As a slight change of pace, rather than providing my commentary around the candidates in the GOP debate on Tuesday, I’ve decided instead to provide my own answers to the questions posed to them. Since many of the questions were very specific to a certain candidate’s positions or plans, I will use a generalized versions of the questions.
Neil Cavuto: Are you sympathetic to minimum wage?
Absolutely not. If we think about basic economics and go back to the law of supply and demand, we know that when the price of something increases, the demand decreases. There is no difference between a simple consumer product and the price of labor. If the cost of employing people increases, the demand for their services will decrease. Additionally, as the price of labor is artificially increased, the return on the investment curve shifts downward. This in turn creates an environment where investment in machines and robots becomes more tenable. This is the business aspect of the argument, but doesn’t really touch on the principle of restricting people’s freedom, which is an important component of the issue. The minimum wage outlaws each person’s right to contract and sell their services at a price that they find fair. If an individual decides that they would be willing to walk someone’s dog for an hour for 10 dollars, they would be committing a crime if we were to raise the minimum wage to $15 an hour. This is a violation of that person’s freedom. If two people agree to a voluntary exchange, we can surmise that both parties have benefited. For the State to interject is tantamount to telling people that they don’t know what’s best for themselves. I think for a bureaucrat in Washington D.C. to dictate what’s “good” for millions of individuals in this country is ridiculous.
Maria Bartiromo: What plans do you have to cut federal spending?
This is a pretty easy one for me. First, end the empire. We should not be engaged in perpetual war around the world and “occupying” so many countries. Germany is well able to defend itself – we don’t need troops there. We can close all of our overseas military bases. The second thing I’d do on my first day in office would be to require the head of every executive agency to prepare an argument for the existence of their agency based on the Constitution. If they cannot identify where in the Constitution the role of their agency is authorized, they’d be closed. I’d remind them that the interstate commerce clause is intended only to prevent tariffs between the States, and that the general welfare clause is intended only to allow the Federal Government to carry out actions directly related to those powers expressly delegated to it within the Constitution (e.g., build a building to allow it to establish post offices). I will allow these agencies to defend themselves out of fairness. However, here are some that I’m quite certain won’t be able to defend their existence and will be shut down.
- Department of Education – ~$78 Billion
- Department of Commerce – ~$10 Billion
- Department of Energy – ~$30 Billion
- Department of Agriculture- ~$140 Billion
- Department of Transportation – ~$77 Billion
- Department of Health and Human Services- ~$150 Billion (discretionary only)
- Department of Housing and Urban Development – ~$33 Billion
- Department of the Interior – ~$20 Billion
- Department of Labor – ~$104 Billion
- Department of Homeland Security (this is redundant to the Department of Defense) – ~$55 Billion
Cutting these departments alone would cut nearly $700 Billion from federal spending. With the recent collection of taxes reaching $3.2 Trillion and a total federal spending of $3.7 Trillion, my spending cuts would immediately eliminate the federal deficit.
Maria Bartiromo: What specific regulations would you change and how would that lead to 4% growth?
I would repeal nearly all regulations. I think as a consequence of the cutting of various departments I’ve outlined before, you’d see a drastic reduction in the regulatory state. Dodd-Frank should be repealed. Sarbanes-Oxley should be repealed. The Bank Secrecy Act should be repealed. The free market has its own way to regulate itself. In a free market, the only exchanges that occur are between two voluntary parties. The idea that adding in government regulations that can restrict people’s liberty to transact “protects” people is absurd. I don’t believe people need protection from the market, they need protection from the State.
Gerard Baker: How can you respond to the claim that Democratic presidents are better at creating jobs than Republications?
The first thing I’d say is that Presidents don’t create jobs. Citizens and businesses create jobs. But I understand the thrust of the question. I would caution people to refrain from drawing a direct correlation between the current strength of an economy and the person that is currently occupying the oval office. The “levers” of taxes, regulation, and monetary policy that the federal government has the power to influence on the economy have lagging effects. In my opinion, any time the government pulls these levers, it only has negative impacts on the economy. Those impacts aren’t felt immediately but after a certain period of time. That means that the current president could be suffering or benefiting from the decisions the previous politicians made. So I think a better question is, why do Democrats always seem to be lucky enough to enjoy the economic decisions made by previous presidents and Republicans seem unlucky enough to inherit recessions?
Gerard Baker: Does it matter at all that gap between the rich and everyone else is widening?
On its face I don’t think that it matters from an economic perspective. I constantly hear the refrain, the rich are getting richer and the poor are getting poorer. I’m not sure I entirely agree with this. I think a more accurate phrase is the poor are getting richer and the rich are getting richer faster. I would like to discuss the “rich”. There are really two ways of amassing wealth. The first is through voluntary exchange. In this instance a person creates a product or service that so many other people want that they voluntarily give up their money for that product or service. There is absolutely nothing wrong with someone making millions, billions, or trillions of dollars in this manner. The other way of gaining wealth is through coercion; through the use of force and taking away other people’s wealth to enrich themselves. This is at the heart of our growing disparity in “income inequality”. The Federal Reserve is currently trying to target 2% inflation. To achieve this, the Federal Reserve purchases securities in the marketplace from the large financial institutions on Wall Street. The Federal Reserve prints money, gives it to Wall Street, and simultaneously takes 2% of the value everyone else’s money to enrich the too big to fail banks. This is theft on a massive scale. It’s not the rich business man that should be vilified, it’s the crony capitalism, cozy relationship between government and big business.
Maria Bartiromo: How do you feel about the appeals court ruling to prevent President Obama from implementing his immigration plans?
There are really two topics here that I’d like to discuss. The first is whether the ruling of the court was justified. Absolutely it was. The President had overstepped his constitutional authority and the courts were correct to stop him from acting unconstitutionally. We are supposed to be a nation of laws and no one is above the law, including the President.
The second topic is whether our immigration laws are good or bad. I personally favor open borders. I don’t think we should prevent people from immigrating or emigrating from this country. However, in order for that to be functional, we need to remove the welfare and regulatory state. No one should be receiving transfer payments from the government, including immigrants, and no one should be prevented from selling their services at a price they agree to. This comes back to my position on eliminating minimum wage laws. In my opinion, one of the key drivers of the immigration is the allure of handouts. The idea that if you can just cross the border, there’s a possibility that you’ll be able to get something for nothing. I don’t think it’s appropriate for the Federal government to steal the property of US citizens and give it to other US citizens, let alone give it to people in this country whose first experience was to violate our laws.
Neil Cavuto: What’s the best tax plan?
I have an innate aversion to taxes in general. The best tax plan is no tax plan. Taxation is theft from the productive private sector of the economy to fund the parasitic government. But since we have a government that needs funding at some scale, the least punitive taxation plan would be a system that only taxes the non-productive aspect of an economy, consumption. So I would favor repealing the 16th Amendment and abolishing the income tax. I would rather have an excise tax that taxes only consumption of final goods. I do not in any way, shape, or form favor any sort of a value added tax (VAT).
However, assuming we need to operate under the existing structure, then I would support a flat income tax. I would completely eliminate the corporate tax. Corporations do not pay taxes. The owners of the corporations (i.e., shareholders) pay those taxes, and today they pay it twice – once that the corporate level and again on dividend income or capital gains. I would also eliminate the estate tax. That again is double taxation and discourages the productive savings and investment of people. I would propose a rate of 3%. During the greatest expansion period in the history of this country, in the 1800’s, total federal spending averaged 3% of national income. If the Federal government was limited to its expressly delegated role, that should provide plenty of money for the government to function.
Maria Bartiromo: Do you support the presidents decision to put 50 Special Forces troops into Syria and leave 10,000 troops in Afghanistan?
No. I have a problem with meddling in other people’s wars in general. It’s interesting to me that with all the fear mongering about terrorism that we don’t ever discuss why we may be a target of the terrorists. In the 1700’s I’m quite certain the British crown considered our founding fathers terrorists or insurgents. We felt that we were being occupied by a foreign power. The Third Amendment specifically speaks to quartering of soldiers as a result of the British soldiers living in our country. However, when we go to the Middle East and take over their land and set up military bases we somehow think that’s different. Then, while we’re there, we bomb “suspected” terrorists, kill thousands of innocent people and call it collateral damage. The families that survive the deaths of our collateral damage instantly have an incentive to get revenge.
My view is that we need to use our military for its true purpose, national defense. If we would limit our military action only to responses to attacks against our country, we would have more wealth, fewer enemies, and more freedom. It’s interesting to me that Osama Bin Laden specifically laid out his reasons for declaring war against the United States. Those included the US embargo on Iraq, the establishment of US military bases in their home country, and US support of their enemy Israel. All of these issues are symptomatic of the American impulse to act as the world’s nanny and impose our our agenda on other sovereign nations.
Ironically, those are almost the same exact reasons that Japan gave for attacking Pearl Harbor. Japan accused the US of supporting China, invading their territorial waters with our ships, in combination with a US oil embargo against Japan. It seems to be a common refrain. It’s also interesting to point out that Switzerland has been a completely neutral country and has not experienced any terrorist attacks, did not get destroyed as part of World War II, while simultaneously don’t squander their capital on military adventurism. Cause and effect seems pretty obvious here.
Bottom line, I’m not saying that we are responsible for all terrorist activities by any means, but we aren’t doing ourselves any favors.
Neil Cavuto: Would you let the large financial institutions fail?
Yes. The free market system is a profit and loss system. The losses are just as important as the profits. Losses are a way of removing actors from an economy that have done a poor job at managing the scarce capital that exists within that economy. There have been many claims that letting one of these large financial institutions fail would have resulted in the depositors suffering. I feel that scenario is highly overblown. The fact that certain divisions of these institutions were insolvent doesn’t mean that all the assets of the firm were gone. Many firms go through bankruptcy and return to operation. The best thing we could have done would have been to let these large institutions go bankrupt, then be divided and put under new ownership. The best way to prevent “too big to fail”, let firms fail!
