*Gasp*

You mean, GM isn’t in healthy financial shape like the executives would love to have us believe? Color me surprised. We did not save jobs, we did not save a business, we merely leeched money off of productivity to subsidize an unproductive business making lousy products (if the products aren’t lousy, why did the company need a bailout?). The U.S. auto industry has become so bureaucratic and reliant on government it no longer serves the needs and preferences of the individuals. When companies work to please government and not to please people, you have corporatism – NOT a free market.

With legislation pending in Congress that could put a price on greenhouse-gas emissions, the energy-gulping chemical industry is trying to position itself to emerge as an unlikely winner.

Chemical makers are one of the biggest energy users among manufacturers, expelling about 5% of U.S. carbon dioxide emissions, according to government data. They face heavy costs under a proposed system to cap emissions that would require the industry to purchase permits to pollute.

But a so-called cap-and-trade system would also boost demand for some chemical companies’ products, from insulation to solar-panel components, because those products would help others cut back on the energy use.

“This is really our sweet spot,” said Calvin Dooley, chief executive of the American Chemistry Council, an industry trade group.

http://online.wsj.com/article/SB124416259816487393.html

Throughout time, governments have strong tendencies to simultaneously splurge on both domestic spending and the more sinister business of warfare. This is referred to as the “guns versus butter” economic model. “Butter” is synonymous with domestic spending, while “guns” is synonymous with military spending. As with any economic goods or services, there is always scarcity of labor, machines, raw materials, land, et cetera. Individuals find it very easy to understand that if you want to spend 100% of one’s resources on “butter,” no “guns” can be purchased or vice versa; there is always a trade-off.  Steel can be formed into either a refrigerator or a tank; it can not be used for both.

Now, by their very nature, GOVERNMENTS HAVE NOTHING; they must tax, expropriate and leech from either its citizens or tributaries in order to perform any action whatsoever. However, governments have locked onto two monopolies that are the key to their powers. In addition to the monopoly on the use of force, modern governments, through central banking, have monopolized control over the production of money. While, theoretically, governments can create and then spend whatever amount of currency to obtain as much “butter” and “guns” as they wish, practically-speaking they must still obey economic law since scarcity exists.

A suitable example of “guns and butter” economics helped result in America’s economic doldrums of the 1970s. (Note 1) President Lyndon Johnson dreamed of a magnificent welfare state of nirvana he called the “Great Society” that “[rested] on abundance and liberty for all,” “[demanded] an end to poverty and racial injustice,” and “that [was] just the beginning.” New federal spending programs such as Medicare, Medicaid, and the $3 billion dollar unconditional ‘War on Poverty’ of food stamps, Project Head Start, and Neighborhood Youth Corps set record levels of domestic “butter” spending. Meanwhile the expenses of the Vietnam War skyrocketed as 58,159 American troops perished and 303,635 were wounded in foreign jungles as Vietnam, Laos, and Cambodia were famously bombed “back to the Stone Age.”

Back to the present-day. Many of Johnson’s legacies are still inhaling taxpayer funds despite inevitable ruin, such as the $85 trillion in unfunded liabilities of the Medicaid-related programs. Taxpayers still pay annually for the Vietnam War with the interest paid each year on the war debt. Many Americans are aware of the $871+ billion dollars in the new health care tax bill where government will unconstitutionally enact the inevitable rationing and price controls to result in less care with lower quality, as well as devastating the poor households through draconian changes to labor laws.

However, I believe many Americans are unaware of the true size of the America’s warfare state. Some are aware of facts like over 380,000 soldiers stationed in over 761 bases in 150 of the world’s 194 countries.  Congress passed the $680 billion dollar HR 2647 by a lopsided vote of 389-22, which is the LARGEST ARMS BUDGET IN HUMAN HISTORY even as this Orwellian at the NY Times hilariously heralded it as a “victory” over the military-industrial complex. America now spends more on its military than ALL OTHER NATIONS COMBINED. (See below graph and note 2) Keep in mind this figure only includes the Department of Defense’s expenditures, but it is quite obviously that:

• $49.3 billion in the Department of Homeland Security’s FY2010 budget (page 83/344)
• $108.8 billion in the Department of Veterans Affairs’ FY 2010 budget for medical care of veterans (page 83/344)
• $58.9 billion in the Treasury Department’s FY2010 budget for the veterans’ retirement benefits (page 13/47)
• $16.4 billion tucked away in the Department of Energy in 2010 for the nuclear weapons arsenal (page 1/21)

are all unquestionably defense spending. The sum of the above is a jaw-dropping $913.4 billion, but the true figure is undoubtedly way over $1 trillion. In 2006, Dr. Robert Higgs also included portions of the NASA and Department of Justice budgets, the Department of State in his article “The Trillion Dollar Defense Budget is Already Here.” He estimated the 2006 annual net interest paid on federal debt due to past military adventures at over $206 billion.

While these dollar figures are mind-boggling large, just remember that the federal income tax brought in $1.2 trillion in 2008. It should be plainly obvious that with the $1+ trillion military budget, the wasteful $1.1 trillion Stimulus Plan, the reckless $0.8 trillion Banker Bailout, and the new $0.8 trillion health care tax the federal income tax is completely unnecessary, as well as immoral.

Americans must choose between the domestic “butter” of health care or the foreign “guns” of the War of Terror. I have previously explained why the Iraq and Afghanistan Wars should be brought to an immediate conclusion. It is plainly obvious that in the self-interest of our nation, we as a people should choose the “butter,” but as individuals we should decide how best to spend it. Politicians can be quite good at making it sound like government can provide for every last little want you have and take care of everyone from cradle to grave, but how effective is this really?

Welfare states FAIL once they are visibly leeching away wealth like ours does. With or without Vietnam, Johnson’s “Great Society” was a blatant failure.  Or look at the 60-year experiment in war-torn Africa where, year after year, world leaders trip over themselves to proclaim the end of poverty with the World Bank, IMF, and United Nations welfare programs, which were all funded in large part by plundering the wealth of American households.

Individuals making private transactions to increase their standard of living is what makes market economies work. In the last two hundred years of American history, we have seen how mass production for the masses can increase the wealth of our nation, and how free market principles favors all of society, not just the elite few as the government has shoved in before our faces with the open thievery of the Federal Reserve, the blatant corporatism and bailouts, and a corrupt two-headed, one-party system of Republicans and Democrats both.

We must remember that it is usually the prosperous who choose, of their own free will, how best to help the poor.

We must remember that it was Clara Barton and a group of fellow Americans who founded the Red Cross and Red Crescent…. NOT THE GOVERNMENT.

It is the 400,000 present-day Shriners nationwide who have provided free medical care to nearly a million children and fund 22 Shriners Hospitals for Children…. NOT THE GOVERNMENT.

It was a self-made millionaire from Alabama, Millard Fuller, who founded Habitat for Humanity International and helped provide 1.75 million people with safe, decent, and affordable homes. He did this without government assistance.

Andrew Carnegie, who became enormously wealthy by pioneering the efficient mass production of steel for everyone at Pittsburgh’s Carnegie Steel Company, founded over 2,509 libraries.  You don’t hear of the 2,053 central bank employees at the Federal Reserve starting too many libraries with their average salary of $256,502 – though some individuals may indeed give to charity, these people are PAID to steal the people’s wealth by counterfeiting money.  [Not that I want any of them polluting our minds by stocking library shelves with economic baloney!!]

When I am elected Congressman this year, I have promised to only accept the median household income and will donate the remainder to local non-profit hospitals. To get elected, all that’s needed is the determined efforts of a few individuals who also realize just how dear, how rare, and how precious our liberties really are.

I will write in more detail in the coming year, but please understand that my proposals are aimed at first slashing military and war expenditures along with unnecessary federal government functions that provide no social benefits whatsoever. While I maintain that the vision should be an America without a government-sponsored welfare state, social safety nets would be the very last programs to be eliminated – this will take a few decades provided a dollar collapse can be averted – and the only rational way to do this are gradual phase-outs.  However, expanding the welfare state is out of the question. Constant prosperity through the credit of a welfare state is no more possible than constant peace through heroin injections.

My best wishes for peace, prosperity and freedom in 2010,

Jake Towne, the Champion of the Constitution

Note 1: For the sake of simplicity, please understand I do not mean to insinuate that “guns and butter” was solely responsible for this era. Certainly the collapse of the London Gold Pool in 1968 and the resulting breakdown of the post-WWII monetary system played a role, and the rather insightful commentary on the gold-oil-dollar relationship by the anonymous FOFOA played a major role as well.

Note 2: The figure used for America is $680 billion, the Department of Defense approved spending per HR 2647, which has been signed into law.  The figures used for all other countries are 2008 – the latest available year – and the source is here from the Stockholm International Peace Research Institute, or SIPRI.

Jake Towne is running for U.S. Congress in eastern Pennsylvania’s 15th district in 2010. Prior to returning home, he had been living in Shanghai as an engineer in the semiconductor industry for over 3 years. As part of defending liberty and championing the Constitution, Towne is offering the citizens in his area a novel form of accountable government called “Our Open Office.”

Profit represents the reward for taking a risk. You wouldn’t start a business if you knew you weren’t going to make more than you would spend creating that business, would you? However, if you can increase your income more than your expenditures through that business, you’ll feel much more inclined to continue with the operation. Obviously, people cannot survive operating a business at a loss.

Profits do not come without work and risk. It is only possible to make a profit if you can offer a product or a service that people want, in an efficient manner. No matter how greedy you may be, in a free market you cannot survive without efficiently producing a product that has market demand. You cannot force people to work for you, you cannot force people to invest in your business, and you cannot force people to purchase your product. Your greed is limited to free and voluntary exchange.

Profits have been especially dissed when it comes to health care. It is easy to blame the insurance corporations and many missteps that the current system carries, but people fail to realize that it has been government intervention into the market that has increased prices and decreased accessibility. The more that government regulates, controls, and manipulates health care, the less access individuals will have to health care because of the higher costs.

The Kefauver Harris Amendment of 1962 was added on to the Federal Food, Drug and Cosmetic Act of 1938, providing the FDA with greatly expanded regulatory powers, including the ability to deny approval of drugs that they felt weren’t fully effective. The FDA’s regulatory process to bring new drugs into the market is very costly in terms of money and time, making it exceedingly difficult for businesses other than large pharmaceutical corporations to survive in the drug market. Dr. Mary J. Ruwart estimates that no less than 50% of new drugs have been blocked from the market due to this process.

Because of the 1962 amendments, the FDA can determine and change the requirements to bring new drugs from the laboratory and into the marketplace. In 1962, the development phase of drugs took approximately 4.5 years. A good amount of time for a business to invest money in a product that might never get the chance to sell on the market, right? Today the development time is 15 years. With such brutal development and marketing procedures for drugs, it should be no surprise that drug prices are rising. These regulatory proceedings limit the supply of new drugs, raise the price of existing drugs, and limit patient access overall to drugs. In other words, the demand for these drugs does not disappear, but the supply is often heavily limited. Thus, prices go up.

With the drug market essentially limited to the few businesses who can afford to comply with the expensive FDA regulations, competition has taken a beating. Drugs often represent a more affordable method for prevention, treatment, and a general tool to lower medical costs. However, the FDA has so greatly limited potentially life-saving drugs that medical costs continue to rapidly expand.

If it was the patients, not central bureaucrats, who worked with their doctors to decide whether or not certain drugs were logical for their own situation, competition in the drug industry would flourish, prices would fall, and accessibility would increase. We need to understand that government intervention comes with a price by benefiting larger corporations and limiting the competitive ability of smaller businesses.

I am not discounting the effects of greed and the want/need for profits that is inherent in some individuals. But the answer to these problems is not more government intervention or centralization of the markets. The trouble that we face in health care and many other industries is precisely too little competition, a trend that government has consistently worsened. Just look at the drug market: it has become such a bureaucratized process that it ends up helping the larger corporations, hurting small businesses, and pinching the consumer in terms of choice and cost.

The power of the individual is the power of choice: the ability to choose your own insurance plan (without being forced into an employer or government option), and to choose which drugs and medical treatment make sense to you, not to federal bureaucrats. The more power that you transfer from the individual to the government, the more you will see lobbyist activity, corporatism, and inefficiency increase. We are constantly trying to force a one-size-fits-all system on the country (whether it be HMOs or “public options”), neglecting the fact that we are all very unique as individuals and might have better ideas for ourselves, even if politicians turn “bipartisan” to force legislation on the people.

The key point is that demonizing profits in support of a government plan completely misses the underlying problem: limited competition. You do not need government to encourage competition; you need freedom of the individual, freedom of choice, and freedom of competition to create a prosperous, healthy, and accessible market.

It is amusing that so many people are hopping on the bandwagon that government operating at a loss is somehow nobler than for-profit businesses. The whole reason that government can operate at a loss is because it borrows from foreign nations, prints and devalues the currency, and forcefully taxes private productivity. As much as people would like to believe it, government cannot defy the laws of economics and common sense over the long run. They may be able to operate Medicare, Medicaid, and countless other programs with trillion dollar deficits for a time, but it will come crashing down just as it would for any irresponsible business that chooses to spend more money on unprofitable activities.

We need not look any further than the drug industry to see how disastrous a powerful, unelected, and centralized bureaucracy can be. The FDA has powers intended to help the people, but its very policies to help people have likely caused far more deaths and suffering by preventing and limiting new drugs, raising the price of current drugs, and decreasing accessibility to drugs because of the higher prices.

True, revolutionary, and sustainable change can only come through the individual. Profits themselves are not the problem; discouraging competition for those profits is the problem. Government provides a de facto monopoly to large corporations when it gets as involved as the FDA in private affairs, laying the foundation for a system that can never fully serve the individual. For full individual service, the individual must be in full control.