PrairieMilton

A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.

 

-MF

 

There is a lot of talk on the news, talk radio, NPR, blogs, etc about the stimulus package that President Obama signed here in Colorado yesterday.  Everybody has strong opinions about what the government should do about the economy. 

 

Republicans and Democrats differ on how they would use the power of the federal government to “fix” the economy.  Both agree that something has to be done. Both also agree that it was the other party that caused the problem.

 

The debates and posturing seems endless.  Most all the debates seem to follow the same theme, how do we spend all this money.  It’s an emergency, the government must do something.  The sky is falling; we are on the verge of an economic collapse, melt down, crisis, free fall, doomsday, etc…What seems to be missing is a different debate.

 

Is spending tax dollars to aid the economy in an allegedly free market, the role of the Federal government? 

 

One of the great mistakes is to judge policies and programmes by their intentions rather than their results.

-MF

 

According to Milton Friedman there are four ways to spend money.

 

1. You spend your money on yourself. You’re motivated to get the thing you want most at the best price. This is the way middle-aged men haggle with Porsche dealers.

 

2. You spend your money on other people. You still want a bargain, but you’re less interested in pleasing the recipient of your largesse. This is why children get underwear at Christmas.

 

3. You spend other people’s money on yourself. You get what you want but price no longer matters. The second wives who ride around with the middle-aged men in the Porsches do this kind of spending at Neiman Marcus.

 

4. You spend other people’s money on other people. And in this case, who cares?

 

So it seems to me that the current plan is to spend other peoples money to help stimulate the economy so the same people will have money to spend on themselves. 

 

Is this the proper role of the Federal government?

 

-pf

 

 

 

  There can be no real freedom without the freedom to fail.

 -Erich Fromm

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4 thoughts on “PrairieMilton

  1. Burrowowl says:

    Off the top of my head:

    The underlying problem that the stimulus is meant to address is that a great deal of the money is currently in the hands of people who are afraid to spend it. Banks that would normally be shifting hundreds of billions of dollars around on the confidence that there was some stability in their peers’ books are afraid to stick their neck out.

    Since reconstruction, a great deal of our economy depends on short-term and intermediate-term debt to smooth out the bumpy periods. A small businessman like your cousin Jim may be chugging along making sales and doing good work, but then a dry spell hits where no checks are coming in. This isn’t a problem so long as he either has money in the bank to cover the dry period’s expenses or credit to pay the bills till the next payday comes. When interest rates are low (and they have been for these purposes), a huge number of businesses take the route of using the credit. They pay it off and make their profits and provide their goods and services, so it’s not a problem. Till the tap turns off. Then the next blip of dry spell means missed payroll, missed utility payments, the problem trickles out to the various vendors and contractors, and it’s a gigantic mess.

    On the other hand, companies that have a nice government contract to build some bridge or community college or tennis complex have high confidence that they’re going to make payroll. They don’t have to lay off staff. They can pay their vendors. Their employees can go out and buy furniture and cars and food and put shoes on their kids. That assurance that the business can pay its bills is normally covered by the credit system, which Paulson’s no-strings injection of several hundred billion dollars didn’t do a lick of good for (and I doubt the public has the political will to just keep throwing money at financial institutions right now).

    The Milton Friedman approach is basically “let it burn.” I’m not entirely against that, but that approach would make things a heck of a lot worse before they got better. Let the banks with bad debt die, to be cannibalized by more healthy institutions. Let businesses that play too close to the edge teeter over so that more conservative businessmen can take their place. We’d probably see unemployment jump pretty dramatically, several of the very large institutions we have grown up with (like maybe GM) would go tits-up to have their market share replaced by folks like Toyota and Nissan, and we’d come out of a long rough patch stronger for it, but with a lot of scars.

    Do you think the American people are willing to undergo a depression just so Ron Paul and his ilk can get a chance to play social experiment?

  2. Wow I am impressed.
    Burrowowl you’re not only quick on the reply but supplying a nice concise and well thought out response. Thanks.

    There are necessary peaks and valleys inherent in a free market economy. Is it the roll of the Federal Government to help even this out? Would the peaks and valleys be as harsh with out government intervention? Where does it stop?

    Sometimes I like to view the Government is like armed Boy Scouts, without adult supervision. They are helpful, and earn badges for inane activities and are always working for the greater good as they see it, sometimes with violence. There is a fine line between helping an old lady cross the street and mandating that her slow ass get dragged across against her will to speed up traffic.

    I believe that anything that government does should be looked upon as a necessary evil and every decision should be carefully weighed for its impact upon individual freedom. Whenever power or control is added to the government it must be taken away from someone, usually all of us. I believe that this stimulus package further empowers the federal government and will prolong an economic recovery. Sure the peaks and valleys may be evened out, but they will be on a lower overall level.

    The federal government is not a business; it can’t create wealth it can only move it around, and always at a net loss.
    -pf

  3. Burrowowl says:

    I understand that you served in the military, so you may not like to think of it this way, but really the government is an organized crime racket. You pay your protection money every April, in exchange for which they won’t send their thugs over to your place of business to embarass you in front of your coworkers, or invade your home, rough you up, and shoot your dog.

    That’s a nice house you’ve got there… It would be a shame if something should happen to it.

    • My service in the military is one reason I am now so distrustful of our government. Oh the things I have seen….. I am however grateful for the education and experience.

      You are exactly right, the only power the government has over its citizens is an implied threat to use physical force to enforce its will.

      “Government “help” to business is just as disastrous as government persecution… the only way a government can be of service to national prosperity is by keeping its hands off.”
      Ayn Rand

      That’s why I am disturbed about a “Stimulus package”. It is really just an additional spending bill. It not only plays favorites, but it will increase demand for additional federal hand outs. Oh, and someday it has to be paid back. Hopefully the economy booms to support all the tax revenue that will be needed in the future. I just don’t see how.

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