Elkhorn Creek Lodge

The Cost of Democratic Party Corruption

Posted in democratic party, economics, gop by Eugene Podrazik on September 24, 2008

Here, laid bare is the source of the Wall Street Implosion. Fannie Mae and Freddie Mac. This was a straight party line vote in which the Democratic party blocked necessary reform and oversight for these two mortgage entities that, if passed, would have prevented the Wall Street meltdown of last week. 

Nor, is the “bailout” some sort of violation of free market rules. It is a tax to pay for the corruption of Fannie Mae and Freddie Mac and their enablers in the Democratic party. And, to the extent the bailout will be larded by the Democrats for their pet projects, it will be payment on further corruption. The recent mortgage “relief” bill that included funds that will be funneled into such organizations as ACORN. 

By holding the economy hostage, by threatening a depression, the Democrats manage to saddle our country with a 700 billion tax increase. And, Obama hasn’t even walked into the Oval Office. But, this matter reflects much deeper matters of the interference of politics into the free market and the cost of crony capitalism.  

Start with the relative cost of living and the overall economic health in the blue states. Comparatively, most economic growth, economic opportunity, income potential and population growth trends towards red states. And, this trend correlates with economic policies that emphasize lower taxes and regulation. Tax and regulations policies that represent the overall governing philosophies of the Democratic party that tend to dominate in blue state versus those of the Republican party in red states.

Like stellar evolution of a young blue white start that slowly degrades to a black hole,  the blue states imitate such a life cycle in a final stage of economic paralysis. The black hole stage for a blue state is a social services economy, as noted by the current governor of New York State. Here’s a state that lurches from economic crisis to economic crisis trying to find new sources of revenue, taxes, to fill yet another budgetary shortfall. And, what can’t be taxed is regulated to the point of strangulation. Perhaps blue states should be called black hole states because of their propensity to suck up revenues, in the form of hight taxation, of whatever productivity is left with out creating any discernible economic growth.

New York state is a classic example. Here was a state, a century ago that was a powerhouse of economic growth and innovation. A state of economic power by the likes of Corning, IBM, Xerox, Kodak, Westinghouse.  Now, upstate New York is a shell of itself. Economic news in places like Rochester revolve on more lay-offs from the likes of Kodak and Xerox.

Taxes make everything expensive. Taxes drag up prices because there are always sectors of the economy, with relatively inelastic demand, that will price themselves to completely discount the cost of that tax. Once those cost are factored in, the rest of the economy adjusts, in upward price pressure. It’s no coincidence that some of the highest costs of living occur in jurisdictions that have such innovations as state and, yes, city income taxes. In jurisdictions that have sales taxes hovering at almost ten percent–like Cook County, home county of Chicago.

It is in such jurisdictions that we have building codes larded with building requirements that serve to pad union payrolls. I remember the hullabaloo with the painter’s union over going from a 4 inch brush to a roller; sprayers weren’t even on the market yet. I shake my head at how much less house, for the same amount of money, you can buy in Chicago as compared to my former home town of Houston or now in Casper. I also shake my head at the almost exponential difference in property taxes between the Chicago area and Casper.

In a bustling sun belt city, you can pick up the Sunday newspaper and find full page ads for anyone of a number of new home developments; unlike a counter-part newspaper in Rochester. Or, at least you could once.

Taxes and government spending create corruption. It is a progression that starts from an the creation of bureaucracies to run the “necessary” functions of government. A progression from monopsony functions such as national defense, roads and the post office that creates an army of parties with an interest in governmental revenues soon leads to appropriation of other functions that now become “necessary” governmental functions. Such as the responsibility of feeding your children; the school lunch program. And, rapidly the implicit bribes of a government jobs or contracts become the overt bribes of campaign contributions and, well, bribes. The ultimate bribe and payoff becomes a every accelerating accretion of more governmental programs, spending and jobs. Northern Virginia is about to move Virginia from red to blue because the predominant industry of Northern Virginia is government. An industry that creates nothing and manages to spend trillions.

It goes back to William Jennings Bryan, who campaigned on the coinage of silver for the purposes of creating inflation. Economic policies specifically tilted to benefit a specific group of the electorate contra to free market discipline. And, now, what we have is a William Jennings Bryan economy that has long abandoned the market discipline of precious metals. Or, the discipline of even having to print money. Now, the Fed create money at the stroke of a pen.

By the way, gold is almost $900 per ounce. Devaluation? Inflation? FDR had set its price at $35 per ounce.

Advertisements
Tagged with: ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: