Nothing Is More Expensive Than A Free Government Service
ZeroHedge.com Wed, 07/03/2019 - 15:40
Authored by Jeffrey Tucker via The American Institute for Economic Research,
I’m listening to politicians hock their wares these days. The same ideas keep reappearing. Put them in charge and health care will be free. College education will be free. All life essentials will be free. Jobs will fall like manna from heaven. There will be a guaranteed income. Retirement will be secure.
You get the impression of government as some magic fairy who bestows goods and services on people without the annoying part of having to forgo income to get them.
It’s a world without prices, without demands, without cost, a bounty that comes to one and all merely because powerful people legislated it to be so. The power of a piece of paper backed by law!
That’s the fantasy. The reality of government is radically different. Everything is priced. The pricing is not subject to the competitive discipline of the market. It is irrational pricing made up by a bureaucrat. There are always conditions. Noncompliance is punished by the taking away of your liberty and property.
This is the daily reality of life under government control. Far from feeling like benevolence, in practice, it is exploitative and often brutal. The daily experience of this should be a warning to anyone who considers expanding government control more deeply and broadly into other areas of life.
Let’s just consider an obvious case where government exercises hegemonic control: the ability to drive your car from here to there.
I tell the following story not because it is particularly unusual but only because it is on my mind because it happened just three days ago.
A friend of mine was planning a trip to the city with another friend. They were going to have a night on the town. They hit the road with a sense of carefree happiness and anticipation. Only a few miles later, the blue lights appeared behind them. The policeman pulled them over and demanded identification. The driver asked why she had been pulled over, but the policeman wouldn’t say. After checking the ID, he revealed that he had been checking plates and fishing for possible problems.
He returned after some wait to announce that her license had been suspended. She was shocked. It was an unpaid speeding ticket. She pointed out that she did, in fact, pay the ticket. The electronic database disagreed. He said he could arrest her, but he would exercise compassion and merely impound her car. This he ordered, leaving them potentially stranded on the side of the road. They asked for a ride home. He mercifully agreed to give them that.
Their weekend of fun was ruined. When the Department of Motor Vehicles reopened on Monday, she called. The policeman was completely mistaken. He never should have stopped her. Now, what is the recourse? She could spend a few days in court with an attorney. The result might be some kind of black mark on the cop’s record. Or maybe not. The worst possible result for him would be a paid temporary suspension, but that wouldn’t be likely.
In the interest of time, she could just pay the money. I’m going to make up some numbers because this hasn’t happened yet. She will pay a towing fee, a storage fee, a license-reinstatement fee, a court fee, and some others. Let’s say it costs, in the end, $1,000, plus the opportunity cost of missing a weekend vacation, plus the trauma of being repeatedly threatened with arrest and having her car temporarily stolen by the government.
And yet, it was all a mistake.
That’s the kind of pricing that the state does for you.
Or consider a case where nothing goes wrong. I will use my own case. I bought a car out of state. To make it legal in the state in which I want to drive it, I had to pay a registration fee, a license fee, a fee for the payment of electronic tolls, an emissions-check fee, a titling fee, a property tax, a downpayment on insurance, the first month’s insurance, a local-government fee, a runner fee, a processing fee, and several other fees I can’t remember, for a total of $1,300. All mandatory. This is just to be able to drive from here to there. If I fail to do even one of these, I could be stopped and arrested, and my car could be impounded.
This is further supposing that I get no tickets. A ticket can be written for just about anything. And the price of the tickets is entirely made up by bureaucrats. They aren’t so high as to incentivize you to protest but aren’t so low as to starve the state of the revenue it wants.
In the market, there is always downward pressure on prices. Every entrepreneur tries to cut costs to attract customers. The state is always working to raise its prices as high as possible to get as much of what you own as possible.
If you have ever spent any time in traffic court, you know the racket. You are charged and charged at every step, every piece of paper, every movement made by anyone in the building. They are random, and they add up. The real victims are, of course, the poor, who are pillaged constantly for money they don’t have (so they have to get creative about getting money, not always in legal ways).
The whole world of government services is packed with prices. You have no choice. Everywhere you go you have to pay. And consider this: your taxes are already paying for all these services which are provided for you on a pricing basis. The toll roads, the processing fees, the court fees, the filing fees, the usage fees, the late fees, the tickets, and on and on forever. In practice, government has no hesitation for charging you for everything they grant you for free.
You can’t escape them. There is a Medicare tax, a cell phone tax, a tax on tobacco, a tax on liquor, a tax on landline phones, a tax for being self-employed, a tax on airline tickets, a tax on gasoline, a tax on electricity, a tax on water, a tax on television, a trash-collection tax, a hotel tax, and even a special tax for those who decide to give up their citizenship because they are sick of all the taxes. New York has even a bagel-cutting tax, not to mention thousands of excise taxes.
And keep in mind that you are already paying taxes for the very existence of lots of services. Government taxes you once for providing the service and taxes you again if you actually use the service. I can’t right now think of a single thing that comes from government that is actually completely free.
This fact should at least reveal something about how credible these claims are that somehow magically in the future, you will be getting things for free from government. Every such promise should be greeted with instant, habitual, and empirically verified incredulity.
Memorize This Term: De-dol-la-ri-za-tion!
ZeroHedge.com Wed, 07/03/2019 - 19:20
Colonel Muammar Qaddafi, who wanted to dethrone the dollar, paid for it with his own life.
Iraq’s President Saddam Hussein, who wanted to make settlements in a currency other than the US dollar, was hanged.
Now it is Russia and China, which want to do the same.
Just days ago an agreement was signed to this effect.
(i) Russia and China have decided to begin to make mutual settlements increasingly in their respective national currencies, and
(ii) they have decided to bypass the SWIFT system, introducing their own instead.
Moscow has also revealed lately that Russia has stopped using the US dollar and the SWIFT system for settlements in arms trade.
The exchange of goods between Russia and China is significant; Russian weaponry has a lot of clients around the globe. On the other hand both countries, and especially China, have large dollar reserves. And both states are under attack from the West, be it economic sanctions against Moscow, be it American trade war against Beijing.
To administer punishment for such a daring act was child’s play in the case of Libya and Iraq: the two countries were swiftly dealt with. What can one do with a nuclear superpower on the other hand and Asia’s largest economic tiger on the other?
If Washington has wanted to weaponize Moscow against Beijing or the other way round as it seems it has, then the strategists on the Potomac must swallow a bitter pill. The hybrid war waged against Russia in Georgia, Ukraine, Moscow, the Baltic States, Poland as well as in Venezuela and Syria rather than weakening the target state have cemented its embrace with the Middle Kingdom. The same effect was brought about by America’s trade war against and other unfriendly acts aimed at Beijing. Rather than subdue the two states, Western politicians pushed them into each other’s arms.
The financial world is witnessing the beginning of de-dollarization. We had better become used to this term. Over seventy years after the initiation of the Bretton Woods international financial system that enthroned the dollar as a currency of international settlement (1944), and over forty years after the Jamaica Accords, which modified the former (1976), over twenty years after the fall of the Soviet Union, the prime opponent of the United States, when it seems that history has run the full circle and has nowhere else to go, with humanity being about to enter a politically uni-polar world, the gauntlet has been thrown down by the ruble and the yuan to challenge the position of the greenback and the powers behind it. Will the three remaining BRICS countries (Brazil, South Africa and India) follow suit?
Admittedly, the US and EU economies have no rivals, but empires and superpowers have one characteristic: they can fall and disintegrate within months. World War One brought the total collapse of the German, Hapsburg, Russian and Ottoman Empires; the Cold War – the disintegration of the Soviet Union. Those events happened unexpectedly and swiftly.
Having the international currency in its hands, the United States has been doing all kinds of financial tricks, of which printing money out of thin air is just the best known example. Washington could keep other economies in constant dependence by limiting the availability or value of the dollar and also – as economists call it – by importing American inflation. Stripped of this tool, the US will be deprived of one of the powerful weapons in exacting obedience from foreign sovereigns.
Western economists comfort themselves with the idea that the plan forged by Moscow and Beijing is far from coming to fruition and hampered by so many objective factors that its success is most unlikely. Well, after the Second World War Americans were certain that the Soviet Union – due to the backwardness of its economy and the havoc wreaked by the hostilities – would only have its own A-Bomb in twenty or so years. It had within four, soon to be followed by the launching of the first satellite and putting the first man on the earth’s orbit.
Making settlements in national currencies, both Russia and China will gain more financial leeway. This kind of settlements can gradually be spread to the dealings with other countries. No doubt, Russian weapons, which are of high quality and desired by many countries, once they are sold in exchange for the ruble, will pave the way for turning Russia’s money from a convertible into an international currency.
China will be less dependent on the dollar. It will stop accumulating empty money and gain leverage in its dealings with the United States. The bargain chip? The volume of trade in the ruble/yuan. The less friendly attitude on the part of Washington, the larger the volume and vice versa.