Thursday, March 10, 2011

The Fraud of Waste and Fraud

“There are widespread misperceptions about the state of the federal budget. A majority of voters incorrectly believes the federal government spends more on defense/foreign aid than it does on Medicare and Social Security (63%). Also, a similar majority (60%) incorrectly believes problems with the federal budget can be fixed by just eliminating waste, fraud and abuse.”

This quotation is from a recent poll.  Read the top of the second page.

There we are. People are believing the politicians, especially the liberals. People are not connecting any legitimate idea of waste to a $1.7T deficit. There is a disconnect. This disconnect is going to get us into bigger trouble than any of the other fears that we have considered. This disconnect means that when the meltdown into depression begins people will again be open to the claim that capitalism is at fault. Potentially, our only safeguard will be that the meltdown will be bigger than the last one and the authorities will not be any more prepared than they were last time. They will not have an organized, planned capability to meet the various challenges that a meltdown in a complex civilization like ours will create.

Please allow me to offer my small support to Yaron Brook. He is absolutely right that the immediate present is the best time we have ever seen to make our point, that capitalism, freedom, egoism, and reason are the correct path to take. We may not have another chance.

It is sometimes a bad sign when someone suggests that their own particular area of interest is the most important. I don’t wish to suggest that other areas, say, health care or the war on terror, are minor or less scary. I merely want to say that if we don’t focus on the debt and the deficit and get that turned around, we won’t have the time or energy to spend on other things. A depression in the U.S. will be very bad because we have so far to fall and we depend upon very complex and highly sophisticated economic interrelationships. Just look at the problems we begin to face when the price of gas goes up some. Think of the problems we might have if the supply of gas is greatly reduced. Just think of the process of getting food into our cities, not to mention medications.

Let me suggest another way of looking at your activities. It seems to me that there are several ways of deciding what to focus on. One, which I would normally think is the best, is to focus on what interests you the most. If your interest, for whatever reason, is running a business, for example, it would be appropriate for you to spend your time and energy to free up business practices.

But, consider this, if there is a tidal wave coming at your shoreline residence, you are risking you life by arguing about business regulation. The deficit and debt issues facing us today and the next few years are the economic equivalent of a tidal wave. It will sweep everything before it. We need to either stop the tidal wave or protect ourselves from it as best we can. Look at what is happening in economies much less developed than our own that are having to face up to their debt. What is bad for them will be worse for us.

On the “Front Page” on JPTV, Yaron Brook and his friends try to emphasize that what is happening with our debt is not just another big deficit, like we have seen in the past. The ObamaDeficit is larger by several orders of magnitude, and projected to become bigger. That is bad enough, until you remember that Obama’s predictions are based upon rosy estimates of the economy. It is a tidal wave.

So what do we need to do? There are two avenues to pursue to achieve a solution to this problem. As with any question of budgeting, there is income and there is spending. Most addressing this issue are focusing on spending, especially the entitlement programs. I don’t want to imply that cutting spending isn’t important, it is. Certainly, much of what Obama has added to the budget can be safely discarded (like his medical programs).

Attacking the entitlement programs is a problem. It isn’t that people, especially younger people, aren’t able to accept cuts in entitlement programs. But you do have to find a way to communicate that you don’t want to kill all the old folks. If we can get people to consider financial sanity, a way can be found to ramp down the entitlement programs with out creating a class of impoverished old people.

What I think would help the most is focusing on getting capitalism working, that is, remove the restrictions and regulations. Kill the mixed economy. A few years ago we went through a phase of semi, sort of, half-assed deregulation. There was actually significant results from just the minor changes we saw. If we can begin building on the importance of letting people have the freedom to act, we can “grow” our way out of our mess. I think that the central driving force of our efforts needs to be: make America capitalistic! In this case, focusing on business regulation will help divert the tidal wave.

Instead of going off in many directions, let’s focus our energy and thought on pushing capitalism and the truth about the nature and impact of the Federal debt.


  1. And then, just after I publish my post, I find a Yahoo news story about another recent poll:;_ylt=ApTgbCVLbGzEzYNbeea7WiKyBhIF;_ylu=X3oDMTN1cTMzZXE2BGFzc2V0A2xpdmVzY2llbmNlLzIwMTEwMzEwL2FtZXJpY2Fuc3dhbnR0YXhlc3NwZW50b25oZWFsdGhjYXJlYW5kZWR1Y2F0aW9uBHBvcwMxMQRzZWMDeW5fYXJ0aWNsZV9zdW1tYXJ5X2xpc3QEc2xrA2FtZXJpY2Fuc3dhbg--

    This one lists what "Americans" want their tax dollars spent on. It is a thoroughly altruistic set of requirements. Issues of "halting crime" (5th) and "law enforcement" (10th) are way down the list. And, significantly, combating terrorism and national defense are nowhere to be found. We cannot get our point across without exploding the immorality and impossibility of these goals.

  2. As a technical problem, I think you'd need a massive coordinated effort to reduce the size of government. You'd need to establish an age limit on Social Programs (i.e. no one living today that is, say, 50 years old will receive benefits, or will receive drastically reduced benefits) and then have a huge yard sale of government property. You could use a real trust fund to annuitize the payments or allow people to take a lump sum like a real pension. I'm not sure how else you'd do this without choking off a bunch of senior citizens.

  3. I think that those are excellent ideas, Anonymous. I suggested similar ideas in an earlier post:

    Once price inflation is blotted out, a real pension, an annuity, would work well.

  4. It would be fun, but probably not terribly helpful, to take a poll on what people think constitutes "abuse" in government spending. Another fun experiment would be for each of the congressmen to pick the law he would most like to repeal, and then repeal them all. Boy would government go away fast.

  5. You have such ideas for fun times, Jack! Does Susan share your taste???

    Regarding "abuse", there are so many levels. Examples: spending on government programs that are set up to actually buy votes; programs intended to push money toward prominent backers (or foreign corrupt government officials); threatening to push legislation that will make life difficult for certain businesses and hence getting financial support (or saying that you'll fight against the proposed legislation so you get financial support from the other side). I am sure that I have missed some great schemes.