Following are a list of what we feel are the most critical concepts to understand and use when analyzing political, social, and economic policies.
There is no free lunch
Conversely, there is a cost for everything. The government can’t help the poor without extracting taxes from job providers (we substitute the term “job providers” for “the rich” so that you can see the result which is more important than the intention). When you extract taxes from job providers you reduce the number of jobs available. The government can’t subsidize one industry without hurting other industries and taxpayers. The government can’t apply protectionist tariffs without harming consumers, foreign businesses, and exports.
When politicians promise to give you something for free they are lying. As the economist Thomas Sowell said, “The first lesson of economics is scarcity: there is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics”.
When anlyzing policies it is vital to look at not only who is helped but also to look at who is harmed.
Incentives Matter
People respond to incentives all the time. When we are rewarded we tend to continue the behaviors that are rewarded. When we are punished we avoid the behaviors that led to the punishment. How many of you drive slower after a speeding ticket? How many of you work even harder when your previous hard work is rewarded with a pay raise?
What if the scenarios were reversed? How fast would you drive if you were given money every time you exceeded the speed limit? How hard would you work if you were promoted for being a slacker? Government policies are littered with perverse incentives like this. Two prime examples are welfare and insurance regulation.
When analyzing policies it is vital to look at who or what behavior is rewarded and who or what behavior is punished.
Power Corrupts
Lord Acton said, “Power tends to corrupt and absolute power corrupts absolutely”. We see this on a regular basis as long term politicians are charged with ethic violations, display arrogant attitudes, and act as if a solution that does not include them is inconceivable.
They never blame themselves when their “solutions” create perverse incentives and create a greater problem like mortgage regulation and affirmative action. Rather than admit culpability they insist that someone else caused the problem and they need to fix it!
When analyzing policies it is vital to look at how power is exerted or accumulated via legislation or regulation.
Rhetoric
Rhetoric was originally defined as persuasive speaking or writing. It has since devolved to mean high minded words and turns of phrase which are ambiguous or disingenuous. Rhetoric is used to hide the true intent of the speaker.
The most obvious current user (or abuser) of rhetoric is President Obama. With lofty phrases and ambiguous promises he captured the imagination of a nation and rode into office on a snow white unicorn named Promise. He spoke of uniting the American people like no one before him. He promised a transparent and ethical government. He offered “Hope and Change”.
In other words, candidate Obama promised to do the exact opposite of what he had done his entire professional and political career. For instance, the next uniting and bipartisan attempt he makes will be his first. While an Illinois state senator and later a US Senator he voted the strict progressive Democrat line. He was never accused of reaching across the aisle to include Republicans, or to find common ground, or to craft a compromise that would include conservative principles.
Obama very seldom lets his guard down and says what is really on his mind. In the instances when he does this he is embarrassed like the instance with “Joe the Plumber” when he admitted that he believes it is good to redistribute the wealth. The truth was not supposed to get out and his campaign responded by launching an Ad Hominem attack on the plumber who dared expose what was really on Obama’s mind.
When analyzing policies it is vital to look beyond rhetoric and learn the facts and review past actions of the speaker.
Morality
A great part of progressive rhetoric is put toward the demonizing of business, and in particular businessmen (used here as gender neutral). Franklin Roosevelt bashed the morality of businessmen extensively in the years leading up to his 1936 and 1940 bids for re-election. FDR’s rhetoric prompted his economic advisor Maynard Keynes (the principle proponent of increased government spending during a financial crisis) to pose this comment in a letter to Roosevelt, “It is a mistake to think businessmen are more immoral than politicians”.
Review the following statements and see if you agree or not:
- Politicians are more moral than businessmen
- Politicians are more ethical than businessmen
- Politicians are less corrupt than businessmen
- Politicians are more virtuous than businessmen
- Politicians are more generous than businessmen
- Politicians are more accountable than businessmen
A quick look at news headlines would indicate that none of these statements are inherently true. Yet politicians readily adopt a holier than thou attitude when talking about how businessmen need to be restrained for the good of society. It never dawns on them that they need to be restrained. Our Founding Fathers understood this which is why our Constitution is filled with mechanisms to restrain government.
The biggest difference between politicians and businessmen is the amount of accountability they must deal with. Businessmen are accountable to clients, employees, regulators, financiers, accountants, shareholders, board members, etc. Politicians are accountable primarily to voters. Are voters as demanding as clients are to businessmen? If they were we’d have better representation in the halls of political power.
When analyzing policies it is vital to keep in mind that politicians do not have superior moral character than those impacted by their legislation or regulation.
Charity
Definition: (n.) The voluntary giving of help, typically in the form of money, to those in need.
The key word in that definition is Voluntary. If I took $20 out of your wallet and gave it to the Salvation Army would that be a charitable act on my part? No, it would be theft. Would it be a charitable act on your part? No, because it would not be voluntary.
Many studies tracking charity have uncovered a somewhat surprising fact (to news media anyway): conservatives are more charitable than liberals. You’re kidding right? Nope. Conservatives donate more of their personal income and volunteer more of their personal time than liberals. Why? Because conservatives understand that charity is personal and voluntary. Liberals, who claim to be more compassionate than those mean conservatives, believe that charity is the government’s job.
Does the government provide charity to the needy? NO.
The government takes money from our wallets in the form of payroll taxes, fees, trickle down taxes on businesses, etc. The IRS is even at the gambling hall or racetrack windows to take their cut of your gambling winnings. If you underpay or decide not to pay your taxes the IRS will take you to court and possibly put you in jail (that’s how they got Al Capone). Taxes are not given voluntarily – they are coerced.
In order to give money to the needy the government must first take it from us. As shown in the “No Free Lunch” segment above, the government cannot help one group without hurting another.
When analyzing policies it is vital to remember that charity is a voluntary act performed by individuals acting alone or in a group but never performed by the government.
Compassion
Remember the old maxim, “If you give a man a fish he will eat for a day. If you teach a man to fish he will eat for a lifetime”?
Who was more compassionate, the person who gave the fish or the person who taught the man to fish? We believe the teacher was the most compassionate because that person provided a long term solution rather than short term relief.
What do government services and policies provide – long term solutions or short term relief? The vast majority of government assistance to the needy is short term relief (that can last for decades). The government institutes policies that put them in the position of providing daily fish rather than fishing skills. (Could it be that the government has a vested interest in buying a constituency?)
Can the government help the needy as effectively as non-government charitable organizations? If success is measured as moving the needy to self-sufficiency the answer is no.
Welfare would be the poster child for short term relief. The government does not offer incentives for the needy to get off of welfare nor is their great emphasis in helping welfare recipients acquire work skills that will see them gainfully employed and removed from welfare roles. (Note that welfare reform that did have incentives to go to work was essentially repealed in the Stimulus Bill) Why? Much of this site is dedicated to analyzing this and other critical questions.
When analyzing policies it is vital to ask whether government assistance is teaching the needy to fish or merely giving them daily fish.