Where you gonna get the money?

Every year we say, “We never get any spring around here; it goes directly from winter to summer.” We can’t complain about that, but if you’ve come here to read, you know that if we can’t complain about this wonderful spring we’re having, I will find something to harp about.

As I heard the Chair of the Chesterfield Board of Supervisor say just as the local election was full blown, “We’re in the silly season.” Now, just as that local silly season fades from view, we’re in another silly season. The Democrats and Republicans have come out swinging mano a mano, or should I say moneyo a moneyo.

Oh yes, as you know there’s a pile in it this time around, from Congressional to the Presidential race, the stacks of money wallpaper the world. Considering the “Citizens United” supreme court case, in which corporations, mega and not so mega can spend as many green backs as they want, unfettered by logic or morality. It’s a whole new ballgame and you lose.

But I’m not harping. TV screens everywhere are filled with ads describing the side that will give them the most favor, a clever people-minded bunch. While I haven’t seen many positive ads, there are a few out there.

Don’t go away, I’ll get to some real harping in a paragraph or two.

This from a guy named John Ralston Saul, “…The perfection of the image [television] has brought us to a whole new state of expectation. We are the image. We are the viewer and the viewed. There is no other distracting presence. And that image has all the Godly powers. It kills at will. Kills effortlessly. Kills beautifully. It dispenses morality. Judges endlessly. The electronic message is man as God and the ritual involved leads us not to a mysterious Holy Trinity, but back to ourselves. In the absence of clear understanding that we are now the only source, these images cannot help but return to their expression of magic and fear proper to idolatrous societies. This in turn facilitates the use of the electronic image as propaganda by whoever can control some part of it.”

In other words, especially now since only six media corporations own all media outlets, the television screen is going to decide the outcome of the coming election. The commercials between dance steps and notes coming from Idols will both directly and subliminally push our vote in the direction that may not be in our best interest.

 But I’m not harping.

I’m thinking about a few years ago when budgets around the state were going to hell in a hand basket. The state didn’t have enough money to cover expenses, therefore transportation projects were halted, the Virginia Retirement System was raided and money that school divisions typically get from the state was slashed. If you remember, those were some worrisome times.

The school budget was cut by $80 million and eliminated 325 positions in 2010. The year before the Federal stimulus package laid $20 million of funding on Chesterfield schools, trimming the hole in the Chesterfield Public Schools budget and allowing the Superintendant to cut only 120 positions rather than the 525 previously proposed. The stimulus plugged a hole in the dike until the following year when the stimulus ran out and  the economy dumped on all of us.

But I’m not harping.

In fact, I’ve been following some of the economic doom and gloom through some articles and online newspapers. Please don’t burn down my house after you read what I have come to believe. How a new stimulus could help pull us out of this quagmire. The idea is simple, the new stimulus, although it should be called something else less controversial, would start its funding at the local level. Say Chesterfield County would get $500 million; the county in turn would fund new jobs by contracting for new roads, schools, business development and so on. That in turn would create jobs, right. More jobs means more money in the local economy. More money in the local economy means more private investment in business, more taxes collected by Chesterfield, Virginia and eventually the Federal government – a trickle up program rather than trickle down process.

Imagine if you cut the Federal deficit, some $15 trillion, until it was at the 2000 level of about $5 trillion. That’s a lot of cutting – some $200 billion per state and over $50,000 per person in the U.S. Are we seriously about to cut school teachers, police, firefighters, social service workers, utilities, planners and so on, and expect the private sector to pick up the slack?

Why can’t we stabilize local government first to help increase demand as I stated above, you know, build and fix local roads, stabilize teacher-drain and other local programs. According to economist Alan Blinder, “Government policies can be used to increase demand and economic activity, reducing unemployment and deflation. For example, when the unemployment rate is very high, a government can use a dose” of stimulation funds by the Feds to prop up local government and expand local economies.

Comments

Same old broken window fallacy.

This is the same old broken window fallacy that the French economist, Frederic Bastiat first pointed out. Too often people who promote ideas like this do so because they are not seeing what is hidden from view, only seeing the easily seen surface surface. That is what Bastiat pointed out in his example.

A child breaks a window at a local store, so a new windows is purchased and supposedly economic activity that would not of taken place, takes place. That is where most people stop looking, and point to the transaction as a positive for the economy.

What most people do not see is that if the shop owner did not have to replace the window that was broken, he could of used the money for something else, such as coat. So instead of just having a window, the shop owner would have a window and a coat. Even the community is better off because both the coat and the window will exist in the community, instead of just the window.

Some make the claim that there is no guarantee that the shop owner would of bought a coat. Instead he could of left his money in the bank. By breaking the window, that money is now in the economy, when it was not before. But again they are not looking deep enough into what actual goes on. The money that is deposited in the bank does not sit there locked in a vault, until it is withdrawn. Instead it is loaned out to other people, who spend it on building homes, creating businesses or even purchasing things like windows. So again even if the shop owner was not going to buy a coat and leave his money in the bank, others would use that money to purchase things and again the society will be richer for having those items and the window that was not broken.

This same logic follows through when the government uses our taxes money to fund stimulus plans, like the one mentioned by Mr. Fausz. That is money that businesses, and citizens could of spent on items that would of grown the economy. The fact is that for every dollar you take from the citizens in the form of taxes, the citizens have one less dollar that they would of spent to grow the economy.

So the question is who is going to make the best use of the money? The person who worked hard for it and values it, because of that hard work Or the politicians and bureaucrats that are beholden to special interest and their own selfless desires. Personally, I believe the former would make better choices and I would say history shows that I am right. Think about it, how of you would fund a "Bridge to Nowhere", with your own money.

Finally, some would argue that this is money that is borrowed or just printed out of thin air, but again they are not looking at the complete picture. Money that is borrowed by the government must be repaid, and it will be repaid with taxes paid in the future. So you are just delaying the hit to the economy and paying a price by doing so in the form of interest rates. Printing money is much worst because by doing so you create a hidden tax. As each f these new dollars are put into the system, it lowers the relative worth of the dollars already in the system. That makes savings and other investment worth less in the future then they would of been.

That is not to say that we do not need to pay taxes so that the government can provide the services we need. It is just that using tax money to create economic growth fails, when you look at the full picture and apply logic to it. Government exist solely to protect our Life, Liberty, and Property , so that we can pursue that which makes us happy. When government takes our property, to give to those they favor in the name of economic growth, they are violating that trust and in the process not really doing anything, but moving money from one side of the ledger to the other.

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