Why Bother?

I haven't written anything in a long time – partly because I've been working on the launch of our new website, RevereLiberty.com, but also because politics can be exhausting. If you've ever wondered why I bother writing these articles, then we're in accord.

Firstly, politics takes time – to research, to write coherently, even to be informed. Secondly, it's unpleasant, which probably explains its exalted position as one of the three taboos of polite conversation. Thirdly and finally, it often seems futile.

Why read and think and talk about politics only to end up, not only frustrated and angry, but also no more equipped to do anything about it?

That line of reasoning certainly stands up to logic. Putting so much effort into politics offers no immediate reward – on the other hand, it does introduce the risk of offending or losing the respect of loved ones.

Moreover, it's a difficult battle. Unless you're selling 'change you can believe in,' you can't merely tell people what they want to hear. From what I've seen, most people would rather indulge in wild rationalizations than accept basic principles of liberty and personal responsibility.

So why bother?

If everyone follows the same logic, then we can only expect our problems to worsen. People will continue to vote away the rights and money of others – including their posterity – but we will have done nothing to oppose this injustice.

That makes us accomplices to the robbery of our fellow countrymen and our children. Wealth redistribution is just organized thievery, whether we're taking it from 'the rich' using income taxes or from future generations using ever-growing public debt.

If that's not enough for you – if you have a higher purpose that makes stealing seem justified – then consider the fact that what we're doing as a nation also is not sustainable. In other words, ultimately, it will affect all of us – not just 'the rich' or our successors.

The more we destroy productivity by punishing achievement, the fewer 'rich people' we'll have to loot. The more free money we offer, the more 'poor people' we'll have dependent on the government. The more debt and IOU's we pile on, the more interest payments we must make and the sooner that debt turns becomes unmanageable.

People understand this in their personal lives – otherwise parents wouldn't bother encouraging their kids to work hard, go to college, and balance the budget. A good parent wouldn't wish financial ruin on his child, so why would he wish it on the entire nation?

Because he doesn't understand, or he is deluding himself – either way, that is why it's important to get involved. Eventually, the delusions will have the same effect on the country that we would expect them to have on our personal lives.

And although the United States is 'too big to fail,' you can bet the farm no one will be there to bail us out.

Greed

I've always been mystified at how readily the public seemed to swallow the notion that the entire housing crisis, credit crunch, and ensuing recession were caused by greed.

Here is an articulate analogy I got from one of Thomas Sowell's columns: greed is like gravity – it's a fact of life, and blaming greed for anything that is going on now, or indeed anything you don't like in the free market is like blaming gravity for a plane crash.

Sure, if there were no gravity, the plane wouldn't crash; however, we cannot remove gravity from the physical world any more than we can banish greed from human interactions. People are hard-wired to act in their own best interests.

Any sane person's explanation of a plane crash would probably focus on whatever caused the plane to fall from the sky – not on the universal force that hundreds of thousands of flights defy each day.

By the same token, millions of Americans greedily go about their business every day without causing terrible disaster.

All of the routine decisions we make about money each day – choosing which credit card to use, if any, deciding whether to rent or buy a home, searching out the cheapest gas prices (if only by a couple cents), and so on – are properly motivated by the ubiquitous desire to obtain and preserve wealth: in other words, greed.

Therefore, it simply does not stand to reason that greedy behavior can cause major disasters like the subprime mortgage crisis. If it could, crises like this would be commonplace. Instead of labeling the current problem as the worst financial crisis since the Great Depression, it would merely be the worst since last year.

Clearly, greed fails to explain the whole story, and we should be skeptical of anyone making such claims: either they are misinformed, or they are trying to divert the conversation from the realm of reason to the realm of emotion and gut-reactions.

Here is a funny example of the artful use of rhetoric against greed:

Greed is just one of those words that push people's buttons, and I believe it is invoked to stoke the embers of class warfare in people's minds. Condemning the rich as greedy gives us 'ordinary folk' a false sense of self-righteousness: we might not be as wealthy, but at least we weren't greedy like those jerks on Wall Street.

However, this sort of reasoning, if it can be called that, reeks of jealousy – which is ironic because if we didn't desire more wealth (in other words, if we weren't greedy), we would have no reason to be jealous, or even to care about another person's greed.

For a society that values freedom, we cast an awful lot of blame on the free actions of free people, and that blame does nothing to explain the reality of the situation.

Here is my suggestion: the next time you find yourself in danger of being swayed by the rhetoric of self-righteousness and altruism, stop and ask yourself what your life would be like without the greed of others.

I cannot think of a single (material) thing in my life that I devised and built on my own.

That means other people invented and put together all the things that I enjoy in my day-to-day life, from my computer to my comfy bed and favorite slippers, to my car. The couch I'm sitting on, the clothes I'm wearing, electricity, running water – all possible because of the volition of other people, motivated not by altruism but by the reward that comes from producing something of value.

In short, my life is unfathomably better and easier because of: the resourcefulness that enables people to create, and the greed that motivates them to produce more than they need for themselves.

The Bright Side of Health Care Reform

Every iteration I've seen of the health care legislation has been a lot like the junk food we Americans love so much - chock full of the things people like, but practically nothing that would actually be good for anyone.

Although total government takeover is not on the table (yet), by setting up insurance companies to fail while simultaneously driving up costs (one of those nasty side effects of increasing demand of medical care without increasing supply), our public servants in DC can bet on us crawling back to them to 'fix it' sooner or later.

So the question is not whether the path we're on leads to government-run health care, but when. If, like me, you're a fan of liberty - and our very high standard of living - that realization might seem a little depressing.

However, as with many things in life, there is indeed a silver lining to this (hurricane) cloud. Being the optimist that I am, I like to try to look on the 'bright side of life,' so here it is:

When we arrive at government-run health care, we can undoubtedly expect 'free' medical procedures, at least the ones approved by the government. If our friends in Washington really want to fix all of our problems – as they promise – all they would have to do is make sure that surgeries altering the connections to the prefrontal cortex are fully covered and accessible to everyone.

That's right – the answer is FREE lobotomies for everybody!

Imagine the possibilities: all those dissenters and naysayers, all those rowdy individualists could be relieved of the responsibility of thinking (along with everyone else). What could be better for a government that wants to run our entire lives than reducing the entire population to tranquil, unthinking cattle?

Some might say that this would be really bad for our productivity. Not important. If people aren't productive, then we won't have to bother taxing them for being too productive. It's a win-win.

Everyone will just live their lives whatever way our enlightened leaders dictate. Without the capacity for original thought, they won't be able to cause all those undesirable symptoms of freedom, like unequal outcomes.

After all - isn't that the goal of constantly expanding the government, anyway? Might as well get it all over with at once - like ripping off a band-aid.

Wealth Redistribution: Two Stories

Anecdotes are never a valid substitute for good logic and fact; however, they can serve as examples to help illustrate logic.

I disagree with the concept of forced wealth redistribution on many levels. Most importantly, it violates one person's rights in the name of another's need. This sort of precedent does not bode well for a free society.

It also is not good for the prosperity of a society as a whole. While decreasing the incentive to work hard, it offers reward for not working hard. The logical implication of this is that people will tend to work less and produce less. Here is where my two stories come in.

Taxing the Rich

Having lunch with my friend last week, I found myself in a conversation about parents and living so far from home. My friend, whom I'll call Jane, expressed concern that her dad was bored now that he's retired.

I can understand that – my dad would never be able to sit on his hands at home. He'll probably always have some sort of occupation – even if as a mountaineering guide – because retirement would simply kill him.

From what I've been able to gather, Jane's parents are fairly well-off. They own a farm, and her dad was in some sort of medical profession. Both of them are well-educated.

So I asked Jane, "Why doesn't he just get a job?" To which she replied, "Because that would put him in the next income bracket, and he doesn't want to pay more taxes."

That kind of blew me away. Jane's dad is a highly educated – and formerly highly productive – member of society. And now, he's sitting at home, bored, because working isn't worth giving up more of his income.

To Give to the Poor

Where would his money go? Well, some of it would go to people like my in-laws' former tenant, whom I'll call Nancy.

Being a single mom, Nancy needed all the help she could get. And she was getting plenty – enough to rent a very nice house (better accommodations than I could afford at the time) – thanks to various state and federal aid.

Nancy, like many in her position, didn't want to be there forever. She wanted to go back to school so she could stand on her own and support her family.

So she got a part-time, minimum wage job, and started taking night classes. When she got the job, however, she no longer qualified for government aid – so they pulled the plug.

At that point, she had to make a decision: keep working, or pay the rent. She quit the job – and the classes – and went back to living off the government.

If Nancy had the determination to overcome her circumstances on her own, she probably could have. However, the incentive for not working was too great.

These two people, Nancy and Jane's dad, both left the workforce because of the incentives created by forced wealth redistribution. Their stories go to illustrate the point the logic already makes – that punishing success and rewarding failure merely leaves us with less success and more failure. It encourages more people to become a burden on others – and more people to shrug off their burdens.

It makes me wonder – what would our economy be like if those incentives were removed?

Fun Facts: Federal Taxes

Doing a little research on income and tax burden distribution in my spare time (I know, get a life, right?), I came across a few interesting nuggets of information to share. The following is the most recent data (2006) provided by the Congressional Budget Office here.

Income tax (after credits): 43.4% of tax receipts in 2006

• The top 10% of income earners pay 72% of the taxes.
  
• The top quintile pays 86%.
  
• The bottom 40% actually earn 3.6% after credits (meaning they pay negative income taxes)
  
• The effective income tax rate spans from 19% (top 1% of earners) to -6.6% (bottom quintile)
  
• Average effective tax rate is 9.1%
  

Payroll tax: 34.8%

• This is the only category in which the top 10% do not pay over half the total taxes collected
  
• The top 10% pay a quarter of these taxes
  
• The top quintile pays 43%, more than the bottom 3 combined
  
• Due to caps on taxable amount, the tax rate spans from 9.6% (second-highest quintile) to 1.6% (top 1%)
  
• Average effective rate is 7.5%
  

Corporate income taxes: 14.7%

• 80% is paid by the top 10% of earners
  
• The top 1% actually pays over 50% of total taxes
  
• Effective tax rate spans from 10.4% (top 1%) to 0.4% (bottom quintile)
  

Overall:

• The top 10% pay over half (55%) of all federal taxes
  
• The top 20% pays 69%
  
• The bottom 40% pays 5%
  
• Effective tax rate spans from 31.2% (top 1%) to 4.3% (bottom quintile)
  

So, next time you're enjoying one of the many services our federal government provides, be sure to thank a rich person…

Blame the Greedy Insurers

As the basis for attacking business, I often hear the argument that companies are greedy SOBs. Instead of fellow human beings, they see market share. They care more about profit than curing diseases.

This tactic seems effective because of the emotion it invokes. Damn them for being so selfish. They're probably rich too. Certainly more wealthy than I am - those jerks. Why shouldn't I have some of what they have? (And so on.)

All that self-righteousness must cut off circulation to the brain, because as often as I hear someone deplore the profits made by another, I never hear anyone complain of his own earnings.

Anyone who works and saves money is guilty of making a profit. Moreover, if you're managing to save more than 3-5% of your income, you're even greedier than the health insurance companies are.

Companies are just groups of people, and you can always count on people to do what's best for them first. That's not me being cynical – it's actually a good thing. If a person doesn't take care of himself and his family first, then they become a burden on others.

In a free market, companies have an incentive to make customers happy. If they take advantage of people, they might make a huge profit for a little while, but then it's only a matter of time until others crowd into the industry to get some of that profit.

More firms in the industry means competition – which means it is in a company's best interest to keep customers as happy as possible. Neglecting customers for long enough could put them out of a job.

Wait a minute, aren't health insurance companies not making their customers happy? That's all I hear about in the news – how insurers are just screwing us out of money and driving up the cost of health care, right?

Firstly, insurers' profits only account for 1% of total spending on health care.

Secondly, according to this Gallup poll, 57% of Americans are satisfied with the total cost of their health care, 70% categorize their health care coverage as good or excellent, and 83% of them categorize health care quality the same way (with 95% confidence that the sample numbers are within +/- 3% of the population).

Finally, insurance companies already operate under a tangled web set of regulations at the federal and state levels. For example, every health insurance website I've visited has almost the exact phrase: "health insurance prices are fixed by law." However, if you want to find out exactly what laws they follow, you must look at each state individually. It's amazing we have people willing to work in health insurance at all!

Back to the original point. You can count on the people who work in health insurance to put their own interests first, and to condemn that is nothing short of hypocritical.

In a purely free market, you know that a company's best interest is to serve the customer, for fear of losing market share. However, as the market becomes less and less free, the incentive shifts from pleasing the customer to pleasing the government.

If the government fixes the price and mandates levels of coverage, is it really the fault of the insurers and their shameless 'greed' if we think there are problems in the insurance industry?

Perhaps the answer to health care reform is less self-righteous altruism and more free-market greed.

The Talents Parable

[Warning: This article contains Biblical references. If that offends you, don't read it.]

Here is another example of the omnipresence of politics in my mind. I was in bed last night trying to sleep when a parable from Matthew 25 popped into my head.

It's the one where the master leaves town for a long journey and entrusts each of his three servants with some talents (some kind of Greek currency). From verse 15: "unto one he gave five talents, to another two, and to another one; to every man according to his several ability"

When the master returns, he finds that the first two servants have doubled their money – not bad! The master rewards each for being a "good and faithful servant" (verses 21 and 23).

On the other hand, the servant with just one talent buried his in the dirt because he was afraid. For that, the master called him a "wicked and slothful servant" (v. 26), gave his talent to the guy that had 10, and cast him into the "outer darkness," where "there shall be weeping and gnashing of teeth" (v. 30).

When I heard this story as a kid, I thought it was somewhat unfair. The talents were not distributed equally in the first place – they were given according to each servant's ability. Then the guy with the short straw ends up with nothing at all. Talk about a regressive tax structure!

In Sunday school, it was explained to me that the story meant we must make the most of our abilities and not let ourselves go to waste – that the 'talents' are just a metaphor for our time on Earth.

Still, I was already steeped in the culture of entitlement – in reading the story for the first time, I expected it to end with the master giving the third servant a little from the others, to make him feel better.

If you think about it though, that would be contrary to reason. The third servant has demonstrated that he couldn't manage his master's money – he just wasted his opportunity when the others capitalized on it. Why punish the two that did exactly what the master wanted for the benefit of the one who didn't?

I'm not advocating that we rob poor people and give it to rich people – merely that we cease to rob anyone.

I realize that it seems pretentious of me, being blessed with very good parents and never knowing real poverty, to make this argument repeatedly. It has been brought to my attention many times that maybe I would feel differently if I had been born in some ghetto or some third world country.

Maybe I would – but how I feel about something is irrelevant. I still feel bad for the servant who ended up with nothing. If I were one of the other servants, I probably would have shared some of what I had with him.

That is the difference between emotion and reason. It is not rational to force equality on inherently unequal circumstances. Firstly, it is unjust to punish the innocent. Secondly, taking resources from those who can use them well in order to give to those who can't is suboptimal for society.

It is perfectly fine to allow emotion to guide my personal decisions – like giving to the servant that didn't earn it – but I cannot impose my feelings on others and force them to share.

This is why I get annoyed when people invoke religion to support mass entitlement programs. They use plenty of lovely words like "take care of" and "stewardship" and "compassion" – and all the rhetoric serves as a smoke screen to steer us away from reason.

However, I've never seen anything in the Bible about forcing people to give unwillingly or to ignore reason in the name of emotion. If God wanted that kind of behavior from us, the parable above would have had the Hollywood ending I expected as a child.