David Berube’s OLD Blog

I was having lunch with Allan, an associate of mine, the other day. The talk was tech related and then somehow it turned into a chat on civil liberties and capitalism, don’t ask me how, but it did.

I explained to Allan that I’m a strong believer in personal freedoms and civil liberties. He asked how so? I explained to him that I thought laws outlawing smoking in businesses is ridiculous since it is private property and the property owner should be able to do as he wishes within his property.

“Fair enough, but what about the employees that work here and the customers that come in?” was his response. I quickly chimed back that if an establishment allowed smoking then it would be up to the customers to decide whether or not they wanted to be in that environment and the same for the workers.

“Ok, but some people may take the job because they need it, even though they don’t want to be around the second hand smoke” was his response to that. I replied with “Oh well, that’s their personal choice.”

Then he introduced me to something that’s never come across my mind. The true cost of capitalism and personal liberties.

So an employee takes a job in a smoking establishment because it’s the only job they can get. They’re exposed to the effects of second-hand smoke and maybe sometime down the line they fall ill and need medical care. The employer doesn’t offer health insurance so the employee goes to the hospital to get treatment at the tax-payers’ expense.

This happens every day from second-hand smoke. So the cost of that pack of cigarettes was $5.00, but the true cost of that pack of cigarettes when you add in all the unforeseen or foreseen consequences might be $50.00.

The same holds true for fossil fuel consumption. A gallon of gas might be $3.00, but that price point doesn’t reflect the cost to clean up the environment from the unforeseen and foreseen consequences of consuming that gallon of gas.

You burn the gas, the emission goes into the public air, and sooner or later the government might have to clean that air up, at the tax-payers’ expense. So a gallon of gas might cost us $3.00, but the real cost of that gallon of gas might be $75.00.

This whole conversation got me thinking, and I realized that our taxes are supporting the suppression of prices of products in this free market system.

I realized that the government, at times, limits our personal liberties and freedoms to allow for this fake free-market economy to stay affordable.

Our tax dollars are paying to keep the price of cigarettes low and affordable. Our tax dollars are paying to keep the price of oil low and affordable (yes, $3/gal is affordable).

Now, why should someone who doesn’t own a car and doesn’t smoke be forced to pay to clean-up after someone who chooses to do those things?

Should we all get a tax break and then force the tax burden onto these people? Should the cost of a pack of cigarettes be $50.00? With $45 of those dollars going to treat victims of second-hand smoke? Should the government or an NGO be taking $72.00 from every gallon of gas sold at $75 to help clean up the fossil-fuel related environment disasters such as global warming and oil spills? Or do we stay the course and penalize everyone, even those that don’t partake in such activities, just to keep suppressing the true costs of products?

I might not smoke today, but if I decide tomorrow I want to take it up, I’ll know that I’ll be able to afford a pack of cigarettes because I’ve been paying taxes to keep the price artificially low.

I’m no economist, far from one. What do you think?

China said Friday that it will look for more aggressive ways to invest sizable portions of its massive $1 trillion currency reserves.

Most of China’s $1 trillion in reserves is currently invested in ultrasafe U.S. Treasury debt. You know, all that money we’ve borrowed from China over the years to keep our government running and interest rates low. Or as I like to put it, to keep the bankers happy.

If China does indeed sell all their US Bonds it could cripple the US economy. Interest rates would spike and the dollar would weaken significantly. What does this mean for the average US consumer? Well, it would be a lot more expensive to borrow money for a home mortgage or a car loan, and paying back debt you already construed would be extremely hard.

I don’t think China is at a stage in the global economy just yet to pull this move. If they were to indeed sell off US Treasury bonds and in essence weaken the US dollar that would mean we would not be able to keep purchasing all the junk that they make, since we are their top market. So weakening our dollar would mean weakening their economy as well.

But just the mention of this from the Chinese government is scary, and gives us more reason to take a long hard look at the Federal Reserve system. We should also start the debate about bringing back the gold standard. The gold standard has its ups and downs, but one benefit of it is that we would not be able to be spending money that we don’t have. I also don’t believe their is another country in the world that currently uses the gold standard, which may be a signal that it is not a good choice and I’m no Milton Friedman.

china, chinese government, economy, gold standard, interest rates, milton friedman, us treasury bonds