Many Americans just recently filed their federal income taxes. Some of them are eagerly awaiting refund checks, or even refund direct deposits since “who writes checks anymore?” There are two things that these people should remember:
1. This money is not a gift from the government. It is your money that you already earned. Think of it more as an interest free loan to the government that you are forced to make and you have to ask nicely before they will pay back.
2. Tax money (money that you worked for and that the government has appropriated) that gets spent on “stimulus” is false economy.* The problem with stimulus spending is that it only accounts for what is seen, not what is unseen.
Every dollar that the government spends is a dollar that some productive person could have spent himself.** We see the government spending the dollar and count it as stimulus. What remains unseen is what the taxpayer would have done with that dollar if he had been allowed to keep it. As it turns out, it is more than likely that he would have spent it. Not only would he have spent it, but he would have spent it on something that he wanted. That is to say, he would have gained something in exchange. Instead, the government gave it to somebody else to spend. The net effect on the economy looks like of $0 (since either way, one dollar gets spent.) However, the tax payer doesn’t get the benefit of his own dollar and the government doesn’t operate for free. So the taxpayer loses a dollar (or, what amounts to the same thing, whatever he would have spent that dollar on) and the economy loses the administrative cost of the government mechanism. So stimulus spending is a net loss.***
Beer of the Week: Bitburger Pilsner – Simple is good. This beer is very simple. It smells of soft malt and a bit of hops. The flavor and texture are both light and refreshing. It is not a great beer, but it is a very nice beer that is made for drinking.
Reading for the Week: The Broken Window by Fredrick Bastiat – In this short and amazingly clear and intelligible economic parable Bastiat explains why a broken window may be good for the window maker, but it is a net loss for the economy on the whole. It is all, as is evident from the title of the essay that contains this parable, all about That Which Is Seen and That Which Is Unseen.
Question for the week: Is there a fundamental difference between stimulus spending and breaking windows? (Hint: In an earlier reading on this site, Bastiat used physical obstructions as an allegory to tariffs.)
It is a ridiculous position to be in, but I find very often that I have to defend a statement that seems self-evident: war is bad. It is obviously bad for the people who die and for the people who are wounded physically and psychologically. But it is also bad for the people who pay for it with their taxes and for the economies that suffer because capital that could be invested in products that improve quality of life is instead invested in devices that blow things up.
As Leo Tolstoy wrote, “in all history there is no war which was not hatched by the governments, the governments alone, independent of the interests of the people, to whom war is always pernicious even when successful.” The heads of government (and their cronies) are the sole beneficiaries of war.
As a response to my beliefs on this subject, one night I was accused of not “supporting our troops.” I had been drinking heavily and decided that my antagonist was correct; I have not done enough to support the troops. It is easy to forget that although it is politicians, the companies that pay for their campaigns, and career military men who are the cause and driving force of war, it is honest young men and women who suffer and die.
Then and there, I made a commitment to do something to support the troops: I wrote to my congressmen and senators, insisting that they introduce or support legislation that would bring home our troops stationed abroad. Of course, I have little faith in the efficacy of writing letters to politicians, but it was the best way I could think of to support the troops. If we really care about these young men and women (which I do), then the loving and compassionate thing to do is to bring them home, take the guns out of their hands, and pour them a nice, cold beer.
Beer of the Week: Kilkenny Irish Cream Ale – It surprised me when I learned that Ireland remained neutral during the Second World War. They certainly had their priorities straight by choosing beers over bombs. Kilkenny Irish Cream Ale is an Irish nitrogen widget beer. As I stated in the review of Guinness Draught, I am not sure that I understand how it works. Notwithstanding, the results are the same in this beer. The head is creamy, lasts forever and pours with some very attractive cascading. The aroma is of sweet roasted malts and the flavor is no different. The ruby brown beer is sweet and smooth and quite enjoyable.
Reading of the week: On Patriotism by Leo Tolstoy – “Patriotism,” writes Tolstoy, “[is] the abdication of human dignity, reason, and conscience… Patriotism is slavery.” For Tolstoy, patriotism is not a love of one’s land and people, but a “slavish enthralment to those in power.”
Question of the week: Is there a valid and meaningful distinction between “patriotism” and “nationalism”?