The “keeping track of government” problem

Watching a video of Lawrence O’Donnell being interviewed by the WeAreChange people about the NDAA and Obama’s kill list. They were asking him something about how he supports Obama if he has a kill list consisting of American citizens and their usual attack line of questions. He says, “I can’t keep track of everything the government does.”

Then it sort of hit me. Why should anyone be expected to keep track of what the government does? Why should this be necessary? The bigger government gets, the less people will be able to track it to see if it is being tyrannical or not, and the next thing you know you’re a total slave and they’re taking your property.

The only reason that it’s necessary to manually keep track of government activities is that money is not an issue. The government can just take or print the money it needs to function, so not only is efficiency unnecessary, but so is internal oversight. Nobody “needs” to keep track of what Apple or Priceline or IBM is doing, because the companies themselves need to keep track of what they’re doing or they’ll lose money. If they steal from someone, that someone should take the company to court. Every transaction a private company has is subject to market regulation, and therefore no one needs to keep an eye on them. The only reason anyone would need to know what Apple is doing is if he wants to invest in the company. If Apple wants investors, they’ll have to be honest. If they lie, they’ll lose investors and money.

But government needs no investors and is not subject to market forces, since they rely on threats and force. That’s why you need outside watchdogs funded by watchdog groups to keep an eye on government. The watchdogs aren’t investing in government. They’re using resources to make sure it doesn’t screw anyone over, because the market itself cannot.

In a free society, there would be no need to see what the government is doing, or to keep track of it. Everything would be subject to market regulation, and everything would be totally decentralized. Problems would be dealt with as they come up, and you’d spot them whenever the price of something falls or rises too fast.

233% custom embroidered teddy bear tax

Long ago, around February or so when my daughter Dafna Betty was born, my cousin Ginny decided to send us a gift from America. We told her not to do anything that crazy, but instead to buy something from Israel, because sending something from America is asking for trouble. A few weeks later I got a package slip notifying me that something was waiting for me at the post office and that I would have to pay 274 shekels to see what it was. That’s about $70.

I didn’t even bother to even attempt to pick it up because I wasn’t going to pay the government anything for my right to accept baby gifts, certainly not 274 shekels. And where the heck did that number come from anyway? Who decided it was 274, and why?

Eventually my landlord, with whom I share a mailbox, told me that the post office was getting angry because I wasn’t even acknowledging that I owed them 274 shekels, and that I should tell them what to do with the gift. I responded that I really didn’t care what they did with it, I’m not paying them anything.

Eventually, I had to go to the post office to pick up my glasses I ordered from China for $10 which work great. Glasses are about 20 times more expensive here, money I’d rather not spend. I got lambasted at the post office by the woman who told me I was taking up room in her post office because I never picked up my other package. I said I didn’t want the other package. She asked why. I said because I don’t want to pay the customs fees. I didn’t even know what was in the package or who sent it.

How it works in Israel is that if you feel the government has wronged you, you can fax in a complaint to an office about why you should not have been required to pay the customs fees. If they feel like giving you the time of day, they will send you a refund. I’m sure this works great. Nevertheless, I didn’t attempt to use this system.

Today I got a phone call from my mother in law who informed me that the gift was in fact two stuffed teddy bears embroidered with the names Tzitzia and Netanya, one for each of my daughters.

Their names are Tzivia and Dafna, but close enough. (Both were born in Netanya so Ginny got that right. And I in no way am demeaning the gifts. In fact, I can’t wait to pick them up when I get to the US because now there’s a story behind them. When Dafna asks me why she has a bear with the name Netanya, I can tell her that she was born in Netanya, and she’ll think that’s pretty cool. No one else has a teddy bear indicating their birth city.) My guess is they’re worth about $30 for the custom embroidery. So the 274 shekels would constitute roughly a 233% custom embroidered teddy bear tariff.

Well, I guess the Israeli government has to try and rip me off for my teddy bear importation. They do have a lot of $100 Katyusha rockets to shoot down with $1 million precision guided missiles. Somebody’s gotta pay for that. May as well take it out on the damn bears.

Hey, at least our budget’s balanced…more or less.

The gluttonous Israeli gov’t & the gluten-free subsidy

Every so often a flash of hope flickers past my eye and I think that maybe, just maybe in these times of global debt turmoil, the Israeli government is smart enough not to do too many idiotic things and get themselves in too much debt. And then I see stories like this one.

According to the proposal, the cost of gluten-free bread will be kept at a level that is never higher than that of standard bread. In addition, those who suffer from celiac disease will be reimbursed for up to NIS 500 per month per family for purchasing special food, and the income tax rates of companies that sell gluten-free food products will not go above 25 percent.

So now I have to pay for the gluten free bread of some guy with celiac who wants to eat a sponge. Beyond costing hundreds of millions of shekels a year, the program will:

  1. Waste every shekel that goes into it
  2. Disrupt market forces and the prices of other foods competing with the gluten free bread
  3. Raise the price of corn that goes into these gluten-free sponges
  4. Cause many many many more people who don’t even have celiac to be diagnosed with celiac just so they can get 500 shekels more a month from Uncle Shmuel
  5. Cause 20 more unintended consequences that the government will then have to regulate by force with committees who get government paychecks
  6. Be immoral, because I shouldn’t have to pay for the luxuries of a celiac, a luxury by the way that tastes like crap.

Before anyone objects to my heartlessness, I am also on a gluten free diet. Not because I am celiac, but because I subscribe to the Primal Blueprint diet and way of life. And I do not eat gluten-free bread either, because I do not eat corn. My food is much more expensive than someone’s who eats grains, and I’m not asking for other people to subsidize my shopping list.

It will be a long time coming before I will be able to convince anyone in this country that it is not the government’s role to take care of someone’s celiac, that it is immoral and unjewish to force someone to pay for someone else’s luxury. Israel is still a country deeply mired in Marxist ideology and is very statist.

I shiver to think that this is where our money is going while the finances of the entire western world are on fire.

Stop hiring people to dig holes and refill them

It was a few months ago when I heard some guy, I think it was Jessie Jackson’s son actually, say that he supported the “outright hiring of 10 million people” or however many unemployed there were at the time. Hiring them to do what, exactly? To all go dig holes and refill them? And then I heard this interview with Congresswoman Maxine Waters (or is it Senatress) that Obama has to be “bold” and “stimulate” the economy with “1 trillion dollars”.

So I suppose that with the magic trillion bucks he’s going to hire the 10 million unemployed to go dig him some holes and refill them thereby stimulating the economy and making us a fully employed country.

What’s a trillion divided by 10 million? 10 thousand bucks a hole-digger? That’s not enough. They’ll be poor. They won’t be able to buy enough food with the holes they dig and refill. Maybe we should make them dig twice as many holes and refill them so they’ll be more productive, and then we can double the “stimulus” to $2 trillion and they’ll be at minimum wage. (Which itself is a government mandate.)

This is obviously the more ludicrous side of the whole issue. The more mundane is that whenever people ask Ron Paul what will happen to the economy when all those government workers he wants to fire go unemployed and the jobless rate spikes and where does the trillion dollar spending cut go, they’re asking as if by the very act of spending one trillion dollars, the government is creating wealth. No, they’re not digging holes and refilling them. They’re just stamping forms and filing them. But that’s

PRETTY

DAMN

CLOSE.

When you cut them away, the trillion dollars used to pay them to stamp those forms gets freed for people who use the money to create things that people actually need.

But the journalists can’t stomach that fact. They think that if you shrink the government, unemployment goes up, and that’s all that matters.

The truth is, every overpaid and useless government employee is on welfare. He’s wasting his time and the country’s time, and eating up your money. So we may as well stop the nonsense, stop hiring them to dig their holes and just tell them they’re on welfare. Stop the Orwellian nonsense.

The point of a job is not to influence the unemployment rate. The point of a job is to produce wealth that people need – emotional wealth, psychological wealth, spiritual wealth, or physical wealth. If you’re not doing that, you’re on welfare.

Government debt, the consumer promising production

Government doesn’t produce anything. It always consumes more than it produces. When it attempts to produce something, it always has to consume more in tax revenue than it produces in order to produce whatever it is it’s trying to produce. So you always end up with a black hole. This is because if the government needs more money, they can ask the Fed or tax you for it. A constant source of revenue at the point of a gun or the flick of a switch.

We are all taught that money doesn’t grow on trees. But for the government it does.

What does it mean exactly that “the global economy is broken”? How can that actually be quantified? Well, we discussed previously that money is not wealth. Money is merely the means with which one can either produce or consume wealth. So theoretically, we could have a world with money everywhere but no wealth. This would be the world of maximum inflation and minimum prosperity.

A broken global economy means that too much money has been spent on consuming wealth and not enough has been spent producing it. An undrugged economy would be able to balance that out when investors spot a need for more production and supply it. But that can’t happen in this economy because the main consumer, the government, forbids market entrepreneurs from entering the market and rebalancing the production side of the equation with regulation, taxes, forms, and the like.

So the government, just like the Keynesians want, becomes the spender of last resort. Spreading money around and getting less efficient in every spending round. Whereas in the first round, say they had to spend $10 for every unit of wealth, now they have to spend $50. But the amount doesn’t matter to them because they can always print it.

And then you have “government debt”. Debt meaning money is owed. Money, again, can either represent newly produced wealth (in the best case) or preexisting wealth. The former is when a business succeeds. The latter is when you are taxed or your money inflated.

Any normal business pays back its debt by either producing or going bankrupt. The government though can just steal it from you and pay back its debts, making you poorer.

The inanity of government hiring regulations, Natasha case in point

Before I get started with this case study, let me clarify that Israel is a socialist country founded by Marxists. So there is very little freedom here.

Now, that being said, government controls healthcare and education entirely. My wife, Natasha, works at a college that is funded by the government. It is extremely inefficient because, no matter how wasteful it gets, taxpayer funding is always guaranteed. Natasha is also very pregnant. There is also a law here that you can’t fire pregnant women. Sounds great, right?

Well, I came home today and Natasha told me that because she’s giving birth (God willing) before the semester actually officially ends, the college cannot legally NOT rehire her. So because she’s having a baby, she’s assured a placement next semester, regardless of whether the college has a class for her to teach.

Well, good news for us, right? Eh…I’d much rather not pay taxes than pay taxes and have my wife get a job because it’s illegal if she isn’t rehired.

It turned out OK for us, but what if circumstance were reversed? What if they refused to hire Natasha initially, suspecting she was pregnant, because they know that they wouldn’t be able to let her go the following semester?

The whole system is rotten. Taxpayer money flowing through a system and misdirected through legal mechanisms will only cause mal-investment, which, any Austrian will tell you, will have to be liquidated. Money earned through government force may as well be welfare. Money must represent value. Not government intrusion.

Natasha is a good teacher. She should be rehired on the basis of need and talent. If they have no need for her, they shouldn’t rehire her just because she was pregnant. If they do, we’re getting money that represents no value.

And the debt bubble expands just a little bit more.

What will we spend it on? Probably gold.

Europe and the entire Western economy is a Global Ponzi scheme

It hit me when I was reading an article about Italy “refinancing” its debt by selling bonds. Bonds are debt.

The definition of a Ponzi Scheme, as I’m sure we all know ever since Madoff ran away with $50 billion that never existed, is paying investors off with money from other investors.

In financial newspapers and other smart guy publications with articles written by people with $100,000 MBA’s that aren’t worth 50 cents, they’ll call it refinancing, or restructuring, or recombobulating, or whatever. Doesn’t make a difference. When a country like Italy sells bonds in order to pay off other maturing bonds, they are by definition engaging in a Ponzi Scheme. They are taking money from new investors – the buyers of the new bonds – to pay off old investors – the holders of the old bonds.

The reason the financial magazines and websites and newspapers call it “refinancing” is that they don’t want us to freak out and pull our money out of Europe by calling it what it is, because this would mean the reset button would have to pushed all the sooner.

It’s not just Europe. America pays off interest it owes to China and Japan with money that it borrows from somewhere else. It pays off old treasury bills by selling new ones. There’s no real genius to it.

Why can’t they pay off with real money? Because they’re busy using that to blow up rocks in Afghanistan and Iraq with billion dollar precision missiles.

The entire Western economy is nothing but selling bonds to pay off bonds. Paying off investors with other investors’ money. The clock stops when they can no longer attract new investors.

That’s when 1.5 quadrillion dollars in global derivatives gets wiped off the books in one shot.

Stay safe out there.