Saturday, August 1, 2020

Capitalism, the Wealth Gap, and Creative Destruction

A frequent complaint I hear from those leaning more to the left about the "evils" of capitalism is the exaggerated "wealth gap" that results from "unfettered capitalism" along with the implied allegation that it is the result of the wealthy exploiting and even "stealing" from the poor.  I will leave it for another discussion to explain why that isn't true, because the point of this post is to go into how "creative destruction" constrains the exorbitant wealth of those who do well under capitalism, absent government interventions.

The first thing it is worth noting, is that today's super wealthy are, by and large, not actually capitalists.  At best, they are corporatists leveraging their relationships with politicians to get favorable tax rules, government contracts, and regulatory frameworks set up that put them at an advantage over their competition, much of which is small(er) businesses and new startups that would otherwise threaten their market share.  Monopolies are bad for consumers, but any real monopoly requires government enforcement while "natural" monopolies that come into being without government intervention are few and short lived.

Past that, let's talk about bailouts.  The most notorious bailout in recent memory is the TARP bailout at the tail end of the George W. Bush administration in the wake of bankruptcies at a number of prominent and previously respected Wall Street firms.  More recently, we have the CARES Act, which though it included $1,200 for every tax filer with bonuses for dependent children, that charitably works out to about $360 billion out of a total of $6 TRILLION in spending and borrowing that was earmarked to bailing out businesses, most of which ended up being large businesses already blessed with a large market share.

This is NOT capitalism.

Many of these large businesses had been ducking attention in the financial press even before the COVID-related shutdowns for their profligate practices of using tax rebates and debt to buy back their stock in an effort to inflate their share prices.  These were not healthy companies, though obviously they owned a lot of assets.  Their balance sheets, however, left them in a poor position to finance any cash flow shortfalls resulting from the reduced consumption and mandatory shutdowns caused by the COVID pandemic.  In a healthy capitalist economy, these businesses would have gone bankrupt.  Their assets would have been sold off to satisfy the claims of their creditors, even if there were airlines selling off their Boeing passenger jets for the price of a luxury car and cruise lines selling their ships for the usual price of a ticket for a 7-day Caribbean jaunt due to market saturation and illiquidity.

Such a fire sale of assets would have narrowed that "wealth gap" pretty quick.  The beneficiaries of those sales would be anyone with liquid assets.  Given the state of these companies, there were probably a few high school students on a proverbial paper route with a healthier balance of assets to liabilities than these giant cornerstones of Wall Street stock tickers.

Creative destruction is not pretty.  Immediately following the 1929 stock market crash and during the ensuing Great Depression, infamous stories abound of formerly "wealthy" titans of industry jumping from their high rises as their debt-financed fortunes evaporated around them.  There are no such stories from the 2008 "Great Recession" and TARP can perhaps be credited with "saving lives" on that account, but at the expense of interrupting the natural unfolding of creative destruction and the narrowing of the wealth gap that would have resulted from the fire sale of assets, including homes and real estate, if bailouts and government mortgage modifications had not intervened.

Today is not 1929.  Even without the largess of government bailouts to big businesses, a social safety net has been put in place to ensure that even the poorest among us has access to food, health care, housing, and assistance for other essential utilities and services.  You may still find a few of those "titans of industry" preferring a long drop and a short stop to the humbling experience of clipping coupons and sending their children to public schools, but you would also find a new generation of entrepreneurs, homeowners, and true free market capitalists taking ownership of the hard assets to begin rebuilding from the ground up without the overleveraged, debt-ridden mismanagement that led to the initial meltdown, creating new jobs and wealth to replace that which was "creatively" destroyed.

It doesn't take long these days on social media to find leftists and proudly declared "communists" and "socialists" posting memes about guillotines and "eating the rich", because the government interventions of the past 12+ years have effectively entrenched the wealthy "1%" into a position of extravagant wealth and political influence while likewise entrenching the rest of us in a wage/salary economy of insecure employees without the "licenses", regulatory compliance, or direct line to federal funding of our failures to ever catch up to them.  It breeds a radicalism and revolutionary sentiment waiting for a spark to erupt into violence.  Any perusal of right-wing social media would, in isolation, convince you that the Black Lives Matter protests against police brutality are precisely that spark and that they are a thinly disguised conspiracy of "Marxists" intent on overturning the political order far more dramatically than a simple exchange of a Republican for a Democrat in the White House could ever entail.

A quote is attributed to JFK, "Those who would make peaceful evolution impossible will make violent revolution inevitable."  Government interventions to protect established political and business interests, preventing creative destruction and a narrowing of the wealth gap, are making peaceful evolution impossible and are not overseeing a capitalist economic system.  They are making violent revolution increasingly inevitable and it will not just be "the rich" who are eaten in the violence.

Thursday, January 23, 2020

Give Me Money

I plan to run again.  I am still deciding on my strategy for doing so.
In the event I choose to run in a major party, the filing fees for State Representative have been established by the party committees at $945 for both parties.
These funds go directly to the county party organizations. In the event of a primary with a "REAL" Democrat or Republican, they will undoubtedly be used to assist in the effort to defeat me. These funds do not defray the cost of running the primary. Those costs are borne entirely by the State.
This is a clear advantage to running as a Libertarian. The Libertarian Party of Delaware does not charge its candidates to become their nominee. Obviously, running as a Libertarian would also confer the advantage of accurately reflecting my partisan allegiances, but at the cost of the legitimacy conferred on major party candidates for being more "electable".
I will be contributing my own funds to any campaign I run, but before committing to funding my own destruction in a major party primary, I would like to gauge the level of real support I can expect. While I am grateful for the words of encouragement I have gotten on my last post, real support means votes from those in my district, and funds from anyone and everyone legally permitted to contribute.
Whether I go the major party route or not, any contributions will be accounted for in the Delaware CFRS system, and will be utilized either for my campaign or to support other Delaware libertarians and libertarian causes in Delaware.
Thank you in advance for your help.

Friday, October 26, 2018

Inside Baseball

I was having a conversation with my father the other day in the context of the League of Women Voters forums which have been hosted over the last two weeks.  He was saying that the incumbents at the local candidate forum in particular on October 17th seemed to be very knowledgeable about the issues and legislation in Delaware.  I noticed a similar familiarity with the intricacies of federal policy from Senator Carper at the statewide forum on October 24th.  His comment was that this expertise was of little value if the candidates did not philosophically align with the voters.

I would take that one step further.  It should be expected that incumbent legislators are familiar with the issues and legislation they are charged with addressing and voting on.  Anyone doing the job as long as they have should have a passable knowledge above and beyond what should be expected of the average voter sitting in the audience.  They can reveal (a little) inside baseball about how a piece of legislation was developed and the various working groups they have been part of to try to address this issue or that one.  If, having done the job for 4-18 years, they cannot present themselves in a way that illustrates their obvious experience, then they are clearly ill suited to the position.

What voters must ask themselves, beyond philosophy, is what are the results?

If the result is higher taxes, more spending, and less freedom and prosperity, then what good is a little inside baseball?  Any challenger given a month or two to get their bearings once elected will be familiar with the procedures and issues getting things done in the legislature.  Incumbents may start with that advantage, but they also carry the disadvantage of having presided over what has come before.  They have voting records illustrating the issues they've gotten wrong, the compromises they've made to appease the special interests bankrolling them, and the failures they've presided over either through action or inaction.

If you're happy with where things are, by all means, vote for experience.  If you're not, then don't be blinded by it.  Change starts at home.  Vote the incumbents out.

Thursday, October 18, 2018

LWV: Education

Last night, I was privileged to meet both of my opponents and a number of candidates for other offices at the Modern Maturity Center for the League of Women Voters Candidate Forum.  Among the topics discussed was education.  A number of educators from the audience came to me afterwards to commend me for my comments on education.  In my answers, I noted that there was a shared consensus among everyone on the stage that one of the most important things that could be done for education was to ensure that more education dollars were actually spent in the classroom rather than on administrative costs at the state and local levels, but that despite the apparent agreement between the Democrats and Republicans present, the goal hadn't been achieved.

What was distinctly absent from the responses of the other candidates was any discussion of CHOICE.  Delaware has one of the highest levels of education spending per pupil in the country, so the money is there.  If our results are not what we would want or expect for the money that is being spent, and if the political powers that be have not been able to achieve their goals with budgets and regulations despite the apparent agreement on those goals, then what is to be done?

My answer focused on the issue of choice.  If parents and students aren't getting the education they need and want from the public schools in their district, they should have the choice of moving those education dollars to a school that will meet their expectations.  If that means another public school, a private school, or homeschooling, they should have the freedom to vote with their feet and the option to hold that final rebuke over the heads of their school administrators.

Public education in Delaware holds a monopoly.  Bloated budgets that spend more on administrative overhead than they do on actually providing the services demanded are not a bug, they are a feature of that monopoly.  Only by holding the state Department of Education and public school districts accountable for results through retaining the option to fire them can inflated costs and sub par results be brought under control and accountability be restored.

The two-party candidates agree that more tax dollars need to be spent in classrooms instead of on administration.  They agree that special interests should not hold more sway than professional educators and parents.  They cannot seem to bring themselves to restore choice as the ultimate mechanism for accountability in education.

If I am elected to the General Assembly on November 6th, choice will be my policy towards education.

Wednesday, October 10, 2018

I'm Doing This Thing Again

I'm in a different district now.  I've been in Virginia working for the man, but now I have a daughter who is here in Dover so I moved back, but turned up in the 34th Representative District instead of the 32nd.  That's just as well, really, because Representative Andria Bennett and I have developed a friendship and I wouldn't be enthusiastic about running against her.

Anyway, I haven't run a very active campaign.  I did a Facebook Post about it.
I have not run a very active campaign this year. I have a young daughter and about a million other things to do.
I am still an option on November 6th though. I have had conversations with both of my opponents. They seem like decent people. They have not displayed the outward hostility towards me that I have faced from some of my opponents in previous campaigns, and for that I am grateful to them.
We do, however, have fairly stark differences of opinion when it comes to policy in the State of Delaware.
My primary difference of opinion with the incumbent Republican relates to the legalization of cannabis and the importance of placing principles over partisan loyalty. In reviewing his voting record and even in my conversation with him, I became aware of his support for a number of tax increases during the showdown to pass a state budget in 2017. As many of you will remember, there was a sizable gap between the projected revenues and expenditures which caused a great deal of handwringing in the countdown to the close of the regular legislative session. Rep. Andria Bennett, the Democrat from the 32nd Representative District and my erstwhile opponent from the 2014 campaign, who I endorsed in the 2016 campaign due to our personal friendship, her willingness to learn about Libertarian beliefs and philosophies, and willingness to place the needs and desires of her constituents above those of her party leaders, demonstrated her independence again by voting against tax increases which would have resolved the "crisis" and earned the ire of her party leadership by doing so. Not so for my Republican opponent. He was apparently told by his party leadership that he could "afford" to alienate certain lobbies and encouraged to support the increase in the Real Estate Transfer Tax. He also voted to support the licensing and taxing of Fantasy Football leagues. Finally, he voted to support the "Bump Stock Ban" in the wake of the push for more gun control in Delaware. These choices stand in stark contrast not only to the choices I would have made, but also to the professed philosophy of his party to support lowering taxes and oppose imposing additional penalties on otherwise law abiding citizens based on the possession of a certain type of firearm or accessory.
While my Democratic opponent has expressed his support for cannabis legalization, I can otherwise see no real distinction between him and the Republican incumbent. "Common Sense" is, to me, a euphemism for "lack of principles" in the areas of gun control and government spending. Imposing penalties on innocent people and taxing them to fund bloated government budgets is not how I believe government should operate.
Faced with those choices, and the desire to "show the flag" for the Libertarian Party in the November election, I accepted the nomination of the Libertarian Party of Delaware. While I have not had the time to devote to a strenuous campaign this year, I still hope to get the support of voters in the 34th Representative District.
If elected, and even if I'm not, I will continue to promote a small government that works effectively and efficiently to protect the rights of those subject to the jurisdiction of the State of Delaware. I will support the legalization of cannabis, the reduction of taxes and government spending, legislation like HB450 which will allow those with criminal records to get a second chance, and a disruption of the two-party system which has a stranglehold on the political conversation both in Dover and DC.
Thank you for taking the time to read my wall of text, and thank you in advance for your support on November 6th and moving forward.
I will be at the League of Women Voters debate on 10/17 at the Modern Maturity Center though.  Now that I've reregistered my domain name, I'll be putting out some of my signs.  I'm surprised no one tried to hijack it since I've been a filed candidate for a few months now and left the domain available.  I look forward to seeing everyone out and about.  Don't send me money though.  It just makes Campaign Finance Reporting more complicated.  Kthxbye.


Tuesday, September 11, 2012