The Global Unanimocracy Network » Politics

State of Illinois is in hock, productive people on the hook

A.B. Dada — Thu, 11 Mar 2010 17:05:25 +0000

There’s an aphorism that us free marketeers say often: “If you subsidize something, you get more of it.” That’s always the case when government starts a “war” on some impoverished industry or group of people: they subsidize things to make them “affordable” without looking at the losses that are placed on the backs of the productive people in society. Bastiat wrote of it in his parable of the broken window.

The biggest problem with subsidies is that the State can never really pick the industry to subsidize as fast as consumer demand changes to account for what people want and need. Just because some people want more money spent on education doesn’t mean that the State’s education spending will go to the people who want it the most or need it the most. Only with private, competitive businesses do we see the kind of price and service adjustments happen in nearly real time that account for consumer demand for a given product or service. Almost everything the State does is a near monopoly on the provision of a service.

The State of Illinois budget website has 5 items that lead their campaign for “reform,” which generally means more taxes:

Promote JOB GROWTH

The State of Illinois passed a ridiculous law in 2009 called Illinois Jobs Now! The program, which the State estimates to create nearly 500,000 jobs at a cost of $70,000 per worker, is supposed to fund community projects to get things done that the local communities weren’t doing for themselves. This is just a make-work program, one that takes money from productive people and gives it to unproductive people at a salary far above what would likely be spent hiring them in the private market for services people actually want and need. When the State spends $31 billion to create State jobs, it’s no wonder that they’re broke.

That $31 billion is money that could stay in taxpayer’s pockets and be spent on things they want and need. It isn’t the wealthy who are paying it, either: consider all the tax money that even the poor pay to the State through sales tax, cigarette tax, alcohol tax and all the variety of user fees and taxes that are hidden in the cost of production and servicing. The jobs that are created are not needed and are frivolous — if local communities really need to do things, they should focus on finding the funds to do them without stealing from the rest of the State.

Request continued FEDERAL ASSISTANCE through the recession

The State of Illinois has received billions in “bailout” money and then spent it on candy for their voter blocs. This money is running out, so the State of Illinois hopes to steal from other more productive states to buy even more candy for the welfare recipients. Federal money comes from somewhere, and over time the amount you receive will almost always be lost to the amount you pay to other states who will have “needs” for Federal assistance in the future. On top of that, favoritism and cronyism takes its own share of those funds, money that never gets spent properly by consumers on their needs and wants, an activity that tells the market how to adjust what products and services it provides and at what cost.

Worse, this bailout money actually makes it difficult for businesses who are not cronies of State legislators because they have to compete on uneven grounds. Bailout funds likely cause net job LOSSES as the unsubsidized private companies go under, leaving only the subsidized companies who then cry for more money. The old adage stands true: if you give someone something, they will not be a good steward of it.

Continue to CUT SPENDING

This is always humorous, because governments rarely actually cut overall spending, they just make minor adjustments to certain areas and point the finger at their “great” work while patting themselves on the back. Even if some future spending is cut in some areas, past debt and pension agreements will still inflate the budget beyond what can be debated as fundamental spending for a huge government body.

Many areas that the state spends money in make little sense for a large government body to attack. The war on drugs costs Illinois taxpayers billions and has done nothing to halt the use of drugs. Even worse, the long term costs of this war make it detrimental to taxpayers: jailing drug users is expensive, and creates more debt for the overburdened taxpayers.

To truly cut costs, the state has to do it significantly. There are many programs the state can shut down entirely that will be instantly covered by private industry, and at a better cost with more variety of service levels, too. Even though we supposedly had an economic boom for years, the State of Illinois has spent 38% more money per citizen in 2008 than in 1998, adjusted for inflation. Why a state thinks it should need to spend money when people are making more money has never been answered.

The state still spends money putting lights up for little league stadiums, disburses billions to crony businesses through the Department of Commerce and Economic Opportunity, and sends billions in pork barrel projects downstate so the southern legislators look the other way on City of Chicago outlays by the state. The measly few billion the state is underwater could be solved with no “fundamental” services being trimmed, and no income tax increase.

Adopt REVENUE ENHANCEMENTS

Revenue enhancements means tax and fee increases. They’re already talking about raising the income tax 50%, creating new fees for vehicle registration, and adding another $1 tax increase for cigarettes. All of these “enhancements” push the opportunities for business growth into other states with less of a burden on citizens living and working in the state. There’s no doubt that raising taxes and fees would help repair the debt issue, but as we all know, government can’t keep its hands out of the cookie jar. The minute that taxes are raised, spending will move upwards, too, until the new funds are long gone.

To push for more jobs, more growth and a more secure future for Illinois citizens, the State needs to re-read its Constitution and follow it. It has overextended its domain and authority into areas where a large, bureaucratic and parasite-laden organization can not handle efficiently. Cut the state budget significantly, send the money back to taxpayers, and see the economy within Illinois boom as it attracts competitive businesses to fill in the holes temporarily left by government leaving those markets.

That effect would happen almost overnight. The current ideas put forth by the State will just push the punishment for years of overspending and overreaching down the road further, but that bill will be paid in full, on the backs of those of us who aren’t wise enough to jump across the border to a fairer, less intrusive state.

Amazon versus Macmillan, Hachette, Publishers, Authors, etc.

A.B. Dada — Sun, 07 Feb 2010 17:21:40 +0000

When Amazon decided to try to fight publishers by telling them they were going to sell e-books at a fixed price ($9.99), Apple came in with their iPad and another e-book store to give publishers the option to sell books at a range of prices ($5.99 to $14.99). The publishers balked, and Amazon cut their ability to sell on Amazon, causing some in-fighting until Amazon finally capitulated and gave in to publishers for some sort of variable pricing arrangement.

Lots of industry experts in publishing and tech have chimed in. I think the best article I’ve read, but still far from reality, is author and ex-publisher Paul Carr’s article on TechCrunch “Hey, 1997 – Macmillan called, they want the Net Book Agreement back.” Good job for Mr. Carr to point the fingers at the publishers, but he’s still off track on the reality of online publishing of any material. The only people who are capable of understanding what will happen with the e-book market (and the e-music market, and the e-video market) are those who understand the Austrian School of Economic theory. I don’t know, right now, of any Austrians who are addressing this particular event, but it’s easy to consider what exactly will happen in the future: prices of easily copied content will be forced to zero.

Austrians live and die by supply and demand. Even with government laws and regulations that try to create artificial scarcity (copyright laws, for example), the market of content consumers will too easily be able to get around whatever scarcity the publishers create. Usually that scarcity is circumvented through piracy. As long as there is a near infinite supply of an item, the price will fall to zero for those who are unwilling to go through official methods to get the product.

It doesn’t matter how many steps publishers take to try to hamper the efforts of casual pirates (such as those who grab a movie or MP3 off of a torrent site), increasing fines, increasing threats, changing international laws to try to stifle the flow of information. There is no way to stop this progress now that it has begun.

As any Austrian will tell you, the only way to make money in a market is to offer services or products that people want at prices that are aligned with supply and demand. I didn’t say “at prices that people are willing to pay.” Since the supply of electronic content is near infinite, content creators have to find new ways to generate income.

In terms of music, bands will eventually stop working on selling MP3s and likely just give them away for free. The internet, and torrent sites, is the equivalent of a gigantic radio station. MP3s will be downloadable for free so that musicians can show fans what their music is like. In order to make a profit, musicians will have to charge realistic prices for their live performances, or off value added options to fans that are limited in supply. How about giving away MP3s regularly for free, but offering fans access to a fan club website where they can interact with the band? If they don’t pay for access, they can still appreciate the music they like. If they love the band enough, they’ll gladly pay for fan site access or for tickets to the live shows.

The next step for bands to acquire a realistic income for the live performance work they provide is to get rid of the ticket brokers and move to an eBay-like auction site for concert tickets with proceeds from all sales going directly to the band, rather than the ticket brokers. This will remove the “flat cost” that bands get when they sell tickets at a fixed price, which is a ridiculous idea (akin to Amazon trying to sell infinitely available e-content for a fixed price instead of zero).

But how would an author sell their own time if they just gave away their books? That’s a difficult question. Many authors today, amateurs most of us, are just blogging in hopes of getting pennies a day in advertising on our blogs. It’s not very unique and there is a seemingly endless supply of blogs covering the same topics over and over. If a blogger/author writes well and in a way that readers appreciate, there are numerous ways for these authors and bloggers to generate an income without charging for content. One such way might be to allow readers to read their blogs for free, but interaction with the site comes at a monthly subscription. You can read the blogs freely, but if you want to leave a comment and interact with other readers or the author, you have to pay.

The same case can be said for book authors — the difference between a blog and an e-book is slim, if not none. Authors can release their e-book online for free (in parts, or wholly) and then offer readers the opportunity to pay the author for online interaction with the book (in a private forum or through private comments). Maybe the author’s website could show a limited amount of each comment left, hiding the rest so that readers are enticed into subscribing to read the whole list, and leave their own comments.

It’s crazy that musicians, authors and video directors want to cry about being artists, but then demand payment for something they’ve created. Those who paint oil on canvas usually paint ahead of time with no payment until someone finds a reason to pay them for their limited-supply oil painting. Only then do they get paid, but the oil painting is limited to one unique piece. Supply and demand works. Authors who create online content or content that is easily copied can also do the same thing: maybe offer readers access to limited supply content that is difficult to copy or where time is of the essence in offering value. An author could offer subscribers access to previews of the next book in a series, or insight into the character development stage, things that others could login and copy but might be in such high quantity that it is easier to just pay the $2 or $3 a month for access to the site’s private content.

Regardless of what the end result will be for delivering income to artists for their unique services and products, rather than electronic products that are easily distributable, the reality is that no matter how much the distributors (Amazon, the publishers, even the authors directly on blogs) want to stifle the price falling to zero, it will happen. It’s already happening at a record pace if you look at any torrent search site for current books and music and videos. They can not stop the market, even if the market is considered illegal.

Authors and content creators should be thinking of new ways to offer unique services and products immediately to their readers and fans. There are unlimited options and ideas out there, and the day will come faster than expected when Amazon, iTunes and the publishers are just useless for distributing content that can already be distributed freely by others through legal and illegal means.

I voted today

A.B. Dada — Wed, 27 Jan 2010 19:51:18 +0000

I voted today.

Not in a voting booth, and not with a ballot.

I voted today when I woke up. My internal alarm clock told me I had to get up early, so at just before 6am, I arose. I turned on the lamp near my bed, my first vote of the day.

The act of turning on my lamp drew electricity into the bulb. That increased energy draw was my vote, it informed the electric company that I needed more electricity. My vote immediately made a difference to hundreds of workers at the electric company who made sure that I received what I voted for: stable and inexpensive electricity.

I voted again when I walked to my kitchen and made a cup of coffee using my Tassimo Single-Serve coffee maker. Making that cup of coffee was actually a few different votes: I voted to tell the electric company that I needed additional electricity for a few moments. They answered my vote with what I wanted. I voted when I told the water company that I wanted cold water out of my tap. They answered my vote instantly. Starbucks answered yet another vote when I put a Starbucks Tassimo pod in the coffee maker, allowing me a fresh and tasty cup of coffee for under 60 cents. I could have voted differently by walking to the nearby coffee shop and placing my vote to purchase a $3 cup of coffee. In either case, my vote would matter and I’d get exactly what I want.

When I turned on my shower, I voted again: I told the water company that I needed a massive amount of water for 15 minutes. My water heater drew natural gas at a greater speed than just a few minutes earlier. That’s another vote, a vote that I could undo just by turning the water control from hot to warm or warm to hot.

I voted when I decided to boot up my netbook and tether it to my T-Mobile Google phone. T-Mobile provides me with the data connection I need to post this article. When I voted to connect to the web, thousands of T-Mobile engineers provided me with a consistent, fast and cheap connection.

Sometimes my vote doesn’t work to the best of my desires, so I can change it instantly. A few years ago I used to vote for AT&T to provide me with the same, but they failed me so I stopped voting for them, instantly. I used to use filtered bottled water I bought from the store for my coffee, but I decided to just use tap water to save some money. That was a vote undone, and it signaled to the grocery store that they had one less customer for their bottled filtered water. That vote made a difference up the chain of water provision: maybe the grocery store had dozens or hundreds of customers tell them they didn’t want bottled filtered water. The grocery store could buy less, or discount the water they sell in order to attract new customers.

I voted again when I responded to a customer’s email request to hire me for a short term project. I did that project over a few hours today, making the decision that earning money was more important to me than going to the movies, or taking a nap, or visiting with my family, or having an afternoon lunch. My vote mattered instantly, and it effected dozens, hundreds of people along the way. My customer voted to select me out of millions of possible candidates to fulfill the work, and their vote counted. It also engaged hundreds, thousands of people instantly. If I fail at the job, he won’t vote for me again.

I didn’t vote today at a ballot box, informing a virtually anonymous politician that I want them to act on my behalf, regardless of what they do. If I had voted for a politician, I wouldn’t be able to instantly change my vote in the future. I would be stuck with them, even if they do me harm, especially if they do me harm. If that politician changes their opinion, I would be stuck. If they decided to steal money from my neighbors to provide a service that I need more, my vote is what hurt my neighbors. If they decided to drop bombs on civilians in foreign lands, it is my vote that said it was OK to do it.

Voting isn’t an act of force if you have the ability to undo your vote instantly. Voting with your dollars, with what actions to make every minute of every day, with how you spend your free time, that’s what counts. Voting in a voting booth is the opposite: it provides a single politician with a dictate from the voters that it is OK to use force to change people. My way of voting never uses force, since anyone can decide not to accept my vote, or they can perform to the best of their ability in hopes that I will vote for them again.