if you won’t, why don’t you care about the public good?

    Also, will you state that the only thing that keeps you from poisoning babies and dumping toxic waste are the threat of punishment from government regulations, and that if they weren’t there, you’d immediately start doing both?

    What we’re going to see very quickly, I predict, is the blubbering response of the statist: “No! I didn’t mean that I should have to follow the rules! I’m an Obamunist! Party ideologues and donor don’t have to follow our rules, only you do!”

    Comment by North Dallas Thirty — December 7, 2012 @ 9:16 am - December 7, 2012

  29. ILC – Your arguments did nothing to counter blah blah blah

    No mike; they did. You just prefer not to deal with it.

    on the local level, China’s economy is amazingly Laissez-faire

    … as dissidents are hauled off to jail and courts and media are manipulated by Party officials, which means the consumer is not actually sovereign (can’t much speak out, for example). A part of my argument that you simply choose to ignore, as if I haven’t said it. Good luck.

    Mitch:

    You said that regulation doesn’t help protect consumers.

    No, I didn’t say that. I can see how you got that, but what I really said is that protecting consumers is not its main purpose (the reason it comes about and the main thing it achieves), only its supposed purpose (the reason that its advocates offer for it). Having said that, I can grant that regulation may achieve its supposed purpose on an occasional/random type of basis.

    If you buy milk powder from a Chinese company, for example, your baby might die from poisons intentionally laced in the product in order to increase its protein content.

    “Intentionally laced”? Please provide the cite, so we can examine the case together.

    IF there was a regulator that looked at food and produce, then perhaps those babies would be alive

    That’s a stretch, perhaps a fantasy. If China is as bad a country as you yourself say, there is no reason to suppose their regulators would achieve much.

    It comes down to this: China is a screwed-up place, period. To the extent that they have adopted capitalism/freedom in the last 30 years, their life is better than it was in the Great Cultural Revolution. But it doesn’t heal the Cultural Revolution or make the place perfect overnight; the more so because, in reality, China has NOT adopted some of the most crucial pieces of capitalism/freedom. So no, you don’t get to point their problems and say “That’s because of capitalism/freedom”; at least not around here.

    There’s not some kind of bribery going on in China between peddlers on the street, who engage in the same kind of unethical and harmful tactics, and officials.

    As I said to mike: How would you really know? BUT, the larger point is that there doesn’t have to be. The larger point is that ‘people doing the right thing’ is a culture whose development requires time and the impartial protection of individual rights to life, liberty and property, something that China still lacks. China still doesn’t even have a real concept of land ownership, for cryin’ out loud.

    the pirated goods market in China: They have a whole market in Shanghai filled with people selling fake luxury brand clothing. Everyone knows it

    Translation: CHINA DOES NOT PROTECT RIGHTS TO LIFE, LIBERTY OR PROPERTY… including intellectual property.

    Am I not saying this often enough? Am I not making it clear?

    When the police come, the merchants shut their shop doors and pretend to be closed. I’ve been there when the police were there, and they have curtains over their warehouse doors, and some one comes up to you and asks if you want to buy, then they wait till the police aren’t looking, and they open the door a bit and rush you in under the curtain.

    Translation: REGULATION DOESN’T WORK. The economic regulator, in this case the policeman, has little real power to stop people from doing what they’re going to do. At best, he’s a showpiece who gives some people a false sense of confidence, like the SEC did with Bernie Madoff’s victims. That’s the fact, but somehow you can’t see it, even though your own comments depict it clearly.

    Your answer to lax regulation that can result in deadly products is that people should be left on their own

    No, only that the solution need not be governmental. Sorry Mitch, but you’re engaged in the typical straw man tactics of the Big Government brainwash-ee (or worshipper). You think it’s either a governmental solution, or doom. It’s not. In a free country, a country which protects individual rights to life liberty and property impartially, consumers and do can band together to accomplish all sorts of things and spread all sorts of helpful information.

    The problem is that consumers would be better off if they were guaranteed a minimum level of safety and reliability from products.

    No, they wouldn’t. Because it’s an impossibility, something that GOVERNMENT IS NOT ABLE TO GUARANTEE, a false guarantee. Furthermore, in making the effort, government becomes an actual violator of individuals’ rights to life liberty and property.

    People create governments specifically to carry out functions that they can’t carry out on their own in order to make their lives better.

    Morally speaking, the created entity can have no more rights than the people creating it, and what they have delegated to it. Example: If I don’t have the right to silence your speech (and morally, indeed I don’t), then neither can the government. If I don’t have the moral right to re-distribute your income for supposed “fairness”, neither can the government. And so on. If I don’t have the moral right to stop you from setting up a hair-braiding business or impose 10,993 requirements on you before you do so, neither can the government. What I can morally do, though, is (1) refuse to go to your hair-braiding business, and/or (2) spread the word about it, if something bad is going on there.

    I’m running short on time. I would like to address the rest of your arguments in detail, but there isn’t enough time. They’re all in pretty much the same vein, though, and my comments collectively have laid out general principles which would fully answer your points, if applied correctly.

    Just a couple more things:

    in the 1800′s, when the government’s scope and impact on the economy was much less than it is today, there were also lots of boom and bust cycles taking multiple years to correct.

    The most important price in the economy, the one of which the government’s manipulation will have the greatest effect in causing the boom-bust cycle, is the interest rate. And unfortunately, the U.S. has never been free from government efforts to manipulate interest rates (or equivalently, money supply). In the 19th century, for example, they had the Bank of the United States, the printing of greenbacks in the Civil War which caused huge inflation that later had to be purged when returning to a gold standard, etc.

    Having said that: The supposed badness of the 19th-century economy is a fallacy spread commonly, on the Left. Overall, it gave us the greatest advances in human living standards yet seen. They called it a “depression” if the U.S. real economy only grew by 40% in a decade, instead of the 50% or 60% they were used to. See cite provided at comment #14.

    I was simply stating that SOME government spending does help the economy, which is a point that we both apparently agree on.

    Maybe, we’ll see. Here’s the thing. Government spending is necessarily wasteful and inefficient, compared to private sector spending. That is a big part of why “Government Spending Hurts the Economy”, the point of this post.

    What that means is, we should avoid it whenever possible. The function of government, the thing that the private sector simply cannot do because otherwise the result would be civil war, is: physical protection of individual rights to life, liberty and property. So we put up with government spending there, even though said spending is still necessarily and inherently going to be inefficient.

    So, yes: I support minimal spending on government’s legitimate functions, even though that spending will still be rife with waste, will cause higher expenses in (thus damage to) the private sector, etc. But whether we should include road-building in those functions is a debatable question. We can debate it another time. Suffice to say that at least half of what government spends on today, and probably two-thirds, is not things which government has any business trying to do.

    government spending on most programs does help the economy by some amount in the short term even if the program isn’t a good idea. The money goes to people, being spent once, then is spent again by them, and is spent a few other times maybe

    Already answered by many of my comments. First, you’re indulging the Keynesian “spending drives the economy” theory, which is false.

    Second, even if we were to accept that theory, you’re still ignoring the counter-acting effects which undermine the Keynesian multiplier, such as: increased inefficieny and malinvestment, loss of demand/spending due to higher taxes (if taxes are raised to pay for the government spending), loss of demand/spending due to higher debt service (if government borrows), loss of demand/spending due to higher consumer and commodity prices (if government prints money, to salve the impact of its borrowing), and higher private sector costs generally. It’s as if you have not read my post which started this discussion, “Why Government Spending Hurts the Economy.”

    You also said that there shouldn’t be regulation, because sometimes regulation doesn’t work (Bernie Madoff).

    Again, that’s not actually my argument. But I just don’t have all day, sorry.

    Comment by ILoveCapitalism — December 7, 2012 @ 9:38 am - December 7, 2012

  30. And why do you insist that one incident proves that all businesses want to poison babies, while multiple incidents of regulatory failure and corruption don’t mean all regulations are bad?

    Excellent question. (Though, again and to make it clear for Mitch, NOT my own most important argument against regulation.)

    Comment by ILoveCapitalism — December 7, 2012 @ 9:45 am - December 7, 2012

  31. “one time at band camp in China” stories

    Heh 🙂

    [is it the case,] that the only thing that keeps you from poisoning babies and dumping toxic waste are the threat of punishment from government regulations, and that if they weren’t there, you’d immediately start doing both?

    Another great question.

    Comment by ILoveCapitalism — December 7, 2012 @ 9:47 am - December 7, 2012

  32. So, does any statist (or advocate of Big Government) have points to make which haven’t already been answered? “Going, going, …”

    Comment by ILoveCapitalism — December 7, 2012 @ 12:41 pm - December 7, 2012

  33. Already answered by many of my comments. First, you’re indulging the Keynesian “spending drives the economy” theory, which is false.

    Second, even if we were to accept that theory, you’re still ignoring the counter-acting effects which undermine the Keynesian multiplier, such as: increased inefficieny and malinvestment, loss of demand/spending due to higher taxes (if taxes are raised to pay for the government spending), loss of demand/spending due to higher debt service (if government borrows), loss of demand/spending due to higher consumer and commodity prices (if government prints money, to salve the impact of its borrowing), and higher private sector costs generally.

    Perhaps I can assist by phrasing it this way, ILC.

    Keynesians believe in the all-powerful and all-goodness nature of government spending, insisting that government spending is always better than private-sector and individual spending.

    We see this attitude from Mitch above:

    Finally, government spending on most programs does help the economy by some amount in the short term even if the program isn’t a good idea. The money goes to people, being spent once, then is spent again by them, and is spent a few other times maybe, so that would help some in the short term, as argued by both Keynes, the Congressional Budget Office, and Congressional Republicans, who argue that if sequestration takes place as part of the so-called “fiscal cliff”, the economy will be hurt next year.

    Comment by Mitch — December 7, 2012 @ 2:57 am – December 7, 2012

    To put that into a real-world example, Mitch is stating that it is better for the economy that the government raise taxes on (and thus channel money away from) working people so that it can provide unlimited free health care to drunks. Mitch is stating that drunks spend money more effectively and in a fashion better for the economy than the people who earn it.

    Again, I repeat myself. That drunk is spending the equivalent of $7,500 in taxes per year from twenty working taxpayers. Mitch is stating that the drunk spending that money on alcohol, drinking himself into a stupor, and then requiring paramedic and police attention is spending that money better than every single one of those twenty working taxpayers could ever do.

    Seriously. Putting that money in a savings account? Nope, worse for the economy than the drunk. Spending it on your kid’s education? Worse for the economy than the drunk. Paying down the mortgage or other bills? Worse for the economy than the drunk.

    You can repeat this ad infinitum. Mitch and his Obamunist/Keynesian ilk believe it is better for the economy for working taxpayers to give money to adult babies to pay for “nurses” than to pay for their own parents’ home health aide. Mitch and his Obamunist/Keynesian ilk believe it is better for the economy for working taxpayers to subsidize rent for four Manhattan apartments for a multi-millionaire Congressman than to use it to pay their own rent or mortgage on their single home.

    This is the fiction of Obamunism. Mitch and his ilk preach that even wasteful government spending is better than private spending in every single respect.

    Why?

    Because that is the only way they can rationalize taking money from others for their own uses. They are moochers and looters who use every excuse and trick in the book to scream that you don’t deserve your money, you didn’t build that, hand it over or you’re an evil racist bigot who wants to kill all gays, push the elderly off cliffs, and leave women to die on the floor.

    It is the tantrum of a child. Mitch, concern-troll mike, Levi, Barack Obama, and their entire Party are nothing more than malevolent and malicious children who are trying to use on everyone else the games they played on their spineless, incompetent parents.

    Comment by North Dallas Thirty — December 7, 2012 @ 12:51 pm - December 7, 2012

  34. Mitch and his ilk preach that even wasteful government spending is better than private spending

    In effect, yes. I couldn’t say if Mitch personally believes (or is) all that you ascribe to statists/leftists as a group. But you’ve correctly understood the implications of his words in favor of the (incorrect) Keynesian multiplier theory, his use of the “Government regulation or DOOM!” false dichotomy, his/mike’s/Levi’s efforts to blame capitalism for the bad actions of some market actors in Communist China, etc.

    Comment by ILoveCapitalism — December 7, 2012 @ 1:00 pm - December 7, 2012

  35. And I can take this one even farther.

    Remember, Mitch says the following:

    Finally, government spending on most programs does help the economy by some amount in the short term even if the program isn’t a good idea.

    Comment by Mitch — December 7, 2012 @ 2:57 am – December 7, 2012

    So Mitch says it is better for the economy for taxpayers, rather than buying plane tickets for their business trip, to buy private airliners stocked with gourmet food and liquor for insider-trading multimillionaires.

    So Mitch says it is better for the economy for taxpayers, rather than throwing a party for their own family and friends, to fund massive Hollywood affairs for Michelle Obama and her friends to prance around in costume.

    So Mitch says it is better for the economy for taxpayers, rather than taking their own families on a Las Vegas vacation, to pay for Washington DC bureaucrats to have a lavish “over the top” conference.

    Comment by North Dallas Thirty — December 7, 2012 @ 1:10 pm - December 7, 2012

  36. Oh, but there’s even better examples.

    From above, we have Obama and the Obamunist administration haranguing corporations and taxpayers that “you can’t take a trip to Las Vegas on the taxpayer’s dime” and “you don’t blow a bunch of cash in Vegas when you’re trying to save for college” – while planning, approving, and carrying out multiple lavish Las Vegas vacations, fundraising trips, and government bureaucrat conferences, all on the taxpayer’s dime.

    We have Obama and the Obamunist Party shrieking about “global warming” and telling Americans that they can’t drive their SUVs and eat as much as they want and keep their homes on 72 degrees at all times – and then driving around in their fleets of black SUVs from their private jets to dinners featuring Wagyu beef in rooms they have hiked up to hothouse temperatures.

    Again, according to Mitch, this is not waste, because it’s government spending — even if the government in the form of Dear Leader Obama is haranguing people that it IS waste.

    This brings into stark relief the philosophy behind Mitch’s statement here:

    People create governments specifically to carry out functions that they can’t carry out on their own in order to make their lives better.

    And from what we see Mitch supporting and endorsing, he and his fellow Obamunists have created government with the functional goal to be to take money from people who have earned it to give to them — and to make sure that people who are not in the government “elite” are harangued and punished into not doing the things that the elite are doing at taxpayer expense.

    In short, Mitch creates government to enable theft for the benefit of himself and other Obamunist elites.

    Comment by North Dallas Thirty — December 7, 2012 @ 1:23 pm - December 7, 2012

  37. The statement:

    People create governments specifically to carry out functions that they can’t carry out on their own in order to make their lives better.

    …is rather two-edged. I tried to put on it (and thus to assert) a correct interpretation: that people delegate a part of their right of self-defense to government in order to avoid civil war, and that government must be limited because it can’t possibly be right for government to exceed the limited rights which have been delegated to it.

    But Mitch’s original is less carefully phrased. It does lend itself to Levi’s beliefs about government, namely, that government exists so Levi can impose his wishes on people (“drag them kicking and screaming into the future”, Levi’s words), which of course Levi would normally be unable to do.

    Comment by ILoveCapitalism — December 7, 2012 @ 1:39 pm - December 7, 2012

  38. Keynesians believe in the all-powerful and all-goodness nature of government spending, insisting that government spending is always better than private-sector and individual spending.”

    Comment by Passing By — December 7, 2012 @ 9:11 pm - December 7, 2012

  39. Too bad your Obama lies and hypocrisy were already pointed out, Passing By.

    But we should expect that. Obama supporters like yourself are nothing more than brain-dead Nazis, dependent on welfare checks and looking to government to facilitate the murder of everyone you hate.

    Comment by North Dallas Thirty — December 9, 2012 @ 11:52 am - December 9, 2012

  40. “Too bad your [Choose Republican of your choice] lies and hypocrisy were already pointed out, [North Dallas Thirty].

    But we should expect that. [Choose Republican of your choice] supporters like yourself are nothing more than brain-dead Nazis, dependent on [corporate] welfare checks and looking to government[subsidies and tax expenditures] to facilitate the murder of everyone you hate.”

    Comment by Passing By — December 9, 2012 @ 10:19 pm - December 9, 2012

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