Friday, March 18, 2011

Why can't I pay more?

A few days ago I had the pleasure of visiting the DMV. It wasn't the worst experience I have ever had, but unpleasant nonetheless. What is amazing to me, is that there is ALWAYS a line. I mean, by sheer chance, one would think that there are times of the day where business is slow and you could get right in. Not a chance.

My purpose at the DMV was to get a new Washington State drivers license. It cost me not only 2 hours in line, but $64 to boot. It's really not about the money, but about my time. Truth is, I have better things to do than sit at the DMV. I could watch TV, enjoy a nice relaxing walk, or even work a little bit. I value my free time a lot, and I would be willing to fork over a few more dollars to have more of it.

But I can't pay more at the DMV for another person behind the counter. The reality is that the number of people behind the counter is very loosely correlated to the number of people in line. So, when lines build up, you wait. You wait as long as it takes, or until the next election.

In another system known as the free market, when demand goes up, prices go up, which encourages more supply and less demand. In laymans terms, you wait less.

Thursday, March 10, 2011

It's all been said before

I can't tell you the number of times I hear people tell me that all you have to do is explain things to people and it will change their minds. It won't, and for proof I offer the simple fact that nothing I say is original. Truth of the matter is that everything I say, pretty much everything I will say, has already been better said.

I'll give myself a little credit and say that my thoughts are not exactly the same as others, but the point is that everything you read here about economics and politics can be found throughout history. Hell, that's where I get a lot of inspiration from.

My point is not to diminish my uniqueness, but to say that if you believe lack of knowledge is what drives people, and that someone like me providing that knowledge will change people, you are dead wrong. Most political blogs preach to the choir, and the choir loves to sing. It's not about debate, or rationality, but adherence and propagation of dogma. We all love to hear that someone agrees with us, and we seek out that approval. It's a good feeling.

For me however, that's not interesting. I actually want to change things and I am not interested in dogma. I don't care if liberals or conservatives are hypocrites. I don't care if something is "unconstitutional" or not. What I care about is how can we make things better. Better, not perfect, but within reason and reality, better.

I firmly believe in the supremacy of free markets. Sound economics dictates that that is the best way to allocate resources. But I also believe that human nature doesn't give two shits about sound economics. They care about fairness, and dignity and life in general. Perception is reality. Not something I like to admit, but it's the truth. I write with that in mind, I write, act, to make things better. That's my only goal and it's what interests me most.

Tuesday, March 1, 2011

Borrowing from the future, today

Generally, I try to understand the other side. Especially when it comes to economics because that's a topic which ought to be non-partisan. The goal is to generate wealth. What we do with that wealth is another question. Yet, despite everyone sharing the same goal, there is a ton of disagreement over how to get there.

Over and over again liberals (and some conservatives) extol the virtues of deficit spending. They say there is slack in the economy due to lack of demand and that government must pick up the slack. Below is what Alan Blinder of Princeton University had to say in the Wall Street Journal:
...But even if you dislike some particular piece of government spending, how exactly does it kill jobs? (The taxes raised to pay the bills may kill jobs, but we are talking about deficit spending here.) If the government either hires people itself or purchases things from private companies, doesn't that create jobs?

...My point is simply that, when there is so much unused capacity and so many unemployed people hungry for work, "job-killing government spending" is oxymoronic. Virtually any type of spending, public or private, will create jobs.
Princetonians deserve better. First, there is no such thing as spending. Only trading between people. Let's think about it.

When I spend money, what I am really doing is trading either something I made, or a service I provide to another person for something they made or a service they provide. Money represents what you have made or done for someone else. It's a store of value to be used in the future. Money is not simply a piece of paper.

Second, there is no such a thing as deficit spending. If we calling spending what it is, trading, it would be obvious that deficit trading is nonsensical; you can only trade what you have. The fiction being perpetuated is that by government printing money you can have deficit spending. Well, no. What happens when the government prints money is that the value of all money goes down. In essence, all current holders of money have been taxed by the government and according to Mr. Blinder, that does kill jobs. Regardless of your political persuasion, government spending is always a tax on the economy.

The reality is that government spending doesn't create anything, by definition it cannot. It can only direct the spending of it's citizens. It can trade what people have already created, We can debate when and how government should do this. But make no mistake, government never creates anything. The worst part about this scheme, is that in a stealth attempt to redistribute wealth, it hurts those most with the least wealth. Ask yourself this, who out there have the most resources to guard against government devaluing the currency? You guessed it, the rich.