Ivy League school doesn’t accept Advanced Placement credits — good news or bad?

Via U News: Ivy League school no longer accepts Advanced Placement credits. Will this be a trend? – They tried to rationalize it from an education standpoint, but that is a joke.  The AP tests are standardized, which would mean that it wouldn’t matter what high school someone went to.  They either knew the material or they didn’t.  And the college pretends that they have something special to offer in basic classes like history, English, etc. that no one else has access to. Sure.

This is about money: They want you to pay $50,000 per year to take basic courses, which is ridiculous.

I highly encourage people to take dual-credit classes at their local community college.  The community colleges cost a fraction of the state schools, and if you are a high school student they cost almost nothing.  If you home school you can graduate high school with almost a year’s worth of credits.

The good news is that the college model is starting to crack.  It simply can’t stand another 10-20 years of cost increases that are multiples of inflation.  It is a bad move that they are taking away AP credits, but good news that they may drive people to more cost-effective solutions.

When Liberals unwittingly apply conservative economic principles . . .

The principles of capitalism work and have raised more people from poverty than Communists and Socialists ever dreamed of.  And even though Liberals literally fail at basic economics, every now and then they accidentally get one right. See Official: NY tax breaks would apply to ‘Tonight’:

The bill expected to be voted into law in coming days would provide a 30 percent tax credit for a “relocated television production.” Past and current tax credits have gone to new productions starting in New York, such as “Law & Order.”

Hmmm . . . so if you lower taxes, a business will be more likely to come to your location. Shocking.  And it stands to reason that if you raise taxes then more will leave.

Are the NY officials being irrational by offering the tax break?  No, because they realize that luring the Tonight Show will have all sorts of other benefits.  Too bad they don’t apply that across the board.

When you consider how the same behavior applies to countries you can see why jobs get outsourced (it isn’t just the wages).

How “food stamps” are helping to destroy the country, and how to fix the problem

I am all for helping the truly poor, but the current food stamp program is out of control and being systematically abused.  It is hard to conceive how much the program has grown under Obama, and we all know it would be a 24×7 news item if it occurred under a Republican administration.

The cards are basically treated like cash and can easily be converted to buy tobacco, alcohol, drugs — anything!  It was originally a program to help the truly needy but is now a thinly disguised vote-buying scheme.

We’ve all got examples of abuse.  My most recent one was a shoe salesman describing how his ex-girlfriend had literally thousands of dollars of tattoos while being on these programs.

The government could easily track the spending of these cards, but chooses not to.

The Kenyan hospital we visited on many mission trips has a worthwhile “food stamp” program.  Women walked long distances to get basic commodities and carried them back themselves.  Yet unlike most U.S. recipients, these women were extremely grateful and would dance and sing when they got the food.

The U.S. should go back to giving real food instead of cards.  Then the truly needy would get food and the fakers would skip the process entirely.  And the food would be healthier and less expensive: oatmeal, bread, apples, bananas, rice, pasta, butter, milk, OJ, peanut butter & jelly, corn flakes, sugar, flour, etc.

Oh, you don’t want those?  Tough!  That is proof that you don’t really need them.

And there should be drug and/or polygraph tests.  Have you gotten a tattoo or been on drugs while on food stamps?  Then you are cut off.

Enabling people to abuse the system harms the abusers, their children and those forced to pay for them.

Car buying tips

If you are in the market for a Honda in the Houston area, I highly recommend contacting Ali Fard at Russell & Smith Honda. We just replaced our 10 yr. old Honda Odyssey with a CRV and couldn’t be happier with it. I was dreading the car buying process because of all the games the salespeople typically play. I know how to get good deals but that doesn’t mean the process is enjoyable.

But this was different. Ali was extremely responsive, gave me a detailed drive-out quote via email with the best offer in town and took a lot of time to show us all the features of the new vehicle. It was, by far, the best car buying experience I’ve had.

The guy who did the paperwork didn’t try to high pressure me on any additions or extended warranties. I was in and out of his office in about 10 minutes.

Top three tips to get your best deal

1. Do your homework on Edmunds. They have great information on what people are really paying. The “True Market Value” prices are good to aim at and you can even beat them.

2. Go through the Internet salesperson at the dealership.

3. Be very clear about what you want. I always emphasize that all I care about is price (a Honda is a Honda, and I get my service done at Christian Brothers Automotive, not the dealership) and that I don’t like surprises. They are heavily rated and compensated based on customer satisfaction ratings so I make it clear that price and a lack of surprises will yield the highest satisfaction for me.

Some other things to think about

Unless your current car is costing too much in terms of repairs, seriously consider holding onto it.  It is the least expensive car you’ll ever own.

Consider getting your current car detailed.  For roughly $150 (typically much less than a monthly payment), it will look like new and help curb your craving for a new car.

Don’t just buy a new car to get better gas mileage.  Do a little math and you’ll find out that it will take years to pay back your investment.

Buy low maintenance cars and hold them a long time.  We aim at 10 years.

Check out Dealer Rater to understand who you’ll be dealing with.

Don’t buy high-tech extras like DVDs and GPS systems.  They cost 4-5 times what portable versions do and will be outdated quickly.  They cost a lot to fix if they break.  You also can’t transfer them to other vehicles.

Don’t look too eager when talking to a salesman.  You must be ready to walk away.  They get serious about negotiations when you are walking out.

Make your best deal on the price, then tell them you don’t like surprises and you’re sure that they won’t add in any charges such as “advertising fees” when they do the final paperwork.  Those should be part of the negotiated price, but they often sneak them in later.  A guy did that to me and I told him the deal was off unless he removed the $250 charge.  He did.

Don’t let them tell you they are “only” making $25 (or whatever) on the car.  That is a silly partial truth they use to describe the intercompany profit when one division of Honda, for example, sells to another division.  It is meaningless, especially when they try it on a CPA / finance executive with 25+ years of experience.

Go through the fleet dealer at the dealership if you can.  Most dealerships have a sub-group that sells to businesses who buy multiple cars.  Those buyers don’t have time for the gamesmanship of spending a whole day negotiating over each car.  The prices tend to be lower and non-negotiable.  Individuals obviously don’t buy a whole fleet of cars but sometimes a group like a credit union will combine the purchasing power to get fleet deals. You can submit what you want on the web and within an hour you’ll have lots of quotes.

Save up and pay cash.  When you tell them you’re ready to write a check when they agree to your price it gives you negotiating leverage.

The real outsourcing

Barack Obama is trying to appeal to people’s concerns about job outsourcing by making distorted attacks against Mitt Romney’s business record.  But I hope this backfires on him as his other attacks have thus far.  Consider these facts.

1. GE, one of Obama’s non-tax-paying cronies, is moving its x-ray division headquarters from Wisconsin to China. That’s one of many examples.

2. Tax rates are often bigger drivers than wage rates.  When Compaq shipped tons of jobs to Singapore in the 90′s it was because of Singapore’s tax rates.  I know, because I did many of the financial analyses.  Democrats have done nothing to make our tax rates more competitive.

3. The real problem with outsourcing isn’t that the jobs shift geographies but that they shift from citizens/taxpayers to non-citizens/non-taxpayers.  Therefore, illegal immigration is the ultimate catalyst for losing jobs.  Yet Obama has done everything he can to buy more votes by losing more jobs for his citizens.

4. Unions make U.S. businesses less competitive and foreign goods more attractive.

5. The anti-drilling Democrats send countless high paying jobs overseas, and most “Green” jobs have gone to other countries.

6. Oppressive and unworkable regulations like the Dodd-Frank bill and Obamacare make it more enticing for companies to move jobs.

Vote Republican to keep more jobs here.  More jobs here = less unemployment = more taxpayers = less people receiving benefits.

Health care: Still not a right.

This is a great primer on what rights really are, why universal health care won’t work, how to get health care costs down, the problem of trial lawyers and more.

Good doom.

In fact, the best doom I’ve heard of in a long time — Governor Walker’s Victory Spells Doom For Public Sector Unions – Forbes.

In 1959 Wisconsin became the first state to allow collective bargaining by government employees. The projected cost of supporting Baby Boomer union retirees now threatens to bankrupt the state, as it does many others. Scott Walker ran for office promising change. The fiscal medicine he is administering may be bitter, but it looks like it is starting to work.  The state budget has been balanced.  The unemployment rate has been dropping and is now below the national average. Property taxes are down. Fraudulent sick leave policies—which allowed employees to call in sick and then work the next shift for overtime pay—have been ended. The government has stopped forcibly collecting union dues from workers’ paychecks.

It gets better:

Best of all, the myth that union bosses represent their members’ interests has been exposed as a lie. Now that union dues are voluntary, tens of thousands of union members have stopped paying them.  Membership in the Wisconsin chapter of the American Federation of State, County and Municipal Employees union (AFSCME) has dropped by half. Membership in the state’s American Federation of Teachers (AFT) is down by over a third. Given unions’ influential role in most elections, the national implications of this trend are staggering.

Walker’s message is clear: The key to bringing balance back to public sector labor relations and balance state budgets is to break the iron triangle of closed-shop mandatory unionization, compulsory dues collection, and oversized campaign donations to politicians that promise to do the unions’ bidding. If other governors take his cue and take up the cause, that giant sucking sound you hear will be the air coming out of union bosses’ bloated political action budgets.

. . .

The power of private sector unions was long ago broken by many heavily unionized companies going bankrupt. While this was painful for both workers and shareholders, the economy motored on as nimbler non-union competitors picked up the slack. This approach is problematic for the public sector because bankrupt state and local governments cannot be replaced by competitors waiting in the wings. Yes, citizens can always vote with their feet, emptying out cities like Detroit, leaving the blighted wreckage behind. But isn’t Walker’s targeted fiscal retrenchment less painful than scorched-earth abandonment?

Chicago machine candidate Barack Obama rode into office to the tune of Hail to the Chief, promising the unions that backed him the gift of card check elections, ending the secret ballot that shields employees from union intimidation. He may well ride into retirement to the tune of On Wisconsin as the era of closed shop unionism comes to an end.

Hopefully this will embolden other governors to scale back the ridiculous, unsustainable union wages and benefits. If other states will follow the Wisconsin lead all at once then the unions won’t be able to channel all their $$ to just one state. Public sector unions should be illegal. You shouldn’t be able to donate a small amount to your boss so he can take a large amount from your ideological foes to give to you, and then repeat the process over and over.  And remember that many of those public sector union employees are indoctrinating the students in their Liberalism.

President Tightwad?

I think it is pretty obvious that anyone pushing the “really, Obama is super-thrifty” meme is either uninformed or disingenuous, but here’s a simple rebuttal to the math games they are playing.

Greetings from Mount Perspective, executive pay version

I worked at a Fortune 50 company for 17 years and saw a few executives that were grossly overpaid.  But many people were very talented and worked extremely hard to be outstanding in their fields.

But when you hear the class warfare rhetoric about executive pay, along with the ridiculous notion that the government should have any say in the issue, then think about these figures via A Little Perspective, Please.  The only problem is that they left off people like Al Gore, who have made outrageous amounts of profits peddling lies, aided and abetted by our government and public schools.

Actors	Earnings (Millions)
Leonardo DiCaprio	$77
Johnny Depp	$50
Adam Sandler	$40
Will Smith	$36
Tom Hanks	$35
Ben Stiller	$34
Robert Downey, Jr.	$31
Mark Wahlberg	$28
Tim Allen	$22
Tom Cruise	$22

Actresses	Earnings ($Millions)
Angelina Jolie	$30
Sarah Jessica Parker	$30
Jennifer Aniston	$28
Reese Witherspoon	$28
Julia Roberts	$20
Kristen Stewart	$20
Katherine Heigl	$19

American Athletes	Earnings ($Millions)
Tiger Woods	$62.3
Phil Mickelson	$61.2
LeBron James	$44.5
Peyton Manning	$38.0
Alex Rodriguez	$36.0
Kobe Bryant	$34.8
Kevin Garnett	$32.8
Matt Ryan	$32.7
Tom Brady	$30.0
Dwight Howard	$28.6
Dwayne Wade	$28.2
Sam Bradford	$27.3
Dale Earnhardt, Jr.	$26.6
Darrelle Revis	$25.8
Jim Furyk	$25.3

International Athletes	Earnings ($Millions)	Sport
Roger Federer	$52.8	Tennis
Manny Pacquiao	$52.5	Boxing
Fernando Alonso	$45.0	Auto Racing
Lionel Messi	$43.8	Soccer
Cristiano Ronaldo	$38.8	Soccer
Yao Ming	$35.7	Basketball
Rafael Nadal	$31.5	Tennis
Valentino Rossi	$30.0	Motor Sports
Wayne Rooney	$29.2	Soccer
Kaka	$27.3	Soccer
David Beckham	$26.8	Soccer
Ronaldinho	$25.8	Soccer
Ichiro Suzuki	$24.0	Baseball

Reality “Stars”	Earnings ($Millions)
Kim Kardashian	$6
Lauren Conrad	$5
Bethenny Frankel	$4
Audrina Patridge	$3.5
Kate Gosselin	$3.5
The Situation	$3

The budget and the “Christian” Left

In God’s Federal Budget Priorities? Mark Tooley does a good job of analyzing the problems of the religious Left, specifically the views of the Sojourners group led by false teacher Jim “the Gospel is all about wealth redistribution“ Wallis.  The allegedly Christian portion of the “religious Left” routinely denies the deity of Christ, his exclusivity for salvation, the authority and accuracy of the Bible and so much more. We have a term for people who hold their views: Non-Christians.  We aim to share the Gospel with them at their earliest convenience, and we aim to remove them and their false teachings from real churches as soon as possible.

But in the Religious Left’s surreal universe, all persons are intrinsically good but victimized by oppressive social systems, for which they are entitled to endless redress by a mammoth, centralized state, controlled of course by the enlightened Left.

So many serious problems are caused by ignoring the truth of original sin.  And it never occurs to the Religious Left that those systems had to have been designed by all these “intrinsically good” people.

Sanctimoniously, the Sojourners mobilizer bewailed that the “vulnerable” may lack super PACs and “gangs of lobbyists . . .

Sadly, the most vulnerable — innocent human beings in the womb — have the Sojourners and the rest of the religious Left either ignoring or advancing the ultimate social injustice of abortion. They love to quote the “least of these” part of Matthew 25 while ignoring that they all want taxpayer-funded abortions. That means they think one of our problems is that we aren’t killing enough unborn children.

But how can there be “advantage” for future generations if the U.S. federal government is straddled with tens of trillions in unredeemable debt, crippling taxes, bankrupting entitlement programs, an enervating Welfare State, and crippling regulations? The Religious Left’s faithful budget prophets do not explain.

. . .

Traditional Christianity envisions a world of balance in which all persons are called to contribute towards the common good with their own God-given talents.  Traditional Christianity sees all persons as moral agents responsible for their own decisions.  And traditional Christianity sees all persons as sinners who often need rewards, punishments and incentives as well as ongoing challenge and accountability.  But in the Religious Left’s surreal universe, all persons are intrinsically good but victimized by oppressive social systems, for which they are entitled to endless redress by a mammoth, centralized state, controlled of course by the enlightened Left.

. . .

How to pay for all these additional expenses?  Cut nuclear weapons, submarines and aircraft, along with prisons, and immigration law enforcement.

What could possibly go wrong with that plan?

Christianity is a very earthy, no nonsense faith embodied in St. Paul’s admonition, “If you don’t work, you don’t eat.”  The early church fathers and sensible churchmen ever since have believed that governments are ordained mainly to defend their people with armies and police, to punish the criminally wicked, and to sustain public order so that honest people can exercise their virtues freely to the glory of God.

But the Religious Left chooses to see Big Government almost as a replacement for God, the church, the family, and virtually all other human institutions.   They ascribe to the federal Welfare and Regulatory State powers and mysteries that even the most zealous of ancient pagans never ascribed to their favorite golden idols.

Coming soon to a country near you

It is just a matter of time for any entitlement state.  People will vote for free money (well, free to them, at least) and would rather see the country go down in flames (literally and figuratively) than give up some of their extravagant benefits.  Via Greek lawmakers approve austerity bill as Athens burns.  (Hat tip: Lone Wolf Archer
)

The Greek parliament approved a deeply unpopular austerity bill to secure a second EU/IMF bailout and avoid national bankruptcy, as buildings burned across central Athens and violence spread around the country.

Yep.  That’s what unions and entitled people do.  Remember Wisconsin?

Cinemas, cafes, shops and banks were set ablaze in central Athens as black-masked protesters fought riot police outside parliament.

. . .

“Vandalism, violence and destruction have no place in a democratic country and won’t be tolerated,” he told parliament as it prepared to vote on the new 130 billion euro bailout to save Greece from a chaotic bankruptcy.

Papademos told lawmakers shortly before they voted that they would be gravely mistaken if they rejected the package that demands deep pay, pension and job cuts, as this would threaten Greece’s place in the European mainstream.

Too late, I’m afraid.

“It would be a huge historical injustice if the country from which European culture sprang … reached bankruptcy and was led, due to one more mistake, to national isolation and national despair,” he said.

It will be a greater historical injustice if politicians on both sides succeed in destroying the U.S. because they were too gutless and/or incompetent to cut entitlements while we still have time.

“We are facing destruction. Our country, our home, has become ripe for burning, the centre of Athens is in flames. We cannot allow populism to burn our country down,” conservative lawmaker Costis Hatzidakis told parliament.

The air in Syntagma Square outside parliament was thick with tear gas as riot police fought running battles with youths who smashed marble balustrades and hurled stones and petrol bombs.

Remember this important graph.  The real purpose of government — defense, keeping an orderly society and manage a reliable currency — could be more than paid for with our current tax receipts.  But the entitlement spending dwarfs those costs and ensure that entitlement spending will grow.

 

Remember the cycle: Politicians and public sector unions funnel cash to each other — cash that they got from taxpayers.  They have no reason to change anything, and every reason to grow.

We need to elect some adults who will do something about this.

A few money-saving tips

I’m a big fan of living below your means and the reduced stress and peace that come with it.  I’m also a big fan of saving money and making the most of what we’ve been blessed with.

How to save at Target — If my family misses a week at Target they send us get well cards.  You can get their “Red Card” credit card and save 5% on everything in the store and online.  You also get free shipping, which makes it handy for sending gifts.  And you can have 1% go to a school of your choice.  And if you use eBates you can get an extra 3% off online — so that is 8% off online purchases plus free shipping.

How to save on Amazon — Get the Amazon VISA and you get 3% off Amazon purchases and 1% on everything else you use it for (the credits are applied to your Amazon account so they are nearly as good as cash).  Also be sure to use the “Subscribe and save” feature where you can. You get 15% off on things you buy regularly, such as batteries, and they deliver them every X months. You get to pick the delivery schedule, it is easy to skip shipments if you don’t need them and easy to cancel.  We use Amazon a lot so the Prime membership (free two-day shipping on almost everything) is a great value.

Bing travel - I have found that their price indicators (guidance on whether prices are likely to increase or decrease) have been accurate.

Credit cards: Have the full balance paid from your checking account if you can (Chase and  Target do, for example).  That way you are never late and you don’t have to spend money on checks and stamps.

Note: Captain Obvious says that the suggestions on credit cards only work if you don’t buy anything you weren’t going to buy already.

Don’t be fooled by the income inequality red herring

Via On Income Inequality:.

It is certainly worth investigating why income and wealth inequality are increasing, but only to better understand the global economy and to help determine how to increase the income and wealth of the poor even faster. The real question is not how to reduce income and wealth inequality but how to increase the income and wealth of everyone. Increasing income and wealth inequality is not a problem if real income and wealth are also increasing at all levels, as is the case now. Leftists, who dislike capitalism and envy the rich, want everyone to be focused on the wrong issue (income inequality) in order to avoid talking about the fact that the free market has succeeded in increasing real incomes at all levels.

The income and standard of living of the poor and the “poor” (i.e., those who make less than average but have remarkably higher standards of living than most of the planet) have risen dramatically over the last 200 years.

When politicians of a certain political party are destroying the wealth for everyone — not just the rich — they like to change the subject by encouraging coveting and envy.  Their trick du jour is to talk about income inequality.  Just remind them of the facts of history and then ask how spending over 50% more than you take in is helping the situation.

And you can also point out that confiscating the wealth of all billionaires and professional athletes barely makes a dent in the deficit.

Some good ideas for the college loan problem

Hey, if you want to get a degree in a field with little or no demand* then don’t be surprised if you end up with a lot of debt and no job.

The government has been the problem here, not the solution.  The part in bold is a must-read, as it gives a simple explanation of how the government has wreaked havoc with the student loan crisis and the housing crisis in typical “ignoring human nature and the law of unintended consequences” style.  Via Glenn Reynolds: Let’s put colleges on the hook for loans that their students can’t repay:

How do you solve the problem of young adults earning worthless degrees and a truckload of debt? Three ways. One: The Chinese way, which, while characteristically direct, is probably too authoritarian for most Americans’ tastes. Two: End federal student loans. Let kids take their chances with private lenders, who’ll need assurances up front before they lay out the cash that they’ll get a return on their investment after graduation. This idea would, I assume, die a grisly death after the first round of “all Jimmy/Sally wanted to do was go to State but he/she couldn’t get the money” stories. Three: The Reynolds way.

This is a simple case of inflation: When you artificially pump up the supply of something (whether it’s currency or diplomas), the value drops. The reason why a bachelor’s degree on its own no longer conveys intelligence and capability is that the government decided that as many people as possible should have bachelor’s degrees.

There’s something of a pattern here. The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle class people.

But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay in, the middle class.

Subsidizing the markers doesn’t produce the traits; if anything, it undermines them. One might as well try to promote basketball skills by distributing expensive sneakers…

For higher education, the solution is more value for less money. Student loans, if they are to continue, should be made dischargeable in bankruptcy after five years — but with the school that received the money on the hook for all or part of the unpaid balance.

* that is, degrees such as Lesbian Astrology (it is possible I made that up) or Women’s Studies (sadly, I didn’t make that up).

The Isle of Deserta exercise, or how a bunch of 7th graders are better at setting up a society than our politicians

For 12 years, I taught Junior Achievement classes to nearly every grade from K-12, but the Junior High classes were my favorites (I was as surprised as you are).  They weren’t too cool to take part and had a lot of energy.  They were quick to pick up business concepts such as supply and demand and even the elasticity of supply and demand (e.g., insulin has inelastic demand because no matter how low the price goes non-diabetics won’t buy it, but iPods have elastic demand because the lower the price the more people will buy).  Even the non-egghead kids understood the concepts and actively participated in the lessons.

One of my favorite exercises was the Isle of Deserta.  The kids pretended that they had won a trip to an exotic vacation paradise and would describe what they would pack.  Once they got there they discovered that the island was deserted and they had to figure out how to survive (the exercise predated the Survivor TV show but had a similar concept).

They always created a consistently logical and workable society, but with the proper controls to ensure that it was sustainable.  They realized that it was better to split up jobs to those most qualified and interested, such as some doing the fishing / gathering and others doing cooking and cleaning, as opposed to having everyone fend for themselves.

When asked what they would do for those who could work but refused to, the immediate reaction was something like “Make them shark bait!”  But what about an injured person who couldn’t help?  ”We’ll take care of them and give them food anyway.”  What if the person gets better but doesn’t want to work? “Shark bait!”

They intuitively knew that a society should care for the weak and needy, but that it couldn’t survive if able-bodied people shared in the benefits but not the workload.

Even the Bible notes that, although the false teachers pretend this verse isn’t there or isn’t from God:

2 Thessalonians 3:10 For even when we were with you, we would give you this command: If anyone is not willing to work, let him not eat.

One of my favorite moments was when a girl went against her peers and insisted that everyone should get the same food and benefits regardless of how hard he or she worked.  She was most adamant about this point, so I let her share her minority view.

But at the end of the lesson when I went to pass out some candy for their overall good behavior (Jolly Ranchers, the official candy of Junior Achievement), she pleaded for extras because she had participated more than the others.  At first I thought she was kidding, but she didn’t catch the irony of her request.  I didn’t want to embarrass her, but it was a teachable moment to point out that she was now proposing a system that was the opposite of her previous submission.  I hope the lesson wasn’t lost on her, and that I cured her of her liberal inconsistencies!

The 7th graders intuitively understood the basics of human nature, especially when the situations were stripped of politics and sound bites.  It is noble and right to help the truly weak, such as widows, orphans and the disabled, but a system without controls and accountability is doomed to fail.  And a system full of entitlements, political payoffs and incentives not to do your best is doomed to fail more quickly.

I say with all seriousness that our country would be much better off if everyone, including every elected official, had to take Junior High level Junior Achievement classes.

Two easy pictures: How the welfare state begins and ends

It is disappointing to see how people think the Greece situation is some sort of anomaly that could never happen here. But it is only a matter of time. Look at the reactions in Wisconsin and Occupy Wall Street when the entitlement crowd was asked to give up a small part of their higher-than-market-rate benefits.

See Two Pictures that Perfectly Capture the Rise and Fall of the Welfare State:

These images are remarkably accurate. The welfare state starts with small programs targeted at a handful of genuinely needy people. But as  politicians figure out the electoral benefits of expanding programs and people figure out the that they can let others work on their behalf, the ratio of producers to consumers begins to worsen.

Eventually, even though the moochers and looters should realize that it is not in their interest to over-burden the people pulling the wagon, the entire system breaks down.

Then things get really interesting. Small nations such as Greece can rely on permanent bailouts from bigger countries and the IMF, but sooner or later, as larger nations begin to go bankrupt, that approach won’t be feasible.

Here are some lessons from the European crisis that would help us, if only the voters would come to their senses and elect some leaders with the courage to carry them out, instead of continually electing people who fail at basic economics:

1. Higher taxes lead to higher spending, not lower deficits. Miss Morandotti looks at the evidence from Europe and shows that politicians almost always claim that higher taxes will be used to reduce red ink, but the inevitable result is bigger government. This is a lesson that gullible Republicans need to learn – especially since some of them want to acquiesce to a tax hike as part of the “Supercommitee” negotiations.

2. A value-added tax would be a disaster. This was music to my ears sinceI have repeatedly warned that the statists won’t be able to impose a European-style welfare state in the United States without first imposing this European-style money machine for big government.

3. A welfare state cripples the human spirit. This was the point eloquently made by Hadley Heath of the Independent Women’s Forum in a recent video.

4. Nations reach a point of no return when the number of people mooching off government exceeds the number of people producing. Indeed, Miss Morandotti drew these two cartoons showing how the welfare state inevitably leads to fiscal collapse.

5. Bailouts don’t work. This also was a powerful lesson. Imagine howmuch better things would be in Europe if Greece never received an initial bailout. Much less money would have been flushed down the toilet and this tough-love approach would have sent a very positive message to nations such as Portugal, Italy, and Spain about the danger of continued excessive spending.