|A simple bottle of water, available in stores for under a dollar, proves why
communism, socialism and all command economies are doomed to failure.
By: George Noga – March 27, 2016
In the 1970s still water began to be offered for sale in the USA in single serving sizes. I knew sparkling water had been sold for some time and there was a market for bottled water in parts of the world where the tap water was not safe or of poor quality. But I thought “Who in America would pay for single serving still water when safe, good quality water runs Scott free out of faucets, water fountains and coolers?”
I am trained in economics and like to consider myself as reasonably bright, possessing integrity and motivated to make the best possible decisions to serve my fellow man. Yet, if I were a 1970s era government planner, I would have prevented our economy’s scarce resources from being used to produce and distribute bottled water.
I would have been dead wrong! Today, bottled water is the second largest beverage sold – ahead of both milk and beer. In 2014, 11 billion gallons ($25 billion) were sold in just the USA – equal to 34 gallons per American and this ranked the US as only 10th in the world. This was true despite its cost of around $1 for 500 milliliters which works out to $7 per gallon – nearly three times the price of gasoline.
Education, training in economics, smarts and logic coupled with the very best of intentions would have proved incapable of discerning the preferences of my fellow citizens, the ambitions and creativity of entrepreneurs and the behavior of consumers armed with a free choice. If I had been the chief government planner in the 1970s, there would be no bottled water available for sale today in the USA.
Yet, despite a government apparatchik being as totally wrong as I would have been about bottled water, no one ever would have known about my mistake because no one could possibly have known what would happen with free people in a free market. And it isn’t just bottled water. There would be no copy machines or personal computers; IBM originally estimated the world market was for only 5,000 copiers and under 100 personal computers. There would be no internet as the cognoscenti of the time believed it would only be used by government and universities.
The humble bottle of water we now take for granted proves all forms of socialism and command economies are frauds and conversely proves why free markets work.
The next post will be on April 1st; readers may think it is an April fool, but it isn’t!
The principles identified supra lead to twelve major initiatives I now announce. There is much more to be done; however, this is where we must begin to restore our Constitutional Republic.
- The Constitutional Box: We are a government of laws and not men. The identity of those who hold executive, legislative or judicial offices should be of little consequence to citizens provided they act within the confines of the Constitution, i.e. stay inside the Constitutional box. This means shrinking government to its core responsibility of securing our rights and, to a very limited extent, providing infrastructure. Accordingly, we will scale the federal government back to 15% of GDP, a level which empirically is demonstrated to result in the maximum rate of economic growth and hence the maximum well-being for all our citizens.
- Free Trade: Wealth and prosperity are created by trade among peoples. Traders take substantial risks and can accrue riches; however, their wealth ultimately depends on improving the lives of their customers. If they fail to make you better off, they do not prosper. Free and unfettered trade is universally good – always and everywhere. For that reason I announce the United States unilaterally will eliminate all tariffs and trade barriers – even if other countries do not reciprocate. We will be better off for that action and those who do not follow will be worse off.
- Sound Money: The Federal Reserve will have one mission only: to maintain sound money. This means purchasing power will be maintained, inflation eliminated, and increases in the money supply subject to strict constraints. The Fed will be audited regularly and we will take a hard look at reestablishing a gold standard.
- Taxation: As we scale government back to 15% of GDP, taxes can be slashed. I am asking for repeal of the 16th amendment to eliminate the income tax. We also will eliminate the death tax and Social Security/Medicare payroll taxes. These will be replaced by a consumption tax at the lowest rate possible – likely in a single digit. The 60% of Americans who currently pay no income tax (net of credits) will begin to enjoy the dignity that comes with being a taxpayer. Moreover, they will have a personal stake in controlling spending and holding taxes to the absolute minimum. The crisis of spending, debt and deficits will end instantaneously.
- Defense and Foreign Affairs: We will follow the admonition of President John Quincy Adams that “America is a friend of freedom everywhere, but a custodian only of our own.” Simultaneously, we will observe George Washington’s advice that “The best way to keep the peace is to be prepared for war.” We will strengthen and then consistently maintain the military for the long term at such a high level as to deter any possibly adversary.
- War on Drugs: The war on drugs is over. As we learned with prohibition, the drug war is unwinnable and never should have been fought. Henceforth, all drugs will be legal but regulated, taxed and discouraged just as with tobacco. Drug taxes collected will go solely for rehabilitation of those who continue to abuse them. We immediately will realize benefits including: (a) releasing non-violent drug offenders; (b) ending drug related crime; (c) putting drug cartels out of business; (d) reducing police corruption; (e) refocusing our foreign policy; (f) ensuring safety of drugs; and (g) eliminating drug dealers as role models.
- Regulation: All regulations will automatically sunset ratably every 10 years. Congress must enact any that need to be replaced. Any regulations promulgated by bureaucrats that have an economic impact of over $25 million must be voted on and approved by Congress before taking effect.
- Role of Juries: Henceforth, defendants (and their attorneys) will have the right to explain to juries that juries are sovereign and, as intended by our nation’s founders, have the final say about the legality and enforcement of all laws. The grand jury system will be reformed to stop prosecutorial abuse and to allow citizen grand juries.
- War on Poverty: The war on poverty is finished. The percentage of Americans who, by their own reports, lack a healthy level of food, shelter, clothing or medical care is 2%-3%. This cohort is identical to the 2% to 3% of Americans with very low mental acuity, i.e. those who struggle to fill out a simple form. We will therefore refocus our attention and also our solutions to better deal with the real problem. Even though the percentage in poverty is low, it still equates to 7-8 million of our countrymen to whom we pledge a strong safety net.
- Entitlements: Obamacare is to be repealed and replaced with free market solutions. Entitlements will be placed on budget. Social Security gradually and voluntarily will be privatized. In the interim, benefits will be maintained by changing indexing and lengthening eligibility ages. Medicare benefits will be maintained by gradually lengthening eligibility ages and changing to a premium support model; also, medical costs will moderate given real prices. Medicaid will be block granted to the states to administer as they see fit without interference.
- Energy/Climate: The Keystone Pipeline will be built and natural gas exported. We will drill and frack in ANWR, offshore and on federal lands – all ASAP. Our national delusion about manmade global warming is over. Warming is a solar phenomenon to which man’s contribution is minimal. We will continue to develop alternative fuels for the future while eliminating subsidies for wind, solar and biofuels. The EPA’s mission will be refocused.
- Education: School choice is the civil rights issue of our time. We will move with all deliberate speed to universal school vouchers. We will bring education into the 21st century with technology and by furthering alternatives such as online and home schooling and by creating entirely new paradigms.