Tag Archives: Size of Government

The Beholden State. How public-sector unions broke California

The camera focuses on an official of the Service Employees International Union (SEIU), California’s largest public-employee union, sitting in a legislative chamber and speaking into a microphone. “We helped to get you into office, and we got a good memory,” she says matter-of-factly to the elected officials outside the shot. “Come November, if you don’t back our program, we’ll get you out of office.”

The video has become a sensation among California taxpayer groups for its vivid depiction of the audacious power that public-sector unions wield in their state. The unions’ political triumphs have molded a California in which government workers thrive at the expense of a struggling private sector. The state’s public school teachers are the highest-paid in the nation. Its prison guards can easily earn six-figure salaries. State workers routinely retire at 55 with pensions higher than their base pay for most of their working life. Meanwhile, what was once the most prosperous state now suffers from an unemployment rate far steeper than the nation’s and a flood of firms and jobs escaping high taxes and stifling regulations. This toxic combination—high public-sector employee costs and sagging economic fortunes—has produced recurring budget crises in Sacramento and in virtually every municipality in the state.

How public employees became members of the elite class in a declining California offers a cautionary tale to the rest of the country, where the same process is happening in slower motion. The story starts half a century ago, when California public workers won bargaining rights and quickly learned how to elect their own bosses—that is, sympathetic politicians who would grant them outsize pay and benefits in exchange for their support. Over time, the unions have turned the state’s politics completely in their favor. The result: unaffordable benefits for civil servants; fiscal chaos in Sacramento and in cities and towns across the state; and angry taxpayers finally confronting the unionized masters of California’s unsustainable government.

California’s government workers took longer than many of their counterparts to win the right to bargain collectively. New York City mayor Robert Wagner started a national movement back in the late 1950s when he granted negotiating rights to government unions, hoping to enlist them as allies against the city’s Tammany Hall machine. The movement intensified in the early sixties, after President John F. Kennedy conferred the right to bargain on federal workers. In California, a more politically conservative environment at the time, public employees remained without negotiating power through most of the sixties, though they could join labor associations. In 1968, however, the state legislature passed the Meyers-Milias-Brown Act, extending bargaining rights to local government workers. Teachers and other state employees won the same rights in the seventies. (Read more from city-journal.org)

Obama sets Mars goal for America

“By 2025, we expect new spacecraft designed for long journeys to allow us to begin the first ever crew missions beyond the Moon into deep space,” he told his audience. “So, we’ll start by sending astronauts to an asteroid for the first time in history.”

And then he added: “By the mid-2030s, I believe we can send humans to orbit Mars and return them safely to Earth, and a landing on Mars will follow.” (Read more from news.bbc.co.uk)

Sounds like an excellent use of other people’s money to me!

The $747 Space Program

WEST YORKSHIRE, GREAT BRITAIN — Putting NASA and its billion dollar budgets to shame, a British space enthusiast took amazing photos and video from space with just a few hundred dollars, a home camera and a balloon.

Robert Harrison spent a mere $747 dollars to take his photos and video from 22 miles above Earth’s surface.

The results are stunning.

Harrison told the L.A. Times that a NASA official who saw the photos and video called him and asked him how he did it.

Apparently NASA thought Harrison used a rocket to achieve the flight into space.

Harrison says he put a camera into a polystyrene box and attached it to a helium balloon.

The camera was programmed to snap 8 photos and a short video every five minutes.

When the balloon reached an altitude of 22 miles, it popped.

As the camera fell, a parachute opened and the box gently floated back to earth.

Harrison found his camera some 50 miles from his home with the help of a GPS locator. (Read more from ktla.com)

Exploitation — 6 of the 10 richest counties in U.S. are in DC area

(From washingtonexaminer.com)

I like Hans Hermann Hoppe’s resurrection of the terms “exploiters” and “exploited.” In his essay, Marxist and Austrian class analysis, he describes the surprisingly common ancestry and common ground between the Marxist and Austrian Schools, then explains how the Marxist depart down the road to tyranny and depravity with their patently absurd Exploitation Theory, which misidentifies the exploiters.

The exploiters are NOT the owners of capital (business men). The exploiters are those who instead of producing goods and services society voluntarily consumes, feast in the coercive sector of the economy — on wealth taken from the voluntary sector of the economy by force or threat of force. These are the exploiters.

And I suspect they are the people who largely make up the 6 out of the 10 richest counties in the U.S. which are around DC.

The Scandinavian-Welfare Myth Revisited

It is always good to look at the history of a country when examining its economic performance. Stefan Karlsson did just that back in 2006 in an excellent article on the economic history of Sweden. I will therefore only give a brief overview of this subject before focusing on the central point of this article.

Karlsson wrote the following:

As a result of its free market policies, the resourcefulness of its people, and its successful avoidance of war, Sweden had the highest per-capita income growth in the world between 1870 and 1950, by which time Sweden had become one of the world’s richest countries.

. . . .

Indeed, thanks to its “neutrality” during WWII, Sweden was never bombed or invaded.[1] This left Sweden’s industries intact and unharmed, which, along with its free-market-oriented economy, enabled the country to profit extensively from the reconstruction of war-torn continental Europe: Sweden exported huge amounts of goods and natural resources to the rest of Europe, fueling an economic boom in Sweden that lasted for over two decades.[2] As Karlsson points out, during this time “Sweden was still one of the freest economies in the world, and government spending relative to GDP was in fact below the American level.”

On the back of this boom the Swedish government began setting up a massive welfare state throughout the 1950s, ’60s and ’70s, causing government spending to skyrocket to more than 50 percent of GDP. At one point during the mid-’70s, the top marginal tax rate was an unbelievable 102 percent.

One of the people who were burdened with this tax was Astrid Lindgren, the famous author of children’s books best known for her Pippi Longstocking series. In 1976 she wrote a satirical short story published in one of Sweden’s biggest newspapers, where she told the tale of a troubled children’s-books author called Pomperipossa, who lived in the fictional kingdom of Monismania. Among other things, Pomperipossa pondered why the more she earned, the less she got to keep, and why people like her were being economically punished by the government simply for writing popular children’s books. The story also mentions that in Monismania one could escape some of the taxes by purchasing real-estate property, which is exactly what the Swedish secretary of the treasury, Gunnar Sträng, had been doing at that time.

Lindgren’s story stirred up a fierce tax debate in Sweden, and for the first time in 44 years the incumbent Social Democratic Party lost the general elections.

The Swedish economy was in an uphill struggle throughout the ’70s, mainly because the increasingly socialist policies had caused the economy to stagnate and lag behind the rest of the world. Many other European countries had caught up with Sweden and its monstrous welfare state and were now outperforming the country economically.

In an effort to save the economy, the government carried out extensive reform and liberalizations throughout the ’80s and ’90s, cutting taxes and welfare expenditures, abolishing government monopolies, reducing regulation, floating the currency, and permitting more private alternatives in the public sector.

This increase in economic freedom is partially illustrated in Fig. 1, which comes from the Heritage Foundation’s annual Index of Economic Freedom.

. . . .

We have seen that while the Scandinavian countries have extremely high amounts of what Rothbard called binary intervention, i.e., taxation, their saving grace is their relatively lower amount of triangular intervention, i.e., regulation. This puts the Scandinavian countries on a level playing field with other developed countries and helps explain why they are able to have equal or higher living standards. The misconception that the other Western countries are a lot more free-market oriented than Scandinavia is very unfortunate; it feeds the notion that more government expansion would bring joy and happiness to all, when in fact it would make things worse.

However, the real point of all this is that the world at large is so unfree that even the massive Scandinavian welfare states can be considered among the “most free” countries in the world. While things have generally moved in the right direction in Scandinavia in terms of increased economic freedom, the very opposite trend seems to be taking place in several other countries, particularly the United States. Seeing as the United States has already descended to the level of Denmark in terms of economic freedom, one can only wonder how long it will be before it finds itself approaching Finland, Norway, and Sweden. (Read more from mises.org)

Toyota vs. Government Motors

The media has been hyperventilating over safety concerns in Toyota vehicles, presumably for our sake. Now that the government owns and runs GM, I cannot take this news without suspicion.

Austrian Economist Patrick Barron said it best:

The U.S. government owns General Motors and now it gets to sit in judgement of GM’s most successful rival, punishing it and waging a public relations campaign to malign Toyota’s products. Sounds like another great way–in addition to the “Cash for Clunkers” program–for the government to provide a backdoor subsidy to its captive company and its union supporters.

***

Toyota’s Troubles Deepen
Toyota Motor Corp.’s quality crisis deepened Tuesday, as U.S. regulators accused the company of dragging its feet on fixing defective gas pedals and threatened civil penalties and further reviews of Toyota products.

The move means that Toyota’s efforts to address its biggest-ever safety and public-relations mess are far from over. Last week, the administration indicated it had no issues with how Toyota had responded to the sudden-acceleration reports, which led the company to recall about six million vehicles and have been linked to at least five fatalities.

“While Toyota is taking responsible action now, it unfortunately took an enormous effort to get to this point,” Secretary of Transportation Ray LaHood said Tuesday in a statement. “We’re not finished with Toyota and are continuing to review possible defects and monitor the implementation of the recalls.”

Mr. LaHood said Transportation Department officials flew to Japan in December to meet with Toyota executives and remind the company “about its legal obligations.”

Toyota woes mount as gov’t examines Prius brakes
Toyota faced mounting pressure Thursday as the government opened a probe of brake problems with the Prius, a crown jewel of its lineup. The beleaguered automaker said it was “too soon” to decide whether to add the hybrid to the millions of cars it has recalled.

. . . . The National Highway Traffic Safety Administration said it would assess the scope of the problem and the safety risk to about 37,000 cars that could be affected.

Obamanomics

Obama unveils $3.83T budget with massive deficits
President Barack Obama sent Congress a $3.83 trillion budget on Monday that would pour more money into the fight against high unemployment, boost taxes on the wealthy and freeze spending for a wide swath of government programs.

The deficit for this year would surge to a record-breaking $1.56 trillion, topping last year’s then unprecedented $1.41 trillion gap. The deficit would remain above $1 trillion in 2011 although the president proposed to institute a three-year budget freeze on a variety of programs outside of the military and homeland security. (Read more from news.yahoo.com)

Obama vows to fight for jobs in retooled message
President Barack Obama tried to revive his battered agenda and rally despondent Democrats on Friday with a renewed emphasis on jobs. (Read more from news.yahoo.com)

This lies somewhere between idiocy and shameless pandering. The pandering is evidenced in the obscene something-for-everyone budget which attempts to buy votes by sprinkling money on every special interest you’ve ever heard of. The idiocy comes from running a deficit on one hand and from presuming to create jobs on the other. In fact, government does not have the power to create jobs, because government has nothing which it doesn’t take from its people. Government only has the power to redirect jobs. Efficient, private-sector jobs must be destroyed so that in-efficient, politically motivated, public-sector jobs might be created.

Behind The Real Size of the Bailout

This was a pretty widely reported story from motherjones.com:

The price tag for the Wall Street bailout is often put at $700 billion—the size of the Troubled Assets Relief Program. But TARP is just the best known program in an array of more than 30 overseen by Treasury Department and Federal Reserve that have paid out or put aside money to bail out financial firms and inject money into the markets. To get a sense of the size of the real $14 trillion bailout, see our chart here. Below, a guide to the pieces of the puzzle: (Read more from motherjones.com)