Tim Hortons and Lessons in Government Inefficiency

LvMIC:

Tim Hortons is Canada’s largest fast food chain.  It has over 3,000 stores across the country; twice the number of McDonald’s.  The multi-million dollar brand is most famous for its donuts and coffee.  With such popularity and profitability, it would seem that investment in the Tim Hortons franchise almost guarantees financial success.   Building a brand which consumers trust takes time.  Customer preference can change instantaneously.  The entrepreneur’s job is to predict unpredictable behavior.  Whether he is correct is measured in the profit he earns by satisfying purchasers of his offered goods.  The myth that the average consumer is blindly duped into buying whatever predatory advertisers decide is the new “it” product is a deceitful conception peddled by enemies of the free market.  As Murray Rothbard points out,

For if, by advertising, business production automatically creates its own consumer demand, there would be no need whatever for market research—and no worry about bankruptcy either. In fact, far from the consumer in an affluent society being more of a “slave” to the business firm, the truth is precisely the opposite: for as living standards rise above subsistence, the consumer gets more particular and choosy about what he buys.

Tim Hortons has earned its favorable reputation by satisfying consumers for decades.  Otherwise it would not have grown into the dominant restaurant chain Canadians see today.  It is estimated that, on average, the owner of a Tim Hortons franchise makes $265,000 in profit.  So when the National Post reported that a specific franchise in Newfoundland found itself in the red by $260,000 last year, it would seem that something else was amiss besides inept management.  According to NP, the failure to turn a profit didn’t have to do with individual managers but the fact that this specific franchise was staffed by public employees.

When the Tim Hortons at Newfoundland’s Health Sciences Centre opened in 1995, the hospital’s administrator predicted the shop would turn an annual profit of up to $300,000 and pay for seven nurses — or 11 support staff, or maybe even pay for the increase in chemotherapy drugs for cancer patients.

Instead, the coffee shop at the St. John’s hospital lost about $260,000 last year, offering what critics say is a cautionary tale of what can happen when the public sector gets involved in things better done by private enterprise.

According to the President and CEO of Tim Hortons, Vicki Kaminski, the staff who pour coffee and serve food within the franchise are unionized public employees who are paid $28 an hour.  “No Tim Hortons pays that,” says Kaminksi.  The Eastern Health authority which runs the Health Sciences Centre is losing $1.2 million annually on dietary services.  With Canada’s government-administered health care system, that means taxpayers are on the hook to make up for the loss.

Over in Ontario, the three Tim Hortons within Windsor Regional Hospital are losing $265,000 a year.  This is because the employees are paid “nearly triple what the average coffee server makes” according to CBC News.  Food services overall see a $600,000 loss at the hospital.  Again, taxpayers are forced into paying for the shortfall.

This money losing fiasco is illustrative of why the state, unlike the private sector, is unable to economize effectively.  When private business has no choice but to appease willful consumers in order to be profitable, it must control costs in such a way that it can remain operational.  Any experienced losses are borne by the owners, shareholders, and subsequently the employees who expect a steadily reoccurring paycheck.  In short, a private company’s livelihood depends on its income covering its costs.  For those businesses that find themselves unprofitable, bankruptcy occurs and assets are sold off to aspiring entrepreneurs who hope to be better stewards of the newly acquired capital.  This recycling of resources results in the most effective producers prevailing over the inefficient ones in the long run.

What governments lack in comparison with the private sector is not only the monetary incentive to earn a profit but the flexibility in meeting the capricious demands of the fickle consumer.  Those firms more in tune to the changing conditions of the market are in a better position to adapt and direct production towards what will yield a profit.  The state, in being an abominable bureaucracy, will tend to always fall prey to its own static operational style.  As goes Gary North’s comical yet accurate Law of Bureaucracy:

“There is no government regulation, no matter how plausible it initially appears, that will not eventually be applied by some bureaucrat in a way that defies common sense.”

North’s Law is on full display in the case of the various unprofitable Tim Hortons.  Even though the three restaurants are losing massive amounts of money each year within the Windsor Regional Hospital, the chair of the union which represents its workers is unwilling to budge on wage concessions.

CAW Local 2458 chair Ken Durocher, who represents over 450 service workers at Windsor Regional, said his union lost a few jobs in the past, but never experienced wage concessions.

“We wouldn’t accept a lower wage just to keep the cafeteria open,” Durocher said.

Instead, he said cutting the hours of the cafeteria’s operation would be a better option.

The motto of every union leader, especially those in the public sector, is always “never cut pay, never cut benefits, the public be damned!”  Windsor CEO David Musyj has admitted “the hospital will likely continue to lose money” as he is bound to abide by the collective bargaining agreement.  This government enforced contract of subservience all but ensures taxpayers will remain targets for continued shakedowns to pay for the above-market pay and benefits of unionized employees.

So while Canadians are burdened with enduring increasing costs and reduced quality of state-run health care, they are also coerced into paying extravagant wages for unionized coffee pourers.  Politicians keep buying votes.  Unions get their overpriced perks.  Joe Public has the jackboot of government extortion pressed ever more firmly against his throat.

Obama's Despotism and Kill List

LvMIC:

Imagine the following situation:  a brutal dictator of some Middle Eastern country has devised a type of hit list on which he is able to place individuals who are to be assassinated on the government’s dime.  There is no due process given to whatever victim is chosen with the assistance of a few politically chosen advisers.  The target is unable to appeal his death warrant.  Not only can this privilege of unchallenged execution be carried out domestically but all around the world. With one word, this oppressor quite literally holds millions of lives in his hand.

In our present day, would such vile and crude discretion over human life go unchallenged by busybody international bureaucracies like the United Nations?  Would not the U.S. government, always on the unrelenting hunt for imaginary hobgoblins used to justify gargantuan defense spending, denounce such evil and pledge to eradicate it through awesome displays of force?

In Syria, President Bashar al-Assad has been violently clamping down government protestors and his regime stands accused of killing thousands of civilians.  Before a ceasefire was adopted between rebel forces and the Assad government back in April (the recent Houla massacre did away with that), Secretary of State Hillary Clinton described the Syrian President as a “war criminal.”  When Washington aided in the overthrowing of Libyan leader Muamar Gaddafi, President Obama announced victory by declaring “one of the world’s longest-serving dictators is no more.”  And who could forget when George W. Bush stated on the eve of the invasion of Iraq,

Unlike Saddam Hussein, we believe the Iraqi people are deserving and capable of human liberty. And when the dictator has departed, they can set an example to all the Middle East of a vital and peaceful and self-governing nation.

Indeed, Middle East dictators like Hussein, Assad, and Gaddafi committed plenty of atrocities.  They will find their due justice somewhere in the after life.  The real question is whether the United States government has the moral imperative to intervene in such affairs given its own conduct.  When the President or gung-ho Congressmen go in front of the television camera and denounce the heinous killings conducted by tyrants, are they not guilty of the same atrociousness?  One of the successes of the War on Perpetual Terror has been the still-widely believed fictive that the U.S. government wages war in a much more humane and “rights” sensitive manner than its enemies.  Instead, the last decade has seen such a rise in the unchecked authority of the Chief Executive that the office is hardy indistinguishable from that of the dictators it supposedly stands in opposition to.

Today in the New York Times, some details behind the President’s secret “kill list” were finally revealed.  In what can be construed as a blatant effort to appear “tough on terrorism” in an election year, Obama has crowned himself the sole decider in the determination process for who is placed on the list of future assassinations.

Mr. Obama has placed himself at the helm of a top secret “nominations” process to designate terrorists for kill or capture, of which the capture part has become largely theoretical. He had vowed to align the fight against Al Qaeda with American values; the chart, introducing people whose deaths he might soon be asked to order, underscored just what a moral and legal conundrum this could be.

“He is determined that he will make these decisions about how far and wide these operations will go,” said Thomas E. Donilon, his national security adviser. “His view is that he’s responsible for the position of the United States in the world.” He added, “He’s determined to keep the tether pretty short.”

Authoritarians traditionally coerce those unfortunate enough to reside within the national borders of the dictatorship.  Only in some instances, usually involving border states, must they fear the leader of another country.  But not in America; not in today’s context of ever-present threats.  The U.S. President now has the assumed authority to order the killing of suspected terrorists in sovereign nations halfway across the globe.  In essence, the office of the President is now the world’s foremost dictatorship.  Every human being on the planet can be put to death upon the approval of just this one man.

Even more disturbing is the incredibly loose criterion used to judge if someone is suspected terrorist.  From the NYT article:

It in effect counts all military-age males in a strike zone as combatants, according to several administration officials, unless there is explicit intelligence posthumously proving them innocent.

Counterterrorism officials insist this approach is one of simple logic: people in an area of known terrorist activity, or found with a top Qaeda operative, are probably up to no good. “Al Qaeda is an insular, paranoid organization — innocent neighbors don’t hitchhike rides in the back of trucks headed for the border with guns and bombs,” said one official, who requested anonymity to speak about what is still a classified program.

Just from guilty by association, someone can find themselves on the end of CIA drone strike.  This disgustingly loose standard for rendering what is an unquestionable death sentence has resulted in hundreds of civilian deaths in Pakistan alone; including 168 children.  There are few estimates for civilian deaths in Yemen or Somalia caused by drone strikes.  The CIA and top administration officials claim that “collateral damage,” the Orwellian term for unintended murder, is actually quite low.  This presumption is doubted by experts however as the article explains:

This counting method may partly explain the official claims of extraordinarily low collateral deaths. In a speech last year Mr. Brennan, Mr. Obama’s trusted adviser, said that not a single noncombatant had been killed in a year of strikes. And in a recent interview, a senior administration official said that the number of civilians killed in drone strikes in Pakistan under Mr. Obama was in the “single digits” — and that independent counts of scores or hundreds of civilian deaths unwittingly draw on false propaganda claims by militants.

But in interviews, three former senior intelligence officials expressed disbelief that the number could be so low. The C.I.A. accounting has so troubled some administration officials outside the agency that they have brought their concerns to the White House. One called it “guilt by association” that has led to “deceptive” estimates of civilian casualties.

“It bothers me when they say there were seven guys, so they must all be militants,” the official said. “They count the corpses and they’re not really sure who they are.”

The NYT article is just a glimpse into the imperial, nontransparent, and frankly immoral methods by which the U.S. government now conducts war.  Due process is a relic of the past.  Little to no regard is given to those placed on the President’s “kill” list.  There is little effort made to even determine if “suspected militants” are indeed militants after they are slaughtered by unmanned drones.   After a century and a half long crusade, the United States President finds himself in a position to unilaterally render final judgment to anyone on Earth without repercussion.  If that isn’t uncontrolled despotism, nothing is.

And yet none of these humanity crushing efforts will actually keep the country safe in the end.  The constant bombing and killing of innocents only stokes the flames of hatred toward the U.S.  As Glenn Greenwald observes in regard to the twisted logic behind American foreign policy:

we have to keep doing things we know will result in large-scale civilian deaths in order to stop the Terrorists, who are really terrible because they keep killing civilians.

War will always be a means for the state to ultimately usurp more power and wealth from the population.  The patriotism invoked by campaigns for blood eases up the normal reluctance many have toward increased government pilfering.  As long as public officials can convince the citizenry they are fighting to keep “the people” secure, the feebleminded will happily pay more taxes and suffer from the inflationary rising of prices.  Their loyalty to the state makes them the perfect mules to be worked till exhaustion.  Murray Rothbard was absolutely correct when he described the true nature of war:

In other words, if let’s say, Paraguay and Brazil are going to get into a war, each State – the Paraguayan government and the Brazilian government – is able to convince their own subjects that the other government is out to get them and loot them and murder them in their beds and so forth, so they are able to induce their own hapless subjects to fight against the other State, whereas in actual practice, of course, it is the States that have the quarrel, not the people. The people are outside the quarrels of the State and yet the State is able to generate this patriotic mass war hysteria and to call everybody up to the colors physically and spiritually and economically and therefore, of course, aggrandize State power permanently.

Manufactured fear and apathy toward the rights of others have allowed the Office of the Presidency to become the judge, jury, and executioner to all the world.  For those who mistakenly believed in the state as the enforcer of goodness and decency, they only need to blame themselves.

Barry Ritholtz Mistaken on FDIC

Does the banking industry operate under the confines of genuine capitalism?

For the contemporary leftist thinker, the financial crisis was caused by the imprudence and recklessness of Wall Street.  The lack of government regulation over such instruments as subprime mortgages allowed the Street’s greedy ambitions to run amok.  The casino-like risky lending which dominated the industry’s operations culminated in the worst economic downturn in nearly a century.  Taxpayers were then forced to pony up for Wall Street’s despicable gluttony for immense riches.  Hence the need for all-knowing, all-powerful government regulators untainted by political biases to police the sector.

Or so the popular narrative goes.  There is no doubt the “greed is good” mentality afflicted Wall Street during the run-up to September 2008.  The same train of thought drives not just financial wheel-dealing but all economic transactions at every point in time.  It is in man’s nature to act with purpose.  What leftist egalitarians and fairness fighters call greed is simply men, regardless of economic standing, attempting to achieve their subjectively desired ends.  In the proper understanding of free markets, voluntary transactions are necessarily a positive sum game.  Exploitation occurs only when coercion or fraud is employed; that is when government violently interrupts the market process by erecting barriers to entry and delegating how business should run.

And exploitation is precisely what modern banking is about.  At few points during the history of the United States was banking totally unregulated by either state or the federal government.  Inflationary credit expansion, laws forbidding branch banking, and legal tender laws all contributed to financial panics throughout the 19^th century.  It was the government’s intervention with laws such as the National Bank Acts that created the conditions for expanding the overall money supply beyond the accumulated supply of gold.  This environment all but ensured the legal right would be granted to banks which would allow them to renege on “their contractual obligations in times of difficulty by the legal suspensions of cash payments to their depositors and note-holders” according to economist Joseph Salerno. With the emergence of the Federal Reserve as a “lender of last resort,” moral hazard was firmly implanted into the psyche of the banking industry.

Acclaimed financial blogger Barry Rithotlz recently discovered (or at least outright acknowledged) that modern day banking is completely removed from an industry operating under private gains and losses.  In an effort to squash the threat of “too big to fail” banks once again bringing down the global economy, the purveyor of the Big Picture blog penned a fictional letter where the chairman of the Federal Deposit Insurance Corporation informs an anonymous banker as to newly adopted operating restrictions set forth by the bureaucracy:

Following the most recent bank failures, the Federal Deposit Insurance Capital Reserves have fallen to perilously low levels. This pool of capital is the guarantor of public monies deposited in demand accounts in the actual bank divisions of your firm. We cannot sit idly by while this becomes exhausted due to your speculations, thus putting taxpayers monies at great risk. Nor can we assume unlimited liability in guaranteeing deposits at firms that were once depository banks but now have morphed into giant derivative trading casinos with potential liabilities measured in the trillions of dollars.

Therefore, as chairman of the FDIC, with the full support of my Board of Governors, we have decided upon the following changes:

1. Effectively immediately, we have increased the FDIC deposit insurance for any US bank that engages in ANY trading of derivatives or underwriting securities or other investment banking activities by threefold. This 3X fee increase goes into effect immediately. It applies regardless whether these trades are hedges for proprietary trades or are made on behalf of clients.

2. Effective in 90 days, we are LOWERING the insured maximum insured deposit liability to $100,000 per account for derivative trading firms. Effective in 180 days, the insured maximum insured deposit liability drops to  $50,000 per account.

3. Effective in 1 year from today, on May 23, 2016, we will no longer offer deposit insurance for any firm that engages in derivative trading, underwriting securities or engages in Investment banking.

4. Any bank with fewer than 10,000 depositors or less than $5 billion in assets may apply for a discretionary waiver of these rules.

Sure enough, the measures Ritholtz is in favor of would help alleviate Joe Taxpayer’s burden in being forcefully compelled into providing universal deposit insurance.  But for someone who wrote the indispensable “Bailout Nation,” it’s disappointing to see Rithotlz propose the solution he does.  Instead of finally getting rid of the absurd notion of “too big to fail,” he favors maintaining one of the bureaucracies most at fault for incentivizing excessive risk in the financial sector.  He misses the root of the problem while advocating the continuation of keeping taxpayer money at risk to cover the failed investment decisions of others. Tinkering around with FDIC rules doesn’t fix what over a century of government enabled fractional reserve banking created.

Empirically, Rithotlz is correct that a lower threshold of coverage for deposit insurance may actually promote stability in the banking sector.  As economist Kam Hon Chu points out in a recent Cato Journal article:

Therefore, the assertion that higher deposit insurance coverage can induce a more stable banking system might still be empirically valid. Yet a further examination of the data indicates that the opposite is actually the case in reality. Deposit insurance schemes with low coverage actually had fewer banking crises in terms of both absolute number and proportion — only one systemic crisis among 22 countries. This country is South Korea, which suffered a systemic crisis during 1997–2002 as a result of the Asian currency crisis. In contrast, schemes with high coverage had the highest numbers of banking crises: three non-systemic and six systemic. In terms of proportion, the seven schemes with full coverage had the worst performance. Three or nearly half of them registered systemic banking crises.”

Empirical evidence doesn’t always prove causation in the science of economics however.  Since man is free to choose, isolated cases don’t translate into what would happen in every future instance.  Trends can be observed and interpreted by understanding that man acts purposefully and will react to incentives.  Since markets have internalized checks which enable them to regulate and encourage those firms or entrepreneurs which satisfy consumers the most, banks operating in open competition would be forced to rely on an established record of business to attract patrons.  Rithotlz actually recognizes this in the closing to the letter:

As a bonus, without the intervention of government guarantees, those of you who continue to have depositors will finally be able to compete in a free and open market. Without FDIC insurance, your depositors will be making their decisions based on your reputation, and their assessment of the safety and security of your operations — and not Uncle Sam’s willingness to continually bail you out.

What he fails to do is take the implications of dynamic, unfettered competition and apply it wholly to the banking sector.  If McDonald’s and Burger King must produce tasty fast-food to draw consumers away from each other, banks also have to operate under the same conditions in that they have to convince potential customers that their money is safe within their proverbial vaults.  Not only does this competition limit the amount of un-backed credit expansion which threatens the solvency of banks, it serves as a disincentive to not engage in highly leveraged investing for fear of losing depositors who perceive their money to be at greater risk.

These market-produced checks and balances don’t exist anymore within the context of today’s central banking system and government guarantees of deposits.  What has happened is that bankers have been assured that their reckless speculations are protected to a certain degree.  High risk, high profit investments now appear more attractive when the potential downside is cushioned by the pledge of stolen income.  The Federal Reserve exacerbates this immoral state of affairs with its monopoly over the printing press.

And as Frank Shostak aptly recognizes,

By means of monetary policy, which is also termed the reserve management of the banking system, the central bank permits the existence of fractional-reserve banking and thus the creation of money out of thin air.

The modern banking system can be seen as one huge monopoly bank that is guided and coordinated by the central bank. Banks in this framework can be regarded as “branches” of the central bank.

The existences of the Federal Reserve in itself means that all banks are functionally under the tutelage of government-enforced regulation.  It has been this way since 1913.  The purpose of the Fed was always to serve as a backstop for credit creation out of thin air.  Its formation had no angelic intent behind it.  Scheming bankers and their political enablers sought out a “lender of last resort” to cartelize the industry against competitors and also to ensure a steady flow of income directed toward government bonds.  The banks got their implicit bailout guarantee.  The federal government got its backdoor printing press.  The general population was gifted with being forced to use dollars that have lost 97% of their purchasing power since the Fed opened its doors.

The FDIC’s deposit insurance will always serve as another incentive for banks to expand credit and take riskier positions.  The solution isn’t for the bureaucrats in charge to come up with new operating rules and “be more conservative in our risk management and assumptions,” it is to finally do away with the implied socialization of losses.  The fact that taxpayer funds were put at risk to aid the speculative errors of a politically favored industry is demonstrative of the insidious nature of state intrusion into the market.  Forced deposit insurance is of little benefit of the taxpayer.  It gives the public a mirage of security when it is of full benefit to the banking class that maintains better access to pools of capital from which to pyramid credit creation.  When it all comes crashing down as boom inevitably turns to bust, as it did in the financial crisis, taxpayers are thrown under the bus in favor of Wall Street.

In short, government deposit insurance, like central banking, is a racket.  The state specializes in fooling the masses into believing themselves protected from all the great insecurities of life.  The reality is that they are viewed as empty vessels from which to siphon off as much wealth and resources as possible to enrich public officials and their benefactors.

It’s a shame Rithotlz, for all his valuable insights, still buys into the fable of “good government.”

Washington D.C.’s High Life Leeches

LvMIC:

The Associate Press recently reported that half of all new college graduates are either unemployed or underemployed.  These fresh faced Bachelor degree holders are finding themselves opting for waiting tables and serving coffee just to pay off a trillion dollars in student loans.  They are coming to grips with a lie perpetuated by university professors, faculty unions, and politicians that deluded them into thinking college by itself was the golden ticket to success.

Meanwhile, the rest of America is still muddling through years of high unemployment.  The jobs connected to Alan Greenspan’s housing bubble are gone and will likely never return.  Federal Reserve chairman Ben Bernanke met the financial crisis with an unprecedented amount of monetary base expansion which has failed to significantly affect the unemployment rate.  President Obama and his allies in Congress threw $800 billion at the economy to no avail and have been running federal deficits to the tune of over $1 trillion for three years now.  This orgy of money printing and spending has done little for the residents of Main Street but has done wonders for Wall Street and other politically connected interests.

Last fall’s Occupy campaign was representative of a growing distrust of the American economic system.  Although many occupiers were mislead into believing capitalism is the culprit behind the sluggish economy, the protest’s focus on income inequality was not wholly inaccurate.  Of course the inequality in income that is a byproduct of an unhampered market economy is not something to demonize.  As Ludwig von Mises wrote in Economic Freedom and Interventionism:

Inequality of wealth and incomes is an essential feature of the market economy. It is the implement that makes the consumers supreme in giving them the power to force all those engaged in production to comply with their orders. It forces all those engaged in production to the utmost exertion in the service of the consumers. It makes competition work. He who best serves the consumers profits most and accumulates riches.

Today, no Western, industrialized country operates under genuine capitalism.  What passes for the free market in the context of mainstream political debate is actually a fascist like partnership between big government and big business.  The dynamic, cost-cutting competition which defines the uninhibited market has been stifled by Washington’s endless decrees of regulation.

As Leviathan’s grasp over all economic life continues to grow, it only makes sense that greater amounts of wealth funnel into the area which surrounds the various bureaucracies and decision making bodies that make up the state.  This past October Bloomberg News reported that Washington D.C. now tops Silicon Valley as the richest metropolitan area in the country.  In a recent Time Magazine article entitled “Bubble on the Potomac,” author Andrew Ferguson documents the lifestyles of those within or well-connected to the federal government apparatus.

Even as the nation struggles, the capital has prospered, making it a magnet for young hipsters but leaving its residents with only a tentative understanding of how the rest of the country lives.

Every week brings fresh evidence of continuing prosperity: a new restaurant, a new nightclub, another restored 19th century townhouse in a previously dodgy neighborhood selling for $1 million or more. Start-ups are hiring through Craigs­list, and just opened lobbying firms have no trouble collaring clients.

Other big cities, of course, have made it through the recession in one piece. But few eased through the crash as lightly as D.C., much less prospered so widely on the rebound. The local unemployment rate, at 5.5%, stands well below the national figure of 8.2%. The region’s foreclosure rates have always been significantly lower than those elsewhere, and now housing prices in D.C. and across the river in the Virginia suburbs of Arlington and ­Alexandria are close to their precrash peaks.

While Washington’s palette of policy prescriptions becomes more diversified, more and more feeders are flooding to the public trough to get a share of the pie.  Trillions of tax dollars being spent every year means a better chance to obtain that much needed earmark or appropriation.  The political class’s inclination to create a perfect society has resulted in the state having an influence in virtually all aspects of private life.  The car you drive, the food you eat, and the pillow you lay your head down on to sleep at night all have to comply within the legislative whims of the federal government.  Lobbying has thus become a lucrative profession for those savvy enough, and well financed enough, to pay for that subsidy or competitor crushing regulation.  Just as F.A. Hayek recognized “the worst rise to the top of government,” centers of power attract all types of opportunists.

Though lobbying for privilege has become a staple industry amongst the D.C. area, it isn’t the sector experiencing the biggest growth in employment.  Ferguson explains:

Why the boom? The size of the nonmilitary, nonpostal federal workforce has stayed relatively stable since the 1960s. What has changed is not the government payroll but the number of government contractors. It’s estimated that, thanks to massive outsourcing over the past 20 years by the Clinton and Bush administrations, there are two government contractors for every worker directly employed by the government. Federal contracting is the region’s great growth industry. A government contractor can even hire contractors for help in getting more government contracts. You could call those guys ­government-contract contractors.

Which means government hasn’t shrunk; it’s just changed clothes (and pretty nice clothes they are).

In order to project the image of a scant increase in the number of federal government employees, a type of shadow economy of contractors has developed to deceive the public’s eye.  These contractors are nonetheless employees of the state despite not being on the official payroll.  Their income is derived from stolen funds just as much as the budget analyst at any of the alphabet soup bureaucracies.  The so-called private companies they work for do the bidding of the state at what is often an exorbitant price compared to what may prevail under free market conditions.  Government contractors are merely deceptive when describing themselves as private, for-profit companies.  They are de facto agents of the state.

With all the money culminating in the Washington area, the city and its surrounding suburbs are indeed a world apart from the rest of the country.  As the Time article shows, while regulatory uncertainty and the threat of increased taxation continue to stifle entrepreneurial capital investment, D.C. residents often help themselves to $150 meals, a taxpayer subsidized metro system, and a variety of bars serving over-priced drinks.  Armed with “fistfuls of disposable income,” they live in paradise compared to recession-wrecked America.

This disconnect in lifestyle is understandable when considering the anatomy of the state.  As Murray Rothbard defines it,

Social power is man’s power over nature, his cooperative transformation of nature’s resources and insight into nature’s laws, for the benefit of all participating individuals. Social power is the power over nature, the living standards achieved by men in mutual exchange. State power, as we have seen, is the coercive and parasitic seizure of this production– a draining of the fruits of society for the benefit of nonproductive (actually antiproductive) rulers. While social power is over nature, State power is power over man.

By being infused with the central state, much of Washington D.C. lives parasitically off of the collective labor of the rest of the country.  Their standard of living comes at the expense of those who they lord over.  The ruling class establishes the rules of conduct for millions despite being made up of just a very small portion of the population.  In return, it demands and receives compensation which is then funneled to the politically connected.  This stream of violently confiscated funds is the lifeblood of the city.

To drive this point home, it must be emphasized that those on the payroll of the state don’t actually pay taxes.  As Rothbard points out, the notion that they do is “a mere accounting fiction.”  Claiming a government employee pays taxes is the equivalent of claiming they pay their own salary.

In the end, the people of Washington have little desire to have their lavish way of life fall by the wayside.  Their goal is to keep the nation’s focus on the government’s operations.  This guarantees more power, prestige, and authority for a city overrun by men and women who take pride in their lawful ability to wage war abroad and at home.  As long as the federal government remains an overarching factor in everyday life, it will attract a great deal of wealthy interests looking to the game the system in their favor.

The D.C. mindset is fixated on the idea that such a state of affairs can last forever.  Yet much of the younger crowd that resides in the nation’s capital still doesn’t see the writing on the wall.  Ferguson ends the article explaining why:

The optimism of über-Washingtonians so far survives the unspoken worry about a coming age of austerity, in which government spending cuts would end the high life that Washingtonians have come to expect. They are right to be optimistic. The two most plausible deficit-reduction proposals—one by President Obama, the other by the Republican-controlled House Budget Committee—each calls for the government in 2021 to spend a trillion dollars more than it spends today.

Those living off the state are convinced the good times won’t come to an end.  Trillion dollar deficits beg to differ however.  The day will come when either investors demand higher interest rates for government bonds or prices pick up exponentially due to the extraordinary amount of inflation engineered by the Fed.  Either way, Washington will then have no choice but to cut back or risk the complete destruction of the dollar.  It will be a period of reckoning like no other.  As Tom Woods writes in “Rollback: Repealing Big Government Before the Coming Fiscal Collapse,” it is estimated that the federal government’s unfunded liabilities comes in at around $111 trillion.  According to Professor Laurence J. Kotlikoff, the unfunded liability gap actually exceeds $211 trillion.  Such staggering numbers mean a great default is coming.  It’s only a matter of who the losers will be.

For a country that is forced into subsidizing the profligate living habits of the state and its partners in crime, the only justifiable outcome is for the latter to suffer.

For every government employee or contractor relieved of service in Washington D.C. and elsewhere, one or more taxpayers will be relieved of the burden of paying their salary.  When such an event happens en masse, it will truly be a time of celebration for America as a whole.

The Taxpayer Funded PR Campaign for Obamacare Begins

LvMIC:

Only in public schools and universities is the fairly tale still taught that governments are representative of the people.  The blue collared man on the street realizes the chips are stacked against him.  For those who don’t have political connections, the pseudo fascist system that is still referred to as “capitalism” in the U.S. is akin to a casino game of chance.  That is, the odds are always in the house’s favor.  The house is the federal leviathan and its equivalent at the state and local level as well as the big, cartelized industries which feed off government protection.  As comedian George Carlin accurately observed:

It’s a big club and you ain’t in it!

Even the catalyst for the American Revolution, the Boston Tea Party, was not a grand political statement on the unjustifiable nature of taxation without representation.  At the time, founding father John Hancock was the richest smuggler in North America.  The British Parliament lowered the import tax on tea in 1773 which cut into Hancock’s profits.  According to economic historian Gary North:

The Tea Party had stopped the unloading of the tea by throwing privately owned tea off a privately owned ship – a ship in competition with Hancock’s ships. The Boston Tea Party was in fact a well-organized protest against lower prices stemming from lower taxes.

The state, by virtue of its monopoly on predation, has always functioned as a power center to be exploited by the elite few.  Politicians deceive their way to public office by promising voters the world while pocketing the campaign funds to do the bidding of their corporate masters.  For all his populist rhetoric, President Obama was bankrolled into office by Wall Street; namely Goldman Sachs.  This is why no top financial executives have been charged for fraud stemming from the housing bubble.  It’s the same reason he backed the granting of immunity to telecommunication companies for illegally aiding Washington in warrant-less domestic wiretapping of private communications. Obama travels the country on the taxpayer’s dime to convince Americans he is still the fighter for the middle class.  The more gullible of voters will believe the lie time and time again despite his administration being staffed by Wall Street alum.  They are infatuated with the idea of being part of something meaningful.  This naivety en masse is the true aim of the state.  It ensures for the least amount of objection and more opportunity for exploitation by the establishment.

The President’s “universal health care” scheme is yet another example of the incestual relationship between big government and big business.

In what can only be described as a modern day case of Orwellian irony, the Health and Human Services Department has awarded a $20 million contract to public relations firm Porter Novelli to begin promoting the Affordable Care Act.  From The Hill newspaper:

The Health and Human Services Department has signed a $20 million contract with a public-relations firm to highlight part of the Affordable Care Act.

The new, multimedia ad campaign is designed to educate the public about how to stay healthy and prevent illnesses, an HHS official said.

The campaign was mandated by the Affordable Care Act and must describe the importance of prevention while also explaining preventive benefits provided by the healthcare law. The law makes many preventive services available without a co-pay or deductible, and provides new preventive benefits to Medicare patients.

To sum up this disconnect between reality and fantasy: the myth goes that government is beholden to the people.  Elected representatives only ever act in the best interest of their constituents.  This is why Congress enacted a health care reform bill that was opposed by a majority of the American public.  But of course the reform was for their own good.  The public wasn’t allowed to know the final ramifications of Obamacare before it was passed.  The truth is never meant for the little people.  That’s why then-Speaker of the House Nancy Pelosi declared “we have to pass the bill so that you can…find out what is in it.”  In other words, “obey us unconditionally.”

Again, this whole affair was supposedly done in the public’s interest.  Average Joe just doesn’t understand what is good for him.  How dare he question the intention of his political leaders!

Now a promotional campaign must be undertaken to convince the people that this new frontier in health care is a great step forward to more affordability.  Taxpayers only have to pick up the $20 million tab to be told about the good their government delivers to them.

What the ad campaign won’t reveal is that the Affordable Care Act was never the product of well-meaning souls but was crafted exclusively by the health industry itself.  The bill is virtually identical to a plan outlined by the trade association American’s Health Insurance Plans (AHIP)) in 2009.  A former Vice President to Wellpoint Inc. was revealed to have written the original bill in 2009.  Stocks of health care companies actually shot up as the bill made its way through Congress.  The reasoning was quite simple since the bill acts as a huge subsidy to the industry.  With millions poised to be forced into buying insurance, Howard Dean was dead on when he called the bill “an insurance company’s dream.”

Like compulsory vaccinations, the individual mandate is nothing but an industry bailout.  Under the guise of protecting the right of citizens, government merely acts as a puppet of entrenched special interests.  Politicians and bureaucrats further advance their dream of centrally managing more of the economy while simultaneously appeasing big business.  Competition is inhibited with regulatory red tape as the big players continue to rake in income and market share.  The state looks out for itself and its financiers only.

With Obamacare, the middle class will end up being liable for yet another entitlement program that, like any other government initiative, will cost more than was initially estimated.  Worse yet, they will be bombarded with advertisements they paid for which attempt to convince them that Uncle Sam has once again delivered prosperity with a badge and a gun.

The disheartening part is some Americans will be foolish enough to actually believe it.

The Inhumane Nature of Anti-Scab Legislation

LvMIC:

Today, workers of the Canadian Pacific Railway went on strike.  According to the Teamsters Canada Rail Conference, the union which represents the CP workers, the strike is mainly over management’s attempt at “watering down existing defined benefit pensions and placing new union hires on less costly defined contribution plans.”  From the Globe and Mail:

More than 4,800 Canadian Pacific Railway Ltd. employees have gone on strike, stopping freight shipments.

The strike by the Teamsters Canada Rail Conference began at 12:01 a.m. on Wednesday, after the two sides in the labour dispute tried but failed to reach a pact late Tuesday night.

CP spokesman Ed Greenberg confirmed that Canada’s second-largest railway has halted freight deliveries. “The union has withdrawn its services and as a result, CP has successfully executed the safe and structured shutdown of its freight train operations in Canada,” he said.

This work stoppage is estimated to cost the Canadian economy “$540 million a week.”  With such a large sum at stake, what would be the free market solution to an entire workforce refusing to do their job?  Hire those still willing and able to work for whatever pay is offered or course!

By virtue of owning one’s body, man is able to decide where he dedicates his labor.  Striking is a natural extension of property rights.  Any other state of affairs would be analogous to slavery.  Just as employees are free to withhold their labor whenever it’s deemed necessary (except in the military), employers have the right to refuse to hire or pay out exorbitant wages as such is their property initially.  Advocates of the labor movement either don’t realize, or refuse to admit, that the process of bargaining occurs throughout the entirety of a worker’s tenure of employment. Beginning with the hiring process, each potential worker comes to an agreement over the pay they are willing to accept for the offered position.  Each day the employee must then decide if continuing to work at his chosen firm or company is worth his time and labor.  The decision process is continual as working conditions change and adapt to better meet the need of the consumer and different levels of pay and benefits are offered.

The same principle applies to management who must constantly measure costs and income along with the productivity of the workforce.  If one or more workers begins to produce at a level not agreed to in the employment contract and is not satisfactory to the owners of the business, than the owners are free to withhold payment or reject them from the premises.  The guarantee of full ownership of property is always the best means to incentivize private investment and wealth production.

With the upholding of private property, the relationship between the worker and management is mutually beneficial.  There is no force initiated by either side.

The establishment of government enforced collective bargaining throws the peaceful market process on its head.  In the name of protecting exploited workers, the state grants itself the authority to intervene in the market economy.  It is not a protection against the excesses of capitalism but the diminishing of capitalism in favor of future socialism.

Like the Air Canada strike before it, Labor Minister Lisa Raitt is threatening “back to work” legislation while Ottawa is currently considering such a bill.  This legislation would send the management of CP and the Teamsters into binding arbitration in order to ensure the rail workers return to their positions.  Under this binding arbitration, a government-appointed arbitrator comes up with a “compromise” both parties are forced to accept.  Compromise is a deceitful term however since both parties end up with no choice in the matter.  With the passing of a “back to work” bill, Ottawa will then reassert its implied domination over the national economy.

This was an easily foreseen outcome when the Canadian government passed legislation to prevent private businesses with a unionized workforce from hiring replacement workers as a reaction to an impending strike.  According to Section 94 of the Canada Labour Code:

2.1) No employer or person acting on behalf of an employer shall use, for the demonstrated purpose of undermining a trade union’s representational capacity rather than the pursuit of legitimate bargaining objectives, the services of a person who was not an employee in the bargaining unit on the date on which notice to bargain collectively was given and was hired or assigned after that date to perform all or part of the duties of an employee in the bargaining unit on strike or locked out.

The only way to prevent willing laborers from replacing union employees who refuse to work is through systematic violence.  That is, the government forbids the hiring of replacement workers with the promise of legal penalty.  Unions and their gang of armed toughs are more than willing to impose violence on the man who wishes nothing more than to better his own state of affairs.  As Murray Rothbard notes on the history of union violence in the United States:

Union history in America is filled with romanticized and overblown stories about violent strikes: the Pullman strike, the Homestead strike, and so on. Since labor historians have almost all been biased in favor of unions, they strongly imply that almost all the violence was committed by the employer’s guards, wantonly beating up strikers or union organizers. The facts are quite the opposite. Almost all the violence was committed by union goon squads against the property of the employer, and in particular, against the replacement workers, invariably smeared and dehumanized with the ugly word “scabs.” (Talk about demeaning language!)

The immorality of anti-scab legislation is staggering.  Utilizing one’s labor to produce is essential to survival.  To bar a man from working for the sheer fact that another, backed by his union, refuses to accept the offered conditions of employment is completely unjustified.  There is nothing at all demeaning by taking the job of someone unwilling to do it.  With the state at their backing, unions are no better than thugs who hold their employers hostage.  If involuntary human bondage is inhumane, then so must be state-enforced collective bargaining.  After all, what else could be tantamount to slavery than literally forcing an employer to employ someone?  Slavery is inherently a government construct since a slave could run away if not for the state that would force him back to his owner.  And it is because slavery is inefficient in terms of productivity that such an exploitive system ended itself in every Western country besides the U.S. without war.

Anti-scab legislation is really just another method of modern enslavement.  Instead of the servant beholden to the whip wielding master, it is now private employers who must pay heed to the all-powerful state and its union enforcers.

“Back to work” legislation may be appealing to opponents of forced collective bargaining but it only perpetuates the problem of union tyranny.  The real solution, as Rothbard recognized, is

not to pass laws outlawing strikes; the remedy is to remove the substantial body of law, federal, state, and local, that confers special governmental privileges on labor unions. All that is needed, both for libertarian principle and for a healthy economy, is to remove and abolish these special privileges.

There is little chance of union privileges being revoked because they ensure for backdoor domination of the economy by the state.  The strike of CP workers is already being considered a “national emergency” as Parliament is gearing up to intervene in what should be a private affair.  Whatever legislation is adopted to deal with the strike will only serve as a stern reminder to Canadian business owners that they are not the controller of their destinies; the ruling class of government is.

Unemployment Insurance Schemes and the Dependency of Welfare

LvMIC:

In the Garden of Eden there is no scarcity.  Food, clothing, and shelter in are abundance.  Resources merely fall from the heavens upon command.  It is economic paradise precisely because economics does not exist.  The universal laws that hold in the world of scarce goods vanquish in the land of the plenty.

The vision of Eden is the politician’s main source of employment.  That is, promising to lead the suffering masses toward utopia by government decree makes for great electoral results.  The voting fodder ignorant of economics falls in line to cast a ballot to grant themselves other people's money.  But of course many voters don’t see it this way.  Their vision of the state is that of Eden.  They see the bureaucrats and enforcers capable of tapping an infinite pot of wealth to pass along prosperity to those subservient enough to put them in office.

This in turn has lead to the establishment of the welfare state and its plethora of entitlement programs.
For those who see the modern day welfare state as corrosive to the productive capacity of any given country, no where is this theory more evident than the scheme of unemployment insurance.  In a recent National Post article, the entitlement attitude was on full display:

Jenna Somerton views her layoff from a job at Algonquin College in June of 2010 as a blessing in disguise: She lived on employment insurance benefits for eight months, took stock and decided what she really wanted to do with her life.

Of course, she admits to taking advantage of her EI cheques at the beginning, after hunting for a job with no luck.

“I was thinking ‘Free money, the government owes me, I paid for school … I deserve this,” the 27-year-old Ottawa resident says now.

She soon got serious, using the subsidized income to hatch plans to start her own web development business. Some of her friends, she said, have not been so diligent.

“I’ve known lots of people on EI and I know a lot of them just stayed on EI and as soon as it ran out they started freaking out and then they started looking for jobs…. [The government] makes it so easy.”

In Ms. Somerton’s view, it is the government that owes her and she is rightly deserving of the “free” money.  Her error is unfortunately not unique.  The notion of the government not restricted by the amount of resources it is able to squander from the private sector is hardly touched on in what passes for informed opinion.  The reading of the editorial section in today’s highly regarded newspapers often contains numerous recommendations on what the state can and should provide.  What is never eluded to is the real cost of government expenditures.  While it is a simple task to rattle off the dollar cost of a program, to truly gauge the price of the state, one must look at what may have been foregone to provide for the payment of taxes.

The proper understanding of government is that it is parasitical in nature.  It can only spend what it first forcefully takes.  Because the political class is beholden to how much theft it can get away with before sparking an enraged uprising, it also invents new schemes to not be reliant on tax collection alone.  This includes borrowing and accumulating debt; which is nothing more than the promise of future taxes.  And there is inflation which benefits the first receiver of new money, that is the state, to spend freely before prices adjust economy wide.

Whatever the devious method, each comes at cost to the taxpayer.  Again, the nominal price of taxation by itself is easy to calculate.  What is often neglected is what the pilfered funds could have been used for if left in the necessarily more prudent non-public sector.  It was recently came to light how the great technological innovator Apple Inc. sets up branches in cities with low corporate tax rates in order to lower its tax bill.  This is of course a great thing as Apple, constrained in income by how much it receives from consumers, is a better steward of scarce resources then the state.  Apple’s tax avoidance is obvious.  The further technological innovations financed by money the government bandits don’t help themselves to is not readily apparent.

The general public is blind to this state of affairs.  Many have been conditioned through years of public schooling to see the state as Eden.  The short term benefits of government transfer payments override any conceivable long term gains of genuine wealth creation in the private sphere.

Decades of the predominant welfare state have not only created a reliable voting constituency dependent on handouts, it has perpetuated the Santa Clause-like image of the state.  What isn’t considered is the overall social degeneration that is a byproduct of the so-called “social safety net.”  As noted economist Thomas Sowell explains:

While liberals may think of the 1960s as the beginning of many “progressive” trends in American society, cold hard facts tell a very different story. The 1960s marked the end of many beneficial trends that had been going on for years — and a complete reversal of those trends as programs, policies, and ideologies of the liberals took hold.

Teenage pregnancy had been going down for years. So had venereal disease. Rates of infection for syphilis in 1960 was half of what it had been in 1950. There were similar trends in crime. The total number of murders in the United States in 1960 was lower than in 1950, 1940, or 1930 — even though the population was growing and two new states had been added. The murder rate, in proportion to population, in 1960 was half of what it had been in 1934.

Every one of these beneficial trends sharply reversed after liberal notions gained ascendancy during in the 1960s. By 1974, the murder rate had doubled. Even liberal icon Sargent Shriver, head of the agency directing the “war on poverty,” admitted that “venereal disease has skyrocketed” even though “we have had more clinics, more pills, and more sex education than ever in history.”

As for black economic advances, the most dramatic reduction in poverty among blacks occurred between 1940 and 1960, when the black poverty rate was cut almost in half, without any major government programs of the Great Society kind that began in the 1960s.

Why be productive and take of yourself when someone else picks up the tab?  This isn’t a cold hearted question but a basic recognition that in most cases, leisure and immediate pleasure are preferred to delayed satisfaction.

Back to unemployment insurance, no matter how much it is denied by entitlement apologists, there is no escaping the truth that if someone is paid not to work, they will generally not work.  As Murray Rothbard writes in his magnum opus Man, Economy, and State:

For almost all actors, leisure is a consumer’s good, to be weighed in the balance against the prospect of acquiring other consumer’s goods, including possible satisfaction from the effort itself.

People will always be economizing beings who make choices between how they spend their time and where they dedicate their labor.  The National Post article makes mention of this consideration among those on the dole as small business owners…

have found themselves competing with the EI system for workers who are weighing opportunity costs: Would I toil in a hard labour job for $10 an hour or not go to work for roughly the same amount of cash?

This reluctance to work was documented in a 2009 survey which found many businesses unable to hire those on the unemployment rolls:

A CFIB survey published in September, 2009, found 22% of small businesses owners had trouble hiring people who are on EI, as workers said they would rather continue collecting benefits than work in the more hands-on jobs. Another 16% said that in the past year, they had had an employee ask to be laid off so he or she could collect EI benefits (these rates were higher in Newfoundland and Prince Edward Island).

This is all a consequence of the welfare state which has institutionalized poverty instead of relieving it.  The real beneficiaries of entitlement programs are not the recipients but those who maintain their positions as gatekeepers to the money.  The saddening dependency of others and the government’s monopoly over coercive tax collection is what provides them a steady stream of income.

As long as the public still operates under the fallacious assumption that the state is costless, they will continue to vote themselves into destitution.  Living standards will decline as productivity gains begin to taper off.  A generation of the entitled will soon find themselves deserving of nothing because the real wealth producers will have long since abandoned their efforts to serve others.

Host bodies only ever have so much blood to give.

Italy and the Great Tax Revolt

Taxation is theft.

There is no denying this.  If I and a few brutes appeared at the door of an unsuspecting individual and demanded monetary compensation less we drag him off to jail, this would be a clear cut case of robbery.  It is a common tactic used by mobs or street gangs to offer protection with the barrel of a gun.  The only difference between shakedowns by private thugs and those employed by the state is the badge.  The badge legalizes extortion and imprisonment.

With that being said, it has been three years since the financial crisis and governments around the world are still reeling in the lesser Depression.  Tax collections are down while public expenditures have skyrocketed in a vain effort to stabilize the economy.  Much of this mass orgy in spending has been financed by central banks printing money and the suppression of interest rates down to artificially low levels.  This is the Keynesian remedy to recession.  Spend what you don’t have via the printing press.  Have central bankers create paradise on Earth through counterfeiting.

So far it hasn’t worked.

Like the Great Depression before, regime uncertainty and an emphasis on consumption over private investment have prevented a sustainable recovery from taking hold.  Public debts continue their upward trend with no conceivable end in sight.  The bond vigilantes have started their attack on the Eurozone; namely Greece, Portugal, Italy, and Spain.  Greece is all but finished as even the most dimwitted of commentators is conceding than an exit from the euro is likely.  Meanwhile in Italy, the lack of tax collection has forced the hand of Prime Minister Mario Monti to crack down on tax evasion.  This hasn’t gone over well with the Italian public.  From the San Francisco Chronicle:

Equitalia, the state tax-collection agency, has been targeted in a wave of attacks as Italians chafe under stepped-up efforts to recover an estimated 120 billion euros ($153 billion) in lost revenue from evasion. On May 12, a Molotov cocktail exploded outside Equitalia’s Livorno office, one day after a parcel bomb was delivered to the Rome headquarters, site of a December explosion that tore off part of the general manager’s hand.

“I have never seen such a tense atmosphere” said Ballico, who has been employed by Equitalia since 1998 and is now on temporary leave to work for the UGL labor union. “They call us loan sharks, bloodsuckers; my colleagues have to deal with anxiety and stomach aches every day and they are scared.”

News to Ms. Ballico: you and your coworkers are “bloodsuckers.”  Your profession is based on pure violence and robbing your countrymen.  Why should they not identify you for what you truly are?
The reactionary attacks are the result of the austerity measures being imposed in Italy and other highly indebted countries of the Eurozone periphery.  These measures are often described as savage cuts in spending when in actuality the public is being squeezed more to fund the government’s operations.  The political class remains unwilling to significantly scale back its operation and profligacy.  The money was supposed to be cheap.  The good times were never supposed to end.

And now the slaves are revolting.

Earlier this month, a 54-year-old small businessman facing financial difficulties and tax debts of around 2,400 euros, took 15 hostages at an Equitalia office near Bergamo for several hours before surrendering to police.

When the chains of oppression are being tightened, some react in not-so-kind manners.

And yet this is the trend happening all around the world.  In light of Facebook co-founder Eduardo Saverin renouncing his U.S. citizenship to live in Singapore and avoid filling the coffers of the IRS from the billions he stands to gain on the popular website’s initial public offering, New York Senator Chuck Schumer and Pennsylvania Senator Bob Casey have introduced legislation to mandate a 30% capital gains tax on those who follow in Saverin’s footsteps.  In France, many entrepreneurs are gearing up to leave as newly-elected President Francois Hollande has promised to raise the highest marginal tax rate to 75%.  Greece is being pressured to clamp down on tax evasion.  The same goes with Spain.  Even Swiss banks are being targeted by the U.S. Department of Justice for acting as tax safe havens.

Politicians and their bureaucratic foils think only in the short term.  They see less tax money flowing into their hands and instantly attempt to confiscate more.  This reaction is an inner glimpse into their true motive of reestablishing supremacy.  Why people would be reluctant to hand over even more of the sweat of their brow is never a consideration.  In the politician’s mind, it is the populous that serves the state, not vice versa.  Centuries of compulsory democracy haven’t altered the relationship between the aristocracy and the serfs who plow the field.  Today, serfdom is disguised with the existence of the ballot box.

Like a drug addict, the state must be sustained by increasing amounts of revenue to satisfy its craving of paying off voters.  It must continually buy legitimacy to hold up the veil which masks its thieving tendencies.  As the tax fund dwindles, governments in the West are becoming desperate.  Like the producers in Ayn Rand’s uncannily predictive novel Atlas Shrugged, many of the more productive members of society have grown tired of being soaked to pay for political handouts and unending wars of aggression.  The resistance isn’t limited to the rich as the Chronicle article points out, “much of the anger directed at Equitalia is from people with more modest means.”

Italian Interior Ministry Anna Maria has declared that attacking tax collectors “is the equivalent of attacking the state.”  What she won’t admit is that the state carries out a perpetual war on those who it feeds off of to function.  In perhaps the greatest and most precise description of the state ever written, individual anarchist Lysander Spooner explains difference between a highway robber and a government tax collector:

The government does not, indeed, waylay a man in a lonely place, spring upon him from the roadside, and, holding a pistol to his head, proceed to rifle his pockets. But the robbery is nonetheless a robbery on that account; and it is far more dastardly and shameful.

The highwayman takes solely upon himself the responsibility, danger, and crime of his own act. He does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit. He does not pretend to be anything but a robber. He has not acquired impudence enough to profess to be merely a “protector,” and that he takes men’s money against their will, merely to enable him to “protect” those infatuated travellers, who feel perfectly able to protect themselves, or do not appreciate his peculiar system of protection. He is too sensible a man to make such professions as these. Furthermore, having taken your money, he leaves you, as you wish him to do. He does not persist in following you on the road, against your will, assuming to be your rightful “sovereign”; on account of the “protection” he affords you. He does not keep “protecting” you, by commanding you to bow down and serve him; by requiring you to do this, and forbidding you to do that; by robbing you of more money as often as he finds it for his interest or pleasure to do so; and by branding you as a rebel, a traitor, and an enemy to your country, and shooting you down without mercy, if you dispute his authority, or resist his demands. He is too much of a gentleman to be guilty of such impostures, and insults, and villainies as these. In short, he does not, in addition to robbing you attempt to make you either his dupe or his slave.

The only difference between a thief and the taxman is the thief recognizes his crime is wrong.  The taxman not only feels entitled to the labor of others but routinely pilfers under the pretenses of serving its victims.

Decades ago in the depths of the Great Depression, Western governments took advantage of the crisis and consolidated power and enlarged the scope of their authority.  Voters barely put up a fight.  They gave up personal and economic liberty for entitlement programs.  It seemed like the right choice at the time.
It was the great swindle orchestrated by a ruling class looking only to expand its control.

Now that the money for the savior state is running out, the choice is clearer than ever.  The leeches living off the state apparatus are prepared to do whatever is necessary to preserve their well being.  From political protest to tax evasion, trampling the citizenry into compliance is their goal.  It is ultimately up to the public at large to decide how much they are individually willing to take.

The small businessmen of Italy have made their choice and have said no to more of their income being squandered away on the perks of government employees.  Let’s hope they won’t be the only ones.

The Ongoing War on Political Protest

LvMIC:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

So reads the first amendment of the U.S. Constitution.  The establishment of the freedom of political protest was one of the shining features enshrined within the Bill of Rights.  It was supposed to make certain that public officials would always be under the impression that they were beholden to the taxpayers that put them in office.  It was to guarantee a government by and for the people.

In reality, it was little more than a naïve delusion.  Governments lie, cheat, steal, murder, and subtly ground those under its authority into submission.  They inevitably turn from serving those who entrust it with protecting person and property to a mechanism of exploitation and profiteering by special interests.
Even the American Revolution and formation of a centralized national government is often an exaggerated tale of throwing off oppression.  Yes, the colonists were unjustly taxed by Great Britain.  All taxes at all times are unjust.  But what replaced British rule would have the opposite of the desired effect.  Economist and historian Gary North explains:

The colonists had a sweet deal in 1775. Great Britain was the second freest nation on earth. Switzerland was probably the most free nation, but I would be hard-pressed to identify any other nation in 1775 that was ahead of Great Britain. And in Great Britain’s Empire, the colonists were by far the freest.

I will say it, loud and clear: the freest society on earth in 1775 was British North America, with the exception of the slave system. Anyone who was not a slave had incomparable freedom.

The Continental Congress declared independence on July 2, 1776. Some members signed the Declaration on July 4. The public in general believed the leaders at the Continental Congress. They did not understand what they were about to give up. They could not see what price in blood and treasure and debt they would soon pay. And they did not foresee the tax burden in the new nation after 1783.

In an article on taxation in that era, (Alvin) Rabushka gets to the point.

“Historians have written that taxes in the new American nation rose and remained considerably higher, perhaps three times higher, than they were under British rule. More money was required for national defense than previously needed to defend the frontier from Indians and the French, and the new nation faced other expenses.”

So, as a result of the American Revolution, the tax burden tripled.

In the post 9/11 era, the Constitution’s protection of civil liberties, namely the fourth and fifth amendments, have all but been torn to shreds.  It was a century and a half long decaying process set off by America’s grand experiment in imperialism.  The illegal arrests, denial of due process, exile of a sitting U.S. Congressmen (Clement Valladingham of Ohio) for anti-war remarks, and overall empowerment of the federal government that took place during the Civil War came full circle with the attack on the World Trade Center on September 11^th.  The decade following saw an explosion in the growth of the U.S. security state.  In the past ten years the country has seen at least thirty three new building complexes erected to house the various intelligence bureaucracies tasked with fighting the War on Terror.  This includes roughly 30,000 employed to listen in on phone and other lines of domestic communication according to Fareed Zakaria.

The 2008 campaign of President Barack Obama was filled with the promise of reigning in the excesses of the Bush administration.  Instead, not only has Obama continued much of the same warfare and domestic surveillance abuses of the Bush years, he has exacerbated them.  The drone war continues unabated in countries such as Somalia, Pakistan, Iraq, and Yemen.  Hundreds of civilians have been killed including innocent children. For all of Bush’s war crimes, at least he never had the insolence to declare himself the authority to assassinate American citizens or lock them up indefinitely without the luxury of charging them for a crime.

While the National Security Agency archives trillions of communication transactions, the administration is currently waging what Glenn Greenwald calls an active “war on whistleblowers” despite a campaign pledge to “protect” them.  So far, six whistleblowers have been charged by the Department of Justice under the Espionage Act.  Up until Obama took office, only three individuals were ever charged.  Clearly the idea of citizens rising up to challenge the practices of public non-servants is not so sacred in the days of manufactured terror plots.  The government’s motives and agenda are supposed to go unquestioned.
In another egregious act of late, on Wednesday the President signed an executive order that forcefully relinquishes the assets of anyone who engages

in acts that directly or indirectly threaten the peace, security, or stability of Yemen, such as acts that obstruct the implementation of the agreement of November 23, 2011, between the Government of Yemen and those in opposition to it, which provides for a peaceful transition of power in Yemen, or that obstruct the political process in Yemen

The very act of challenging the U.S.’s involvement in a sovereign nation’s presidential election is now punishable by all-out burglary of one’s personal assets.  With U.S. troops now stationed in Yemen, the EO is supposed to ensure the country’s political transition to the administration of President Abed Rabbo Mansour Hadi.  Now the citizens of Yemen might want to think twice on challenging the U.S. backed regime they are forced to live under.  Glenn Greenwald asks the pertinent questions:

But what if someone — a Yemeni or an American — opposes Hadi’s rule and wants to agitate for a real election in which more than one candidate runs? Is that pure political advocacy, as it appears, now prohibited by the U.S. Government, punishable by serious sanctions, on the ground that it “obstructs” the transition of power to Hadi? Can journalists who report on corruption or violence by the Hadi regime and who write Op-Eds demanding a new election be accused, as it seems, of “threatening Yemen’s political stability”?

None of this is clear but that is entirely the point.  The Obama administration wants flexibility in enforcement and making sure their guy is put in control.  The political protest has essentially been deemed a crime.

The disturbing part is that such a clampdown on speech and protest is being enforced by governments worldwide.  In Canada, the providence of Quebec is cracking down on students protesting over university tuition hikes.  The interior Minister of Spain has announced plans to reform the penal code in order to impose minimum jail sentences for some protesters who have taken to the streets over unpopular austerity measures.  As Greece continues its inevitable descent out of the Eurozone, protests continue along with bank runs that will, if history is any guide, be shut down with a bank holiday declared nation wide to prevent the fractional reserve system from becoming more insolvent than it already is.  Back in the U.S., Obama signed a bill last March which forbids demonstrations in areas under the jurisdiction of the prostitute loving Secret Service.

These are all the consequence of governments in constant need of more control and domination.  Government “of the people, by the people, for the people” is a child’s fantasy.  To question the state is to question the livelihood of the societal parasites which staff it.  Those who look to politicians as their saving grace are quickly learning a valuable lesson.  As more of the public becomes aware of the massive loss of liberty and wealth it has suffered at the hand of the state, the jackboot of despotism will be pressed down further.

Texas Congressman Ron Paul was accurate when he declared “truth is treason in an empire of lies.”

The truth is serfdom is slowly approaching.  Treason have become speaking out against it.