Friday, January 20, 2012
Thursday, January 19, 2012
Revisiting William Graham Sumner from 1883: A Society That Refuses a Class Structure Must Be a Society With No Special Class Rights
“If we refuse to recognize any classes as existing in society when, perhaps, a claim might be set up that the wealthy, educated, and virtuous have acquired special rights and precedence, we certainly cannot recognize any classes when it is attempted to establish such distinctions for the sake of imposing burdens and duties on one group for the benefit of others.”
“If words like wise and foolish, thrifty and extravagant, prudent and negligent, have any meaning in language, then it must make some difference how people behave in this world, and the difference will appear in the position they acquire in the body of society, and in relation to the chances of life. They may, then, be classified in reference to these facts.”
“The class distinctions simply result from the different degrees of success with which men have availed themselves of the chances which were presented to them. Instead of endeavoring to redistribute the acquisitions which have been made between the existing classes, our aim should be to increase, multiply, and extend the chances.”
“Such expansion is no guarantee of equality. On the contrary, if there be liberty, some will profit by the chances eagerly and some will neglect them altogether. Therefore, the greater the chances the more unequal will be the fortune of these two sets of men. So it ought to be, in all justice and right reason. The yearning after equality is the offspring of envy and covetousness, and there is no possible plan for satisfying that yearning which can do aught else than rob A to give to B; consequently all such plans nourish some of the meanest vices of human nature, waste capital, and overthrow civilization. But if we can expand the chances we can count on a general and steady growth of civilization and advancement of society by and through its best members. In the prosecution of these chances we all owe to each other good-will, mutual respect, and mutual guarantees of liberty and security. Beyond this nothing can be affirmed as a duty of one group to another in a free state.” (1)
Notes:
(1) What Social Classes Owe to Each Other, William Graham Sumner, 1883, pages 98 and 99.
Wednesday, January 18, 2012
Buffaloed in Buffalo -or- The Home of The Public Employee Face Lift
Buffalo may be the paradigmatic example of why expensive government revitalization efforts often fail. Back in 2004, the Buffalo News estimated that the city had garnered more federal redevelopment aid per capita than any other city in the country, a total of more than half a billion dollars since the 1970s. Yet, the paper noted, the city had virtually nothing to show for the money.
Officials squandered millions granting loans and subsidies to projects that went bust. There was a proposed trade center near the famed Peace Bridge that was never completed even after the city granted it federally backed loans; a failed shopping plaza on William Street; and several hotels that defaulted on their government loans. Among the past three decades’ failures have been a dozen or so businesses in the theater district—”one of Western New York’s most heavily subsidized stretches of real estate,” said the Buffalo News.”
“But Buffalo also struggles because it remains among the highest-taxed localities in the country. According to Cato Institute scholar Dean Stansel, a Buffalo resident pays 25% more in income taxes than does the average resident in America’s 100 largest metro areas. Buffalo’s 8.75% sales tax, according to the Tax Foundation, is the fifth highest among the country’s 120 cities with more than 200,000 residents. And the property-tax burden in Buffalo and surrounding Erie County ranks in the top 10% nationwide.
These taxes have gone to support a spendthrift local government that nourishes itself at the expense of the private sector. In 2003, then-Gov. George Pataki appointed a financial control board to audit Buffalo’s finances. The Buffalo Fiscal Stability Authority accused city government of financial mismanagement, inadequate oversight, and fragmented record keeping. It detailed numerous wasteful practices in city government, including loading employee contracts with expensive provisions.
The city’s virtually insolvent school district, for example, paid for elective cosmetic surgery for its teachers and other staff. “Buffalo must have the best looking teachers in the country,” says John Faso, a former member of the control board, which lobbied unsuccessfully to have the perk ended. It continues today, to the tune of some $6 million a year.
The city also struggles to cut spending because of expensive state-imposed mandates, including a union-friendly binding arbitration law that results in rich public-employee contracts, and a state law that allows unionized public workers to continue receiving the benefits of a contract—including pay increases—even after the contract has expired. Good luck getting concessions from union leaders in new contract negotiations under such conditions.”
“In the Empire State, the official version of Buffalo’s decline is that the city lost its manufacturing jobs to cheap overseas competitors. But the flight of blue-collar jobs from upstate New York began in the late 1950s when businesses and investment bolted to more competitive American states, not to foreign countries. Today, business executives consistently rank New York one of the least desirable states in which to open or expand a business.” (1)
Read the entire essay, How Stimulus Spending Ruined Buffalo, at either of the following links:
http://online.wsj.com/article/SB10001424052970204409004577156603296740624.html
http://newyorklibertyreport.com/?p=4717
Notes:
(1) How Stimulus Spending Ruined Buffalo, The Wall Street Journal, weekend edition, 01/14-15, 2012, Steven Malanga
Tuesday, January 17, 2012
Regarding the web site Dirty Spending Secrets Dot Com
The web site Dirty Spending Secrets Dot Com is informative, enlightening, as well as entertaining. You'll laugh, you'll cry, you'll kiss your tax dollars goodbye! Link as follows:
http://www.dirtyspendingsecrets.com/
Sunday, January 15, 2012
A Charming Tale of Political Nitwitery and Your Tax Dollar: Neighborhood Stabilization Program (NSP).
There are two
distinct camps of thought regarding the US housing bubble: (a) the government induced
bubble caused by decades of housing market intervention augmented by a cheap
money bubble created by the Federal Reserve 2002-2004, (b) greedy bankers. Regardless of which school
of thought one subscribes to the US housing bubble resulted in a mortgage foreclosures
crisis, resulting in an economic down turn, resulting in millions of lost jobs
and consequentially millions of discouraged workers, with a lingering result of
lost wealth in housing values.
Setting
aside for a moment which school of thought one might subscribe to, congress set
out to mitigate the effects of the now burst bubble and associated cascading consequences
by introducing legislation known as the Housing and Economic Recovery Act
(HERA). Within this particular legislation was a sub component known as the Neighborhood
Stabilization Program (NSP).
The Neighborhood
Stabilization Program was recently studied by The Federal Reserve of Richmond
to find what stabilizing effects the program managed to produce. The title of
the study is: Neighborhood Stabilization –
Putting Policy into Practice. The results? One might want to pay particular
attention to the following which is part of the study’s conclusion:
“….framing
neighborhood stabilization as an emergency relief program posed special
challenges for recipients. Despite its tight deadlines, NSP1 was also
characterized by complex rules and policies, and for indirect recipients, an
additional layer of bureaucracy that stymied quick progress. In addition, the
pressure to obligate funds quickly seems to have forced recipients to choose
the most efficient strategies from the five eligible uses and to change plans
midprogram. As one local government official remarked during our visit, “We
have been so focused on following the NSP1 grant rules and getting the program
up and running that your visit was the first time we have thought about the
broader context of stabilization”. (1)
The
Neighborhood Stabilization Program (NSP), the aim thereof, was to quickly
stabilize a housing market suffering from unprecedented foreclosure rates. That
is to say, the program is politically depicted as causing only positive
externalities with no negative externalities associated. That politicos through
the mechanism of government are quick to point to supposed market based
negative externalities but government based programs are politically framed as
only causing positive externalities. Stated alternatively:
“The point,
rather, is to provide background for asking why the free-rider,
collective-action, externality problems that are regularly identified as
sufficient reason for restricting the role and scope of markets are so seldom
identified as reasons for restricting the role and scope of government”. - Dr. Donald Boudreaux, department of economics
George Mason University (2)
What was
not part of the Federal Reserve of Richmond’s report is a report entitled Chronology:
Neighborhood Stabilization Program, The Modesto Bee, 01/03/2012. One should
take a moment and go to the link below and read the report. It’s a charming
tale of general conflicts of interest, city councilmen and conflict-of-interest-rules,
non-profits with individuals compensated in excess of $400,000, family members
of the participants living in taxpayer renovated structures, exorbitant
spending and extravagant purchases, shoddy workmanship, "egregious
deficiencies", city bureaucrat resignations, the FBI, and HUD's Office of
Inspector General. You’ll laugh, you’ll cry, you’ll kiss your tax dollars
goodbye.
Chronology:
Neighborhood Stabilization Program, The Modesto Bee, 01/03/2012.
Notes:
(1) Community Scope, vol2, Issue 2, 2011, Neighborhood Stabilization - Putting Policy into Practice
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