With pressure in the Senate to pass the Farm Bill this week (they approved cloture this morning) and showmanship killing any consideration of further amendments, things aren’t looking good for reformers. This leaves taxpayers on the hook for an expanded crop insurance program with incredibly few taxpayer protections built in.
The Senate lauds this as progress, claiming $24 billion in savings over ten years. But a simple breakdown makes it clear that these supposed savings will never be realized. Luckily, the American Enterprise Institute has a great infographic presenting the numbers as they are likely to look over the next ten years. Instead of finding $24.4 billion in savings, the AEI graphic shows $31.2 billion of increased spending, which they rightly term a “bait-and-switch” for the taxpayer.
So where do these costs come from? The answer is the Agriculture Risk Coverage provision, a proposed “shallow loss” program that would make up the difference for revenue not covered by crop insurance. The program works with crop insurance to guarantee revenues, basically ensuring farmers 89 percent of their average revenue over the last five years. So if prices fall or your yield decreases, ARC will smooth over the difference.
I know we’re focused pretty intensely on the elections, which are only two weeks away, but we always need to focus as well on underlying principles and concepts that drive our economy and our government. Elections come and go; this stuff is forever. In that vein, you really need to take a look at a new paper from the Mercatus Center at George Mason University, by Randall Holcombe:
Crony capitalism describes an economic system in which the profitability of firms in a market economy is dependent on political connections. The term has been used in the popular press but rarely appears in academic literature. However, there has been a substantial amount of academic research on various components that, when aggregated, describe crony capitalism. This literature shows that crony capitalism exists only because those in government are in a position to target benefits to their cronies, and have an incentive to do so, because they get benefits in return. The ability to target those benefits is a result of the spending and regulatory power of government, so big government causes cronyism. One remedy often suggested for cronyism is more government regulation and oversight of the economy, but this remedy misunderstands the cause of cronyism. The substantial and well-established economic literature on the components of crony capitalism shows that big government is the cause of crony capitalism, not the solution.
By “crony capitalism,” of course, he refers to lobbyists, and big business using those lobbyists to get more power and take more wealth away from the public. It’s the reason we had Occupy Wall Street, and why many folks still cry out for “regulation” to “rein in” big business and the big banks.
Don’t look now, but the Solyndra scandal is coming back up in the media. The now-defunct, politically-connected green energy company was given a sweetheart $500+ million loan from the Obama Administration back in 2009. By August 2011, Solyndra had filed for bankruptcy, leaving taxpayers on the hook for millions.
Supporters of heavily subsidized green energy projects downplayed cronyism, which runs rampant in the Obama Administration. But new e-mails show that a White House analyst warned that giving taxpayer money Solyndra would be a big mistake (emphasis mine):
As the Obama administration moved last year to bail out Solyndra, the embattled flagship of the president’s initiative to promote alternative energy, a White House budget analyst calculated that millions of taxpayer dollars might be saved by cutting the government’s losses, shuttering the company immediately and selling its assets, according to a congressional investigation.
Even so, senior officials in the White House’s Office of Management and Budget did not discourage the Energy Department from proceeding with its plan to restructure a federal loan to Solyndra — a move that put private investors ahead of taxpayers for repayment if the company closed, the investigation by Republicans on the House Energy and Commerce Committee found.
EDIT: I’m not saying that Ron Paul fans are necessarily anarcho-capitalists. They are two camps that need to be addressed equally, and thus share a post. I apologize if the title seems a bit misleading.
I love you guys. Well and truly.
You are truly the only people who can say, with a straight face, that you want to see absolutely no government in the world, or that parents should be able to sell their children, or that law could be perfectly administered through courts that competed for customers like car dealerships. (“You need a court that respects your right for others to pay for your contraception? Come in and get no money down on a brand new 2012 court case!”)
The unbound and unhampered loyalty you have to a Texas congressman who preaches liberty and peace is just simply adorable. You call his son a sellout for not endorsing his father, start riots at state GOP conventions to grab as many delegates for him as possible, and even started a campaign to sue the Republicans for not allowing delegates bound to other candidates to vote for him. Just adorable. You’re like little puppies, yipping and yapping at anyone who gets too close to your candidate, anyone who might might be some big ugly meanie in disguise. It’s cute.
So that’s why, since I’m so in love with you, that I have to take a moment and tell you to stop hurting yourself.
You’re starting to make yourself look foolish. Childish, even. Your inability to accept that Ron Paul will not win the nomination is a sign of being a poor loser, and nobody likes a poor loser. Your other inability to accept compromise with others—such as you demonization Paul’s son Rand—means you won’t have any friends. And for some of you, your inability to take what you can get, rather than singing Queen’s “I Want It All” at the top of your lungs every day, makes you look utterly crazy.
Yesterday, we went over the top 10 news stories from 2011, which were mainly about news and issues that made headlines this past year. This morning, we’re recapping our most read stories from 2011.
Being a libertarian-leaning blog, we touch on a variety of issues. From those of you that aren’t familiar with libertarianism, it is a philosophy grounded in individual liberty. We believe the individual is sovereign and has a right to pursue whatever lifestyle he chooses, provided that he doesn’t harm or disparage the rights of other sovereigns in the process. The belief in individual sovereign also extends to economic liberty and a belief in free markets.
With that said, our top posts from 2011 range from civil liberties issues, including the National Defense Authorization Act (NDAA) and the Fourth Amendment, to defending free markets and fighting cronyism and corporatism in Washington and on Wall Street to covering Ron Paul’s presidential campaign and having an open discussing the libertarian philosophy.
We offer no additional commentary on these posts. If you would like to read them, just click on the title. Again, have a safe and happy new year.
For the last few weeks, protesters have camped out in New York City to express their grievances with Wall Street. The complaints are somewhat familiar and to some extent, I can understand where they’re coming from. They are upset with what they see as government colluding with corporations for taxpayer-funded bailouts during very tough economics times.
The frustration with corporatism is understandable, libertarians and free market conservatives have expressed the same sentiment for years only to take a back seat to the idea that what’s “good for business” is good policy. But as we’ve come to learn, so-called “pro-business” policies aren’t always a good deal for taxpayers. And by that I mean that we truly want a level playing field, but not through excessive taxation or regulation. Rather, keeping government out of the business of picking winners and losers.
But some members of the nascent “Occupy Wall Street” have expressed demands (note that these demands are unofficial), which for all of their supposed distrust of government, these guys have a very utopian idea of what government should be — likely enough to make Karl Marx and Che Guevara proud. Nevermind that they would be economic suicide.
Among the suggested demands for the movement are (with my comments next to them):
There are more and more people out there pissed at the rich. I certainly understand where they’re coming from, but they’re wrong. The rich per se aren’t the problem. It’s time to quit fighting against the rich. Occupy Wall Street has been wanting to smack the rich, and making a lot of noise about it. The problem is they’re wrong. The rich are not now, nor have they ever really been, the problem.
No, the problem is the corporatists. Those are the people we need to stand united against.
Corporations are a tool, a way to organize businesses. They’re not the enemy either. However, the people who seem to believe that corporations deserve tons of special breaks, including government bailouts, are. They are the reason people are pissed.
Ezra Klein has a piece where he outlines many of the complaints of the OWS-ers. Most of them are debt related. A lot of it is student debt, debt that Presidents through the years told them to take on for a better life. I understand that anger…to a point.
But you look around and the reality is not everyone is suffering. Wall Street caused this mess, and the government paid off their debts and helped them rake in record profits in recent years. The top 1 percent account for 24 percent of the nation’s income and 40 percent of its wealth. There are a lot of people who don’t seem to be doing everything they’re supposed to do, and it seems to be working out just fine for them.
The free market. Capitalism. Call it what you will. The truth is that people often don’t understand the difference between capitalism and what we currently have. They mistakenly call our current mixed economy capitalism, and they blame companies that try to stamp out competition as being capitalistic. They’re wrong.
Today, many companies spend a great deal of money on lobbyists that take their wish list to Congress. That wish list does occasionally call for relaxing of some regulations, but more often than not it calls of increases in regulation. Why? Because they like the idea of making in harder to enter the market and provide competition. Increase regulations also give them the benefit of possibly stamping out smaller competitors. That forces consumers to go to one of the big guys for their products.
This, my friends, is not capitalism in any way, shape, or form. It’s not. This is corporatism, plain and simple.
In capitalism, these regulations designed to stamp out the little guy wouldn’t exist. Would the little guy thrive? Maybe, maybe not. It would be up to that little guy to make it though. He (or she) would have to work hard, make good decisions, and convince his potential customers that they should be from his company. If all that comes together, then he’ll survive just fine. If not, well…it’s all on him.
Capitalism isn’t a pretty system, but it actually is the most fair. When progressives talk about fairness, they never consider capitalism as being just that. However, it really is. An open market, where each individual is free to determine their own destiny. If they want to start a company, there’s not a governmental body standing in the way trying to keep them from it. There’s nothing to it but their own determination and skill.
K Street lobbyists may have a thing or two to teach us about bipartisanship.
Recent reports concerning the latest NSA scandals suggest major super-computer makers, defense contractors and telecommunication companies are big on landing a hand to any member of the political class from both sides of the aisle, so long as they are ready to push for legislation outlined to promote the use of their services. We might not want to blame the companies for using the tools available to attempt to create an artificial increase in demand for their services, but we can blame the government for encouraging the push.
The Hill has announced recently that defense giants Northrop Grumman Corp., Raytheon Co. and General Dynamics have contacted the National Security Agency in the last quarter. While representatives for the firms declined to comment on what was found on the record, experts claim that lobbyists were simply following the money.
Critics are quick to point out that nobody has come out publicly to state just how much money is in play at the NSA. This piece of information could be crucial in light of claims linking lobbyists for major defense contractors and the NSA. In the recent past, General Dynamics lobbied on “funding and issues related to Intelligence Classified Annex for Fiscal Year 2013.” According to official numbers disclosed by OpenSecrets.org, General Dynamics alone spent over $22 million with lobbying efforts in past couple of years.
There are countless examples of cronyist policies passed by Congress. Some would point to bailouts for Wall Street and automakers, while others would remind us of the loans and subsidies for green energy companies. While these are all good examples of cronyism and corporate welfare that are frequently mentioned by critics, the Export-Import Bank is frequently overlooked.
Authorized by Congress in 1945 to promote goods and services produced in the United States to be sold across the world, the Export-Import Bank (Ex-Im Bank) has become a source for bureaucrats to pick winners and losers in the market place and politically-connected businesses to take advantage of taxpayers.
Back in December, Pete Sepp, Executive Vice Chairman of the National Taxpayers Union, noted the Ex-Im Bank has a history of subsidizing failed firms — with a $10 million loan to Solyndra serving as an example — as well as giving money to profitable businesses, including Boeing, General Electric, Caterpillar, and Dell.
“In order to keep its portfolio from sagging and putting taxpayers on the hook for future Solyndras, the bank must often invest in large, established firms that are already highly profitable. Over the years this has included firms such as General Electric, Caterpillar, and Dell,” wrote Sepp. “Another example is aerospace giant Boeing. In 2012, nearly 83 percent of the loan guarantees issued by the Ex-Im Bank benefitted Boeing, meaning of the $14.7 billion in loan guarantees, $12.2 billion helped bolster the company’s sales.”