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Friday, September 27, 2013

Helping a Few, Hurting Many

There is a beautiful, new metro rail line being constructed that will run within a couple blocks of my office.  I love the architecture of big construction projects like this one.  I also greatly appreciate the engineering that goes into construction of a major project like this one.  It is truly amazing.

Sadly, however, while this mass transit project is beautiful to behold, it is a nightmare to the taxpayer and to all residents who will be taxed to support it.  The projected annual operating shortfall is $170 million per year for the Silver line.  Of course, the actual shortfall will probably be in the neighborhood of $200 million, if the taxpayers are lucky.  The operating shortfall for the entire system (without the Silver line) is more than $535 million.  In other words, with the Silver line in service, the annual revenue shortfall (covered by a taxpayer subsidy) will be in excess of $700 million dollars.  This does not include substantial annual federal subsidies for capital improvements.

It is true that a few taxpayers will come out on the positive side.  Those who benefit are limited to the less than 10% of daily commuters who actually ride Metro rail.  The other 90% who drive automobiles subsidize those who ride Metro rail so that the fares charged by Metro are low enough to attract riders.  But, the cost is not limited to drivers of automobiles.  In fact, everyone in the Commonwealth of Virginia who pays taxes into the general treasury pays for the few who actually ride Metro.

But, in fairness, DC Metro rail is not an anomaly.  Economists often note that anytime any government entity gets involved in the marketplace it causes dislocations.  What does that mean? 

A simple way to explain it is this.  Whenever government (at any level) provides subsides, tax breaks, tariffs, privileges, or any other benefit or punishment to any individual or enterprise, a few benefit and many are burdened.  Even simpler, any government interference in the free market, no matter how well intentioned, helps a very few, and hurts many.  Sometimes, that interference doesn’t help anyone, but hurts everyone.

Every regulation drives up costs, every single regulation.  I am not suggesting that we should do away with all regulations, but I do believe that we should regulate with our eyes wide open.  We need regulations to protect the public from genuine public health issues.  But, even in this area, regulations are often created not to protect the public, but to protect businesses from competition.  For example, regulating taxi service is proclaimed to be in the public interest, but in reality, it limits entry into the marketplace by entrepreneurs who can provide that service better and cheaper as has been repeatedly shown.  The result is that a few benefit, and many suffer.

Some states regulate barber shops and beauty parlors in the supposed interest of the public.  In reality, the source of these regulations originates from those already in the marketplace who fear that more competition will reduce their charges.  Again, a few benefit, many suffer.

US Sugar producers (like many other industries) receive millions of dollars in subsidies from the federal government to protect them from “unfair” competition.  Without such subsidies, cheaper sources of sugar from overseas would drive down sugar prices.  A few, the sugar producers benefit, while everyone who uses sugar, suffer.

Subsidies never benefit the public, they always benefit a few at the expense of the public.  But, government interference in the marketplace doesn’t just help big businesses at the expense of the public.  Instead of letting the free market function to the benefit of many, government intervenes into affecting wages and benefits with the goal of establishing a “level playing field.”  It sets rules telling businesses that they can’t fire workers if they strike, they must hold organizing elections for unions if petitioned, they cannot hire nonunion workers if their state allows a closed union shop.  And so, by such intervention, what happens?  Because wages are artificially raised, the prices of goods and services produced are higher.  The union workers in those specific industries benefit, everyone who buys those goods and services pays more.  Again, a few benefit, many suffer.

Recently, the State of California raised the minimum wage to $10 an hour.  Sounds great, doesn’t it.  Finally, the advocates say, people will be paid a fair wage for their work.  But, does it really work that way?  Let’s see McDonald’s workers will get $10 per hour, but with that added cost, two things will happen.  First, the price of hamburgers and fries will go up.  There is no other way to stay in business.  So, a few workers will benefit, and many will suffer.  So what, you say, isn’t it better that you and I pay a few cents more for our next Quarter Pounder™ so that those workers will benefit?  That is certainly the way it looks on the surface of the matter, but it’s not reality.  The second thing that will happen is that McDonalds and other businesses that need minimum wage workers will simply shut down some stores, and they won’t build others.  The fact of the matter is that the free market always sets the minimum wage based on the free give and take of the worker, the consumer and the provider.  Politicians can convince themselves that they are bighearted by raising the minimum wage, but such artificial wage increases simply curtail business expansion and, therefore, job creation. 

Worse yet, by setting a minimum wage, government interferes in the marketplace, discouraging and preventing budding entrepreneurs with creative new ideas from starting up businesses.  In addition, it kills “first time jobs” for young people, especially the poor. 

Recently, the District of Columbia City Council passed a bill to raise the minimum wage (they called it the “living wage”) to $17 an hour.  They did this to keep Wal-Mart from building some seven stores in poor communities in DC.  Why did they try to kill off much needed jobs for poor people?  They did so because these city council members depend on union money and support for re-election.  Wal-Mart said they would have to stop construction on the stores and not enter into the District of Columbia if they have to pay a minimum wage of $17.  It almost makes one laugh.  If $10 or $17 is a good minimum wage, why not raise it to $25 or $50 an hour?  When the DC City Council tried to set a minimum wage of $17, it was punishing many to benefit a few.  By driving out Wal-Mart they would not only kill off much-needed jobs for their constituents, but also force them to pay more for the goods and services that they would otherwise purchase at Wal-Mart.  It is just another case of government benefitting a few to the detriment of many.  Fortunately, the Mayor of Washington, DC vetoed the kill Wal-Mart bill, but the City Council is threatening to override the Mayor. 

The other day the United States Postal Service (USPS) announced the intent to raise the price of a first class stamp by 3 cents.  The USPS already loses billions of dollars each year and it will always lose money as long as there is no competition and it is run by government.  The problem is that there is no fair mechanism to set wages and benefits for unionized postal workers.  Because government is doing what a private firm should be doing and has granted itself a monopoly, many suffer, a few benefit. 

The solution is to get government out of the marketplace.  It has no means whatsoever of setting fair wages, benefits, or prices for goods and services.  In every single instance, it makes matters worse for many, while benefitting a privileged few.

Today, we are strangling our economy through government interference into the marketplace.  The result is that each and every American pays above market prices for nearly every good and service we purchase.  Through government interference in the free market, we entrap the poor in poverty and remove opportunities to escape their dire situation.  Through government interference, every sector of our society suffers to benefit the ruling class. 

And, things are not going to get better.  This is not just an accident, it is by design.  Those in the ruling class realize that the more people they make dependent on their handouts, the easier it is to manipulate them.  That’s why you see government pushing food stamps on nearly 50% of Americans.  They even changed the name of the Food Stamp Program to the Supplemental Nutrition Assistance Program, but manure by any other name still smells as bad.

President Obama is not worried about the number of people out of work, he wants more people to be out of work.  It is to his political benefit and his continuing goal of reducing America to the same state as European nations.  He has to be careful how he does this, but it is politically beneficial to him to destroy the American dream, and replace it with the soft tyranny of a Socialist state.  The goal is to increase the power and reach of the bureaucracy at the expense of those who fund it. 

Obamacare is not about medical care, it’s about political control.  Socialized medicine is always the crown jewel of socialists because they know that once they control your health care, there is no escape.  At that point, every single American becomes dependent upon the government.  And, if they are willing to corrupt the Internal Revenue Service for political gain, what makes you think they will not corrupt Obamacare for political gain?  Besides which, the ultimate goal is not Obamacare.  The ultimate goal is the failure of Obamacare and replacing it with total socialized medicine that gives the politicians and bureaucrats life and death power over your life.

There is nothing unique or new about the left’s goal for America.  It is to abandon the dream of a free society as created by our Founders and replace it with a top down, autocratic society that benefits the few in power at the expense of many.  The left’s goal is as old as the first sin in the Garden of Eden.  Adam and Eve weren’t satisfied with living in God’s perfect world, they wanted to be like God.  And, that is exactly what liberals want to do today, to play God and rule over everyone who they think is inferior to them.

The solution to our problems is not economic or political, it is theological.  Until and unless we witness spiritual renewal in our land, we will continue to slide toward a cold, brutal, totalitarian state.  As Americans, we inherited the greatest nation in the history of the world.  It was the most free, the most generous nation ever created. 

Can it be rescued?  Or, are we willing to let it slide into just another top-down, autocratic state such as the ones our Forefathers fled?  How much do we really care about the future of our children and grandchildren?  If we are dedicated, if we are willing to get down on our knees and plead for mercy, perhaps, just perhaps, we can rescue this once great nation. 

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