Big Government

USA, Inc from the view of Kleiner Perkins.

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Powerline today has an analysis of the USA as if it were a firm applying for funds from Kleiner, Perkins. The presentation has a number of slides, some of which I will reproduce here. The link to the full presentation doesn’t work, unfortunately.

[Jonathan adds: Click on the large charts to display them at full size.]

The net worth of the US is on the right side scale. The trend is pretty obvious. The small improvement is probably a sign of some recovery in the past year.

Spending has followed historical events, such as World War II. The trend, however, is not good. After 1930, spending on entitlements began and has grown out of control.

Defense spending is blamed by leftists but there has not been a lot of defense spending since Vietnam.

Taxes have followed a steady trend line until Obama was elected. The sharp rise has not helped as costs far outstrip revenue.

What, then, is the problem ?

Entitlements.

Entitlements plus interest alone will exceed revenue by 2027. That’s 16 years from now.

The left wants to raise taxes.

How high must tax brackets go ?

How do we compare to other countries ?

Better than some and not so good as others.

Can the left stop denying reality and start to discuss it?

No.

Here is the response I got:

I am certain that not everyone here is as stupid as I am.

I try very hard to keep factual information from you. To wit, here is some bad analysis of our fiscal situation.

Of course, I could be wrong and I’m not this dumb. But probably not.

[fixed it for you. If you’re not even going to acknowledge our good faith attempts to allow you to comment while simply requiring that you not insinuate everyone’s stupidity then we can only assume you don’t mind the same treatment in return – mod.

Posted by: Mike K

They constantly use fake versions of my signature, which of course the moderators could stop. It fits their pattern. Modifying my comments is also standard and they actually think this is clever.

No, I am not optimistic.

Nanny State Running Amok

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Enraged over an argument, a young woman snatched up the family gerbil and crushed it to death. Now she faces criminal charges. A felony!

The accused doesn’t seem like a very nice person. Anyone who would slaughter a harmless family pet in such a manner isn’t someone I would invite over for afternoon tea.

But, even so, I can’t help but wonder if this is an appropriate use of scarce government resources.

Read the news article, and please note that the author listed the causes of death for the rodent. Did the Medical Examiner perform an autopsy on the deceased? It would seem so.

Do any of our readers have memories of dissecting a rodent for biology class? Maybe you had to kill the rat as part of the process. I wonder if you would land in jail if you tried it today.

I see that this sorry little drama is taking place in New York, a bastion of Liberal groupthink. Even so, I would be surprised if the votyers there were happy to learn that this is what the tax dollars they pay for their criminal justice system is buying.

Create Borrowing and Paid For Budgets

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In these times of fiscal insanity, the US desperately needs as many moments of clarity as it can get. One way to get an institutionalized moment of clarity on federal spending is to explicitly state which programs are paid for by our own tax monies and which programs we pay for by borrowing money. The most important programs go into the paid for budget and the stuff that’s nice to have goes into the borrowing budget.

There is little cost associated with this process. All the same spending will happen except that instantly all the incentives change. Getting a spending item into the paid for budget makes it secure. It is a statement that we are willing to pay taxes to do this activity. Getting a spending item into the borrowing budget means that if there is a fiscal crisis (and at this point that’s more a when than an if) we would all have a first order screen that we could instantly use to focus our cuts on the stuff that Congress determined was not as important.

Another very good effect on our politics is identifying where do interest payments go, in the paid for or borrowing budget. Every US consumer knows in their bones that if you’re paying off your debts with borrowed money, you’re in deep, deep trouble. So where would Congress put debt interest payments? By putting them into the paid for budget, they inspire confidence but at the same time this decision would push many more programs onto the borrowing budget.

As a separate process, a bipartisan committee (similar to the successful BRAC committees that cut defense spending in the 1990s) could take the borrowing budget and provide a yearly fiscal sanity bill that took the borrowing budget and identified cuts to distribute fairly across the nation and across all the low priority programs in an intelligent way.

But even without an institutionalized spending cut process, this change would improve things by setting priorities and getting the spending conversation where it should be, is program x, y, or z worth borrowing money to fund.

Free-Market Job Protection for Teachers

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Megan McArdle quotes E. D. Kain arguing for teachers’ unions by saying:

Teachers need protection from over-zealous bosses and ideological politicians. This is the same thinking behind seniority rules, which protect more expensive teachers (i.e. veterans) from being laid off due to budget cuts. Teaching is not a high-paying job compared to jobs in the private sector, and one of the benefits is some job security. Occasionally this means bad teachers take longer to fire.

Because of and not in spite of my free-market beliefs, I think Kain makes a valid point. Public-sector employees are not protected from arbitrary firings to the same degree that private-sector workers are and that does create a somewhat compelling argument for public-sector unions.

The free market actually protects workers from being fired for reasons unconnected to their job performance. This is not to say that such firings never occur but rather that the free market provides a built-in mechanism for punishing managers who don’t make personnel decisions based solely on merit. This immediate and powerful feedback means that private-sector worker have more built-in and systematic protection against managerial bias, incompetence and malice than do public-sector workers.

The best way to protect teachers and other public sector workers is to increase the exposure of their managers to market forces.

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Going Dark

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I’ve mentioned the concept of water empires here before.

The idea is that a central government has control over a vital life-sustaining resource, such as water. If a province rebels or otherwise acts up, then the supply is cut off. The problem takes care of itself in a year or two of savage starvation, since there will be no harvest if the fields are dry.

Water empires invariably lead to both despotism and corruption. It is so easy to exert total control over life and death, why wouldn’t the people in charge work to consolidate their power? They’d be idiots if they didn’t, after all.

And, since the aforementioned people in charge are in total control, the rules simply don’t apply to them. They can indulge their every whim, favor this person or industry over another, simply because they can. Who is going to stop them? Anyone who tries will be in big trouble when the water stops flowing, after all.

So what happens if the vital resource is electricity instead of water? Why wouldn’t history repeat itself?

(Hat tip to Glenn.)