Tag: debt limit

Keynesian Economics: A Misleading Policy

By Jack Parkos | United States

Imagine a kid doing chores for his parents. One day there isn’t a lot for him to do, so the parents make a huge mess for him to clean up. Does this make sense? Of course not. But, this logic is similar to the Keynesian school of economics. Keynesianism has taken over both American parties and severely hurts the economy.

What is Keynesian Economics?

During The Great Depression, economist John Maynard Keynes developed a new school of economic thought. He hoped that his Keynesian economics would bring an end to the decade’s stagnant economy. Keynes’s theory focuses on demand-side economics. Keynesian economics asserts that a mixed-market economy will be the most successful in the long run.

Governments employ this by increasing both spending and the money supply. Keynesians would argue that the government should spend on programs such as infrastructure in order to boost the economy.

The Critical Flaw: Increased Spending

Despite such common adherence, Keynesian economics has a number of key problems. The first of which deals with spending increases. The money for this spending must come from somewhere, and it usually lands on the taxpayers. Otherwise, US debt levels just increase even more.

The wealthy, who play a key role in economic growth, often see the worst of tax hikes. The government taxes those who provide jobs and products, then uses for the money on a bridge, for example. The idea here is that government created jobs and a product. However, they only did so by robbing the same opportunity from a private company, which is more likely to use the money more efficiently to provide a greater number of jobs and better services. Allowing all classes of wealth to have more disposable income will simply lead to more economic growth.

Keynesian Economics and Government Monopolies

Keynes often criticized the free market, claiming it created monopolies. But government is also capable of doing this. In fact, the creation of monopolies is a huge fault of Keynes’s theory. A government, with its reckless spending, can easily create monopolies and ruin private businesses, which only spend more if profits increase.

On the other hand, the government has a tax farm of millions of citizens. Thus, it can take money from any one of them, or simply print more of it. For example, Keynesian economics would have the government spend more on infrastructure. But what happens to the companies that the state does not fund? They will likely lose business, even though they may be the best ones for the job.

On the other hand, government services are usually subpar and inefficient. There are just some things government can’t provide that the market can. Government is not meant to produce, it is meant to protect rights. A business owner, to keep customers, has to make an effective product or service. This forces him or her to improve the quality of service.

State services simply do not work the same way. Don’t like the service? Too bad. They don’t need to rely on supply and demand. Rather, they can tax people or drive further into debt and provide a subpar service. We have established that under Keynes’s model, there will be more state services. This will be an atrocity! Instead, the state should seek to lower taxes and lower spending in order to improve the economy.

The Danger of Increased Money Supply

The last and possibly the most dangerous part of Keynes’s model, increasing the supply of money. Simply printing out more money will not help the economy but will do the opposite, it will cause inflation which hurts the economy. This has happened a lot in history.

Hyperinflation in the Weimar Republic

The most infamous example of this is 1920’s Germany.  The problem started when Germany abandoned its gold standard during World War 1. After the war, the Treaty of Versailles forced Germany to pay reparations that they simply could not afford. The government then printed out more marks to pay off these reparations, but this caused hyperinflation. Money became worthless to the point where Germans used it for kindling. Children would use paper money to make toys to play with. If someone went to the store with money to buy two loaves of bread, they would only be able to afford one by the time they arrived. In fact, by late 1923, 1 US Dollar was worth a staggering 4.2 trillion German marks. The German Mark was worthless.

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Of course, hyperinflation will not occur every single time money is printed. But history repeats itself with many other examples of hyperinflation. Zimbabwe also tried this and, like Germany, saw hyperinflation in its economy. Keynesian economics would suggest printing more money for the economy during times of recession. However, history shows this does not work.

The Keynesian School of economics suggests increasing spending, debt, and taxes. It also replaces market services with the government and calls for the risky activity of printing money. Most of the last century’s policies have been Keynesian. Without a doubt, they have raised taxes and sent the country further into debt. Hope, however, is not lost. By looking towards more free-market schools of economics, the American people and state may create a freer and stronger economy.


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The National Debt Mess: How did we Get There?

Indri Schaelicke | United States

At the time of writing this, the US debt sits at $21.15 Trillion, and recent trends would suggest that our elected representatives do not care to step back, consider the potential disastrous effects, and reverse our course. How does such a large debt even come about? Let’s examine a few fundamental reasons.

Politicians give people what they want in order to win votes, but have no regard for what the budget can handle.

Over the course of the past year, many people have realized that nearly every facet of our lives is becoming increasingly politicized. The same is true of our budget creating process. Both parties make a show of what they wish to focus their spending on. Since the beginnings of the earliest political systems, the savviest politicians recognized that while campaigning for office one will be most successful if they tell their constituents what they want to hear. They can then promise a whole host of “free” programs, portraying government as the superhero that will save you from whatever affliction you face. Once in office, the politician will move to fulfill these promises, thereby expanding the scope of government and widening their base of supporters.

The public would be in uproar if the government taxed at the rate required to cover all spending.

In order to cover the cost of the programs that they wish to create, politicians would need to charge taxes at an incredibly high rate. There’s just one problem- no one wants to pay high taxes in order to get some “free” hand out from the government. They simply want their free healthcare. People want to have the cake, and eat it too. Politicians cater to this desire in order to secure votes, and the debt continues to grow.

As a libertarian, I support a dramatic reduction in government spending and seek to end our federal government debt. There are a few reasons I support this:

The more the state spends, the more control over our lives they have.

Government spending increases the size of the bureaucracy, creating more and more agencies that have a say in the way I live my life. Don’t you think I can manage my life better than an unelected official sitting at a desk in Washington DC, who knows nothing about me?

I don’t believe in coercion and wealth redistribution policies.

No one should have to pay for someone else’s birth control, for example. I say we lower tax rates for everyone, and minimize government influence in our daily life (cut spending),  allowing people to make decisions for themselves. No one knows how you should live your life better than you, so why pretend a government agent does?

However, knowing the tendency of both parties to oppose any spending cuts, a solution will have to be much more pragmatic. Fiscal conservatives must push for cuts to spending whenever they present themselves, such as when a bill comes up in committee, is being debated on the floor of their chamber or discussed in the public eye.

Ideally, fiscal conservatives who seek to end several agencies will be elected, as well as leaders in both houses of Congress who are committed to entitlement spending reform. Doing these two things will help us eliminate our debt.

I was driven to become a libertarian by being made aware of the government’s waste. I’m sure that a coherent message preaching the inefficiencies of the state would attract many more to the liberty movement.

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The Top 5 Reasons Not to Go to War with Syria

I found Trump Version 20.17 to be a pleasant surprise. He stuck to many of the promises I had hoped he would keep (like nominating textualist justices, taking a hatchet to the administrative state, and cutting the corporate tax rate) while not doing anything too drastic regarding the promises I hoped he wouldn’t keep (like going over the top on immigration or starting trade wars).

Trump Version 20.18, however, is turning out to be an absolute disaster. This is largely due to his signing of an obscene omnibus spending bill, starting a trade war with China, and beginning to fill the foreign policy wing of the executive branch with neocons.

Just as John Bolton, who is essentially a caricature of a belligerent American war hawk, enters his role as Trump’s national security advisor, reports of a chemical attack in Syria have surfaced. The attack is being blamed on President Bashar al Assad, and Trump has tweeted a warning to the Syrian dictator, Vladimir Putin, and Iran.

It seems as though the US is on the verge of yet another attempt at regime change in the Middle East. The mainstream media and establishment wings of each major party are fanning the flames of war, and I would wager that our presence and involvement in Syria is fit to escalate soon.

I do not think the United States should get any more involved in the Syrian conflict than it already has and, in an ideal world, would like all US forces in Syria to return home immediately.

Here are five of the main reasons I believe we should stay out of the Syrian conflict:

  1. It’s complicated

The Syrian Civil War is complex and impossible to fully understand. There are many factors that make this so. The simplest is that this is not a battle between two opposing factions, but a proxy war with at least four direct participants.

Bashar al Assad, protected by the Syrian Armed Forces, is trying to maintain control over the nation. “The rebels” are his primary opposition, and they would like to see Assad removed from power altogether.

To me, this is already reason enough for the US to stay out. While I believe in the right of a people to secede from a government they find intolerable and would not be so squeamish about the US assisting a population in declaring their independence, I generally do not support revolutions that disenfranchise those who are loyal to an established government, and certainly do not believe the US has any business getting involved in conflicts of this nature, especially when they are contained within a single country.

Other opponents of Assad include ISIS and more undoubtedly terroristic organizations. Since fighting against Assad, as bad as he may be, is effectively fighting alongside ISIS, it seems like the best bet is to let the monsters settle their own scores.

The fourth major faction in the Syrian conflict is the Kurds. This ethnically-bound group occupies portions of both Syria and Iraq and have their sights set on founding a nation of their own. The Kurds are generally too busy fighting ISIS and other enemies to be in armed conflict with Assad.

Several months ago, when it felt like the Syrian Civil War was finally beginning to wind down, certain pro-government social media outlets I had been following were settling into victory. To my surprise, they quickly began espousing hostile rhetoric about the Kurds. To me, this suggested that Assad and his backers had no interest in allowing the Kurds their independence, which further illustrated how complex the situation is.

Keep in mind that what I have attempted to explain thus far is only the direct participation in the war. The proxy-component takes the situation to a new level. Assad is backed by Iran and Russia among other nations, the rebels are backed by most of the west, Israel, Turkey, and Saudi Arabia, ISIS is backed by terrorist outfits across the Middle East (and indirectly backed by supporters of the rebels), and the Kurds are supported by the US (though the feds did not back their independence referendum), but brutally opposed by Turkey, Iraq, and Assad.

And that’s not all. We must also be aware (or aware that we are not aware) of the linguistic, ethnic, religious, and cultural divides across the diverse population of Syria. There are at least 16 ethnoreligious groups residing in Syria, and no one is capable of possessing the knowledge required to accommodate even a fraction of them. This challenge is Syria’s, not America’s.

  1. The evidence leaves much to be desired

The most recent “gas attack” continues the cliché of incidents that are blamed on Assad without verification. Aid groups on the ground tend to be the primary sources for the UN and the US federal government, and videos documenting the aftermath always accompany the reports.

The problem with all of this is that hard evidence is never presented to the public. Perhaps the government has evidence that it refuses to release, but as far as anyone can tell, hard evidence does not exist.

Just two months ago, Defense Secretary James Mattis publicly stated that the US is still looking for proof that Assad is the culprit in previous gas attack allegations. Per ZeroHedge:

“I don’t have the evidence,” Mattis said. “What I am saying is that other groups on the ground – NGOs, fighters on the ground – have said that sarin has been used, so we are looking for evidence.”

While it is silly to use President Trump’s Twitter handle as a source of factual information, the president seems to have admitted that he has no evidence the latest gas attack is Assad’s doing either:

If the area in question is “inaccessible to the outside world,” and it needs to be opened up for “verification,” it is obviously not confirmed that Assad launched the chemical attack.

As I outlined in my latest blog post, applying Occam’s razor to the situation makes it hard to imagine that Assad is the culprit. Why would Assad, on the verge of victory and fully aware that the bulk of the Western world is seething for a reason to remove him from power, commit a strategically and economically idiotic war crime that makes it impossible for the US to exit? Why would he do this on the heels of Trump saying that the US would be exiting Syria very soon? Could any remotely rational human being be so evil that he puts everything he has spent most of the past decade fighting for on the line just to murder a few civilians?

It is true that logic may not be the best means of understanding Middle Eastern conflicts. But I still find the possibility that Assad was framed by his enemies to be far more persuasive than Assad effectively committing suicide.

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  1. Regime change does not work

Let’s give two huge benefits of the doubt and assume that 1) we know who the good guys are in Syria and 2) we can verify that Assad is intentionally engaging in something akin to genocide.

Even under these circumstances, contemporary history teaches us that toppling dictators and installing democracies is a futile effort. Iraq and Libya remain failed states years and year after their autocrats fell. There are probably many reasons for this, but I will extrapolate on two.

First, I believe, as Andrew Breitbart famously stated, politics is downstream from culture. Unlike many radical leftists, I generally do not believe in social constructionism in which oppressive systems are put in place and dictate the way society turns out. Instead, I believe people get the governments they deserve. In other words, Saddam Hussein was a result of Iraqi history, values, and living conditions, not the other way around. If I am right, removing the system will not lead to sustained improvements in the way a people do politics. They will resort to their old ways quickly, and the effort will be all for naught. The people must change before the way they are governed can.

Secondly, Jeffersonian Democracy is not for everyone. While I am only in favor of government if its purpose is to protect natural, individual human rights, other people may have other preferences. You cannot force a form of government on people who do not understand it and do not want it.

  1. Trump is president

Here’s a brief list of accusations that have been hurled at Trump over the past few years:

  • Idiot
  • Liar
  • Conman
  • Racist
  • White Supremacist
  • Nazi
  • Fascist
  • Homophobe
  • Xenophobe
  • Misogynist
  • Rapist
  • Thief
  • Russian agent
  • Corrupt
  • Lunatic
  • Mentally ill
  • Reckless
  • Immature
  • Ignorant
  • Illiterate
  • Vengeful
  • Narcissistic

I’m not going to say which ones I think are accurate and which ones I think are off base. But if a handful of these are true, anyone that would follow Trump into war is a complete and utter dotard. Since there is a common hawkishness among many of Trump’s most fervent critics, they must not believe what they say about Trump or are miles past sensibility in their stubborn desire for war.

  1. We are $21 trillion in debt

Last but not least, war has costs. The most horrific tragedies of war are the lives lost, both military and civilian. Injuries are suffered, homes and livelihoods are destroyed, and relationships are torn to shreds in all armed conflicts.

With that being said, I understand that war is sometimes the best option, and that the costs of not going to war can vastly outweigh the costs of participating.

But based on the complexity of the situation in Syria, the unproven nature of the claims that would justify intervention, America’s recent history of failure in armed conflict, and the lack of competence in the White House, this is not one of those times.

Since intervention remains unwarranted, exhausting more US resources as a trillion-dollar surplus looms would be beyond the pale. As Pre-President Trump tweeted way back in 2013:

Let’s hope the new Trump channels the old Trump before we get ourselves in another mess.

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