Monday, February 16, 2009

New math - hold onto your wallets

Since when did the federal government become an effective solution for the redistribution of wealth?

In this new world, math has become relative. I always knew that 5
minus 2 is 3… except today if we subtract $7 from $5 (taking money FROM the economy) that somehow it will ADD money to the economy. Let’s go over this. Explain exactly how taking everyones money (money each of us WORKED to get); money that hasn’t even been collected yet; THEN wasting at least 30% of it in bureaucracy, and then spending what’s left on projects that don’t work is a good plan?

The government can’t handle money, properly, PERIOD.

Bill Gates privately gives $10bil to needy causes.

If you are Bill Gates and give away $10billion, you have to hire someone to do it and let’s say that’s a team of 20 people each paid $50k on average (or $1million per year). Let’s say we want 5 years to disperse it all. Now assuming 4% market return. The group would give away about $2.245bil per year and have overhead of $1mil and over the entire period it would cost $5mil to give away about $11.2bil. That means it would cost Bill Gates .00891% to give away the money.

Bill Gates gets taxed and the government gives it to needy causes.

The federal government does it at a rate of about 20% to 40% cost (give or take) and in many cases accepts an additional 30% fraud on that redistribution. So applying the same situation they take $2bil from bill per year for 5 years, using up the $10bil. Bill doesn’t have to hire anyone to give the money away. Instead the federal government overhead uses up at best only 20%. So the IRS and handling drops the $2bil to $1.6 to be distributed. Now distribution actually eats more, but let’s say that cost is only 10% in oversight (which is impossibly low based on Government Accounting Office numbers). But for arguments sake let’s say it’s only 10%, now we are down from $1.6B to $1.44B to distribute. The ever efficient fed government distributes it now and has a record low 15% fraud. So now the money that actually is given to those SAME needy organizations is $1.224Bil.

So let’s compare. In one case its $2.2bil distributed to needy causes in the other is $1.2bil in funds. Work that out. It means that at BEST the federal government will deliver 45% of what it takes in back to the needy people. You might argue 35% even but that is still 35% LOSS.

The government was not founded to provide healthcare, tennis courts, and art endowments. Art, healthcare and other welfare programs were NEVER discussed during the ratification of the constitution. There were discussions about the federal government getting too much money, and in fact there was NO means created for the feds to get money except through the states, intentionally to keep the federal government from getting too much power. Don’t trust me - look at the debates, look at the writings.

Also look at the facts. When the government gets involved generally it screws up. Not intentionally but with the bureaucratic morass it has ALWAYS been, it only makes this more messed up.

Take gasoline, the government is here to help. To control the markets
and clean up the air there are now over 38 “blends” of gasoline - all regulated. That means I can’t sell gasoline from blend x in a county that uses blend y - Does anyone understand the simple rules of supply and demand!? That automatically creates 38 mini economies that CANNOT TRADE. If you run out of blend x you must wait for MORE blend x - you cannot use blend y.

Again, it’s just gasoline - ANY of the 38 blends will run a car, but oh no, the government can’t let the market solve shortages it must create
shortages of its own.

Or take the EPA, it gets $7.14billion in 2009 (plus anything buried in the $790Bil porkulus package). That’s right annually over $5Billion.

If you had $5bil to clean things up what would you do? You would do more and have a LOT less overhead. The government is simply NOT efficient or effective in 99% of things we as a society want done. The feds would be much more effective in contracting that out or simply setting rules that reward good behavior and tax bad behavior.

Bureaucracies have no incentive to do anything but exist and GROW.

Or take schools. More money is spent per student in the USA than in ANY other nation on the planet so we are #1 right? Nope. So maybe #2 or
#3? Nope. We must be in the top 10? Nope. We are #18 (or worse).
We spent over $8000 per student in 2003 . In 2006 we spent $9138 per student based on US Census Bureau numbers . I don’t know about you. But I am SURE I could spend $9k
per year on schooling better than the federal government is. I could send my kids to a good private school and actually get them to have better outcomes than we are getting, and if the school sucked I could spend my money at ANOTHER school that did NOT suck. #18 does not cut it, and doing the same old thing is NOT going to fix it. Double the amount schools get and it would NOT fix the problem.

Or take religion. The constitution says”Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof”. This doesn’t say rip down any religious symbol, it doesn’t say a kid saying a prayer is “BAD”. In fact, where does it say I must create public footbaths for Muslims? Where does it say that I must have representative religions? It doesn’t say any of that, but your recent leaders have been helping out with that, and the courts have been weighing in on what is simply NONE OF THEIR BUSINESS. This is simple common sense. A cross or a star of David or other religious symbol is simply that - a symbol. I really wish they had pushed religion a bit more – EVERY one of the founders were afraid of state sponsored religion. Look at Iran, Syria, and Malaysia… oddly these governments are not black listed by the left when nearly EVERY one of the people on the left would be outright KILLED by the fundamentalists in this three countries. So back to the point: Religion is NOT supposed to be part of the congressional rules yet here we are “DENYING” the free exercise thereof.

Everyone compares the big spending going on in Washington DC to the “new
deal”. Which were effectively useless, even UCLA analysts (a quite
liberal institution) has proven that the policies of spending most likely prolonged the Great Depression.

I feel we are at a crossroads. I am absolutely positive at least some of the people setting up the gasoline programs, or the schooling legislation or the EPA were operating with good intentions. But clearly intentions and reality don’t match up. I understand the urge to help others, I volunteer and donate $. I understand the need for an even playing field for employment. But all I see is the private sector,
which is where ALL value is – demonized, taxed and squashed. Continuing with this silliness will end up in 5yr plans and socialism/communism and eventually to the collapse of the USA just like the USSR collapsed.

Oh, and give me a break, what’s being done in DC is communism. If you take money in through the government and give it to someone else based on their needs that’s the tenant of Karl Marx. If the government controls WHO gets to make money in free markets and who doesn’t that’s Communism with a capital C. It’s the idea that one guy is smarter than everyone else and should decide what EVERYONE else is doing (that NEVER works for long). I am told it’s NOT ok for CEO’s to make $millions.
But apparently it is OK for actors, artists, football players and former presidents to make $15million for speaking engagements. This is pure nonsense, a slippery slope to economic collapse, a recipe for disaster.

All I can hope and pray is the entire left wing silliness gets knocked out in the next elections and that common sense starts to take hold again.

No comments:

Post a Comment