–Is gun control possible?

An alternative to popular faith

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Jesus: “all they that take the sword shall perish with the sword.”
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Recently, a Chicago off-duty policeman was shot and killed by four good-for-nothing bums, who decided it would be a lark to commit armed robbery. Ho hum. Another Chicago murder. Another good life lost.

Is there any way to stop the killing, or at least slow it? In answer to that question, we must consider a few facts:

Most murders are committed with guns
Millions of Americans want guns.
The gun lobby is powerful.
Even the Supreme Court ignores the first phrase of the 2nd Amendment, to make anti-gun laws unconstitutional.
Gun manufacture, import and sales are quite profitable.
Prohibition of something people want never works.
There is widespread belief that anti-gun laws leave criminals armed and honest people unarmed.
Chicago, and most other cities, do not have fully staffed, fully trained police. Money has gone elsewhere.

So, what to do? Here are a couple thoughts. Though none is a complete solution, a few worthwhile partial solutions could move us in the right direction:

Make each manufacturer, seller or provider of a gun liable for the use of that gun.

If you make or sell or give someone a gun that is used in a crime, you are responsible for that crime. Harsh? Unfair? Some states have “dram shop” laws, making a tavern responsible for damages where intoxication was at least one cause of the damages. Sell liquor to a drunk; the drunk commits a crime; you go to jail.

If you feed someone liquor in your home, and that drunk drives a gets into an accident, you could be found guilty of aiding and abetting a crime.

These laws are weak (they generally don’t apply to the manufacturer, importer, wholesaler or package liquor dealer), are different in every state, and are difficult to apply across state lines, but the point is, they do make sellers liable for a product they sell, even though they themselves didn’t misuse it. So even these woefully weak laws make bartenders a bit more cautious about selling drinks to doubtful people.

The precedent, of making a seller liable for the misuse of product he sells, could be extended to guns. Gun manufacturers, wholesalers, retailers, even private citizens, would be liable for crimes committed with guns. So you, the gun provider, better set up a system to prevent your customer, or your customer’s customer, from misusing the gun.

Rather than trying to outlaw gun ownership, which for the above-mentioned reasons won’t work, merely make gun ownership more costly. Sellers probably would have to buy expensive insurance, the cost of which would be added to the cost of the gun.

I visualize a clearing center that would track every gun sale in America. All manufacturers, wholesalers, importers, retailers and private citizens would be required to submit a report on the purchaser of every gun.

The clearing center could be financed by a tax on gun sales and ownership. Just as we tax the sale and ownership of homes, cars, liquor and cigarettes, we could tax the sale and ownership of guns. The tax also could be used to hire, train and equip more police, as increasing police presence deters crime.

Under the economic theory “money changes everything,” making gun ownership more expensive, and making gun sellers more wary about liability, and hiring more police could together reduce the availabiltiy and ownership of guns — and reduce the murder rate.

Would this eliminate guns? No.
Could honest people still obtain guns? Of course.
Could criminals still obtain guns? Sure.
But the increased cost, the clearing house and the added police represent a step from the current, insufficient control for the single most dangerous, easily available product the world has ever known.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–Worried about your children and grandchildren paying the federal debt?

An alternative to popular faith

The debt hawks claim to be concerned about your children and grandchildren, but their proposals actually will punish your heirs. The debt hawks say future taxpayers will pay for today’s federal deficit spending. This is factually wrong. Unlike state and local governments, the federal government does not spend tax money. It, in fact, destroys the tax money sent to it, and it creates new money, ad hoc, when it credits the bank accounts of creditors. Federal spending is not limited by, or related in any way to, federal taxes. Thus, taxpayers never have, nor ever will, pay for federal spending.

What the debt hawks fail to mention is that their solutions (raising taxes and cutting federal spending) to this non-existent problem will impoverish you, your children and your grandchildren. Here is a sampling of debt hawk proposals. Read them carefully, and think about each proposal’s effect on current and future generations.

Retirement:
    Raise the normal retirement (Social Security) age to 68
    Reduce scheduled Social Security benefits
    Reduce Social Security spousal benefits
    Increase taxes on Social Security benefits

Health care:
    Tax insurance benefits
    Tax employees for employer-paid premiums
    Cut Medicare payments
    Cut Medicaid payments
    Raise Medicare premiums
    Cut spending on graduate medical education
    Raise the Medicare retirement age (again)
    Cut federal Medicaid funding to states

Jobs:
Do not enact a new jobs bill

More taxes; higher taxes
    Raise taxes on higher incomes
    Increase the inheritance (“death”) tax
    Increase the gas tax
    Enact a VAT tax
    Increase the payroll tax (FICA)
    Eliminate the mortgage interest deduction
    Eliminate state and local tax deductions
    Tax life insurance benefits
    Eliminate EITC (Earned Income Tax Credit for low and moderate income workers
    Eliminate the $400/person making-work-pay credit
    Eliminate the “American Opportunity” college tax credit
    Add and excise tax on high-cost health plans

Military and Security:
    Reverse the “Grow the Army” initiative (fewer paid soldiers)
    Reduce purchases of weapons systems
    Reduce veterans’ income security benefits
    Reduce Homeland Security spending

Aid for the poor:
    Cut food stamps
    Cut average unemployment benefits
    Cut temporary assistance to needy families (TANF) program
    Cut funding for adoption and foster care

Education:
    Cut federal funding of K-12 education
    Cut school breakfast programs
    Cut funding for the education of disadvantaged and disabled children

Infrastructure:
Cut federal highway funding
Cut funding for bridge repair

Research & Development:
Cancel NASA missions to the moon and Mars

States and Cities:
Cut mass transit funding
Cut federal funding to the states and cities

This is the world — a world of higher taxes and fewer benefits — the world the debt hawks propose for you, your children and your grandchildren.

And what is the federal debt the debt hawks worry over? The federal government spends by crediting the bank accounts of its vendors. Every credit demands a debit, and this debit on the government’s balance sheet is called “debt.” It more properly should be called, “money,” because the way the government creates money is by crediting bank accounts. That balance sheet merely is a score sheet, showing how much money the government has created.

You don’t owe it, nor do your children and grandchildren. It’s just a score sheet.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–A mainstream economist writes about the EU

An alternative to popular faith

Readers of this blog and Modern Monetary Theory blogs know the mainstream economists have been ignorant about the realities of today’s post-gold-standard economy, and this ignorance has caused untold damage, as ignorance always does.

Here is a perfect example. John Cochrane, professor of finance at the University of Chicago, wrote an article titled, “Greek Myths and the Euro Tragedy,” published in the May 18, 2010 Wall Street Journal. His concluding paragraph read:

”The only way to solve the underlying euro-zone fiscal mess (and our own) is to slash government spending and to focus on growth. Countries only pay off debts by growing out of them.. And no, growth does not come from spending, especially on generous pensions and padded government payrolls. Greece’ spending over 50% of GDP did not result in robust growth and full coffers. At least the looming worldwide sovereign debt crisis is heaving “fiscal stimulus” on the ash heap of bad ideas.”

Let’s examine this amazingly clueless article, sentence by sentence: ”The only way to solve the underlying euro-zone fiscal mess (and our own) is to slash government spending and to focus on growth.” By definition, economic growth requires money growth. There is no known mechanism by which a nation simultaneously can reduce net money creation (aka “deficit spending”), while promoting growth.

”Countries only pay off debts by growing out of them.” Wrong. Countries pay off debt by creating the money to pay the debt. Economic growth does not pay for government debt. Countries do not pay debt with GDP or with taxes on GDP. In a monetarily sovereign nation, as is the U.S., taxes do not support spending. Were taxes to drop to zero, the government’s ability to spend would not be affected by even one penny.

”And no, growth does not come from spending, especially on generous pensions and padded government payrolls.” Federal spending does cause growth, which is why every recession and depression in U.S. history has been cured with increased federal spending. As for “generous pensions and padded government payrolls,” this represents money paid to real people, who will spend this money on goods and services to stimulate the economy. Professor Cochrane must believe there is some strange force that will cause reductions in private spending to stimulate the economy.

”Greece’s spending over 50% of GDP did not result in robust growth and full coffers.” Since when is 50% of GDP a magic spending number? Greece’s problems relate to its inability, caused by EU rules, to create money to service its debt. (Greece is not monetarily sovereign.) Spending as a percentage of GDP is irrelevant to causing or to solving its problems, which only can be solved by an infusion (not a reduction) of money.

”At least the looming worldwide sovereign debt crisis is heaving “fiscal stimulus” on the ash heap of bad ideas.” Here is monetary ignorance at its best. Greece is not a monetarily sovereign nation; the U.S. is. Any blanket statement about national debt, that does not take this difference into consideration, is certain to be wrong. The notion that the U.S. could be emerging from our recession without fiscal stimuli, would be laughable were it not so sad. If anything, the stimuli were too little, too late (See April 9, 2008 LETTER )

In summary, Professor Cochrane merely parrots bits and pieces of things he has heard from various (wrong) sources, and with them created an article, stunning in its inaccuracy, but printed by the Chicago Tribune, probably because he is from the University of Chicago, a hotbed of obsolete, mainstream economics. It is their influence and leadership that has resulted in an average of one recession every five years. Is there any way they could have done worse?

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–China buying bonds. Who cares.

An alternative to popular faith

5/17/2001: WASHINGTON (AFP) – China boosted its massive US Treasury bond holdings in March for the first time in six months as foreign buying of long-term US assets set a new record high, official data showed Monday.

So, as always, the debt hawks have been proven wrong. Here we are, running huge deficits probably for many years into the future, and despite debt hawk predictions, other nations continue to buy our bonds.

Why? Are they being charitable? Just nice guys? No.

The interest rate is good, considering the U.S. never will default, and we will fight inflation. In short, our bonds are a good investment (although as a monetarily sovereign nation, China does not need to profit from investment), which is the sole reason countries ever buy them.

Of course, none of this really matters, since the U.S. does not need to create and sell T-securities, nor should we. The U.S. can create dollars at will, without bonds. Creating and selling bonds does not help the economy, nor does it affect inflation or any other economic problem.

The notion that we need to borrow the money that we exclusively can create, is obsolete — as dead as the gold standard.

But, for a while, at least, we won’t have to listen to uninformed pundits worrying that nobody will buy our bonds.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

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