Tag Archives: education

Biden’s Student Loan Bailout is More Proof the Government Doesn’t ‘Invest’

President Biden today announced he would forgive up to $20,000 in student loans for people making less than $125,000 per year, with several other qualifications determining the amount each applicant is eligible for.

Biden’s political opponents have raised very reasonable objections to this politically motivated favoritism just over two months before the mid-term elections. What about people who paid off their loans? Why only student loans and not others arguably taken to underwrite more productive efforts than women’s studies or French poetry?

Why does someone who borrowed money to start a profitable business that employs people have to pay back its loans when someone who works a tax-subsidized job does not?

While calling out such blatant vote-purchasing for its violation of equal justice under the law and other statist dogma is perfectly valid, let’s not forget the economic law demonstrated by this bailout: the government cannot “invest.”

Politicians love to use that word for its wealth transfer schemes. “Invest in infrastructure,” “invest in working families” (which families don’t work?), and, in this case, “invest in education.”

Merriam-Webster dictionary provides two relevant definitions for the word “invest.” Government-guaranteed student loans doesn’t meet either of them:

1: to commit (money) in order to earn a financial return

2: to make use of for future benefits or advantages

Had the government’s “investments” in student loans met the definition of the word, there would be no need for a bailout. The money spent on tuition would be paid back out of the additional earnings students realized over and above what they would have earned without going to college.

That they not only aren’t in the black based on additional earnings to what they would have earned with a high school diploma, but can’t pay the loans back at all, should end once and for all the ability for politicians to claim they are “investing” in anything.

This excludes all the student loan borrowers who can pay back their loans but now will shift some of that burden onto others. Doctors, lawyers, university professors, and other affluent debtors will force plumbers, taxicab drivers, and construction workers – not to mention other doctors, lawyers, etc. who worked their way through school without student loans or who already paid them back – to pay their debts.

The grand experiment with government “investing” in higher education has produced two returns: people who can’t earn enough to pay back the loans and people who can but choose to force somebody else to do so.

All the same arguments against student loan bailouts can be made against public education in general. Why are homeowners forced to pay for public schools whether they use them or not, while wealthy renters pay nothing? Why is the service called “education” Sovietized in the first place? Is there something special about education that makes the government owning its means of production successful?

Of course not. Just look at the results. The more the government has “invested” in education, the less literate and numerate graduating students have become. Like every government-provided service, the cost keeps going up and the quality keeps going down.

Education, healthcare, infrastructure, transportation, the military – they are all the focus of massive government “investment.” And those investments all continue to produce the same returns: skyrocketing prices and plummeting quality.

Everything the government does is Afghanistan.

Investors in the private sector aren’t better people. They merely work under different incentives. When private sector actors invest, they stand to lose their own money. This powerful incentive doesn’t produce perfect results, but it produces infinitely better results than government spending. And when private sector investments go bad, no one else is forced to pay for their mistakes.

That is, unless one is on the Christmas list of the ultimate government investor, the Federal Reserve System. Its “investments” in stimulating the economy are the most damaging of all, producing steadily rising prices, artificial booms, disastrous busts, and more and bigger bailouts over time.

We have no choice but to pay for Biden’s latest vote buy. But let’s not let him or any other politician continue to call their loot distribution “investment.” Doing so should be tried in The Hague as a crime against veracity.

Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Society is in every state a blessing, but government…

DENVER, CO - JUNE 16: The TSA security lines in the main terminal are crowded with vacation travelers on June 16, 2013, in Denver, Colorado. Located 25 miles from downtown, Denver International Airport is the largest airport in the United States. (Photo by George Rose/Getty Images)

DENVER, CO – JUNE 16: The TSA security lines in the main terminal are crowded with vacation travelers on June 16, 2013, in Denver, Colorado. Located 25 miles from downtown, Denver International Airport is the largest airport in the United States. (Photo by George Rose/Getty Images)

This thing we call “society,” which Thomas Paine correctly observed is separate and distinct from government, is basically an economic arrangement. The basis of and primary reason for society is people exchanging their various goods and services with each other.

I wonder how many hundreds or thousands of years more it will take for people to realize what should be blatantly obvious: that every set of exchanges in which government is heavily involved, by either subsidizing, regulating (aka “protecting established firms from new competition”), or downright monopolizing it, is painful. All these sectors (education, health care, air travel, etc) share the same characteristics: poor service, no accountability, high prices, incredibly outdated, bureaucratic procedures (paper forms, long lines, etc), and lack of choices or options, just to name a few.

Conversely, every industry in which government has low or zero involvement has precisely the opposite characteristics: constantly lower prices, better and always improving service, absolute accountability (you go to a competitor if you’re not happy), cutting edge technology (phone apps, automated texts, etc) and constantly improving ease of use and convenience.

Anyone not completely blinded by their emotions (mostly envy) can see glaringly obvious cause/effect relationships that lead inevitably to one conclusion:

All advancement in human happiness results from markets and other voluntary cooperation and virtually all human misery is rooted in government.

One would think a light bulb would go on sooner or later for most people and government would be banished from most or all human interaction.

Instead, it’s “Thank you sir, may I have another!” ad infinitum.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

 

More anti-libertarian nonsense: Libertarians are heartless

TAMPA, March 28, 2013 – This week’s anti-libertarian nonsense is “libertarians are heartless.”

There are many variations on this theme. Libertarians oppose government-run education so they must not want poor people to get an education. They oppose government-run healthcare so they must want poor, sick people to die. They oppose government-subsidized housing so they must want poor people to be homeless, too (if they aren’t already). Libertarians are selfish, amoral…You get it.

Libertarians also oppose state religions, but no one claims libertarians are against religion. I wonder why? It seems to follow.

The people who make these claims don’t understand what libertarianism is and don’t really understand the nature of government or their relationship to it, either.

Libertarians do not object to you helping the poor. They merely object to you forcing someone else to help the poor.

Libertarianism answers only one question: When is violence or threatening violence justified? The libertarian answer is only in self-defense. That includes defending your life from an immediate attack upon it or defending yourself against a previous theft of property or other crime.

This is where libertarians face reality and their opponents don’t. Libertarians understand all government action is violent action. That’s not because people in the government aren’t doing it right. It’s because that is what government is designed to be. Violence is its raison d’etre.

The philosophical justification for government in a free society is security. Because humans will sometimes invade the life, liberty or property of their neighbors (whether next door or in another country), there has to be some adequate means to force the perpetrator to cease his criminal activity and make restitution to his victim.

Government is supposedly the answer. Government is the pooled capacity for violence of everyone in the community. That’s all it is. That’s why Thomas Paine based his entire treatise Common Sense on one fundamental assumption:

“Society in every state is a blessing but government even in its best state is but a necessary evil; in its worst state an intolerable one;”

Why an evil? Because it is an institution of violence, nothing more. This is a foundational American idea. It is the reason for the entire Bill of Rights. Government must not be allowed to suppress speech because offensive speech does not justify violence. Government may not prohibit the keeping and bearing of arms because merely possessing arms does not justify violence against the possessor.

When intolerable? When it is used to initiate force, rather than respond to it. If one individual steals from another, the victim has a natural right to point a gun at the thief and demand his property back. In society, the individual supposedly delegates this power and the government points the gun at the thief for him. Almost no one would consider this unjust.

But what if no crime has been committed? Suppose I knocked on your door and demanded money from you at gunpoint. Would you drop the charges against me if you found out I had taken your money and paid some anonymous stranger’s medical bills? Do you believe that is the best way for human beings to solve the problem that the stranger can’t afford to pay them?

Almost no one would answer either of those questions “yes.” Yet, there is absolutely no substantive difference between that scenario and a government-run healthcare program (or education, or housing…). The only superficial difference is a government official is holding the gun. But most Americans can’t see it and will actually argue with you that it isn’t there.

There is an easy way to find out. Simply refuse to cooperate. Deduct the amount you owe for Medicare from your tax return next month and include a note waiving any benefits from the program. Or deduct the amount of your property taxes that underwrite public education and Medicaid (which is most of the bill) and indicate you waive the right to utilize either.

What will happen next? You will get some “reminders” about the oversight in the mail, followed by increasingly threatening letters. Sooner or later, someone in a black robe will write on a piece of paper. Then, men with guns will show up at your door. Don’t believe me? Test my theory.

So what do libertarians really say that is supposedly selfish or amoral? That initiating force against people is wrong. Period. You are free to help other people who need it, but you cannot force your neighbors to do so under a threat of violence if they don’t. You may build schools and hospitals for the poor and ask for contributions for anyone you wish. You just can’t pull out a gun if they decline to participate.

At one time, Americans believed so strongly in this principle that they seceded from their country and formed a new one based upon it. Imagine if they reestablished it again.

Libertarianism anyone?

 

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

What is Your Fair Share?

“For were the impulses of conscience clear, uniform, and irresistibly obeyed, man would need no other lawgiver; but that not being the case, he finds it necessary to surrender up a part of his property to furnish means for the protection of the rest…”

– Thomas Paine, Common Sense (1776)

There were not many surprises in President Obama’s 2012 state of the union address on Tuesday. He touted what he claims are the accomplishments of his administration and pushed his left-leaning economic agenda. For the president, all economic growth has its roots in some sort of government intervention, including “help financing a new plant, equipment, or training for new workers,” giving “community colleges the resources they need to become community career centers,” or trying to “spur energy innovation with new incentives.” Of course, further expanding a government that already spends about 50% more than it collects in taxes can only be accomplished one way – by collecting a lot more taxes.

To this end, the president resorted to the perennial liberal/progressive mantra that everyone “pay their fair share.” Obama used this term three times during the speech in regard to taxes. As even many of the Republican presidential candidates seem to buy into it, the president was also unable to resist the urge to promote the latest left-wing myth that millionaires like Mitt Romney pay less in taxes than their secretaries. This is complete nonsense, of course, but it is effective in eliciting the appropriate outrage from people who don’t stop to do either some simple math or even a little critical thinking.

For the president, there doesn’t seem to be a ceiling on what anyone’s fair share might be. However, he does have a clearly defined floor. “If you make more than $1 million a year, you should not pay less than 30 percent in taxes.” Exactly why that number is “fair” or even the millionaire’s “share” is somewhat difficult to determine. Neither does Obama answer the question that should logically follow. If you make under $1 million per year, what is your fair share in taxes?

Now, in any other situation where a group of people agrees to pool its money to buy something, this is a very easy question to answer. If you and three friends decide to go in on a large pizza, each of you will pay 1/4 of the cost. Assuming it is a typical pie, it will be cut into eight pieces and each of you will eat two. Thus, everyone has received an equal amount of the pizza and each has paid his fair share of the cost.

Of course, before anyone determines your fair share of the cost, you would be asked if you want pizza in the first place. In all such arrangements between human beings, other than government, you have a choice of whether you want to buy or not. Perhaps you’d like to eat something else. Perhaps you’re not hungry. You can always allow the other three to buy pizza and provide for your own meal yourself.

Not so with government. Not only can the other three take a vote and force you to buy part of this pizza, but they add insult to injury by proclaiming that their vote represented your consent to buy it. With this dubious consent in hand, they then decide what your fair share of the cost of the pizza will be, regardless of how the slices are distributed. If you have acquired too much wealth, even honestly, then you might find yourself paying for 3/4 of the pizza and only getting one slice in return. Once voluntary consent is eliminated and force is put in its place, it becomes difficult to use words like “fair” and “equitable” without committing grave offenses against the language.

Putting that aside for the moment, let’s assume that 315 million people have actually all agreed to constitute a government and pool their money to pay for its services. Before determining what anyone’s fair share of the cost would be, we first have to determine what services the government can offer. It would not make any sense for the government to offer services that only benefit one or two people, because all 315 million are paying. No, the only legitimate services that the government could offer would be those that contributed to the “general welfare.”

This widely abused term is not anywhere near as mysterious as it is made out to be. Promoting the general welfare is offering only those services that benefit every member of society equally. For example, if the government devotes resources to a military establishment to protect the nation’s borders, it is promoting the general welfare. Regardless of how effective the service might be, every member of society within the borders is benefitting equally from it. From the Wall Street financier to the general contractor to the grocery clerk to the homeless man, all are receiving equal protection from foreign invaders. Thus, a defensive military establishment is a service that promotes the general welfare and therefore could be offered fairly under such an arrangement.

Similarly, a system of law enforcement and courts would also promote the general welfare. If the person or property of one member of society were invaded by another, then employees of this agency would investigate the incident, determine if a tort or crime had been committed, and make a determination on what penalty or restitution should be paid by the defendant. This, too, would benefit all members of the society equally. Whether you were a Wall Street financier whose partner had embezzled millions or a taxi driver whose modest home had been burglarized, you are equally protected by laws against theft.

Notice also that the cost of providing these services is the same for each member of society. Obviously, it costs no more for an army to defend the financier from an invading army than it does to defend the taxi driver. The army defends against the invader for all within the borders at one cost. Similarly, it costs no more to provide a police officer, a judge, a jury, etc. for the financier than it does for the taxi driver. The only exception is defense attorney, which is provided for a defendant who cannot afford one, but this is a minute percentage of the entire cost.

In short, any defense of life, liberty, and property, whether from foreign invasion or aggression by another member of society, is a service that benefits the general welfare. It benefits all members of society equally and costs relatively the same to provide to all members of society.

Let us now consider some services that the government offers that do not promote the general welfare. Healthcare is obviously one. First, all members of society do not benefit equally when the govenrment provides healthcare. For example, Medicare only benefits people over 65 yeras of age and disabled people under 65. Not only does the program not benefit all members of society equally, but it actually does not benefit those paying for it at all, while those receiving the benefits (those over 65 and the disabled) do not pay at all. Recall the pizza example. Imagine if you had to pay for a whole pizza that your three friends ate, and then had to pay additional monies to provide for your own meal. Medicare, Medicaid, or other government programs for specific groups are really no different.

In addition, government medical care can never cost the same to provide to all members of society, as security services do. Some people will be sicker than others, either through misfortune or their own lifestyle choices. Some will need surgeries or chemotherapy or other expensive care. Some will need relatively little care. It is not an exaggeration to say that there may be 315 million different costs to provide healthcare to 315 million different people.

Education is another service that does not promote the general welfare. When the govenrment provides education, it is of absolutely no benefit to anyone that is not in school or does not have children in school. Neither does it benefit parents who homeschool their children or enroll them in private schools or childless adults who all must pay for government education. Some of the people who benefit do pay part of the expense, but obviously this does not constitute “fairness.” It is no different than if four friends all paid for 1/4 of the pizza, but two of them ate it all. Certainly, the other two had no “fair share” for any of the pizza at all. As with healthcare, the cost of education is also going to be different for different people. An education in medicine has a different cost than an education in engineering or art.

In looking at the federal government’s budget, one can see that the overwhelming majority of the money spent is not spent for the general welfare. Almost all of it is collected from one group of people and spent for the benefit of others. The only services provided by the federal government that truly promote the general welfare are those that concern defense of the borders and defense of person and property related to interstate commerce. At the state level, only defense of person and property within the state promotes the general welfare. All other services represent a forced redistribution of wealth from one person or group to another. When anyone other than the government engages in a “forced redistribution of wealth,” we call it “armed robbery.”

It should also be noted that even the “Defense” portion of the federal budget largely does not promote the general welfare. Only that portion necessary to defend U.S. citizens from aggression by foreign nations does. Those expenditures related to defending people in other countries or which are unnecessary for security not only do not promote the general welfare, they do not benefit anyone within the United States at all – except for those military contractors and financiers that are fortunate enough to profit from these activities.

There is also frequent confusion about government services commonly referred to as “infrastructure.” It is argued by some that if the government builds a road that is accessible to everyone, it promotes the general welfare. However, this argument does not hold up to scrutiny. If federal money is used to build a light rail system in Florida, it is going to benefit people who live or travel frequently in Florida much more than people who do not. Certainly, a citizen in California or Montana is unlikely to ever even see that railroad, much less benefit from it equally. Who would not agree that his fair share of this railroad is zero?

Even at the local level, a road or a bridge does not benefit every member of society equally. The local businessman whose products are more cheaply transported is going to benefit far more than the occasional traveler that might use the road for convenience. Yet, when the government builds the road, both are forced to pay equally. Furthermore, since the businessman is running heavier vehicles over the road with much greater frequency than the occasional traveler, it costs more in maintenance to provide this service to the businessman than to others. Obviously, the road or bridge does not promote the general welfare even at the local level.

So, what is your fair share in taxes? The answer is that you owe an equal share of those services provided by the government that promote the general welfare. Those services benefit you and everyone else equally. However, examination of any government budget, at the federal, state, or local level demonstrates that these services are now a tiny fraction of overall spending. A quick look at Florida’s budget summary reveals that about 8.7% of government spending promotes the general welfare. That $4.9 million in expense should be born by every citizen of Florida equally. The other $51.4 million does not promote the general welfare and should not be provided by the government at all.

An examination of the federal government’s budget for 2012 yields similar results. Once you subtract services that do no promote the general welfare, like education, healthcare, social security, and that part of the defense budget that is devoted to purposes other than protecting U.S. citizens from foreign aggression, you are left with a tiny fraction of overall spending.

For services that promote the general welfare, there is a finite cost. It does not vary depending upon how productive you are, so your fair share of that cost certainly can’t be a percentage of your income. Logically, the way to determine your fair share is to divide the total cost of services that promote the general welfare by the total population. If you have no dependents, then the quotient is your fair share. If you have dependents, then you simply multiply that quotient by the sum of your dependents and you. When you do the math, you’ll find that your fair share in taxes is a very small amount. As Thomas Paine pointed out, it is that tiny portion of your property necessary “to furnish means for the protection of the rest.” It would be easily paid by even a person of modest income. It would not require an income tax, as history before 1913 demonstrates.

For those services that the government provides to other people, your fair share is zero. However, the government routinely forces some people to pay more than their fair share and allows others to pay nothing at all. It generally collects the most in taxes from people who receive the least in benefits, which is the predictable result of offering services that do not promote the general welfare. Now, President Obama wants some people to pay even more. He and the Congress have the power, but that does not make it right. And please, President Obama, don’t insult our intelligence by calling it “fair.”

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.