Enacting useless regulations in order to force the transfer of wealth from rich to poor

There’s a famous story about Milton Friedman’s response when confronted with make-work projects:

While traveling by car during one of his many overseas travels, Professor Milton Friedman spotted scores of road builders moving earth with shovels instead of modern machinery. When he asked why powerful equipment wasn’t used instead of so many laborers, his host told him it was to keep employment high in the construction industry. If they used tractors or modern road building equipment, fewer people would have jobs was his host’s logic

Then instead of shovels, why don’t you give them spoons and create even more jobs?” Friedman inquired.

We all know that government’s do this to swell the job rolls.  But what happens when governments create regulations that force private citizens to create make-work?  Zombie explains that it’s just socialist redistribution in a different guise.

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  • SADIE

    I prefer your animated “icons” much more than the one currently living in the WH.  ;)

  • Ron19

    Some correspondence with a friend.  There are three people and three emails in this.
    Fw: Fwd: Our government at work.
     
     
    —– Original Message —–
    Subject: Fw: Fwd: Our government at work.

    Got this from a left liberal leaning friend .    I get the message, but how would you answer his question without sounding pompous or ridiculing him ? I thought you might have a better way of explaining it to him since I get snarky and patronizing at times. I think sometimes he is baiting me since he knows I am conservative———————Barb
     
    Subject: Fwd: Our government at work.

         I Got this same e-mail some time ago.  I have thought about it on and off for some time.   I guess because I am netting slower mentally as I age, (and debatedly never having been extremely quick to start), I don’t understand the underlying message.  Government stimulus—good, or bad??      Please tell me what I am missing!!!
     
    Begin forwarded message:
     
    subject: Our government at work.
    It’s a slow day in the small town of Pumphandle and the streets are
     deserted. Times are tough, everybody is in debt, and everybody is
     living on credit.
     
    A tourist visiting the area drives through town, stops at the hotel,
     and lays a $100 bill on the desk saying he wants to inspect the rooms
     upstairs to pick one for the night.

     As soon as he walks upstairs, the hotel owner grabs the bill and runs
     next door to pay his debt to the butcher.
     (Stay with this… and pay attention)
     
    The butcher takes the $100 and runs down the street to retire his
    debt to the pig farmer.

     The pig farmer takes the $100 and heads off to pay his bill to his
     supplier, the Co-op.

     The guy at the Co-op takes the $100 and runs to pay his debt to the
     local prostitute, who has also been facing hard times and has had to offer her “services” on credit.

    The hooker rushes to the hotel and pays off her room bill with the
    hotel owner.
    (Almost done…keep reading)

    The hotel proprietor then places the $100 back on the counter so the
    traveler will not suspect anything. At that moment the traveler comes
    down the stairs, states that the rooms are not satisfactory, picks up
     the $100 bill and leaves.

    No one produced anything. No one earned anything. However, the whole
    town now thinks that they are out of debt and there is a false
    atmosphere of optimism and glee.

    And that, my friends, is how a “stimulus package” works!

    Dear Barbara:

     
    This isn’t perfect, but here are some thoughts:
     
     
    The hotel proprietor is a thief.  He then later gave up his increase in wealth to stay out of jail and not get sued and lose his hotel.
     
    He also ends up with no more money (wealth) than he had before, so he must rely on the business acumen of the butcher (again) to buy some more meat.
     
    Same for the next few filthy capitalists who are the ones who actually stimulated the town’s economy, in the past, by being “Wall Street bankers.”  That’s when the economy was productive.  There is no productivity today, and no stimulus to the economy today or tomorrow from this illegal bailout.

     
    The prostitute could have broken the chain by keeping the money and promising the hotel proprietor a freebie for him or his next poker party.

     
    Times appear to be great, because everybody’s debt has been forgiven.  Everybody feels good, so the farmer will advance another pig to the butcher, who will advance some pork chops to the hotel proprietor for dinner tonight.  The farmer now has no extra pig to use as trade or collateral to get feed from the Co-op, so he’ll have to go back into more personal or third-mortgage debt.  He’ll be able to mingle with all his friends there.

     
    The Co-op guy isn’t getting any tonight, because the prostitute is eating free celebratory pork chops at the hotel, so the Co-op guy will be in a nasty mood tomorrow when the pig farmer comes to ask for a low-interest loan from the Co-op guy.

     
    The traveler has wasted his time and effort inspecting a hotel that needs to be fixed up so that it will become tolerable.  He will never come back to this hotel to spend his money, and will tell his family, friends, associates, and total strangers to never bother with this hotel, unless they want to experience the bed and linens that the pig farmer used for a night with the prostitute.

     
    The townsfolk have spent a lot of effort for no increase in the economy or wealth (and health) of the town and its inhabitants.  They have spent the day doing pseudo community service instead of creating wealth.  The town has gotten nothing from this except the excess CO2 from all these people wearing out their shoe leather.  Do you know that the methane from living cows and all those other precious animals is a more potent green house gas than their CO2?  Maybe the cobbler can join this circle-jerk next time around.  (I know, snarky, snarky, snarky.)

     
    When the hotel proprietor eventually gets arrested and sued by some other tourist, the lawyers and the government will get some stimulation.  They are not likely to offer credit, so the bail-bondsman is going to get some stimulation too, by becoming part owner of the hotel along with the tourist and both lawyers.  Even if the hotel proprietor beats the rap and the civil suit, he will have lost substantially.  In the meantime, his wife will divorce him on the grounds of alienation of affection, with the prostitute as a co-respondent. 

     
    Productivity?  We don’t need no stinkin’ productivity; we got government stimulus!  By the way, the traveler is an IRS agent.  All this busy economy will inspire a town-full of auditors.
     
     

     
    This is similar to something else you may have heard of, “The Broken Window” stimulus.  Not the same but similar in its explanation and expectations of people’s attitudes.  Frederic Bastiat wrote an essay about this a long time ago:
     
     http://mises.org/daily/3804 
     
    The writings of Frederic Bastiat, Ludwig von Mises, F. A. Hayek, Thomas Sowell, and Walter E. Williams are important reads on economics.
     
    This also reminds me of the two sisters who gave each other twenty dollars every year for their Christmas presents.  When the Depression came along and money was tight, they agreed to only give each other five dollars for Christmas.
     
    If you’ve been reading http://Bookwormroom.com you know that your liberal friend will not be converted because he does not want to be converted, will not listen with an open mind, and will quickly change the subject to a name-calling attack on you personally, because you don’t automatically accept his secular religious theology.  That’s what liberals do, and I know this from my own life experiences.
     
    Barbara, go with God.  I will pray for you for when you try to explain reality to your friend. (I know, snarky again; but based on reality.)
     
    With love in Jesus Christ for both of you, 
    Ron
     
     

  • Ron19

    This is the reply my friend got back after she sent the above to her friend:

         No I am not pulling your chain.   I just can’t think of any sane reason that something like this would be disliked by anyone.  I think if any one on either side of government, or business, or labor, could come up with a plan that would allow everyone to get rid of an equal amount of debt without costing ANYONE ANYTHING they should be appointed omnipotent ruler for a lifetime of such deeds.   Just sayin
     

    One sane person who thought about this was St. Thomas Moore in his book Utopia (about the time of King Henry VII).  He wrote it as a satire for/about people like Just sayin.  the inevitable result of such a society was non-compliant citizens got turned into slaves.

    Without costing ANYONE ANYTHING, except your life, and you get the Soviet Union at its worst, or Nazi Germany.

  • Mike Devx

    The premise of #2’s debt scenario is rather humorous. You have a circular chain.  A owes B who owes C who owes D  who owes A.   It circles back to person A.   And they all owe exactly the same amount of money. The net result is, of course, zero.

    IF you owe Joe $50, how likely is it that he’s going to owe Sally $50?  And that Sally’s going to owe somebody who… eventually owes YOU 5$50?  Almost never does that happen.  Very little debt can be traced “circular”.  Try it mentally with anyone to whom you might owe real money, and consider whom they might owe money to… and try to trace that debt back to someone who owes money to YOU.  Ha!

    If you could find such a circular chain of exact debt in reality, yes, you could cancel out THOSE debts.  That would happen, oh, about 0.000001 % of the time.  Id guess. It’s a ludicrous scenario.
     

  • Ron19

    Having had more time to think, I have more thoughts about the $100:
     
    That night at the poker party, the players were reluctant to buy into the game, saying they were broke.
     
    The hotel proprietor said to the butcher, “Of course you have money!  Just this afternoon I paid you back the $100 I owed you for meat.”
     
    The butcher said, “Yes you did, but earlier today I bought a pig on $100 credit, did $100 of butchering and delivering meat to your hotel dining room.  My bank account was still at zero, but I  put in a full day’s work.  When you paid me that $100 later on, I had to take it out to the pig farmer to pay off the loan he gave me this morning.”
     
    The hotel proprietor said to the pig farmer, “Well, you now have a hundred dollars, so here, buy some poker chips.”
     
    The farmer said, “This morning I got up early and hauled a pig to the butcher.  He couldn’t pay me for it, so I gave him a $100 personal loan on his handshake.  While I was in town, even though I didn’t have any money, the Co-op guy lent me $100, which I immediately gave back to him to buy some feed, which I hauled back to the farm, where I cleaned out the pigsty.  I still had no money in my pocket, but instead had a $100 debt after I spent a whole day doing pig farmer work.  When the butcher paid me back the $100, I had to pay all of it to the Co-op guy, after I had spent my day hauling and mucking.”
     
    The hotel proprietor looked at the Co-op guy, wondering what his excuse was going to be.  “You’re a successful businessman,  let’s play poker!”
     
    The Co-op guy complained, “Today I had to add to the farmers tab $100 so he could buy some feed.  I was willing to do this because I felt better this morning, after talking the prostitute in to giving me a $100 night on credit.  It felt good for a little while, but I was out $100 worth of Ralston-Purina Pig Chow.  When the farmer paid me the $100 he owed me, the prostitute happened to be standing nearby, and demanded her $100 dollars or she would tell my wife.”
     
    The hotel proprietor turned to the prostitute and said, “Well?”
     
    The prostitute said, “Last night the Co-op guy came to me and said he didn’t have any cash, but since he was such a frequent flyer, I should give him $100 of joy on credit.  I had to go into double overtime before he stopped braggin’ that he would ‘Finish’ any minute now.  When I saw him get $100 from the pig farmer, I had to threaten him with post-coitus exposure to get my $100 dollars from him.  Since the only place I can sneak this guy to is the hotel, I knew I had to pay the hotel proprietor the $100 for last night’s room.  All that work, and I still only have just as much money as I did the day before, after all that work.  Oh, my aching back, not to mention the clothing that I spent the day sewing back together.”
     
    So the others looked at the hotel proprietor and said in unison, “Where’s our money?”
     
    The hotel proprietor said, “I had to use that $100 dollars to put back on the counter so the traveller wouldn’t call the sheriff on me.  I spent a miserable day with the hotel staff, trying to convince them to keep on working without pay.  I don’t have $100 either.  I was hoping to get it from you guys by running the poker chip bank in tonight’s game, and playing some brilliant poker that I learned from those card sharps that were here last month.  I’ve been practicing their techniques for a week.”
     
    No one produced anything. No one earned anything. However, the whole
    town now thinks that they are out of debt and there is a false
    atmosphere of optimism and glee.

     
    Well, half of that conclusion is true, they are out of debt.  But they all produced goods or services by putting in a full day or night of effort and work and getting paid back for their loans.  And at the end of the day, they all have nothing to show for it in their pocket or purse.
     
    The cobbler went to the big city that morning to work all day to buy supplies for his shop.  On his way back that evening, he stumbled on the bridge over the Ragin’ River, and watched all of his purchases get swept downstream and out of sight.  He picked himself up, brushed himself off, and thought, “It was a good day and I’m well off, because after putting in all that work, I don’t owe any money.”
     
    1.  After a day’s work, the butcher has no increase in compensation.
     
    2.  After a day’s farming, the pig farmer has no increase in compensation.
     
    3.  After a day’s work, the Co-op guy has no increase in compensation.
     
    4.  After night’s manipulating, the prostitute has no increase in compensation.
     
    5.  After a day’s scheming, pleading, cleaning a room and washing sheets, and practicing, the hotel proprietor has no increase in compensation, but he didn’t get caught by the traveller and wasn’t strung up by his poker buddies for cheating at cards.
     

  • http://ymarsakar.wordpress.com Ymarsakar

    I never expected better out of an alliance composed of basically evil entities.

  • JKB

    They realized in the early 20th century that they’d never achieve government ownership of the means of production in the US.  Americans just balk at that.  So, a better strategy was devised.  That is the government control of the critical elements of society and production through regulation.   It hardly matters whose name is on the title if someone else controls what, when and how of use of the property, equipment or capital.  Thus we see churning cause by regulation, mandates for approval and NGO action to spur corporate donations and programs.  Economist Sumner Slichter called it “government guided enterprise”.  The problem government is a horrible guide, lacking in vision, innovation and adaptability.  Government bounded enterprise is a better way if government uses technology and policy to expand the boundaries rather than what it normally does, which is to assert more and more day to day control by shrinking the bonds till the enterprise is strangled.

    Lady Thatcher clips are all the rage with the movie having just come out.  The gap explanation is very popular.  I clicked on past that one and found this one, which I think is far more telling

     Thatcher about socialists – YouTube

  • http://ymarsakar.wordpress.com Ymarsakar

    conservative or republican propaganda is still too weak to fight against the Leftist juggernaut. It’s like trying to fight the Blitzkrieg while sitting in a rocking chair talking about honor, rules, and politeness. Pfft.

  • MacG

    And yet, they’ll all have to claim it as income.