God Give Us More Jokers

There is always Joker to see through the delusion.

― Jostein Gaarder

Delusion: a false belief or opinion.

Same old same old every day

if things don't change you're just gonna rot

Cause if you do what you've always done

you'll always get what you always got

Uh could that be nothin'

-        Aerosmith

Delusion: Psychiatry. A fixed false belief that is resistant to reason or confrontation with actual fact.

With that as foundation…

A Six-Point Plan to Restore Economic Growth and Prosperity, By John Mauldin and Stephen Moore

Mauldin and Moore offer their prescription for economic growth, via this op-ed for the Investor’s Business Daily.  I probably would not have bothered to comment, except that Stephen Moore represents (I think, but I am not sure) the “freedom” position in the Dream Debate of the Century (as Paul Krugman represents the other half of this mainstream-allowable festival of freedom). 

Introducing the characters: why jokers, and why delusion?  Let me explain….

Austrians, and their close cousins the libertarians, are considered jokers; living in a land of utopia, liquidationists, don’t they know the world is full of bad guys, it has never worked anywhere before, blah, blah, blah.

The delusionists?  Anyone who believes that playing with the fringes of the current system will change anything; further delusional, that anything meaningful can change within the current system.  This has been tried before, and failed spectacularly every time.

David Stockman, Jim Grant, and Peter Schiff can be considered jokers; call Mauldin and Moore delusional.

For me, it is far better to grasp the Universe as it really is than to persist in delusion, however satisfying and reassuring.

― Carl Sagan

From the op-ed:

The dismal news of 0.2% GDP growth for the first quarter only confirmed that the US is in the midst of its slowest recovery in half a century from an economic crisis.

The two of us have met with several [presidential] candidates and discussed tax reform and other economic growth issues. We offer here some solutions of our own for them to consider.

The authors offer their prescription for a cure.  In this will be found the delusion.

First:

Streamline the federal bureaucracy…. The president, with some flexibility, should require each agency to reduce the number of regulations under its purview by 20%, at the rate of 5% a year.

In the history of the United States government, such a thing has never come close to happening.  Take the Federal Register:

…the Federal Register is the official daily publication for rules, proposed rules, and notices of Federal agencies and organizations, as well as executive orders and other presidential documents.

Go ahead and click on any one day of any one month of any one year.  Get an eyeful.  Not only does the Federal Register increase daily, it is increasing at an increasing rate. 

Mauldin adds some thoughts not in the original op-ed:

Let’s be clear: in a society as complex as ours, we need regulations.

Of course we do.  The question is, regulations provided and enforced how and by whom?  The market can be quite effective at regulation – it does this daily via the system of prices and profit and loss; it does this through gain or loss of reputation.  And it is not subject to regulatory capture. 

It was the banks – perhaps the most highly (government) regulated industry in the United States – that had to be rescued from the brink beginning in 2007.  This is typical of government regulation.

Try the market; see if we end up in a situation of too big to fail.

Delusion detests focus and romance provides the veil.

― Suzanne Finnamore

Second:

Simplify and flatten the income tax. Make the individual income rate 20% (at most) for all income over $50,000, with no deductions for anything.

Reagan tried this.  Even granting a streamlining and efficiency effect (which I do not), it didn’t last very long.

My reality is it’s nighttime. The truth is I’m just blindfolded. How many people live like me, in self-deluded darkness?

― Jarod Kintz

Third:

Replace the payroll tax with a business transfer tax of 15%, which will give lower-income workers a big raise. Companies would pay tax on their gross receipts, minus allowable expenses in the conduct of producing goods and services.

They want to introduce a new tax, a type of value-added tax.  Now, instead of being taxed only on profits, all enterprises will be taxed whether profitable or not.  They do not suggest that a consumption tax is introduced only if all other taxes are removed (not that I would feel any better about this); they suggest it in addition to current tax schemes. 

From Mauldin, when considering a consumption tax rate high enough to eliminate other taxes:

No income taxes, no corporate taxes, no Medicare taxes, no Social Security taxes.  No tariffs. Nothing.  In a perfect economic world, I would adopt that plan. Consumption taxes are far more economically efficient than income taxes.

But in our discussion with a variety of players, we found that the appetite for getting rid of all income taxes is just not there. So we opted for a flat tax.

Consumption tax and a flat tax; the worst of all worlds.

People need to be educated so that they can make intelligent moral choices.

― Gary L. Francione

Fourth:

Provide certainty by keeping tax rates low through a tax-limitation constitutional amendment that would require future tax increases to be passed by 60% of the Congress, in combination with a balanced-budget amendment.

The root of the issue isn’t taxes, it is spending (and not one item on the list addresses spending); every dollar spent by the federal government is a wasted dollar, a dollar taken from the productive economy.  Wages are stagnant, disposable income is stagnant, job growth is stagnant – all with the same root cause: investment has shifted away from the productive sectors of the economy and toward the non-productive sectors of the economy via government largesse.  This shift has been uncontrolled ever since 1971.

As to a balanced budget amendment, whatever exceptions that the amendment offers (and rest assured, there will be exceptions) will suddenly become a permanent condition of America.  There will certainly be an exception for “time of war.”  Guess what will be a permanent condition?  Well, nothing new – in other words, no balanced budget amendment.

My father taught me that you can you read a hundred books on wisdom and write a hundred books on wisdom, but unless you apply what you learned then its only words on a page. Life is not lived with intentions, but action.

― Shannon L. Alder

Fifth:

Roll back the regulatory state. Recognize that many federal agencies are still mired in the mid-20th century if not the 19th. It's time to design a regulatory system that fosters jobs and growth while protecting citizens.

This isn’t much different from the first recommendation.  Other than a couple of moves by Jimmy Carter, I don’t think anything like this has happened in the adult lifetime of any living American.  And maybe not in the life of any dead American either.

Mauldin adds:

I am most definitely in favor of a drug regulatory authority. It is absolutely critical to the safety of the public.

America is perhaps the most chronically over-drugged society on earth.  This is a result of the belief in drug regulation (in all of its forms) by government.

But we need to design one from scratch that is capable of functioning in today’s scientific world and delivering drugs and therapies in a timely and cost-effective manner.

Government regulation can never a) keep up with market developments, and b) be more effective and efficient as market regulation.

I beseech you, in the bowels of Christ, think it possible you may be mistaken.

― Oliver Cromwell

Sixth:

Drill for America's domestic energy and use the royalties on federal lands to retire the debt and/or fund needed infrastructure repair instead of raising taxes.

No need for the “and/or.”  The “or” will suffice – there will be no retiring the debt until the markets force this action.  Anyway, tried…and failed:

After the 1973 oil crisis, the United States Department of Energy and Synthetic Fuels Corporation were created to address the problem of fuel import dependency.

Setting aside the foolishness of such an objective, just one more failure on the infinitely long list of government failures resulting in perpetual funding for the bureaucracy in question.  Nice incentive system.

 

When enough insane people scream in harmony that they really are healthy, they can actually start to believe themselves. Or put even more simply: people with overlapping delusions get along wonderfully.

― Daniel Mackler

Murray Rothbard rightly describes the libertarian (and I suggest this applies to the Austrian as well) as realistic and the delusionists as utopians:

The libertarian is also eminently realistic because he alone understands fully the nature of the State and its thrust for power.  In contrast, it is the seemingly far more realistic conservative believer in “limited government” who is the truly impractical utopian.  This conservative keeps repeating the litany that the central government should be severely limited by a constitution…. The idea of a strictly limited constitutional State was a noble experiment that failed, even under the most favorable and propitious circumstances….No, it is the conservative laissez-fairist, the man who puts all the guns and all the decision-making power into the hands of the central government and then says, “Limit yourself”; it is he who is truly the impractical utopian.

The delusionists are those who believe that the current system can be reformed, made more efficient, streamlined.  The delusionists believe that government bureaucracies act on market-like incentives.  The delusionists believe that those in government bureaucracy can be convinced to reduce their role and influence.  The delusionists believe that the president is in control of the bureaucracies.  The delusionists believe that government bureaucracies are led by good people just trying to do the right thing.  The delusionists believe that individuals, acting as central planners, are even capable of identifying the right thing to do.

God, give us more jokers.

(Source for all quotes regarding delusion)