Pretending Money is Wealth

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... There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. ...
  — Frédéric Bastiat, 'What Is Seen and What Is Not Seen', 1850

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In 1850, the French economist Frédéric Bastiat wrote an essay entitled 'That Which Is Seen, and That Which Is Not Seen', which included a little parable called 'The Broken Window' —
      http://www.econlib.org/library/Bastiat/basEss1.html
      http://bastiat.org/en/twisatwins.html
      https://mises.org/library/broken-window

In 'The Broken Window' Bastiat explains the fallacy of the popular view that there is economic benefit to society from destruction.  Whenever there is some natural disaster, for example, it is not hard to find claims in the press that large-scale destruction results in some economic gain.  Here is one example, published in October 2012, after hurricane Sandy --

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http://finance.yahoo.com/blogs/the-exchange/economic-impact-hurricane-sandy-not-bad-news-150458002.html
https://archive.is/ntrpl

The Economic Impact of Hurricane Sandy … Not All Bad News
By Peter Morici
Hurricane Sandy will have a devastating impact on life and property. However, gauging its ultimate impact on an economy -- still struggling to overcome the Great Recession but with substantial resources to overcome adversity -- is far more complex than merely adding up insurance payouts and uninsured losses.

The Upside
Disasters can give the ailing construction sector a boost, and unleash smart reinvestment that actually improves stricken areas and the lives of those that survive intact. Ultimately, Americans, as they always seem to do, will emerge stronger in the wake of disaster and rebuild better-making a brighter future in the face of tragedy.
...

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The quote above is obviously absurd on its face — it simply begs the painfully obvious question: 'Can't smart investments be made without wide spread destruction first, and didn't things that did not need to be replaced also get destroyed in the disaster?'

And notice this estimate from the State of New Jersey, cited by the U.S. Department of Commerce, of $29.5 billion in construction costs just 'to repair and replace the damage caused by the storm'.  And even while acknowledging the enormous amount of lost wealth, they pretend that the work to restore conditions prior to the storm creates new jobs, even though no new wealth is being created — ignoring that the $29.5 billion could have been spent on projects to actually raise living standards, had it not been for the damage caused by the storm.  Yet again, we see Bastiat's Broken Window Fallacy --

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http://www.esa.doc.gov/Reports/economic-impact-hurricane-sandy
https://archive.is/Du2vx

• The New Jersey state government estimated construction costs of $29.5 billion to repair and replace the damage caused by the storm.  If this money is spent over the next four years, the state should realize a gain of $44 billion in total output and about 281,000 new jobs (full- and part-time).

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Here is Lawrence Reed of FEE addressing the same kind of nonsensical thinking regarding a devastating earthquake in Kobe, Japan, back in 1995 —
    http://www.fee.org/the_freeman/detail/destruction-is-no-blessing

Bastiat was addressing the same kind of absurdity back in his day, when it was suggested that rebuilding Paris would somehow make French society better off --

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http://bastiat.org/en/twisatwins.html
http://www.econlib.org/library/Bastiat/basEss1.html

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When we arrive at this unexpected conclusion: "Society loses the value of things which are uselessly destroyed;" and we must assent to a maxim which will make the hair of protectionists stand on end - To break, to spoil, to waste, is not to encourage national labour; or, more briefly, "destruction is not profit."

What will you say, Monsieur Industriel -- what will you say, disciples of good M. F. Chamans, who has calculated with so much precision how much trade would gain by the burning of Paris, from the number of houses it would be necessary to rebuild?

I am sorry to disturb these ingenious calculations, as far as their spirit has been introduced into our legislation; but I beg him to begin them again, by taking into the account that which is not seen, and placing it alongside of that which is seen. The reader must take care to remember that there are not two persons only, but three concerned in the little scene which I have submitted to his attention. One of them, James B., represents the consumer, reduced, by an act of destruction, to one enjoyment instead of two. Another under the title of the glazier, shows us the producer, whose trade is encouraged by the accident. The third is the shoemaker (or some other tradesman), whose labour suffers proportionably by the same cause. It is this third person who is always kept in the shade, and who, personating that which is not seen, is a necessary element of the problem. It is he who shows us how absurd it is to think we see a profit in an act of destruction. It is he who will soon teach us that it is not less absurd to see a profit in a restriction, which is, after all, nothing else than a partial destruction. Therefore, if you will only go to the root of all the arguments which are adduced in its favour, all you will find will be the paraphrase of this vulgar saying — What would become of the glaziers, if nobody ever broke windows?
...

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But here is a writer trying to argue that the 'Broken Window Fallacy' is not a fallacy --

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http://thinkprogress.org/yglesias/2011/08/16/296903/the-denial-of-money
https://archive.is/gB1ct

'The Denial of Money'
Few myths are as persistent as the idea that Keynesian and monetarist thinkers fail to appreciate Frédéric Bastiat point about broken windows. As even a cursory examination of efforts to apply Bastiat’s ideas to the conditions of a depressed economy will show, the so-called “broken windows fallacy” is not a fallacy at all, just a special case. Here’s Daniel Mitchell:

[Krugman] committed the “broken-window” fallacy, explained more than 150 years ago by a famous French economist, Frederic Bastiat.

Breaking a window at the local bakery, Bastiat explained, might generate business for the town glazier, but only at the expense of some other merchant, like a tailor, who would have benefited if the baker didn’t have to spend money on a new window.

In other words, the destruction of wealth is not good for an economy. At best, it makes us poorer and then shifts how current income is allocated.

When Bastiat wrote that, “money” meant, in France, a commodity of which there was limited supply. Specifically, the so-called “Germinal Franc” contained 290.32 mg of gold. The modern economy isn’t like that. The quantity of money and credit are policy variables. If the country were afflicted with unemployed glaziers, Ben Bernanke could run around smashing bakery windows and leaving checks behind. The checks don’t need to be backed by anything, and the bakers will use the checks to hire glaziers to replace the lost windows without reducing their spending on tailors. Problem solved. This would be, admittedly, a silly way to resolve the problem. A more reasonable approach would be to cut the checks and pay the glaziers to do something useful. But it would work. Everyone understands that we don’t have a barter economy operating or a gold standard operating purely with cash-in-advance, but people often fail to see that this is important. But it makes a ton of difference. Among other things it means that if your argument about why something can’t be done turns at some key point on an alleged scarcity of money that something has gone awry.

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Well, there is nothing new here, given that people have been trying to pretend that money printing is helpful since long before Bastiat.

But notice that the statements quoted above regarding 'The Broken Window' are both a straw man and red herring fallacy.

Bastiat described costs in francs in 'The Broken Window' as a way of illustration, but his argument has nothing to do with the supply of money as the writer stated in the quote above, but rather the opportunity cost of production — Bastiat was simply making the obvious point that the economic activity that results from replacing something that was destroyed does not add wealth — 'an alleged scarcity of money', to quote the writer above again, has nothing to do with Bastiat's argument (straw man).

Even if, as this writer described, a Federal Reserve chairman paid for the broken window with printed money, so that the shopkeeper's spending were not reduced as a result of replacing the broken window, the actual labor and resource cost of the replaced window are still lost — printing money does not replace the lost wealth, which is the utility of the window that was destroyed, and the labor and resources consumed to produce it in the first place.

And arguing that it is helpful to pay individuals to do things that have no market demand — given that they are not already being purchased — as the writer described above, is simply a distraction from Bastiat's point, and is not relevant — even if it were true that it is useful (red herring).

It is especially ironic that a writer would begin by stating it is a myth that Keynesian and monetarist thinkers do not appreciate the point of 'The Broken Window', but then go on to completely miss the point.

The writer helps to prove the claim that he is supposedly attempting to debunk.

Money, in any form (whether it is cigarettes or gold coins), is only a tool — a medium of exchange to facilitate trade, and a store of value.  The only legitimate spending is the result of production, or loaned production — a person trading the thing they have made or grown (or borrowed (debt)) with others.

Wealth is produced goods and services — not money. Trade based solely on money printing is no different than counterfeiting — it makes everyone poorer, because it supports consumption without the prerequisite production.  It just makes the medium of exchange worth less.  This is the only possible outcome of simply distributing money, since the supply of available goods is not magically increased as money is printed — as that additional money is spent, prices must rise.

Counterfeiting (printing money on your own) is illegal for good reason — in essence, it is theft.  Why?  Because it allows the counterfeiter to receive and consume goods and services without offering anything of value in exchange.  The only difference between counterfeiting and governments printing money, is the hope that governments will be responsible and will not steal too much, in debasing the value of their currency.

And note that the writer does not give any indication that he is aware of the obvious inefficiencies, in paying someone with printed money to perform work not required by normal market demand — not only has the medium of exchange been debased, but any resources that were consumed were more than likely put to a less effective use, potentially forever (it does not get more costly than that).

Of course, a government can always print its currency, and distribute funds to everyone, thereby giving them as much money as they want to spend.  But what would happen then?

Is not this, in essence, what happened during the U.S. mortgage crisis from 2007 to 2009?  Most people who applied for a loan, were given that loan, at very low cost, and this fueled wild speculation on assets that were worth much less than people were paying for them.

Many would be quick to respond here that a loan is different than simply printing money for people to spend, since the borrower is obligated to pay the money back — well, of course — that makes the mortgage crisis more useful as an example for demonstrating the folly of money printing, not less.

The mortgage crisis functions as a more illustrative example, and demonstrates the folly of money printing even more clearly, since even the obligation to pay the money back, could not prevent wild speculation and a massive waste of resources.

In short, printing money in an attempt to recover from recessions marked by a large misallocation of resources, is an attempt to use a disease as a cure.

The essential point is that legitimate trade is the result of production — not the possession of money.

Simply giving everyone more money does nothing to increase the available goods or services that have been produced (or that even can be produced) — it can only increase scarcity by giving people the ability to purchase goods and services when they have not produced anything valuable to exchange for those goods or services — in essence, it is manufacturing counterfeiters.

Here is a nice short video explanation of the nature of money, and the inevitable result of money printing --

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http://www.learnliberty.org/videos/why-not-print-more-money/
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Printing more money will simply spread the value of the existing goods and services around a larger number of dollars. This is inflation. Ultimately, doubling the number of dollars doubles prices. If everyone has twice as much money but everything costs twice as much as before, people aren’t better off. Having the government print money will not increase wealth.

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Here is another article that explains the obvious point that the only way money printing will not cause inflation is if the money is not spent (i.e. it creates no new demand) —
    http://economics.about.com/cs/money/a/print_money.htm
    https://archive.is/5enBd

There is a long list of countries that created inflation catastrophes by taking this absurd logic regarding eliminating a supposed 'scarcity of money' to its extreme —
    http://en.wikipedia.org/wiki/Hyperinflation
    http://en.wikipedia.org/wiki/File:German_Hyperinflation.jpg

Supposedly, this is not what Keynes had in mind, but he helped legitimize the idea that government spending can create economic growth, even though it is often wasteful and ultimately results in taxation, so he paved the way for asinine arguments like the one the writer made above in 'The Denial of Money'.

People just love trying to pretend there is a free lunch.  If it were possible to create prosperity by printing money, there would not be any poverty in the world.

All Government Securities are a Liability to Taxpayers

One obvious fallacy that is often repeated, especially in regard to Social Security, is the claim that government debt is an asset to taxpayers, when that debt is intended for some public purpose.

At the link below is an article from a fellow at the Brookings Institution with a Ph.D. in economics from MIT, in which he claims there's no immediate problem in Social Security collecting less in tax payments than it pays to beneficiaries.  Why?  Because the interest income on the trust fund is NOT being counted, and that the nation's private pension system is also normally in this 'cash negative' situation.

Notice that the author correctly describes the Social Security interest earnings as an expense to the U.S. Treasury, thereby cancelling out the interest earnings as a source of income to taxpayers.  He then contradicts himself by calling it a 'plain fact' that the interest earnings 'add to Social Security's spending power just as it does in the case of a private pension plan.'

But the author doesn't mention the obvious point that Social Security's interest income is paid by the same people contributing to the plan (U.S. taxpayers), since the so called Social Security 'trust fund' holds government treasuries (as the author also points out), so any Social Security income is yet another expense that must be paid by future taxpayers — that is, the so called income from Social Security's 'investment' must be paid by the plan participants — this is not the case with private pension plans holding real investments that generate income that is in no way paid by the plan participants --

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http://www.brookings.edu/research/opinions/2011/11/16-social-security-burtless

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The investment income of a private pension plan is regarded as a legitimate and uncontroversial way to pay for pension benefits. Curiously, however, the investment income of Social Security is widely believed to be a dubious, almost fictional source of funds. This is mainly because all the investment income of Social Security is earned on U.S. Treasury bonds, which is the only asset held in the Trust Funds. Interest on Treasury bonds is also a source of income for private pension plans, of course. In fact, Treasury securities are generally considered the safest assets in a pension fund’s portfolio. Why, then, are Treasury bonds thought to be such an unreliable source of revenue for Social Security?

The simple explanation is the treatment of Social Security interest earnings in the federal budget accounts. The interest earned on Social Security reserves is an income entry in the Social Security accounts, but it is a spending item in the U.S. Treasury accounts. The positive entry for Social Security is exactly offset by a negative entry in the Treasury accounts. When the two items are summed to calculate the unified federal budget balance (including both Social Security and the Treasury), the interest income essentially disappears. The only Social Security items that remain are the program’s tax collections and its benefit and administration outlays – in other words, the program’s “cash balance.”

The plain fact, however, is that the investment income of Social Security adds to the program’s spending power just as it does in the case of a private pension plan. If the Social Security Trust Funds earn $117 billion in interest income, as they did last year, the Social Security Administration has the authority to spend an additional $117 billion on benefit payments, either this year, next year, or in any future year when the Trust Funds still hold positive reserves.
...

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The real 'plain fact' is that it's correct to cancel out the Social Security interest earnings by the expense of that interest to the U.S. Treasury — unless you want to pretend that you can become richer by moving money from your left pocket into your right.

Of course, the interest income does add to the spending power of the Social Security program — but not before it has reduced the spending power of the U.S. Treasury by the same amount.

It's absurd on its face to claim that an interest expense to taxpayers is somehow increasing their spending power.

What is it about the relationship between government securities and taxpayers that makes it so hard for people to understand that the citizens of a given nation do not profit when their government issues debt, since the citizens are responsible for paying back the principle, as well as making the interest payments on that debt?  Government debt is always a net loss to taxpayers, since taxpayers must make the interest payments on the debt.

In essence, government debt is equivalent to a home mortgage with a huge principle where all taxpayers share the mortgage payment.  There are different kinds of government debt securities — Treasury Bills, Treasury Bonds, etc. — that all work in slightly different ways, but they all share the essential feature of making a promise to a lender (the purchaser of a given security), to pay back the original loan principle, along with a certain amount of interest.  A home mortgage works the same way — a lender puts up the bulk of the purchase price of a borrower's home purchase, under the agreement that the borrower will make payments to the lender to return the original loan principle with interest.

A home mortgage is an asset to the lender, and a liability to the borrower. A home mortgage is a net loss to the borrower, because the borrower must pay back more than they borrowed (the interest), in order to incentivize a lender to make the loan.

In the same way, a government security is an asset to the lender, and a liability to the taxpayer (borrower).  A government security is a net loss to the taxpayer, because the taxpayer must pay back more than they borrowed (the interest), in order to incentivize a lender to make the loan.

A borrower may purchase an asset with a loan (like a home, or, for taxpayers, a new highway), and that asset may appreciate or provide economic gain beyond the interest cost of borrowing the money, leaving a net gain — but that's a separate issue, that doesn't remove the cost of the interest.  And this certainly doesn't apply to Social Security, which is a transfer payment — not an asset purchase.  Taking a payroll deduction from a worker, and paying that money to a retiree, is a zero sum game.

Whatever the result of spending borrowed funds, interest payments reduce that result, since interest payments are a cost over and above the amount of money borrowed, that must be paid from a borrower's income, thereby reducing the living standard of the borrower.

Here's another person with a Ph.D. in economics who doesn't understand that all government securities are claims on future tax receipts, which means they are a claim on the future earnings of taxpayers, since, again, debt payments must be made from the taxes collected from the earnings of taxpayers --

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http://zfacts.com/node/141

Who’s behind zFacts, oil companies or what?  Nope.  I’m Steve Stoft and this is my web site. I’m building it with a little help from my friends and volunteers, but so far, it’s mostly my work. I’m a Ph.D. economist and my day job is consulting for public electricity markets—California, PJM, ISO-NE, some private generators, and occasionally the World Bank, DOE and the UK Department of Energy and Climate Change.
...
What are your biases?  At heart, I’m a scientist; that means I’m a skeptic. I don’t trust easy answers especially from politicians. I also don’t trust extremists, either left or right. But I don’t think these are biases; they’re based on observation. It’s hard to know your own biases, but I believe openness, information, and clear thinking are helpful—maybe those are my bias. I tend to be hard headed and soft hearted.

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Note that even with the impressive credentials described at the previous link, including an advanced degree in economics, this author doesn't seem to understand that a Treasury bond represents money spent by government, that it must pay back from taxes, including interest.  The author does also make the comment that the money is spent once borrowed, but he still insists the debt is an asset to taxpayers.  A U.S. Treasury bond, or any other government security, in no way represents money that has been saved by the U.S. government, as stated here --

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http://zfacts.com/zfacts.com/p/477.html

Is the Trust Fund Fake?  It contains  $2+ trillion saved for our retirement from our paychecks (FICA) and by our employers. The White House says "There is no Trust Fund, just IOUs." It's just paper. But those papers are Treasury bonds. What gives? Who could steal this much hard earned money?

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Here's more confusion from the same author --

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http://zfacts.com/zfacts.com/p/336.html

The Whitehouse says:   There is no trust fund, just IOUs that I saw firsthand, that future generations will pay. –Bush, April 5, 2005   • We take your payroll taxes; we pay out the benefits to the current retirees; and with the money left over, we pay -- pay for other programs. And there's nothing left but file cabinets with IOUs. –Bush, April 26, 2005   • I went to West Virginia the other day to look at the filing cabinets, to make sure the IOUs were there — paper. And it's there. ... not a very encouraging sight. –Bush, April 18, 2005 • Now, about $1.7 trillion of that is in the so-called trust fund; that is, money -- that's money that's been collected that's not there as cash at this point. –Cheney, March 22, 2005

Hey, wait a minute!  • What about the Federal Pension Trust Fund? It's just the same—all $800 billion of it. You mean there are no military pensions?!  • What about the $280 billion in Medicare Trusts—are those fake?  • And, the highway trust and all other government trusts? $3.1 trillion all told. And what's their problem with "paper"? A thousand dollar bill is paper, the check I write, my stock certificate, my government bond—all paper. Did they expect the trust would be made of diamonds? What of the millions of Americans who own Treasury bonds, all paper? Seven trillion dollars of national debt has been spent on government programs, and there is "nothing left." Has the US of A defrauded the world of $7 trillion?

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Oh brother.  Notice again the same confusion, and the failure to distinguish between government agencies holding debt that they issued, and private citizens holding that debt.

Of course, there are government trusts, and the U.S. Treasury hasn't defrauded the world of $7 Trillion (at least not yet).

The problem is in pretending a government, any government (or any entity, for that matter), can generate income by paying itself interest.

A private citizen (from any country) can profit from purchasing U.S. treasuries, or the debt of the country in which they live, since in that case the individual acts as the lender, not the borrower, and receives interest payments from the taxes the respective government treasury collects.  In other words, when an individual acts as a lender by purchasing a government security, they have a claim on the future tax receipts of other taxpayers to that government — whether they live in the country that issued the debt or not.

But when governments hold their own debt as part of some government program, that debt is a marker for how much that government must collect in future taxes.  If you're a citizen of a country whose government holds debt it has issued, that debt is a claim against you — there's no reasonable way citizens under such governments can view such debt as an asset, any more than they can view a mortgage on their home as an asset.

And notice this absurd quote, again, from the same author at zfacts.com --

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http://zfacts.com/zfacts.com/p/336.html

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Is the national debt so big we can't pay it back? Compared to the size of our economy it's smaller than in World War II, and we paid it down after that. There is only one danger to social Security, and that's Congress.
...

http://zfacts.com/p/318.html

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So supposedly we don't have to worry, because we paid down the debt from the unusual expense that resulted from WW II — an expense that went to ZERO when the war ended — even though our debt is now approaching the same level that occurred during a full scale world war, while nothing comparable is happening, or has happened since.  So what big one time expense is supposed to end, to reverse the trend shown in the chart above?

It's also interesting to note that someone who describes himself as 'a scientist and skeptic' who 'doesn't trust extremists', would create a chart that pretends that U.S. Presidents can unilaterally pass budgets without congressional approval (referring to the comment in green in the chart above).

And note that there was a Republican majority in the Senate for six of the eight years that Reagan was in office, but the House had a Democratic majority the entire time Reagan was in office, from 1981 to 1989.

And it was even worse for George H. W. Bush — there was a Democratic majority in both houses of Congress from 1989 to 1993, when George H. W. Bush held office —
    https://en.wikipedia.org/wiki/United_States_presidents_and_control_of_congress

So the chart below is a little more objective, in that at least it doesn't pretend that the country would have a dramatically lower level of debt, had a couple of Republican presidents tried to do something different with the budgets that were passed during their tenure --

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http://www.truthfulpolitics.com/http:/truthfulpolitics.com/comments/us-federal-debt-by-political-party/
http://www.truthfulpolitics.com/images/us-federal-debt-percentage-gdp-by-president-political-party.jpg

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Milton Friedman Addressing Some Popular Fallacies

Here's Milton Friedman taking a question back in 1978 in his 'Free to Choose' series —

https://www.youtube.com/watch?v=rQLBitV69Cc

The questioner nicely captured the main fallacies that the majority of people accept today.   Here are the highlights of those fallacies —

1. there are no good examples of free economies working.
2. resources cannot be allocated efficiently without govt. involvement.
3. that the economy is driven by demand (spending) rather than productivity, so government taxation and spending is critical to economic growth.

It was nice to see the questioner explicitly name the use of force in the third part of his question.  I rarely hear anyone acknowledge this obvious point — many people pretend that we have a voluntary taxation system, and only people who want to free ride, or don't care, object to 'voluntarily' giving a large portion of their productivity to government to spend — as if questions concerning waste and corruption aren't especially important.  Never mind that most people do what they can to avoid paying taxes, even while denouncing 'the rich' for using tax shelters.

This fallacy regarding government taxation and spending is so pernicious — so few people acknowledge the obvious point, that government cannot spend what it does not take from the private sector (via explicit taxation, or through money printing (inflation)), so any 'stimulus' the government creates at one time, will be cancelled out (and then some due to waste) when the taxes are taken to pay for it.

In his response, I thought Friedman made a great succinct statement that perfectly addresses the root cause of the problems we're facing today.  Here's part of Milton's response --

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     No, the third part of your thing is just pure fallacy from beginning to end.  Because if those people who are now government employees were employed in creative activity and productive activity they would also be spending their money.  And we'd have a greater total around.
     All you're doing ... let's suppose for a moment, take the extreme case, that that 40% [used for government spending] is being used just to have people sit around — the fact that they spend their money doesn't alter the situation.
     The only product there is, is what the 60% produce, and that 60% is divided among the 100%.  If those 40% are also producing goods, then there are more goods to go around among everybody.
     You are just involved in a fallacy of looking at dollars, which is important sometimes, instead of looking at the real product, the goods and services that people produce and people consume.
     Spending isn't good, what's good is producing.  What we want to have is more goods and services.  And as I say, the obvious indication that that's clear, is that if your logic were right, it would apply at 50%, 60%, 70%, 90%, 98%, 100% — and obviously you would see that that would be a bunch of nonsense at that stage.
...
     We express some of our values through doing things through government, and there's nothing wrong with doing that, provided we keep in control, and don't let the government become the master instead of the servant.
     And the real problem is, in my opinion, that as we move from the local community to the state, from the state to the federal government, it becomes increasingly difficult for us to control the mechanism we have established, and that mechanism tends to control us.
     That was the great wisdom of the founding fathers of this country, of the people who wrote the Constitution.  That Constitution was designed to limit government's powers in order to preserve the freedom of the individuals.  And what has happened in the past 50 years is that the fundamental character of the Constitution has really been changed.
     We have broadened enormously the conception of what is a governmental power and what is not, and have departed from that limited government, until we have created a Frankenstein, an unlimited government that threatens to destroy us.

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And note that his 'Free to Choose' series is now over 30 years old — the trend toward greater government control that he described, is even more firmly in place now than it was then.

Of course, most people would just pretend that Friedman's statements in the video are false, even though they're incapable of making a convincing argument to refute them.

As an example, here's a comment to the video I noticed on YouTube, regarding Friedman's emphasis of the value of productivity over spending —
     "if no one spends no one produces..."      (some version of this is repeated often)

Even after Friedman specifically explained the obvious point that increased productivity is what raises living standards (rather than spending and consumption), someone still posted a comment attempting to reverse cause and effect — as if their comment is obviously true, and needs no defense. Of course, the comment is an obvious fallacy, since if you haven't produced something (or borrowed what someone else has produced), you will have nothing to spend — productivity must come first, since all market activity is an exchange of what people have produced.

The comment is just obvious question begging —  'what is being spent, if no one has produced anything?' 

Imagine you're stranded on a deserted island — will you not work as productively as you can to survive, if no one comes to spend money?   So a better comment would be, 'If no one produces, there is nothing to spend.'

The original series can be watched here —  http://www.freetochoose.tv/

https://www.youtube.com/user/FreeToChooseNetwork

The Government Most Deserve

Sandra Fluke is running for CA state senate -- http://www.standwithsandra.org/

Fluke's testimony before congress back in 2012 was especially appalling, not so much because she pretended women must use birth control to maintain their health, and that a business can properly be forced to provide a service just because someone decides they want it, but also because she completely exaggerated the cost of birth control.

Of course, it was also simply idiotic that no one seemed to understand that a viable insurance plan has to charge more than it spends on claims, so any insurance plan that covers regular maintenance expenses must cost more than those expenses (obviously the plan will fail, if this isn't the case), so someone who can't afford to purchase birth control regularly, wouldn't be able to afford the coverage for regular purchases of birth control -- just like someone who can't afford eye glasses, couldn't afford to purchase vision insurance, because you can always get cheap eye glasses for less than the cost of those plans.  Of course, I guess that's the point -- it's the old entitlement mentality again -- if I can pretend I have enough of a need, then I can try to make someone else pay part of my costs through some kind of forced government subsidy.

It's instructive to watch Sandra speak on the birth control issue -- there's a video of it here --
    http://en.wikipedia.org/wiki/Sandra_Fluke
She even get's emotional at one point, as if it's a dramatic tragedy being played out.

Sandra Fluke doesn't give any indication that she's qualified to serve in government, but she has that pretentious, morally presumptuous and self-righteous attitude that many people respond to, so that means she's likely to be a popular candidate.

Here's a good analysis of the absurdity of Fluke's statements --
   http://online.wsj.com/news/articles/SB10001424052970204603004577269491399954950
   https://www.google.com/search?q=sandra+fluke%27s+amazing+testimony
The author points out how inexpensive various forms of birth control are (nowhere near $3,000 per year, as Fluke claimed), and also that birth control pills are only one of the treatments for Polycystic Ovarian Syndrome -- the condition Fluke emphasized in her testimony.

And I found it especially frustrating to hear Fluke denounced as a slut in the media, because these comments helped to obscure how ridiculous her testimony actually was, and also helped to turn her into a kind of folk hero for corrupt progressives, who want to treat society as some kind of play toy that they can control and manipulate at will, to satisfy their smug moral presumptuousness.

And notice the vacuous content on Sandra's campaign website.  Here's a link to an issue she's prominently supporting -- equal pay for women --
    http://www.standwithsandra.org/huffington_post_sandra_fluke_equal_pay

As one might expect who is familiar with political discourse and vote buying, that issue is a complete myth, but it's very useful for demagoguery.  So it's no surprise that she would get behind it, given her testimony on birth control.

Here's an article by Hanna Rosin (a woman!), published in August, 2013, on Slate.com (no anti-feminist bastion) explaining the myth --

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http://www.slate.com/articles/double_x/2013/08/the_familiar_line_women_make_77_cents_to_every_man.html

How many times have you heard that “women are paid 77 cents on the dollar for doing the same work as men”? Barack Obama said it during his last campaign. Women’s groups say it every April 9, which is Equal Pay Day. In preparation for Labor Day, a group protesting outside Macy’s this week repeated it, too, holding up signs and sending out press releases saying “women make $.77 to every dollar men make on the job.” I’ve heard the line enough times that I feel the need to set the record straight: It’s not true.

The official Bureau of Labor Department statistics show that the median earnings of full-time female workers is 77 percent of the median earnings of full-time male workers. But that is very different than “77 cents on the dollar for doing the same work as men.” The latter gives the impression that a man and a woman standing next to each other doing the same job for the same number of hours get paid different salaries. That’s not at all the case.
...

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Of course, it's not surprising that men make more than women on average, if you pause and think for a moment.

Men should make more than women, on average, not because they're smarter, faster, or bigger, but because (again, on average) they're willing to do things women will not do.

When's the last time you saw a crew replacing a roof, and noticed any of them were women?
When's the last time you called for a plumber, and a woman showed up?
Ever see any women on an Alaskan crab boat?   (I wouldn't try this either)
      http://www.discovery.com/tv-shows/deadliest-catch

This is just one obvious point that explains part of the pay difference -- another I've read is that women work fewer hours than men on average -- a point Hanna Rosin also makes in her article quoted above.

Sadly, I'd say we can expect to see more of Sandra Fluke -- she's already demonstrated a talent for the kind of pretentious demagoguery that is effective with the public, and it seems like she's just getting warmed up.   She'll fit right in the California State legislature.

It's almost comical how she gets behind these bland uninformed conformist positions, and then acts like she's waging this lonely battle against entrenched power.

The road to hell being paved by so-called 'good intentions'.