“It injects demand into the economy,” Pelosi said, arguing that when families have money to spend it keeps the economy churning. “It creates jobs faster than almost any other initiative you can name.”

Pelosi said the aid has the “double benefit” of helping those who lost their jobs and acting as a “job creator” on the side.

“It’s impossible to think of a situation where we would have a country that would say we’re not going to have unemployment benefits,” Pelosi said. (Read more from foxnews.com)

My reaction:

Newsbusters has a nice story on this that links to a Forbes story on this house of lies. GM received $50B in bailout funds while only $6.7B of that amount was deemed a loan (at 7% interest). As most folks know, most of the bailout money was given to GM, by the US and Canadian governments, in return for a large stake in the company. As to how the loan is being paid back, as Shikha Dalmia of Forbes explains:

As it turns out, the Obama administration put $13.4 billion of the aid money as “working capital” in an escrow account when the company was in bankruptcy. The company is using this escrow money–government money–to pay back the government loan.

Additionally, as Dalmia goes on to say,

Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government’s tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new–and bigger–DOE loan much more feasible.

The gist of this is – if you didn’t catch it – that General Motors will get a DOE loan at 5% to pay off its 7% loans, so essentially it is a refinance of debt, at a lower rate, with the Government playing banker with your money. Even the awful, pro-bailout Charles Grassley referred to this as the TARP Shuffle. In a letter from Grassley to Timmy Geithner, he stated:

On Tuesday of this week, Mr. Neil Barofsky, the Special Inspector General for TARP, testified before the Senate Finance Committee. During his testimony Mr. Barofsky addressed GM’s recent debt repayment activity, and stated that the funds GM is using to repay its TARP debt are not coming from GM earnings. Instead, GM seems to be using TARP funds from an escrow account at Treasury to make the debt repayments. The most recent quarterly report from the Office of the Special Inspector General for TARP says “The source of funds for these quarterly [debt] payments will be other TARP funds currently held in an escrow account.” See, Office of the Special Inspector General for TARP, Quarterly Report to Congress dated April 20, 2010, page 115.

Furthermore, Exhibit 99.1 of the Form 8K filed by GM with the SEC on November 16, 2009, seems to confirm that the source of funds for GM’s debt repayments was a multi-billion dollar escrow account at Treasury—not from earnings.

Yet so many people, including those in the media, are swept off their feet by the lies. A really, really, really bad article on cars.com has the nerve to make this Mickey Mouse statement:

Essentially, GM no longer needs emergency government aid to stay afloat. While the taxpayer still has a sizable investment wrapped up in the automaker, GM has returned to decent health for the time being.

(Read more from lewrockwell.com)

From the Forbes article: But when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion–the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.

But wait! Even that’s not the full story given that GM, which has not yet broken even, much less turned a profit, can’t pay even this puny amount from its own earnings.

So how is it paying it?

As it turns out, the Obama administration put $13.4 billion of the aid money as “working capital” in an escrow account when the company was in bankruptcy. The company is using this escrow money–government money–to pay back the government loan.

AN overseas holiday used to be thought of as a reward for a year’s hard work. Now Brussels has declared that tourism is a human right and pensioners, youths and those too poor to afford it should have their travel subsidised by the taxpayer. (Read more from timesonline.co.uk)

. . . . But I don’t think the US is consciously choosing socialism per se, even though we are sliding toward socialism one step at a time, with the electorate ratifying each and every step. Furthermore, I doubt that many of our representatives who voted for the healthcare bill, the bailouts, and all the rest would agree that it is fair to call them socialists. They are simply giving Americans what they think we want. If they did otherwise, they would be voted out of office.

The slide toward socialism in America is not a conscious act. Rather it is the inevitable consequence of abandoning the fetters placed upon the federal government by the Constitution. Nowhere in the Constitution will you find authorization for funding ninety percent of the federal government’s current operations or regulating America’s private businesses.

Rather, the electorate understands that to refrain from lobbying for a government handout of some kind is to become a victim…the government robs you and returns nothing to you or it handicaps you in dealing cooperatively with others. Therefore, the electorate wants “middle class” entitlements similar to the ones the government has granted to the poor, the unions, and big business for decades…with no appreciable beneficial result, by the way.

Economists call this phenomenon a “Tragedy of the Commons”, where all scramble to grab as much of the commonly owned resources as they can before others grab them. Eventually these commonly owned resources are plundered to extinction; thus the name, “Tragedy of the Commons”.

The underlying fact of modern American life is that more and more resources are considered to be “commonly held” or at least subject to confiscation and/or regulation by the government for the benefit of government’s constituencies. It is clear that if you desire to live a life of personal responsibility, asking nothing of anyone, you will become the victim of all the rest—you will contribute more and more to the “common” and get nothing in return. (Read more from patrickbarron.blogspot.com)

The latest food stamp data for January of 2010 shows that 39,430,724 Americans are receiving food stamps or are part of the supplemental nutritional assistance program (SNAP). If you make the acronym and name long enough and with a neutral undertone average Americans won’t fret that 40 million of their fellow neighbors are one government debit card away from being unable to eat. Yet this is the new corporate funded recovery and somehow things don’t seem to be improving for the middle class and definitely not for those at the lower rung of the socio-economic ladder. In fact, we may have more than 40 million on food assistance today. Since the start of the recession in December of 2007, we’ve added on average 474,000 people each month to SNAP. Since the data lags a bit and we only have January 2010 data, it is likely we now have between 40 million and 41 million Americans on food assistance.

There is little to doubt where the trend is heading. (Read more from mybudget360.com)

The Davey family’s £815-a-week state handouts pay for a four-bedroom home, top-of-the-range mod cons and two vehicles including a Mercedes people carrier.

Father-of-seven Peter gave up work because he could make more living on benefits.

Yet he and his wife Claire are still not happy with their lot.

Read more: http://www.dailymail.co.uk/news/article-1265508/Peter-Davey-gets-42-000-benefits-year-drives-Mercedes.html#ixzz0lUIzQiwn

. . . .

‘It’s really hard,’ said Mrs Davey, 29, who is seven months pregnant. ‘We can’t afford holidays and I don’t want my kids living on a council estate and struggling like I have.

‘The price of living is going up but benefits are going down. My carer’s allowance is only going up by 80p this year and petrol is so expensive now, I’m worried how we’ll cope.
How it adds up.jpg

‘We’re still waiting for somewhere bigger.’

Mrs Davey has never had a full-time job while her 35-year-old husband gave up his post in administration nine years ago after realising they would be better off living off the state.

At their semi on the Isle of Anglesey, the family have a 42in flatscreen television in the living room with Sky TV at £50 a month, a Wii games console, three Nintendo DS machines and a computer – not to mention four mobile phones.

With their income of more than £42,000 a year, they run an 11-seater minibus and the seven-seat automatic Mercedes. (Read more from dailymail.co.uk)

This is a wonderful explanation.

Euro Zone Grapples With Debt Crisis
The European Commission warns that public finances in half of the 16 euro-zone nations are at high risk of becoming unsustainable

Governments will spend the next year and beyond balancing the urgent need to fix public-sector debt and deficits — without imperiling what appears to be a feeble economic recovery.
(Read more from online.wsj.com)

Commentary by Patrick Barron: Many people support increasing social welfare programs in the U.S. by citing the experience of Europe; that is, that Europe has far more generous welfare benefits than the U.s. and seems to be doing “just fine”. Well, the European Commission itself disputes the long-term viability of many of Europe’s finances.

[But] None of the welfare plans in any of the Eurozone countries are financially sound. They are simply state-sponsored Ponzi schemes that must crash when the demographic reality of a declining birthrate makes their payment impossible.

Most of my socialist leaning friends would be at a loss to tell me how to poor were cared for before the growth of our massive welfare state. Perhaps they assume that before Medic Aid in 1965, people were stepping over corpses on their way to work. Most of my non-socialist friends also do not know.

The following are excerpts from an important essay about the role Fraternal Societies used to play before government killed them off.

Thoough I’m not certain it was written as an academic study, I makes me think of how few academics pursue things that actually matter. Most humanities Phd’s I know are the first to admit their subject is bullshit. They compare lengths of dresses, catalog break-dance movies, and deciding how the trauma of immigration is evident in some obscure writer’s description of nature. What a waste…

Mutual aid was one of the cornerstones of social welfare in the United States until the early 20th century. The fraternal society was a leading example. The statistical record of fraternalism was impressive. A conservative estimate is that one-third of adult American males belonged to lodges in 1910. A fraternal analogue existed for virtually every major service of the modern welfare state including orphanages, hospitals, job exchanges, homes for the elderly, and scholarship programs.

But societies also gave benefits that were much less quantifiable. By joining a lodge, an initiate adopted, at least implicitly, a set of survival values.

Societies dedicated themselves to the advancement of mutualism, self-reliance, business training, thrift, leadership skills, self-government, self-control, and good moral character. These values, which can fit under the rubric of social capital, reflected a kind of fraternal consensus that cut across such seemingly intractable divisions as race, sex, and income.

The record of five societies that thrived at or near the turn of the century illustrates the many variants of this system. Each had a distinct membership base. Two of the societies, the Independent Order of Saint Luke and the United Order of True Reformers, were all-black. Both had been founded by ex-slaves after the Civil War and specialized initially in sickness and burial insurance. The other societies had entirely white memberships. The Loyal Order of Moose was an exclusively male society that emphasized sickness and burial benefits. It became best known during the 20th century for its orphanage, Mooseheart, near Aurora, Illinois. The Security Benefit Association (originally the Knights and Ladies of Security) followed in a similar tradition but broke from the mainstream by allowing men and women to join on equal terms. During the 1910s and the 1920s, the Knights and Ladies of Security established a hospital, a home for the elderly, and an orphanage all in a single location near Topeka. The Ladies of the Maccabees was an all-white, all-female society. It provided such health benefits as surgical care. It is worth noting that the women who belonged to these societies, regarded themselves as members of fraternal rather than sororal societies. For them, fraternity, much like liberty and equality, was the common heritage of both men and women. To this end, an official of the Ladies of the Maccabees asserted that “Fraternity in these modern days has been wrested from its original significance and has come to mean a sisterhood, as well as a brotherhood, in the human family.”

. . . .

During the 1930s, officials of the homes for the elderly and orphans of the SBA cited Social Security and other welfare programs as justification not only for rejecting applicants but for closing down entirely. The Security Benefit Association, for instance, closed its orphanage because of “a lack of demand or need for that form of benevolence attributable to public funds now available for the support of dependent children.” It used the same justification to discontinue its home for the elderly several years later. While Mooseheart remained open and even increased capacity, applications fell off rapidly in the decades after the Depression because of a rise in social-welfare alternatives such as Aid to Families with Dependent Children.

Mutual aid was a creature of necessity. Once this necessity ended, so too did the primary reason for the existence of fraternalism. Without a return to this necessity any revival of mutual aid will remain limited. Moreover, fraternal membership, although still heavily working class, no longer includes the very poor who most need social welfare services.

Nevertheless, a reinvigoration of mutual aid (though not necessarily through fraternal societies) is not out of the question in the 21st century. One reform that would encourage such a trend is to repeal or revise laws that subsidize third-party insurance. Perhaps the leading example is legislation enacted during World War II, which exempts employer-provided fringe benefits, such as health insurance, from income tax. According to John C. Goodman, the annual value of this exemption adds up to an enormous $130 billion. For a typical autoworker, for example, it is over $1,200 per year. Federal tax policy has not only tied workers to their jobs but has undermined their incentives to purchase health insurance through non-governmental organizations such as fraternal societies. It has also created a perverse system where workers lose all their benefits when they change jobs or become unemployed. By contrast, if individuals had the same tax incentives to purchase insurance from associations, such as lodges, as they do now from their employer they could still retain full coverage even if they changed jobs.

The shift from mutual aid and self-help to the welfare state was not just a simple bookkeeping transfer of service provisions from one set of institutions to another. As many of the leaders of fraternal societies had feared, much was lost in an exchange that transcended monetary calculations. The old relationships of voluntary reciprocity and autonomy have slowly given way to paternalistic dependency. Instead of mutual aid, the dominant social-welfare arrangements of Americans have increasingly become characterized by impersonal bureaucracies controlled by outsiders. (Read more from heritage.org)

About the author: David T. Beito is assistant professor of history at the University of Alabama in Tuscaloosa and is the author of From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 1890-1967 (University of North Carolina Press).

by Robert Higgs

Our predecessors dealt with their worries by relying on religious faith. For tangible assistance, they turned to kinfolk, neighbors, friends, coreligionists, and comrades in lodges, mutual-benefit societies, ethnic associations, labor unions, and a vast assortment of other voluntary groups. Those who fell between the cracks of the voluntary societies received assistance from cities and counties, but governmentally supplied assistance was kept meager and its recipients stigmatized.

In the 20th century, especially during the past seventy years, Americans have placed their faith in government — increasingly the federal government. Since Franklin Delano Roosevelt assumed the presidency in 1933, voluntary relief has taken a back seat to government assistance. Eventually, hardly any source of distress remained unattended by a government program. Old age, unemployment, illness, poverty, physical disability, loss of spousal support, childrearing need, workplace injury, consumer misfortune, foolish investment, borrowing blunder, traffic accident, environmental hazard, and loss from flood, fire, or hurricane all became subject to government succor.

. . . .

Our ancestors relied on themselves; we rely on the welfare state. But the “safety net” that governments have stretched beneath us seems more and more to be a spider’s web in which we are entangled and from which we must extricate ourselves if we are to preserve a prosperous and free society.

. . . .

The modern welfare state is often viewed as originating in Imperial Germany in the 1880s, when the Iron Chancellor, Prince Otto von Bismarck, established compulsory accident, sickness, and old-age insurance for workers. Bismarck was no altruist. He intended his social programs to divert workingmen from revolutionary socialism and to purchase their loyalty to the Kaiser’s regime; to a large extent he seems to have achieved his objectives.

. . . .

We can have a free society or a welfare state. We cannot have both. (Read more from mises.org)

I had no idea Mexico introduced silver as a competing currency.

I found this on examiner.com. Truth, staring you in the face.

Minimum wage laws cause unemployment and higher prices. They harm exactly the people they are designed to help. If someone cannot produce something worth $7.25 an hour (or whatever the minimum wage), you do not help him by making it illegal for him to work.

To paraphrase Ron Paul: the goal of improving the standard of living for Americans is certainly a noble one, but if this could be accomplished simply by passing laws which require employers to pay more money to their employees, then what is the moral justification for stopping at $7.25? Why not raise the minimum wage to $8 or $10? or for that matter why not $15 or $20 or $100?

Clearly, if the minimum wage were $100, you could imagine businesses, large and small, restructuring their production methods to favor automation, and fewer, more highly skilled employees. You can also imagine prices rising, because these means of production are less efficient. A small increase in the minimum wage has exactly the same effect, though its impact isn’t clearly discernible as unemployment numbers get overwhelmed by other factors.

I often debate my friends’ casual (naive?) suggestions that the state control commerce, fight the war on drugs, and bailout incompetent companies. I argue, as Bastiat does in The Law, that government is our collective defense of life, liberty and property, and that whatever government does beyond this mandate is offensive to both freedom and prosperity because government must take from one to do for another.

When my friends give ground in the debate, they usually do so grudgingly, retreating to the sacred cows of statists – public education, public transportation, pollution laws and child labor laws.

There is much to be said about each of these. Below, I excerpt a couple of articles from mises.org regarding child labor laws.

The first is a long list of snippets from the Child Labor Amendment Debate in the 1920s.

The Trouble With Child Labor Laws
“Let’s say you want your computer fixed or your software explained. You can shell out big bucks to the Geek Squad, or you can ask – but you can’t hire – a typical teenager, or even a preteen. Their experience with computers and the online world is vastly superior to that of most people over the age of 30. From the point of view of online technology, it is the young who rule. And yet they are professionally powerless: they are forbidden by law from earning wages from their expertise.

Might these folks have something to offer the workplace? And might the young benefit from a bit of early work experience, too? Perhaps – but we’ll never know, thanks to antiquated federal, state, and local laws that make it a crime to hire a kid.

Pop culture accepts these laws as a normal part of national life, a means to forestall a Dickensian nightmare of sweat shops and the capitalist exploitation of children. It’s time we rid ourselves of images of children tied to rug looms in the developing world. The kids I’m talking about are one of the most courted of all consumer sectors. Society wants them to consume, but law forbids them to produce.

You might be surprised to know that the laws against ‘child labor’ do not date from the 18th century. Indeed, the national law against child labor didn’t pass until the Great Depression – in 1938, with the Fair Labor Standards Act. It was the same law that gave us a minimum wage and defined what constitutes full-time and part-time work. It was a handy way to raise wages and lower the unemployment rate: simply define whole sectors of the potential workforce as unemployable.

By the time this legislation passed, however, it was mostly a symbol, a classic case of Washington chasing a trend in order to take credit for it. Youth labor was expected in the 17th and 18th centuries – even welcome, since remunerative work opportunities were newly present. But as prosperity grew with the advance of commerce, more kids left the workforce. By 1930, only 6.4 percent of kids between the ages of 10 and 15 were actually employed, and 3 out of 4 of those were in agriculture.

In wealthier, urban, industrialized areas, child labor was largely gone, as more and more kids were being schooled. Cultural factors were important here, but the most important consideration was economic. More developed economies permit parents to ‘purchase’ their children’s education out of the family’s surplus income – if only by foregoing what would otherwise be their earnings.

The law itself, then, forestalled no nightmare, nor did it impose one. In those days, there was rising confidence that education was the key to saving the youth of America. Stay in school, get a degree or two, and you would be fixed up for life. Of course, that was before academic standards slipped further and further, and schools themselves began to function as a national child-sitting service.” (Read more from mises.org)

The Child Labor Amendment Debate of the 1920s
“Few causes are so shrouded in sanctimonious mist as the movement, early in the twentieth century, to abolish child labor. Sympathetic journalists and historians dubbed it ‘the crusade for the children’ and depicted its foes as avaricious manufacturers.

Some self-styled ‘child savers,’ especially the women novelists and inveterate reformers of New England, were sincerely concerned about exploited children. Others, however, intended to reconstruct the family and install ‘government as overparent,’ to use the words of Colorado Judge Ben Lindsey. Opponents of the Child Labor Amendment, far from being the calloused plutocrats of legend, included noted Progressives, urban Catholics, and thousands of farm families.

The fight over the amendment highlighted the growing breach between those loyal to Jeffersonian America and those who sought to concentrate power in the grandest overparent, Washington, D.C.

. . . .

Here you are, a Jeffersonian Democrat, the cardinal principle of which doctrine was the integrity of the states, urging me, a Hamiltonian Republican, to support a constitutional amendment enabling the national government to deal with the children of the states. Strange times, these are. But I think I can encourage you to expect favorable action, as the women always get nowadays what they ask for. – Senator William Borah (RID)

to a constituent, 1924:

[A] communistic effort to nationalize children, making them primarily responsible to the government instead of to their parents. It strikes at the home. It appears to be a definite positive plan to destroy the Republic and substitute a social democracy. – Clarence E. Martin, President American Bar Association” (Read more from mises.org)