Sunday, July 6, 2014

John Stossel Is Almost Always Right....Except'''

Errors in John Stossel's Expose' On Free Loading and Free Loaders John Stossel's Free Loader Television is Generally a Great Idea in Exposing How Government Services and Benefits Benefit Some People a Lot More Than Others but He Had Made a Few Errors in His Analysis . John Stossel is doing a great public service in talking about free loaders and free Loading in society. The topic is about people taking advantage of government benefits and programs only for their own benefit and not for the benefit of all of society as a whole. That is not quite the classical libertarian idea. The idea is not that people should not be able to find a way to free load or become free loaders but should always have the option of making their own choices and not have their choices made for them. Some libertarians see the homeless street beggars who are exploiting people's passions for giving away their money or their concern as a perfectly legal and ancient profession. The classical libertarian can even see the wise homeless street beggar who can more than get by earning as much as 90 dollars a day tax free by collecting donations as a sort of Noble capitalist being capitalizing on human emotion including those of sympathy and empathy. Being able to get by as a street vagrant is not exactly necessarily easy work especially when you find out a lot of these people have bad addiction habits that they have great difficulty over coming. The whole existence of cities on planet earth came with what we call civilization. It took a lot of time for humans to become civilized and for us to create civil urban areas. We have always had beggars and we have always had dependence because of civilization. Civilization arose not just because agriculture became firmly implanted in particular areas but because cities offered economic advantages to people where they could indeed live lives with more leisure time and not be salves to the work of hunting, gathering ,fishing and agriculture. Civilization gave people the economies to freeload. Athens is one of the great ancient examples of a place where philosophers first came into existence. These philosophers were people who spent their time enjoying life thinking and not working which by ancient standards was a very definite form of freeloading. Even Plato's Socrates makes it clear that the public places in Athens like the Agora was a place for the public to freeload. Most people in cities ancient and modern are freeloaders to some degree. Thanks to petroleum and other energy resources we are all free loading in the sense that we do not need to expend the work energy required of all our machines that do most of the work for us in our society. Even horses for which horse power is named are free loaders today. More horses are likely to be transported by motor vehicles to day than are going to be found pulling coaches. Cities are free loader paradise and beggars are a universal part of almost every culture. There are countries from Mexico to India where begging is part of the religious experience outside of major shrines. The Gypsies in Rome make a big business out of begging from tourists lined up to enter the Vatican. This is business as usual and it is not the product of big government. The problem with big government and homelessness in America is that often the government wants the beggars to be out in force because they need the sight of a problem like that to justify their seeking power. In cities like Portland Oregon the beggars are invited in because there is free food made available. When it comes to the part time employment these people want the same government has 45-80 an hour union jobs available on a constant basis to college grads and people that tow the party line and most of these jobs are silly punch clock do nothing free loading jobs that don't fix pot holes and don't sweep the streets. A small number of people are spending city money planning to spend more money than the city has on really stupid projects that all have a long term negative return. Compared to the beggars these are the real freeloaders. You don't want beggars on the streets well then fire some of those do nothings entitled to 80 dollars an hour or more who spend all their time in meetings and committee meetings spinning the wheels of do nothing government and just start making 10 and hour part time jobs available! In terms of the rest of society hiring people well the government could make it unnecessary for the individuals hiring to have to register the workers and get insurance to hire them. There are real impediments to hiring people and some of these people who only want part time work because they only have a part time attitude is the minimum wage which may be just a little too high to justify hiring. With big government setting minimum wages one would think that they would be hiring as many minimum wage workers as possible especially when they are always talking about employment being their biggest concern. This is not to say that cities should not hire some high cost employees it is to say that everyone knows that a lot of those people are the real free loaders. Civilization is a bit about sharing or distributing the wealth of society in a manner benefits more people in an economically vibrant way. In Portland and other cities there is this big running lie about turning cities green. The reality is that the industry is basically forced out of the city because since the triangle fire etc the industries like sweat shops in cities have become illegal. Working conditions and anti pollution requirements force industry outside of urban centers and so the suburbanization is actually inevitable. The whole city then becomes an entertainment complex and bedroom community freeloading off the wages available outside of the city except for financial services and distribution services and then health care type service industry jobs. Farmers growing the food and miners and manufactures should see entire cities as free loading organisms and there is nothing wrong with that kind of free loading so long as everyone supplying goods and services is paid and not robbed. When Portland makes living in a new downtown apartment or condo a tax advantaged thing that seems like unfair freeloading because the city and state are not lowering the taxes of the people actually producing the goods and services outside of the city where the supposedly environmental things are happening. That kind of freeloading Stossel is right about, Stossel is completely wrong that these people with their social service agencies that want to force the homeless into their care are somehow better than the beggars. Some of us see those agencies, public and private, as self serving organizations. It was not long ago that people were angry to find out that the head of united way was paying himself and his top insiders multi million dollar salaries annually. So much for Charity! Even Goodwill has a multi million dollar CEO as captain! The beggar bothers me less so long as it is voluntary . Cities are much less giving to the homeless by making part time work available where basic city maintenance work is not being done and the same cities are sitting on vacant properties they own outright as if the goals of the city is to compete with the capitalism that they rely on for taxation. The next error Stossel makes is to say there is something wrong about people walking away from mortgages they cannot afford. Stossel does not seem to understand what a mortgage is or how that contract works. Walking away from a property, not trashing it, is perfectly legal. People can and do over pay for real estate they give mortgages to banks for. In those cases where the banks are dumb enough to take low minimal down payments and when the banks have not apparatus set up to take back the properties and to rent them out it is completely the bank's fault. Mortgages that have a walking away escape clause is not free loading. Why not ? because people who have paid for homes have put down money as down payments for the banks to own those properties plus they have paid off some of the loan. Smart banks should be ahead. Mellon was hated as a banker for his ability to take back properties when people walked away and retain ownership of those properties at a discounted price from what the borrowers paid. There is no freeloading in walking away from a mortgage and if it is legal to do and property prices were over inflated at one point it maybe the only solution for some shorter term property owners. Banks know from the beginning that when markets turn speculative loaning money is at additional risk to them . Banks should have asked for higher down payment ratios per value when they created those mortgages. No one is freeloading then not banks and not those walking away from their mortgages legally for any reason. A lot of people were against that General Electric earned billions of dollars and will pay no taxes the way it structured its business to the tax code that the government created. That also is not freeloading. It is smart for the shareholders who own general electric and will eventually pay taxes on income and capital gains when they sell their shares in the company. General Electric just saved their shareholders from double or triple taxation by getting lucky one year and owning no taxes. No company owned by shareholders should be taxed because it is double taxation. Stossel is right that companies should not get special tax breaks. If Government wants broad general economic growth it should not have double taxation in effect for any company. Government has no business favoring one company over an other for special tax treatment but it can legally decide which companies it wants to support by giving it business. Halliburton's sin was not that it got the business from the government nor that the government hired it to free load which maybe true. The sin was that the company did not have to present competitive bids allowing other companies to show they could provide the same services to the government more efficiently and/ or cheaper. Stossel is right that we have a big government in place that spends most of its time and effort deciding who gets to have the free lunch and who has to pay for it so long as they as power brokers always get their cut. Blaming big corporations for having to go and pay for expensive lobbyists to have representation in that sort of patronage system is an ideological impossibility. If government has a round about way to force corporations to pay bribes to get direct representation than most members of the public with a lot less money have absolutely no chance of lobbying for the free lunch programs. The only solution is really just to cut taxes drastically so there are less free lunches to pay for in aggregate. American Society is pretty much a lot of people always looking for a free lunch. Big Capitalist Hero Warren Buffet is vastly admired and respected because he shows people how to exploit inefficient free markets to find free lunches that are so good they are like buffet banquets for life and more than you can ever eat not just all you can eat. The difference between that kind of free lunch and the one the government is offering on a constant basis is that it is completely voluntary. Buffet probably does look to find people forced to sell at low prices because of bad business decisions or poor understanding of value. In the story of Jack and the Bean Stalk Jack sells a perfectly good cow that produces milk for a small hand full of magic beans. In real life the bean seller comes out ahead except sometimes you do buy some beans and they turn into the next Intel or sysco corporation. The risk is enormous if you look at Jack in that story as being a very lucky investor to get something that grows so high it goes above the sky. Most Jacks are going to end up realizing they are fools and Warren Buffet is going to own all their best producing cows. There can't be any law to prevent people from being tempted to buy magic beans. There will always be people selling magic bean and the temptation is too great. Las Vegas is probably the greatest magic bean generating machine in world history and they do offer free lunches dinners and hotel rooms for their best customers. Milton Friedman said there is no such thing as a free lunch and that partly cancels out any of the benefits of government free lunch programs . Much of the big government free lunch program is completely self serving and it may actually cost the actual free loaders more than they realize. In the Old soviet union the cost of having to wait in line and not be working to get a tiny bit of bread butter or meat was such a long time that people had less time to work for money that could have paid for a lot more goods and services. Lost time is a basic lost opportunity cost where people could do something other than wait for benefits to come. The economics of a communist free lunch society fail so badly that one realizes that the biggest free loader is even worse off free loading than if there had never been a government program encouraging it. . Close

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