I was surfing for some news this evening on my Sirius Radio while driving in my car. The dreaded drive hours, more advertising than music. Today reminded me of those days, I was flipping through my news channel presets and thankfully the BBC doesn’t care as much when we are in our cars. But eventually I stumbled onto Stuart Varney filling in for Neil Cavuto on his business news program Your World. He was doing an acceptable job in being politely cynical of the assertions of Dennis Kucinich, (D-Representative of Ohio’s 10th). I feel no need to be impolite, but ration is neither polite nor rude so I feel no desire to ignore the truth in the name of being polite. Nor do I feel the need to be disrespectful of Mr. Kucinich, he is willing to put his feelings out here for the likes of me to challenge, which is more than I can say for many of his 535 or so Congressional colleagues. But fallacy deserves no respect, as misleading people, no matter if inadvertent or well intended is to be eliminated whenever it is discovered. You be the judge of my reasoning.

The discussion that caught my attention, (in addition to not being another advertisement extolling the virtues of buying physical gold or online data backups), was about President Obama’s stated intent to “invest” in, among other things, an expansion of the Smithsonian Library to the tune of $100 million. Small change compared to the high speed rail President Obama wants to replace the mostly empty slow speed rail the government currently “invests” in every year. Mr. Varney asked how the conversation could be about lowering the deficit in the same breath as suggesting that we borrow more money to build infrastructure. Mr. Kucinich said several incorrect things but I will only challenge one of them, “We need to have good paying jobs in America, and when the private sector isn’t creating the jobs, the public sector has a moral responsibility to do that.” His assertion was that government spending on infrastructure creates jobs for people who then pay taxes and tax revenue will go up, reducing the deficit. Sounds good, a kind of Government-Reagan-Trickle-Down on steroids, investment for short.

First think back to high school (I know, it hurts), do some math using the Smithsonian expansion as an example since the round $100 million price tag makes it somewhat simple. I am a simple man, I need simple explanations. If all the money went to pay people doing these new jobs, none for materials etc., and all the new employees make more than the magical $250K, and do not take advantage of any of the myriad deductions like employer provided health insurance, so they all pay the maximum 35% back in the form of income taxes, the tax revenue would be $350,000. Tax revenues cannot be increased with the spending of tax revenues, as this is not an “investment” but rather an expenditure. Even if we grant poetic license to the use of the word investment, spending $100 million in hopes of getting a maximum $350,000 return is a terrible investment. But, I can cut the guy some slack since he blurted out his financial rationale in the middle of making the bigger point that this is a moral imperative.

I looked on Mr. Kucinich’s website where he claims to be “America’s Congressman,” and “America’s most courageous Congressman.” He also asks that visitors sign a petition to make healthcare a “civil right”. I know from such that he is drawing on people’s feelings more than their logic. If health care is a right, a person could infringe on someone else’s rights simply by choosing to become something other than a doctor or a nurse, or an orderly. The government could put people in jail for such infringement on people’s right to their health service. It seems obvious to me that Mr. Kucinich turns to his sense of morality for guidance instead of his sense of reason. It does not take courage to do what feels right. Courage is doing the right thing when people like Kucinich want you to feel like it is wrong or immoral. I contend there is no contradiction and that logic will give you the morally superior direction. People who do not turn to logic first, often disagree with me. I could be wrong. This is such an instant.

If you want to put more people to work, do you borrow money to hire them and then tax the pay to pay it back, with interest? Or do you let them keep the money to start with and save the overhead and interest? Logically, you choose the most efficient method which is the one without the interest. The one who would get the money now, and be taxed later may not like it, but in the end, some wealth is consumed in the borrow-spend arrangement. If your answer requires some leap of faith and ignorance of logic with an explanation that sounds something like, “the prosperity if creates will employ more people and amplify the effect,” then I suggest your answer is based on hope not reason. Los Vegas was built and thrives on people waging their own money on hope and a roll of the dice. Consider how powerful such hope is with other people’s money and a belief in “moral responsibility. If people hired by government investment would be able to pay back the loan with interest in the form of taxes, then government subsidy would not be needed. They would be able to borrow the money themselves, which is an investment by the lender in the worker. They would pay it back themselves, right? This is the logic behind school loans, borrow now and pay it back via the job you get later. The benefit of teaching a man to fish far outlasts the original investment. But where will the job be for the person working on the Smithsonian expansion once it is finished? This is the fallacy of all government “investment.” They all rely on a ponzi scheme of some sort where more and more people pay more and more into the scheme to keep it going. The Smithsonian job is an example of a Government bubble; take away the subsidy and the job is gone. The private sector is not investing in the project because there is no economic return. To keep the job, more borrowing or taxation and subsidy will be required. This is not creation, but consumption. But this spending is not about investing, or even getting a larger Smithsonian, or putting people to work or any other morally admirable goal. It is about getting money from some people, namely those of the future, and giving it to others, namely those of the now. You can try to assign any number of motivations to this desire, for example now people vote now, and future people vote later. Maybe Mr. Kucinich prefers to entice people to vote for him now as apposed to hoping they will vote for him later. But I don’t need to question his motivation, I can simply point out that his logic is flawed.

As I have pointed out, government infrastructure spending, although tolerable in some circumstances, is a form of consumption. But I assert his main failing in logic, which prompted this post, is that Mr. Kucinich suffers from selective morality. Albeit well intentioned, he is a hypocrite, although I suspect he is not aware of it. He is like the person who insists that the rich pay their share of income taxes, and then do not disclose all their income on their own tax return. Mr. Kucinich took a solemn oath to defend the Constitution of the U.S. He did this freely as a condition of the job of U.S. Representative. There is no provision in the U.S. Constitution confirming Mr. Kucinich’s assertion that the Federal Government has any authority to provide American jobs because he is unhappy with how the private sector does so. This does not change for good paying or otherwise. It does not change because Mr. Kucinich would choose industries different from that of the private sector. Further, there is no provision in the U.S. Constitution with which moral responsibility is implied. Mr. Kucinich is attempting to use the office which he holds for personal motives of morality, as he defines it. Mr. Kucinich took an oath to defend the Constitution from all enemies and then ignores that oath and the Constitution or assumes the Constitution is flexible to fit his own morality. Even if he were attempting to persuade me to donate to his cause of my own free will, I must be skeptical of his description of moral responsibility when he has turned his back on his freely accepted responsibility to the Constitution. His oath did not stipulate enemies who would attack the Constitution, or break it, or bend it to their will. His oath stipulates ALL enemies. He is the domestic enemy he is sworn to defend against.

Much political discussion involves terms and phrases used in ways contrary to their definition. The cynical call it spin. President Obama says he wants to “invest” in research, education, and infrastructure. In part, his motivation for this “investment” is to get ahead of the Chinese in the green technologies race and fabricate a “sputnik” moment. He wants us to “Win the Future.” On the surface, this sounds great, after all who would not want to “Win The Future”, which I will abbreviate WTF. Would I be a loon if I wanted to loose the future green race to the Chinese? After all, they are so interested in being green in China, they have a head start, right? They have demonstrated some technological advance on par with the Russians beating us into space to prompt a Sputnik moment, right? So what could the President possibly mean? As an attorney, he understands that words have meaning, and that reasonable people turn to the dictionary to determine the common accepted definition, so let’s start there. He obviously did not intend for us to understand a meaning different from the common accepted definition. Did he? He would not count on us reacting to our feelings about the word instead of critically checking to see if he used it properly. Would he?

I have to believe his intentions are pure, that he thinks he is doing this for our own good. But his perspective, and belief in economic salvation through government fiat makes me skeptical that he has the usual understanding of the word investment. So consider the following, recognizing my skepticism, and decide. For example, an office manager might invest in training for the staff, invest in education. But buying everyone beer one evening after a training session is spending on a consumable expense. The training should lead to improved production, team cohesion, etc., payback in excess of the costs. The beer, leads to trips to the bathroom. Similarly, truthful investment in research would be in technologies with potential for a return on that investment. Spending on research in thousand year old technology with physical or chemical limitations that limit financial feasibility, would not be investment. Do you agree? We would not, for instance invest in research in windmills or ethanol. If we are to invest in education, like the office manager, we should choose those areas in which we expect the greatest, financial, return on our investment. Such investment might be in the form of incentives to attract medical students to increase medical professionals and lessen the shortage, especially in anticipation of all the new people expected to be on Medicaid in 2014. Investment in education would not be in subjects with no practical use, except to produce future professors. Investment in education would be in science, economics, and business management. There would be no investment in educating people in trades with no market demand as there would be no return on that investment. And any investment in infrastructure would be along the lines of the Panama Canal. We would invest in infrastructure with proven economic advantage over our current methods. We certainly would not invest in more government operated railway, for instance, high speed or otherwise. It would be easy to see the evidence of sincerity and understanding of the word investment. We should not see a line waiting outside the men’s room, or hear talk of free beer.

Simple investment is made in assets which are expected to go up in value with time. This can be raw materials which are tooled or modified so as to add value to them, or it can be real estate which can be improved to add value. Investment can be in people, by increasing their ability to do such things. In other words, investment is the act of taking wealth (capital) and using its ability to produce work to create more wealth. A factory owner might invest in more efficient tools and in the education of the workers to operate them, only if it allowed that owner to increase production value and therefore see a return on that investment. Without a return, spending is consumption, or charity, not investing. A factory owner could find busy work for his employees and call it investment, for a while. But just as beer is a fools investment, his capital would soon be flushed down the proverbial toilet, and he would not long be a factory owner.

“Green” is not relevant to this discussion.. When we spend tax money on research on such limited use technology as solar panels or windmills, we are duplicating research conducted for generations by the private sector. The areas where this method of power generation is preferable to other methods is well understood and found unfeasible outside of limited, remote situations. My family uses solar powered devises and I have seen solar powered wells provide water where it was not feasible to bring power lines. For as long as there has been written record, windmills have lifted water into elevated tanks for later use. But, whenever we must rely on such devices, we must have an alternative for days when the wind does not blow or clouds persist. Any savings in the “free’ energy is lost in redundant spending on duplicate structure. When we can tolerate intermittent failure, we put up with the inefficiency and losses for the savings. But, make no mistake, energy companies have thoroughly tested known material and aerodynamic technology and continue to do so secretly. Each is desperate to be the marketer of the next nuclear fusion plant or any other fossil fuel replacing technology. Are we likely to get that kind of fanatical zeal for discovery through government-grant-investment research? Perhaps, but will the zeal be to find something economically feasible, or something popular, or the answers which bring more congressional funding?

We know how much energy reaches the earth from the sun. There is not enough energy in sunlight to power our country if we could capture it all, with 100% efficiency. Solar panels and windmills will never be 100% efficient, nor will the energy storage arrangements they charge. Anyone who suggests we could have a breakthrough to change our understanding of physics sufficiently to overcome this fact is praying, not planning. Such a person is praying for a change in the natural, physical world, not planning for an improvement in our understanding of it. They are banking on an answer existing in the realm of what we do not know, no in the overall expansion of what we know. A cynical person might attribute such folly to spin as well.

I suggest we let the private sector spend its own money when something new is to be gleaned, instead of spending the money confiscated from all of us because we wish it were so. Following the real Sputnik moment, we didn’t beat the Russians to the moon, we ran there alone. No one was following us. The world was more than willing to let us spend the resources, and watch for the occasional discovery when we stumbled onto one. The world is doing the same now that we are in the “green race”. We performed a technological feat with no financially viable use for it. The world knew it could be done, but only government would do it without answering the question of why would we. I think it is really neat that we have been to the moon, and love the romantic images of doing so with a slide rule. But I would never condone outpacing the Russians if it meant borrowing the money from the Chinese, giving our discoveries to them, and mothballing the program a generation later to rely on Russian rockets to get our satellites into orbit and our astronauts to a space station we share with them. We went to the moon to prove that American ingenuity can solve any problem, the Russians went into space to prove to the Russian people that the Russian government was the solution to any problem. Which more closely resembles the arguments President Obama makes for, “investment”? Let us not spend money we borrow from our kids to mothball another technology without financial feasibility when we can do it now for free.

When we have invested (spent) tax money on education, we got more expensive education. Don’t believe me? Why would anyone spend the tax money to educate their kids in a public school, and also spend the tuition money to educate them in a private school, (as all private school parents do), if one were not better than the other? As education spending doubled in this country, our student’s performance relative to the rest of the world did not change appreciably. When we spent tax money to help students pay for college tuition, we got a corresponding increase in tuition costs. When we use government loan guarantees, we get students studying subjects and pursuing degrees they never would on their own dime, much less if a private bank had to be convinced that demand for workers with those degrees was sufficiently high to empower the graduate to repay the loan. Only the idle rich would pay their own money for degrees in un-marketable subjects. A musician of moderate skill and disadvantaged background can get a loan and earn a music degree with no hope of being employed as such upon graduation. This is not investment, it is entitlement. We believe that this mediocre musician has a right to pursue this career path and some believe he is entitled to have the rest of us pay for it. But more importantly, is such a young musician well served in being led to believe that a music degree and loan payments provide a better future than being a brick mason, for instance?

When we spend tax money on our “crumbling infrastructure”, we are doing maintenance, not investing. Such maintenance is a consumable, not an investment. This is not to say that maintenance is not necessary, but it is not investment. I suggest a restructuring instead. I suggest that we go back to the funding scheme that built much of our crumbling infrastructure. I suggest that we use the gasoline tax for road construction and maintenance as it was originally sold to us. I suggest that we end the practice of raiding that tax to subsidize public transportation like Amtrak and city buses.

I challenge you to find any area where the government operates in even tangential competition with the private sector where the government efficiency is on the same order of magnitude as the private sector. Find any activity where the government keeps its promise of controlling costs and continuously improving customer satisfaction. There is no private concern which can survive any substantial length of time without doing just that, and paying a return on investment. There are legitimate uses for government, such as refereeing and national defense. But anytime government spending is recommended as an investment, or to control costs, or as a way to provide for those who cannot provide for themselves, there has been and by the very nature of it will be, an ever increasing collection of resources and liberties in an attempt to react to the cascade of disappointments and demands. Spending tax money on beer leads to well used toilets, not return on investment. Unfortunately, it also assures votes from the brewer’s union, big toilet manufactures, and drunks.

We were promised that Social Security taxes were the property of the person paying them, that they would be available with interest once one retired, and that they could be passed on to one’s heirs should one die before drawing the funds out. How does that resemble what we actually have?

We were promised that if we only gave people who needed it a Welfare hand up, we could assist most in moving back into the working main stream. Now, more people are on Welfare as a percentage of population, the programs were extended to less and less willing to accept a hand up over a hand out, and who find a gap between what the government will pay them to stay home and what working people are paid (after the taxes are paid).

We were promised that the 4 cent per gallon gas tax would only be used to fund highway construction and maintenance. It did just that, until Congress voted to use the funds to support public transportation like Amtrak, city busses, subways, etc. Now, transportation funds are scarce, Amtrak looses $39 per passenger (despite promises that it would be returned to the private sector, at a profit for taxpayers, once it is profitable), and gas taxes are many times the 4 cents per gallon that originally worked.

In Virginia, we were promised that if we allowed a state lottery, the money would be used for public education. Although the amount spent on education does come from the left over lottery money, the left over money equaled the previous budget. The original money was used for other desires. Now, the Virginia lottery participates in the Mega Millions ring that includes several states, the payouts have risen in dollar amounts, the chances of a Virginian winning have gone down, and the school systems are still peddling cans of Virginia Diner peanuts to help supply classrooms.

In June, a District of Columbia Metro crash killed 9 people. Accidents happen, and the causes must be identified and corrected, regardless of who is in charge. In an unrelated line of thinking, the NTSB and others exclaim this as an example of the need for more federal oversight of locally operated systems. They say that there needs to be more uniform rules among States and within localities. Why is this related to the “Trust me, I’m with the government” charade of the previous examples?

The District of Columbia is the exclusive purview of Congress. The DC Metro is completely within federal control. How can the NTSB then claim that the accident indicates the need for more federal oversight? They do so same way that they say that the deficit in highway spending is the result of anything other than Congressional raiding of the funds for other desires. They do so in when talking about the deficit in funds for Social Security after allowing people to get benefits without being citizens, much less contributors to the system. They talk about amendments to the current health care “bills” to forbid the use of Medicare money for other programs, even though the “trust fund” has long been dissolved and the money spent for other desires and Medicare funds do not cover Medicare expenses now, much less other desires.

In the words of Ronald Reagan, “Government is not the solution, Government is the problem.”

Are we more interested in doing the most good with the available resources? Or are we more interested in having equal good for all, even if it is, on average less good?

The “poor” are now a powerful electorate demographic, our children are less educated despite the spending, Amtrak is still bankrupt, people are still “denied” health care, and the list goes on. And the statist wrings his hands and points to these facts as proof that the original takeovers of these things didn’t go far enough.

I ask a simple question: Is there any cause for which our public servants solved the problem in their charge, where the program and its offices were then closed, and where the taxes collected for that purpose stopped?