Government Power vs. Rights and the Cypriot Crisis

Posted on March 26, 2013. Filed under: Politics |

Much of the problem we have with with our government today is not the system of government, though we are led to believe that is the problem. The problem is the people we elect.

Take Nanny Bloomberg, for example. He recently implemented a soda ban, which was struck down by the New York State Supreme Court (which, ironically, is not the state’s supreme court) as “arbitrary and capricious”. Bloomberg has appealed.

The city does not allow homeless shelters to serve donated boxes of food, because they can’t guarantee how much sodium is in them. We don’t care if you are starving, you may get too much sodium in your diet!

Michael Bloomberg - Caricature

Michael Bloomberg – Caricature (Photo credit: DonkeyHotey)

Nanny Bloomberg also helped form, and mostly funds his highly touted “Mayors Against Illegal Guns”, a group of 800 mayors across the country, mostly Democrats who are, more or less, a Democrat lobbyist group. The group has announced a $12 million PSA blitz in which they claim that “background checks have nothing to do with taking guns away from anyone.”

It has everything to do with building a huge database that contains information on guns owners.

My wife went to the doctor on Friday, and among her paperwork was the question of firearms in the home.

It is really none of their business, so my wife left it blank.

People like Bloomberg believe that it is up to the government to control our lives, to tell us what to do.

“I do think there are certain times we should infringe on your freedom,” Mr. Bloomberg said, during an appearance on NBC. He honestly believes that there are times when government knows best, which means he knows how to run our lives better than we do.

It is scary when a government official speaks candidly.

Of course, there are those who will just go along with it, because it is too much effort to oppose the government.

It is important to remember, government does not have rights, it has power.

To show that power, desperate Cyprus agreed at the last minute to grab up to 40% of uninsured deposits with the State Bank. This seizure allows them to grab about 4.2 billion euros, but will end the State run bank.

13.00 Sky’s Ed Conway reports that the Bank of Cyprus haircut on large depositors will happen on Friday. Cypriot finance ministerMichalis Sarris earlier (08.50) told Radio Four large depositors could see as much as 40pc wiped off their savings. (All times GMT)

The Russians, who have a lot of deposits in Cyprus, are angry at their money being frozen and seized. Small wonder why.

In the meantime, the banks remain closed for the second straight week. People can’t use their debit or credit cards, online or elsewhere. They aren’t allowed to pay their bills, because all accounts are frozen. At least one person had a job offer rescinded after the government froze the banks.

The Eurozone Chief, Jeroen Dijsselbloem has said this will become the norm to save the Euro.

“If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’,” he said.

“If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders.”

Socialism got Cyprus into trouble, spending more than they were taking in. Socialism is threatening France, Italy and Spain, where uninsured deposits will be snared by the powers that be to save their currency. When will they start snagging private savings to capitalize their pet projects when there is no crisis? There is no need to tax, we can just take what we want.

This is one of the dangers of socialism. What happens when OPM (Other People’s Money) dries up? What happens when you can’t tax any more out of the people?

As a fellow blogger says, sooner or later, you have to pay the piper. It matters not if it is Cyprus or the US, sooner or later, the check comes due.

Does the government have the right to grab money our of your savings and retirement accounts?

From my point of view, governments have no rights at all, they have powers. They have the power to take your money. They have the power to infringe on your rights. They have the power to tell you have to live.

That does not mean, however, that they have the right to do so.

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6 Responses to “Government Power vs. Rights and the Cypriot Crisis”

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The question of whether government has a right to to take the property of it’s citizens depends on ones view of government. Some view individuals as having the primary right to property whereas others view government as having the right to property.

Personally I am divided. IF the people supported the government or their representatives when they were spending the money that got them in debt then I think that it is fair for the government to take money to pay that debt. That is if we as a nation support the programs that drive us into debt then we are responsible for our own debt. Thus we the people should have to pay it. Though I don’t agree with taking it directly from banks, I would implement a sales tax or something like that to acquire the money. Taking it from banks can destroy people’s trusts in banks which can serious impact the economy.

IF the people as a whole did not support the programs that got them in debt and it was the government that pushed those programs on the people then I don’t agree with taking the money from the people. In that case the debt is the government’s debt because the government chose it not the people. So the government would have to deal with it. That would imply that the government should cut programs and budgets in order to pay.

In the US people generally support the programs that are driving our debt. A large percent support Medicare, Social Security and defense spending. Those three pieces drive our debt more than anything else. Now I understand some don’t support those programs but the majority do. So the way I see it we the people are responsible for our own debt in the US. That is why I think we really need to get it under control.

Though debt shouldn’t be controlled purely with budget cuts. Rather we need to spend our money smarter. We need to clean up government so as to improve efficiency and cut waste. It can be done but it will take a lot of pressure from a lot of people to do it. Also it is not as simple as cutting budgets since you have to really think through the issues and try to fix complex problems.

PS Thanks for the reference 🙂

You’re welcome. I enjoy reading your blog, and I agree with most everything you say.

I was actually writing this post and was taking a break when I ran across your post, so I thought I would link it.

The only thing that I disagree with is that, from what I’ve read, the Cypriot people will be paying very little. Most of the funds seized from the banks will be from wealthy people, in particular, wealthy Russians, and they are not happy about it.

In this country, however, we have one side that believes we are spending and taxing too much, and the other side thinks we are taxing too little and not spending enough. I think it is a little of both, but I don’t believe the government was meant to do a fraction of what it is doing. While the entitlements and defense are the primary drivers of government spending, there is a lot of overlap and waste within government, and a lot of fraud in the entitlement system (and the government contractor system).

If we could consolidate some of these agencies that overlap, or have programs that overlap, and go after those who are defrauding the system (in today’s digital age, that should be easier than it was in the past). It won’t solve the problem, but it’s a start. I always save pennies, because they add up over time.

People talk about term limits for Congress. I think that’s a simpleton’s look at the problem, personally. The problem isn’t that people are there until they are dead (Strom Thurmond, Robert Byrd, Ted Kennedy, et. al.), it’s that Congress is always in session (except for holidays, and a short break between sessions). When it is always operating, they are constantly coming up with new laws, new ways to spend money. Let them meet in Washington to do their committee work, to do their oversight, but limit the time (as in weeks or months) that they can actually work on passing legislation, unless it is an emergency. Give them time to actually read the bills they are supposed to vote on.

I think a lot of the problem is that the machine never stops. We now have what, 225 years worth of laws on the books? There are laws on the books as far back as 1798 (at least)!

I agree that it’s become complex, and the solution will be painful. We, the people need to figure out how to get our government under control (and I’m not talking about armed revolt). We are supposed to be the government, but it doesn’t work that way in practice. In the past, we have been the most innovative nation on earth. We need some of that innovation to figure out how to get the debt (not to be confused with the deficit) under control before it collapses.

When I talked to my wife after posting about Cyprus she brought up the fact that a lot of the money taken was Russian. Now I don’t know the specifics of Cyprus but I do know that tax havens like that tend to have much of their legal system written by outside interest that want to put their money there. If that is the case then the Russian may very well had their fair share of political influence over the country to say that they also hold some responsibly. Also the Russians benefited from the Cyprian government because it allowed them to stash their money there. They gained benefits from the country and thus they are loosing like everybody else when the country is forced to pay it’s debts. If you prosper from the policies in good times then you also should feel the pain in the bad times. Though I agree the case for Russian responsibility in paying Cyprian debt is weaker than the case for Cyprians paying the debt.

As for the US, we may have one side that says we tax too much and spend too much. While the other side says we need to tax more and spend more. But both parties behave the same when it comes down to business. Both parties continually expand government and we the people keep voting for them. So I think that we all hold the responsibility even those that say government should be smaller because few actually act on that belief.

Next you really hit on one of the fundamental flaws of our system. The combination of Congress continually making laws along with almost never eliminating laws has made our system overly complicated and bloated. Congress doesn’t need to constantly make new laws, though they do have plenty of work to do. They need to start fixing our system, our immigration system is broken, our criminal justice system is broken, our entitlement system is broken and our department of defense is broken. Immigration is unable to deal with the need for labor in our country which forces illegal immigration. Our criminal justice system incarcerates more people than any other in the world. Our entitlements are wasteful and in some cases counter-productive. Our department of defense is way over-sized and can’t even account for all the money it spends. There is a lot Congress could be doing. But instead they spend their time writing stupid laws we don’t really need.

On top of that we don’t eliminate old laws, we just add to the mess. I think we need a part of the government focused purely on cleaning house. They should evaluate laws and determine if they are really needed or if they are redundant or if they are ineffective, then they should eliminate worthless laws. They should also look at regulations and regulatory agencies and determine what need to be eliminated and what is actually needed. We need to clean up 200 years of clutter in our government.

Also I forgot to mention in regards to Russians that as investors they should carefully examine where they put their money. The debt problems in Cyprus didn’t occur overnight. If they were concerned about the health of the nation as a whole then they might have considered taking their money out of Cyprian banks. They left their money in Cyprus of their own volition and now it sucks to be them.

A couple of points that I want to address as I re-read all of the comments.

The question of whether government has a right to to take the property of it’s citizens depends on ones view of government. Some view individuals as having the primary right to property whereas others view government as having the right to property.

Anyone who believes that the American government has the right to property is very mistaken. Property ownership in this nation is an individual right, per the Virginia Declaration of Rights (section 1), and the Fifth Amendment implies it as well. Article 1, Section 8 of the Constitution spells out and restricts the purposes of the Federal government to purchase land, and this does not include National Parks or National Forests. But the government has decided, in the name of “conservation” that they must own land that belongs to the states. In my own state of Oregon, the Federal government owns over half of the land.

As for the Russians, since no “democratic republic” has ever seized bank deposits before, I think they had a reasonable expectation that it wouldn’t happen. Cyprus never let on that something like that was in the works, and when they did, they closed the banks by forced holiday and froze all of the accounts to make sure that none of the money escaped.

Now, the BBC is reporting that the amount taken for deposits above 100,000 euros will now reach 60%, double what they were originally saying. I don’t care who you are, I don’t think it is right for any government to just start seizing money. A lot of the problem extends from these governments, ours included, can’t bring themselves to cut their budgets. In Greece, we saw what happened when they tried to cut. People rioted in the streets. That’s what government dependence fosters.

So, are the depositors to blame? Well, since nothing like this has ever happened before, to my knowledge, I don’t know that you can blame them. It seems to me that most of the blame has to fall squarely on the shoulders of the government that just couldn’t stop spending, although the media is framing it like it is a revenue problem.

Ok I will grant you that Russians had a reasonable expectation to not have their money taken. As I said before I knew that side of the argument was weak. My overall point which we both agree on is that eventually you have to pay the bills.

Though I do think the US government’s right to take property is debatable. Here in TX if a oil company wants to build a pipeline through your property they automatically get imminent domain and can simply take it for the price they are willing to offer you. It was a big deal a couple years back because somebody was fighting this. Also the government has always had the right to seize property through taxes and if you don’t pay taxes then they can seize it through force. So simply taking money from bank accounts might be wrong. But passing a 40% tax on bank accounts could be legal. I don’t think anybody really questions the right of a government to tax. We may question is taxes are excessive or if tax dollars are wasted but generally it is accepted that governments can tax. Even if you go back to Hobbes or Locke or Nozick they still grant that the government should provide security and safety for the people which requires taxes to pay for.

But I think the way Cyprus did things was a mistake. First they didn’t get their financial house in order before taking other people’s property. Second taking from bank accounts is a problem as it breeds distrust of banks and encourages people to deal in cash so that it is harder to seize. That will negatively impact the economy which then will drive down tax revenue which then makes the debt problem greater in the future. Also it might encourage more under the table deals so people can hide money.

When it comes to Greece I think that there was a high level of government reliance because far too much of the economy was based on government employees. But also there were other issues. Greece didn’t collect a huge amount of tax money that by law they should have. I heard a piece on a guy who set up a program to identify people who under paid taxes then notified the tax offices of that. He worked with the government for a couple years getting it going and monitoring it. He eventually walked away because the tax offices never even tried to collect the money. Also Greece has a huge under the table economy to avoid taxes. On top of that Greece is horrifically wasteful in tax collection. I heard that for every dollar collected in tax the government only gets $0.60 in actually revenue. So yes they were dependent but they also had huge issues with tax collection and government waste too.

Here in the US we are dependent on tax dollars too. If we cut our budget so that we had no deficit in a single year we would really impact the economy in a negative way. It is like stopping a medication we are hooked on, gotta do it slowly or it could cause big problems.

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