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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Tuesday, December 30, 2008

Government Promises the Easy Way out....

Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn't have a surplus, then it must come from taxes. If taxes don't go up, then it must come from increased borrowing. If lenders won't lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value of those already in circulation. Something cannot be effortlessly created from nothing.

Similarly, any jobs or other economic activity created by public-sector expansion merely comes at the expense of jobs lost in the private sector. And if the government chooses to save inefficient jobs in select private industries, more efficient jobs will be lost in others. As more factors of production come under government control, the more inefficient our entire economy becomes. Inefficiency lowers productivity, stifles competitiveness and lowers living standards.
All of it here. Some people will whine that there was a failure in the market. That Capitalism does not work. that it hasn't delivered what it promises. so what has capitalism promised? That everyone gets what they think that they should be delivered without earning it? that everyone should get one type of economic good that someone thinks that is essential to life? There has been no failure in the market. GM should declare bankruptcy, idiotic healthcare plans need to be abrogated and people that work in these industries must face the music that they were complicit in creating. Its just real life people.

The market is telling all of us we no longer can live the way that we did before. Bu this is not a failure in the market, its the market adjusting to decades of bad behavior. A few days ago, I chatted with an economist from the World Bank. He kept talking about about market failures. Like, for example, the failure of the market to deliver healthcare services to millions of Americans. Of course 100% of his focus was on the demand side of the equation and zero attention paid to the supply. 30 million new customers with, lets say 2,500 patients per doctor, leads to new demand for 12,000 new doctors. This is addition to the estimated shortfall of about 35,000 GP practitioners that currently are needed. He figures that if funds are magically created to pay for these people, that mystically there will be some fairy that provides these services to people. But in reality, there are severe shortages of supply of simple healthcare services since there are few that want to deliver service at the prices that governments pay for these things. Many people go without healthcare today not due to ability to pay but to a complete lack of supply.

So, here we have a trained economist, working for a major multilateral financial institution that is not looking at a problem with is eyes open. Golly gee, this would never be the case with the golden calf idol in Washington would it? Of course not, the Obamessiah with his golden Negro capacity would be able to determine exactly how to create the resources perfectly by balancing supply and demand so that everyone is perfectly met with what they need at a price that they can pay. Its amazing.

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