Moral Hazards In The Second Coming

Here we go again. Obama and Harry “The Mortician” Reid are aiming to raise taxes – balanced, of course, by promises to cut spending at some point 10 years from now, cuts the rate of increase, defense cuts or to propose sham cuts that simply don’t reduce spending enough to matter.

So in other words, no cuts in spending.

One thing is a fact, any “temporary” tax will be permanent.

There are two aspects of the debate about spending and taxes that are not being discussed. Perhaps they are too uncomfortable to contemplate – but it is far more likely that a debate and recognition of these issues would lead to a clear answer to the questions about our current situation.  These two are perhaps the greatest danger to our country – greater than terrorism or economic decline because they go directly to the heart and soul of what America is.

The left in America is busy manufacturing them fresh every day… people as diverse in thought as de Tocqueville, Nietzsche, Burke, John Stuart Mill, and Ayn Rand have all warned against them.

They are 1) the creation of moral hazards combined with 2) the tyranny of the majority.

First, we hear no recognition of the creation of moral hazards. A moral hazard can be defined as any situation in which a party insulated from risk behaves differently from how it would behave if it were fully exposed to the risk.

Sort of a “tax the rich”, they can afford to “pay a little more” kind of thing.

Sure, it can be done legislatively, but should it be?

Is there evidence of moral hazard in society today? Do the “less fortunate” behave differently than if they were totally responsible for their financial health?

Let me ask you – how many people have you personally seen shopping with food stamps while talking on a mobile phone? How many take their food from those purchases and put them in their car? How many have you overheard talking about what they watched on TV or a game that they played on X-Box? Have you ever seen people paying for groceries with and EBT card and paying cash for cigarettes and beer?

If you haven’t, you haven’t been in a grocery store anywhere in America, at least not in the inner city or the panhandle of Florida.

Does the “safety net” provide survival or “stuff” to provide a certain standard of living? Why can the “poor” afford TV, mobile phones, cars and X-boxes and why am I expected to pay for them?

Did you know that America’s poor rank in the top 10% of global incomes? Not in the top 10% of the world’s poor – the top 10% of all incomes. The US poverty line is $11,170 for an individual – according to the World Bank statistics, 80% of the world’s population gets by on less than $10 a day – $3,650 a year, 90% less than $20 a day – $7,300 a year.

It is well documented that our “poor” are middle class by world standards – anything that government provides in excess of basic food, clothing and shelter is pure redistributive policy, and therefore by definition, Marxist.

As for the tyranny of the majority: when the majority realizes that they can vote themselves a larger share from the government larder, the Republic is done. 75% of the people pay 14% of the income tax burden. Each of their votes is equal in value to the ones from the top 25%.

The lower 75% are being told that “the rich” are TAKING food straight out of their kid’s mouth, that they DESERVE to take money from the “rich”, that it is OWED to them, that they have a RIGHT to programs and services that are paid for by the “rich”…for no other reason than “because they can afford it”.

There are consequences to this quest for income equality (Marxism).

Conservatives are accused of wanting to go back to the 1950’s – the American left wants to go back to 1793 – to the French Reign of Terror. The left is creating the modern version of the Girondins versus the Jacobins, and this will be marked by mass executions of “enemies of the revolution” (who are now called “the rich”). These “executions” won’t be by guillotine, but will be carried out via economic confiscation.

The American left is creating a tipping point. They are so concerned about confiscating the next dollar to fund their socialism that they fail to consider the true impact of their actions.

What is remarkable in this discourse is the stark contrast between the two sides. Liberals tend to jump to the conclusion that conservatives are for the “law of the jungle” or an anarchist approach to government. I personally have never said that there should be no assistance. I simply do not believe that government should be involved in creating a standard of living higher than basic need for those who are temporarily in need. The basic liberal hypothesis presupposes that people are helpless on their own and cannot succeed without government; I choose not to believe that because my life story is living proof that you can get knocked down and get back up without going on government assistance.

What liberals hear is filtered through their perception of conservatives. Nobody is calling for the poor to be ignored. There have been poor throughout history and there will be forever. Sometimes being poor is a function of bad choices. Sometimes education. Sometimes the economy. Sometimes just pure bad luck.

Conservatives want to free people to earn all that they can, to accept any advantage that comes their way – to create opportunities for those who have less to have more.

In other words, to lift the less fortunate up.

Liberals want to make people dependent on the government, to limit them to what they are given, to avoid any risk that comes their way – to take from those who have more to give to those who have less.

In other words, to bring the more fortunate down.

What I and most conservatives I know are against is the perpetuation of a permanent underclass that is dependent on handouts. There is no way that you can look at the 8 trillion dollars that have been spent in the “War on Poverty” and call it a success. There is no way that you can look at the record level of food stamp enrollees and tell me that we are winning.

Communism/statism has proven that it cannot resolve poverty. There were poor in the USSR – basically everybody but the members of the politburo.

We have tried it the “progressive” way, maybe it is time to try it ours.

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9 thoughts on “Moral Hazards In The Second Coming

  1. Pingback: Stupid “Progressive” Tricks « The Rio Norte Line

  2. The left in America is busy manufacturing them fresh every day… people as diverse in thought as de Tocqueville, Nietzsche, Burke, John Stuart Mill, and Ayn Rand have all warned against them.

    They are 1) the creation of moral hazards combined with 2) the tyranny of the majority.

    When those two agree on something like this, you KNOW you’re in the wrong if you disagree.

    It is well documented that our “poor” are middle class by world standards – anything that government provides in excess of basic food, clothing and shelter is pure redistributive policy, and therefore by definition, Marxist.

    I read a survey this week that detailed how a person can make the equivalent of $45k/yr living off “public assistance.” Ah, that’s middle class by our standards.


    The American left is creating a tipping point. They are so concerned about confiscating the next dollar to fund their socialism that they fail to consider the true impact of their actions.

    In other words: they are eating the entire crop without worrying about keeping seed for next year’s crop.

    First, we hear no recognition of the creation of moral hazards. A moral hazard can be defined as any situation in which a party insulated from risk behaves differently from how it would behave if it were fully exposed to the risk.

    Careful, my friend: this is an argument against corporations. ;-)

  3. “Let me ask you – how many people have you personally seen shopping with food stamps while talking on a mobile phone? How many take their food from those purchases and put them in their car? How many have you overheard talking about what they watched on TV or a game that they played on X-Box? Have you ever seen people paying for groceries with and EBT card and paying cash for cigarettes and beer?

    I’m too preoccupied at the grocery store to notice other shoppers. Now I’m getting the giggles….. I was in the Publix shopping and here’s this cute blond that says “hey” to me. I smile, wave and wonder who the hello the cute blond is. It was one of my sisters! “Gah, Kelly, you’re so woo!”
    “Whatever, hussy; I’m not wearin my four eyes.”
    “Gah, wear your glasses!, You’re so blind! I’m right in front of you!”
    “Hell with that. I’m cool without glasses.”

    Now….. my son has seen this…….

    We’re now debating. We’re both very keen on Republicans dropping social issues. Unfortunately, I believe and argue with him that he is too naive. Immigration? Mr. Kells told him that there are Obama adds in Mexico that tout our welfare system here in the U.S.. He told him that he would translate them for him. Here’s the rub: My son believes that democrats want what’s best for the country, they just have a different way of going about it. We are basically trying to show him that he may want to re-think is position on the democrats.

  4. I’ve discussed personal rationing of resources before:

    When government or any entity picks up the cost of someone’s healthcare, the result is a lack of concern for costs. People become incentivized to spend. In many cases, they spend well beyond what they would be willing to pay themselves even if they had the resources. With no cost barrier, and as the supply demand curve of economics 101 shows, demand exponentially increases as the price falls. At zero prices, or free, demand is infinite.

    We see this daily in healthcare. Tying this together, I would like to share a little story with you. Out of my own pocket, I purchased a Bariatric Rollator Walker for a patient after Medicare denied him one (they purchased him one the month before).

    Not two weeks later, I get this photograph mailed to me by the Home Health Agency along with a request for a prescription for a new walker:

    Do we have a morality problem in America? You damn right we do. The Free Sh*t Army wants what they want, when they want it, and they do not care where it comes from, or who pays for it … as long as it is not themselves. I discharged the patient right there on the spot.

    I guess I am the one with the morality problem.

  5. Pingback: Passing Thoughts On Being At The Bottom Of The Fiscal Cliff | The Rio Norte Line

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