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Monthly Archives: January 2012

The Economics of Taking and Giving

I often hear, when talking to people about government debt and deficits, that social programs are vital to our society and provide great benefits.  This always gives me pause as I try to break this down in my mind of how exactly government social programs benefit society and what are the costs and benefits.  First, and the most easily recognizable benefit, is that some people receive assistance – food subsidies, healthcare subsidies, housing subsidies, and direct money transfers.  It is good that people who need help can get help, but then I start to brood over how exactly this is accomplished and if they are truly beneficial.

The government can only give what it first must take.  This is the side of social programs people rarely examine in any great detail because the surface level observation is that people are getting help and this makes people feel good.  If the government is to deliver one dollar of assistance, it must first extract that dollar out of the economy.  So how does the government extract money out of the economy and what effects does this have?

Most often, people assume that a dollar can be taken from one person and given to another with a costless mechanism.  That is, there are no costs associated with the gathering, accounting, and delivery of the dollar to be transferred.  According to James R. Edwards, in his essay “The Costs of Public Income Redistribution and Private Charity”…

…public income redistribution agencies are estimated to absorb about two-thirds of each dollar budgeted to them in overhead costs, and in some cases as much as three-quarters of each dollar. Using government data, Robert L. Woodson (1989, p. 63) calculated that, on average, 70 cents of each dollar budgeted for government assistance goes not to the poor, but to the members of the welfare bureaucracy and others serving the poor. Michael Tanner (1996, p. 136 n. 18) cites regional studies supporting this 70/30 split. Read the rest of this entry »

 
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Posted by on January 14, 2012 in Uncategorized

 

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Constitutional Intent Perverted

In 1823 John Taylor (of Caroline) wrote a book titled “New Views of the Constitution of the United States.”  A strange title for a book written so close to the ratification of the US Constitution, I had originally thought, however, after reading the book the title is very appropriate.  The secret journals of the Constitutional Convention were not published until 1821 and it was these journals, in my opinion, that spurred John Taylor into writing this book.

Had the journal of the convention which framed the constitution of the United States, though obscure and incomplete, been published immediately after its ratification, it would have furnished lights towards a true construction, sufficiently clear to have prevented several trespasses upon its principles, and tendencies towards its subversion. Perhaps it may not be yet too late to lay before the publick the important evidence it furnishes.

It was the opinion of John Taylor that the same men who promoted and argued for a consolidated national government during the convention were the same men who, after the ratification, were attempting to interpret and “construct” meanings from the document that were never intended.  His book aimed to do one thing (albeit complicated):

I shall attempt to ascertain the nature of our form of government, and the existence of a project to alter it.   

Prior to the release of the journals, Patrick Henry (who was not present at the Convention of 1787) warned against the consolidation of power and an end to the confederation in 1788 during the Virginia Ratifying Convention:

I am sure they were fully impressed with the necessity of forming a great consolidated Government, instead of a confederation. That this is a consolidated Government is demonstrably clear, and the danger of such a Government, is, to my mind, very striking. I have the highest veneration of those Gentlemen,–but, Sir, give me leave to demand, what right had they to say, We, the People.

It is this view of a consolidated National Government that John Taylor analyzes and exposes in his book.  The new view is that instead of the limited, federal government the Constitution was meant to create, the constructionists “project” was to break down the barriers put in place and expand the powers of the Federal Government into a national consolidated body with power over the several states.  Read the rest of this entry »

 
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Posted by on January 3, 2012 in Uncategorized

 

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