Milton Friedman MCs the 26th Legislative District Kilmer-Driscoll debates. Driscoll extolls the benefits of an economy unfettered by debt and restrictive drilling policies. Sen. Kilmer announces his ability to micromanage our economy via his ability to manipulate and micromanage every possible sub-sector, while completely divorced from any visibility on infinitely complex daily price signals occurring at the rate of about 10B per sec. All while standing on one leg and juggling.

Last Friday night at the Gig Harbor, WA Peninsula High School, 6th Congressional District candidates Bill Driscoll-R and Derek Kilmer-D debated, fielding questions from former County Councilman Terry Lee, Gateway and Puyallup Herald editor Brian McClean, and former GH City Council member Bob Dick.  

State Sen. Kilmer argued that allowing the Bush tax cuts to expire would raise 1 trillion dollars, equivocated on Keystone Pipeline construction, attributed the 1990s economy to Clinton’s fiscal policies, and employed the oft-used non sequitur “government investment”.

Regarding tax cuts, the 1 trillion-dollar increase in revenues is based on a “zero sum assumption”.  Meaning taking 1 trillion dollars away from “the rich” – a populist pejorative – will result in no offsetting decrease in spending and hiring by many of those small business owners passing through business profits to their 1040s.  Democrats’ proposals to raise taxes on these households, not accounting for the negative effects on revenue and employment, would cover about 1.1% of the national debt.  Only a middle class tax hike will produce their desired results.  The middle class is seeing annual $4,520 decreases in income and $2,500 increases in health care premiums.  In the debate Sen. Kilmer praised forcing insurance companies to insure 26-year-old dependents.  This is a prescription for higher premiums.  (He also bemoaned the loss of forestry jobs when he lived in Pt. Angeles, ignoring his party’s deference to the environmental lobby that precipitated this tragic blow to Olympic Peninsula employment.)

Regarding Sen. Kilmer’s equivocation on the Keystone Pipeline, even the current State Department (approval is needed due to the Canadian border crossing) could not show potential hazardous consequences.  The pipeline might go to the B.C. coast instead of Louisiana, the oil ending up in China instead as candidate Driscoll said, should Sen. Kilmer and his party prevail on Nov 6th.  Sen. Kilmer also demurs to the anti-domestic-energy lobby about developing our recently discovered, poorly utilized vast resources of oil and natural gas, e.g. the Marcellus and Permian Basin formations.  Estimates show 100+ years of gas resources, including a shift to a net energy export.  Any extraction increases have been on private and non-federally controlled land.  Current drilling on Federal land operates under Bush-era permits.  I assume Sen. Kilmer would support the administration’s policies denying and reducing permits?

Regarding Sen. Kilmer’s admiration for the Clinton era, the deficit improved only after the Republicans retook congress in 1994 and forced conservative fiscal policies like capital gains cuts and welfare reform, which Pres. Clinton signed only due to the pending election.  A briefly balanced budget resulted from this action, as well as from Clinton’s defense and intelligence cuts, and also from capital gains influxes due to the brief Internet day-trading craze, which then crashed.

Pres. Bush’s deficits, which I wasn’t pleased with but which were mostly wartime vs. entitlement caused (and the market based therefore under budget Medicare Part D prescription drug program), decreased to 162B after his tax cuts.  Following the Democrats’ 2006 congressional takeover, it increased to 450B.  Since 2008, we’re at annual deficits of about 1.3 trillion a year.  Even the current Senate majority refuses to pass the White House’s budget proposals.

Regarding Sen. Kilmer’s favored term “government investment”, transfer payments aren’t, as economist Milton Friedman said a free lunch.  Top-down central planning invariably results in misallocation of resources and quid pro quo distribution to unions, and to business via crony capitalism.  Not to mention budgetary sinkholes like light rail and alternative energy, which lack science-based and cost-effectiveness-based justification.

The marketplace, via billions of daily price signals, is the only practical method of resource allocation.  It’s impossible for government bureaucracies (or the most powerful supercomputer) to react to these infinite price signals.  Nor do these officialdoms have a profit-motivated incentive to do so, given never-ending taxpayer subsidies supporting this vicious cycle of damaging economic manipulation.

For our local politicians like Sen. Kilmer who think regulations such as the 9,000 page Dodd-Frank Act are required interventions, please investigate the root causes of this recession.  The Community Reinvestment Act, created under Carter and accelerated under Clinton, sought to guarantee home ownership regardless of creditworthiness.  This, combined with Fed’s then (as now) low-interest rate policy, and the creation of a secondary market for collateralized mortgages by government-created (and taxpayer-bailed out) entities like Fannie Mae, created the perfect storm that caused this recession.

Misguided government attempts to efficiently allocate resources fuel the self-fulfilling natural expansion of these bureaucracies.  This is why famous economist Friedrich Hayek wrote The Road to Serfdom.  Hayek’s last book The Fatal Conceit, also illustrates Sen. Kilmer and his party’s conviction in government’s ability to pick winners and losers in the marketplace.

“Government investment” is an oxymoron. 

Published in: on November 4, 2012 at 23:47  Leave a Comment  
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