By: George Noga – Updated March 10, 2014
A balanced budget amendment (“BBA”) is favored by 80% of all Americans in the belief it will, once and for all time, force fiscal discipline on the government. They are putting way too many eggs in the BBA basket. Watch out what you wish for. If there is a BBA, all those eggs will end up scrambled into a rather unpalatable omelet.
There are myriad paths through, over, under and around a BBA. In short, it would not be worth the paper it was written on – assuming it can garner two-thirds majorities in Congress and ratification by 38 states. Following is a partial list of ways a BBA could be eviscerated.
- A BBA appears simple but is complex. How do you define budget; what does balanced mean; what is a tax? It would be the only part of the Constitution that could be waived.
- What are allowable exceptions such as for military actions and natural disasters? There will be escape hatches big enough to drive a truck through. Whatever exceptions are carved out for some things, expect many more of such things. How would waivers work?
- How would a BBA deal with economic cycles? Revenues can both skyrocket and plunge from year to year. Are we to slash spending in a recession and be profligate in a boom? How do we define recession and boom? How is a BBA to be managed over the course of an entire economic cycle without opening to door to great mischief?
- Lawsuits will tie up a BBA for decades and federal judges will wind up with enormous power to change it. Consider how the federal bench has dealt with desegregation and busing; they still are entangling themselves over 60 years after the initial ruling.
- How do we distinguish capital expenditures from annual expenses? Surely, the argument will go, a BBA was not meant to include infrastructure spending that has a life of 50 years. If capital is treated differently, more expenditures will be classified as such.
- How do we address off-budget spending such as by Fannie, Freddie, USPS and the Federal Reserve? Who will prevent government from creating scores of new off-budget entities? Do we exempt interest on the debt; what happens when interest rates skyrocket?
- Watch out for so-called special taxing districts; these are favorites of local government with 50,000 nationwide. If they are not under the BBA ambit, they will mushroom.
- Are Social Security, Medicare, Medicaid and civilian/military pensions to be part of the regular budget? Are they no longer to be considered off budget entitlements?
- User fees will sharply increase and the government will be creative in imposing new ones. Be prepared to pay handsomely for everything you get from Washington – how about $100 to file a paper income tax return or $50 to get into a national park?
- Loan guarantees will become de rigueur as a way to fund programs off budget. After all, a loan guarantee is not an expenditure – is it?
- Instead of direct taxation, costly new regulations will flourish. Rather than spend tax money, Congress will bypass taxes and accomplish the same result through regulation.
- The tax code can be used for far more than raising taxes subject to a BBA. It can be larded with tax expenditures, incentives, penalties and all sorts of tomfoolery.
- Don’t forget mandates. Since the ObamaCare mandate survived judicial scrutiny, what is to stop government from substituting mandates for taxes or spending? The feds could mandate that states, counties, cities (and even people) spend money not subject to BBA.
- A budget can be balanced with tax increases. This would strictly comply with a BBA but tax increases are certainly not what BBA proponents intended.
Reluctantly, I have come to the view that a BBA is not the answer because: (1) we would expend lots of energy (perhaps for naught) enacting a BBA better spent elsewhere; (2) it will not work for all the reasons noted supra; (3) it would beguile us into falsely believing the problem is solved once and for all; (4) many of us would declare victory and move on while the other side would keep fighting; and (5) you can’t take the politics out of politics.
The solution is to remain engaged permanently, albeit this is contradictory to human nature. Once a problem appears solved, we tend to go back about our private business. But big government and its acolytes never stop and neither must we. As seductive as it may seem, a balanced budget amendment is fool’s gold; it is not the Holy Grail.
By: George Noga – Updated March 1, 2014
In 1957 my parents paid $10,900 for a new median-price home. Their monthly payment including principal, interest, taxes and insurance was under $100. The house cost 1.5 years of my father’s income and the annual cost of ownership consumed less than 15% of income. We lived quite well without my mother ever working a single day.
I graduated from high school in 1961 and went on to college. Most high school chums remained in Orlando, began work at entry-level positions, married, had children and bought homes. The wives stayed home as a second income was not necessary to own a home or to raise children. I kept in touch with many erstwhile high school classmates and often visited them in their homes. Following is the story of two such people, Steve and Sandy.
The True Story of Steve and Sandy
Steve and Sandy (their real names) were high school sweethearts who married following graduation. Steve was hired in the paint shop of the Martin Company. His starting wage of $2.00/hour soon was increased to $2.25; including a little overtime, their family income was $5,000 per year. Less than a year after their marriage, they bought a new home; soon thereafter they had a daughter. Sandy did not work and stayed home to care for the baby.
I visited Steve and Sandy frequently during summers. They bought and furnished a new median-price single family home in Orlando. They were able to accumulate the down payment and to furnish the home in less than one year with both working. Once Sandy became pregnant, she quit work as they were able to afford the cost of home ownership solely on Steve’s income. Their home cost two years of Steve’s income; their monthly house payment including principal, interest, taxes and insurance was under $100. They comfortably managed the cost of home and baby and never contemplated Sandy going back to work as it simply wasn’t necessary.
Let’s fast forward 50 years to 2012 and to Steve and Sandy’s grandchild, Steve III. After high school Steve III earns at best $12/hour, or $24,000 per year. The median home costs 10 times his income and accumulating even a low 10% down payment would be daunting requiring years of saving. Even at low interest rates, the monthly nut would be $1,500, or $18,000 annually – nearly equal to Steve III’s take home pay. What possibly could account for such a dramatic change in only two generations? The answer in one word: government.
The American dream is dead, thanks entirely to government that sucks the blood out of its citizens, i.e. the vampire state. For the first time ever, Americans believe the next generation will be worse off. In 1962 single-income families like Steve and Sandy were the norm; it was rare indeed for a married woman, especially one with children, to work outside the home.
Within one generation (by 1985) two-income families became a majority. Now Steve and Sandy’s son, Steve Jr., was 50% likely to have his wife in the work force. Today, during the generation of Steve III, wives and mothers must work to keep the family afloat. How and why did these changes happen? Why is it necessary today for a family to have two wage earners merely to live as well as their grandparents once lived with only one wage-earner?
“Two-income families are a Faustian bargain; the second income
pays only for more government, i.e. more blood for the vampire.”
The causes are many but all have a nexus to government. Fiat money and the abolition of the gold standard debased the dollar and devalued thrift and savings. Payroll and income taxes mushroomed and applied to ever more income. Property taxes rose exponentially. Regulation chokes growth and hidden taxes proliferate. Housing costs skyrocketed due to government growth management diktats such as concurrency, greenbelts, zoning, bureaucracy, regulatory delay, infill and anti leap-frogging to name only some of the culprits. The vampire state sucked out ever increasing amounts of blood – but it never is sated.
We were hoodwinked and seduced; for a brief time ersatz prosperity seemed to follow the transition to two-income households. Yes, we could have a second car (albeit a necessity not a luxury for two wage earners) and an extra TV and a few other accoutrements. By the time people noticed the degradation in their quality of life, it was too late for a volte-face. Two-worker families are a Faustian bargain; the second salary pays only for more blood for the vampire. Families doubled the number of workers and received only fool’s gold in return. Are Steve and Sandy’s grandchildren really better off today than their grandparents?
By: George Noga – Updated February 22, 2014
Nothing matches the environmental movement for effrontery. Everything about it is fraudulent; yet it has captured the hearts, minds and souls of our children. Try explaining to your kids that every measure of human and environmental well-being is better today than at any time in the past 100 years and continues to improve; they will not believe you. And it just isn’t our kids; too many of us buy into environmental myths.
Everyone supports reasonable laws for clean air, water and energy, biodiversity, saving rain forests and right on down the line. So what’s the difference between us and those who usurp the mantle of environmentalism? There are three main differences: (1) we are for capitalism, free trade and limited government; (2) our beliefs are based on empiricism and science; and (3) we make rational, economic tradeoffs when human well-being is at stake.
The Environmental Movement is Led by Marxists with Other Agendas
Like most movements of our era, environmentalism began in response to legitimate concerns. All people of good will supported laws to address the concerns. Then things began to diverge. Moderates left the movement believing their mission accomplished. Extremists took over and pushed for more and costlier laws to eke out smaller and more dubious improvements. Then the Berlin Wall fell; communism collapsed; and the most diehard Marxists found themselves homeless. Patrick Moore, a founding member of Greenpeace, stated it well.
“Following the collapse of world communism . . . many of its members moved into the environmental movement, bringing with them their neo-Marxist, far-left agendas. The environmental movement was hijacked by political activists using green language to cloak agendas more about anti-capitalism and anti-globalization than with science or ecology.”
Today the environmental movement is run by former Reds and the hard left. They have morphed into Greens for maskirovka but they are like watermelons, i.e. green on the outside and red on the inside. Its acolytes today are limited to big government types, professors, teachers, movie stars, a smattering of unthinking camp followers – and many of our children.
The ultimate irony is that for a country to improve the environment, it must be wealthy. The only way for nations to become wealthy is via capitalism and free trade. That is why America, Japan and western Europe are able to spend lavishly on the environment. The worst environmental tragedy in human history was the Soviet Union and its satellites. The same leftists who created an environmental Armageddon in the USSR and who advocate a return to its disasterous ideology are the very ones leading the environmental movement in the USA.
Science and Empiricism Versus Failed Political Dogma
We differ from the extremists in another important respect; our views are based on science and not failed dogma. Following are but a few examples to ponder.
- As well documented by economists Julian Simon and Steven Moore in their book It’s getting Better All the Time, the 100 greatest human and environmental trends of the past 100 years are the best they ever have been and continue to improve.
- Environmentalists oppose the Keystone Pipeline, US drilling for oil in the Gulf of Mexico (new wells), ANWR and the Atlantic continental shelf. Yet Cuba, Venezuela and many South American countries, with far worse safety records, drill in the gulf and on the continental shelf. Logically, it would be more eco-friendly for the US to drill.
- Extremists push for ever more costly laws to achieve insignificant marginal benefits while ignoring the 800-pound gorillas in the world such as coal mine fires in China and India that create more pollution than all the fuel burned by cars in a year in the USA.
- Organic food in scientific taste tests cannot be distinguished from conventionally grown food; it harms the environment as it requires 40% more land for production.
- Extremists insist we spend trillions in the years ahead to combat alleged warming and all to lower global temperature by an imperceptible .1 degree Fahrenheit by 2100. The same amount of money could be better spent fighting TB and malaria, ad infinitum.
Conflicts Between the Environment and Human Well-Being
When inevitable conflicts arise between environmental and human well-being, extremists totally disregard economics and human suffering. There arise situations when harm to the environment is uncertain or minimal while the cost and suffering to humans is astronomical. In such situations, like the snail darter and delta smelt, my calculus favors humans.
We are losing our children’s hearts and minds to eco-extremists who seduce them like the Sirens of Greek mythology. The Sirens were seductresses who lured sailors with enchanting music to shipwreck on the rocky shoals of their island. Today’s environmental Sirens similarly are beguiling our kids with enchanting thoughts but with the same pernicious intent.
By: George Noga – Updated February 15, 2014
High in the pantheon of environmental gods is recycling. A religion is a set of fundamental beliefs based on faith about the nature of the universe involving ritual observances and a moral code governing the conduct of its adherents. Recycling in the environmental religion is accepted dogma and a universally practiced sacrament. Even those who do not fully imbibe in environmentalism, believe in and practice recycling.
The act of recycling itself is viewed as a morally redemptive, transcendental experience that meets some deep-seated emotional need. It involves just enough effort (but not too much) to impart an eco-high. Explaining to its acolytes why recycling is a waste of time, money and resources, i.e. a fraud, is received with predictable paroxysms.
“Recycling: A morally redemptive, transcendental experience satisfying deep-seated emotional needs and imparting an eco-high.”
Recycling has its own mythology which, although not as entertaining as its Greek counterpart, is equally fatuous. The top five myths will be examined and debunked; but first it must be duly noted that my quarrel is only with recycling mandated by government. For many decades businesses have been voluntarily and quite profitably recycling, inter alia, steel, aluminum, and newsprint. Recycling makes sense only when confirmed in the marketplace.
The Five Biggest Recycling Myths
- Recycling is good for the environment In many places up to half of recycled waste goes into the same landfill as other waste. Two separate trucks and crews make the pick ups and burn twice the fuel to drive to the same landfill; of course, the wasted trucks, people fuel and money (to buy more trucks, etc.) are not counted as an environmental cost. A true accounting would be devastating for recycling. The U.S. Office of Technology Assessment reports recycling changes the nature of pollution – often for the worse.
- There is a shortage of landfills This is true only in a few areas of the Northeast and that primarily is due to politics. In any event, those few areas are able to ship their garbage economically to places that compete aggressively for the business. If every US county devoted one square mile to landfills, it would be enough for 4,000 years. In recent years private companies have opened huge new landfills and prices are plummeting.
- Packaging is a problem Au contraire, packaging actually is a net environmental benefit. Packaging results in less waste and breakage; less advanced countries without modern packaging generate more waste. Mexico has fewer packaged goods but produces 33% more waste than a comparable American household. Egad, even McDonald’s is eco-friendly; it discards less than two ounces of waste per customer, less than eating at home.
- Natural resources (trees) are wasted Trees are a farmed product grown expressly for paper. It makes no more sense to conserve paper to save trees than it makes to conserve cloth to save cotton. Paper is natural, organic, biodegradable, renewable and sustainable. Working forests employ millions of Americans and help the environment by providing clean air and water, wildlife habitat and carbon storage. There are more trees planted each year (40% more) than are consumed. There are more trees than 100 years ago. Failure to use paper can hasten the conversion of forests to strip malls and parking lots.
- Plastic is particularly evil Plastic doesn’t decay but neither do many biodegradable things in a landfill. Because plastic is so lightweight it uses less landfill space. Moreover, plastic is getting stronger, thinner and lighter all the time. Lightweight plastic requires less energy to manufacture and to transport; 12 plastic bags fit in the space of one paper bag. Plastic packaging reduces waste and thereby is eco-friendly. Learn to like it.
Most everything you thought you knew about recycling is wrong. Many times recycling is a waste of scarce resources and – when considering all the costs – likely harms the environment. You will know it is time to recycle when the marketplace deems it profitable – and not before.
By: George Noga – February 1, 2014
Whenever I want to understand an economic issue, I use a didactic aide that never fails me. I reduce elusive concepts to their simplest form by assuming the world consists of a small island. For example, if I wish to understand the economic effects of labor unions, I think through the effect on the island before and after unions are created; who benefits and why; who suffers and why; and what is the net effect on wealth creation and/or destruction. I call this Island Economics. Following is the first lesson from island economics – it explains a powerful, yet simple, economic precept.
Many eons ago on a small as yet unnamed island, the denizens subsist as hunter-fisher-gatherers. They are unaware there may be other islands. There is no economy per se; people are divided into small families or clans, each of which functions as a putative economic unit. They coexist with other such units – sometimes peaceably, sometimes not. Their lives, short and brutish, are on a bare subsistence level, dependant on the fickle bounty of the sea, the exigencies of the hunt and the caprice of nature. They still are many generations removed from division of labor, having a medium of exchange or even agriculture and animal husbandry.
“The natural and normal condition of mankind is poverty.”
What economic lesson can we sophists of the twenty-first century learn from such primitive people? What, if anything, can they teach us? Surprisingly, they teach us an ineffaceable economic truth applicable across all time and space. Indeed, the lesson applies throughout the universe even on other planets wherever scient beings may exist. The lesson: it is universally true that the natural and normal condition of mankind is poverty.
There is no instance where any aboriginal population existed in a state other than poverty. Yes, some aboriginal populations were better off than others; any such distinctions however were due solely to the beneficence of nature and not to any form of economic activity.
Okay, so you already knew the normal condition of mankind is poverty. But, do you understand all the implications that flow from that axiom? It is clear from their behavior that many folks today do not fully understand that immutable truism. Progressives still prattle about poverty and ruminate about its root causes; we even have declared war on poverty. If everyone understood the natural state of man is poverty, there would be nothing more to discuss.
“The question we should be asking is:
What causes wealth and how can we bring it about?”
Those who futilely and unproductively seek to understand poverty are wasting their time. The question they should be asking is: What causes or creates wealth and how can we bring it about? Wealth is not a natural condition of man; indeed, it is rare throughout human history. Wealth creation must be studied, understood, fostered and replicated for progeny. Indeed, it is only by understanding wealth that poverty may be alleviated. Someone may assert that, for example, ignorance or lack of education creates poverty. This is a posteriori reasoning. People are born ignorant and uneducated. To better create wealth they need to become educated. Education creates wealth; ignorance does not create poverty.
The aboriginal inhabitants of our unnamed island did not even know wealth existed. If they had, they likely would have attributed their impoverished state to displeasure of the deities. Perhaps a few of them viscerally understood their poverty was a natural condition; but they would have held no clue about how to escape it via economic activity that resulted in wealth creation. This was a process that required mankind millennia to discern and about which our present grasp remains far more tenuous than it should.
Let’s review lesson number one, arguably the most basic lesson of economics. This prime lesson, compliments of our aboriginal island dwellers, is a valuable one not fully appreciated several millennia later. Poverty has no causes; it is the natural condition of mankind. We have known that for centuries. We also understand what causes wealth even though we are doing much today to destroy it – purely for ideological and political reasons.
“Poverty today continues because of obsience to false gods.”
Mankind will continue to advance economically only by shedding its shibboleths which we possess in abundance. Unlike our island denizens, we do not blame poverty on deities, animal spirits or natural phenomena. Oh no – we have progressed to where we assign fault based on ersatz science, modern mythology and political correctness. We now blame poverty on bogeymen like greed, multi-national corporations, western civilization, and capitalism.
Nothing causes poverty; it is our natural state. To escape poverty we must focus on what is required to create wealth. At the dawn of the twenty first century, we understand reasonably well how to create wealth but we fail to do so solely because of obseiance to false gods.
- Even before Matt died, national gay rights groups trumpeted Matt’s story as one of extreme homophobic cruelty and violence; they condemned Laramie, and by extension all of middle America, as a crucible of intolerance. The national media uncritically bought in and made the case a cause celebre. Matt was portrayed as an innocent martyr.
- At least four TV movies have been made – each one increasingly mawkish.
- The Shepard saga has spawned a panoply of art, poetry, publications, studies, museum exhibits, merchandise and dramatizations – which continue 15 years after his murder.
- Matt’s mother founded the Matthew Shepard Foundation, which sells goods including a hoodie emblazoned with “Erase Hate”. She travels widely and gives 50 speeches a year.
- The most successful commercial exploitation of Matt is The Laramie Project, a play staged thousands of times; it is among the 10 most ever performed plays in high schools. It depicts life in middle America as ugly, violent, intolerant and hopelessly psychotic.
- Schools throughout the land use “Laramie” study guides that direct classroom discussion about homophobia, our culture of violence and rampant injustice in fly-over America.
“Matt Shepard was murdered by his gay lover in a drug deal gone bad. Everything you ever thought you knew about Matt Shepard is a lie.”
The Real Lesson From Matt Shepard’s Murder
“The visceral contempt and hatred liberals, progressives andthe media have for America is the real hate crime of the century.”
Prequel: December 25, 1776 – Crossing the Delaware
“The reflection upon my situation and that of this army produces many an uneasy hour when all around me are wrapped in sleep. Few people know the predicament we are in.” (George Washington 1776)
A Mt. Vernon Christmas: November 17 to December 24, 1783
Quelling Revolt of Officers
Farewell Orders to the Troops
New York and Fraunces Tavern
Philadelphia, Wilmington and Enroute to Annapolis
Annapolis and Returning His Commission
Christmas in Mount Vernon
In Vernon’s groves you shun the throne,Admired by kings, but seen by none.
Moon: Temperature sensors were placed on the moon by Apollo 15 in 1971; additional probes were deployed by Apollo 17 in 1972 at a different lunar site. They reported rising temperatures year after year for as long as they operated. Moreover, the observed lunar temperatures were comparable to the long term warming trend on Earth. Candor however compels me to report there are SUVs on the moon – detritus from Apollo missions.
- Mars: NASA’s Mars Global Surveyor and Odyssey missions in 2005 showed the south polar icecap receding each year. Recently the Mars Rover mission reported much higher than expected temperatures. NASA scientists say Mars has warmed by the same amount as Earth since the 1970s. Critics blame higher Martian temperatures on dust storms, albedo (reflection coefficient) and a host of other things. They also point out that the Martian north polar icecap has been increasing. Well – so has Earth’s south polar icecap. Oh yes – there also are some SUVs on Mars – jetsam from various NASA missions.
- Jupiter: Jupiter is developing a second red spot which scientists attribute to warming. Some parts of Jupiter now are 6 degrees warmer than before. Data from NASA’s Hubble Space Telescope and the Keck II telescope show Jupiter in the midst of a significant warming trend. Critics blame shifts in internal turbulence – whatever that means.
- Saturn: Recently temperatures jumped several degrees based on data from Voyager 2 and the later Cassini probe. Critics say the warming is momentary and due to orbital position.
- Neptune and Triton: Voyager 2 observed the atmosphere of Neptune and Triton (a moon of Nepture) in 1989. Recent data from Hubble confirm that Neptune and Triton have warmed considerably since Voyager 2 took readings in 1989; thus at least since 1989 Triton has been warming. More recent Earth-based measurements show the surface temperature has increased up to 5%. Critics haven’t yet responded to this data.
- Pluto: In recent decades Pluto has warmed considerably based on studies by scientists from MIT, the University of Hawaii and Cornell – and this is occurring despite the fact Pluto is moving away from the sun. The study was conducted by telescopes based at Mauna Kea, Lick, Lowell and Palomar Observatories. Critics blame Pluto’s orbit.
- Elsewhere in the solar system: There are data showing warming on Titan and Enceladus (both moons of Saturn) and Dysnomia, a moon of dwarf planet Eris. There is not one single measurement anywhere in our solar system showing lower temperatures.
“There has been observed warming on our moon, Earth, Mars, Jupiter, Saturn, Neptune, Triton, Pluto, Titan, Dysnomia, Eris, Enceladus and elsewhere. There is not one instance of observed temperature decrease anywhere in the solar system.”
“GMOs are mentioned in the Bible – Genesis 30:25-43.”