Thursday, February 5, 2009

Ron Paul: A Patriot

These are some excerpts from Ron Paul's The Revolution: A Manifesto.

On the philosophy of economic freedom:

"Economic freedom is based on a simple moral rule: everyone has a right to his or her life and property, and no one has the right to deprive anyone of these things.
To some extent, everyone accepts this principle. For instance, anyone going to his neighbor's home and taking his money at gunpoint, regardless of all the wonderful, selfless things he promised to do with it, would be promptly arrested as a thief.
But for some reason it is considered morally acceptable when government does that very thing."

- Page 69

On free trade:

"Consider a single, almost trivial example of government favoritism: sugar quotas. The United States government limits the amount of sugar that can be imported from around the world. These quotas make it more expensive for all Americans since they now have fewer choices as a result of diminished competition. The quotas also put at a competitive disadvantage all those businesses that use sugar to produce their own products. That's one reason that American colas use corn syrup instead of sugar: American sugar, thanks to quotas, is simply too expensive."

- Page 72

On government expansion:

"Once government does become involved in something, intellectual and institutional inertia tend to keep it there for good. People lose their political imagination. It becomes impossible to conceive of dealing with the matter in any other way. Repealing the new bureaucracy becomes unthinkable. Mythology about how terrible things were in the old days becomes the conventional wisdom. Meanwhile, the bureaucracy itself, with a vested interest in maintaining itself and increasing its funding, employs all the resources it can to ensuring that it gets a bigger budget next year, regardless of its performance. In fact, the worse it does, the more funding it is likely to get - exactly the opposite of what happens in the private sector,..."

- Page 74

"Take arts funding, for example. Some Americans appear to believe that there would be no arts in America were it not for the National Endowment for the Arts (NEA), and institution created in 1965. They cannot imagine things being done any other way, even though they were done another way throughout our country' existence, and throughout most of mankind's history. While the government requested $121 million for the NEA in 2006, private donations to the arts totaled $2.5 billion that year, dwarfing the NEA budget...
... NEA funds go not necessarily to the best artists, but to people who happen to be good at filling out government grant applications."

- Page 75

"To get an appreciation for the difference between public and private administration in terms of bureaucracy and cost-effectiveness, consider this. The Brookings Institution's John Chubb once investigated the number of Bureaucrats working in the central administration offices of the New York City pubic schools. Six telephone calls finally yielded someone who knew the answer, but that person was not allowed to disclose it. Another six calls later, Chubb had at last pinned down someone who knew the answer and could tell him what it was: there were 6,000 bureaucrats working in the central office.
Then Chubb called the Archdiocese of New York, to find out the figure there. (The city's Catholic schools educated one-fifth as many students as did the government-run schools.) Chubb's first telephone call was taken by someone who did not know the answer. Here we go again, he though. But after a moment she said, "Wait a minute,; let me count." Her answer: 26."

- Page 77

On welfare:

"... but private efforts could never substitute for gigantic government budgets for various forms of welfare. But private assistance would not need to match these budgets dollar for dollar. As much as 70 percent of welfare budgets has been eaten up by bureaucracy. Moreover, government programs are far more easily abused, and the money they they dispense more readily becomes a destructive habit, than with more local or private forms of assistance."

- Pages 75-76

On the income tax and the redistribution of wealth:

"In another chapter I explain my opposition to the military draft, a government institution based on the idea that the government owns its citizens and may direct their destinies against their will. The income tax applies the same things: government owns you, and graciously allows you to keep whatever percentage of the fruits of your labor it chooses. Such an idea is incompatible with the principles of a free society. 
Robert Nozick... minced no words when it came to the taxation of earnings from labor. How, he demanded to know, was this any different from forced labor? In America, the average citizen in effect does unremunerated work for various levels of government for the equivalent of size months out of the year. People who favor this system should be honest about what they are saying: we have the right to force you to work against your will. Strip away the civics-class platitudes about "contributions" to "society", which are mere obfuscations designed to engineer the people's consent to the system, and that is what the income tax amounts to."

- Page 78

"Abolishing the income tax on individuals would cut government revenue by about 40 percent. I have heard the breathless claims about how radical that is - and compared to the trivial changes we are accustomed to seeing in government, I suppose it is. But in absolute terms, is it really so radical? In order to imagine what it would be like to live in a country with a federal budget 40 percent lower than the federal budget of 2007, it would be necessary to go all the way back to... 1997."

- Pages 79-80

On regulation:

"Americans have been the impression that "regulation" is always a good thing, and that anyone who speaks of lessening the regulatory burden is an antisocial ogre who would sacrifice safety and human well-being for the sake of economic efficiency. If so much as one of the tens of thousands of pages in the Federal Register, which lists all federal regulations, were to be eliminated, we would all die instantly.
The real history of regulation is not so straightforward. Businesses have often called for regulation themselves, hopeful that their smaller competitors will have a more difficult time meeting regulatory demands. Special interests have helped to impose utterly senseless regulations that impose crushing burdens on private enterprise -- far out of proportion to any benefit they are alleged to bring -- but since those interests bear none of these burdens themselves, it costs nothing to advocate them."

- Page 91

"It is not unusual for American students to find their textbooks telling them that injustice was everywhere before the federal government, motivated by nothing but a deep commitment to the public good, intervened to save them from the wickedness of the free market."

- Page 93

"An argument we hear even now is that a hundred years ago, when the federal government was far smaller than it is today, people were much poorer and worked in less desirable conditions, while today, with a much larger federal government and far more regulation in place, people are much more prosperous. This is a classic case of the post hoc, ergo propter hoc fallacy. THis fallacy is committed whenever we carelessly assume that because outcome B occurred after action A, then B was caused by action A. If people are more prosperous today, that must be because government saved them from the ravages of the free market.
But that is nonsense. Of course people were less prosperous a hundred years ago, but not for the reason fashionable opinion assumes. Compared to today, the American economy was starved for capital. The economy's productive capacity was miniscule by today's standards, and therefor very few goods per capita could be produced."

- Pages 93-94

"Soaking the rich works for only so long: the rich eventually wise up and decide to hide their income, move away, or stop working so much. But investing in capital makes everyone better off. It is the only way we can all become wealthier. We are wealthier today because our economy is physically capable of producing so much more at far lower costs. And that's why, just from a practical point of view, it is foolish to levy taxes along any step of this process, because doing so sabotages the only way wealth can be created for everyone."

- Pages 94

On the Constitution:

"Our Constitution was written to restrain government, not the people. Government is always tempted to turn that maxim upside down. Little wonder that George Washington, the father of our country, once said, "Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.""

- Page 135

He has an entire chapter on the Federal Reserve that is so good it cannot be adequately summarized here. 

Paying off your mortgage early, and the rewards that ensue...

Let's do an example problem.

Let's say you're 25 years old and find a house on the market for $150,000. You love the house so much that you decide to buy it. You have the required 20% ($30,000) to put down in order to avoid PMI (private mortgage insurance), and you put the rest on a 15-year $120,000 mortgage at 7%. You decide to be billed once every two weeks, instead of once every month. 

Principal: $120,000.00
Biweekly Payment: $497.37
Total Amount of Payments Per Year: $12,931.62
Total Amount of Interest (15-years): $73,975.02

Now, let's say that after you get the house you get a nice raise and are able to pay an extra $150 every two weeks towards the principal. That would make your total biweekly payment $647.37. If you keep paying this amount every two weeks for the duration of the loan, it'll be paid off in October of the 9th year, 5-years and 2-months early. 

Principal: $120,000.00
Biweekly Payment: $647.37
Total Amount of Payments Per Year: $16,831.62
Total Amount of Interest (9-years, 10-months): $46,440.58

So that's great! You'll have an extra $647.37 to spend on whatever you want! But what if you took the money that would've gone towards the mortgage and invest it in growth-stock mutual funds? That sounds good, right? After all, the money that would normally be going towards the mortgage is freed up now. That amount would total $64,658.10 for the 5-years and 2-months. 

If the $647.37 was invested at 8% starting the second week after the mortgage was paid off and ending with the original last payment period you would end up with $109,611.81. If left invested for 25 more years until age 65 (at 8%), you'd end up with $807,446.68. That's without even having to add any extra money after age 40!

Hmmm, and yet the average person wouldn't consider a 15-year mortgage. They'd just go with the 30-year and end up paying $167,278.51; $120,837.93 more than the accelerated plan.

But people will be people...