The debate on illegal immigration has been roaring for years now and both sides perpetually debate a few key points.    We focus one common portion of the debate, “cheap labor.”  In developing this project, we took great pain to find the right question and we hope that we have.  The question we want to answer is this: is cheap labor the same as a free lunch?  In the first day of our principles economics class we remember learning that there is no such things as a free lunch and that idea has been expanded and proven time and again throughout every course we have taken in the years since.  To begin this paper let us consider the core and principle ideas that we hold as economists to be self evident applying them to the concept of domestic “cheap labor.” 

      Wages determine the normative phrase “cheap” in reference to labor.  Let us remember that wages are very similar to prices in their behavior with a few idiosyncrasies.  Wages like prices are tied to money.  As we look at money let us understand that money has several functions.  Money is a medium of exchange and has no real power in and of itself.  Money functions as a representative of value as a unit of exchange, a store of value and a unit of account.  Artificially forcing down the price of a good does not really change the value of that good or its production costs.  As we look at the problem of “cheap labor,” we hear the cry of many that illegal immigrants do jobs that “Americans aren’t willing to do” and on its face this claim chills our spines because as economists we know that such a claim is false.  The truth is that Americans will not do these jobs at the same low wages that illegal aliens are willing to accept.  This begs the question in our mind: What effect does this have on other markets?  We have tried throughout this paper to look at the real impacts of this group who is willing to work below the market wages and we ask ourselves what impact if any does this have on our national economy.  The primary issue which arose in our research was the problem of externalities.  We found that “cheap labor” is a phrase which discusses only the wage, which laborers demand, but ignores the societal cost associated with that low wage.  If we took the time to consider this market in the same way we would address a goods market I believe that we would find a shocking result.  It would appear that we are subsidizing our domestic low skilled labor as well as their illegal competition.  It appears that the many current policies are, in fact, working against themselves when the issue of illegal immigration comes into the picture.  The rest of this paper will be dedicated to understanding the true cost of these illegal immigrants on the U.S. both socially and economically.

      The cost on taxpayers is almost impossible to calculate systemically with real accuracy due to the inherent nature of tracking a group of people who don’t want to be found and who operate whenever possible off the grid (Siskin, 2005).  A Congressional Research Service Memorandum on the topic suggests that honest intellectuals can disagree about the actual numbers because there is much uncertainty in this field.  They state that reliable sources have disagreed by millions on the actual number of illegal immigrants in the U.S. and disagree by billions on the cost those illegals impose on tax payers (Siskin, 2005).  While it may be difficult to determine the exact price tag, we can be sure that unchecked the problem will get worse.  According to the Pew Institute we have gone from an estimated 8.4 million illegal immigrants in 2000 to 12.4 million in 2007 (Jeffrey Passel, 2008).  The same study showed a small decrease in 2008 likely attributed to the massive increases in agents at the border during President Bush’s last term.  

      Though calculating the exact price is difficult, many have done excellent work estimating portions of the cost.  Robert Rector, a leading researcher in the field, estimates that illegal immigrants cost the government around $90 billion a year.  He goes on to say that over the last 20 years we have imported about $2 trillion worth of taxpayer liability in the form of low skilled immigrants(Rector, 2006).   One study looking only at the burden to the Federal tax payer (ignoring the vast burden on state and local government) found that illegal households run a net fiscal deficit of $2,736 at the federal level alone.  This is a reduction from similarly situated immigrants who, if legalized, are estimated to cost $6,000 or $7,000 a year. The average, non-immigrant federal tax payer runs a net deficit of only about $1 a year by the parameters of the same study (Center for Immigration Studies).  A similar study suggests that in 2007 the burden per immigrant was $9,139 at the federal level (Rubenstein, 2008).  FAIR, The Federation for American Immigration Reform has done extensive studies in this area and estimated that the local costs of illegal immigrants in 2004 and 2005 amounted to over $36 billion.  This study included only the 3 areas which could most accurately be tracked: public education, emergency room medical care and incarceration.  FAIR projects that if recent historic patterns where to continue unabated the costs could climb to over $100 billion a year by 2020.  The study looked at many individual states and found shocking costs associated with illegal aliens.  For example, they estimated from those three primary areas of local costs that Californian taxpayers shell out $1,183 per native household to defray the costs of illegal immigrants (Federation for American Immigration Reform).

      It is difficult to estimate the exact toll of illegal immigrants on all levels of government.   At first, when we began researching and reading the various estimates we immediately felt that they must be biased and exaggerated. However, as we continued to read from dozens of sources we found that the various aggregate estimates could easily be underestimating the true costs.  It is clear from these partial aggregate studies that the burden appears to be immense.  Now let us look at some the more detailed information, which really helped us to understand this problem. 

      We look first at our public school systems which are under immense pressure as they struggle to keep pace with the ever expanding number of students, many of whom require higher than average expenditures.  This increased burden on our education systems is due to the federal government’s failure to control our international borders.  According to the Department of Homeland Security there are an estimated 1.54 million illegal immigrants under the age of 18.  This figure does not include children of illegal immigrants who were born here in the States, often known as “anchor babies” (Michael Hoeffer, 2008). Out of the 6.3 million “unauthorized immigrant” families, (out of a national total of 116 million families) over 40% have children.  This adds up to a total of 4.7 million new students to be dealt with by our public education systems (Pew Hispanic Center Publication, 2005). Another study claims that 1.5% - 3% of all public school students are undocumented aliens and that between 4-5% where born to undocumented aliens nationwide (Urban Institute).  Rubenstein says that 19% of all students in public schools are immigrants or the children of immigrants (Including both legal and illegal).  He suggests that those students easily account for 25% of total educational spending because of the special services required such as language assistance which can cost $460 to $1,600 per pupil (Rubenstein, 2008).  A different report done by FAIR, estimated that the total costs of educating illegal immigrants and their children came to $28 billion in 2004 (Martin, 2005).

      Next let us look at our justice system which is congested with illegal immigrants who have shown a disrespect for and propensity to disregard the laws of this land by the very virtue of their presence.  While congress agreed that the cost to incarcerate inmates at the state and local level in 2002 was around $13 billion (US Congress, 2003) there are clearly greater costs.  This $13 billion does not attempt to cover the judicial costs, the apprehension costs, and the costs of increased law enforcement it mandates or the damages both physical and psychological to the victims of these crimes.   In cities with large illegal immigrant populations, the problems are vast and have a huge impact on native citizens. “In Los Angeles, 95 percent of all outstanding warrants for homicide (which total 1,200 to 1,500) target illegal aliens. Up to two-thirds of all fugitive felony warrants (17,000) are for illegal aliens.  A confidential California Department of Justice study, reported in 1995 that 60 percent of the 20,000-strong 18th Street Gang in southern California is illegal; police officers say the proportion is actually much greater” (Donald, 2004). According to the Iowa congressman, Steve King, 80% of meth in the U.S. comes across our southern border on the backs of illegal immigrants not to mention the pressures on our society from the 12 murders, 13 drunken driving deaths and 8 sex crimes against minors which illegal aliens are responsible for each and every day (King, 2006).  A corollary of illegal immigration is the problem of substances which are transported across the border on the backs of illegal immigrants.  In fiscal year 2006 US Customs and Border Patrol confiscated 439,748K of Marijuana, 28,513K Cocaine, and 1,345K Heroin which adds up to 2.2 million pounds of illegal narcotics (US Customs and Boarder Protection Agency, 2006). 

      Our Medical system is under an unbearable strain due to the illegal immigrants.  Between 1993 and 2003, 60 hospitals have closed in California alone because such a large percentage of their services where becoming unpaid and another 24 hospitals are on the verge of closure, according Dr. Cosman (Madeleine Pelner Cosman, Illegal Aliens and American Medicine, 2005).  As of 2003 and 2004 about 32% of foreign born children are on public insurance and another 54% are uninsured.  U.S. born children of immigrants aren’t any better with about 60% on government insurance and another 16% uninsured (Pati & Danagoulian, 2008).  Another source says that over 60% of all illegal immigrants are uninsured (Martin E. , 2007).  Whether uninsured or on public insurance the burden eventually falls on some section of American society.  The burden from uninsured fall heaviest on the poor since the hospitals bear the costs and are able to provide fewer services to the native poor.  The burden from those on public insurance would be spread among taxpayer’s at all levels of government.  In 2000, 23% of the UCC in Southwestern border hospitals (approximately $190 million) was allocated to treat undocumented immigrants for emergency medical services (Coustasse, Lorden, Nemarugommula, & Singh, 2009).  California like other states has tried to defray the burden placed on their hospitals by the failures of the federal government.  Proposition 187, a bill designed to allow organizations to verify legal status before performing services, passed overwhelmingly on November 8, 1994   (Martin P. , 1999).  The propsition was soon challenged in court and ruled unconsitutional  (Ruth S. Adams, 2000).  Yet again the citizens and taxpayers are required to carry the burden.

      Our social safety net and welfare system are at the mercy of illegal immigration both through the abuse of the system and through the displacement of Americans at the low end of the labor market. This burden on our welfare system translates into a burden on the taxpayer, which is much heavier than it would otherwise be.  The stresses of illegals on the system act to pervert native’s use of these programs and perhaps more importantly prevents better allocation of these funds.  Organizations like the NILC brag on their website that they have worked tirelessly to restore $12 billion in Supplemental Security Income (SSI) and more than $800 million in food stamps to immigrants(Sophia Fund, 2004).  The number of legal and illegal immigrants on welfare programs like SSI has risen from around 3% in 1982 to almost 25% in 2003 (Madeleine Pelner Cosman, Spring 2005).  Children born to illegals are considered citizens and the parents immediately qualify for legal permanent status.  Beyond these “legal immigrants” who are legal only because of loopholes allowing them to convert their illegal status to legal status there is also the increased need for these programs by native citizens.  In economics, we often discuss behavior at the margin and when we look at the lowest segment of the American economy we see a very sensetive group on the margin.  With a drop in wages due to the abundance of “cheap labor” and the increased unemployment caused by an excessive supply unskilled labor.   The domestic laborers are displaced and those near the margin are forced onto the government rolls.  An indepth study would be required to determine the exact number of natives forced into excepting government aid but it is clear that the number is large.  One study projects that there is a redistribution of wealth away from this bottom bracket equal to 2% of GDP; that is not to mention that there are now more mouths chasing a piece of the significatly smaller pie (Borjas, 2006). 

      Illegal immigration truly does puts it greatest burden on the American working poor. According to a Heritage Foundation Study, low-skill households create a net cost to taxpayers of $22,449 (expenditures of $32,138 minus $9,689 in taxes) (Robert Rector).  The study concludes, “Households headed by persons without a high school diploma are roughly 15 percent of all U.S. households. Overall, these households impose a significant fiscal burden on other taxpayers.”  While this may seem like irrelevant information take a moment to consider the weight of this burden.  According to the Pew Hispanic Center about 49% of “unauthorized immigrants” (Illegal Aliens) have less than a high school diploma and a full 75% have no more than a high school education (Passel, 2005). Considering the same data for native born citizens a mere 9% fail to earn a high school diploma and a full 59% have obtained some college education.   With illegal immigrants estimated to make up 4% of our current population.  With a little extrapolation we can see that this bottom 15% has a large immigrant component with six out of fifteen persons in this category falling under the category of immigrant and around two of every fifteen are undocumented or illegal immigrants. American’s in the unskilled labor market are getting pushed out and those who remain pay a price in the form of significantly lower wages.  The wage fell by 7.4% for native high school dropouts as a result of immigration according to a study which looked across the period of 1980 through 2000 (Borjas, 2006).  According to the same study, their model suggested that in the year 2000 wage earners lost $278 billion dollars in wages.  He went on to project that $300 billion would be made by employers of illegal immigrants creating an unnatural redistribution of wealth away from low skilled laborers (Borjas, 2006).  While employers gain a limited benefit from “cheap labor” the laborers lose almost as much in reduced wages alone.  Some have even shown fear that the benefits of the new stimulus plan will be limited as illegal immigrants take up to 15% of the 2 million newly created construction jobs (Camarota, 2009)(Passel, 2005).

      When unskilled laborers are forced down in wages or out of a job altogether we end up with more people dependant on government but this is not the only price the American working poor pay for illegal immigration.  This bottom bracket of American Society is also the group who suffer most from the other costs.  The poor lose the most from the burden placed on public schools, emergency rooms and the social welfare system.  No matter how you cut it there is necessarily a negative correlation between the standard of living for native workers especially those at the unskilled end of the spectrum and illegal immigration in this country. 

      The labor market is not the only market affected.  The $300 billion in employer profits due to this reduced labor costs gives companies employing illegals a comparative advantage over those employing legal labor.  This generates a distortion in both the markets for goods and labor.   Furthermore, aside from the effects and alterations of the labor market and the goods market there is also an impact on the financial markets.  Immigrants from Mexico send massive amounts of money from the US economy to Mexico in the form of remittance.  Those remittances are linked to migration patterns.  Remittances in some countries can have major macroeconomic impacts; resources are needed to be able to track such transfers in order to predict the impacts and to be able to counter them.  In fact in 2003 remittances  where the second largest source of external finance in Mexico second only to oil sales and equaled more than $13 billion dollars that year (Hernández-Coss, 2004). When combined with absorption of jobs created by economic stimulus packages this group could represent a significant leakage.

      When addressing the problem of illegal immigration things become more complicated by laws which reward illegal immigration; it is a problem of labeling.  Each year 300,000 to 350,000 “anchor babies” are born in the United States becoming citizens.  As they become new citizens their parents and siblings become instant legal permanent residents (Madeleine Pelner Cosman, Illegal aliens and American Medicine, Spring 2005).  60% of Immigrants are legal permanent residents as of 2004, which add up to almost 22 million people compared to a little over 10 million who were illegal immigrants (Pew Hispanic Center Publication, 2005).    A vast majority of these new legal permanent residents do not have high school educations.  These “anchor babies” are US Citizens and qualify for federal benefits.  One example given shows a family who came here illegally and had 2 babies costing over $300,000 in medical bills. This immediately gave several family members legal permanent status and over $12,000 a year in welfare funding (Madeleine Pelner Cosman, Spring 2005).  None of these costs are counted when looking at the issue of illegal immigration because the families are considered legal immigrants and the babies are considered citizens even though they would not be here if their parents had not come illegally.  This means that all estimates of the costs of illegal immigrants are underestimating the true costs on our society.  If these illegal immigrants had not been here illegally then we would not have these perpetual costs.

      It is clear by now that there is a great toll on American Society from illegal immigration but what are our alternatives?  The Center for American Progress raised the question: Does the cost of illegal immigrants justify the cost of solving the problem?  In a study of the costs of such action they found that the costs of sealing the border would require an increase in border security spending of $1.25 billion a year.  They further projected that capture and deportation of the present pool of illegal immigrants would cost around $200 billion over 5 years.  This works out to around $40 billion a year to bring the total number of “unauthorized immigrants” to near zero (Rajeev Goyle, 2005).  It is clear from our research that this cost would be significantly less than the cost of doing nothing.

      In conclusion, illegal immigration has a massive and incalculable net cost on this economy. Perhaps the greatest cost would be the massive distortions and leakages preventing normal market conduct across the economy.  This expenditure is certainly greater than the cost of sealing our border and very likely double the $40 billion dollars price tag that some estimates say it would take to solve the problem.  Some long run estimates would place the lifetime savings of implementing a strict sealed border and deportation policy at $1.2 Trillion (Rector, 2006) (Rajeev Goyle, 2005). Illegal immigration puts pressure on the poorest segments of society creating greater wealth disparity and causing increased numbers of native laborers to rely on the government.  The various studies cited thus far place the consensus cost on tax payers in the ballpark of $65-100 billion dollars a year and climbing.    This estimated taxpayer burden must ignore the reciprocal costs such as the social and economic costs of native low wage earners who are forced onto taxpayer support by the market distortions caused by this problem.  Finally, we cannot forget the most difficult cost to calculate; the direct effects on native citizens which includes distortion of political representation, damages from criminal immigrants, and the damage done to native citizens who lose access to public goods like hospitals and education.  We ignored what we felt to be a self evident national security issue that arises from a porous border but please do not forget the extensive and incalculable costs associated with such risk.  Essentially after all of the research we have done on the issue and after checking factual assertions against various sources we have come to the decision that there can be no reasonable economics justification not to spend the necessary funds to seal the border and encourage or force those here illegally to leave.

       We find it patently unfair to the unskilled laborers and to the taxpayers here in the states to mandate a massive cost and lower standard of living in order to support a failed federal government policy.  International borders, immigration and trade are the sole duty and responsibility of the federal government and because of their colossal failure trillions of dollars of productivity have been leached out of this economy at the cost of a lower standard of living for Americans.  The federal government is so focused on all of its assumed and created powers that it has failed to meet its enumerated responsibility of protecting its citizen’s life liberty and property from threats both foreign and domestic.  We urge our representatives to remember your oath and our fellow citizens to be vigilant in demanding that the federal government live up to its enumerated duties. 

Works CitedBorjas, G. J. (2006). THE IMPACT OF IMMIGRATION ON THE LABOR MARKET. Harvard University.

Camarota, S. A. (2009, February). Senate Stimulus: 300,000 Jobs for Illegals? - 1 in 7 New Construction Jobs Could Go to Illegal Immigrants. Retrieved April 5, 2009, fromhttp://cis.org/SenateStimulus

Center for Immigration Studies. (2004). The High Cost of Cheap Labor: Illegal Immigration and the Federal Budget. Retrieved April 5, 2009, from http://www.cis.org/articles/2004/fiscalfindings.html

Coustasse, A., Lorden, A. L., Nemarugommula, V., & Singh, K. P. (2009). Uncompensated Care Cost: A Pilot Study Using Hospitals in a Texas County. Hospital Topics , 87 (2), 3-12.

Donald, H. M. (2004). The Illegal-Alien Crime Wave. City Journal. The Manhattin Institute.

Federation for American Immigration Reform. (n.d.). Retrieved from http://www.fairus.org/site/PageServer?pagename=research_localcosts

Hernández-Coss, R. (2004). Lessons from the U.S.-Mexico Remittances Corridor on Shifting from Informal to Formal Transfer Systems. Washinton D.C.: World Bank.

Jeffrey Passel, D. C. (2008). Trends in Unauthorized Immigration: Undocumented Inflow Now. Pew Hispanic Center.

King, C. S. (2006, may 5). Biting the Hand That Feeds You. Retrieved april 5, 2009, from http://www.house.gov/apps/list/hearing/ia05_king/col_20060505_bite.html

Madeleine Pelner Cosman, P. E. (2005). Illegal Aliens and American Medicine. Journal of American Physicians and Surgeons , 10 (1), 6-10.

Madeleine Pelner Cosman, P. E. (Spring 2005). Illegal aliens and American Medicine. Journal of American Physicians and Surgeons , 10 (1), 6-10.

Martin, E. (2007, march). Over the river: treating the flood of uninsured illegal immigrants threatens to. Business North Carolina , 27 (3).

Martin, J. (2005). Retrieved from http://www.fairus.org/site/News2?page=NewsArticle&id=17193&security=1601&news_iv_ctrl=1901

Martin, P. (1999). International Migration Review , 29 (1), 255-263.

Michael Hoeffer, N. R. (2008). Estimates of the Unauthorized Immigrant Population Residing in the United States; Janurary 2008. Office of Immigration Statistics.

Passel, J. (2005). Unauthorized Migrants: Numbers and Characteristics. Pew Hispanic Center.

Pati, S., & Danagoulian, S. (2008). Immigrant Children's Reliance on Public Health Insurance in the Wake of Immigration Reform. American Journal of Public Health , 98 (11), p2004-2010.

Pew Hispanic Center Publication. (2005). “Unauthorized Migrants: Numbers and Characteristics” . Retrieved from http://pewhispanic.org/files/reports/46.pdf

Rajeev Goyle, D. A. (2005). Deporting the Undocumented: A Cost Assessment . Center for American Progress.

Rector, R. (2006, October 29). Lou Dobbs Tonight. Encore Presentation: Broken Borders. (L. Dobbs, Interviewer)

Robert Rector, e. a. (n.d.). “The Fiscal Cost of Low-Skill Households to the U.S. Taxpayer”. Retrieved from http://www.heritage.org/Research/Welfare/upload/sr_12.pdf

Rubenstein, E. S. (2008). Retrieved from www.thesocialcontract.comhttp://www.esrresearch.com/Rubensteinreport.pdf

Ruth S. Adams, F. D. (2000). Immigration: Proposition 187, Five Years Later. Bulletin of the American Academy of Arts and Sciences , 53 (5), 28-50.

Siskin, A. (2005). Cost Estemates of Unauthorized (illegal) Immigration. Congressional Research Service.

Sophia Fund. (2004). The Newsletter of the Ms. Foundation for Women .

Urban Institute. (n.d.). Retrieved from http://www.urban.org/UploadedPDF/311230_new_demography.pdf


US Congress. (2003). Concurrent Resolution 95. Congression Record: March 31, 2003 (Senate), (pp. S4579-S4589).

US Customs and Boarder Protection Agency. (2006). Performance and Accountability Report.  

 
 
 

Let us begin with a few core principles and then expand upon those tenets to develop a simple view of freedom with will inform so much of my positions on public policy, society, government, and life in general. 

    Tenet 1.) Power is a function of choice.

Now in saying that power is a function of choice I am almost manipulating the necessities that arise out of the mere definitions of the words.  Power is in most simple terms the ability to make a determination.  You have power if you influence or dominate a choice or a decision and it doesn't matter if that effect on choice comes from force or will or right or consent or intimidation or by no effort at all the mere existence of such influence on a determination or decision is power quite simply power is the ability to choose.  The effect or weight of the power is of course dependent on the amount of influence or control of the choice and the breadth or bound of the power is determined by the choice being influenced.  

Tenet 2.) Responsibility is a function of Power and therefore also a function of choice.

 I say that responsibility is a function of power simply because that is typically the consensus in society as I understand it.  If I had sole power, or choice, in a matter and I alone determined the decision to be made then that outcome is my responsibility.  If someone in the army or in a corporation or on a team follows a clear order from a higher ranking member or officer then it is not the person following the order who is held accountable but the decision maker who we would hold accountable in the matter.  It is the coach or the team captain in sports who is responsible for the plays because they make the calls and it is the athletes who are responsible for their execution.  Throughout our society everywhere we look we see that responsibility is a function or both Power and subsequently a function of Choice because of my first tenet.

Tenet 3.) Liberty / Freedom is also a function of choice but more importantly is a type of power. 

Liberty and freedom I will use interchangeably as they are in essence the same thing.  Liberty and freedom are closely related to power because both liberty and power are functions of choice.  On a simple plain Liberty is a form of power.  Liberty is a refined word for power limited to ones self.  While Power is a broad word for decision influencing ability; Liberty is power limited to those decisions that directly alter your own personal state.  You have liberty when you have power in your own life.

Tenet 4.) Consequences are a function of Responsibility 

Consequences are a function of responsibility.  While these words are not exactly synonymous they are very similar.  Consequences are the results of of the decision while responsibility is the level of duty or right or accountability and association with those results.  I think it reasonable to claim that in a perfect world consequences and responsibility should be perfectly connected and those responsible for something should reap the whole benefit or the whole cost.  This may seem cruel but we have the option of hedging our responsibility through a series of decisions.  For example we may choose to eat healthy or we may choose to eat less healthy and buy health insurance.  We may consistently choose to drive safely or we may simply choose to buy better insurance coverage.  Responsibility is nearly equivalent to liability and both in my mind and in our society generally require the burden of consequences when the argument is laid out in such a fashion so as liability and consequences are clear cut.

Tenet 5.) Time is the only other variable between power and responsibility and there is no other factor in determining consequences other than responsibility. 

This is fairly common understanding I hope.  Once a choice is made the consequence is inevitable and the consequence is the responsibility or liability of the person with the power to make the decision.  The only factor which separates the consequence from the power time.

Tenet 6.) Liberty is the power over all of those choices whose consequences fall only to you and simultaneously power over all decisions whose consequences touch you.

There if the only person feeling the consequence is individual X then for individual X to have liberty then individual X must have power over that choice.  Now, if another decision has consequences that effect individual X and other individuals then for X and those other individuals to have liberty they must all have influence on that decision with a reasonable connection to the level of their portion of the consequence.  Therefore if a decision effects multiple individuals then their must be a form of shared power for all to have liberty since liberty is essentially power over ones own life.


The Good Stuff

In these tenets I hope and expect that you will agree with me that I have done little more than expand and connect the principles of the definitions of these words I am making no attempt to establish some new idea but simply to point out the connections that already exist but which sometimes elude our conciseness at a given point. 

If we accept the 6 above tenets then it is clear that when we apply calculus principles we see that if consequences are a function of responsibility and responsibility is a function of power  the consequences are a function of Power.  Since Liberty is a type of power then consequences must be a function of liberty. If this is true then let us continue with the analysis.    If one person has power such as Liberty and delegates that power by choice to another then that person has made a decision with his power and that decision was to allow someone else to decide.  At that point I propose that the consensus would be that there is some sharing of power since the act of delegating is a form of influence and thus an exercise of power but not an absolute use of power but only a partial use mixed with a transfer.  Therefore the consequences would be shared by both the original and the later decision makers relative to the levels of influence or power exercised by each. 

It seems clear therefore that since the only separation between Liberty and the consequences of the exercise thereof is time then if one is absent then the other either is, was or will be absent as well with the only question being when.  There is a lag that is difficult to define between a lose of power and the loss of consequences and I would propose that the lag could be in either direction.  I suggest that either could disappear before the other but since one is a function of the other and time then when one vanishes the other will vanish once the appropriate time whether that be a positive or negative value expires.

I would argue then that if my consequences vanish my Liberty is in jeopardy because when I don't bare the burden of my own choices then I am no longer the only party to those choices and therefore it is no longer an issue of liberty.  If I have no consequences then I have no Liberty because when someone assumes consequences they must put limits on either the assumption or on the decisions.  For two individuals X and Y to both have liberty each must have power over those decisions that effect each of them respectively.   However, if X suddenly assumes all of the consequences of Y, X must either limit Y or limit the consequences assumed otherwise X will have over asserted his own power to assume.  Therefore by assuming the consequences he also assumes the power of choice.  For both to maintain liberty in such a scenario X must have all decision making power about both X and Y's life because X is then being effected by Y's decisions.  

I make all of these arguments to make this one.  When a government assumes consequences for choices of individuals or groups of individuals and places that consequence on others or the body as a whole then by necessity either the seeding individual or groups of individuals are losing their liberty by giving the collective power over their choices or the collective is losing their liberty by being forced to assume consequences of decisions to which they do not have control.  Government must only act as a collective organization for the facilitating of group decisions.  Therefore government must only have power over those decisions that individually effect a large number of those in the jurisdiction of that government.  Then government is a representative decision making body ensuring liberty for all by giving power to all effected but if government is involved in something that is not naturally a decision which effects the whole body then it is not a deliberative body facilitating liberty but a power facilitating its destruction.  

Government is by nature a condenser of power.  When government is condensing collective power over collective decisions it acts as a medium for liberty but the danger is that it will move beyond truly collective decisions and act as a separator, as it is now, between decisions and consequences.  The problem with this is that since consequences are a function of Liberty and Time the removal or separation of consequences means that liberty is being lost for someone.  The redistribution of consequences is an eventual redistribution of power we just don't know when they will come into equilibrium.    

The laws of nature establish clearly that every action has a proportionate reaction.  Why would we think that we can separate action and reaction thereby breaking the laws of nature without some catastrophic result? 

 

In Economics there is a basic understanding that money is only a medium of exchange.  Money really doesn't anything by itself it is representative of other things.  Money represents productivity and it represents the value of what is produced to society.

Progressive income taxes cause people who make more money to pay a higher percent of that money in taxes.  This sounds good to many people... tax the rich for the benefit of the poor... it's very Robin Hood.  But what are the long run impacts of such policies?  Do they benefit the poor? Do they help or hurt the disparity of income distributions?

I believe that progressive income taxes may be making the income gap wider!  I think that over time the policy is widening the spread between high income earners and low income earners.  I know this sounds counter intuitive but give me time to explain.

People make decisions based on the cost and benefit of those decisions.  High income earners are generally people with a high degree of skill... Doctors, Lawyers, Business/finance gurus, Engineers, Scientists, inventors... generally people with lots of investment in their career.  These people often spend years in college living like monks and come out owing thousands or hundreds of thousands in student loans... WHY?

They do this because they think it will be worth it.  They want high incomes and they are willing to sacrifice years of their youth for a job that pays well when they get older.  Now... Why do these jobs pay so well?  They pay well because there is such a high cost to gain the skills necessary to do them... not anyone can go in and do open heart surgery.  Basic supply and demand keeps the wages for these kind of jobs high to pay these people back for their investment of time and money to gain the skills needed to perform these high value jobs for us.

Now what happens when we increase taxes on these folks?  Well one thing I have learned from my research into economics is this: Government tries very hard to control who pays taxes but they in reality they almost always fail!  Government can control who writes the check but not who pays.  ultimately who pays taxes is determined by many factors but mostly the elasticity of supply and demand.  As we look at high skill high wage jobs it is clear that these people will get their higher relative wages regardless of taxes because society needs them and they are hard to replace.

So we see that the costs of these services will continue to rise to cover these high taxes so that these individuals can recoup their costs and still afford to pay these high taxes.  These means me and you as consumers are the ones actually paying the taxes because those costs feed through to us.  But there is a bigger issue. Psychology

What happens when college students see that if they make good money they will be taxed back into poverty?  What if people considering going to medical school see that the marginal tax rates keep climbing and they may end up not making that much money relative to the sacrifice to get the necessary training?  Well at the margin, econ speak for people who are on the verge trying to decide, trying to determine if its worth it ... they are less likely to choose to go into those fields becuase of the risk that they won't make enough to cover their investment... they are giving up years of their youth and taking on huge debt... for what?  to make 10grand a year more than a highway worker?  Many won't take that risk... especially those on the margin..

 So what happens in the long run?  Well if people aren't sure if they can recoup their costs to get these high skill levels we don't get as many high skilled employees because the sight of high taxes scares them off.  So... Supply is decreased... there are not fewer brain surgeons than there would have been but demand hasn't fallen... so what happens?  Those surgeons now have pricing power.  They now raise their rates not only to make up for the excess taxes but because their is more demand for their services then they can provide and they have to choose who to help.  

What does this mean for us poor folks?  Well it means that over a few generations we end up with a supply and demand elasticity that forces all of the higher tax burden to shift through to us... we pay it in the form of higher medical and legal and tuition bills.  Just check inflation in those fields and see if it proves me right... So we pay the higher tax not the those making the big bucks... they make the big bucks because they are providing a service that is hard to provide!  Otherwise competition would force the price lower... but wait their is more... now because we scared off people from the field with the threat of higher taxes limiting profitability we pay an even higher premium because the supply has been cut and with it competition. 

So Progressive taxes feed through to consumers and are not paid by the high skill workers who write the check but even worse the consumer pays a premium because the bad tax policy has manipulated the marker to make it less efficient by scaring people away from the investment needed to enter the market.  Its terrible!  

If we tax everyone the same we remove the disincentives that alter behavior and we will have more people trying to do these jobs forcing the price down.  Its cheaper on everyone but it especially helps bring down the disparity in income over a few generations.

 

Why is it that men who will scream freedom when no freedom exist are so few? Why is it that the crazies who think they can change a world so much bigger than them so popular? I look at men like Neal Boortz and Ron Paul and even Ralph Nader these guys truly act as if they are capable of saving the world.  They act as though they actually believe that they can impact something so much larger and more power than them that it is utterly unfathomable.  I say that... I think that... but then it hits me... I am no different than they are. What separates me from men like this is only time.  I truly believe that I can change things.  I see this world not as it is but as it should be.  I am a visionary and I see how fouled up things are but instead of being depressed I open my eyes wider and I see the potential.  When an antique hunter finds a rare treasure or when a chef finds that perfect fish it isn't a matter of the present but of potential.  I find that I am no different.  I see the potential and I know that I can bring that potential to life if only I get the opportunity.   These guys, these revolutionaries for all of their flaws are precisely what I will be in due time.  These are people who where naive kids just like I am now but they have survived. So often when we are in college it is easy to shout freedom and chant for peace or whatever it is we believe in but as time passes our wills are sapped and our principles dulled.  These men, these revolutionaries, they are no different than I or any of the other visionaries except these guys have not been dulled but refined.  I ask myself why there are so few influential people willing to stand on principle and I see that it is because the task is so difficult. It is so tough to stand alone even if you are the only one who is in the right... sometimes it’s just simpler to be wrong.   What is most interesting to me is the money that these guys must make for their effort.  I know it sounds hollow for me to mention it but when I consider the number of true visionaries it is those with the courage to stand alone that often garner a huge following.  I wonder how I will survive in these various arenas if I am going to stand up to the status queue and stand on principle and truly try to change the engrained errors and inefficiencies but today it hit me.  I dawned on me.  In today’s culture it is possible to be the lone voice of sanity.  Between book sales and website hits you actually can survive as a revolutionary.  The more I look into it and the more I research it the more I realize that my dreams of changing the world while broad may be far more plausible than everyone who knows me thinks.  It might even be more plausible than I believe. It seems as though when someone is willing to take that size risk to be the only one who is right the very act breeds courage in those around them and garners a following that makes it possible to actually make a difference.  Maybe I won't change the world but I'm beginning to see that thinking that way may not be a bad thing.  The very courage to try may be enough to do significant good.  I sure hope it is

I read a quote by Samuel Adams that sums up my thoughts on the matter...
“It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds”

 

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    Ludwig von Mises: 'Used to the conditions of a capitalistic environment, the average American takes it for granted that every year business makes something new and better accessible to him. Looking backward upon the years of his own life, he realizes that many implements that were totally unknown in the days of his youth and many others which at that time could be enjoyed only by a small minority are now standard equipment of almost every household. He is fully confident that this trend will prevail also in the future. He simply calls it the American way of life and does not give serious thought to the question of what made this continuous improvement in the supply of material goods possible.' - Economic Freedom and Interventionism
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