MA: I get Mises. thanks. On Tue, Feb 3, 2009 at 6:48 AM, M.A. Johnson <[email protected]> wrote:
> Travis > And what we need NOW are more tax cuts and make > permanent the Bush tax cuts. Best bet would be to > implement the Flat-Tax. > And the elemination of at least 1,000,000 Fed gov't > jobs too. > > *"Do You Austrians Have a Better Idea?" > *by Robert P. Murphy <http://mises.org/articles.aspx?AuthorId=380> > Posted on 2/2/2009 > > A lot of people get annoyed with Austrian economists because they tend to > be so dogmatic (we prefer the term *consistent*) and because they cloak > their strictly economic claims with self-righteousness (we prefer the term > *morality*). After a good Austrian bashing of the latest call to steal > taxpayer money and waste it on something that will make a given problem > worse, the stumped critics will often shout, "Oh yeah? Well do you guys have > a better idea?" > > Now, in truth, someone doesn't have to have a better suggestion in order to > point out that a recommended strategy will exacerbate the situation. If an > allergic man has been stung by a bee, I don't know what to do except rush > him to the hospital and maybe scour the cupboards looking for Benadryl. But > I'm pretty sure drawing blood from his leg, in order to inject it into his > arm and thus "stimulate his immune system," is a bad idea on numerous > accounts not least of which, is that I'm pretty sure an allergic reaction > means your immune system needs to calm down. But the point is, if a bunch of > guys hold the man down he has to be *forced* to endure the procedure for > his own good, don't you know I feel perfectly qualified in yelling, > "Stop!" > > If you grasped that analogy, you can understand my feelings about anything > Paul Krugman writes. > > (All joking aside, I am pretty proud of the above analogy. But to make it > even more accurate, let's stipulate that a blind heroin addict, who has been > convicted of manslaughter on three separate occasions, is the one entrusted > with making the transfusion. Naturally he will use one of his own needles > for the procedure.) > > > *An Austrian Recommendation for President Obama > > *In one sense, the critics are right when they ask, "Oh, so we should just > sit back and do *nothing* and let the market fix itself?" Yes, that would > be a perfectly good idea. The whole reason we are in a recession in the > first place is that the capital structure <http://mises.org/story/3155> of > the economy had become unsustainable due to the Fed's massive credit > expansion <http://mises.org/story/3252> following the dot-com bust and > 9/11 attacks. Resources most notably, labor are currently > idle<http://mises.org/story/3290>, > because the economy needs to readjust. Overextended lines such as housing > and finance need to shrink, while others need to expand. (And no, I don't > know what those understaffed lines are; that's why we have a price system.) > Because Americans lived beyond their means for so many years, they now need > to live below their means, consuming less while they rebuild their checking > accounts and portfolios. > > Given the diagnosis, we can be sure that efforts to borrow and spend our > way back into prosperity, or massive bailouts of the banks and homeowners, > are only pumping air into a flat tire with a gaping hole. And Bernanke's > unbelievable > injections of new funny money <http://mises.org/story/3305> into the > credit markets will only ensure that those failed institutions remain > afloat, paralyzing true recovery in the loan market, and risking very large > price inflation if Bernanke does not soon reverse course. > > However, even though "nothing" would be much, much better than all of the > alleged remedies being bandied about, the Austrians actually do have > concrete proposals for President Obama. The following list includes items > that I would have endorsed even before the crisis, but inasmuch as they > would definitely help things, I offer them with sincerity to the new > administration. > > One last caveat: I know there are many purists who read the Mises Daily, > and will be aghast at my watered-down recommendations. Yes, yes, I agree > that the best thing would be for Obama, Pelosi, Reid, and all my friends to > say, "You know, if you look at the history of this company, it always ends > up wasting money and getting innocent people killed. I think we should just > quit and go volunteer at a church instead." > > But, if I said that as an Austrian recommendation, it would be dismissed as > "unserious," a very grave charge indeed. Thus, the following list of > recommendations are not politically impossible, just exceedingly unlikely: > > > 1. Eliminate the personal and corporate income tax. Don't put in a flat > tax or a fair tax or a VAT or any other cute name for a very uncute > process. > To make sure that individuals and corporations realize you are serious, > blow > up the IRS building. (Have everyone vacate the premises first, of course.) > Tell all of the displaced workers that they have 9 months of full pay, plus > whatever pension and health-care benefits they had contractually earned to > that point. If the workers get new jobs 3 days after being laid off from > the > IRS, that's fine; they still get their full 9 months' pay. But if they > haven't found a new job after 9 months, tough. > 2. Unfortunately, dismantling the Social Security system will have to > wait. (That means some of the IRS personnel would sigh have to be > retained. But they would move to a different building.) Getting rid of the > income tax will knock out much of the federal revenues, and taking out all > payroll "contributions" would take us into the realm of "unserious." Note > that in 2007, even without the personal and corporate income tax, the > federal government still took in more than $1 trillion in receipts. > <http://www.census.gov/compendia/statab/tables/09s0457.xls>[image: > Download XLS] > <http://www.census.gov/compendia/statab/tables/09s0457.xls> > 3. The loss of some $1.5 trillion in annual tax receipts sounds absurd, > but the actual figure would be lower, because of "supply-side" effects. > That > is, the true stimulus to the economy from such an enormous tax cut would > cause the revenues from other sources to grow. So long as the federal > budget > were cut by, say, a trillion dollars, within a few years it would be in the > black. > 4. Reducing annual federal expenditures by $1 trillion sounds > inconceivable, but it actually could be phased in. The government has many > assets that it could auction off into private hands, so that in the first > year or two, the government could take certain programs and say, "This will > have its budget cut by one-third over each of the next three years." The > auction receipts would fill the gap until these phased-in reductions had > fully occurred. Some of the obvious auction items would be the oil in the > Strategic Petroleum Reserve (current value of about $35 billion at $50/bbl > oil), as well as all of the mineral deposits (both onshore and offshore) > technically owned by the federal government. It is difficult to come up > with > an estimate of how much the latter properties would fetch in an auction, > since the proposals right now are for leasing extraction rights. But since > the Outer Continental Shelf is estimated to have some 86 billion barrels of > oil, presumably the government could receive many hundreds of billions of > dollars and possibly trillions from an orderly and staggered sale over > a > few years of the most lucrative (and environmentally noncontroversial) > lands. Now, where to start cutting? > 5. Eliminate the DEA and the SEC. Since the SEC failed to catch > Madoff<http://mises.org/story/3273>, > despite nine years of warnings, I think its $950 million annual budget is > obviously a waste of money. The DEA's $1.9 billion > budget<http://www.usdoj.gov/jmd/2008summary/html/118_dea.htm>in 2007 also > strikes me as counterproductive. Beyond the issues of violent > gangs and judicial corruption, there is the fact that this is a recession > and we need to cut costs. If you're afraid of your kid doing drugs, have a > serious talk and then make him watch this > movie<http://www.imdb.com/title/tt0180093/>. > And if he's still keen on the idea, I'm not sure the DEA is going to stop > him. (By the way, the DEA and SEC employees get the same deal as the > laid-off IRS personnel.) > 6. Cut the Pentagon budget in half. In FY 2008 it was (officially) some > $460 billion, > > <http://www.defenselink.mil/comptroller/defbudget/fy2008/fy2008_summary_tables_whole.pdf>[image: > Download PDF] > > <http://www.defenselink.mil/comptroller/defbudget/fy2008/fy2008_summary_tables_whole.pdf>so > that cut alone would free up $230 billion per year. This isn't an article > about foreign policy, so we won't be specific about how the military could > achieve such cuts. But if you're worried that the country would suddenly be > overrun by Iranian tanks, the following chart should reassure you: > > *Top 10 Countries by Military Expenditure, 2007* [image: []] > Eliminate the Department of Education. That would save $68.6 billion a > year, based on its latest > budget<http://www.ed.gov/about/overview/budget/index.html>. > Does anyone want to argue that Americans are well educated? And > incidentally, I was a college professor for a few years, so I can say from > personal experience that there are *way* too many kids going to college. > If you think "everyone should get a college degree," let me ask you this: > Should everyone get a PhD? If not, then why a bachelor's degree? The more > kids crammed into the school, the harder it is to teach to the truly > academic, and the less of a signal the diploma provides. Plus, $68.6 billion > is some serious money. > Cancel all the pending "stimulus" and other bailout packages. Tell the Big > Three that small is beautiful. Tell the banks, "OK your 'short-term' loan > from the Fed has expired, here are your mortgage-backed securities back, and > we'll be taking our reserves. Good luck to you. This is a capitalist > country, where you keep your earnings if you forecast well (we just > eliminated the income tax!) and where you go bust if you don't realize real > estate sometimes drops. Have a nice day." Yes, this would cause some banks > to immediately go bankrupt, but the big banks aren't doing anything now > anyway. The dreaded *liquidation* would actually wipe the slate clean so > recovery could begin. As it is, trillions of dollars in capital is now > locked up in undead institutions that can't make new loans but won't mark > their assets at true values, since they are insolvent. And with the income > tax being wiped out, the toxicity of these troubled assets would come way > down. > Allow unrestricted immigration so long as the incoming folks had a secure > job in which the employer (a) paid three years in advance on any state and > local taxes that would accrue from the employment and (b) bought at least a > $100,000 house for the immigrant and his or her family. (Yes, yes, the last > point is silly, but it will help sell the package.) > Abolish the minimum wage. That coupled with the elimination of the income > tax will take care of unemployment within 6 months. The above steps are > incomplete, and I'm sure many readers will email me with snags in them. Fair > enough. But I am confident that the above would make a heck of a lot more > sense than letting blind heroin addicts borrow an extra trillion dollars to > "stimulate" the economy. > > [VIEW THIS ARTICLE ONLINE] <http://mises.org/story/3316> > _________________________ > > Robert Murphy, an adjunct scholar of the Mises Institute and a faculty > member of the Mises University, runs the blog Free > Advice<http://consultingbyrpm.com/blog/>and is the author of > *The Politically Incorrect Guide to > Capitalism*<http://www.mises.org/store/Politically-Incorrect-Guide-to-Capitalism-The-P360C0.aspx>, > the Study Guide to > <http://www.mises.org/store/Man-Economy-and-State-Study-Guide-P304.aspx>*Man, > Economy, and State with Power and > Market*<http://www.mises.org/store/Man-Economy-and-State-Study-Guide-P304.aspx>, > and the *Human Action Study > Guide*<http://www.mises.org/store/Human-Action-Study-Guide-P547.aspx> > . > > > > -- *~@):~{> --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. 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