Big Bad Profits

A resurgent economic rationale for rapacious government intervention in the delivery of consumer goods and services is the unfounded claim that government can provide said goods and services at a lower price to consumers. This is because government does not have a profit motive; there is no mark-up. To some, this convenient argument may initially make sense. In the real and lucid world, it is senseless.

For example, let's assume that a product costs $100 to produce. Cheerleaders for big government would want you to believe that if the government produced that product you would be able to buy it at the same $100 cost. However, if a private business made the product, the cost would still be $100 but you would need to pay, say $120, with the extra $20 representing the businesses' profit margin. If this were only true, then government should produce everything and sell at cost. Social utopia. Rejoice Karl Marx!

The hallucinogenic logic craters when one considers the reality of a competitive marketplace where demand/supply dynamics give rise to price elasticity. Price elasticity dictates the limit to which the price of a product can be elevated and still be acceptable to consumers. The freer, or more competitive the market, the more forceful are the constraints of price elasticity. In pure monopolies, where there is no competition, a seller can charge exorbitant prices because the consumer has little alternatives. Monopolies must be regulated because they bypass the demand/supply characteristics found only in a dynamic free market.

Given the price constraints imposed by demand/supply forces, it is imperative for a private sector business to become effective and efficient in order to lower its cost structure, sell the product, and still make a profit. Hence, price levels are tight (inelastic), creating a ceiling. The cost needs to be safely below the price ceiling if a merchant intends to render a profit.

The key here is cost. Government, not having shareholders that demand profits, allows inefficiencies and waste that consequently drive up the cost of any good or service it produces. Government cannot, simply due to its political nature, produce at costs lower than what economic driven private business can achieve. If made to compete with private business, the government will kill business profit by excessive regulation. Businesses then fail. Farewell private sector employment.

In more extreme cases, government will legislate that it is the only "permitted player" with respect to a good or service and therefore nationalizes the product/service altogether. The government creates a monopoly that it gets to regulate. Foreign competitors? These get thwarted by raised tariffs that jack up their cost structure.

The government payroll swells and the cost of our hypothetical product soars from $100 to $225 and we consumers can only be comforted by knowing that although we are now paying exceedingly more, big bad greedy private business is not making a profit.

But, hey, Mr. Obama would look at that $225 cost and proudly defend it by saying: "It could have been worse, it could have been $375. Be thankful that I limited it to $225. Now let's increase unemployment benefits for those who used to work for now defunct companies that produced the same product at $100."

Voodoo for an Ailing Economy

"Doctor, help me, this flu is killing me. I have barely the strength to walk. I am struggling to even tell you that I'm sick"

"Hmmmm...let me think for a moment. I know what - you should guzzle a fifth of whiskey right away. Then I will deftly remove two quarts of blood from your body. But first, do fill out these dozen and a half forms for me, would you?"

The American economy is fragile and there are quacks holding political office that would prescribe massive doses of deficit spending followed by hefty tax increases. And don't forget the bureaucracy that we endure just for the sake of complying with the clueless economic voodoo doctors.

The illness is bad enough but the antidote is ten times worse.

How to Pass Legislation

The "Americans for Dignity Act". That would have been a splendid name to attain swift and non-controversial passage of a pending bill that would further extend unemployment insurance benefits. The bill, scheduled to pass this week, extends benefits to 99 weeks (one can only figure that the political calculation was that 100 would appear excessive. Items priced as $2.99 are considered a bargain; $3.00 is over the top). But if Democrats had just called it the Americans for Dignity Act they could have pushed benefits out for 40 more years.

Think of it. Who would dare commit political suicide by opposing an act of this name?

Fiscally responsible senator: We should make extended benefits deficit neutral.
Spendthrift senator: Are you saying you're AGAINST dignity?

Thoughtful senator: Wouldn't more benefits just deter people from finding work?
Blowhard senator: Mean-spirited bigot; trampling on those seeking DIGNITY!

Bush had the PATRIOT Act. We all want to be patriots, correct?

Other brilliant ideas for naming bills:

Want to ram through Stimulus Part 2 at, say, $13 Trillion dollars? May I suggest "Save our Country Act"

Unfettered access to food stamps and fine wine? The "Keep Citizens from Starving Act". Oops, that may appear too anti-illegal immigrant. Better call it the "Keep Humans Alive Act". Then again, PETA may object.

How about outlawing political dissent on the airwaves? The "Americans for Truth and Equality Act" should do the trick.

Who dares stand against saving our country, preventing starvation, and the defense of truth and equality?

Hello 1984.

Lessons from the Gipper

Barack Obama's adoration of the power of government is sure-fire confirmation of Ronald Reagan's quip. To wit, "Government's view of the economy could be summed up in a few short phrases: If it moves, tax it; If it keeps moving, regulate it; If it stops moving, subsidize it."

Under the Obama administration, we are being deluged with the manifestation of all three parts of the Reagan axiom. Taxes? Going up, thank you. Increased capital gains taxes, termination of Bush tax cuts, and the omnipresence of ObamaCare taxes. With regard to the latter, in September 2009, Obama adamantly denied that the mandatory nature of ObamaCare participation was a tax. However, in response to State law suits against the constitutionality of ObamaCare, his own Justice Department proffers the "government right to impose taxes" argument to defend the "non-tax tax".

Regulation? The about to be signed Financial Deform bill will only serve to make the extension of certain types of consumer credit impossibly difficult and expensive to the masses. This will create another crisis for which there will be the typical Obama response: regulate more, to the point of nationalization.

Subsidize? Here Obama reached a new and somewhat perverted low. He invited three jobless Americans to the White House as props for extending unemployment benefits. Wait a moment now, wasn't he going to put Americans back to work via the $800 Billion (before interest payments) Stimulus Bill? Seeing that the Stimulus Bill only stimulated a desire to spend more money, he now wants to pay extra for what he could not fix in the first place. (Think of buying a cordless vacuum cleaner and then having to buy a broom). The three jobless Americans are a testament to Obama's failure. My prediction is that he will want to extend unemployment benefits through, say, November 2012.

Obama is actually making Jimmy Carter not look so bad.

On Humor

Having a sense of humor is having a sense of proportion. Humor is a lubricant that does wonders under the friction of intense debate. I was saying these things to a close friend as we entered into a discussion of the importance and rightful place of humor within our societal fabric. My friend told me that the influence of humor should be taken more seriously as a conduit of communication. And so the conversation went.

Later, and still thinking about the polemics we had engaged in earlier, I showed my friend a humorous refrigerator magnet of Sarah Palin with the caption: "Bush with tits". Okay, that was clever but it shifted the humor probe into the political realm. For instance, are liberals humorless? Would a store even carry a magnet with the likeness of Obama captioned, I don't know: "Carter with a jump shot"? I find both funny but I must admit that liberals are more than casually humorless when it comes to satirical pokes at their beloved people and causes.

Later, at a comedy club, I focused on how common it is to target "right wing" views for ridicule. Left wing crusades are holy - thou shalt not target nor laugh at a left wing cause. But, come on, Bush (either Bush) was an easy target. They have screwed up syntax and possess comical facial and bodily gestures. All true. But it is also true that Obama can easily be caricatured by showing his abject ineloquence when absent a TelePrompTer. And, come on, that Mussolini pose is to die for when he exudes his air of self-importance (arrogance).

Humor is indeed powerful. It is necessary. It is well, funny and relaxing. It is also selective. It is also political. Liberals lack proportion.

The Problem with Socialism is that sooner or later you run out of other people's money -- Margaret Thatcher