Rodent Regatta

Are Americans Wimps and Socialists?
by Craig J. Cantoni

Why aren’t Americans storming the castle and overthrowing the overlords who have consigned them and their offspring to lives of tax servitude? Are they wimps and socialists?

They are neither. They are frogs.

You may know that if a frog is put in hot water, it will jump out. But if it is put in a pot of cold water on a stove and the heat is slowly turned up, the frog will stay put and boil to death. The same is true for taxpayers.

If government expenditures suddenly increased by 300%, taxpayers would grab their pitchforks, overthrow the House of Lords in Washington and put the heads of the tyrants on pikes on the Memorial Bridge over the Potomac. But because expenditures have grown over 104 years instead of overnight, taxpayers have sat like boiling frogs as government spending has increased threefold since 1900 as a percentage of Gross Domestic Product.

Imagine the revolution that would have occurred had the government increased spending by 300% in 1900 in one fell swoop. It would have made the Boston Tea Party look like tea and crumpets at Buckingham Palace.

Americans also have sat still as transfer payments, which are a euphemism for neighbors stealing from neighbors, have ballooned like a bullfrog’s throat over the last century from 2% of government spending to 40%, or 20-fold. Imagine Americans being told in 1900 that 40% of their taxes would be stolen by their neighbors and special-interest groups. The nation would have seen its second civil war.

And imagine taxpayers being told in 1914, which was the year following the ratification of the income tax amendment, the 16th Amendment, that the federal income tax per capita would be where it is today, at $2,500. That is 352% more than per-capita income taxes in 1914, in inflation-adjusted dollars. Or imagine taxpayers finding out on April 15, 1914, that they had to pay an accountant to file their taxes because there were suddenly 4,000 pages of tax forms, as is the case today.

It would have been unimaginable 100 years ago for Americans to think that federal spending would ever reach today’s astonishing level of $21,671 per household.

If President William McKinley had said in his inaugural speech in 1900 that he was going to increase government expenditures by 300% and taxes by 352%, his assassination would have occurred on the spot instead of in 1901. And his assassin would have been lionized instead of vilified. There would be a statue of him in the Capitol Rotunda next to other revolutionary heroes.

There are other reasons why Americans are behaving like boiled frogs instead of people who love liberty. First, most taxes are hidden and not paid directly by taxpayers. For example, for homeowners with mortgages, property taxes are paid by the mortgage company and not directly by the homeowner. Likewise, sales taxes are tacked on bills and not paid separately. The same is true for income taxes and FICA taxes, which are withheld from paychecks and never seen by workers. And corporate taxes are passed on to consumers in the form of higher prices.

It’s not surprising that the self-employed and small-business owners tend to be fiscal conservatives. They know what they pay in income and FICA taxes, because they write quarterly checks to the government for the taxes.

It’s also not surprising that per-pupil spending has skyrocketed over the last 25 years. That’s because Americans have no idea what they pay in public education taxes over their lifetime. (They pay over $150,000 per household.)

The government demands accurate financial statements from corporations but doesn’t practice what it preaches. Have you ever received a statement from your state, county or city government showing what you’ve paid in taxes from year to year and the percentage that the taxes have increased? Naturally, the government’s coconspirators, the leftist media and government K-12 schools, are not about to tell the public.

Another reason why Americans are behaving like boiled frogs is that they are considerably more wealthy than 100 years ago, in spite of the growth of government. Thanks to the free market—or I should say the 50% of the market that is still free and not socialized or regulated to death—the average income in inflation-adjusted dollars has grown from $8,360 in 1900 to over $40,000 today. During the same period, the portion of income spent on food has dropped from 43% in 1900 to 15% today, and the number of autos has increased from 8,000 to over 132 million. Lower-income Americans have conveniences and a quality of life that only the upper-crust of society had 100 years ago.

I have been writing about taxes for years and have usually been met by yawns from readers, especially from Republican soccer moms in open-toed shoes with their webbed feet showing. Politicians only have to mention the magic words ”children” and ”per-pupil spending” for female frogs to agree to the stove being turned to a higher temperature. Male frogs are just as agreeable, but the magic words for them are ”subsidized sports stadiums.” And older frogs are even more agreeable. The magic words for them are ”send the bills for our medicine to future generations.”

Americans consider the French to be wimps and socialists, and the British call them frogs. Ironically, Americans are not wimps and socialists, but they are frogs.

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Mr. Cantoni is an author, columnist and founder of Honest Americans Against Legal Theft (HAALT). He can be reached at ccan2@aol.com

Economics Lessons for Reporters
by Craig J. Cantoni
June 9, 2004

The June 8 edition of the Arizona Republic had a front-page story with this opening line: ”More than 45,000 seniors and disabled Arizonans have saved $3.2 million on prescription drugs in the year since Gov. Janet Napolitano launched her program to help deal with expensive but necessary medication.”

In keeping with the standard journalism formula, the story had the obligatory quotes from someone with AIDS and from a single mom of three kids. It also printed quotes from leftists who think the program isn’t rich enough, from a Retard (Republican embracing taxes and rampant dependency) and from a representative of AARP, which should change its name to Bunch of Avaricious Robbers and Fleecers, or BARF, in view of the fact that it engages in nauseating lobbying for the richest socioeconomic group in the nation.

The 108 column-inch story did not say anything about the economics of the program, but if we accept the story at face value, as most readers of the Republic will, then why should the state restrict itself to buying medicine?

If buying medicine results in lower prices at no cost to anyone else, as the story implied, then the state should buy all necessities of life, including food, shelter and clothing, for all citizens. It should become a gigantic buying cooperative and issue discount cards for food, shelter and clothing.

Note to staffers Karina and Jon: stop salivating over the prospect of your socialist utopia being realized. It’s been tried before and doesn’t work. The reality of economics doesn’t go away just because economic reality is ignored.

Here are some lessons on the economic reality of drugs and health care in general:

Lesson 1: The government fatally wounded a consumer market in health care 60 years ago when misguided government policies resulted in most Americans becoming dependent on their employers for health insurance, unlike the situation for food, shelter and clothing. The coup de grace was delivered 39 years ago with the enactment of Medicare, which now has over 100,000 pages of regulations and price controls. Those who say that the consumer market has failed in health care do not realize that there is not a consumer market in health care.

Lesson 2: A couple of predictable outcomes have resulted from the death of a consumer market: First, utilization and costs have increased, due to the users of medical services not paying directly for the services. It would be akin to grocery shoppers sending their supermarket bills to their employers or the government. Hamburger sales would decline and steak sales would increase. Then, to stop people from buying steak, a huge corporate and governmental bureaucracy would issue diktats and price controls. The second outcome is immoral cost-shifting. The self-employed, the unemployed and others pay more for health care than the members of corporate and government health plans, because of cost shifting to the least powerful consumers. Cost shifting also occurs through the tax code, due to the self-employed, unemployed and others not getting the same tax breaks for medical expenses as members of corporate and government health plans, due to those with the least political power getting the shaft from those with the most political power.

Lesson 3: If pharmaceutical companies don’t get a high enough return on investment, they can’t attract capital to invest in new drugs and production capacity. This lesson plays out in Europe, where the pharmaceutical industry has been in decline due to a low return on investment, due to government meddling in the market.

Lesson 4: If pharmaceutical companies give discounts to states, they have to make up the lower profit margins somewhere else or lose investment capital. See Lesson 2 about cost shifting.

So what is the answer for the poor? Private charity is one answer. But if the state is going to be involved in helping the poor buy medicine, a system should be developed that causes the least distortion in the market and doesn’t put the state between consumers and health care providers. Food stamps are an example of a system that causes the least market distortion.

It’s become a cliche to say that there is no free lunch in economics, although the mainstream media doesn’t seem to have heard the cliche. The newspaper coverage of health care and other economic issues has too much barf and too many retards.

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Mr. Cantoni is an author, columnist and founder of Honest Americans Against Legal Theft (HAALT). He has been active in health care reform for years and can be reached at ccan2@aol.com

A friend named Joe mutters, ”when we start the Island of Joe, things are going to be different.” Normally, the muttering begins after listening to a radio or TV news broadcast. The ”liberals” get him down, and he thinks of setting sail for the ”new world.”

I’ve often wondered (too seriously for some) where we would go if we began to have the urges that caused the original colonists to abandon Europe for America. Where is the New World? Joe knows we would simply head for the Island of Joe. We haven’t found it on a map.

On the first boat leaving for the island there’s one person in particular that I’d want on board. No one is better at finding the gaps between what the Founders intended for this nation and where we are today. Better still, he can (and is unafraid to) communicate those gaps better than anyone I know. Here’s the latest from Craig Cantoni:

What Is a Moderate Republican?
by Craig J. Cantoni
June 4, 2004

After publishing a four-page article yesterday saying that Republicans are either in denial or power-hungry liars for claiming that they are for limited government and that they have actually limited government, an Arizona Republic editorialist was on the local PBS affiliate last night speaking favorably about ”moderate Republicans.” Can someone please tell me what a ”moderate Republican” is?

I think it is someone who goes along with Democrats regarding increased taxes and spending on education and other social programs, but I’m not sure. If that is the right definition, then I have a follow-up question: Why is that considered moderation?

To me, the term smacks of some kind of Orwellian doublespeak or Politburo propaganda, especially considering the statistics on the growth of government that I cited in my article and which I’ll summarize below. It’s the opposite of moderation. It’s immoderation, or to use a synonym, excessive. It would be akin to calling someone who drinks a fifth of Jack Daniels each night a ”moderate drinker.” Given the facts about taxes and spending, the big spenders should be called ”excessive Republicans” or ”immoderate Republicans” or ”thieving Republicans.” Here are some of the facts:

– Federal spending comes to $20,000 per household. Is that moderation? – The cost of regulations adds about another $8,000. Is that moderation? – We are leaving our kids a horrible legacy of debt in the trillions of dollars for our entitlements and other selfish, greedy gorging. Some economists put the total bill for future generations at $40 trillion. If that’s moderation, then robbing piggy banks is moderation. – Transfer payments, which are a euphemism for citizens taking money from their neighbors, now account for 40% of federal spending, up 20-fold from 1900, when they accounted for 2% of federal spending. Moderation? – When my grandparents immigrated here in the early 20th century, total government expenditures were about 8% of Gross Domestic Product. Today, they are about 375% higher. Moderation? – In 1914, the year after the ratification of the Sixteenth Amendment and five years before my dad’s birth in the coal mining town where his dad worked in the mines and was able to keep almost all of his money from the tax man, the income tax per capita was $69 in inflation-adjusted dollars. Today, it is over $2,500. Moderation? – The tax rate on a median family was zero in 1914. Today, it is over 25%. Moderation? – In 1914, there were four pages of IRS forms. Today, there are over 4,000 pages. Moderation? – Discretionary non-defense spending will have increased by 30% in President Bush’s first term. Moderation? – There are now about 22 million federal, state and local public-sector employees, or about 83% more than manufacturing employees. The nation has ”outsourced” millions of wealth-producing jobs from the private sector to the wealth-taking public sector. Moderation? – Local county and city governments have spent about $1 billion on subsidies to private sports teams and another billion for an expanded convention center and a biotech research center in the face of excess convention capacity and excess biotech investment across the country. In addition, they are proposing $2.3 billion on a light-rail line that will actually increase pollution and have a negligible effect on traffic. That comes to $4.3 billion, which is equivalent to the annual income of about 108,000 families. Moderation?

Help me out here. In view of the foregoing facts, could someone please tell me what the term ”moderate Republican” means and why the mainstream media loves to use it? Thanks in advance for sending your response to the e-mail address below. I may summarize the responses without the names for a future article.

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Mr. Cantoni is a moderate author, moderate columnist, moderate small ”L” libertarian and moderate founder of Honest Americans Against Legal Theft (HAALT). He lives with his moderate family in Scottsdale, Arizona, where the summer temperatures are not moderate. He can be reached at ccan2@aol.com

Insulting Your Intelligence Once Again
by Craig J. Cantoni
June 3, 2004

Is it possible to pick up the newspaper and not have your intelligence insulted? Not today.

The headline on the front page of the local section of today’s Arizona Republic reads: ”State ranks 45th in kids’ well-being.” The accompanying story quotes a study by the left-leaning Annie E. Casey Foundation and quotes the director of the left-leaning Children’s Action Alliance. It did not quote anyone with a different perspective and ideology.

The story cites a high dropout rate, a high teen birth rate, a high child death rate, the percentage of children in poverty and the percentage of children in single-family homes as the primary causes of the state’s low ranking. It also lists the five states with the best ranking (Minnesota, New Hampshire, New Jersey, Iowa, Utah) and the six states with the worst ranking (Arizona, South Carolina, Alabama, New Mexico, Louisiana, Mississippi). Surprisingly, unlike many previous stories on the subject, today’s story did not imply that the low ranking is due to cheapskate, heartless Republican legislators who don’t want to raise social spending and taxes.

So where was the insult to intelligence?

It was the fact that the story did not mention the role that race plays in the states with high rankings and in the states with low rankings. Because of political correctness, ignorance, laziness, a leftist bias or whatever, race wasn’t mentioned at all. Thus, readers did not get the full story.

Let me fill in the missing piece.

Putting New Jersey aside for a moment, four of the five states with the best rankings are overwhelmingly white, ranging from 89% white in Utah to 96% white in New Hampshire. Four of the six states with low rankings have large black populations, ranging from 25% black in Alabama to 36% black in Mississippi. Two of the states with low rankings, Arizona and New Mexico, have large Hispanic (really Mexican) populations, at 25% for Arizona and 40% for New Mexico, and large Native American populations, at 5% for Arizona and 9% for New Mexico.

At first, New Jersey seems like an anomaly. It ranks in the top five but has a white population of only 69%. But having lived in the Garden State and being honored as ”Community Service Volunteer of the Year” by a major Gannett newspaper there, I know the state very well and understand that it really isn’t an anomaly. First, 5% of the state is Asian, mostly from the subcontinent of India. Second, a significant percentage of its Hispanic population, unlike New Mexico and Arizona, is Puerto Rican and Cuban. Third, the white population consists of a lot of old money, a large professional class and relatively few lower-income transients, unlike New Mexico and Arizona. When people get divorced in other states and look for a place to start a new life, they tend to move to the Southwest and not to New Jersey, where housing is expensive. Such factors also explain why New Jersey ranks near the top in per-capita income.

In other words, both low and high rankings are mostly the products of racial demographics, immigration patterns and socioeconomic legacies. And that, as Paul Harvey says, is the rest of the story.

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You can reach the author at ccan2@aol.com

Are Republicans In Denial
or
Simply Power-hungry Liars?
by Craig J. Cantoni
June 3, 2004

Republicans continue to say that they are the party of limited government and that voting for them will reduce the size and reach of government. At the same time they claim to be winning against the Democrats and the Left.

Republican leaders who say that the Republican Party is winning and is the party of limited government are either in denial about the growth of govenment or are power-hungry liars.

Let’s start by looking at the growth of Leviathan over the last century and then follow with a look at more recent growth.

According to the Heartland Institute and verified by my own research, total government expenditures were 8.2 percent of Gross Domestic Product in 1900. Today, they hover around 30 percent.

Memo to Republicans: When the score is 30 to 8.2 in your opponent’s favor, you’re not winning.

Republicans say they have won if they succeed in reducing government expenditures by a percentage point or two. But even a reduction to 28 percent of GDP would mean that government expenditures would be 3.4 times higher than 100 years ago.

Memo to Republicans: Unless it’s a game of golf, if your opponent’s score is 3.4 times higher than your score, you are not winning.

More important, like a cancer, the nature of the expenditures has metastasized into something that is insidious and pernicious.

In 1900, almost all government expenditures were for the common good—for those government services like national defense and public infrastructure that benefited all people equally or as equally as practical. Back then, transfer payments were only 2 percent of government spending. Today, they are over 40 percent. Stated differently, there has been a 20-fold increase in transfer payments in 100 years.

Memo to Republicans: When the score is 20 to zero in your opponent’s favor, you’re not winning.

Of course, the words ”transfer payments” are a government and media euphemism for ”theft.” We can have endless debates about the merits of programs like Social Security, Medicare, Medicaid, KidsCare, AFDC, school lunches, school loans, farm subsidies, mass transit subsidies, subsidies for professional sports teams (e.g., Bush’s Texas Rangers), and thousands of other thefts, er, income transfers. But make no mistake about it, such programs benefit the recipients of the money much more than society at large and certainly more than non-recipients. For example, there is no doubt that a Medicare enrollee will get a direct, tangible benefit from the Republican prescription drug benefit. However, few if any benefits will accrue to future generations that have to pick up the $7 trillion tab for the Medicare deficit.

It is axiomatic that people on the receiving end of transfer payments tout the general welfare more than those on the paying end. Similarly, politicians who gain political power by redistributing money tout the general welfare more than politicians who don’t gain from redistribution. Some will even go as far as to call themselves ”compassionate conservatives” to win votes with other people’s money.

Compassionate conservatism is expensive. Discretionary non-defense spending has increased under President Bush more than under any president since Lyndon Johnson.

Unfortunately, he has been aided and abetted by the mainstream media, Hollywood and other shapers of the popular culture—all of whom favor the takers of other people’s money over the rightful owners of the money. And, naturally, government schools, which have a state monopoly on K-12 classroom thought, do not teach that transfer payments are synonymous with theft. To the contrary, the schools are used by the government to recruit parents to sign up for transfer payments. Maybe that is what President Bush means by his ”Leave No Child Behind” program. If there were truth in government labeling, the name of the program would be ”Put All Children on the Government Plantation.”

When my grandparents walked off the boat and onto Ellis Island at the beginning of the 20th century, about 60 percent of government spending was at the state and local levels. A century later, federal spending is twice as much as state and local spending combined, costing each household a whopping $20,000 per year. The Founders’ idea of a limited national government has been turned on its head, and with it, the belief of citizens that they can influence the government.

As anyone who has ever worked in a large corporation knows, the more centralized and bureaucratic an organization becomes, the less influence those at the bottom of the organization have and the more out of touch those at the top become. The same holds true for nations.

The other thing that happens is that power shifts to bureaucrats. Low-performing corporations are almost always centralized, hierarchal organizations in which accounting, human resources, legal, government affairs and other administrative departments have more power than sales, engineering and manufacturing. Over time, the culture changes from risk taking to risk aversion and from dynamism to bureaucracy. The same holds true for nations.

There are now almost twice as many public-sector employees at all levels of government as manufacturing employees. Tellingly, the mainstream media engages in hyperbole about 100,000 call center jobs being outsourced to India but is silent about the ”outsourcing” of millions of jobs from the wealth-producing private sector to the wealth-consuming public sector.

Before the income tax was authorized in 1913 with the ratification of the Sixteenth Amendment, Americans, including my grandparents, could save for retirement and not pay any taxes on the earnings on their savings. None. Zero. Today, it is very difficult to earn enough on one’s retirement savings to beat inflation and taxes.

Both Democrats and Republicans pretend to be munificent by letting taxpayers defer a small portion of their income taxes through such tax code provisions as 401(k) plans. And the government’s bed mate, the mainstream media, including the business press, joins in the pretense. In reality, such provisions are a bonanza to government bureaucrats and hundreds of thousands of tax accountants, tax lawyers, investment advisors, corporate benefits administrators, sellers of record-keeping software, and other professions that feed off the body politic, including trial lawyers who sue employers when they inadvertently violate some arcane regulation of the Employee Retirement Income Security Act.

In 1914, the year after the ratification of the Sixteenth Amendment, the income tax per capita was $69 in inflation-adjusted dollars, versus over $2,500 today. In 1914, less than one percent of the population had to file a tax return. Today, 45 percent of the population has to file. The number of IRS employees was 4,000 in 1914, versus 110,000 today. In 1914, there were four pages of IRS forms. Today, there are over 4,000 pages. The tax rate on a median family was zero in 1914. Today, it is over 25 percent. (Source: Cato Institute)

Memo to Republicans: When the score is 25 to zero in your opponent’s favor, you’re not winning.

And then there are all of the hidden costs of regulations. To take just one example out of thousands of examples, a little-known federal agency is harassing—yes, harassing—the Swift Transportation Company of Phoenix for being successful. A $2.4 billion company with 16,500 trucks, Swift is the largest long-haul trucking company in the nation.

The harasser is the Federal Motor Carrier Safety Administration, which was a Frankenstein monster created in 1999 by the creator of Frankenstein monsters, Congress, ostensibly to make roads safer. Which party controlled Congress in 1999? Hint: It wasn’t the Democrats.

It just so happens that large-truck accident rates have declined by more than half over the past three decades, and companies like Swift already had incentives to reduce accidents, including the prospect of fewer lawsuits and lower premiums for liability, medical and workers’ compensation insurance. Because of the incentives, Swift had only 1.6 fatalities per 100 million miles driven in 2002, but that didn’t stop the FMCSA from harassing the company.

What was Swift’s offense? It didn’t complete the required paperwork to the satisfaction of the bureaucrats at FMCSA.

All bureaucracies grow larger, and FMCSA is no exception. Two years ago its budget was $361 million. This year it requested a 24 percent increase to $447 million, which is equivalent to the annual income of approximately 11,000 families.

Memo to Republicans: Creating new monsters is not a way to achieve limited government and grow the economy.

At its current growth rate, FMCSA may eventually issue enough regulations to rival the current 100,000 pages of Medicare regulations, including the hundreds of pages for the new Republican prescription benefit that will grow to thousands of pages. Medicare regulations have little to do with patient care, just as FMCSA regulations have little to do with highway safety. But the regulations have turned doctor offices into paper factories and a source of income to consultants who help them stay out of trouble and to trial lawyers who want them to get into trouble.

The regulations also increase campaign donations (really protection money) to politicians. And then do-gooders, who can’t connect the dot of the growth of Leviathan with the dot of the growth of campaign contributions, want to solve the problem of money in politics by restricting free speech instead of reducing the size of the regulatory state.

Multiply the dead weight of the FMCSA by a thousand, and you’ll get an idea of how much of the nation’s resources are disappearing into a bureaucratic black hole instead of being invested in productivity improvements and new businesses. Some estimates put the annual cost of regulations at $7,000 per household

Just as sobering is the fact that many of the nation’s best and brightest people, including Republicans, make six-figure incomes from feeding off the regulatory state by being Gucci-clad regulatory experts, consultants and lobbyists. They will not let their regulatory rice bowl be taken without a fight.

So how can Leviathan be stopped? Since all political change begins with a change in mindsets, it can’t be stopped unless there is a change in the public’s mindset about transfer payments. As long as most Americans do not realize it is wrong to feed off of the regulatory state and to take their neighbor’s money for themselves under the guise of the common good, Leviathan will continue growing and politicians will continue finding creative ways of redistributing money, regardless of what the U.S. Constitution says about enumerated powers.

But Republicans can’t change mindsets as long as they tiptoe around this issue for fear of alienating voters, for fear of being called mean-spirited and for fear of becoming a minority party once again. If they are really for limited government and really care for this nation, they have to say over and over again, without equivocation, that transfer payments are a form of stealing and that stealing is not only wrong but will lead to our demise. Calling transfer payments ”compassionate conservatism” plays into the hands of liberals and leftists, who have their own euphemisms, such as ”social justice” and ”fairness.”

A party that speaks in euphemisms can’t be trusted. A party that wins elections but loses the war against Leviathan is a loser. A party that is the lesser of two evils is still evil. And a party that grows Leviathan while preaching limited government is either a liar, in denial or power hungry.

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Mr. Cantoni is an author of a book on bureaucracy, a columnist and the founder of Honest Americans Against Legal Theft (HAALT). He can be reached at ccan2@aol.com