Experimentation with writing an op-ed: Senator Rand Paul’s balanced vision for the economy

While Obama was  recently  addressing the aftermath of his sexist remarks on the charm and physical beauty of the attorney general of the state of California and the democrat leaders in the senate were busy finding ways and means to snatch the guns from the hands   of the law-abiding citizens, there emerged the leader that the country most needed; namely senator Rand Paul. Senator Paul has recently proved that he is the serious leader our country wants most urgently amid President Obama and some democrat leadership obsession with petty and superficial issues. Senator Paul protested Obama’s usage of drones to kill American citizens and showed that kind of leadership that transcends the party lines. However, the most amazing of Senator Paul’s vision is his economic policies and  budget plan.

Rand Paul’s economic plan for the United States is short and simple.  In an interview with Glenn Beck, Senator Paul summarized his plan, “Money goes where it’s welcome and it’s not welcome in the US, so it’s going to other countries.”

Senator Paul opposes “revenue neutral” tax reform, saying that it does nothing for the economy.  It simply means that one person pays less, while someone else pays more.

The senator proposes a flat 17% tax, a 5-year balanced budget plan, and cuts on regulations facing American businesses.  The only thing that truly stimulates an economy is money in the economy, he says.   His 5-year plan to balance the budget is  practical not radical; it does not raise taxes, instead it stops and reverses the currently unsustainable federal spending in all areas.  The subsequent flow of money within the economy then produces growing revenues.  The plan extends tax cuts, eliminates 4 departments, addresses entitlement programs with final implementation in fy2016, and repeals Obamacare with all its subsequent taxes and regulations.  While this may sound radical to some, the plan is indeed balanced in that it does not change social security or Medicare benefits and important responsibilities within the 4 eliminated departments are transferred to other existing departments (nuclear research and weapons are transferred from the dept. of energy to the defense department).  For those of us seeking further education, an additional benefit is that Pell Grants are maintained despite the deletion of the dept. of education.

FreedomWorks once again rates Paul’s budget the “best of show” when compared against Paul Ryan’s plan, the official Republican plan, and the Democrats’ plan.  Paul’s is the only one to genuinely tackle and reform entitlement spending (social security, Medicare, and Medicaid) by making participation voluntary and letting individuals opt into private accounts.  Paul’s budget creates a single flat tax system and reduces regulatory pressures on American businesses.

Senator Paul demonstrates long-term interest in growing the economy.  In 2011 he drafted an economic growth blueprint which promotes a pro-drilling policy on American soil to “expand U.S. industry and reduce the country’s reliance on Middle East oil.”  The plan also cuts corporate tax rates to 25% from 35% and reduces the regulatory burden on American businesses.

If the senate which is controlled by the liberal democrats votes to accept Senator Paul’s plan, they will be doing all of us an historic favor as the country begins to turn around economically.  If the president were really interested in robust vibrant American economy, he would have worked across the aisle and have embraced some of senator Paul’s visions; the thing which would benefited the whole country. All of us know that Obama did not do any of that. he insisted on his one-sided and short-visioned economic policies which broke the social fabric of the nation and lowered the living standards of the American people and increased the levels of poverty and misery.

Senator Rand Paul is the favorite of the freedom loving Americans in the 2016 presidential elections. Rumors are there that Senator Paul may need to face either Hilary Clinton or Joseph Biden in the general elections in 2016. The liberal media is already pondering that Clinton or Biden are beating Senator Paul in the polls. This is laughable. The absurdity of such predictions is that it shows how much the American voters are brainwashed by the entertainment media,  new channels propaganda and the public education system. These three outlets  misinform and disinform the voters and take them away from the solid constitutional policies, the ones embraced by the Senator Paul, and are given to the shallow policies conducted by the democrats such as Clinton or Biden though the history tells us that these two figures are notorious for being dishonest politicians or by unfaithful republicans such as McCain or Romney. So, Senator Paul has the solid constitutional economic plan that can restore American prosperity, leadership and exceptionalism; the challenge will be to guard against democrats’ smear propaganda and to teach the voters especially the young and immigrants the blessings of liberty and individualism inherent in the Constitution of the United States and will be defended only by the freedom-loving politicians such as Senator Rand Paul.

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The importance of the gold standard

In a phone call recently with my sister who managed to run away from the war between the Syrian army and Islamic radicals, she repeated her praise for gold and her awe over how Syrian paper money lost its value in a matter of a few months.  Without the gold she bought ten years ago, she would not have found resources to escape the war zone.  The paper money they had and saved became almost useless. With the shortage of any other valuable currency  and the uselessness of Syrian paper money, only gold could save  her and her family. 
 
Such conversations with my sister triggered my mind  to think of the dangers of paper money and the importance of restoring the gold standard stolen from the American economy in 1970.  Seeing all the buzz about the federal reserve and the politicians’ interference in the economy through raising or lowering interest rates, over regulating the financial institutions, or printing more money through the notorious QEs (quantitative easing) which gradually cause the value of the paper dollar to decline and perpetuate inflation, I find myself encouraged to embrace and explain to others the importance of the gold standard to the monetary system.  It is well-known that the gold standard in the monetary system guarantees stability in prices and fights inflation because under the gold standard the economic unit of account is based on a fixed weight of gold. In the paper money economy, the federal reserve and politicians decide, for example, the interest rates which is almost zero nowadays  under a controversial principle that the lowers interest rates encourage the desire for borrowing.  The fed does so  without giving attention to the mechanisms of the free market and the law of supply and demand and the market relationships between the borrowers and the lenders. 
 
I came to see that the gold standard has a virtue bigger than the monetary value. It basically encourages the values of individualism and freedom the same way the paper money makes  the individuals subject to the institutions that print that paper. Henry Hazlitt in his book Inflation said, “The gold standard is not important as an isolated gadget but only as an integral part of a whole economic system. Just as ‘managed’ paper money goes with a statist and collectivist philosophy, with government ‘planning’, with a coercive economy in which the citizen is always at the mercy of bureaucratic caprice, so the gold standard is an integral part of a free enterprise economy under which government respects private property, economizes in spending  balances its budget, keeps its promises, and refuses to connive in overexpansion of money and credit.” Hazlitt sees price fixing and monetary management -the most notorious aspects of the paper money economy- as false remedies for the inflation that is inevitable in the paper money situation and they further magnify the role of the government in every economic transaction. In economies that fight the gold standard, Hazlitt sees that  instead of automatic currencies based on gold, people are forced to take managed currencies based on guile. Instead of precious metals they hold paper promises whose value falls with every bureaucratic whim.  
Some may argue that if the gold standard fights  inflation and gives stability to the market, how could  the Great Depression happen in 1929 and last until 1933 at the time most of the world currencies used the gold standard?  This is a legitimate question. The basic answer that scholars give is that the managers of the gold standard not the gold standard itself caused the crisis. Charles Rist in Triumph of Gold addresses this issue and shows that “the gold standard cannot offset the mismanagement of our monetary affairs by government, central banks and commercial banks, made possible by our Federal Reserve Act, nor can it correct, at times, the incompetence of the money managers,” and that the Great Depression was essentially due to the fact that the governments of the United States and of Great Britain failed to recognize that the huge paper money inflation during World War I and the concomitant rise of prices rendered the maintenance of the pre-war relationship between gold and paper currencies impossible. This argument against the gold standard does ignore the fact that the world has continued to witness many economic crisis as recently as 2008 recession even though the gold standard has been abolished since 1970. Contrary to the great depression which was came to an end because of the recovery mechanisms of the gold standard economy of  the 1930s, it seems that the great recession of 2008 never came to an end even though the Fed and the government  have printed more than trillion dollars to bail their way out of the recession.   
It is interesting to see that the root of our financial problems date back to the federal reserve which was established in 1913.  Since its establishment, citizens have always been denied access to the operations of the Fed, neither has it been audited at any time by the congress of the United States.  Such secrecy may make people ask why the Fed is so against the gold standard and so interested in printing money out of thin air.  Congressman Ron Paul is famous for his debates with Ben Bernanke over the Fed and the government’s manipulating hand in the economy. Recently the former congressman issued a statement which clearly referred to the damage  the Federal Reserve policies do to the American economy after Bernanke held a hearing in front of the Congress. To emphasize the Fed’s contradictions and manipulations in economy, Paul wrote: “I would also ask Chairman Bernanke, how the German Bundesbank’s request for the Federal Reserve to return the Fed’s store of German gold to Germany could affect the US’ standing in the global economy. And most importantly, why are so many central banks buying gold when you told me in 2011 that ‘gold is not money’? To sum up, the gold standard protects the citizens and their savings against inflation and maintains the value of the currency. The gold standard economy simply stops the ravages of political interference with the currency and other economic activities. 
 
 

The War on the Small Farms and Raw Milk

It is a fact now that local small farms are healthier and more sustainable and natural than big agribusinesses which use all kinds of chemicals and tactics to produce more products and keep them for a longer time. The story of the farmer Joel Salatin and his polyface farm is the greatest evidence that support my claim.  In the free market, the competition would be open between these two models of farming with free consumers choosing which way to go.  Naturally, they would lean towards the natural local way: the small family farms. However in the USA the rules of the free market are broken and the competition is called for the big agribusiness through mandating that the USDA, FDA, and other federal and state law enforcement agencies fight the  small farms in order to satisfy big agribusiness  lobbyists and insure that the consumers are left only with the products of these big agribusiness on the shelves. No wonder these practices and the heavy hand of government regulations on small farms have diminished an important part of our economy  and workforce. No wonder that the number of farms in the United States has fallen from about 6.8 million in 1935 to only about 2 million today. A blog dedicated to these issues estimated that every week approximately 330 farmers leave their land for good and that only 2% of Americans now live on the farms. The giant food industry’s crony capitalism and defiance of the rules of the free market have caused the near disappearance of small farming. It is estimated that the USA has lost 88% of small farms since 1976. Big agribusiness, the food processing conglomerates, and big seed companies such as Monsanto completely dominate the farming and food industry and consequently dominate the food cycle and food practices in the USA.

Approximately 10 corporations control what 300+ million Americans eat and drink on a daily basis.   Big business is free from regulations and some of their CEOs end up in government positions, as in the case of President Obama appointing Michael Taylor, the former Monsanto vice-president, as the commissioner for the FDA. Interestingly, regardless of who resides n the White House, the big agribusiness have control and power on the decision-making ranks.  The assault of the unrealistic and unfair regulations always falls on the heads of the small farms. These regulations range from complicated definitions of processing raw materials, to the size of the farm, or lengthy legal definitions of what makes a place a retailer or a cooperative, banning farms from producing or processing cheese or yoghurt, mandates on using certain types of coolers and freezers, banning family kids from farm work, and criminally persecuting the farms which dare to defy the raw milk sale ban. 

The ban on the raw milk sale is quite outrageous.  Not only the federal and local agencies are defying the scientific evidence that raw milk is healthy, they are basically handicapping an important microeconomic activity through excessive regulations which basically stop willing farmer from selling to a willing, “free” consumer. Farmageddon and Food, Inc highlight some cases of FDA and USDA interference which resulted in destroying small farming and banning the sale of raw milk. In all cases, the farmers were raising healthy cattle and producing good milk; none of their consumers ever complained. Ron Paul attributed these heinous activities of the federal bureaucrats against the small farmers as reflecting the paternalistic attitude common in Washington, D.C. He counted the cases of persecuting  Rawsome Food in California, and Pennsylvania Amish  farmer Dan Allyger who both were raided by armed federal agents because they were meeting the increasing demand for the raw milk by their willing, free consumers. While the federal agents raid the small farms for selling or producing raw milk on hygienic and health grounds, they are totally fine with the milk that is produced by the big food companies. The milk of the big business as the label will tell you is first- the least of the evils- pasteurized and homogenized. Homogenizing  milk means to break fat molecules and distribute them evenly. Other issues related to homogenizing milk include developing whiter color or different viscosity. However, there are arguments that homogenizing milk is not safe. There is evidence that in some cases the homogenized milk can cause allergic reactions and be subject to light-triggered oxidation because of the changes that happen in the milk’s viscosity.  Most importantly, the labels on the big milk producers will show that it has BST. BST is bovine somatotropin, it also can be called BGH or bovine growth hormone.  The bottom line is that when you get a milk jug from store and have it every morning  be aware that you are consuming the residues of the the leftover hormones injected in the cattle. Regardless of  the FDA or big milk producers’ claims  that BST or BGH are natural, you are still consuming the synthetic hormones that our bodies Were not created to handle. It is a mystery that the government agencies are willing to handicap the economic activities in the small farms because of their concern over natural bacteria or enzymes  in the raw dairy products while the same time they are blind towards the harmful effects of BST, BGH antibiotics, and other chemicals in the milk made by the big agribusiness. All these show us that when the government interferes in the economy, they either take sides, decide the winners and losers, hurt the small guys, and abuse the executive  powers entrusted to our government in the constitutions. In conclusion, the government interference in economy  is harmful even if it is well-intended. 

The Parable of the goats and the raw milk!

My wife and I live on an acre of land surrounded on two sides by woods.  Both of us grew up with animals and gardens and, consequently, both of us value self-sufficiency.  Not long after our marriage, I found some goats listed for sale on Craigslist and my wife and I decided to buy one.  Well, we came home with not one but three pygmy goats!  They were so cute, we couldn’t resist.  Now goats are not exactly quiet creatures and we could not hide our purchase for long.  Our retired, with-plenty-of-time-on-his-hands-to-observe-the-neighborhood neighbor came running over to emphatically inform us that goats were NOT allowed in the city and we had better get rid of them!  Thence began a frantic attempt to call family, friends, acquaintances, and even the zoo to see who would be willing to take three little goats.  To our dismay, no one wanted them and matters got worse when an official notice from the city government arrived telling us that someone had complained about our goats and we had one month in which to get rid of them.  We felt like criminals when in fact we had plenty of room for goats and were in the process of building a fence around our property to “protect” our neighbors from them (or vice versa).  Left with no other options, we soon found ourselves with a freezer full of fresh goat meat which we were at least able to share with our family.  Believe me, this left a sour taste in our mouth for the city government and our neighbor.  Our next venture into territory forbidden by the government was the purchase of raw milk.  It is actually quite laughable to buy a share of a cow in order to legally buy raw milk for one’s health and well-being.  We found a local farmer willing to do sell us a certain number of gallons each week on a “cow-share” basis.  There was plenty of fresh cream left over to make our own buttermilk, yogurt, and sour cream.  Yum, yum, yum!!!  

 

In both examples, we observed the government interfering in the economic and business interests of private citizens. In the case of the goats, the city government could have been justified because of problems with hygiene.  However, in the case of the milk there are people willing to buy raw milk from farmers without pasteurization.  Small farmers cannot afford to buy thousands of dollars worth of equipment to pasteurize an extra 3-10 gallons each week just to comply with government regulations.  Yet the government prohibits the direct sale of farmers’ milk to willing citizens, handicapping the economic activity between millions of small farms and individuals all over the country. 

 

So the next time you see us heading out into the cold winter’s morning with a gallon jug in our hands to milk the cow we partly own, you will understand the farmer’s fear of increasing government regulations and our frustration at doing something completely natural under threat of persecution.

The parable of the ditches

A nice young man named George dreamed of being an architect.  However, he didn’t have any money and education cost so much. He struggled how was he ever going to pay for it?  He didn’t know.. until he received an advertisement from his government offering- could it be true? a financial aid to pay for his education financed and subsidized by taxpayer’s?   Well, that was the only way he was going to be able to afford to get the education and degree which would lead him into his dream job.  So off he went to his first semester of school with a $5000 loan.  This wasn’t so bad after all.  He studied hard and was a good student.  He really enjoyed his classes and what he was learning.  Every so often he would think about the fact that someday he would have to pay back this loan, but he quickly pushed these thoughts to the back of his mind and went about enjoying college life.   Semester after semester went by; each one starting out with a nice big government check in his account to pay for all his expenses.  Finally the day came for him to graduate.  He was so excited to begin working as an architect.  He went out looking for positions, filled out applications, and had interviews….but each time he was told that a Master’s degree was really the best qualification for this type of job.  At last he had to admit that two more years of education and an advanced degree were his best option to work in this field.  And, after all, there was the government offering to pay for it all!  So, he enrolled in a graduate program and spent two more years of living off government loans.  After his graduation, he again set out looking for a job, but alas!  The job market had collapsed in his final year and all the jobs in architecture were filled; there were no openings for new graduates who had no experience.  The only job he could find after a year of looking and struggling was digging ditches for a local construction company at $7/hour.  However, George was an optimistic fellow and he settled himself down to enjoy digging ditches. While He was enjoying his life, his friends were very concerned because George was overwhelmed by $70,000 in debt. Fortunately, one of his fellow ditch diggers was a young law graduate who advised George to declare bankruptcy which would help him be relieved of the debt.  George followed his friend’s advice and consequently the Department of Education secretary received the letter regarding George’s filed bankruptcy. The secretary sighed and said, “Oh! another loss for the taxpayer money.”  She was still upset about the situation when she drove home that night, her mind was full of stress regarding the thousands of letters of debt relief she received every day. She didn’t realize she was veering into the wrong lane. Suddenly, she realized a car was coming towards her; swerving to dodge the car, she heard a loud crash…and woke up to find herself in a freshly digged ditch. 

Lars Christensen and the welfare society

Lars Christensen discusses the dilemma of the welfare state of Denmark in their views of the market, capitalism and tax. on the first hand, the Danish governments for long time created a generous welfare state that it has become more pleasant for the person to be unemployed rather than a hard worker. On the other hand, this huge welfare state needs huge revenues to finance its operations.  The socialist politicians in Denmark  thus considered capitalists  a necessity evil. so, here cometh the taxman. The tax burden in Denmark is among the highest in the world. The productivity is slipping towards the lowest as the social welfare state has created  almost 50% of the nation totally dependents on the state for their daily bread. Almost other 30% work for the government and contribute less to the revenues. The whole Tax burden is left to the remaining 20% who also can find ways to be subsidized.The article highlight the fundamental challenges of a social  welfare society. It works perfectly in times of the high-growth, however it can not survive on the long terms and on the occasions of the change of demographics and demise of the growth rates. The bottom line is that the welfare society poses an extreme vulnerability to the business and capitalism working within it. The writer seems to advocate that for the the USA economy to survive it must avoid the model of the European welfare societies. 

Related:

Can the European Welfare State Survive?

Immigration and challenge to the Danish welfare State

Stossel’s take on government interference in the market

                  John Stossel believes that the more government interferes in the market under the euphemistic label of the financial regulations, the worse it is  for the economy on the long term. Stossel presents  the news of the  government shutting down the online prediction market of intrade.com as an example of the government harmful heavy hand on the US economy. The government agency which forced the intrade.com to shut down in the USA justified that under a plethora of regulations, most of which comprehensible only to the trained bureaucrats. Stoseel implies that this move would prevent the US economy from a significant flow of money in the time of recession and crushes some cases of the individuals’ innovations
               The Online prediction market is not a perfect economic activity, however, it is not government’s business to banish anybody from the market. the market’s mechanisms of supply, demand and contract among free individuals should be the only criteria for the flourish or demise of any economic activity whether it be GE or Intrade.com.